Homebuilder Confidence Dips In April

After reaching 12 year highs in March, Homebuilder confidence dipped in April led by a notable decline in the Northeast and Midwest regions. All four underlying components dropped in April with future sales expectations back near post-election lows.

Current and future sales indices dropped as did prospective buyer traffic.

Of course, as Upton Sinclair pointed out so perfectly in this case, “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

This index is not a leading index in anyway.

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Median LBO Multiple Rises To 10.8x, Highest Since The Financial Crisis

As equity multiples continue to levitate to unprecedented highs, recently rising above 20x on a trailing basis, now in the 99th historical percentile according to Goldman Sachs, the lack of bargains is reflected in the acquisition prices paid by PE firms. According to a new report by PitchBook, after reaching new highs in 2016, acquisition multiples inched even higher in the first quarter of this year, and as a result the median EV/EBITDA multiple hit 10.8x in 1Q 2017, up from 10.7x last year. That was the highest median multiple paid since the financial crisis.

As the report notes, “PE firms are victims of their own success when it comes to pricing. The industry’s strong returns have led to significant stores of dry powder available to tap which, in turn, has created more competition for suitable buyout targets. Meanwhile, strategic acquirers provide plenty of additional competition and have no shortage of available capital. If anything, corporate ability to pay top dollar has only intensified in the last few months. Additionally, rising public market valuations will drive mark-to-market PE prices higher.”

Is there any hope that multiples will pull back from what are the current bubble levels? Not much: PitchBook cautions that “barring economic disaster, multiples shouldn’t recede for at least the next few quarters.

The lack of any notable bargains has also resulted in a general slowdown in average LBO activity: “after three consecutive years of strong PE activity, US deal flow started off slow in 2017. 745 transactions were closed totaling $118.7 billion in value, compared to $138.7 billion across 867 deals in the final quarter of last year.”

That, however, has not dented the capital allocation mood and fundraising has continued at a rampant pace and dry powder sits at a record $552.6 billion as of 3Q 2016 according to PitchBook. “Due to higher multiples and strong competition, capital deployment will be a challenge” the report notes.

Though we’ve been expecting a slowdown in PE fundraising this year, the first quarter could not have told a more different story. Capital commitments totaled $55.8 billion across 57 vehicles in 1Q 2017. Extrapolated across the entire year, that puts PE funds on track for a 15.8% year-over-year increase in commitments across 14.6% fewer funds. In a world where yield is hard to find and there are more available dollars than feasible investment opportunities, LPs are increasingly leaning on PE to meet their growing obligations.

 

Fund sizes grow KKR led the way this quarter with its $13.9 billion upper-middle-market buyout fund, exemplifying the shift toward larger and larger funds. LPs, often anxious to not get cut out of top-tier funds, have been increasing the size of their commitments and reducing the number of managers they employ. This also gives them more leverage when it comes to negotiating fee structures and co-investment.

Yet while overall deal activity has slowed down despite strong flow of capital in PE firms, one sector stands out: one-fifth (20.4%) of all PE deals completed in the first quarter involved companies in the IT sector, above the 10%-15% range seen for most of the last decade. The most popular targets have been software companies, which have made up 54.2% of all PE investments in the space since 2006 and 63.1% of IT transactions in 2016.

Some prominent Q1 examples of this included KKR’s $2 billion acquisition of Optiv Security, and Thoma Bravo’s $800 million purchase of PlanView.

In an amusing tangent, the report notes that “in the tech industry, there are returns to be made by avoiding quarterly earnings expectations and focusing instead on longer-term growth initiatives.” The reason is clear: if one were to focus on the deteriorating cash flows among some of the most overvalued tech giants, the PE community would have nightmares every day. Best to just leave it to “growth” and avoid some of the scarier cash burn stories out there.

The report also highlights the disappearance of mega-deals. It highlights one of the major themes in PE last year, namely the rate at which firms were investing in “mega-deals.” Though generally not of the magnitudes seen prior to 2008, 20 transactions were completed at enterprise values $2.5 billion or greater last year. 2017, however, is off to a slow start. Just two deals of this size were completed in the first quarter: Blackstone’s $6.1 billion take-private of healthcare administrator Team Health Holdings, and Koch Equity Development’s $2.5 billion growth investment in enterprise software developer Infor. The latter represents a new type of “corporate private equity,” similar to what we see in the venture capital realm, and could mirror the permanent capital strategy used by firms such as Berkshire Hathaway. Having made similar investments since 2013, Koch also participated in the aforementioned buyout of insurance software provider Solera.

