Hedge Fund CIO On The Next Leg: “It’ll Be Parabolic. The Talking Heads Will Go Nuts. VIX Will Hit 10”
By Eric Peters, CIO of One River Asset Management
“Still nosebleed long,” grunted Bulldog, selling a few S&P puts for sport. “Bought more stocks, and now I’m buying bonds. Not as a hedge, they’re both going up,” growled Dawg.
“The Baby Boomers are still too nervous about this market, Gaza, Russia, China, Iran. They got trillions sitting in money market funds. But at some point, as stocks rally, these Boomers are going to get FOMO.” That’s when the last leg higher takes off. “It’ll be parabolic. The talking heads will go nuts. VIX will hit 10.”
And Dawg dropped to the ground with a thud, as if all four legs lost power simultaneously, due to some malfunction.
“But after the blow off top, this market will crash, bigger than anything we’ve seen. Gold is telling you what’s coming.”
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“Over the past few weeks, Ukraine came to us and asked for the authorization to use weapons that were provided to defend against the aggression near Kharkiv,” said Anthony Blinken, “including against Russian forces that are massing on the Russian side of the border.”
Rumors circulated that Biden had approved the use of US weapons for strikes inside Russia’s border. The Secretary of State felt it time to confirm that fact.
When asked if the door was open for the US to allow Ukraine to strike further into Russia, Blinken said the US would continue to “adapt and adjust” moving forward.
Markets were profoundly quiet. The Memorial Day holiday seemed to mark the start of summer trading.
For a couple years our central bankers, economists, strategists, and forward markets have gotten just about everything wildly wrong. Inflation, interest rates, real rates, housing, employment, regional banking, GDP, budget deficits, you name it. But lately, surprises seem to have returned to the pedestrian variety of ten basis points here or there.
And with trillions sitting in money market funds, and equity market sentiment neither overwhelmingly bullish nor bearish, the swings in price are kind of boring.
“What we are in now is a production war,” said a senior NATO official. “The outcome in Ukraine depends on how each side is equipped to conduct this war.”
Russia is producing 3x the number of artillery shells as Nato allies and at just 25% of the cost. And Nato has just 5% of the air defenses it needs on its eastern flank. That is sure to soon change.
It’s all heating up in the Pacific too. Lieutenant General Jing Jianfeng denounced the US as the “source of chaos and tension” in the Indo-Pacific and said its regional strategy aimed to “create division, provoke confrontation and undermine stability”. He accused the US of seeking an Asia-Pacific NATO.
Probably true. But markets don’t care until they care, because of course, traders have no real idea how to trade geopolitical risk.
Trump Campaign Raises Staggering $200 Million Since Thursday Conviction
If Democrats needed further confirmation that prosecuting Donald Trump on an obscure misdemeanor elevated to a felony just for him… (while the same DA reduced 60% of felonies to misdemeanors last year), the Trump campaign has raised over $200 million since Thursday’s verdict in the former president’s New York ‘hush money’ trial.
Of that, $70 million was from small donors, and 30% of the total were first-time donors to a political campaign, Eric Trump told Fox News’ Maria Bartiromo on Sunday.
“I mean, these are Americans who are p*ssed off, said the younger Trump. “They’re coming out of the woodwork and they want to support a guy that they just believe is getting bamboozled by a system.
“We saw it with Impeachment one, we saw it with Impeachment two, we see it where they weaponize every liberal DA and AG across the country with one intent: To take him down, to slander him, to ruin his reputation, to try and divide his family, to try and bankrupt him, to throw him in jail, to do whatever the hell they can do,” he added.
“America sees through it. They know exactly what’s going on.”
Eric Trump says the campaign is over $200 million in donations since the verdict
The $200 million was raised in a matter of just three days, which far surpasses any amount raised by President Biden’s campaign in a similar time frame. Within 24 hours of President Trump’s guilty verdict, the Trump campaign received $53 million in donations. The Biden campaign raised a total of $51 million for all of April.
