“Killer Wave” Confirms Big Bear Market Looms

Excerpted from James Stack's InvesTech.com,

Technical Evidence: Confirming a bear market

 It’s been 26 years since we developed our Negative Leadership Composite (NLC) to help identify the best buying opportunities, as well as the highest risk markets. It’s pure common sense that broad upside leadership (and absence of downside or negative leadership) signifies or confirms a new bull market. It usually does the same for second or third bull market legs. This is shown when a bullish “SELLING VACUUM” [*1] appears in the NLC. Conversely, broad and increasing downside leadership –shown by “DISTRIBUTION” [shaded region *2]– will always confirm high risk early in a bear market by dropping to -100.

Our challenge, at times like this, is distinguishing whether “DISTRIBUTION” might be caused by temporary factors, which was the case three times in the current bull market – the Congressional showdown over the debt limit, the market’s Fed “taper tantrum,” and the oil price collapse over a year ago. Judging by the depth, duration, and broadening sector contribution to the “DISTRIBUTION” in leadership, we must conclude that Wall Street is currently in a bear market.

 

 

The run up in margin debt has also become an increasing concern in the past few years. This represents “hot money” borrowed to buy stocks on margin… that will likely panic as selling in a true bear market progresses.

 

Note that past peaks in margin debt have coincided with, or led, peaks in the stock market. That was also the case a year ago when margin debt peaked a month before the blue chip indexes. But as we’ve pointed out, the final peak cannot clearly be identified until margin debt falls enough to make new highs or peaks unlikely. Based on the volatile, high volume down days we’ve experienced since the start of this year, we anticipate margin debt may confirm a bear market when reported later this month by tumbling decisively through the support levels of the past 18 months.

Two (almost three) major U.S. indexes already qualify as bear markets…

Investors might be surprised to learn that most foreign stock markets –including London’s FTSE (Financial Times Stock Exchange) Index, the German DAX, and Tokyo Nikkei– are all off more than 20% from last year’s highs. China’s Shanghai Composite has tumbled 46% from its peak last June.

Globally, one of the safest places to be has been in solid blue chip stocks in the U.S. The S&P 500 Index and Dow Jones Industrial Average are approximately 13-14% off their peaks last May. Meanwhile, the Nasdaq Index is within several percentage points of hitting the -20% threshold of qualifying as a bear market.

By comparison, the Dow Jones Transportation Average is already in bear market territory with a loss of -24%. And the premier small-cap Russell 2000 Index has tumbled over 25%.

In summary, the bear market damage to many investors’ portfolios has already proven significantly more severe than what is portrayed by the more resilient blue chip DJIA and S&P 500. Even within the S&P 500 Index, over 60% of component stocks are down 20% from their 12-month highs, while 37% are down more than 30%!

We also find little to cheer about in market breadth or participation. The Advance-Decline Line, which showed a bearish negative divergence with the S&P 500’s secondary peak in November, continues to weaken with –or ahead of– the blue chip indexes.

When the majority of “troops” are in retreat, it can become increasingly difficult for the “generals” to stand their ground. Without a measurable improvement in breadth, we believe this market will continue to struggle in the coming weeks and months.

More bad news…

The Coppock Guide, which has been weakening for almost 2 years, is now confirming a bear market. That’s bad news for the market in the near-term, but has positive implications down the road. This important indicator was developed more than 50 years ago by Edwin S. Coppock and has often been described as “a barometer of the market’s emotional state.” As such, it methodically tracks the ebb and flow of equity markets, moving slowly from one emotional extreme to the other. By calculation, the Coppock Guide is the 10-month weighted moving total of a 14-month rate of change plus an 11-month rate of change of a market index. While that sounds complicated, it’s actually an oscillator that reverses direction when long-term momentum in the market peaks in one direction or the other.

Historically, the value of the Coppock Guide lies in signaling or confirming low risk buying opportunities that emerge once a bear market bottom is in place (black dotted lines on the graph below). And since market bottoms are typically sudden V-shaped reversals, it works amazingly well – as it did shortly after the bottom in 2009.

