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TPK conservative about 2H22 business prospects

Touch module maker TPK Holding is conservative about its business prospects for the second half of 2022 due to volatile macro environments, according to company chairman Michael Chiang......»»

Category: topSource: digitimesJun 24th, 2022

Here"s Why Sunoco (SUN) Stock is an Attractive Bet Right Now

Sunoco (SUN) is expected to benefit from the recovering gasoline demand and rising diesel fuel consumption. Sunoco LP SUN has witnessed upward earnings estimate revisions for 2022 in the past 60 days. The leading independent fuel distributor in the United States, currently sporting a Zacks Rank #1 (Strong Buy), is expected to witness 26.1% earnings growth in 2022.Sunoco LP Price  Sunoco LP price | Sunoco LP QuoteWhat’s Favoring the Stock?Sunoco is among the largest motor fuel distributors in the U.S. wholesale market in terms of volume. The partnership continues to generate stable cash flows by distributing more than 10 fuel brands under its long-term distribution contracts, with about 10,000 convenience stores.Apart from geopolitical uncertainties resulting from Russia’s invasion of Ukraine, oil’s remarkable turnaround has been prompted by a demand spike due to the reopening of economies.Because of a rebound in activities, higher fuel consumption and refining production in the domestic market will likely drive the demand for wholesale fuel distribution businesses. Sunoco is expected to benefit from the recovering gasoline demand and rising diesel fuel consumption. This will boost the partnership’s profits.For 2022, Sunoco revised its adjusted EBITDA guidance upward to $795-$835 million from $770-$810 million. The metric suggests an improvement from the $754 million reported last year. Despite the pandemic-related uncertainty, Sunoco expects year-over-year continuous volume improvements.The partnership is currently focusing on reducing costs and expenses, which are expected to benefit its bottom line. In 2021, the partnership’s lease operating expenses decreased to $59 million from $61 million a year ago.Thus, the Sunoco stock appears to be a solid bet now, based on the strong fundamentals and compelling business prospects.Other Key PicksInvestors interested in the energy sector might look at the following companies that also presently flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.Imperial Oil Limited IMO is one of the largest integrated oil companies in Canada. IMO’s debt-to-capitalization of 18.9% is quite conservative versus 32.1% for the sub-industry it belongs to. Imperial Oil has ample liquidity, with cash and cash equivalents of $1.7 billion.Imperial Oil remains strongly committed to returning money to investors via dividends. The company’s board of directors approved a hike in the quarterly dividend payment. The new payout of 34 Canadian cents is 26% above the prior dividend. Also, Imperial Oil revised its existing share repurchase policy to buy up to 4% of outstanding common shares.Enterprise Products Partners EPD is among the leading midstream energy players in North America. EPD is well-positioned to generate additional cash flow from under-construction growth capital projects worth $4.6 billion.Enterprise Products Partners is strongly committed to returning cash to shareholders. The partnership’s board of directors increased its quarterly cash distribution to 46.5 cents per unit, suggesting a 3.3% hike from the prior dividend of 45 cents.Marathon Petroleum Corporation MPC is a leading independent refiner, transporter and marketer of petroleum products. MPC currently has a Zacks Style Score of A for Growth and Momentum, and B for Value.The industry’s improved fundamentals in the form of constrained supply and robust demand have led to rising refining profitability for the players involved. As a reflection of this, Marathon Petroleum’s Refining & Marketing segment reported an operating income of $768 million in the first quarter, turning around from the year-ago loss of $598 million. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Enterprise Products Partners L.P. (EPD): Free Stock Analysis Report Sunoco LP (SUN): Free Stock Analysis Report Imperial Oil Limited (IMO): Free Stock Analysis Report Marathon Petroleum Corporation (MPC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 24th, 2022

3 Stocks to Watch From the Prospering Accident & Health Insurance Industry

Higher claims frequency leading to upward pricing pressure, coupled with the adoption of technology, is likely to boost the performance of Zacks Accident and Health Insurance industry insurance players like AFL, UNM, and AMSF. The Zacks Accident and Health Insurance industry is expected to ride on the increase in underwriting exposure. Aflac Incorporated AFL, Unum Group UNM and Amerisafe Inc. AMSF should continue benefiting from prudent underwriting standards. However, a rise in claims frequency could weigh on the positives.The industry has been witnessing soft pricing over the past several quarters and the same is expected to continue for the remainder of the year. Nonetheless, a rise in claims due to business activities returning to normal levels is likely to increase pricing for this industry in the coming days. Also, the increasing adoption of technology in operations will help in the smooth functioning of the industry amid coronavirus-induced challenges.About the IndustryThe Zacks Accident and Health Insurance industry comprises companies that provide workers’ compensation insurance, mainly to employers operating in hazardous industries, such as construction, trucking, logging and lumber plus manufacturing and agriculture. These insurer also offer group, individual or voluntary supplemental insurance products. Workers' compensation is a form of accident insurance paid by employers without affecting employees’ pay. Claims are generally met by insurance companies or state-run workers’ compensation fund. Thus, these coverages benefit both employers and employees. While it boosts employees’ morale thus productivity, employers stand to benefit from lower claims costs. As awareness about the benefits of having such an accident and health insurance coverage rises, the future of accident and health insurers seems bright.3 Trends Shaping the Future of Accident & Health Insurance IndustryPricing Pressure to Continue: The worker compensation industry has been witnessing pricing pressure over the past several quarters. Given this soft pricing, the efforts to retain market share will again induce pricing pressure, which might curb top-line growth. Per Willis Towers Watson’s Commercial Lines Insurance Pricing Survey, workers’ compensation likely witnessed a slight price reduction in 2021. Per the survey, pricing at workers' compensation could be down 2% to up 4% in 2022.  With commercial and industrial activities back on track, demand for insurance coverage is likely to be on the rise.Claims Frequency Might Rise: The accident and health insurance space has witnessed growth over the years, primarily driven by an increase in benefits offered by employers. The right kind of workers’ compensation policy translates into personal care for injured workers, increased productivity, higher employee morale, lower turnover, reduced claims costs and less financial worry amid rising medical costs. Increasing underwriting exposure, sustained decrease in claims frequency rates attributable to a better working environment and conservative reserve levels have been boosting the industry’s performance. With workplace injury and illnesses decreasing, insurers could meet claims without putting margins under strain during this pandemic. However, with business activities getting normal and people returning to their workplaces, claims could be on the rise.Increasing Adoption of Technology: The industry is witnessing accelerated adoption of technology in operations. Telemedicine has gained pace amid the pandemic. Carriers started selling policies online that appeal to the tech-savvy population. Given the current pandemic, several organizations are working remotely to comply with social distancing norms. Electronic applications, e-signatures, electronic policy delivery, cloud computing and blockchain should help insurers gain a competitive edge. Nonetheless, higher spending on technological advancements will result in escalated expense ratios.Zacks Industry Rank Indicates Bright ProspectsThe group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all-member stocks, indicates encouraging near-term prospects. The Zacks Accident and Health Insurance industry, housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #107, which places it in the top 43% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group’s earnings growth potential. The industry’s earnings estimate for the current year has moved up 0.2% in a year’s time.We present a few stocks one can buy or retain, given their business advancement endeavors. But before that it’s worth taking a look at the industry’s performance and current valuation.Industry Outperforms Sector and S&P 500The Accident and Health Insurance industry has outperformed both the Zacks S&P 500 composite and its own sector over the past year. The stocks in this industry have collectively lost 4.2% in the past year compared with the Finance sector’s decline of 15.5% and the Zacks S&P 500 composite’s decrease of 12.7% over the same period.One-Year Price PerformanceCurrent ValuationOn the basis of a trailing 12-month price-to-book (P/B) ratio, commonly used for valuing insurance stocks, the industry is currently trading at 1.04X compared with the Zacks S&P 500 composite’s 5.65X and the sector’s 2.91X.Over the past five years, the industry has traded as high as 1.6X, as low as 0.58X and at the median of 1.15X.Price-to-Book (P/B) Ratio (TTM)Price-to-Book (P/B) Ratio (TTM) 3 Accident & Health Insurance Stocks to Keep an Eye onWe are presenting two Zacks Rank #2 (Buy) stocks from the Zacks Accident and Health Insurance industry and one Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Unum Group: Chattanooga, TN-based Unum Group provides long-term care insurance, life insurance, employer- and employee-paid group benefits and related services. The continued rollout of dental products and geographic expansion has been paying off as the acquired dental insurance businesses are growing in the United States and the United Kingdom. The Zacks Rank #2 insurer has an impressive VGM Score of A.The expected long-term earnings growth rate for Unum Group is 11.9%, better than the industry average of 8.4%. The Zacks Consensus Estimate for 2022 and 2023 earnings indicates a year-over-year increase of 17% and 14%, respectively. UNM delivered a trailing four-quarter earnings surprise of 22.06% on average. The consensus estimate for 2022 and 2023 has moved 1.6% and 0.2% north in the past 30 days, reflecting analysts’ optimism. The stock has risen 10.5% in a year.Price and Consensus: UNMAmerisafe:  DeRidder, LA-based Amerisafe is a specialty provider of workers’ compensation insurance. AMSF should continue to gain from its high hazard niche focus, small to mid-size employer focus, high hazard underwriting expertise and intensive claims management.A balance sheet with no debt provides Amerisafe plenty of financial flexibility to fund operations, meet financial obligations and weather shocks or unexpected expenses. The Zacks Consensus Estimate for 2022 has moved 3.9% north in the past 60 days. AMSF delivered a trailing four-quarter earnings surprise of 4.16 on average. The stock has lost 17.4% in a year. Amerisafe carries a Zacks Rank of 2.Price and Consensus: AMSF Aflac Incorporated: This Columbus, GA-based company offers voluntary supplemental health and life insurance products and operates through Aflac Japan and Aflac U.S. Aflac’s Argus buyout will provide it with a platform to build the company’s network of dental and vision products and further strengthen its U.S. segment.AFL delivered a trailing four-quarter earnings surprise of 12.05% on average and has an impressive VGM Score of A. The expected long-term earnings growth rate is pegged at 5%. The Zacks Consensus Estimate for 2022 has moved north by a cent in the past 30 days. The stock has lost 1.1% in a year. Aflac carries a Zacks Rank #3.Price and Consensus: AFL  7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Aflac Incorporated (AFL): Free Stock Analysis Report Unum Group (UNM): Free Stock Analysis Report AMERISAFE, Inc. (AMSF): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJun 24th, 2022

