Zero Hedge

In Reversal, General Motors Backs Biden, Withdraws Support For Trump Emissions Rollbacks

In Reversal, General Motors Backs Biden, Withdraws Support For Trump Emissions Rollbacks Tyler Durden Mon, 11/23/2020 - 17:20

By Linda Baker, of FreightWaves

General Motors will no longer support President Donald Trump’s battle to roll back California’s fuel economy rules designed to slow global warming, CEO Mary Barra wrote in a letter on Monday. In the correspondence, delivered to leaders of environmental groups, Barra sided with  President-elect Joe Biden, who has expressed strong support for vehicle electrification.

“President-elect Biden recently said, ‘I believe that we can own the 21st century car market again by moving to electric vehicles.’ We at General Motors couldn’t agree more,” Barra wrote.

Barra said GM is no longer backing a Trump lawsuit that aims to undercut California’s ability to set its own fuel economy standards.

“We believe the ambitious electrification goals of the President-elect, California, and General Motors are aligned to address climate change by drastically reducing automobile emissions,” she said. 

“We are confident that the Biden Administration, California, and the U.S. auto industry, which supports 10.3 million jobs, can collaboratively find the pathway that will deliver an all-electric future. To better foster the necessary dialogue, we are immediately withdrawing from the pre-emption litigation and inviting other automakers to join us.”

The letter comes less than one week after Barra said during the Barclays Global Automotive Conference that the OEM would ramp up its electrification goals, and bring to market 30 all-electric models globally by mid-decade. 

GM had previously said it would bring 20 electric models to market by 2023.

The company’s truck electrification plan includes ongoing negotiations to take a stake in electric truck maker Nikola Corp, as well as supply advanced batteries and fuel cells for Nikola’s Class 7 and 8 trucks. An electric delivery van is also reportedly in the works.

According to The New York Times, Barra on Monday also spoke by telephone with Mary Nichols, head of the California Air Resources Board and a leading candidate to helm the Environmental Protection Agency in a Biden administration.

America's Economy Cannot Survive Another Lockdown, And The Cult Of The Reset Knows It

America's Economy Cannot Survive Another Lockdown, And The Cult Of The Reset Knows It Tyler Durden Mon, 11/23/2020 - 17:00

Authored by Brandon Smith via Birch Gold Group,

The U.S. economy has been on the verge of collapse for at least a decade, ever since the crash of 2008 and the subsequent explosion in fiat stimulus from the Federal Reserve. While the mainstream media has always claimed that central bankers “saved” us from another Great Depression, what they actually did was set us up for a far worse scenario — a stagflationary implosion of our society.

Here is the primary problem: By injecting trillions of bailout dollars into the system, the Federal Reserve prevented the economy from going through its natural purging cycle. This cycle would have been painful for many, but survivable, and it would have removed large amounts of excess debt, parasitic corporations that produce little or nothing of use, as well as numerous toxic assets with no legitimate value. For a real free market to function, weak or corrupt elements must be allowed to fail and die. Instead, central banks around the world and most prominently the Fed kept all of those destructive elements on life support.

This has created what amounts to a “zombie economy:” a system that needs constant outside support (stimulus) in order to continue moving forward. In the process of keeping zombie corporations and other parts of the body alive, healthy parts of the economy, like the small business sector, get devoured.

The zombie economy is, however, highly fragile. All it takes is one or two major shocks to bring it down, and the moment this happens the whole facade will disintegrate, leaving the public in panic and disarray. This is what is happening right now in 2020, and it will get much worse in 2021.

Bailouts encourage and reward unhealthy financial behavior, and this is why national debt, corporate debt and consumer debt have recently hit historic highs. When every pillar of the economy is encumbered with the weight of debt, any instability has the possibility of bringing all those pillars down at once. The Federal Reserve turned the U.S. into an economic time bomb, and the Fed is itself more like a suicide bomber than some kind of fiscal savior.

The “Great Reset”

I first heard the term “global reset” or “great reset” back in 2014/2015. I wrote an article about how the reset was actually a long term process in my article The Global Economic Reset Has Begun. Christine Lagarde was the head of the IMF back then, and she mentioned it briefly in multiple interviews.

I made a mental note of it because it seemed planted into the discussion very awkwardly, as if it was scripted. I rarely heard it mentioned for years after that. In 2020, as we descend into social and economic chaos, I’m seeing the phrase used everywhere in the media and by globalists.

Over the past decade, globalist institutions have come up with numerous phrases that seem to refer to a worldwide planned and dramatic shift in human society sometime in the near future. The “great reset” is just another phrase for “the new world order.” It is important to understand that the reset these people are talking about has actually been engineered and staged for many years. This is not something that just popped up in 2020 — they have been talking about it since at least 2014. And before that, they talked about the new world order, and “multilateralism,” and the “multi-polar world order,” and Agenda 2030, etc.

The reset is the catalyst phase of an agenda that has been in the works for a long time now. The goal, as they have openly admitted many times, is to centralize the entire globe into one monetary structure, one highly interdependent and socialized economy, and eventually one faceless and unaccountable governing body.

One of the biggest obstacles to the finalization of the reset and the formation of the new world order has been liberty-minded populations across the planet — most of all, the liberty-minded people within America. The U.S. has to be destabilized or eliminated; the old world order has to be brought down before the new world order can be introduced. The people have to be beaten down and desperate, so that when the globalists offer their “reset” as the solution, the people will gladly accept it without question — simply because they want the economic pain and uncertainty to stop.

A common statement made by globalists from Klaus Shwab at the World Economic Forum to the current Prime Minister of Canada, Justin Trudeau, is that the coronavirus pandemic is the “perfect opportunity” to trigger the “great reset.” As globalist Rahm Emanuel is famous for admitting, in crisis there is opportunity to do things you were not able to do before.

In other words, when people panic in the face of crisis, they become easy to manipulate. And, if a crisis doesn’t happen naturally, then why not create a crisis from thin air and use that to cause panic?

Enter the economic lockdowns…

The lockdowns have not only been proven to do nothing to stop the spread of the coronavirus, but they are also a clear attack on what’s left of our economic system. The small business sector in particular is being gutted as more than 60% of those that shut down during the first lockdown were unable to reopen. Small businesses provide more than half of all employment in the U.S.. When they collapse, the U.S. economy will have nothing left except the big-box corporations that the Fed put on life support over a decade ago.

Real unemployment, which is already at 26%, will skyrocket even further if a second national lockdown is initiated. The speedy collapse of the U.S. economy will be assured, and the “great reset” can commence. At least, that is what the globalists want to happen…

With the U.S. presidential election currently being contested, it is hard to say how the next few months will play out in detail. As I have been pointing out since July, contested election is the best possible scenario for the globalists because it creates a Catch-22 situation:

  1. If Trump stays in office, the political left will accuse him of usurping the presidency and there will be mass riots in the streets. Conservatives will be tempted with the idea of bringing in martial law to suppress rioters, and such measures will undermine the flow of the U.S. economy, causing its fragile structure to implode.

  2. If Biden enters the White House, then he will attempt a Level 4 lockdown similar to the lockdowns we have seen in Australia, France, Germany and the UK; perhaps even worse. Our economy will crumble, conservatives will revolt, and Biden will attempt martial law measures.

Either way, the globalists get their crisis, and therein their opportunity.