Perhaps the most interest point of the report is how PE firms are exiting existing investments: not through such conventional methods as corporate acuqisitions or IPO, but increasingly more frequently by flipping to other PE firms, or secondary buyouts: “it’s no longer in vogue for tech founders to exit via IPO. Just 5.0% of US venture-backed exits in 2016 happened via IPO, down from a post-financial-crisis high of 11.6% in 2014. Conversely, 13.3% of venture-backed exits last year were via PE firms, the highest of any year since at least 2006.”

Some more observations on exits:

PE-backed exits of all types fell to their lowest level in almost four years last quarter. Just 207 PE backed exits were completed, totaling $31.2 billion in deal value, representing quarter-over-quarter decreases of 28.9% and 58.0%. Firms have already divested of most of their portfolio companies bought before the financial crisis, and median hold periods for PE portfolio companies have hovered between five and six years for the last half decade. That leaves the vintages of 2011 and 2012 now ready for harvest. It will still be some time until the bulk of PE investments made in the boom years of 2014-2016 are realized.

Finally, for those curious, here is the latest PE leage table according to PitchBook:

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Facebook Killer Manhunt Continues – Cops Warn “May Be Out-Of-State”

Amid hundreds of tips – direct to law enforcement officials and across social mediaCleveland police warned early Monday that residents in Pennsylvania, New York, Indiana and Michigan should be on the lookout for 37-year-old Steve Stephens, who is driving a white Ford Fusion and is believed to be armed and dangerous. "Suspect may be out-of-state at this time…Those outside of Northeast Ohio: Contact Local Authorities."

As The New York Post reports, the deranged gunman who randomly executed an elderly Cleveland resident and posted footage of the killing on Facebook has possibly fled the city – and may be on the loose in another state, cops say.

As Cleveland's News5 reports, rumors filled social media but, case after case, the information led police to a dead end.

News 5 went to about a dozen scenes from the east side of Cleveland to Solon to Chesterland . We shot video of several white cars — like the one the suspect is reportedly driving — being checked out by police.

In Maple Heights, someone called saying they saw a man matching the description of the shooter walking into the Giant Eagle on Warrensville Center Road. Maple Heights, Bedford, Bedford Heights, and Regional Transit police responded but did not find the suspect.

?

After hours of misinformation being circulated online, Cleveland police are telling citizens to make sure they pay attention to reliable social media feeds. 

"Misinformation in emergencies is dangerous," a Cleveland police spokesperson wrote.

Still, tips are essential in this case and police encourage anyone who sees the vehicle or Steve Stephens to immediately call 911.

"Everybody is out there looking for Steve," Calvin Williams, the Cleveland police chief, told a news conference, where he joined Mayor Frank Jackson in asking Stephens to turn himself in.

"We want this to end with as much peace as we can bring to this right now," Williams said, adding police knew of no other victims.

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Are Stocks Finally About to “Wake Up” From a Fed Induced Stupor?

The economy is now in VERY serious trouble.

The Fed’s own GDP models now show 1Q17 growth tracking at just 0.5%. This is DOWN from an original forecast of 3.2% in February. Put another way, the economy has begun contracting at a RAPID pace.

Moreover, we are getting numerous signals that the US consumer, the single largest driver of the economy, is not spending.

According to Reuters US consumer spending FELL for a second straight month in March. Moreover, the Fed’s internal models show that 1Q17 consumer spending is clocking in at a “barely alive” rate of 0.3%.

Why does this matter?

The Fed managed to “paper over” the weakest recovery in 80 years with massive QE programs. As a result of this, for the last seven years, weak economic fundamentals have been largely “ignored” by stocks.

However, the Fed STOPPED QE back in October 2014. Which means stocks are due for a “wake up call” as they begin to “wake up” to the TRUE state of the US economy.

On that note we are already preparing our clients to make money from this with three simple investment strategies designed to pay out when the markets enter periods of heightened risk.