TPK conservative about 2H22 business prospects

Touch module maker TPK Holding is conservative about its business prospects for the second half of 2022 due to volatile macro environments, according to company chairman Michael Chiang......»»

Category: topSource: digitimesJun 24th, 2022

Trump"s media company is planning a streaming service featuring "non-woke" content such as "shows that embrace the Second Amendment"

The streaming service hopes to be a "non woke alternative" for conservatives and libertarians. Former President Donald TrumpAP Photo/Pablo Martinez Monsivais TMTG, the company behind Truth Social, is planning a streaming service to appeal to conservatives. Programming will include "shows that embrace the Second Amendment" and "Trump-specific shows." It will be "similar" to Netflix but will not "push some particular political ideology," an SEC filing says. Trump Media & Technology Group, the company behind former President Donald Trump's social media app Truth Social, recently laid out their plans for a new 'non-woke' streaming service called TMTG+. The subscription-based streaming service is set to be a "non-woke alternative to the programs offered by streaming services" like Netflix and Disney+. However, it will not " insist that programming push some particular political ideology," according to an SEC filing from Digital World Acquisition Corp, a SPAC or "blank check" firm, set to merge with TMTG.The streaming service will offer shows "that embrace the Second Amendment," "Trump-specific shows," and other topics that appeal to "conservative and/or libertarian views."It will also offer podcasts."TMTG+ intends to offer programs including, but not limited to blue-collar comedy, cancelled shows, Trump-specific programming, faith-based shows, family entertainment, shows that embrace the Second Amendment, and news."DWAC says TMTG+ will emphasize shows that "cancel 'cancel culture.'""Particularly, President Trump has stated that TMTG will stand up to 'cancel culture' and the 'self-righteous scolds.' Failure to realize this vision would adversely affect TMTG's brand and business prospects," the filing from DWAC said.TMTG began posting job ads for producers on May 11 for its streaming service, Rolling Stone previously reported. TMTG's previous venture, Truth Social, has been scrutinized for multiple issues, ranging from outages to technical problems, and reports of censorship.It has also been noted by DWAC multiple times that TMTG "may never achieve profitability." DWAC warned investors in a previous regulatory filing that Trump's history of failed business ventures meant that "There can be no assurances that TMTG will not also become bankrupt."Representatives for TMTG did not immediately respond to Insider's request for comment.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 27th, 2022