Surviving the lockdowns and deterring the globalists

But here is where things get less certain for the elites. If liberty-minded Americans organize immediately for security and mutual aid, we can defuse the Catch-22. If we provide for our own security within our own communities, there will be no rationale for Trump to institute martial law. Community security is an awesome deterrent against leftist rioting and looting, and basic economic trade can continue.

By extension, if we organize our own community security as well as localize our economies with barter and trade, we also act as a deterrent to Biden and any ideas he might have of enforcing national lockdowns. The point is, we can’t allow the globalists to dictate the terms of the crisis. We must act to change the rules of the game.

The reset is not a natural inevitability, it is a con, a trap. No matter how bad the crisis in our nation becomes, it is the people — namely the liberty-minded people — who will determine the future, not the globalists. Their plan relies on our panic. Instead of panic, let’s show them a unified front and a plan of our own.

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Apple Head Of Security Charged With Attempted Bribery Over Concealed Carry Gun Licenses

Apple Head Of Security Charged With Attempted Bribery Over Concealed Carry Gun Licenses Tyler Durden Mon, 11/23/2020 - 16:40

Apple's Chief Security Officer, Thomas Moyer, has been charged by a California District Attorney for attempting to bribe state officials in return for concealed firearms licenses, according to Bloomberg, citing court documents and a statement from the Santa Clara DA's office.

Thomas Moyer (left) and Santa Clara County Undersheriff Rick Sung

Apple's Thomas Moyer, 50, was named along with Santa Clara County Undersheriff Rick Sung and Captain James Jensen in a scheme to trade CCW licenses for 200 iPads worth close to $70,000. The deal was called off after Sung and Moyer learned that the District Attorney's office had executed a search warrant at the Sheriff's Office, seizing all CCW license records.

The two-year investigation by the District Attorney’s Office revealed that Sung, aided by Jensen in one instance, held up the issuance of concealed firearms (CCW) licenses until the applicants gave something of value. -Bloomberg

"In the case of four CCW licenses withheld from Apple employees, Undersheriff Sung and Cpt. Jensen managed to extract from Thomas Moyer a promise that Apple would donate iPads to the Sheriff’s Office," reads a statement from the DA. "The promised donation of 200 iPads worth close to $70,000 was scuttled at the eleventh hour just after August 2, 2019, when Sung and Moyer learned of the search warrant that the District Attorney’s Office executed at the Sheriff’s Office seizing all its CCW license records."

"The various fees required to obtain a CCW license generally total between $200 and $400. Under state law, it is a crime to carry a concealed firearm without a CCW license. Although state law requires that the applicant demonstrate “good cause” for the license, in addition to completing a firearms course and having good moral character, the sheriff has broad discretion in determining who should qualify," the statement continues.

Moyer, who has been with Apple for approximately 15 years, has been the head of global security since November 2018, according to LinkedIn.

His attorney said in a statment: "Tom Moyer is innocent of the charges filed against him," adding "He did nothing wrong and has acted with the highest integrity throughout his career. We have no doubt he will be acquitted at trial."

'Anonymous' Anti-Trump NYTimes Writer Identified As Witness In Gen. Flynn Probe: Senators

'Anonymous' Anti-Trump NYTimes Writer Identified As Witness In Gen. Flynn Probe: Senators Tyler Durden Mon, 11/23/2020 - 16:20

Authored by Jack Phillips via The Epoch Times,

Two GOP Senate committee chairs have requested FBI documents that apparently identified the “anonymous” anti-Trump New York Times op-ed writer who claimed to be part of the “resistance inside the White House” two years ago.

Several weeks ago, former Department of Homeland Security (DHS) staffer Miles Taylor outed himself as the “anonymous” author. He also penned a book that was released in 2019.

Sens. Chuck Grassley (R-Iowa) and Ron Johnson (R-Wis.), in a letter (pdf) to the Department of Justice (DOJ), requested the declassification of an 11-page document that allegedly “includes information about the status of the then-ongoing investigations into those individuals and references new information obtained through witness interviews.”

“One of the witnesses named in the section of the document labeled ‘Michael Flynn [CROSSFIRE RAZOR]’ is Miles Taylor,” they wrote.

“Although the document does not fully explain the FBI’s interest in Taylor in relation to Flynn, the memo included a ‘place holder’ for an ‘interview w/ Miles Taylor.'”

 

They noted that Taylor, who was former DHS Secretary Kirstjen Nielsen’s chief of staff before his departure in 2019, revealed that he wrote the 2018 NY Times article, “I am Part of the Resistance Inside the Trump Administration,” where he said he would “thwart” President Donald Trump’s agenda.

Sen. Chuck Grassley (R-Iowa) on Capitol Hill in Washington on June 11, 2019. (Anna Moneymaker/Getty Images)

Taylor, they said, appeared to have been a witness in 2017 records pertaining to former national security adviser Michael Flynn as part of a probe. Flynn pleaded guilty to lying to the FBI about his contacts with Russia’s ambassador to the United States, but he later recanted his guilty plea and professed his innocence.

“This heavily-redacted document suggests that the FBI spoke directly to Taylor and it also provides additional information relating to Crossfire Hurricane,” the senators wrote. “Accordingly, we request that the entire document be further declassified.”

The two senators also indicated that Flynn’s lobbying organization, Flynn Intel Group, met with Taylor in October 2016.

No more details were provided.

“Witness interview of Miles Taylor, mentioned in the FARA documents, indicated Flynn Intel Group’s involvement with a late 2016 Turkey-related briefing to the now-National Security Adviser to the Vice President,” their document stated.

Johnson, the head of the Senate Homeland Security Committee, and Grassley, the head of the Senate Finance Committee, said the DOJ needs to explain Taylor’s role in the Flynn probe. They said Attorney General William Barr should provide a briefing on the matter and declassify more of the agency’s documentation related to the investigation.

The Trump administration said in October that Taylor, who revealed himself as the “anonymous” author, is a “liar and a coward.” Taylor’s bio on Twitter says he is currently employed with CNN.

Grassley and Johnson said the DOJ needs to provide comply with their request by Nov. 30, or next Monday.

Dollar Jumps, Gold Dumps, As Massive Short-Squeeze Sends 'Greed' Near 2020 Highs

Dollar Jumps, Gold Dumps, As Massive Short-Squeeze Sends 'Greed' Near 2020 Highs Tyler Durden Mon, 11/23/2020 - 16:01

Another Monday, another positive vaccine headline...

Small Caps soared to a new record high today after better than expected PMIs and positive vaccine headlines trumped increasingly distant stimulus hopes (but it's clear the rotation continues)... The market extended gains late on after stimulus-hungry-Yellen was reported as Biden's primary pick for Treasury Secretary (but that spike did not hold)...Nasdaq ended unch...

Since the election, Small Caps are up almost 12%, Nasdaq and S&P up around 5%...

Russell 2000 is at its highest relative to Nasdaq 100 since June...

Source: Bloomberg

Momentum continued its November collapse...

Source: Bloomberg

Crashing to its lowest since June...

Source: Bloomberg

AAPL tumbled around 3% today, breaking below its 50DMA...

On a side note, after briefly topping 100% of the Russell 2000's Market Cap, AAPL is now back at 'just' 75% of it...

Source: Bloomberg

Cyclicals have recent soared to their strongest vs Defensives since

Source: Bloomberg

Today was the biggest daily short-squeeze since mid-July (up 13 of the last 16 days)...