According to a Friday statement by Trump campaign officials Susie Wiles and Chris LaCivita, “Biden and his Democrat allies have turned our legal system into a political tool, and Americans from every corner of the country have had enough,” adding “This momentum is just getting started and together, as President Trump stated perfectly, Americans will render the real verdict on November 5.”
Sometimes weeks shortened by holidays are painful to follow. It somehow seems difficult to get a good sense of flows and momentum. In addition, last week had a dearth of economic data, at least until Friday. Let’s be honest, when we are looking at Treasury auction results for direction, we are in a market devoid of much else going on.
The market did seem to digest the news that a former president and presumptive nominee was found guilty of felonies. At some point, markets are likely to focus on the election. The one thing I’m reasonably sure about regarding the election is that as the campaigning begins in earnest, it will not be great for Treasuries. Neither candidate/party seems particularly interested in doing anything about the ballooning national debt and that will weigh on markets yet again.
Other factors such as “okay” inflation data will also impact Treasuries. We crawled back into our 4.3% to 4.5% range, but largely on a simply atrocious Chicago PMI report. While we can all agree that neither Chicago, nor Manufacturing are as important to the nation as they once were, it is at least mildly disturbing that we surpassed the 2001 trough (though we are marginally higher than the 2008/2009 and COVID troughs).
Which brings me to the chart of the day.
The Nasdaq 100 dropped about 300 points on the week or about 1.5%. Not horrible, but late into the day on Tuesday and late into the day on Friday (which also happened to be month-end), the Nasdaq 100 gained about 470 points (about 2.5%). Now, maybe the “hockey stick” save into the close on Tuesday is explicable, but we saw those gains fade as the week progressed. However, Friday’s action seemed bizarre at best. Presumably, it was due to some sort of month-end rebalancing, but it was hardly something that a continued rally seems likely to be based on.
That is in addition to some of the moves (up and down) highlighted in yellow, that seem almost random. Sure, some can be tied to a specific headline, but many just seem to be reactions to flows.
I’m increasingly worried about a lack of “true” liquidity in the markets. Sure, algos create a perception of liquidity (one that can be used in reasonable size), but those pockets of liquidity seem to disperse more and more frequently.
Without a doubt, in a quiet tape, the relentless buying from share repurchases has helped, but that didn’t seem to work last week.
One thing that caught me somewhat by surprise was that going back to March 1st, the S&P 500 is up 2.4%. No, I’m not surprised that despite all the hype and relentless “all-time high” headlines, stocks are barely up over the last 3 months. What surprised me (a little) was that the utilities sector was by far the best performing sector in the S&P 500 (up a whopping 16.4% over that period).
We have stretched the AI Deputization theme to its limit. Yes, data centers are being built. More and more computing power is also being built. They will need energy to run, but I suspect that will take time and the markets are “compressing” time. We’ve pulled forward lots and lots of expected cashflows and benefits from AI. NVDA remains strong and is up over 30% since March 1st, but even the AI leadership doesn’t seem broad and has relied on utilities. That all seems “stretched” to me.
We continue to see large stocks react 10% (or far more) to earnings, which I interpret to be a function of options and a lack of true liquidity.
Maybe we will grind higher again, but markets seem stretched, leadership is flagging, and we should get some interesting data this week. I care far less about the inflation data and far more about the data pointing to economic activity and the consumer.
The May jobs data should be really interesting. From a “seasonal” perspective, it should pick up summer hiring in the Northeast. I continue to wonder if our “seasonal” adjustments no longer match the reality of a country where the demographic mix and manufacturing/service hubs have changed over time (away from the Northeast). Maybe the corollary of Chicago doesn’t matter, but is this why we’ve been overstating jobs due to seasonality, which is no longer accurate?
Bottom Line
I expect “American Exceptionalism” to be sorely tested this coming week with the onslaught of data (jobs in particular).
I’m increasingly nervous that we are about to undergo another round of selling pressure in Treasuries. Foreign bond yields are getting more attractive, the deficit is concerning, and China (amongst others) needs to raise money to fund stimulus. However, I think the economic data will outweigh that and keep us drifting back towards 4.3% on 10s.