Saga Partners 1Q22 Commentary: Carvana And Redfin

Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio […] Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio is 112.0% net of fees compared to the S&P 500 Index of 122.7%. The annualized return since inception for the Saga Portfolio is 15.4% net of fees compared to the S&P 500’s 16.5%. Please check your individual statement as specific account returns may vary depending on timing of any contributions throughout the period. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Interpretation of Results I was not originally planning to write a quarterly update since switching to semi-annual updates a few years ago but given the current drawdown in the Saga Portfolio I thought our investors would appreciate an update on my thoughts surrounding the Portfolio and the current market environment in general. The Portfolio’s drawdown over the last several months has been hard not to notice even for those who follow best practices of only infrequently checking their account balance. Outperformance vs. the S&P 500 since inception has flipped to underperformance on a mark-to-market basis and the stock prices of our companies have continued to decline into the second quarter. In past letters I have spent a lot of time discussing the Saga Portfolio’s psychological approach to investing to help prepare for the inevitable chaos that will occur while investing in the public markets from time-to-time. It’s impossible to know why the market does what it does at any point in time. I would argue that the last two years could be considered pretty chaotic, both on the upside speculation and now what appears to be on the downside fear and panic. I will attempt to give my perspective on how events played out within the Saga Portfolio with an analogy. Let’s say that in 2019 we owned a fantastic home that was valued at $500,000. We loved it. It was in a great neighborhood with good schools for our kids. We liked and trusted our neighbors; in fact, we gave them a spare key in case of emergencies. It was the perfect home for us to live in for many years to come. Based on the neighborhood becoming increasingly attractive over time, it was likely that our home may be valued around $2 million in ~10 years from now. This is strong appreciation (15% IRR) compared to the average home, but this specific home and neighborhood had particularly strong long-term fundamental tailwinds that made this a reasonable expectation. Then in 2020 a global pandemic hit causing a huge disorientation in the housing market. For whatever reasons, the appraised value of our home almost immediately doubled to $1 million. Nothing materially changed about what we thought our home would be worth in 10 years, but now from the higher market value, the home would only appreciate at a lower 7% IRR assuming it would still be worth $2 million in 10 years. What were our options under these new circumstances? We could move and try to buy a new home that provided a higher expected return. However, the homes in the other neighborhoods that we really knew and liked also doubled in price, so they did not really provide any greater value. Also, the risk and hassle of moving for what may potentially only be modestly better home appreciation did not make sense. We could buy a home in a less desirable neighborhood where prices looked relatively cheaper, but we would not want to live long-term. Even if we decided to live there for many years, the long-term fundamental dynamics of the crummy neighborhood were weak to declining and it was uncertain if the property would appreciate at all despite its lower valuation. We could sell our home for $1 million and rent a place to live for the interim period while holding cash and waiting for the market to potentially correct. However, we did not know if, when, or to what extent the market would correct and the thought of renting a place temporarily for our family was unappealing. For the Saga family, we decided to stay invested in the home that we knew, loved, and still believed had similar, if not stronger prospects following the COVID-induced surge in demand in our neighborhood. Now, for whatever reason, the market views our neighborhood very poorly and the appraised value of our home declined to $250,000, below any previous appraisals. It seems odd because it is the exact same home and the fundamentals of the neighborhood are much stronger than several years ago, suggesting that the expected $2 million value in the future is even more probable than before. It is a very peculiar situation, but the market can do anything at any moment. Fortunately, the lower appraisal value does not impact how much we still love our home, neighborhood, schools, or what the expected future value will be. In fact, we prefer a lower value because our property taxes will be lower! One thing is for certain, we would never sell our home for $250,000 simply because the appraised value has declined from prior appraisals. We would also never dream of selling in fear that the downward price momentum continues and then hopefully attempt to buy it back one day for $200,000. We can simply sit tight for as long as we want while the neighborhood around us continues to improve fundamentally over time, fully expecting the value of our home to eventually go up with it. It just so happens humans are highly complex beings and do not always react in what an economist may consider a rational way. Our emotions are highly contagious. When someone smiles at you, the natural reaction is to smile back. When someone else is sad, you feel empathy. These are generally great innate characteristics for helping to build the strong relationships with friends and family that are so important throughout life. But it also means that when other people are scared, it also makes you feel scared. And when more and more people get scared, that fear can cascade exponentially and turn into panic, which can cause people to do some crazy things, especially when it comes to making long-term decisions. As fear spreads, all attention shifts from thinking about what can happen over the next 5-10+ years to the immediate future of what will happen over the next day or even hour. Of course, during times of panic, “this time is always different.” It may very well be the case, but the world can only end once. Historically speaking, things have tended to work out pretty well over time on average. I am by no means immune to these contagious feelings. My way of coping with how I am innately wired is by accepting this fact and then trying to know what I can and cannot control. A core part of my investing philosophy is that I do not know what the market will do next, and I never will. Inevitably the market or a specific stock will crash, as it does from time-to-time. This “not timing the market” philosophy or treating our public investments from the perspective of a private owner may feel like a liability during a drawdown, but it is this same philosophy of staying invested in companies we believe to have very promising futures which positions us perfectly for the inevitable recovery. Eventually, emotions and the business environment will normalize, and the storm will pass. It could be next quarter, year, or even in several years, but we will be perfectly positioned for the recovery, at which point the stock price lows will likely be long gone. The whole investing process improves if one can really take the long-term view. However, it is not natural for people to think long-term particularly when it comes to owning pieces of publicly traded companies. It is far more natural to want to act by jumping in and out of stocks in an attempt to outsmart others who are trying to outsmart you. When the market price of your ownership in a business is available and fluctuating wildly every single day, it is hard to ignore and not be influenced by it. While one can get lucky through speculation, the big money is made by investing, by owning great businesses and letting them compound owner’s capital over many years. As the market has evolved over the last few decades, there appears to be an ever-increasing percent of “investors” who are effectively short-term renters, turning over the companies in their portfolios so quickly that they never really know the business that lies below the surface of the stock. While more of Wall Street is increasingly focused on the next quarter, a potentially looming recession, the Fed’s next interest rate move, or trying to time the market’s rotation from one industry into another, we are trying to think about what our companies’ results will be in the year 2027, or better yet 2032 and beyond. The most significant advantage of investing in the public market is the ability to take advantage of it when an opportunity presents itself or to ignore the market when there is nothing to do. The key to success is never giving up this advantage. You must be able to play out your hand and not be forced to sell your assets at fire sale prices. Significant portfolio declines are a good reminder of the importance of only investing money that you will not need for many years. This prevents one from being in a position where it is necessary to liquidate when adverse psychology has created unusually low valuations. However, we do not want to simply turn a blind eye to stock price declines of 50% or more and dig our heals into the ground believing the market is just being irrational. When the world is screaming at you that it believes your part ownership in these companies is worth significantly less than the market believed not too long ago, we attempt to understand if we are missing something by continually evaluating the long-term outlooks of our companies using all the relevant information that we have today from a first principles basis. Portfolio Update Instead of frequently checking a stock’s price to determine whether the company is making progress, I prefer looking to the longer-term trends of the business results. There will be stronger and weaker quarters and years since business success rarely moves up and to the right in a perfectly straight line. As a company faces headwinds or tailwinds from time-to-time, the stock price may fluctuate wildly in any given year, however the underlying competitive dynamics and business models that drive value will typically change little. Regarding our companies as a whole, first quarter results reflected a general softness in certain end markets, including the used car, real estate, and advertising markets. However, the Saga Portfolio’s companies, on average, provide a superior customer value proposition difficult for competitors to match. Most of them have a cost advantage compared to competitors; therefore, the worse it gets for the economy, the better it gets for our companies’ respective competitive positions over the long-term. For example, first quarter industry-wide used car volumes declined 15% year-over-year while Carvana’s retail units increased 14%. Existing home sales decreased 5% during the quarter while Redfin’s real estate transactions increased 1%. Digital advertising is expected to grow 8-14% in 2022 while the Trade Desk grew Q1’22 revenues 43% and is expected to grow them more than 30% for the full year 2022. While industry-wide TV volumes remain below 2019 pre-COVID levels, Roku gained smart TV market share sequentially during the quarter, continuing to be the number one TV operating system in