Source: Bloomberg

The Russell/Nasdaq ratio has decoupled from real-yields for now...

Source: Bloomberg

Energy stocks surged once again today, back to its highest relative to tech since early August...

Source: Bloomberg

Credit spreads compressed dramatically after blowing out on Friday after TSY pulled some support from The Fed...

Source: Bloomberg

Yields were higher on the day (Japan closed) with 30Y up around 4bps, but notably there was no extension of the yield spike from the AZN news...

Source: Bloomberg

The dollar spiked significantly after PMIs beat and stimulus hopes faded...

Source: Bloomberg

Bitcoin was flat from Friday but the rest of the crypto space soared...

Source: Bloomberg

Ethereum topped $600, dramatically outperforming Bitcoin in the last few days...

Source: Bloomberg

As flows are favoring crypto over gold for now...

Source: Bloomberg

Gold caught down to real-yields today after the PMI/Stimulus headlines...

Source: Bloomberg

WTI continued to rally, back above $43 (but unable to take out the 11/11 highs for now)...

Gold was clubbed like a baby seal as stimulus hopes faded and PMIs soared after the vaccine news...

Finally, we note that hard (real economy) and soft (survey) data has massively decoupled once again on a sea of hope...

Source: Bloomberg

...and 'everything' is risk-on...

And we haven't seen this level of greed in a while...

As Deutsche notes, "This asymmetric market response suggests that positioning is now extended".

And the good news is that the positivity rate is rolling over...

UK's Boris Johnson Says Won't Make COVID Vaccination Compulsory

UK's Boris Johnson Says Won't Make COVID Vaccination Compulsory Tyler Durden Mon, 11/23/2020 - 15:55

Following in the footsteps of Dr. Moncef Slaoui, the head of the White House's Operation Warp Speed, who said yesterday that the US vaccination effort would be 70% completed by May (eliciting some pushback from Dr. Fauci), British Prime Minister Boris Johnson said Monday that he believes most of Britain's vulnerable will have been vaccinated by Easter.

During remarks on Monday, the prime minister added that there will be no compulsory vaccination requirements (though, to be sure, it's extremely likely that employers and schools will require people to be vaccinated, threatening to turn anybody who resists into a kind of second-class citizen/leper).

"This is entirely hypothetical, we should be able to inoculate the vast majority of people who need the most protection by Easter," BoJo said during a press conference.

Any order to require vaccinations would of course need to be approved by Parliament, and there are many Tories who wouldn't want to risk angering their supporters by trying to force them to get vaccinated.

Earlier, BoJo warned that England would soon revert to a tiered system of restrictions as a national lockdown will come to an end early next month.

Though the UK has suffered a relatively high mortality rate, thousands of Britons have traveled to London to participate in rallies opposing mandatory vaccination.

What's more, public opinion polls show many Americans and Europeans are in no hurry to get vaccinated. 

People Going Hungry = Record High Stock Prices

People Going Hungry = Record High Stock Prices Tyler Durden Mon, 11/23/2020 - 15:40

Authored by Simon Black via SovereignMan.com,

New York City is up 33% this year. St. Louis is up 66%. In Oregon it’s up 100%.

I’m not talking about real estate prices, local budget gaps, or even property tax rates.

These are the startling increases in the number of people across the country, and the world, who are in need of food.

Food banks across the Land of the Free are experiencing an enormous surge in demand from people looking to feed their families, many of whom are experiencing such economic hardship for the first time.

The director of a local food bank in western Massachusetts, for example, recently said,

“I thought I had seen the worst during the Great Recession [of 2008-2009]. But what we have experienced since March due to COVID-19 has really overwhelmed us.”

saw a video last week showing thousands of cars “stretching as far as the eye can see” in line to receive free food from a local food bank in my hometown of Dallas, Texas.

Similarly, Miami had a “massive food bank line stretched for two miles.”

You can see the same thing in big cities like New York and LA, to quieter towns like Erie, Pennsylvania, and across the world.

In the small town of Dorset in southwestern England, food banks have handed out an astonishing 1.2 million meals over the past few months, shattering all previous records. And local officials say that was just the tip of the iceberg.

It’s obvious there are millions upon millions of people who are suffering immeasurably because of Covid lockdowns.

Yet amazingly enough, the stock market is at an ALL TIME HIGH.

More than 11 million people in the US alone are still unemployed. 2.7 million homeowners are in forbearance (meaning they’re not paying their mortgages). Millions more are relying on food banks to feed their families.

Consumer spending (which makes up 70% of US GDP) is still well below where it was before the pandemic.

And according to Standard and Poors, corporate profits of the S&P 500 are down 48.96% compared to this time last year.

Plus there are entire industries– retail, travel and tourism, commercial real estate– which have been completely vanquished. And it’s unclear if they’ll ever fully recover.

Lockdowns have already restarted across the country, and Joe Biden’s advisors are suggesting that the entire nation should lock down for 4-6 weeks early next year.

(Ironically these same advisors are calling to #defundthepolice while simultaneously demanding the police enforce their ridiculous lockdowns. They also want to raise taxes on businesses, but that’s another story…)

Yet, again, the stock market is at an all-time high, higher than it was before the pandemic when corporate profits were at record highs and the unemployment rate was at a record low.

Somehow lower profits + lower consumer spending + higher unemployment + ravaged economy + soaring demand for food banks = record high stock prices.

I don’t think you need a PhD in finance to understand that this makes absolutely no sense - the stock market is completely disconnected from any sort of reality.

It’s no longer about productivity, innovation, profitability, or the health of the economy.

The market has become nothing more than a casino, and investors merely gamblers, placing bets on how much government stimulus money will be sprinkled around the economy, or how much more money the central bank will print.

It’s as if as if trillions of dollars of wealth didn’t evaporate this year. Or that all of the lost value can just be conjured out of thin air by the Federal Reserve.

That isn’t even close to the same thing.

Real wealth comes from production and value creation. It doesn’t come from a central banker conjuring trillions of currency units out of thin air with the push of a button.

And wealth certainly isn’t created when governments go into debt to pay people to NOT work.

I’m not saying any of this to be pessimistic; there are obviously a lot of signs of improvement, and the economy is in better shape than it was six months ago.

But even if Covid did suddenly and miraculously disappear off the face of the Earth, there would still be the legacy of trillions upon trillions of dollars of new debt to contend with.

Consumer debt, corporate debt, and government debt have all soared to all-time highs due to Covid.

But debt is not wealth. Going into debt means borrowing from future prosperity in order to consume today. Debt has to be repaid eventually, and serviced. This is the opposite of wealth.

Yet no matter how high these debt burdens grow, the stock market keeps charging higher.

Even more bizarrely– there’s a decent chance this trend will continue as long as the Fed keeps interest rates at record lows to fuel the stock boom (which they probably will).

And that’s the nature of asset bubbles: as long as central banks print money, asset prices have support to move higher. It’s basically free money for investors.

Now, there’s certainly nothing wrong with grabbing some of that free money that the Fed keeps pumping into the stock market.

Just make sure you’re keenly aware of the risks that you’re assuming. Because if 2020 has taught us anything, it’s that everything can change in an instant.

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On another note… We think gold could DOUBLE and silver could increase by up to 5 TIMES in the next few years.

That's why we published a new, 50-page long Ultimate Guide on Gold & Silver that you can download here.