Unfortunately, the Coppock Guide is generally not as useful in identifying market peaks. One reason is that bull market tops are usually slow, rounding formations in which momentum –and the Coppock Guide– peak up to a year or more ahead of the market. Yet there are certain instances when it has proven invaluable at a market top…

In the late 1960s a technician named Don Hahn observed another phenomenon about the Coppock Guide. When a double top occurs without the graph falling to “0” –a phenomenon that Hahn referred to as a “Killer Wave”– it confirms an extended bull market where psychological excesses can reach extremes. In those situations, the appearance of a second peak generally means a bear market has just begun or is not far off (see red dashed lines). The late 1990s was an exception.

Killer Waves are rare, and they can be dangerous. This is only the 8th bull market in the past 95 years to see a double top in the Coppock. The table at right shows that in 5 of the previous cases the second peaks were associated with the start of the more notorious bear markets of the past century: 1929, 1969, 1973, 2000, and 2007.

The Coppock Guide is now projected to drop through “0” in February, which in the past carries over a 75% probability that a bear market has taken hold. Of course, that does not mean the bear market will soon end, and it would be foolish to attempt to second guess when or where the Coppock might bottom. But the more important message for defensive investors is this: Once the Coppock Guide does hit bottom and turns upward –by even 1 point– we will be presented with one of those historical buying opportunities that comes around only once or twice a decade. We can’t rush it… and we certainly can’t forecast it… but we can look forward to it and quickly recognize it when it does occur. So be patient, stay defensive, and remember that there is light at the end of the tunnel.


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In Unexpected Twist, Oil Exporters Are Buying Treasurys While They Liquidate Stocks

Long before the mainstream media caught on to the topic of SWF selling of stocks, we warned a month ago that as a result of the collapse in oil, and assuming oil remains priced at roughly $31 per barrel, the world’s largest SWFs showin the chart below…

… would be forced liquidate at least $75 billion in equities and the lower the price of oil goes, the more selling there would be.

Subsequently, we showed both the equity sector and region allocation of SWF equity exposure, noting that financial stocks located in Western Europe are most exposed, something both DB and CS have found out the hard way.

We also warned (ironically, courtesy of a Deutsche Bank analysis) to stay away from European stocks with high EM government ownership such as these:

 

Yet while the wholesale equity selling by SWFs has become manifest just as predicted, in recent months something unexpected emerged when looking at other asset classes in which SWFs are involved, most notably Treasurys.

” Unexpected”, because US Treasury paper was one of the asset classes many expected would feel the brunt of SWF selling, perhaps much more so than equities. Quite the opposite has not happened.

As Stone McCarthy writes, based on TIC data for Asian oil exporters, those countries have been more aggressively selling risk assets than Treasury securities since oil prices began to slide in mid 2014. The chart below shows the cumulative net purchases of U.S. securities since July of 2013, about a year before oil prices began their descent, for the “oil-exporter” group.

From SMRA:

Since oil prices began falling, oil exporters have been cumulative buyers of $12.5 billion in Treasury securities. Until November, cumulative purchases of Treasuries were continuing to trend higher. During the same period, oil exporters have been net sellers of $19.9 billion in U.S. equities, and $10.0 billion of corporate and agency debt, with corporate bonds accounting for almost all of the sales.

Will this trend of SWFs and oil exporters selling equities even as they buy TSYs change? The Treasury will release the latest December TIC data on Tuesday, February 16. Any notable changes will be promptly apparent, however based on the Fed’s weekly custody holdings data, there has been no notable changed in December, and only in January was there an accelerated decline of TSYs held in custody.

 

Which means that the liquidity preference of those most exposed to oil prices remains one of unwinding risky equity positions, while adding to Treasury holdings. We only mention this in case the record high spec net shorts in Treasury…

… are curious who keeps forcing them to add capital to fund those relentless margin calls.


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Saudi Stocks Slammed As War Worries Trump Dead-Crude-Bounce

Oil's late week surge provided much buying excitement asd Mid-East equity markets opened with flashing green numbers across every screen. However, by the close, it was a sea of red with Kuwait, Egypt, Amman, and Iraq all lower and Saudi's Tadawul All Share Index tumbling almost 4% from the opening highs as war worries dragged The Kingdom's stock market back near 5-year lows.