the U.S. and number one TV platform by hours streamed in North America. Weaker industry conditions will inevitably impact our companies’ results; however, our companies should continue to take market share and come out on the other side of any potential economic downturn stronger than when they went in. For the portfolio update, I wanted to provide a more in-depth update on Carvana and Redfin which have both experienced particularly large share price declines and have recent developments that are worth reviewing. Carvana I first wrote about Carvana Co (NYSE:CVNA) in this 2019 write-up. I initially explained Carvana’s business, superior value proposition compared to the traditional dealership model, attractive unit economics, and how they were uniquely positioned to win the large market opportunity. Since then, Carvana has by far exceeded even my most optimistic initial expectations. While the company did benefit following COVID in the sense that customers’ willingness to buy and sell cars through an online car dealer accelerated, the operating environment over the last two years has been very challenging. Carvana executed exceedingly well considering the shifting customer demand in what is a logistically intensive operation and what has been a tight inventory environment due to supply chain issues restricting new vehicle production. Sales, gross profits, and retail units sold have grown at a remarkable 104%, 151%, and 87% CAGR over the last five years, respectively. Source: Company filings Shares have come under pressure following their first quarter results, which reflected larger than expected losses. The quarter was negatively impacted by a combination of COVID-related logistical issues in their network that started towards the end of the fourth quarter as Omicron cases spread. Employee call off rates related to Omicron reached an unprecedented 30% that led to higher costs and supply chain bottlenecks. As less inventory was available due to these problems, it led to less selection and longer delivery times, lowering customer conversion rates. Additionally, interest rates increased at a historically fast rate during the first quarter which negatively impacted financing gross profits. Carvana originates loans for customers and then sells them to investors at a later date. If interest rates move materially between loan origination and ultimately selling those loans, it can impact the margin Carvana earns on underwriting those loans. Industry-wide used car volumes were also down 15% year-over-year during the first quarter. While Carvana continues to grow and take market share, its retail unit volume growth was slower than initially anticipated, up only 14% year-over-year. Carvana has been in hyper growth mode since inception and based on the operational and logistical requirements of the business, typically plans, builds, and hires for expected capacity 6-12 months into the future. This has historically served Carvana well given its exceptionally strong growth, but when the company plans and hires for higher capacity than what occurs, it can lead to lower retail gross profits and operating costs per unit sold. When combined with lower financing gross profits in the quarter from rising interest rates, losses were greater than expected. In February, Carvana announced a $2.2 billion acquisition of ADESA (including an additional $1 billion plan to build out the reconditioning sites) which had been in the works for some time. ADESA is a strategic acquisition to help accelerate Carvana’s footprint expansion across the country, growing its capacity from 1.0 million units at the end of Q1’22 to 3.2 million units once complete over the next several years. It is unfortunate the acquisition timing followed a difficult quarter that had greater than expected losses, combined with a generally tighter capital market environment. Carvana ended up raising $3.25 billion in debt ($2.2 billion for the acquisition and $1 billion for the buildout) at a higher than initially expected 10.25% interest rate. Given these higher financing costs and first quarter losses, they issued an additional $1.25 billion in new equity at $80 per share, increasing diluted shares outstanding by ~9%. Despite the short-term speedbumps surrounding logistical issues, softer industry-wide demand, and a higher cost of capital to acquire ADESA, Carvana’s long-term outlook not only remains intact but looks even more promising than before. To better understand why this is the case and where Carvana is in its lifecycle, it helps to provide a little background on the history of retail. While e-commerce is a more recent phenomena that developed from the rise of the internet in the 1990s, the retail industry has undergone several transformations throughout history. In retailing, profitability is determined by two factors: the margins earned on inventory and the frequency with which they can turn inventory. Each successive retail transformation had a similar economic pattern. The newer model had greater operating leverage (higher fixed costs, lower variable costs). This resulted in greater economies of scale (lower cost per unit) and therefore greater efficiency (higher asset turnover) with size that enabled them to charge lower prices (lower gross margins) than the preceding model and still provide an attractive return on capital. The average successful department store earned gross margins of ~40% and turned inventory about 3x per year, providing ~120% annual return on the capital invested in inventory. The average successful big box retailer earned ~20% gross margins and turned its inventory 5x per year. Amazon retail earns ~10% gross margins (including fulfillment costs in COGS) and turns inventory at a present rate of 12x times annually. The debate that surrounds any subscale retailer, particularly in e-commerce, is whether they have enough capital/runway to build out the required infrastructure and then scale business volume to spread fixed costs over enough units. Before reaching scale, analysts may point to an online business’ lower price points (“how can they charge such low prices?!”), higher operating costs per unit (“they lose so much money per item!”), and ongoing losses and capital investments (“they spend billions of dollars and still have not made any money!”) as evidence that the model does not make economic sense. Who can blame them since the history books are filled with companies that never reached scale? However, if the retailer does build the infrastructure and there is sufficient demand to spread fixed costs over enough volume, the significant capital investment and high operating leverage creates high barriers to entry. If we look to Amazon as the dominant e-commerce company today, once the infrastructure is built and reaches scale, there is little marginal cost to serve any prospective customer with an internet connection located within its delivery footprint. For this reason, I have always been hesitant to invest in any e-commerce company that Amazon may be able to compete with directly, which is any mid-sized product that fits in an easily shippable box. As it relates to used car retailing, the infrastructure required to ship and recondition cars is unique, and once built, the economies of scale make it nearly impossible for potential competitors to replicate. Carvana is in the very early stages of building out its infrastructure. There is clearly demand for its attractive customer value proposition. It has demonstrated an ability to scale fixed costs in earlier cohorts as utilization of capacity increases, providing attractive unit economics at scale. Newer market cohorts are tracking at a similar, if not faster market penetration rate as earlier cohorts. Carvana is still investing heavily in building out a nationwide hub-and-spoke transportation network and reconditioning facilities. In 2021 alone, Carvana grew its balance sheet by $4 billion as it invested in its infrastructure while also reaching EBITDA breakeven for the first time. The Amazon story is a prime example (pun intended) of a new and better business model (more attractive unit economics) that delivered a superior value proposition and propelled the company ahead of its competition, similar to the underlying dynamics occurring in the used car industry today. Amazon invested heavily in both tangible and intangible growth assets that depressed earnings and cash flow in its earlier years (and still today) while growing its earning power and the long-term value of the business. The question is, does Carvana have enough capital/liquidity to build out its infrastructure and scale business volume to then generate attractive profits and cash flow? Following Carvana’s track record of scaling operating costs and reaching EBITDA breakeven in 2021, the market was no longer concerned about its liquidity position or the sustainability of its business model. However, the recent quarterly loss combined with taking on $3 billion in debt to buildout the 56 ADESA locations across the country raises the question of whether Carvana has enough liquidity to reach scale. Carvana’s current stock price clearly reflects the market discounting the probability that Carvana will face liquidity issues and therefore have to raise further capital at unfavorable terms. However, I think if you look a little deeper, Carvana has clearly demonstrated highly attractive unit economics. It has several levers to pull to protect it from any liquidity concerns if needed. The $2.6 billion in cash (as well as $2 billion in additional available liquidity in unpledged real estate and other assets) it has following the ADESA acquisition, is more than enough to sustain a potentially prolonged decline in used car demand. The most probable scenario over the next several quarters is that Carvana will address its supply chain and logistical issues that were largely due to Omicron. As the logistical network normalizes, more of Carvana’s inventory will be available to purchase on their website with shorter delivery times, which will increase customer conversion rates. This will lead to selling more retail units, providing higher inventory turnover and lower shipping costs, and therefore gross profit per unit will recover from the first quarter lows. Other gross profit per unit (which primarily includes financing) will also normalize in a less volatile interest rate environment. Combined total gross profit per unit should then approach normalized levels by the end of the year/beginning of 2023 (~$4,000+ per unit). Like all forms of leverage, operating leverage works both ways. For companies with higher operating leverage, when sales increase, profits will increase at a faster rate. However, if sales decrease, profits will decrease at a faster rate. While Carvana has high operating leverage in the short-term, they do have the ability adjust costs in the intermediate term to better match demand. When demand suddenly shifts from plan, it will have a substantial impact on current profits. First quarter losses were abnormally high because demand was lower than expected. Although, one should not extrapolate those losses far into the future because Carvana has the ability to better adjust and match its costs structure to a lower demand environment if needed. As management better matches costs with expected demand, operating costs as a whole will remain relatively flat if not decline throughout the year as management has already taken