AstraZeneca Credits "Dosing Error" For Boosting COVID Vaccine Trial Outcome

AstraZeneca Credits "Dosing Error" For Boosting COVID Vaccine Trial Outcome Tyler Durden Mon, 11/23/2020 - 15:25

Bloomberg beat out CNBC for an interview Monday with the analyst of the day, SVB Leerink's Geoffrey Porges, who was the first on Wall Street to highlight the shortcomings from Monday's AstraZeneca data, which Leerink criticized as hopelessly incomplete.

AstraZeneca-Oxford, which said earlier this month that it would share information with regulators including the FDA in real time to try and accelerate the approval process, had tried to "embellish" the data from a too-small sample of infected patients.

Other details released by AZ puzzled the market, including a finding that patients who received an initial half-dose have seen 90% efficacy, while a larger group that received two full doses saw efficacy of just 62%.

In an interview with Reuters, Mene Pangalos, the head of AstraZeneca’s non-oncology research and development and a frequent voice in the press commenting on the AstraZeneca project through its ups and downs, explained that the half-dose group occurred as a "serendipitous" accident during the study, something Pangalos described as a "stroke of good fortune".

"The reason we had the half-dose is serendipity," Mene Pangalos, the head of AstraZeneca’s non-oncology research and development, told Reuters.

Around the time when Astra was initiating its partnership with Oxford at the end of April, university researchers were administering doses to trial participants in Britain, but they noticed that patients who received two full doses sometimes demonstrated symptoms like fatigue. But researchers soon noticed a few patients who saw notably milder symptoms, and when they checked their charts, they discovered that they had accidentally been administered a half-dose instead of a full dose.

"So we went back and checked...and we found out that they had underpredicted the dose of the vaccine by half," said Pangalos.

Well, if a mistake had to be made, at least nobody was harmed. As for those trial halts, AstraZeneca has insisted that all seriously sickened patients received the placebo, not the vaccine. The leaders of the trial decided to continue with the half dose followed by a full "booster" dose.

Qantas Airways CEO Says COVID Vaccination Will Be Mandatory For Travel

Qantas Airways CEO Says COVID Vaccination Will Be Mandatory For Travel Tyler Durden Mon, 11/23/2020 - 15:13

Authored by Paul Joseph Watson via Summit News,

The CEO of Qantas says that the COVID-19 vaccine will be mandatory for anyone boarding his flights and that this will become the norm for all international travel.

“We are looking at changing our terms and conditions to say, for international travelers, that we will ask people to have a vaccination before they can get on the aircraft,” said Alan Joyce.

“I think that’s going to be a common thing talking to my colleagues in other airlines around the globe,” he told Australian news program A Current Affair.

Qantas will only resume flights to the US and the UK once a jab comes to market.

As we previously reported, airlines across the world are likely to introduce similar measures once the coronavirus vaccine is widely available.

“Three global alliances representing 58 airlines are pushing governments to allow widespread COVID-19 testing of passengers instead of existing quarantine restrictions that they argue are ineffective and have killed travel demand,” reported Axios.

The system would likely be organized under the auspices of CommonPass, a program sponsored by the World Economic Forum, which is pushing for a post-COVID “Great Reset” that would transform the world.

Ticketmaster is also considering introducing a system where customers have to prove they’ve taken the vaccine before being allowed to buy tickets for music and sports events.

*  *  *

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14 Million People Will Lose Their Unemployment Benefits, 30 Million At Risk Of Eviction On January 1

14 Million People Will Lose Their Unemployment Benefits, 30 Million At Risk Of Eviction On January 1 Tyler Durden Mon, 11/23/2020 - 14:55

While markets remain on edge over the sudden tension between the Treasury and the Fed, following Mnuchin's surprise notice to Powell that the Treasury would let 8 of the key 13(3) "emergency" programs currently in place (including the critical for the bond market Corporate Credit facilities, PMCCF and SMCCF) at the Fed expire on Dec 31...

... which also threatens the continuation of Helicopter Money into 2021 as the only reason the Fed has been able to monetize all US issuance this year while sending stocks soaring has been the close cooperation between the Fed and Treasury, another, more important "expiration" will take place on Dec 31, and will likely have far more profound consequences for the broader US population.

Here's why: on Dec 31 is when many of the key provisions in the CARES Act are set to expire if there is no action from Congress. All else equal, some 12 million American will likely lose access to their Emergency unemployment benefits activated in the aftermath of the covid pandemic, which alone could be a drag of up to 1.5% to growth in 1Q according to Bank of America. Additionally, the concurrent expiration of eviction moratorium, mortgage forbearance programs, and suspension of student loan payments could all be headwinds early next year, creating further obstacles.

Some background

The CARES Act expanded unemployment insurance eligibility and duration during the pandemic. Of this, the Pandemic Unemployment Assistance (PUA) program was the largest component, giving unemployment benefits to workers who are normally ineligible for regular state UI programs such as contract and self-employed workers. The PUA gave these workers 39 weeks of unemployment benefits. Meanwhile the Pandemic Emergency Unemployment Compensation (PEUC) program provided 13 additional weeks of benefits to those that exhausted regular state UI benefits. These programs will expire on December 26th.

According to the latest DOL data, there are currently over 21 million unemployed workers receiving UI benefits of which 13.6 million are enrolled in either PUA or PEUC; these are shown in red and green in the chart below.

According to analysts at the Century Foundation, roughly 12 million workers enrolled in PUA or PEUC will see their UI benefits cut off at year-end, and based on BofA calculations, this would roughly translate into an income shortfall of $39BN in 1Q if these workers are unable to find work or alternative income support. BofA also calculates that based on its work on fiscal multipliers, income loss of $39BN would translate into a 1.2% hit to growth on an annualized basis in 1Q 2021.

Beyond the direct hit to those losing their benefits at year-end, many that are currently on regular state UI programs will exhaust their eligibility and be left without a safety net. A back of the envelope calculation suggests an additional 2.4MM  workers who are currently on regular UI benefits will exhaust all available UI resources by 1Q of next year, which would amount to roughly an $8BN income loss or a drag of 0.3% to growth.

In total, some 14.4 million workers will lose their unemployment benefits on Dec 31, resulting in a total hit to the economy of almost $50BN, and without any additional UI support, BofA estimates the income loss could be a drag of up to 1.5% to growth in 1Q 2021. It gets worse as there could be a second mini-cliff in 2Q if there is no additional stimulus as workers on extended UI benefits in select states exhaust their aid.

Bills also come due

The CARES Act also provided some temporary payment relief: it prohibited landlords with federal guaranteed mortgages from evicting tenants until December 31st. According to a survey run by the Urban Institute, 1/3rd of landlords reported not being paid rent in full in September. This implies roughly 30 million renter households will be at risk of eviction once the moratorium expires. As BofA adds, homeowners with federally guaranteed mortgages could request loan forbearance up until December 31st, while those who requested and received forbearances prior to the deadline would be able to delay mortgage payments up to a year. Separately, according to the Mortgage Bankers Association, loans in forbearance stood at 5.7% in the week ending November 15, which roughly translates to 2.7 million homeowners in some sort of forbearance plans.