Equities got the “stick save” on Friday, but I think that will fade and every attempt to rally on lower yields that are a result of weaker data will fade. I just don’t see a third “save” coming and it won’t matter that markets don’t close at 2:30 pm, because there won’t be the late day rally!
The U.S. national debt is at 34.7 trillion dollars. If you laid that many dollar bills end-to-end, it would wrap around the Earth 134,599 times. That’s enough to travel to the sun and back 17 times. Suffice it to say, we’re in a pickle.
America is slowly approaching the precipice of debt default. This is no minor dilemma. A default could cause approximately 8 million jobs to be lost. In other words, the bill would come due.
For many politicians, the debt crisis is not a pressing concern. At least not enough to take measures to fix it. The Biden administration passed a 1.2 trillion-dollar infrastructure bill in 2021, adding 256 billion dollars to the budget deficit over the next ten years. Biden has also forgiven 167 billion dollars in student loans during his tenure, which was financed through increased government spending. Despite already being one of the most indebted countries in the world, politicians continue to dig the U.S. into an even deeper hole. The problem is not simply a monetary one.
There is an ideological battle underlying our descent into debt.
The ideas that have caused America’s current debt crisis were birthed during the Great Depression. In 1932, Franklin D. Roosevelt issued a series of spending measures that were intended to stimulate economic activity in what was called the “New Deal.” FDR spent over 950 billion (inflation-adjusted) dollars on the program while being touted as an economic “savior.” The deal was promoted as what released America from the bonds of the recession. In reality, it made the problem worse.
A study conducted by two UCLA economists found that the New Deal actually extended the Great Depression by seven years. By artificially increasing wages while unemployment remained rampant and below projected recovery rates, FDR’s program harmed economic health. Simply pumping money into the economy wasn’t the fix-all solution it was advertised to be.
This is no surprise. Simply increasing the amount of money in the economy does not increase the total amount of goods and services. It only increases the demand for a stationary supply, which necessarily results in a price increase. Instead of stimulating true economic development, unrestricted government funding has led to an inflationary trap. And yet we keep spending, suppressing the symptoms while worsening the underlying problem.
Another flaw of increasing government spending is its inefficiency relative to private markets. Look no further than the Pentagon’s $640 toilet seat. Government officials don’t have the proper incentives to spend money wisely. Instead, their wasteful spending is bankrolled by tax dollars, debt, and increases in the money supply. Between 2020 and 2022, the money supply alone increased by over 40%. Consequently, inflation burgeoned to 7% and 6.5% in 2021 and 2022 respectively.
Government spending is a slippery slope. Once a private entity becomes dependent on a public sector paycheck, it will keep coming back for more. In return, politicians get more control over the lives of their constituents. The decision to increase taxes, the money supply, or the national debt to fund more spending is rooted in an ideology of increased government intervention.
The thinkers who originated Western political philosophy believed that government was meant to protect life, liberty, and property, and nothing more. The modern American regime has drastically overstepped these bounds and instead spends trillions of dollars on niche issues while citizens pay the price in the form of inflation, higher taxes, and debt.
At the heart of the issue is the belief that politicians can spend your money better than you can. But this couldn’t be further from the truth. Political leaders only have to cater to the current populus to stay in power, and thus have a heavy tendency to overspend in the present and let future generations pick up the pieces. But the bill is coming due. Experts estimate the U.S. has approximately 20 years to change its spending policies or it will have to default on its debt. We are descending into an economic crisis of our political leaders’ design. While excessive spending appears beneficial in the present, the American people always pay the price.
Netanyahu Accepts Johnson’s Invitation – First Foreign Leader To Address Congress A 4th Time
Israeli Prime Minister Benjamin Netanyahu has accepted an invitation to address both houses of Congress, after House Speaker Mike Johnson issued a formal invitation on Friday, with the backing of fellow Democrat leaders.