 

Not "off the lows"…

 

Tumbling near 5-year lows…

 

As Saudi Bank risk begins to rise once again…

 

Which could not be a total surprise as now SonntagsZeriting reports that Qatari state fund and Saudi Olayan Group are reaching for yield and buying Credit Suisse’s CoCo Bonds that are paying as much as 10% interest.

With China set to re-open today, given the carnage across global markets this week, we wonder what kind of margin collateral chains will get snapped…

 

Charts: Bloomberg


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If This Is “Transparency” – We’d Hate To Know What Secrecy Looks Like

Submitted by Claire Bernish via TheAntiMedia.org,

In the spirit of the transparency — of which the Obama administration claims to be a champion — there will be no details regarding the allocation of non-military intelligence spending in the president’s final budget request to Congress.

According to a press release from the Office of the Director of National Intelligence (ODNI), fiscal year 2017’s budget totals $53.5 billion, but don’t ask which agencies or programs will receive the funds — “because such disclosures could harm national security.”

Indubitably.

Of course, the ODNI congratulated the self-titled most transparent administration in history for its laudatory lucidity, anyway.

“Reflecting the Administration’s commitment to transparency and open government, this Budget continues the practice begun in 2012 of disclosing the President’s aggregate funding requests for the [National Intelligence Program],” stated an ODNI fact sheet.

Considering such disclosures became a requirement under the law in 2010, that pat on the back seems superfluous, if not smug.

“That’s a business as usual claim,” said Representative Peter Welch, according to US News & World Report. “There is no transparency there — they’re complying with the thinnest of laws about the [aggregate budget] number. Members of Congress and the American public really are learning nothing.”

US News also reported Welch first learned of the 16 individual intelligence agencies’ budget allocations, along with the rest of the U.S. populace, thanks to Edward Snowden’s disclosures revealed by the Washington Post in 2013.

Welch also explained that although members of Congress aren’t restricted from viewing the specifics of intelligence program appropriations, they are prohibited from discussing the contents — “It’s like going in there with a blindfold and coming out being mute,” he mused. In fact, objecting to the classified budget allotments would mean being “escorted off the House floor in handcuffs” — though it wasn’t entirely apparent whether Welch intended sarcasm in saying so.

Despite the revelations in Snowden’s massive document releases, and his ambitious aspirations to bring transparency to governmental operations, the Obama administration continues to thwart attempts to force the matter — and not only will it continue to do so, but administrations that follow will almost certainly continue the pattern.

In the meantime, it should come as no shock that we will never be completely privy to the intelligence programs we fund through our taxes.


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New Ghost City Under Construction In China

Submitted by Mike Gipp of The World Complex

Developing And Redeveloping Nanning, Guangxi Province

Nanning is called the Green City in China. Unfortunately, having had dinner in one of those rooftop revolving restaurants, I can tell you it is not a beautiful city.

From Qingxiushan looking south and west, one can see a huge swath of developing land at the edge of Nanning.

 

These pictures are looking more or less to the south, running from east (top) to west (bottom). Most of the buildings east of the river are under construction, or just recently constructed, and don’t appear to be yet occupied.

Looking further east, there is still more land that looks like it is set aside for development.

Pictures run from somewhat northeast to southeast. The forested area in the near ground is part of the park, but the cleared area all the way back to the buildings in the distance appears to be open for development.

In addition to the furious expansion of the city, parts of the inner city are getting redeveloped.

All of the remaining pictures are near the city centre, just over 1 km (less than one mile) from the main railway station.

Having a relaxing glass of wine in the middle of a field of rubble.

 

And, as a bonus, if the above fails to “stimulate growth”, China can just make more statues of flowing feces.


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Scalia’s Liberal Tendencies

In October 2012, during oral argument in a case that raised the question of whether and when a canine “alert” justifies a car search, Supreme Court Justice Antonin Scalia seemed genuinely flabbergasted not only by the idea that a police dog might be inadequately trained but also by the suggestion that police might exaggerate a dog’s abilities. “Why would a police department want to use an incompetent dog?” he asked. “What incentive is there for a police department?” The lawyer representing a man who had been incriminated by a dog-triggered search patiently explained that “the incentive is to acquire probable cause to search when it wouldn’t otherwise be available.”