steps to lower expenses. As volumes continue to grow at the more moderate pace reflected in the first quarter and SG&A remains flat to slightly declining, costs per unit will decline with Carvana reaching positive EBITDA per unit by the second half of 2023 in this scenario. Source: Company filing, Saga Partners Source: Company filing, Saga Partners With the additional $3.2 billion in debt, Carvana will have a total interest expense of ~$600 million per year, assuming no paydown of existing revolving facilities or net interest income on cash balances. Management plans on spending $1 billion in capex to build out the ADESA locations. They are budgeting for ~$40 million in priority and elective capex per quarter going forward suggesting the build out will take ~6 years. Total capex including maintenance is expected to be $50 million a quarter. Carvana would reach positive free cash flow (measured as EBITDA less interest expense less total Capex) by 2025. Note this assumes the used car market remains depressed throughout 2022 and then Carvana’s retail unit growth increases to 25% a year for the remainder of the forecast and no benefit in lower SG&A or increased gross profit per unit from the additional ADESA locations was assumed. Stock based compensation was included in the SG&A below so actual free cash flow would be higher than the chart indicates. Source: Company filings, Saga Partners Note: Free cash flow is calculated as EBITDA less interest expense less capex After the close of the ADESA acquisition, Carvana has $2.6 billion in cash (plus $2 billion in additional liquidity from unpledged assets if needed). Assuming the above scenario, Carvana has plenty of cash to endure EBITDA losses over the next year and a half, interest payments, and capex needs. Source: Company filings, Saga Partners The above scenario does not consider the increasing capacity that Carvana will have as it continues to build out the ADESA locations. After building out all the locations, Carvana will be within one hundred miles of 80% of the U.S. population. This unlocks same-day and next-day delivery to more customers, leading to higher customer conversion rates, higher inventory turn, lower risk of delivery delays, and lower shipping costs, which all contribute to stronger unit economics. Customer proximity is key. Due to lower transport costs, faster turnaround times on acquired vehicles, and higher conversion from faster delivery speeds, a car picked up or delivered within two hundred miles of a recondition center generates $750 more profit than an average sale. It is possible that industry-wide used car demand remains depressed or even worsens for an extended period. If this were the case, management has the ability to further optimize for efficiency by lowering operating costs to better match demand. This is what management did following the COVID demand shock in March 2020. The company effectively halted corporate hiring and tied operational employee hours to current demand as opposed to future demand. During the months of May and June 2020, SG&A (ex. advertising expense and D&A) per unit was $2,600, far lower than the $3,440 reported in 2020 or $3,654 in 2021. Carvana has also historically operated between 50-60% capacity utilization, indicating further room to scale volumes across its existing infrastructure without the need for materially greater SG&A expenses. Advertising expense in older cohorts reached ~$500 per unit, compared to the $1,126 reported for all of 2021, while older cohorts still grew at 30%+ rates. If needed, Carvana could improve upon the $2,600 SG&A plus $500 advertising expense ($3,100 in total) per unit at its current scale and be far below gross profit per unit even if used car demand remains depressed for an extended period of time. When management optimizes for efficiency as opposed to growth, it has the ability to significantly lower costs per unit. Carvana has highly attractive unit economics and I fully expect management will take the needed measures to right size operating costs with demand. They recently made the difficult decision to layoff ~2,500 employees, primarily in operations, to better balance capacity with the demand environment. If we assume it takes six years to fully build out the additional ADESA reconditioning locations, Carvana will have a total capacity of 3.2 million units in 2028. If Carvana is running at 90% utilization it could sell 2.9 million retail units (or ~7% of the total used car market). If average used car prices decline from current levels and then follow its more normal longer-term price appreciation trends, the average 2028 Carvana used car price would be ~$23,000 and would have a contribution profit of ~$2,000 per unit at scale. This would provide nearly $5.6 billion in EBITDA. After considering expected interest expense, maintenance capex, and taxes, it would provide over $4 billion in net income. If Carvana realizes this outcome in six years, the company looks highly attractive (perhaps unreasonably attractive) compared to its current $7 billion market cap or $10 billion enterprise value (excluding asset-based debt). Redfin I recently wrote about Redfin Corp (NASDAQ:RDFN) in this December 2021 write-up. I explained how Redfin has increased the productivity of real estate agents by integrating its website with its full-time salaried agents and then funneling the demand aggregated on its website to agents. Redfin agents do not have to spend time prospecting for business but can rather spend all their time servicing clients throughout the process of buying and selling a home. Since Redfin agents are three times more productive than a traditional agent, Redfin is a low-cost provider, i.e., it costs Redfin less to close a transaction than a traditional brokerage at scale. It is a similar concept as the higher operating leverage of e-commerce relative to brick & mortar retailers. Redfin has higher operating leverage compared to the traditional real estate brokerage. Real estate agents are typically contractors for a brokerage. They are largely left alone to run their own business. Agents have to prospect for clients, market/advertise listings, do showings, and service clients throughout each step of the real estate transaction. Everything an agent does is largely a variable cost because few of their tasks are automated. Redfin, on the other hand, turned prospecting for demand, marketing/advertising listings, and investments in technology to help agents and customers throughout the transaction into more of a fixed cost. These costs are scalable and become a smaller cost per transaction as total transaction volumes grow across the company. Because Redfin is a low-cost provider, it has a relative advantage over traditional brokerages. No other real estate brokerage has lowered or attempted to lower the costs of transacting real estate in a similar way. This cost advantage provides Redfin with options about how to share these savings on each transaction. Redfin has primarily shared the cost savings with customers by charging lower commission rates than traditional brokerages. By offering a similar, if not superior, service to customers compared to other brokerages yet charging lower fees, it naturally attracts further demand which then provides Redfin with the ability to scale fixed costs per transaction even more, further widening their cost advantage to other brokerages. So far, the majority of those cost savings are shared with home sellers as opposed to homebuyers. Sellers are more price sensitive than homebuyers because the buyer’s commission is already baked into the seller’s contract and therefore buyers have not directly paid commissions to agents historically. Also, growing share of home listings is an important component of controlling the real estate transaction. The seller’s listing agent is the one who controls the property, decides who sees the house, and manages the offers and negotiations. Therefore, managing more listings enables Redfin to have more control over the transaction and further streamline/reduce inefficiencies for the benefit of both potential buyers and sellers. Redfin also spends some of their cost savings by reinvesting them back into the company by hiring software engineers to build better technology to continue to lower the cost of the transaction. This may include building tools for agents to service clients better, improving the web portal and user interfaces, on-demand tours for buyers to see homes first, automation to give homeowners an immediate RedfinNow offer, etc. Redfin also invests in building other business segments like mortgage, title forward, and iBuying which provide a more comprehensive real estate offering for customers which attracts further demand. So far, the lower costs per transaction have not been shared with shareholders in the form of dividends or share repurchases, and for good reason. In theory, Redfin could charge industry standard prices and increase revenue immediately by 30-40% which would drop straight to the bottom-line assuming demand would remain stable. However, giving customers most of the savings through lower commissions has obviously been one of the drivers for attracting demand and growing transaction volume, particularly for home sellers. The greater the number of transactions, the lower the fixed costs per transaction, which further increases Redfin’s cost advantage compared to traditional brokerages, which provides Redfin with even more money per transaction to share with either customers, employees, and eventually shareholders. With just over 1% market share, Redfin should be reinvesting in growing share which will increase the value of the business and inevitably benefit long-term owners of the company. Redfin’s stock price has experienced an especially large decline this year. I typically prefer to not attempt to place an explanation or narrative on short-term stock price movements, but I will do it anyways given the substantial drop. There are primarily two factors contributing to the market’s negative view of the company: first, the market currently dislikes anything connected to the real estate industry and second, the market currently has little patience for any company that reports net losses regardless of the underlying economics of the business. Real estate is currently a hated part of the market, and potentially for good reason. It is a cyclical industry, and the economy is potentially either entering or already in a recession. Interest rates are expected to continue to rise, negatively impacting home affordability, while an imbalance in the housing supply persists with historically low inventory available helping fuel an unsustainable rise in housing prices. From a macro industry-wide perspective, the real estate market will ebb and flow with the economy over time, but demand to buy, sell, and finance homes will always exist. I do not have the ability to determine how aggregate demand for buying or selling a home will change from year-to-year, but I do know that people have to live somewhere and if Redfin is able to help them find, buy or rent, and finance where they live better than alternative service providers, then the company will gain share and grow in value overtime. Redfin has also reported abnormally high losses of $91 million in the first quarter for which the current market has little appetite. It feeds the argument that Redfin does not have a sustainable business model. While