While it's difficult to quantify the growth impact from these provisions expiring, BofA expects it to have a meaningful impact if consumers are unable to keep current on their debt. According to a study done by Collison and Reed (2018), the value of avoiding an eviction is approximately $8,000 per household. Meanwhile, studies on foreclosures showed that foreclosure-related sales had prices about 27% lower than comparable properties and each foreclosure lowered the selling price of nearby non-foreclosure properties by 1%.

In short, the Dec 31 expiration date means that immediately thereafter, there will be a nontrivial risk that many households will be unable to pay their debts. The latest Household Pulse Survey from the Census Bureau shows that close to 30% of renters and roughly 12% of homeowners with mortgages have slight-to-no confidence that they will be able to make next month's payment.

Last, consumers with student debt will have to resume payments in January. According to a study done by the NY Fed, the payment freeze during the pandemic saved borrowers roughly $7BN per month. All told, with various moratoria ending, debt payments coming due could be a major headwind for the economy at the start of next year.

No safety net.

What is most concerning about the expiration of various CARES programs is that starting Jan 1, the economy will be operating without a safety net. However, according to BofA, this is likely to be short-lived, as Congress and the new Biden administration are expected to strike a deal on a new stimulus package of $500bn-$1tn shortly after the inauguration (Goldman however recently cuts its estimate to just $700BN). And while any new package should be able to offset the drag and boost growth by 2.5% in 2021 (per BofA estimates), any delays and snags could lead to a second major economic hit to the US economy. Already JPMorgan expects a "doube-dipping" 1% drop in Q1 GDP, a decline which will only get worse should the various government subsidies not be extended in early 2021.

Italian Police Use Lamborghini For Urgent 300-Mile Kidney Delivery In Just Two Hours

Italian Police Use Lamborghini For Urgent 300-Mile Kidney Delivery In Just Two Hours Tyler Durden Mon, 11/23/2020 - 14:39

Authored by Elias Marat via TheMindUnleashed.com,

While Lamborghinis are typically thought of as luxury sports cars that are only affordable to the wealthy, in their home country of Italy they have long been a part of the Italian police fleet.

And while these dreamy cars may seem a bit excessive, the car was perfectly suited for a specialized task that your typical “black and white” is hardly cut out for: delivering a donor kidney overs 300 miles away in only two hours.

Earlier this month, the Italian national police posted a video on Twitter showing a police-issued Lamborghini Huracán LP 610-4 being deployed on a life-or-death mission to transport the vital organ from the Policlinico Universitario hospital in the Northern Italian city Padua to the Gemelli hospital in Rome.

During the journey, the Lambo soared over a distance of 500 kilometers – or about 310 miles – in just about two hours. At an average speed of 143 miles per hour, the specialty cop car managed to trim a typically six-hour ride down to one-third of its usual time.

Thanks to the Huracán having a mighty 610 metric horsepower and 4 wheel drive – hence its designation, LP 610-4 – the officers had no trouble meeting the moment with urgency and resolve.

And given that satellite images of the starting point in the journey don’t indicate any helipad or accessible flat area close by, the Lambo seemed like a perfectly logical option.

In the video, the baby blue Lamborghini can be seen being loaded with the fragile donated organ.

The Lamborghini Huracán de la Polizia is a highly specialized vehicle that is prepared for these types of emergency medical transport tasks, and is equipped with a small refrigerated front trunk for this purpose. It also has a defibrillator in case someone requires a life-saving electric shock while suffering cardiac arrest.

Additionally, officers who pilot the vehicle are given specific training on the race track so they can master the vehicle, which – as can be seen in this case – isn’t always used to pursue criminals.

The Huracán is capable of accelerating from 0 to 60 mph in less than three seconds and can reach maximum speeds of about 202 mph, according to Jalopnik.

The car, which also carries out routine patrol tasks, is also fitted out with the typical gear you’ll find in a police car, including lights, a siren, a police computer, and dash cameras.

In the tweet, the Italian Police humbly claim: “‘To save a life you don’t need superpowers,’ – solidarity, technology and efficiency also help.”

However, it remains arguable whether one could claim that a Lamborghini Huracán isn’t a superpower in its own right.

It’s not the only Lamborghini in the national police fleet, either. According to The Drive, the Huracán LP 610-4 was added to the force in 2017 as a replacement for a Lamborghini Gallardo that was decommissioned.

The car, which was the second Huracán used by Italian police, was even delivered to the police personally by Lamborghini’s CEO Stefano Domenicali.

“The new Lamborghini Huracán stands for Italian super sports car excellence and we are proud to provide it to the Italian State Police,” outgoing CEO Stephan Winklemann announced prior to the delivery.

159,000 Teslas At Risk Of Infotainment System And Cameras Dying Due To Worn Out Memory Chips

159,000 Teslas At Risk Of Infotainment System And Cameras Dying Due To Worn Out Memory Chips Tyler Durden Mon, 11/23/2020 - 14:26

While Tesla is sorting out a litany of problems, not the least of which is Consumer Reports slamming their vehicle's reliability and a Chinese recall over Model S and Model X suspensions, while at the same time trying to figure out how to come up with another "profitable" quarter, the quality control issues keep stacking up.

Tesla owners could also been in for worn-out NAND memory chips causing "a whole host of problems with some Tesla cars, ranging from the failure of the rearview camera to an absence of turn signal chimes and other audio alerts", according to The Register

The NHTSA recently found that "at least 30%" of the infotainment systems made in "certain build months" are failing due to the deterioration - typically after "three to four years in service", the report found.

The problem could affect 159,000 Model S and Model X vehicles built between 2012 and 2018. These vehicles "all use an infotainment system powered by Nvidia's Tegra 3 system-on-chips that include 8GB of eMMC NAND storage."

The problem is that these chips wear out, hitting program-erase cycle limits, and become unable to reliably store data. This results in glitches or failure. 

That can then "result in loss of rearview/backup camera, loss of HVAC (defogging) setting controls (if the HVAC status was OFF status prior to failure.) There is also an impact on the advanced driver assistance support (ADAS), Autopilot system, and turn signal functionality due to the possible loss of audible chimes, driver sensing, and alerts associated with these vehicle functions," the NHTSA said.

The agency took on the investigation after 16,000 complaints were submitted by Tesla owners. 

“An engineering analysis has been opened to further assess the scope, frequency, and safety-related consequences of the alleged defect,” the NHTSA's Office of Defect Investigation said. 

You can read the full NHTSA report here

The Way We Train AI Is Fundamentally Flawed

The Way We Train AI Is Fundamentally Flawed Tyler Durden Mon, 11/23/2020 - 14:09

Submitted by Nicholas Colas of DataTrek Research

Peter Thiel’s most famous one-liner may well be, We wanted flying cars, instead we got 140 characters”. As a send-up of tech entrepreneurship’s focus on the mundane rather than the magnificent, it’s pretty good. And Twitter may be 280 characters now, but we still don’t have flying cars.

We thought of that line today when we came across an article in the MIT Technology Review titled “The way we train AI is fundamentally flawed” by Will Heaven, the journal’s senior editor for AI and Ph.D. in Computer Science. The piece reviews a recent paper by 40 Google researchers across 7 different teams. There’s links to both the MIT article and the Google paper below (the latter is heavy reading), but here is a brief summary:

  • Artificial intelligence training is a 2-step process. You start by showing an algorithm a dataset. As it goes through that data, it “learns” to identify images, voices, or whatever you’re trying to teach it by subtly altering the weights of the criteria it is coded to evaluate. Once that’s done, you test it on data it hasn’t seen before. When you get a satisfactory outcome to that test, you’re done.