In light of that exchange, it was not surprising that Scalia four months later joined the rest of the Court in a unanimous decision that effectively gave any cop with a dog the power to search cars at will. Yet a month after that ruling, Scalia wrote a majority opinion—joined by the unusual left-right alliance of Clarence Thomas, Ruth Bader Ginsburg, Elena Kagan, and Sonia Sotomayor—that said deploying a drug-sniffing dog at the doorstep of a home qualifies as a search under the Fourth Amendment, meaning it generally requires a warrant. “The officers were gathering information in an area belonging to [the defendant] and immediately surrounding his house—in the curtilage of the house, which we have held enjoys protection as part of the home itself,” Scalia wrote. “And they gathered that information by physically entering and occupying the area to engage in conduct not explicitly or implicitly permitted by the homeowner.”

These contrasting decisions—one highly deferential to the police, the other demanding that they get a warrant if they want to go snooping around a suspected pot grower’s house—show how Scalia, who died on Saturday, alternately delighted and disappointed libertarians. Although he was not a consistent defender of individual rights (or a consistent originalist or federalist), he was nothing like the authoritarian ogre depicted by his critics on the left.

Daily Kos blogger Sylvia Moore thought Scalia was “clearly an authoritarian.” Panda’s Thumb blogger Matt Young was less definitive, saying “Justice Scalia generally comes across as an authoritarian.” Even legal writer Joan Biskupic, in her relatively respectful and sympathetic biography of Scalia, refers to his “authoritarian bent” and “authoritarian instinct.” Yet on the whole Scalia was more liberal than some of his purportedly liberal colleagues, frequently questioning the government’s authority to invade our literal and metaphorical curtilage.

Although Scalia’s defenses of property rights and the Second Amendment were of a piece with that libertarian tendency, progressives tended to see those stances as consistent with his reactionary reputation. They were less likely to notice when Scalia agreed with them on issues such as privacy, due process, and freedom of speech, since those positions did not fit his image as an arch conservative who automatically sided with the government. Here are some of the cases that contradict the caricature. 

Fourth Amendment. In addition to rejecting canines in the curtilage, Scalia wrote majority opinions requiring warrants for infrared surveillance of homes and GPS tracking of cars. In a 1989 dissent, he said requiring applicants for Customs Service jobs to pass urine tests represented an “immolation of privacy and human dignity in symbolic opposition to drug use.” In a 2009 concurrence, he rejected the notion that the danger posed by hidden weapons automatically justifies searching an arrestee’s car without a warrant, noting that “when an arrest is made in connection with a roadside stop, police virtually always have a less intrusive and more effective means of ensuring their safety.” Scalia also joined the 2014 decision that rejected warrantless searches of arrestees’ cellphones and the 2009 ruling that school officials violated the Fourth Amendment when they searched a student’s underwear for unauthorized ibuprofen. In 2013 Scalia dissented from a decision upholding a Maryland law requiring routine collection of DNA from arrestees:

The Court’s assertion that DNA is being taken, not to solve crimes, but to identify those in the State’s custody, taxes the credulity of the credulous….These DNA searches have nothing to do with identification….If the Court’s identification theory is not wrong, there is no such thing as error.

Due Process. In Hamdi v. Rumsfeld, the 2004 case involving an American citizen detained in the United States as an “enemy combatant,” Scalia took the most radical position against the Bush administration, saying the government had to try Hamdi in civilian court or let him go.

Sixth Amendment. Scalia and Thomas led the charge against mandatory federal sentencing guidelines, insisting that the Sixth Amendment right to trial by jury means judges may not determine facts that automatically trigger harsher punishment. Because that position prevailed, the guidelines are now merely advisory, allowing judges to give defendants shorter sentences when they deem them appropriate (as long as no statutory minimum applies). In a 2011 dissent, Scalia mocked the majority’s conclusion that a dying victim’s identification of his attacker was not “testimonial” and therefore could be repeated in court without violating the defendant’s right to confront his accusers:

Today’s tale—a story of five officers conducting successive examinations of a dying man with the primary purpose, not of obtaining and preserving his testimony regarding his killer, but of protecting him, them, and others from a murderer somewhere on the loose—is so transparently false that professing to believe it demeans this institution…

For all I know, [the defendant] has received his just deserts. But he surely has not received them pursuant to the procedures that our Constitution requires. And what has been taken away from him has been taken away from us all.