Netanyahu boasted that he will be the first foreign leader in history to make four such appearances there. “I am moved by the privilege of representing Israel before both houses of Congress, and of presenting, to the representatives of the American people and the entire world, the truth about our righteous war against those who seek our destruction,” an acceptance statement by the Israeli prime minister’s office said.
The invitation leader had also been signed by Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell, and House Minority Leader Hakeem Jeffries. They said “we join the State of Israel in your struggle against terror, especially as Hamas continues to hold American and Israeli citizens captive and its leaders jeopardize regional stability.”
“For this reason, on behalf of the bipartisan leadership of the United States House of Representatives and the United States Senate, we would like to invite you to address a Joint Meeting of Congress.”
However, some House and Senate Progressives are expected to boycott Netanyahu’s address, including Senator Bernie Sanders.
Sanders issued a statement saying “It is a very sad day for our country that Prime Minister Benjamin Netanyahu has been invited – by leaders from both parties – to address a joint meeting of the United States Congress.”
“Netanyahu is a war criminal. I certainly will not attend,” Sanders added. Indeed it is also the first time that a leader who has an arrest warrant out by the Hague-based ICC has addressed Congress and the American people.
All of this is happening at a deeply strained moment for US-Israel relations. Israel’s military has plunged deep into Rafah, violating prior red lines issued by Biden. Also, Netanyahu appears to have slammed the door on Biden’s publicly backing the current ceasefire deal on the table.
Other Progressive Congressional members say they will ask hard questions during his visit:
I hope you will agree to sit down with Members of Congress & answer questions, @netanyahu. A number of us have great concerns how you’ve conducted the collective punishment of millions & possible war crimes. Also, I hear there may be an arrest warrant to deal with. See you soon? https://t.co/mnmQaMF1RG
The Israeli PM has vowed that the military operation in Gaza won’t stop until Hamas no longer has military or governing capacity. He has said he won’t withdraw troops until the group is eliminated.
HBO ‘Real Time’ host Bill Maher has predicted that if Donald Trump is sentenced to any prison time, there will be a civil war that will quickly evolve into a race war because of MAGA supporters.
“Here’s the key question: Is he going to go to jail? Would this judge dare do that?” Maher said, adding “And should he? I heard some people say if his name wasn’t Donald Trump he would definitely get jail time.”
“MAGA nation will go nuts. I don’t know if that’s a reason to or not to do something, but they will,” Maher continued during the discussion with former Obama chief strategist David Axelrod.
Maher went on to suggest that “because the judge’s name was Juan,” putting Trump in jail would lead to racial political violence.
“Everything becomes racial in this country. That’s partly because of our horrible, despicable racial past, partly because some of that racism lives on in the present and some of it because the far left makes everything racial. But that’s what it’s going to be.” Maher further posited.
“A civil war in this country, I’m sorry to say, becomes a race war. That’s the sad truth about this country,” the host continued, adding “And if they put him in jail, I mean, the first thing his supporters are going to say is, ‘Oh, that’s what it is.’ A Black district attorney. You know, all these people who are the district attorneys, they’re black. The judge was not White. This is what it is.”
Watch:
HBO ‘Real Time’ host Bill Maher has predicted that if Donald Trump is sentenced to any prison time, there will be a civil war that will quickly evolve into a race war because of MAGA supporters. Full report here: https://t.co/BpSpHCoqoNpic.twitter.com/q3hBsQwh6S
As we highlighted earlier this week, former US Attorney for the District of Utah Brett L. Tolman is adament that Judge Merchan will give Trump jail time.
“This judge has considerable power now, on July 11th he has the power to take Trump forthwith, he can take him, put him in custody right then and he can do it for whatever period of time,” said Tolman, warning that despite there being a range of sentencing, “the rules are out the window, who knows what this judge will do.”
“I predict he will give him some jail time, I think he will fine him, he’ll give him a stern lecture and then he’ll promptly plan his retirement and a book deal,” concluded Tolman.