  • The problem is that if you train 50 AI algos on a given data set and then see them all pass their tests, they still perform very differently in the real world. They might be great at identifying images in low light conditions, but not when presented with high contrast, for example. Another AI algo trained on the same data and validated by the same test may have the opposite problem. Or it may do both well…

  • Put succinctly, the MIT journal article says, “the process used to build most machine-learning models today cannot tell which models will work in the real world and which ones won’t”.

  • The problem is “underspecification”, and as the article notes “Google researchers ended up looking at a range of different AI applications, from image recognition to natural language processing (NLP) to disease prediction. They found that underspecification was to blame for poor performance in all of them.”

  • There are ways around underspecification, ranging from more testing (essentially “up-specifying” the algo so it does the work correctly) to releasing multiple versions of the same algo and letting users pick which ones work best for their application.

Our take: while it is surprising that AI researchers have only recently figured out what’s inherently wrong with AI development (and the fact that it’s Google fessing up seems important), at least they are one step closer to a better testing/validation regime. We won’t get flying cars – or even just self-driving terrestrial ones – until this process improves.

Sources:

SMIT Tech Review Article: "The way we train AI is fundamentally flawed"

Google paper, “Underspecification Presents Challenges for Credibility in Modern Machine Learning”

 

Yellen To Head Biden's Treasury, Brainard To Remain At The Fed

Yellen To Head Biden's Treasury, Brainard To Remain At The Fed Tyler Durden Mon, 11/23/2020 - 13:49

While Joe Biden is busy filling up his cabinet with distinguished members of Obama's deep state ensuring years of warfare, at least one presidential coup in a Russia-neighboring nation and record prices for offense defense stocks, the only question that matters for traders is who head Biden's Treasury secretary.

Here, a surprising reversal has taken place, because contrary to previous reports that Fed governor, and prominently political Clinton supporter, Lael Brainard was set to replace Steve Mnuchin, Charlie Gasparino reported that according to a Joe Biden adviser, Yellen has now leapfrogged both Brainard (and Roger Ferguson) to become the most likely candidate to head the Treasury: "Shes liked by banks, OK with progressives and easily confirmed."

And in the worst news for Neel Kashkari whose ambitions to become the next Fed chair are hardly a secret, Gasparino notes that Lael "will be kept at the Fed where she can replace Powell at some pt."

And just minutes later, Bloomberg confirmed, reporting that "Lael Brainard has been told by allies of President-elect Joe Biden that she needs to stay at the central bank."

Also confirming the bad news for Kashkari, Bloomberg notes that "Brainard is the only Democrat on a Fed board filled mostly by President Donald Trump’s appointments, and she may be a leading candidate for Fed chair when Jerome Powell’s term expires in 2022."

In other words, some time in 2022 the five most important financial and political posts in the world - the US Treasury, The Fed, the ECB and the IMF - will be headed by women. The fifth? Why president Kamala Harris who will replace Joe Biden sometime in the next 6-12 months. One can only hope that there is no historic market crash and/r bubble burst in the coming years, because women will never hear the end of it.

Facebook Plans To Promote COVID Vaccines To Curry Favor With Biden White House

Facebook Plans To Promote COVID Vaccines To Curry Favor With Biden White House Tyler Durden Mon, 11/23/2020 - 13:40

Facebook has decided on a novel strategy to try and get back in Joe Biden's good graces (and hopefully stave off a heavy-handed antitrust crackdown): brainwash convince its 2 billion users that COVID-19 vaccines are safe and effective, while also promoting content about the Paris Climate Accords, especially arguments about the US rejoining the agreement. 

Part of the company's strategy, as we've noted before, is to elevate the status of Nick Clegg, a former deputy PM from the UK who already has a close relationship with Biden (who served as VP in the US for part of Clegg's time in the highest echelons of British government).

But will this be enough to salve the fury of progressive Democrats who accuse Facebook of failing to safeguard American Democracy by allowing too many conservative voices to flourish on its platform. Progressives have accused Facebook of allowing hate speech and Russian propaganda to flourish, with little in the way of actual evidence (though every once in a while progressive journalists will find a 'white supremacist' group whose Facebook page hasn't yet been taken down). In reality, Dems are angry that the most popular Facebook pages belong to Ben Shapiro and Dan Bongino, two conservative pundits with more reach than some of the biggest "mainstream" media companies (like the NYT).

According to the FT, Facebook's most immediate goal is to try and secure a 'hearing' with Biden and his top policy team (which, to be sure, includes many Silicon Valley stalwarts who are sympathetic to Facebook's corporate aims).

In its attempt to secure a hearing from the new administration, Facebook is planning a series of initiatives that align with Mr Biden’s top priorities in government, insiders say. The company will expand its efforts to combat misinformation about the coronavirus pandemic, and is considering publishing a banner advertisement at the top of users’ news feeds encouraging them to take a vaccine once it is approved.

Such a move threatens a backlash from the majority of Americans, however, who say they are not convinced that a vaccine will be safe and are not sure they will receive one.

The company is also working on how to promote action on climate change, including a range of new stickers, buttons and other functions to encourage users to share content about the Paris climate agreement, which Mr Biden has promised to re-join.

Mr Biden will now have to decide whether to lend his weight to various Congressional efforts to regulate social media, including whether to follow through on his threat to try to repeal Section 230. And his pick to head the FTC will decide whether to push for Facebook — which bought Instagram and WhatsApp in 2012 and 2014 respectively — to be broken up altogether.

Of course, as the FT pointed out, Facebook's vaccine push could risk upsetting users who are skeptical of the new COVID vaccines and their safety. The company has already taken steps to try and suppress anyone questioning the 'official' narrative, however.

Clegg and Biden have worked closely together during the 5 years - between 2010 and 2015 - that they worked in parallel positions in their respective governments. The two men stayed in touch following their respective stints in government, and they even helped to create the "Transatlantic Commission on Election Integrity" and they participated in an hour-long podcast back in 2018.

One senior FB employee told the FT that the company knows "Sir Nick" won't save Facebook from being broken up. "A lot of the Democrats simply hate Facebook right now. We know Nick Clegg is not going to save us from that, but at least he will help us get a hearing." Ultimately, that will probably depend on how much influence Elizabeth Warren and other progressives like AOC will have during the Biden Administration.

Investing When Markets Detach From The Economy

Investing When Markets Detach From The Economy Tyler Durden Mon, 11/23/2020 - 13:20

Authored by Lance Roberts via RealInvestmentAdvice.com,

“The stock market is not the economy.” Such remains the “Siren’s Song” of investors as valuation expansion is the sole driver of the market’s performance. Given that corporations derive their revenue from economic activity, how do you invest when the economy is detached from the economy?

I explored this issue in my presentation at the MoneyShow Virtual Expo last week. In the presentation I cover:

  • Why we are still in a “bull market.” 

  • The stock market is not the economy.

  • The linkage between the economy and the stock market

  • Where to invest in 2021 

  • The trading rules to follow.

The following articles I recently wrote provide more clarity on the issues I discuss in the following presentation.

With the Federal Reserve creating “moral hazard” in financial markets, it certainly seems as if stocks can never go down. The problem, of course, is that is exactly what sentiment was like prior to the last two major bear markets.