First Amendment. Scalia demonstrated a wide-ranging respect for freedom of speech in cases dealing with advertising, online indecency, flag burning, dog fight films, violent video games, and criticism of politicians. His record in this area is stronger than those of justices commonly portrayed as more liberal. John Paul Stevens, for example, thought neither flag burning nor documentaries produced by advocacy groups organized as corporations should be covered by the First Amendment. 

In these cases, we see Scalia rejecting the arguments of law enforcement agencies, sometimes in scathing terms; defending the freedom to say controversial, offensive, and outrageous things; questioning the war on drugs as a justification for invasions of privacy; and upholding the rights of accused drug dealers, terrorists, rapists, and murderers. That is arguably the profile of a true conservative, assuming he wants to conserve the Constitution and the civil liberties it protects. But it is not the profile of an authoritarian.

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Donald Trump Is Right About the Iraq War’s Failure. Will That Kill Him with Republicans?

During last night’s GOP debate in South Carolina, a state that is not only socially conservative but very pro-military, Republican frontrunner Donald Trump dropped a 50-megaton truth bomb on the audience:

Obviously, the war in Iraq was a big, fat mistake…. George Bush made a mistake. We can make mistakes. But that one was a beauty. We should have never been in Iraq. We have destabilized the Middle East.

He also added this, in an exchange with Marco Rubio:

RUBIO: …I think you can look back in hindsight and say a couple of things, but he kept us safe. And not only did he keep us safe, but no matter what you want to say about weapons of mass destruction, Saddam Hussein was in violation of U.N. resolutions, in open violation, and the world wouldn’t do anything about it, and George W. Bush enforced what the international community refused to do.

And again, he kept us safe, and I am forever grateful to what he did for this country.

(APPLAUSE)

TRUMP: How did he keep us safe when the World Trade Center— the World—excuse me. I lost hundreds of friends. The World Trade Center came down during the reign of George Bush. He kept us safe? That is not safe. That is not safe, Marco. That is not safe.

Full debate transcript here.

Will last night’s debate be the beginning of the end of the affair between Trump and Republican voters? Various observers think so, given the billionaire’s ragged performance last night, inevitably described as grouchy, cranky, and defensive.

I’m less interested in that then the fact that Trump told a Republican audience what only a few stray party loyalists have been willing to say for the better part of the 21st-century so far: Invading Iraq was indeed a mistake on the conceptual level and a failure on a practical one. Does anyone doubt that the Middle East is destabilized? Or that it has much, if not quite everything, to do with the American invasion of Iraq (and let’s dispense with the fiction that there was an international “coalition of the willing”)?

Republicans may want to blame Barack Obama for squandering the non-exsistent gains of the Bush-era surge and refusing to stay in Iraq rather than following the withdrawal plan brokered by Bush, but even they know deep down that the war was poorly prosecuted. In 2011, for instance, 65 percent of Republicans said they thought the war had “succeeded” (whatever that means) but by 2014, only 38 percent did. Oddly—and perhaps just out of partisan loyalty—in 2014, a majority of Republicans thought the war was justified. Democrats were less likely to think the war was justified (about 28 percent) but more thought it succeeded (38 percent).

In any case, for libertarians and independents, it’s a good thing to hear a major-party candidate (a frontrunner no less!) say what is plainly true to most of us: Invading Iraq was a mistake (at best) and the war has only created more problems in a region never short on them to begin with.

Recognizing basic reality seems like a prerequisite for smarter and more-effective U.S. foreign policy and if takes Donald Trump of all people to say the unsayable, well good on him.

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How Antonin Scalia Influenced the Libertarian Legal Movement: New at Reason

Was Antonin Scalia a libertarian? The question seems laughable, right? After all, it’s Anthony Kennedy who’s at the heart of the Supreme Court’s libertarian moment (such as it is), not that arch-conservative who called the ruling striking down the Defense of Marriage Act “legalistic argle-bargle.”

And in truth, one can presume that the first Italian-American justice’s personal views are about as socially conservative as any modern public official. But so what? There are plenty of religious libertarians, and policy issues like abortion and the death penalty split the liberty movement.