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“Nothing To Do With World Events”: Two Unarmed Minuteman III ICBMs Slated For Launch Next Week
The US Air Force Global Strike Command is preparing to conduct two separate tests of unarmed Minuteman III intercontinental ballistic missiles from north Vandenberg Space Force Base in California next week.
“Consistent with previous test launches, this routine, unarmed ICBM test launch will validate and verify the effectiveness, readiness and accuracy of the weapon system,” Vandenberg Space Force Base wrote in a statement.
Here are the tests:
The first test is scheduled for June 4 from 12:01 a.m. to June 4, 2024, 6:01 a.m., Pacific Time from north Vandenberg.
The second test is scheduled for June 6 from 12:01 a.m. to June 6, 6:01 a.m., Pacific Time from north Vandenberg.
Test re-entry vehicles are expected to travel approximately 4,200 miles southwest of California to the Kwajalein Atoll in the Marshall Islands.
“A previous test launch slated for February 2024 had to be postponed due to some needed repairs at Reagan Test Site,” said Col. Chris Cruise, 377th Test and Evaluation Group commander.
Cruise continued, “This summer’s test launch was already scheduled so it made sense to do them both while all the necessary personnel were in place. The launches were scheduled well in advance and have nothing to do with world events.”
Late last year, America’s 450 ICBM silos across five states began a major $96 billion overhaul – part of a nuclear modernization effort. The military as a whole is being modernized as war rages on in Eastern Europe and is set to possibly expand with the Biden administration ‘green-lighting‘ Ukraine to strike inside Russia with US weapons. The conflict between Israel and Hamas is another concern, as well as instability in the South China Sea.
Had the company gone just two more days without an incident, it would have satisfied a settlement to avoid criminal prosecution by the Department of Justice (DOJ).
Instead, the accident triggered investigations by federal agencies and congressional hearings. The incident also renewed public scrutiny of Boeing and the 737 MAX 8 crashes in 2018 and 2019 that killed everyone on board and led to criminal charges for the company.
Boeing has since seen a significant financial fallout, reporting a $355 million loss and a near-50 percent drop in deliveries in the first quarter alone. The company also faces plummeting stock values and canceled orders from multiple airlines since the Jan. 5 incident.
The DOJ ended months of speculation on May 14 with a court filing alleging that Boeing violated its 2021 deferred prosecution agreement. The company failed to “design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws.”
The DOJ will meet with the crash victims’ families on May 31 before announcing its intentions with Boeing’s case by July 7.
According to career pilots, aviation safety experts, and attorneys who spoke with The Epoch Times, how Boeing violated the agreement and the possible consequences are complicated.
To stay competitive, Boeing needed to design a new plane that could fly to destinations such as Hawaii with less fuel. The company’s competitor, Airbus, was edging out the market with new, more fuel-efficient jets.
Instead of designing a brand new plane, which would have required extensive pilot training from the airlines that buy them, raising the jet’s price, Boeing opted to release an upgraded version of its 737 jet, the 737 MAX. It has larger, more powerful engines that are installed farther forward on the plane’s wings, which causes the nose to push up higher during takeoff.
Boeing compensated with a new flight control software called Maneuvering Characteristics Augmentation System (MCAS), which automatically lowers the nose to avoid midair stalling. Federal regulators said Boeing didn’t tell the airlines or the Federal Aviation Administration (FAA) the extent of the software, how it controls the plane in the background, and how to disable it.
Planes also use angle of attack vanes, or indicators, to tell the computer whether the jet is ascending or descending at the right pitch angle. Before the 737 MAX, these indicators were wired to two sensors in case one malfunctioned during flight—because of damage from a bird strike, for instance. On the original 737 MAXs, the angle of attack indicators were wired to a single sensor, causing the flight control software to assume that the plane was in critical danger if either indicator malfunctioned.
During the 2018 and 2019 fatal flights, the MCAS system kept pitching the nose downward with faulty angle-of-attack data, likely from a damaged angle of attack vane. Because Boeing didn’t properly disclose the software nuances and how to disable it to the airlines, the pilots took more than 10 seconds to respond. Federal guidelines expect pilots to respond to such as situation in four seconds to avoid a catastrophe.