To learn them you can pick up a free Investment Report here:

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 

 

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Laura Kipnis on Campus Sexual Paranoia: New at Reason

In an excerpt from her new book Unwanted Advances: Sexual Paranoia Comes to Campus, Northwestern professor Laura Kipnis explains how she found herself at the center of the broiling campus debate over free speech and “safe spaces” after a group of college students staged a protest march over an essay she wrote about sexual paranoia in academe. As she writes:

Future generations will look back on the recent upheavals in sexual culture on American campuses and see officially sanctioned hysteria. They’ll wonder how supposedly rational people could have succumbed so easily to collective paranoia, just as we look back on previous such outbreaks (Salem, McCarthyism, the Satanic ritual abuse trials of the 1980s) with condescension and bemusement. They’ll wonder how the federal government got into the moral panic business, tossing constitutional rights out the window in an ill-conceived effort to protect women from a rapidly growing catalogue of sexual bogeymen. They’ll wonder why anyone would have described any of this as feminism when it’s so blatantly paternalistic, or as “political correctness” when sexual paranoia doesn’t have any predictable political valence. (Neither does sexual hypocrisy.) Restoring the most fettered versions of traditional femininity through the back door is backlash, not progress.

View this article.

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Elliott Wins As Klaus Kleinfeld Steps Down As Arconic CEO After Showing “Poor Judgment”

Paul Singer, whose Elliott Management has been waging a proxy fight with Alcoa spinoff Arconic, demanding CEO replacement, just achieved a key victory when moments ago the company announced that CEO Klaus Kleinfed has stepped down. According to the press release, the departure took place under odd terms, with Kleinfeld stepping down as Chair and CEO “by mutual agreement after the Board learned that, without consultation with or authorization by the Board, he had sent a letter directly to a senior officer of Elliott Management that the Board determined showed poor judgment.

The release adds that this decision was not made in response to the proxy fight or Elliott Management’s criticisms of the Company’s strategy, leadership or performance and is not in any way related to the financials or records of the Company.

Arconic also hopes that with Kleinfeld’s odd departure, the proxy fight waged by Arconis is now over:

Elliott Management’s central objective – a CEO change – has been realized at Arconic. With the completion of Arconic’s transformative separation transaction last November, the substantial refreshment of its Board composition with seven of its twelve directors having joined the Board since the beginning of last year, and now the departure of Mr. Kleinfeld as CEO and Chair of the Board, it is clear that the Company has recently undergone a tremendous amount of change. It is Elliott Management’s decision whether to continue to burden Arconic and its shareholders with its highly disruptive and distracting proxy fight, or to support Arconic in facilitating an effective CEO search and a strong transition.

While the stock is up nearly $2 on the news, we doubt that it will be enough to satisfy Elliott, which will surely demand more changes from the company (as laid out in the hedge fund’s massive, 336-page presentation laying out its vision for a “New Arconic”) especially now that major changes for the aluminum industry may be imminent in light of the previously discussed imminent liquidity crunch facing China’s, and the world’s biggest aluminum producer, China Hongqiao Group.

Full press release below:

Klaus Kleinfeld Steps Down as Chair and CEO of Arconic

 

Arconic today announced that Klaus Kleinfeld, by mutual agreement with the Arconic Board of Directors, has stepped down as Chair and Chief Executive Officer of Arconic and has resigned as a Board member.

 

David P. Hess, a current Board member, has been appointed as Interim CEO of Arconic and will remain on the Board. Mr. Hess has decades of experience in leading aerospace and industrial businesses. Patricia F. Russo, Arconic’s current Lead Director, has been appointed as Interim Chair of the Board. Ms. Russo has served on the Board since 2008 and has been serving as Lead Director since 2015.

 

“The Board is focused on hiring a world-class CEO to lead Arconic into its next chapter. We are focused on ensuring a smooth leadership transition for our customers, employees and many stakeholders,” said Ms. Russo. “The Board is deeply grateful to Klaus Kleinfeld for his dedication and service as Chair and CEO of Arconic, and previously of Alcoa Inc., and appreciates his assistance with this transition. Klaus led a complex and highly successful transformation of Alcoa Inc. that culminated in the launch of two strong, standalone companies – Alcoa Corporation and Arconic. Today,  Arconic is a leading advanced manufacturer of highly engineered products with strong market positions.”

 

Mr. Kleinfeld said, “I have had the honor and the privilege of working with so many talented and dedicated colleagues at Alcoa Inc. and now at Arconic. Together we have accomplished a lot. Today, Arconic is well positioned for the next phase. I am committed to supporting David and the Board through this transition phase.”