losses can be a sign of unsustainable economics, that is not the case for Redfin. There are several factors that are all negatively hitting the income statement at the same time, and all should improve materially over the next year or two. Higher first quarter losses largely reflect: Agent Productivity: First quarter brokerage sales increased 7% year-over-year, but lead agent count increased 20%, which meant agents were less productive, leading to real estate gross profits declining $17 million from the prior year. Lower productivity was a result of a steeper ramp in agent hiring towards the end of the year against lower seasonal transaction volumes. It typically takes about six months for new agents to get trained and start closing transactions and then contributing to gross profits. Any accelerated hiring, particularly during a softer macro environment, will be a headwind while Redfin is paying upfront costs before any revenue is being generated. Further, closing transactions has been difficult particularly for buyers, which is where most new agents start. The housing market has been unbalanced where there is not enough inventory. A home for sale will typically receive many competing offers which makes it difficult for a buyer to win the deal. Since Redfin agents are mostly paid on commission (~20% salary plus the remainder being commission), it has been more difficult for new agents to earn a sufficient income in the current real estate environment. In response, Redfin started paying $1,500 retention bonuses for new agents who could guide customers to the point of bidding on a home, regardless of whether those bids win. While the bonus may impact gross profits in the near-term before a customer closes a transaction, it will not impact gross margins in the long-term when a transaction eventually takes place. Going forward, agent hiring will return to more normal rates and the larger number of new hires from recent quarters will ramp up which will improve productivity and gross profits. RentPath: Redfin bought RentPath out of bankruptcy for $608 million in April 2021, primarily to incorporate its rentals on its website which helps Redfin.com show up higher on Internet real estate searches. Prior to the acquisition, RentPath had no leadership direction for several years and declining sales and operating losses. RentPath had new management start in August 2021 and was integrated into Redfin.com in March. It finally started to see operational improvement with sales increasing in February and March year-over-year for the first time since 2019 despite a significant decrease in marketing expenses. While RentPath had $17 million in losses during the first quarter and is expected to have $22 million in losses in the second quarter, operations will improve going forward. Management made it clear that RentPath will be a contributor to net profits in its own right and not just a driver of site traffic and demand to Redfin’s brokerage business. Mortgage: A recent major development was the acquisition of Bay Equity for $135 million in April. Redfin was historically building out its mortgage business from scratch but after struggling to scale the operation decided to buy Bay Equity. Redfin was spending $13 million per a year on investing in its legacy mortgage business but going forward, mortgage will now be a net contributor to profits with Bay expected to provide $4 million in profit in the second quarter. The greater implication of having a scaled mortgage underwriter that is integrated with the real estate broker is that they can work together to streamline and expedite the transaction closing which has become an increasingly important value proposition for customers. Looking just a little further into the future, having a scaled and integrated mortgage underwriter can provide Redfin with the capability of providing buyers with the equivalent of an all-cash offer to sellers. Prospective homebuyers who offer all-cash offers to sellers are four times as likely to win the bid and sellers will often accept a lower price from an all-cash buyer vs. one requiring a mortgage. A common problem that many homeowners face is that when they are looking to move, it is difficult to get approved for a second mortgage while holding the current one. Much of their equity is locked in their current home. Frequently, a homebuyer wins an offer on a new home and then is in mad dash to sell their existing home in order to get the financing to work. It is not ideal to attempt to sell your home as fast as possible because it decreases the chance of getting the best price possible. A solution that Redfin could offer as a customer’s agent and underwriter is provide bridge financing between when a customer buys their new home and is then trying to sell their existing home and is therefore paying on two mortgages. Redfin would be able to make a reasonable appraisal for what a customer’s existing home will sell for (essentially what Redfin already does with iBuying) and underwriting the incremental credit exposure they are willing to provide the buyer. The buyer would then have “Redfin Cash” which would work like a cash offer. If this service helps buyers win a bid four times more often, it would even further differentiate Redfin’s value proposition and attract further demand. At least in the near-term, the mortgage segment will go from being a loss center to a contributor to net profits as well as further improving Redfin’s customer value proposition. Restructuring and transaction costs: Redfin had $6 million in restructuring expenses related to severance with RentPath and the mortgage business as well as closing the Bay Equity acquisition. $4 million in restructuring expenses are expected in the second quarter but these expenses will go away in future quarters. The combination of the above factors provided the headline $91 million net loss for the first quarter. Larger than normal losses between $60-$72 million are still expected in the second quarter. However, going forward losses are expected to continue to improve materially. While Redfin is not done investing in improving its service offerings, it should benefit from the significant investments it has already made over the last 16 years. Redfin has been building and supporting a nationwide business that only operated in parts of the country and had to incur large upfront costs. Going forward, it will benefit from the operating leverage baked into its cost structure with gross profits expected to grow twice as fast as overhead operating expenses. Redfin is expected to be cash flow breakeven in 2022 and provide net profits starting in 2024. Redfin has built a great direct to consumer acquisition tool that is unmatched by any real estate broker. It has spent the costs to acquire the customer and has now built out the different services to provide customers any of the real estate services that they may need, whether that is one or a combination of brokerage services, mortgage underwriting, title forward, iBuying, or rental search. Being able to monetize each customer that it has already acquired by offering them any of these services provides Redfin with a better return on customer acquisition costs that no other competitor is able to do to the same extent. Additionally, these real estate services work better when they are integrated under the same company. One does not have to dig very deep to see how attractive Redfin’s shares are currently priced. Shares are now selling around all-time historic lows since its IPO in August 2017. The prior all-time lows were reached during the COVID crash which was a time the world was facing an unknown pandemic that would shut down the economy and potentially put us through a great depression. At its current $1.2 billion market cap, Redfin is selling for 3x expected 2022 real estate gross profits, or 4x its current $1.7 billion enterprise value (excluding asset-based debt). Both are far below the historic average of 15x (which excludes peak multiples reached towards the end of 2020 and early 2021), or the previous all-time low of 6x reached in the depths of March 2020. If we assume Redfin can raise brokerage commissions by 30%, in line with traditional brokerage commission rates, and it does not lose business, Redfin would be able to provide ~20% operating margins. If we take a more conservative view and say Redfin can earn 10% net margins on its 2022 expected real estate revenues of $990 million, it would provide $99 million in net profits, providing a current 12x price-to-earnings ratio. This is for a company that has a long track record of being able to grow 20%+ a year on average, consistently gains market share each quarter, and has barely monetized its significant upfront investments and fixed costs with a long runway to continue to scale. This also does not place any value on its mortgage or iBuying segments which are now contributors to gross profits. There may be macro risks as well as other concerns today, however Redfin’s business and relative competitive advantage have never been stronger. The net losses reported are not representative of Redfin’s true underlying earning power. Redfin has untapped pricing power, an increasingly attractive customer value proposition, and a growing competitive advantage compared to alternative brokerages, which will help Redfin to continue to grow and take market share in what is a very large market. Conclusion Of course, the future can look scary, as it often does when headlines jump from one risk to the other. Despite what may be happening in the macro environment, our companies on average are stronger than they have ever been and are now selling for what we believe are the most attractive prices we have seen relative to their intrinsic value. I have no idea what shares will do in the near-term and I never will. Stock prices can swing wildly for many reasons, and sometimes seemingly for no reason at all. They can diverge, sometimes significantly from their true underlying value. I have no idea when sentiment will shift from optimism to pessimism and then back to optimism. This is what keeps us invested in both good times and in bad. The current selloff can continue further, but assuming our companies continue to execute over the coming years by winning market share and earning attractive returns on their investment spending, the market’s sentiment surrounding our portfolio companies will eventually reflect their underlying fundamentals. I will continue to look towards the longer-term operating results of our companies and not to the movements in their stock price as feedback to whether our initial investment thesis is playing out as expected. While the market can ignore or misjudge business success for a certain period, it eventually has to realize it. During times of greater volatility and periods of large drawdowns, I am reminded of how truly important the quality of our investor base is. It is completely natural to react in certain ways to rising or declining stock prices. It takes a very special investor base to look past near-term volatility and to trust us to make very important decision on their behalf as we continually try to increase the value of the Saga Portfolio over the long-term. As always, I am available to catch up or discuss any questions you may have. Sincerely, Joe Frankenfield Saga Partners Updated on May 16, 2022, 4:44 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 17th, 2022