Boeing also didn’t overhaul the flight control software until after the 2019 Ethiopian Airlines crash, which was five months after the 2018 Lion Air crash. The FAA responded by grounding all 737 MAX jets for nearly two years to ensure compliance with regulations.
“The MCAS accidents were pure, 100 percent money accidents,” said Shawn Pruchnicki, aviation safety expert and assistant professor at Ohio State University’s Center for Aviation Studies.
“They killed 346 people over money and nothing else.”
Disclosing the flight control software would have forced airlines to order new training for their pilots before using the 737 MAX, thus raising the sales price.
The DOJ, the FAA, and the House Transportation Committee initiated separate investigations into the crashes. All implicated the MAX’s flight control software and Boeing’s decision to withhold this information from regulators, airlines, and pilots, which meant that pilots didn’t respond in time in both fatal 737 MAX 8 crashes.
Boeing didn’t respond to a request for comment.
How Was Boeing Charged?
The DOJ charged Boeing on Jan. 7, 2021, with conspiracy to defraud the United States, particularly the FAA’s Aircraft Evaluation Group.
The U.S. government stated that Boeing deliberately withheld details of its flight control software from the FAA and airlines. Boeing maintained that two of its 737 MAX Flight technical pilots were responsible for deceiving federal regulators about the MCAS flight control software.
The government then brokered a deferred prosecution agreement with Boeing, a form of criminal settlement in which charges can be dismissed if the defendant fulfills certain obligations within a stated timeframe.
Boeing had to accept responsibility for the acts that led to criminal charges and pay a total of $2.5 billion, which included a $243.6 million penalty and a $500 million fund to compensate the families of the 2018 and 2019 737 MAX crash victims.
However, Boeing also had to stay in compliance for three years from the day the agreement was signed, Jan. 7, 2021.
During this period, the company had to avoid committing any federal felonies, could not deny responsibility for the charges, and was required to implement a “compliance and ethics program designed, implemented, and enforced to prevent and detect violations of the U.S. fraud laws throughout its operations.”
Boeing was two days from the end of its probationary period when the Alaskan Airlines panel blew out.
The DOJ’s May 14 letter states that Boeing failed to “design, implement, and enforce” the compliance and ethics program required under the terms of the settlement. However, the agency did not explicitly say whether the Alaskan Airlines incident or any others from 2024 were linked to Boeing’s lack of a compliance and ethics program.
Robert Clifford, lead attorney for the families of the 2018 and 2019 crash victims, told The Epoch Times that the DOJ hasn’t informed him or the families of the acts or incidents that led to Boeing’s breach of the agreement.
“We hope to learn details of the investigation and government plans going forward,” he said.
“Obviously, the events of 2024, such as Alaska Air, have caused greater focus on Boeing’s compliance and the scrutiny of the government, but we await word on the exact details that led to the finding of [the] breach.”
The DOJ also wrote in the letter that it reserves the right to find Boeing in violation of other terms of the agreement until July 7, when it will announce how the agency intends to proceed with the case.
Possible Criminal Charges
The DOJ could pursue multiple pathways if it criminally prosecutes Boeing.
Neama Rahmani is a former federal prosecutor who once worked for the aerospace company. He told The Epoch Times that the DOJ could issue a “massive fine,” require an independent monitor to “ensure that Boeing is complying with its obligations under the agreement,” or prosecute individuals in the company, such as CEO Dave Calhoun.
Mr. Rahmani explained that going after individuals at the company requires a higher bar of proof. He said prosecutors could use a text message between high-level executives admitting to fraud, for example.
We have been discussing the dubious constitutional basis for President Joe Biden withholding the audio tapes of his interview with special counsel Robert Hur. I have previously written that the claim of privilege makes little sense when the transcript of the interview has already been released. It seems curious that Biden is claiming to be the president “who cannot be heard” in withholding the audio version.
It just got wackier as the Justice Department seeks to create a new type of “Deepfake privilege” that would effectively blow away all existing limits on the use of the privilege when it comes to audio or visual records of a president.