 

Ms. Russo continued, “We are fortunate to have a proven leader of David Hess’ caliber to step into the CEO role on an interim basis while the Board conducts its search process for a permanent CEO. We are confident that David’s abilities and experience will ensure a smooth transition for the benefit of all of our stakeholders.”

 

Mr. Hess said, “I look forward to working closely with the Board, senior leadership team and our dedicated and hard-working employees. Klaus and the Arconic team have built a great company and over the coming months my focus will be on continuing to serve our customers seamlessly, and deliver for our shareholders.”

 

Mr. Kleinfeld stepped down as Chair and CEO by mutual agreement after the Board learned that, without consultation with or authorization by the Board, he had sent a letter directly to a senior officer of Elliott Management that the Board determined showed poor judgment.

 

Importantly, this decision was not made in response to the proxy fight or Elliott Management’s criticisms of the Company’s strategy, leadership or performance and is not in any way related to the financials or records of the Company. The Board continues to believe that under Mr. Kleinfeld’s leadership, the Company successfully executed a transformative vision and improved business performance amid a complex market environment, and the Board reaffirms the strategy developed under Mr. Kleinfeld’s leadership and shared with our investors, customers and employees.

 

Elliott Management’s central objective – a CEO change – has been realized at Arconic. With the completion of Arconic’s transformative separation transaction last November, the substantial refreshment of its Board composition with seven of its twelve directors having joined the Board since the beginning of last year, and now the departure of Mr. Kleinfeld as CEO and Chair of the Board, it is clear that the Company has recently undergone a tremendous amount of change. It is Elliott Management’s decision whether to continue to burden Arconic and its shareholders with its highly disruptive and distracting proxy fight, or to support Arconic in facilitating an effective CEO search and a strong transition.

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EU Leaders Refuse To Congratulate Erdogan, Await OECD Report On Referendum Irregularities

Leaders of member states of the European Union have been cautious about the results of the referendum in Turkey. As KeepTalkingGreece.com reports, no EU leader sent the traditional congratulations message to President Recep Tayyip Erdogan for his victory so far. They are reportedly awaiting for the independent OECD report on alleged voting irregularities, especially after Turkish opposition parties shouted foul play and fraud.

In Germany, Chancellor Angela Merkel, in a joint statement with Foreign Minister Sigmar Gabriel, warned that the “tight referendum result shows how deeply divided Turkish society is and that means a big responsibility for the Turkish leadership and for President Erdogan personally”.

Julia Klöckner, a leading voice in Angela Merkel’s German CDU party said the door to EU accession was “well and truly shut” and called for billions of euros in contributions to finance Turkey’s bid to stop.

Elmar Brok, the German head of the European Parliament’s foreign affairs committee, said the result did not legitimise a complete overhaul of the state.

Austria‘s Foreign Minister Sebastian Kurz said the result was a “clear signal against the European Union”. The “fiction” of Turkey’s bid to join the bloc must be ended, he said.

The European Commission urged Turkey to seek “the broadest possible consensus” in implementing changes. It pointed to “alleged irregularities” in the vote and said it was awaiting the assessment of international observers.

European Commission statement issued April 16, 2017

President of the European Commission Jean-Claude Juncker, High Representative for Foreign Affairs and Security Policy/Vice-President of the European Commission Federica Mogherini and Commissioner for European Neighbourhood Policy and Enlargement Negotiations Johannes Hahn issued the following statement today:

 

“We take note of the reported results of the referendum in Turkey on the amendments to the Constitution, adopted by the Turkish Grand National Assembly on 21 January 2017.

 

We are awaiting the assessment of the OSCE/ODIHR International Observation Mission, also with regard to alleged irregularities.

 

The constitutional amendments, and especially their practical implementation, will be assessed in light of Turkey’s obligations as a European Union candidate country and as a member of the Council of Europe.

 

We encourage Turkey to address the Council of Europe’s concerns and recommendations, including with regards to the State of Emergency. In view of the close referendum result and the far-reaching implications of the constitutional amendments, we also call on the Turkish authorities to seek the broadest possible national consensus in their implementation.”

Greece that became also Erdogan’s target during the campaign keeps a stand-by attitude. Government sources said that Athens “supports stability and democracy in Turkey”. the sources added that the Greek government follows with great attention and interest the developments in the neighboring country and the referendum results.