Ah, but Scalia, who died yesterday at the age of 79, based his judicial opinions on those conservative views, right? Well, with the possible glaring exception of Gonzales v. Raich—the 2005 medicinal-marijuana case in which he went with the Drug War over federalism—it’s hard to point to such corruption. (Democratic partisans also invoke Bush v. Gore, but that case is so sui generis that I’ve come to appreciate the Court’s instruction that nobody should cite it for any legal point ever.) Raich is no small case—it pushed the scales from my eyes about Nino, as NFIB v. Sebelius did regarding John Roberts—but that’s not bad for a 30-year career, especially given the flag-burning and criminal-procedure cases where surely his policy preferences lay elsewhere.

Indeed, writes Ilya Shapiro of the Cato Institute, Scalia based his entire revival of originalism and textualism on the idea that judges are bound by the written text and aren’t free either to impose their own views or to divine some mythical legislative intent. 

View this article.

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Don’t Panic! “Experts” Agree – This Is Not 2008

Submitted by Pater Tenebrarum via Acting-Man.com,

Experts Agree: It Is Not 2008

If someone were to ask us what year it was, we would probably politely answer that it was 2016, curious to find out whether the inquirer was a) very confused, b) had only recently awoken from a coma and was still unsure of his when-abouts, or c) was a time traveler who got temporarily lost.

In the unlikely case that we should find ourselves unable to remember the year with sufficient precision to ensure a reliable answer, we’d probably consult a calendar. We recently found out that a great many people actually seem to be uncertain about what year it is. Or at least many mainstream media appear to think so, as they have launched an intense awareness campaign.

Specifically, numerous people seem to think it is still 2008. Wish that it were so – we’d be eight years younger. It all started on 24 August 2015, when two publications apparently discovered independently of each other that is was no longer 2008 and decided that this information should be urgently imparted to the rest of humanity. It all started with marketplace.org admonishing its readers to engage in mnemonic exercises so as not to forget:

 

1-Marketplace-dot-org-Aug-24-2015

If you repeat it often enough, remembering it will eventually become second nature…

 

On the very same day, NPR noted that a number of economists agreed: it was indeed no longer 2008. Incidentally, this was actually a correct estimate, as it was clearly 2015 at the time. It was presumably good though that some reassurance on the point was provided by experts – that is apparently helpful with averting panic attacks:

 

2-NPR Aug 24 2015

Lay your calendar-related phobias to rest pilgrims!

 

However, these efforts were evidently insufficient: general confusion about the precise year we are in must have promptly resurfaced in early 2016. In the interest of keeping the general population in the date-loop, USA Today had the following information on its January 8 front page:

 

3-USA Today Frontpage, Jan. 8 2016

Right on! By this time the arrow of time as measured by the Gregorian Calendar had in fact advanced to 2016…

 

Inside, the paper assured its readers that once again, “pros” agreed with this assessment. Phew!

 

4-USA today, Jan 10 inside

Once again, well-informed experts are providing reassurance. What would we do without them?

 

It turns out that not everybody realized this at once. One day later, the National Interest felt it had to bring its readers up-to-date as well. In hindsight, the photograph it chose to mark the occasion seems somewhat inappropriate:

 

5-National Interest January-11

Good news true believers! You have not traveled back in time after all! Wrong animal though.

 

It took another three days for CNBC to catch on, but they needed a Mr. Mather from PIMCO to tell them (PIMCO seems to be running a sideline as a time-keeping company):

 

6-CNBC - Not 2008-Jan-14

One has to admit that Mr. Mather was quite right: it was in fact already 2016. PIMCO should consider raising his bonus.

 

Another three days later, editors at the Wall Street Journal began to entertain doubts about the perception of time and date prevailing among the paper’s readers. Better safe than sorry, they must have thought. Someone’s got to tell them!

 

7-WSJ - Jan-17
The headline seemed to indicate that they even knew why it was no longer 2008. But the sub-header betrays that there were still some uncertainties. As you can see, it says there: “US economy and financial system are in a very different place now”. Wrong! They’re in a different time. Oh well.