Multiple committees are investigating Biden for possible impeachment and conducting oversight on the handling of the investigation into his retention and mishandling of classified material over decades. Classified documents were found in various locations where Biden lived or worked, including his garage. The mishandling of classified material is uncontestable. Broken boxes, unprotected areas and lack of tracking are all obvious from the photos.
Biden made the situation even worse with a disastrous press conference in which he attacked Hur and misrepresented his findings.
Hur’s ultimate conclusion that Biden’s diminished cognitive abilities would undermine any prosecution left many dumbfounded. After all, the man who is too feeble to prosecute is not only running a superpower with a massive nuclear arsenal but running for reelection to add four more years in office.
From impeachment to oversight to the 25th Amendment (allowing the removal of a president for incapacities), there are ample reasons for Congress to demand information and evidence from the government on these questions. Congress is also interested in looking at repeated omissions for “inaudible” statements. Under this sweeping theory that Biden can legitimately withhold these recordings under executive privilege, any president could withhold any evidence of incapacity or criminality.
As previously explained, the claim that the audiotape but not the transcript remains privileged is hard to square with precedent or logic. However, now the Justice Department appears to be pivoting with a new claim with a late Friday filing. The filing obtained by Politicostates that the audiotape must be withheld due to the risk that it could be altered by artificial intelligence and passed off as authentic in a deepfake release: “The passage of time and advancements in audio, artificial intelligence, and ‘deep fake’ technologies only amplify concerns about malicious manipulation of audio files.”
Consider the implications of that argument for a second. It would mean that any visual or audio recording of the President could be withheld due to the danger of digital or other manipulation. It would eviscerate any existing limits on privilege assertions.
It is also absurd since you could create such fake recordings using the transcript and Biden’s voice from countless interviews through AI programs. The Justice Department acknowledges that obvious logical disconnect by noting that the release would make any fake version more credible.
“To be sure, other raw material to create a deepfake of President Biden’s voice is already available, but release of the audio recording presents unique risks: if it were public knowledge that the audio recording has been released, it becomes easier for malicious actors to pass off an altered file as the true recording,.”
The filing is logically and legally absurd. It is also dangerous.
For a president who is already carefully insulated from questions and controlled in public appearances, the argument would allow staff to completely control any public or, more importantly, congressional review of his actual speech and discourse.
In seeking to prevent “malicious actors” from altering reality, the government is claiming the right to frame reality as an inherent constitutional prerogative.
The argument ignores that, if an audiotape is released, it is harder to pass off a fake as genuine. As it stands, actors can claim tapes as leaked or derived from other sources. In the absence of an official tape, such arguments can be difficult to refute.
The fact that this spurious argument is being made by Merrick Garland’s Justice Department is another disappointing sign that he has abandoned his pledge to remain apolitical in office. This litigation is clearly designed for one overriding purpose: to delay any release until after the election when it cannot harm the President.
It is the legal version of a deepfake — misrepresenting the law to mislead citizens into believing that they are better off with less information on the credibility and competence of their president.
Two state supreme courts are considering whether workers who administered COVID-19 vaccines to minors without parental consent should be shielded by a federal law.
The North Carolina Supreme Court agreed to take up an appeal from Tanner Smith, one of the minors, and his mother, according to an order dated May 23.
Tanner, who was 14 at the time, went to a clinic at a school in his district, Guilford County Schools, in 2021 to receive a COVID-19 test. Instead, his mom and stepfather learned later, he was injected with a COVID-19 vaccine even after he told workers at the clinic he didn’t want it.
Emily Happel, Tanner’s mother, and the boy sued the district and the organization that was running the clinic, alleging battery and violations of constitutional rights.
A trial court ruled against them, though, finding that the Public Readiness and Emergency Preparedness Act (PREP Act) provides immunity to the workers.
The act, signed in 2005 by then-President George W. Bush, conveys immunity to administrators of covered vaccines except in cases of “willful misconduct.”