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‘These Institutions Are Betraying Their Own Values’—Here’s How Offended Students Seized Power on Campus

ProtestIn the wake of the mob violence against Charles Murray at Middlebury College and Heather MacDonald at Claremont McKenna College, it’s getting harder to deny that there is a censorship problem at American college campuses.

“These cases are proliferating,” Nicholas Christakis, the former head of Yale University’s Silliman College, told Reason in an exclusive interview.

Christakis, readers will recall, faced his own mob of unfriendly students a year and a half ago, after his wife—an early childhood educator—sent a campus-wide email pushing back against the administration’s opposition to offensive Halloween costumes. The students implored Christakis to affirm that it was his job as an administrator to be their father figure on campus and provide a safe space where they would feel protected from emotional discomfort; when Christakis refused to do so—reasoning that learning is sometimes uncomfortable—they demanded his resignation.

The Yale incident happened in the fall 2015 semester. In retrospect, it almost looks like a high-water mark for the civil exchange of ideas. At least Christakis’s students bothered to debate him: the mobs at Middlebury and Claremont McKenna so desperately wanted safety from offensive ideas that they were willing to resort to violence to get it. The 2016-2017 academic year has seen a transgender film director harassed at Reed College, windows smashed at the University of California-Berkeley, a controversial speaker maced at American University, and a liberal professors sent to the emergency room with a neck injury because she dared to have a conversation with Charles Murray.

Meanwhile, countless student groups, visiting speakers, and professors have had their rights infringed by administrators—sometimes at the behest of students.

“If you look at these incidents over the last couple of years, we’re seeing escalations, in my view,” said Christakis.

Indeed, the escalation theory is getting harder and harder to deny. While most college students remain friendly to freedom of expression and genuinely interested in hearing from speakers with different points of view, these students are increasingly cowed into silence by the small minority of censorious activists, New York University psychologist Jonathan Haidt recently told The Wall Street Journal.

“The great majority of college students want to learn,” said Haidt. “They’re perfectly reasonable, and they’re uncomfortable with a lot of what’s going on. But on each campus there are some true believers who have reoriented their lives around the fight against evil.”

Nor is the “fight against evil” mentality reserved for use against characters like Milo Yiannopoulos, who are arguably beyond the pale. The Middlebury and Claremont McKenna incidents demonstrate that students are perfectly willing to shut down speakers who hold views that may be wrong, but nevertheless fall within the bounds of reasonable debate.

To prove this point—that Murray, an American Enterprise Institute and author of The Bell Curve and Coming Apart, is worth hearing out—Cornell University Professors Wendy Williams and Stephen Ceci recently surveyed dozens of professors for a New York Times piece. They sent the (presumably overwhelmingly liberal) professors a transcript of Murray’s prepared remarks for his Middlebury lecture and asked them to rank the speech on a 1-9 scale in terms of how liberal or reactionary it was. Murray’s talk received an average score of 5.05, indicating it was moderate in tone and substance.

That group wasn’t told the remarks were Murray’s. The second group was informed of the author’s identity: this group gave Murray a score of 5.77.

“Our data-gathering exercise suggests that Mr. Murray’s speech was neither offensive nor even particularly conservative,” wrote Williams and Ceci. “It is not obvious, to put it mildly, that Middlebury students and faculty had a moral obligation to prevent Mr. Murray from airing these views in public.”

What’s not obvious to Williams and Ceci, Christakis, Haidt, or any number of other defenders of classically liberal values, seems very obvious to a whole host of people who make excuses for the students.

“There’s nothing outrageous about stamping out bigoted speech,” read the subhed of Slate writer Osita Nwanevu’s piece responding to the Murray episode. The election of Donald Trump to the presidency has, in Nwanevu’s view, dealt a blow to the idea that “those with the best command of facts and reason… will emerge victorious.” The implication: the entire project of using reasoned debate to overcome harmful ideas in place of brute force might therefore be worth abandoning. How the worthy cause of halting Trump’s anti-cosmopolitan agenda could possibly be served by a further retreat from liberal values is left unexplained by the author.

And yet Nwanevu’s position is undeniably popular among the group of people for whom the benefits of free speech should seem most obvious: college professors. John Patrick Leary, an English professor at Wayne State University, celebrated that “Middlebury’s students do, however, have every right to shout [Murray] down, and by all accounts they accomplished this end.” Several professors at Wellesley College recently sent an email to students recommending that speakers like Laura Kipnis—a critic of Title IX witch hunts—no longer be invited to campus. The professors argued that people with disfavored opinions impose burdens on whichever groups are bothered by their views. The obvious flaw in this logic—what about the burdens imposed on the groups who want to hear the disfavored opinions?—was ignored, as is typical.