 

By now you’re probably wondering where Bloomberg was while all of this was happening. Did Bloomberg’s editors trust that its readers were aware of what year we are in? It seems they were waiting for an expert study before making a firm pronouncement on the matter. Such a study was finally forwarded to them by Citigroup on January 20:

 

8-Bloomberg Jan-20a

Instead of urging readers to remember what the current year is, Citigroup seemed to prefer for everybody to forget 2008. This is no surprise, as the bank reportedly suffered a severe dancing accident in 2008. This was rumored to be due to problems with the CEO’s hearing aid. What he erroneously took to be music was actually the sound made by bankers and hedge fund managers falling past his window on the way down.

 

On the very same day, Business Insider finally decided to consult an expert as well. None other than the famous Nouriel Roubini! If anyone knows for sure what year it is, it is surely he. Not only that, he even had the presence of mind to make a very useful suggestion as to what needed to be done to help those who remained confused – although it should be noted that he himself seemed actually slightly confused about the flow of time:

 

9-BI, Roubini Jan 20 - government will save us

Roubini appears to believe that the universe has begun to contract – how else are we to interpret his assertion that “it’s not 2008 yet”? Fortunately, his unerring statist instincts still seem to be in perfect working order: Governments will save us!

 

To make 100% sure that its readers really understood that time had moved on, Bloomberg offered additional commentary on the topic on January 22:

 

10-Bloomberg, Jan. 22

Good news! At least we know now for sure that there’s no time machine hanky-panky involved. Nothing has traveled back to 2008 for a visit. The time-line is safe! No need to call the time cops – they can stay in the 29th, resp. 31st century for now.

 

It took about one more week for Barron’s to decide to bring its readers abruptly into the present, which it did on January 30:

 

11-Barron's Jan 30

It appears from this that Barron’s has also discovered why exactly it is not 2008. We have our own guess actually (don’t take our word for it, do your own due diligence – we could be wrong): the most likely reason is that eight years have passed since then.

 

It took almost another week for the good news to travel all the way to South Africa, where a local paper advised its date & time-challenged readers on February 5 to keep calm in the face of this monumental discovery:

 

12-Fin-24-Feb-05

Or as it says on the cover of the “Hitchhiker’s Guide to the Galaxy”: Don’t Panic!

 

Finally, on February 10, Citigroup analysts felt sure they had at last found out what year it actually is and immediately informed Bloomberg of their theory. You will recall from further above that they previously were merely certain that it wasn’t the year of the Mazurka accident. Unfortunately, they haven’t gotten it quite right just yet. Perhaps someone should mail them a calendar?

 

13-Bloomberg Feb-10

Closer, but still no cigar. We are slightly baffled that no-one at Bloomberg thought to tell them that it isn’t 2011 anymore. If you look closely, you will see that Bloomberg itself is evidently aware of what year it is.

 

The whole thing is a bit of a head-scratcher to be honest. We feel pretty sure that it is 2016, but with so many different papers desperately hammering home the same message, one has to wonder a bit what is going on here. However:

 

It’s Actually True

A friend has provided us with evidence yesterday that shows convincingly that it is indeed not 2008. The experts have it right! Below you see a chart of the performance of major European bank stocks from the beginning of this year compared to their performance in the same time period in 2008. Clearly, it must be 2016:

 

14-Comparison

European bank stocks, performance in 2016 (dark blue) vs. 2008 (light blue), via Thomson Reuters.

 

Conclusion

Normally we try to carefully avoid the following phrase due to the costs it reportedly tends to involve, but here goes anyway:

This time is different!

 

Addendum: More Good News

We are happy to report that it’s not only not 2008 for the markets. It seems Hillary Clinton is no longer stuck in 2008 either. This was discovered by MSNBC on January 16 already. Like the rest of us, she has apparently also arrived in 2016 – and it is said to be worse for her than 2008!

 

15-Hillary

Hillary Clinton has also made the trip from 2008 to 2016… but she may not like it.

 


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Justice Scalia and the Libertarian Legal Movement

Was Antonin Scalia a libertarian? The question seems laughable, right? After all, it’s Anthony Kennedy who’s at the heart of the Supreme Court’s libertarian moment (such as it is), not that arch-conservative who called the ruling striking down the Defense of Marriage Act “legalistic argle-bargle.”