The Failure Of Fiat Currencies & The Implications For Gold & Silver

The Failure Of Fiat Currencies & The Implications For Gold & Silver Authored by Alasdair Macleod via GoldMoney.com, This is the background text of my Keynote Speech given yesterday to European Gold Forum yesterday, 13 April. To explain why fiat currencies are failing I started by defining money. I then described the relationship between fiat money and its purchasing power, the role of bank credit, and the interests of central banks. Undoubtedly, the recent sanctions over Russia will have a catastrophic effect for financialised currencies, possibly leading to the end of fifty-one years of the dollar regime. Russia and China plan to escape this fate for the rouble and yuan by tying their currencies to commodities and production instead of collapsing financial assets. The only way for those of us in the West to protect ourselves is with physical gold, which over time is tied to commodity and energy prices. What is money? To understand why all fiat currency systems fail, we must start by understanding what money is, and how it differs from other forms of currency and credit. These are long-standing relationships which transcend our times and have their origin in Roman law and the practice of medieval merchants who evolved a lex mercatoria, which extended money’s legal status to instruments that evolved out of money, such as bills of exchange, cheques, and other securities for money. And while as circulating media, historically currencies have been almost indistinguishable from money proper, in the last century issuers of currencies split them off from money so that they have become pure fiat. At the end of the day, what constitutes money has always been determined by its users as the means of exchanging their production for consumption in an economy based on the division of labour. Money is the bridge between the two, and while over the millennia different media of exchange have come and gone, only metallic money has survived to be trusted. These are principally gold, silver, and copper. Today the term usually refers to gold, which is still in government reserves, as the only asset with no counterparty risk. Silver, which as a monetary asset declined in importance as money after Germany moved to a gold standard following the Franco-Prussian war, remains a monetary metal, though with a gold to silver ratio currently over 70 times, it is not priced as such. For historical reasons, the world’s monetary system evolved based on English law. Britain, or more accurately England and Wales, still respects Roman, or natural law with respect to money. To this day, gold sovereign coins are legal tender. Strictly speaking, metallic gold and silver are themselves credit, representing yet-to-be-spent production. But uniquely, they are no one’s liability, unlike banknotes and bank deposits. Metallic money therefore has this exceptional status, and that fact alone means that it tends not to circulate, in accordance with Gresham’s Law, so long as lesser forms of credit are available. Money shares with its currency and credit substitutes a unique position in criminal law. If a thief steals money, he can be apprehended and charged with theft along with any accomplices. But if he passes the money on to another party who receives it in good faith and is not aware that it is stolen, the original owner has no recourse against the innocent receiver, or against anyone else who subsequently comes into possession of the money. It is quite unlike any other form of property, which despite passing into innocent hands, remains the property of the original owner. In law, cryptocurrencies and the mooted central bank digital currencies are not money, money-substitutes, or currencies. Given that a previous owner of stolen bitcoin sold on to a buyer unaware it was criminally obtained can subsequently claim it, there is no clear title without full provenance. In accordance with property law, the United States has ruled that cryptocurrencies are property, reclaimable as stolen items, differentiating cryptocurrencies from money and currency proper. And we can expect similar rulings in other jurisdictions to exclude cryptocurrencies from the legal status as money, whereas the position of CBDCs in this regard has yet to be clarified. We can therefore nail to the floor any claims that bitcoin or any other cryptocurrency can possibly have the legal status required of money. Under a proper gold standard, currency in the form of banknotes in public circulation was freely exchangeable for gold coin. So long as they were freely exchangeable, banknotes took on the exchange value of gold, allowing for the credit standing of the issuer. One of the issues Sir Isaac Newton considered as Master of the Royal Mint was to what degree of backing a currency required to retain credibility as a gold substitute. He concluded that that level should be 40%, though Ludwig von Mises, the Austrian economist who was as sound a sound money economist as it was possible to be appeared to be less prescriptive on the subject. The effect of a working gold standard is to ensure that money of the people’s choice is properly represented in the monetary system. Both currency and credit become bound to its virtues. The general level of prices will fluctuate influenced by changes in the quantity of currency and credit in circulation, but the discipline of the limits of credit and currency creation brings prices back to a norm. This discipline is disliked by governments who believe that money is the responsibility of a government acting in the interests of the people, and not of the people themselves. This was expressed in Georg Knapp’s State Theory of Money, published in 1905 and became Germany’s justification for paying for armaments by inflationary means ahead of the First World War, and continuing to use currency debasement as the principal means of government finance until the paper mark collapsed in 1923. Through an evolutionary process, modern governments first eroded then took away from the public for itself the determination of what constitutes money. The removal of all discipline of the gold standard has allowed governments to inflate the quantities of currency and credit as a means of transferring the public wealth to itself. As a broad representation of this dilution, Figure 1 shows the growth of broad dollar currency since the last vestige of a gold standard under the Bretton Woods Agreement was suspended by President Nixon in August 1971. From that date, currency and bank credit have increased from $685 billion to $21.84 trillion, that is thirty-two times. And this excludes an unknown increase in the quantity of dollars not in the US financial system, commonly referred to as Eurodollars, which perhaps account for several trillion more. Gold priced in fiat dollars has risen from $35 when Bretton Woods was suspended, to $1970 currently. A better way of expressing this debasement of the dollar is to say that priced in gold, the dollar has lost 98.3% of its purchasing power (see Figure 4 later in this article). While it is a mistake to think of the relationship between the quantity of currency and credit in circulation and the purchasing power of the dollar as linear (as monetarists claim), not only has the rate of debasement accelerated in recent years, but it has become impossible for the destruction of purchasing power to be stopped. That would require governments reneging on mandated welfare commitments and for them to stand back from economic intervention. It would require them to accept that the economy is not the government’s business, but that of those who produce goods and services for the benefit of others. The state’s economic role would have to be minimised. This is not just a capitalistic plea. It has been confirmed as true countless times through history. Capitalistic nations always do better at creating personal wealth than socialistic ones. This is why the Berlin Wall was demolished by angry crowds, finally driven to do so by the failure of communism relative to capitalism just a stone’s throw away. The relative performance of Hong Kong compared with China when Mao Zedong was starving his masses on some sort of revolutionary whim, also showed how the same ethnicity performed under socialism compared with free markets. The relationship between fiat currency and its purchasing power One can see from the increase in the quantity of US dollar M3 currency and credit and the fall in the purchasing power measured against gold that the government’s monetary statistic does not square with the market. Part of the reason is that government statistics do not capture all the credit in an economy (only bank credit issued by licenced banks is recorded), dollars created outside the system such as Eurodollars are additional, and market prices fluctuate. Monetarists make little or no allowance for these factors, claiming that the purchasing power of a currency is inversely proportional to its quantity. While there is much truth in this statement, it is only suited for a proper gold-backed currency, when one community’s relative valuations between currency and goods are brought into line with the those of its neighbours through arbitrage, neutralising any subjectivity of valuation. The classical representation of the monetary theory of prices does not apply in conditions whereby faith in an unbacked currency is paramount in deciding its utility. A population which loses faith in its government’s currency can reject it entirely despite changes in its circulating quantity. This is what wipes out all fiat currencies eventually, ensuring that if a currency is to survive it must eventually return to a credible gold exchange standard. The weakness of a fiat currency was famously demonstrated in Europe in the 1920s when the Austrian crown and German paper mark were destroyed. Following the Second World War, the Japanese military yen suffered the same fate in Hong Kong, and Germany’s mark for a second time in the mid 1940s. More recently, the Zimbabwean dollar and Venezuelan bolivar have sunk to their value as wastepaper — and they are not the only ones. Ultimately it is the public which always determines the use value of a circulating medium. Figure 2 below, of the oil price measured in goldgrams, dollars, pounds, and euros shows that between 1950 and 1974 a gold standard even in the incomplete form that existed under the Bretton Woods Agreement coincided with price stability. It took just a few years from the ending of Bretton Woods for the consequences of the loss of a gold anchor to materialise. Until then, oil suppliers, principally Saudi Arabia and other OPEC members, had faith in the dollar and other currencies. It was only when they realised the implications of being paid in pure fiat that they insisted on compensation for currency debasement. That they were free to raise oil prices was the condition upon which the Saudis and the rest of OPEC accepted payment solely in US dollars. In the post-war years between 1950 and 1970, US broad money grew by 167%, yet the dollar price of oil was unchanged for all that time. Similar price stability was shown in other commodities, clearly demonstrating that the quantity of currency and credit in circulation was not the sole determinant of the dollar’s purchasing power. The role of bank credit While the relationship between bank credit and the sum of the quantity of currency and bank reserves varies, the larger quantity by far is the quantity of bank credit. The behaviour of the banking cohort therefore has the largest impact on the overall quantity of credit in the economy. Under the British gold standard of the nineteenth century, the fluctuations in the willingness of banks to lend resulted in periodic booms and slumps, so it is worthwhile examining this phenomenon, which has become the excuse for state intervention in financial markets and ultimately the abandonment of gold standards entirely. Banks are dealers in credit, lending at a higher rate of interest than they pay to depositors. They do not deploy their own money, except in a general balance sheet sense. A bank’s own capital is the basis upon which a bank can expand its credit. The process of credit creation is widely misunderstood but is essentially simple. If a bank agrees to lend money to a borrowing customer, the loan appears as an asset on the bank’s balance sheet. Through the process of double entry bookkeeping, this loan must immediately have a balancing entry, crediting the borrower’s current account. The customer is informed that the loan is agreed, and he can draw down the funds credited to his current account from that moment. No other bank, nor any