Wellesley’s students apparently got the message. On Thursday, the college’s student newspaper released a brazenly illiberal and poorly-written editorial that cheered on efforts to quash hate speech. No one on campus has a right to make statements that are sexist, racist, homophobic, transphobic, Islamophobic, or discriminatory in any way, according to the editorial. “If people are given the resources to learn and either continue to speak hate speech or refuse to adapt their beliefs, then hostility may be warranted,” wrote the editors. What kind of hostility? You can guess. The undeniable subtext: Conform to ill-defined and constitutionally-suspect ideas about hate speech, or face violence.

In his interview with me, Christakis stressed that he shares students’ commitments to fighting racism, sexism, and other societal evils.

“I am on the side of students,” he said. “I believe in this generation. I believe in progressive values.”

But censorship is not a progressive value, nor is violence. Christakis thinks professors are retreating from Enlightenment values and thus failing to instill proper liberalism in their students.

“I really believe the faculty, from an understandable position of empathy with the students, are nevertheless abrogating their duty to the students,” he said. This has resulted in a failure on the part of colleges to foster appreciation for freedom of speech. “These institutions are betraying their own values,” he said.

We are living with the results. In fact, Christakis is worried that one of the central tenets of the Enlightenment—that words are not the same thing as coercive violence—is being cast aside.

“During the Enlightenment we drew a big distinction between words and actions, and that the response to words is more words,” he said. “We use our words so as not to fight. This was one of the great contributions of the Enlightenment. We used to burn people at the stake for saying the wrong thing.”

Members of the faculty, particularly those who teach the humanities, social sciences, and the liberal arts, have an important role to play: they could reinforce the values of the institution, explain what a liberal arts education actually means, and push back against the ongoing conflation of words and action. And indeed, many continue to fulfill this role admirably. Not all campuses are plagued by censorship, and not all controversial speakers are run off campus. (Just last week, psychology professor Jordan Peterson, a critic of gender neutral pronouns, gave a talk at Harvard University that met with surprisingly little resistance.)

But more must be done to hold the line, because the power dynamics have shifted in favor of the most offended and speech-averse students at many of America’s top colleges. As Murray himself noted, he has been speaking at university campuses for 20 years, and this was the first time the mob could not be silenced. At previous events, he wrote, “I could count on students who had wanted to listen to start yelling at the protesters after a certain point, ‘Sit down and shut up, we want to hear what he has to say.’ That kind of pushback had an effect. It reminded the protesters that they were a minority. I am assured by people at Middlebury that their protesters are a minority as well. But they are a minority that has intimidated the majority.”

Take it from William Deresiewicz, author of Excellent Sheep: The Miseducation of the American Elite, who recently spent a semester at Scripps College and writes for The American Scholar:

I had one student, from a Chinese-American family, who informed me that the first thing she learned when she got to college was to keep quiet about her Christian faith and her non-feminist views about marriage. I had another student, a self-described “strong feminist,” who told me that she tends to keep quiet about everything, because she never knows when she might say something that you’re not supposed to. I had a third student, a junior, who wrote about a friend whom she had known since the beginning of college and who, she’d just discovered, went to church every Sunday. My student hadn’t even been aware that her friend was religious. When she asked her why she had concealed this essential fact about herself, her friend replied, “Because I don’t feel comfortable being out as a religious person here.”

I also heard that the director of the writing center, a specialist in disability studies, was informing people that they couldn’t use expressions like “that’s a crazy idea” because they stigmatize the mentally ill. I heard a young woman tell me that she had been criticized by a fellow student for wearing moccasins—an act, she was informed, of cultural appropriation. I heard an adjunct instructor describe how a routine pedagogical conflict over something he had said in class had turned, when the student in question claimed to have felt “triggered,” into, in his words, a bureaucratic “dumpster fire.” He was careful now, he added, to avoid saying anything, or teaching anything, that might conceivably lead to trouble.