And in truth, one can presume that the first Italian-American justice’s personal views are about as socially conservative as any modern public official. But so what? There are plenty of religious libertarians, and policy issues like abortion and the death penalty split the liberty movement.

Ah, but Scalia, who died yesterday at the age of 79, based his judicial opinions on those conservative views, right? Well, with the possible glaring exception of Gonzales v. Raich—the 2005 medicinal-marijuana case in which he went with the Drug War over federalism—it’s hard to point to such corruption. (Democratic partisans also invoke Bush v. Gore, but that case is so sui generis that I’ve come to appreciate the Court’s instruction that nobody should cite it for any legal point ever.) Raich is no small case—it pushed the scales from my eyes about Nino, as NFIB v. Sebelius did regarding John Roberts—but that’s not bad for a 30-year career, especially given the flag-burning and criminal-procedure cases where surely his policy preferences lay elsewhere.

Indeed, Scalia based his entire revival of originalism and textualism on the idea that judges are bound by the written text and aren’t free either to impose their own views or to divine some mythical legislative intent. As Jonathan Adler put it, before Scalia, “justices had no reluctance to join an opinion suggesting that statutory text could illuminate congressional intent where the legislative history was inconclusive.”

The point isn’t that Justice Scalia’s jurisprudence was libertarian—Kennedy votes with the Cato Institute’s position more and Clarence Thomas is a more faithful originalist—but that his commitment to the rule of law, and to bringing the Court back to a more principled jurisprudence, is in itself a libertarian victory. Without Scalia, the same kind of attention would not be paid to the Constitution’s text, structure, and history—especially by so-called liberal originalists.

Nor, for that matter, would the Federalist Society, the fusionist group of conservative and libertarian lawyers, be quite the force it is today. Prof. Antonin Scalia was the first faculty adviser of the University of Chicago’s (co-founding) chapter, and Judge and then Justice Scalia continued to be a strong supporter. (As have been Justices Thomas and Samuel Alito, but not Chief Justice Roberts.)

Much as libertarians have disagreed with him on cases regarding unenumerated rights, from Troxel v. Granville to Obergefell v. Hodges—even to McDonald v. Chicago, where at oral argument he disparaged the Privileges or Immunities Clause and instead joined an opinion based in his long-hated substantive due process—libertarian legal eagles have to give Scalia credit. After all, without Scalia’s having made peace with the New Deal, who would Richard Epstein have to argue against about the Constitution’s protections for economic liberty?

Scalia forced everyone to raise their intellectual rigor. I wasn’t reading legal opinions before he joined the Court in 1986 (I was precocious in fifth grade, but not that precocious), but in retrospect it’s easy to see a step-change from the early 1980s to the early 1990s. It’s no coincidence that every law student now reads plenty of Scalia’s writings—majority, concurrence, and dissent—because, agree with him or not in any particular case, he grasps the nettle.

So what now? On so many issues of individual liberty—from the right to participate freely in election campaigns (Citizens United) to the right to bear arms (Heller), from preventing the federal government from commandeering state officials (Printz) to stopping it from forcing people to violate their religious beliefs willy-nilly (Hobby Lobby)—replacing Scalia with even a “moderate” progressive would mean the end. And many close criminal-law cases align along principled-vs.-pragmatic lines, so a centrist would be worse there than someone in the mold of Ruth Bader Ginsburg.

It’s been nearly 80 years since a justice was nominated and confirmed during a presidential-election year, and 100 years since such a confirmation had a recorded vote. (Louis Brandeis was so controversial that the Senate Judiciary Committee had its first-ever public hearing on a high-court nomination.) In a decade when Barack Obama has won two elections and the Republicans have won seemingly everything else, the Senate is fully justified in not taking up any nomination until after a new president is inaugurated.

That, perhaps, is Scalia’s final gift to libertarians: watching both parties struggle not only with Trumpets and Sandernistas, but also with this incredible development in an already bizarre campaign. I can see Nino sitting down with St. Peter over some pizza and chianti and chuckling over the whole predicament.

“If you believe in democracy,” he would say, “you put it to the people.” 

Ilya Shapiro is a senior fellow in constitutional studies at the Cato Institute and editor-in-chief of the Cato Supreme Court Review.

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