The North Carolina Court of Appeals upheld the ruling in March, despite designating the conduct carried out by the administrators “egregious.”
“We must determine whether the scope of immunity covers the potential liability at issue in this case. We hold that it does because, as the trial court noted, the immunity provided by the act is extremely broad,” Judge April Wood wrote in the unanimous ruling.
“Plaintiffs argue that the PREP Act does not cover their claims because they do not arise because of COVID-19, but merely happen to relate to COVID-19. We would be inclined to agree if the PREP Act did not define the scope of immunity so broadly,” she added later.
In a filing to the North Carolina Supreme Court, lawyers for Ms. Happel and Tanner said that the lower court decisions “rendered totally useless N.C. Gen. Stat. § 90-21.5(a1) which prohibited the very acts committed by defendants.” They also said that the trial court erred in finding that available evidence did not show the clinic workers were “acting within the scope of their employment by administering a vaccine” because that meant the court “would have required that administering vaccines without consent be a part of the employment duties of the vaccine clinic workers for a claim to stand.”
State Rep. Neal Jackson and seven other members of the state’s General Assembly said in a supporting brief that the lower court rulings wrongly overrode state law.
The PREP Act states in part that covered persons are immune from “all claims for loss caused by, arising out of, relating to, or resulting from the administration to or the use by an individual” of a covered vaccine. It defines loss as death, injury, fear of injury, or loss of or damage to property.
“Nothing in the text of the PREP Act specifically and expressly speaks to a violation of the state constitution, especially the deprivation of a parent’s right to determine the care, custody, and control of her minor child,” the members said. They added later, “If allowed to stand, however, the decision of the Court of Appeals would permit any constitutional violation and immunize all manner of ‘egregious’ conduct so long as it is done in connection with the provision of a COVID-19 vaccine.”
The Guilford County Board of Education, one of the defendants, told the state’s top court that the matter is “a straightforward application of federal statutory immunity” and not deserving of a fresh look by the court. The Old North State Medical Society, another defendant, said it was in full agreement with the county’s filing.
Vermont Case
The Vermont Supreme Court, meanwhile, heard arguments on May 28 in a case involving a 6-year-old who received a COVID-19 vaccine despite his parents explicitly stating they did not want the child to receive the shot.
The child was injected in 2021 at Academy School in Brattleboro even after Dario and Shujen Politella, the child’s parents, had informed officials they did not want the child vaccinated.
Mark Speno, superintendent of the Windham Southeast Supervisory Union, apologized and blamed the injection on a mixup with name tags.
Mr. and Mrs. Politella removed their child from the school and sued, alleging negligence, battery, and fraud.
The Vermont Superior Court dismissed the suit, finding that they needed to bring litigation in federal court under the PREP Act’s willful misconduct immunity exemption.
Lawyers for the family in a brief pointed to a U.S. appeals court ruling from 2023 that found defendants failed to show the PREP Act covered their actions and directed the case back to state court. “That should happen here,” the lawyers said.
Ronald Ferrara, one of the attorneys, told justices during oral arguments that the failure of school staff to listen to the parents is “really the cause of harm in this case,” the Vermont Digger reported. He said that “the vaccine has absolutely nothing to do with it.”
While the PREP Act immunity appears broad, disallowing the suit due to the law “create[s] some bad public policy because this kind of mistake can be repeated without ever having any judicial review,” he added later.
Vermont lawyers said that the lower court rulings were correct.
“The weight of authority clearly comes down in favor of the defendants having immunity in this case, and the lack of consent is causally related to the administration of the ‘countermeasure’ by covered individuals, therefore immunity applies,” David McLean, a state attorney, told the justices.
Aaron Siri, the managing partner of Siri & Glimstad LLP, who represents plaintiffs in legal action challenging the PREP Act’s compensation scheme, reviewed the cases.
“Anyone that injects a child against the child’s wishes or without parental consent,“ Mr. Siri told The Epoch Times in an email, ”should be criminally prosecuted and treated like any other criminal that engages in battery.”