I listened to students—young women, again, who considered themselves strong feminists—talk about how they were afraid to speak freely among their peers, and how despite its notoriety as a platform for cyberbullying, they were grateful for YikYak, the social media app, because it allowed them to say anonymously what they couldn’t say in their own name. Above all, I heard my students tell me that while they generally identified with the sentiments and norms that travel under the name of political correctness, they thought that it had simply gone too far—way too far. Everybody felt oppressed, as they put it, by the “PC police”—everybody, that is, except for those whom everybody else regarded as members of the PC police.

Permission to speak on campus is no longer absolute: it is managed and restricted by an unofficial ruling class consisting of a small number of students—the aforementioned PC police—who see no difference between speech and action, and reflexively lash out at any kind of expression that might offend someone. Professors are not taking strong enough action to fight this ruling class, and administrators are often complicit in its censorship.

And it’s getting worse.

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Trump Slams ‘Fake Media’ Bias: “We Have To Hold Them To The Truth!”

President Trump has woken up in a angry mood it would appear and is lashing out once again at the media – the ‘fake’ media, not the ‘real’ media…

Of course, what this means is hard to tell, but it does sound a little anti-first-amendment-like – but then again, as Wellesley notes, if someone disagrees with your perspective then violence may be warranted.

He also offers an ironic reading suggestion….

Which Amazon describes as follows: “The most exhaustively researched and coherently argued Democrat Party apologia to date, “Reasons To Vote For Democrats: A Comprehensive Guide” is a political treatise sure to stand the test of time.

Lefty lawyers require that we state the book is mostly blank…”


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Key Events In The Coming Week: French Election, Earnings, Manufacturing, Housing

This week will be dominated by the first round of the French presidential election on Sunday. With the number of undecided voters remaining high, four candidates look set to fight for the two places in the second round on 7 May. On the data side, following China’s strong economic report, attention will focus on US industrial production growth on Tuesday. In the euro area, flash PMIs for April due on Friday could point to moderation. In the UK, retail sales (Friday) should have dropped in March as rising inflation eats into real income growth. On Friday, the World Bank and IMF Spring meetings also start.

In addition, there are a few scheduled speaking engagements by Fed officials this week, including a speech by Vice Chair Stanley Fischer on Monday.

Focusing on the US, after lacklustre readings in January and February, industrial production data in March may finally have exhibited the kind of strength seen in the ISM factory index. Output readings early this year were held down by sharp declines in utilities output, which reflected unseasonably warm weather, but utilities output looks set to have jumped noticeably, which should help to drive the headline figure higher. Meanwhile, existing home sales may have climbed in March, although the expected gain was likely due in part to the unusually warm temperatures in February, which boosted demand in that month and may have propelling contract closings higher last month.

The key this week will be in France on Sunday where the first round of the French Presidential election takes place. Official exit polls are due at 8PM CET. The 11 candidates are then whittled down to two, with the second round runoff held two weeks later on 7 May. On the data front, it looks to be a quiet week. We expect softer numbers in Friday’s flash PMI release while consumer confidence should also moderate.

Finally, this is the first busy week for earnings season: with the following companies expected to report results:

  • Energy: SLB
  • Heatlhcare: JNJ, UNH, ISRG, ABT
  • Tech: NFLX, IBM, EBAY, QCOM, VZ
  • Real Estate: D.R. Horton, SL Green
  • Materials: CCK, KALU, PPG, SHW, STLD
  • Industrials: United Air, CSX, GE, Honeywell
  • Financials: BAC, GS, RF
  • Consumer: GNC, MAT, PM, SHOO

Finally, a full breakdown of the key daily events with consensus estimates, via Goldman

Monday, April 17

  • 08:30 AM Empire manufacturing survey, April (consensus +15.0, last +16.4)
  • 10:00 AM NAHB housing market index, April (consensus 70, last 71): Consensus expects the NAHB homebuilders’ index to edge down by 1pt in April from a post-crisis high of 71, after a strong report in March showed broad-based strengthening across all components and regions.
  • 05:00 PM Vice Chair Fischer (FOMC voter) speaks: Federal Reserve Board Vice Chair Stanley Fischer will give the Inaugural Lecture on Central Banking at the Columbia School of International and Public Affairs. The topic of his remarks will be “Monetary Policy Communication”. Audience Q&A is expected.
  • 04:00 PM Total Net TIC Flows, February (last +$110.4bn)