Currently, just about every measure of valuation is predicting low to negative returns over the next decade.

While such does not mean that every year will be negative, it suggests we will likely witness increased volatility and more frequent declines. As Michael Lebowitz, CFA recently noted:

“Regardless of the economic environment, taking significant risks, and accepting pitiful expected returns is a bad idea. However, there is one more factor we must consider. The Federal Reserve supplies a massive amount of liquidity, much of which is finding its way into the asset markets.

The Fed will likely continue as long as inflation is held at bay. The result may be that stock prices continue to rise, and valuations eclipse all prior norms. However, the music will stop someday, and the facts presented here will be apparent.”

2021 May Be A Challenge

The trend is your friend, currently. The Fed will continue to supply liquidity, which will help the market ignore the reality of valuations, technical deviations, and excessive bullishness for now.

However, as we saw in March, such does not preclude hair-raising volatility and large declines, but it does support prices on the margin regardless of the environment. The problem comes when the Fed backs off, whether by its design, inflation, or an inability to absorb larger levels of debt issuance from the Government. At that point, slower economic growth, massive debt overhead, and rich valuations will matter.

Investors would do well to remember the words of the then-chairman of the Securities and Exchange Commission Arthur Levitt in a 1998 speech entitled “The Numbers Game:”

“While the temptations are great, and the pressures strong, illusions in numbers are only that—ephemeral, and ultimately self-destructive.”

There are a tremendous number of things that can go wrong in the months ahead. Such is particularly the case of a surging stock market against weakening fundamentals.

While investors cling to the “hope” that the Fed has everything under control, there is more than a reasonable chance they don’t.

Regardless, there is a straightforward truth.

“The stock market is NOT the economy.But the economy is a reflection of the very thing that supports higher asset prices – corporate profits.”

Enjoy the presentation.

The MoneyShow: Investing In 2021

I hope you enjoyed it.

 

MoneyShow Presentation Deck

The PDF of the slide deck is provided below for your convenience.

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Disappointing Demand For Tailing, Record 5Y Treasury Auction

Disappointing Demand For Tailing, Record 5Y Treasury Auction Tyler Durden Mon, 11/23/2020 - 13:15

90 minutes after the Treasury sold a record amount in 2Y paper, moments ago in the day's twofer special, another $57BN in 5 year paper was sold to less than eager buyers, because while the morning's 2Y sale was mostly solid, the 5Y auction left quite a bit to be desired, starting with the high yield, which at 0.397%, tailed the WI 0.390% by 0.7bps unlike the stop through in the earlier auction of 2% which stopped through comfortably.

On the other hand, and like the earlier 2Y sale, the 5Y auction was also record big and at $57BN it was $2BN more than October's total, and well over 50% greater than the average auction size in the past decade.

Record auction size does not mean record demand, however, and the Bid to Cover was unchanged from October at just 2.38, and below the recent average of 2.47.

This was especially true when looking at the internals, as Indirects dropped from 61.9% last month to just 56.5%, the lowest since March, and with Directs flat month over month and taking down 14.3% Dealers were once again left holding the big with 29.2% of the auction, up from 24.1% in Oct and the highest since July.

Overall a rather disappointing auction, yet solid enough to absorb another record batch of US debt for sale; as usual the real question is just how big can each individual auction be - $75BN? $100BN? $1TN - before the market gets indigestion and the time to pay the piper finally arrives.

CA Gov Newsom And Family Enter 2-Week Quarantine After COVID-19 Exposure

CA Gov Newsom And Family Enter 2-Week Quarantine After COVID-19 Exposure Tyler Durden Mon, 11/23/2020 - 13:00

A convenient distraction?

After being called out for attending a birthday dinner for a friend/lobbyist at Thomas Keller's the French Laundry all the way out in Napa, California Gov. Gavin Newsom now has no choice but to remain in quarantine with his immediate family after one of his kids was exposed to a Highway Patrol Officer who later tested positive.

The officer is part of the detail that provides security for the governor and his family.

"We are grateful for all the officers that keep our family safe and for every frontline worker who continues to go to work during this pandemic," Newsom tweeted. Three of the governor's four children attend a private elementary school that resumed in-person instruction in November with increased safety protocols in place.

The name of the officer who exposed the Newsoms was not released, but one has to imagine that guy is probably feeling justifiably anxious about his long-term career prospects in the Highway Patrol right about now.

One of Newsom's children was also recently exposed after another student at the private school (which hasn't been named due to their young age and privacy concerns) tested positive.

But one of Newsom's spokesmen said that "after being alerted by the school that a classmate tested positive for COVID-19, the potentially exposed Newsom child began a 14-day quarantine from the date of exposure in accordance with state public health guidance."

While millions of Americans flout the CDC's guidance about not traveling for the Thanksgiving holiday, the Newsom family will simply have to make do in quarantine from Sacramento. Does "The French Laundry" deliver?

The Death Star Strategy: Is Trump Contemplating The Ultimate Constitutional Trick Shot?

The Death Star Strategy: Is Trump Contemplating The Ultimate Constitutional Trick Shot? Tyler Durden Mon, 11/23/2020 - 12:48

Authored by Jonathan Turley,

Below is my column in The Hill on the possibility of contesting electoral certifications by key states. With the adverse ruling in Pennsylvania, the Trump legal team is still pledging new evidence of massive fraud as certifications are completed. The options for the team seem more and more reduced to the ultimate constitutional trick shot in engineering a fight on the floor of Congress. Here is the column:

The Thursday press conference by President Trump’s legal team left many breathless as Trump counsel Rudy Giuliani alleged a global communist conspiracy to steal the 2020 election. While making passing references to credible election challenges over provisional ballots or “curing” rules, he repeatedly returned to the allegation of a purported massive conspiracy directed by Democrats to change and “inject” votes into state tallies.

It was a strange narrative that seemed to move away from the provable to the unbelievable. The question is, why?

One possibility: to raise sweeping allegations with insufficient time to resolve them in order to force an Electoral College fight. The idea would be to give license to Republican-controlled legislatures to intervene with their own sets of electors or block the submission of any set of electors. Concern over such a strategy was magnified when Trump called key Republican leaders from Michigan’s legislature to the White House on Friday.

Call it the “Death Star strategy.”

In “Star Wars,” a struggling rebellion was in full retreat on every front against an overwhelming force in the Empire. The rebels were left with just one strategy and literally one shot. Luke Skywalker had to skim the surface of the Death Star along a trench and fire a round into a small thermal exhaust port to travel down an air shaft and cause an explosion in the core reactor. Then poof! No more Death Star.

However, if this is the Trump team’s plan, it will make Luke Skywalker’s shot look like a beanbag toss.

The electoral ‘trench’

The “trench,” in this instance, is found in state election systems leading to the electoral equivalent of the “exhaust port” in the Constitution’s Electoral College. It is the Electoral College where the actual election of an American president occurs. Each state certifies votes to the Electoral College — a figure that adds up to the number of members the states have in the two houses of Congress, or 535. (In addition, for Electoral College purposes, the District of Columbia is given three electors, for a total of 538.) Thus, a candidate must have at least 270 electoral votes to become president.

To reach that “exhaust port,” Trump’s legal-team equivalent of X-wing fighters must get all the way down the electoral “trench” by creating challenges to multiple state certifications and deny Joe Biden the 270 threshold or claim those votes for Trump. The Trump team has focused on states such as Arizona, Georgia, Michigan, Nevada and Pennsylvania. If the litigation can create serious doubts over the authentication or tabulation of ballots, the Trump campaign could force fights on the floors of these state legislatures. However, after meeting with the president on Friday, the Michigan legislative leaders dealt that potential strategy a serious blow by saying they are unaware of anything that would change their state’s certification for Biden.

The electoral ‘shaft’

Once litigation introduces doubt as to the validity of the vote, the matter travels down the electoral version of the Death Star’s air shaft to individual state legislatures. This is when things move into some uncertain constitutional physics.

Article II of the Constitution states that electors are appointed “in such Manner as the Legislature thereof may direct.” All but a couple of states have directed that all of their electoral votes will go to the candidate with the greater number of statewide votes. The question is, what happens if legislators decide they cannot say with confidence who won the greater number of votes?

Such controversies have arisen before, as in 2004, when Democrats objected to counting Ohio’s electoral votes due to voting irregularities. The greatest controversy occurred in 1876 after a close, heated election between Republican Rutherford Hayes and Democrat Samuel Tilden. Like Biden, Tilden won the popular vote and more electoral votes (184, to Hayes’s 165). The problem was that rampant fraud was alleged in Florida, Louisiana and South Carolina. (For example, South Carolina reported 101 percent of voters voting). The controversy led to rival sets of electors being sent to Congress. A long fight led to the improbable election of Hayes as president.

For Trump to pull off a similar maneuver, he would need the cooperation of Republican state legislators. He also would face collateral litigation over who should certify electors — a state’s governor or its legislature. In Bush v. Gore in 2000, the Supreme Court ordered an effective halt to further litigation, but that was just one state. It is possible that such multistate litigation could push the challenges beyond the end of the safe-harbor period for certification on Dec. 8 or beyond Dec. 23, when those votes are supposed to be submitted to Congress. Indeed, it could force a fight on Jan. 6, when Congress gathers in joint session to count the votes.

The electoral ‘reactor’

Only then would the action make it into the “core reactor” equivalent of our constitutional system — the joint session of Congress. This would trigger a law passed after the Hayes-Tilden election. Unfortunately, the Electoral Count Act (ECA) of 1887 is hardly a model of clarity and would become the focus of litigation itself. Under some circumstances, Vice President Pence could issue a ruling in favor of Trump, but one senator and one House member could challenge his ruling.

What if there were insufficient votes overall to elect a president? This is where we could see a rare court intervention in a contested election in Congress. The ECA is ambiguous on what it means to have a majority of electors; it does not clearly state whether a majority of “electors appointed” means a majority of the 538 electors (270) or simply a majority of those electors accepted or successfully certified (allowing election with less than 270 electoral votes). There also are untested terms and provisions, ranging from the weight given to the decision of governors and the meaning of what is “lawfully certified” or whether votes were “regularly given.”

There also is the potential under the 12th Amendment for a “contingent election” when there is a tie or insufficient votes. In such a case, Trump could win again. In that case, the vote for president is held in the House based on state delegations, not individual members. Republicans likely will control a majority of state delegations in the House, despite having fewer seats overall — as well as the Senate, where Pence could be reelected.

Again, that is all quite a long shot — a bit more than Luke Skywalker’s boast that he could sink it because he “used to bull’s-eye womp rats in my T-16 back home.” It is enough to make an Ewok weep. All one can say, to paraphrase Han Solo’s parting words before heading out for Death Star, is “Hey, Rudy. May the Force — and the ECA — be with you.”

Biden Confirms First Latino Homeland Security Chief Among List Of National Security Cabinet Picks

Biden Confirms First Latino Homeland Security Chief Among List Of National Security Cabinet Picks Tyler Durden Mon, 11/23/2020 - 12:29

Update (1310ET): Charles Gasparino, Fox Business's senior correspondent, has just reported that LA Mayor Eric Garcetti, the Democratic mayor of America's most infamously traffic-clogged metropolis, is the front-runner to serve as Biden's secretary of transportation, taking over from Elaine Chao, wife of Senate leader Mitch McConnell.

But even more interesting than Gaspo's tweet about Garcetti was his follow-up, where he reported that Yellen has leap-frogged Brainard and Roger Ferguson to become the front-runner to lead Biden's Treasury Department.

The logic makes sense: "Shes liked by banks, OK with progressives and easily confirmed. Plus we keep Lael at the Fed where she can replace Powell at some point".

To be sure, considering the source, investors should take this all with a grain of salt. Though it's certainly not much of a departure from what has already been reported.

* * *

Joe Biden and his team have just confirmed a series of staff picks including some that were telegraphed ahead of time (John Kerry, the one-time Democratic presidential nominee back in 2004, to serve as Climate envoy) though none of the picks were really a surprise, as Biden has shown a preference for lobbyists and established Democratic players.

Another former Obama Administration player, Avril Haines, who notably served as the first female deputy Director of the CIA, and later as Obama's Deputy Director of National Intelligence, will serve as Biden's Director of National Intelligence. In that role, Haines will share responsibility for the president's daily intelligence briefings.

Alejandro Mayorkas

Former Assistant Secretary of State for African Affairs in the US Department of State Linda Thomas-Greenfield, also a longtime Obama administration official, is likely to become the new US ambassador to the United Nations.

In another major "first", Alejandro Mayorkas will serve as the first latino Secretary of Homeland Security, after serving in a deputy role during the Obama Administration. Mayorkas isn't widely known to the public, but he did play a key role in one Obama-era scandal, when he was implicated for exerting "improper influence" over granting immigration benefits to politically connected individuals.

Perhaps the most high-profile choice might surprise many Americans: Antony Blinken, a top advisor who has advised Biden on foreign policy since 2002, will serve as Secretary of State (he also once served as a deputy secretary of state during the Obama-Biden days). We have discussed 'deep state' Blinken in detail previously, and for those hoping for an end to endless wars, Blinken says not so fast:

 "Large scale, open-ended deployment of large standing US forces in conflict zones with no clear strategy should end and will end under his watch…. But we also need to distinguish between, for example, these endless wars with the large scale open ended deployment of US forces with, for example, discreet, small-scale sustainable operations, maybe led by special forces, to support local actors… In ending the endless wars I think we have to be careful to not paint with too broad a brush stroke."

Additionally, while Blinken has been a critic of Trump’s tariffs on China and has previously stated that full decoupling from China is unrealistic, he has also made hawkish statements about the need for a more comprehensive US response to Beijing. Indeed, he has specifically spoken about the need to utilize the tool of the recent Hong Kong Autonomy Act (HKAA) to impose sanctions as needed.

Finally, Jake Sullivan, an established Democratic player and former chief of staff to Secretary of State Clinton, will serve as Biden's National Security Advisor.

All six of Biden’s national security picks held senior roles in the Obama administration,

The biggest unanswered question so far is whether Janet Yellen (former Fed chair) or Lael Brainard (a member of the Fed's board of governors) will be selected to serve as Secretary of the Treasury over Elizabeth Warren. Though, at this point, with the central bank pivoting toward pursuing racial and economic equality, whether the truly 'progressive' candidate gets in or not is almost a moot point.

Clearly, as Axios' Margaret Talev notes: The list is a deliberate effort to package nominees in a way that suggests diversity - a "first" for women and Latinos, a Black woman, and a white man.

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