Tuesday, April 18

  • 08:30 AM Housing starts, March (GS -6.0%, consensus -2.8%, last +3.0%); Building permits, March (consensus +2.8%, last -6.0%): March weather featured above-average snowfall and a drop in seasonally adjusted temperatures. Additionally, the level of multifamily starts now appears elevated relative to permits, and we see signs of potential oversupply in that segment. At the same time, we believe favorable single-family fundamentals should help mitigate the winter storm impact as well as the negative impact of higher interest rates on single-family starts. Taken together, we expect a 6% drop in housing starts, reversing the 3.0% rise in February.
  • 09:00 AM Kansas City Fed President George (FOMC non-voter) speaks: Kansas City Fed President Esther George will give a speech on “The Federal Reserve and Monetary Policy” at the 26th Annual Hyman P. Minsky Conference at the Levy Economic Institute of Bard College in New York.
  • 09:15 AM Industrial production, March (GS +0.9%, consensus +0.5%, last +0.1%); Manufacturing production, March (GS -0.1%, consensus +0.1%, last +0.5%); Capacity utilization, March (GS +76.4 %, consensus +76.2%, last +75.9%): We estimate industrial production increased 0.9% in March, likely reflecting a sharp pickup in utilities output due to a sharp drop in seasonally adjusted temperatures. We estimate manufacturing production declined 0.1%, reflecting a pullback in motor vehicle production partially offset by modest growth in ex-auto manufacturing output.

Wednesday, April 19

  • 12:30 PM Boston Fed President Rosengren (FOMC non-voter) speaks: Boston Federal Reserve President Eric Rosengren will give a speech on “The Federal Reserve Balance Sheet and Monetary Policy” at the 26th Annual Hyman P. Minsky Conference at the Levy Economic Institute of Bard College in New York.
  • 02:00 PM Beige Book, May FOMC meeting period: The Fed’s Beige book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. The March Beige Book reported that activity continued to expand across all districts, showing steady improvement. Consumer spending improved modestly, manufacturing activity strengthened somewhat, and the energy sector showed modest signs of improvement. In the May Beige Book, we look for additional anecdotes related to the state of consumption, manufacturing activity, price inflation, and wage growth.

Thursday, April 20

  • 08:30 AM Initial jobless claims, week ended April 15 (GS 245k, consensus 240k, last 234k); Continuing jobless claims, week ended April 8 (last 2,028k): We estimate initial jobless claims rebounded 11k to 245k. Claims have returned to normal levels following two weeks of temporary elevation that likely reflected the impact of Winter Storm Stella (which hit the US during the week of March 18). However, the current level of jobless claims now appears abnormally low in a few large states such as New York and Pennsylvania, where we see scope for a rebound. Continuing claims – the number of persons receiving benefits through standard programs – have continued to trend down in recent months, suggestive of additional labor market improvement that we expect to continue.
  • 08:30 AM Philadelphia Fed manufacturing index, April (GS +26.0, consensus +25.0, last +32.8): We expect the Philadelphia Fed manufacturing index to decline for a second month to +26.0 in April. In the March report, the headline index declined by 10.5pt to +32.8 while all underlying components improved in the March report. The index is likely to remain at levels suggestive of solid expansion in manufacturing activity.
  • 08:00 AM Fed Governor Powell (FOMC voter) speaks: Federal Reserve Governor Jerome Powell will participate in a moderated Q&A on “Capital Markets, Growth & the Economy of Tomorrow” at the Global Finance Forum in Washington, D.C.

Friday, April 21

  • 09:30 AM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Fed President Neel Kashkari will take part in a Q&A on the state of the economy and the role of community developers in the financial system at the Hamline University Community Economic Development Symposium in St. Paul, Minnesota. Audience Q&A is expected.
  • 09:45 AM Markit Flash US manufacturing PMI, April preliminary (consensus 53.8, last 53.3)
  • 09:45 AM Markit Flash US services PMI, April preliminary (consensus 53.6, last 52.8)
  • 10:00 AM Existing home sales, March (GS +3.0%, consensus +2.1%, last -3.7%): We look for a 3.0% rebound in March existing homes sales, following last month’s 3.7% drop. Regional housing data released so far suggest a moderate rebound in closed homes sales, consistent with improvement in February pending homes sales (which represent contract signings). Existing home sales are an input into the brokers’ commissions component of residential investment in the GDP report.

Source: SocGen, GS

via http://ift.tt/2oP0AEM Tyler Durden