other source of funding is involved. With merely two ledger entries the bank’s balance sheet has expanded by the amount of the loan. For a banker, the ability to create bank credit in this way is, so long as the lending is prudent, an extremely profitable business. The amount of credit outstanding can be many multiples of the bank’s own capital. So, if a bank’s ratio of balance sheet assets to equity is eight times, and the gross margin between lending and deposits is 3%, then that becomes a gross return of 24% on the bank’s own equity. The restriction on a bank’s balance sheet leverage comes from two considerations. There is lending risk itself, which will vary with economic conditions, and depositor risk, which is the depositors’ collective faith in the bank’s financial condition. Depositor risk, which can lead to depositors withdrawing their credit in the bank in favour of currency or a deposit with another bank, can in turn originate from a bank offering an interest rate below that of other banks, or alternatively depositors concerned about the soundness of the bank itself. It is the combination of lending and depositor risk that determines a banker’s view on the maximum level of profits that can be safely earned by dealing in credit. An expansion in the quantity of credit in an economy stimulates economic activity because businesses are tricked into thinking that the extra money available is due to improved trading conditions. Furthermore, the apparent improvement in trading conditions encourages bankers to increase lending even further. A virtuous cycle of lending and apparent economic improvement gets under way as the banking cohort takes its average balance sheet assets to equity ratio from, say, five to eight times, to perhaps ten or twelve. Competition for credit business then persuades banks to cut their margins to attract new business customers. Customers end up borrowing for borrowing’s sake, initiating investment projects which would not normally be profitable. Even under a gold standard lending exuberance begins to drive up prices. Businesses find that their costs begin to rise, eating into their profits. Keeping a close eye on lending risk, bankers are acutely aware of deteriorating profit prospects for their borrowers and therefore of an increasing lending risk. They then try to reduce their asset to equity ratios. As a cohort whose members are driven by the same considerations, banks begin to withdraw credit from the economy, reversing the earlier stimulus and the economy enters a slump. This is a simplistic description of a regular cycle of fluctuating bank credit, which historically varied approximately every ten years or so, but could fluctuate between seven and twelve. Figure 3 illustrates how these fluctuations were reflected in the inflation rate in nineteenth century Britain following the introduction of the sovereign gold coin until just before the First World War. Besides illustrating the regularity of the consequences of a cycle of bank credit expansion and contraction marked by the inflationary consequences, Figure 3 shows there is no correlation between the rate of price inflation and wholesale borrowing costs. In other words, modern central bank monetary policies which use interest rates to control inflation are misconstrued. The effect was known and named Gibson’s paradox by Keynes. But because there was no explanation for it in Keynesian economics, it has been ignored ever since. Believing that Gibson’s paradox could be ignored is central to central bank policies aimed at taming the cycle of price inflation. The interests of central banks Notionally, central banks’ primary interest is to intervene in the economy to promote maximum employment consistent with moderate price inflation, targeted at 2% measured by the consumer price index. It is a policy aimed at stimulating the economy but not overstimulating it. We shall return to the fallacies involved in a moment. In the second half of the nineteenth century, central bank intervention started with the Bank of England assuming for itself the role of lender of last resort in the interests of ensuring economically destabilising bank crises were prevented. Intervention in the form of buying commercial bank credit stopped there, with no further interest rate manipulation or economic intervention. The last true slump in America was in 1920-21. As it had always done in the past the government ignored it in the sense that no intervention or economic stimulus were provided, and the recovery was rapid. It was following that slump that the problems started in the form of a new federal banking system led by Benjamin Strong who firmly believed in monetary stimulation. The Roaring Twenties followed on a sea of expanding credit, which led to a stock market boom — a financial bubble. But it was little more than an exaggerated cycle of bank credit expansion, which when it ended collapsed Wall Street with stock prices falling 89% measured by the Dow Jones Industrial Index. Coupled with the boom in agricultural production exaggerated by mechanisation, the depression that followed was particularly hard on the large agricultural sector, undermining agriculture prices worldwide until the Second World War. It is a fact ignored by inflationists that first President Herbert Hoover, and then Franklin Roosevelt extended the depression to the longest on record by trying to stop it. They supported prices, which meant products went unsold. And at the very beginning, by enacting the Smoot Hawley Tariff Act they collapsed not only domestic demand but all domestic production that relied on imported raw materials and semi-manufactured products. These disastrous policies were supported by a new breed of economist epitomised by Keynes, who believed that capitalism was flawed and required government intervention. But proto-Keynesian attempts to stimulate the American economy out of the depression continually failed. As late as 1940, eleven years after the Wall Street Crash, US unemployment was still as high as 15%. What the economists in the Keynesian camp ignored was the true cause of the Wall Street crash and the subsequent depression, rooted in the credit inflation which drove the Roaring Twenties. As we saw in Figure 3, it was no more than the turning of the long-established repeating cycle of bank credit, this time fuelled additionally by Benjamin Strong’s inflationary credit expansion as Chairman of the new Fed. The cause of the depression was not private enterprise, but government intervention. It is still misread by the establishment to this day, with universities pushing Keynesianism to the exclusion of classic economics and common sense. Additionally, the statistics which have become a religion for policymakers and everyone else are corrupted by state interests. Soon after wages and pensions were indexed in 1980, government statisticians at the Bureau of Labor Statistics began working on how to reduce the impact on consumer prices. An independent estimate of US consumer inflation put it at well over 15% recently, when the official rate was 8%. Particularly egregious is the state’s insistence that a target of 2% inflation for consumer prices stimulates demand, when the transfer of wealth suffered by savers, the low paid and pensioners deprived of their inflation compensation at the hands of the BLS is glossed over. So is the benefit to the government, the banks, and their favoured borrowers from this wealth transfer. The problem we now face in this fiat money environment is not only that monetary policy has become corrupted by the state’s self-interest, but that no one in charge of it appears to understand money and credit. Technically, they may be very well qualified. But it is now over fifty years since money was suspended from the monetary system. Not only have policymakers ignored indicators such as Gibson’s paradox. Not only do they believe their own statistics. And not only do they think that debasing the currency is a good thing, but we find that monetary policy committees would have us believe that money has nothing to do with rising prices. All this is facilitated by presenting inflation as rising prices, when in fact it is declining purchasing power. Figure 4 shows how purchasing power of currencies should be read. Only now, it seems, we are aware that inflation of prices is not transient. Referring to Figure 1, the M3 broad money supply measure has almost tripled since Lehman failed, so there’s plenty of fuel driving a lower purchasing power for the dollar yet. And as discussed above, it is not just quantities of currency and credit we should be watching, but changes in consumer behaviour and whether consumers tend to dispose of currency liquidity in favour of goods. The indications are that this is likely to happen, accelerated by sanctions against Russia, and the threat that they will bring in a new currency era, undermining the dollar’s global status. Alerted to higher prices in the coming months, there is no doubt that there is an increased level of consumer stockpiling, which put another way is the disposal of personal liquidity before it buys less. So far, the phases of currency evolution have been marked by the end of the Bretton Woods Agreement in 1971. The start of the petrodollar era in 1973 led to a second phase, the financialisation of the global economy. And finally, from now the return to a commodity standard brought about by sanctions against Russia is driving prices in the Western alliance’s currencies higher, which means their purchasing power is falling anew. The faux pas over Russia With respect to the evolution of money and credit, this brings us up to date with current events. Before Russia invaded Ukraine and the Western alliance imposed sanctions on Russia, we were already seeing prices soaring, fuelled by the expansion of currency and credit in recent years. Monetary planners blamed supply chain problems and covid dislocations, both of which they believed would right themselves over time. But the extent of these price rises had already exceeded their expectations, and the sanctions against Russia have made the situation even worse. While America might feel some comfort that the security of its energy supplies is unaffected, that is not the case for Europe. In recent years Europe has been closing its fossil fuel production and Germany’s zeal to go green has even extended to decommissioning nuclear plants. It seems that going fossil-free is only within national borders, increasing reliance on imported oil, gas, and coal. In Europe’s case, the largest source of these imports by far is Russia. Russia has responded by the Russian central bank announcing that it is prepared to buy gold from domestic credit institutions, first at a fixed price or 5,000 roubles per gramme, and then when the rouble unexpectedly strengthened at a price to be agreed on a case-by-case basis. The signal is clear: the Russian central bank understands that gold plays an important role in price stability. At the same time, the Kremlin announced that it would only sell oil and gas to unfriendly nations (i.e. those imposing sanctions) in return for payments in roubles. The latter announcement was targeted primarily at EU nations and amounts to an offer at reasonable prices in roubles, or for them to bid up for supplies in euros or dollars from elsewhere. While the price of oil shot up and has since retreated by a third, natural gas prices are still close to their all-time highs. Despite the northern hemisphere emerging from spring the cost of energy seems set to continue to rise. The effect on the Eurozone economies is little short of catastrophic. While the rouble has now recovered all the fall following the sanctions announcement, the euro is becoming a disaster. The ECB still has a negative deposit rate and enormous losses on its extensive bond portfolio from rapidly rising yields. The national central banks, which are its shareholders also have losses which in nearly all cases wipes out their equity (balance sheet equity being defined as the difference between a bank’s assets and its liabilities — a difference which should always be positive). Furthermore, these central banks as the NCB’s shareholders make a recapitalisation of the whole euro system a complex event, likely to question faith in the euro system. As if that was not enough, the large commercial banks are extremely highly leveraged, averaging over 20 times with Credit Agricole about 30 times. The whole system is riddled with bad and doubtful debts, many of which are concealed within the TARGET2 cross-border settlement system. We cannot believe any banking statistics. Unlike the US, Eurozone banks have used the repo markets as a source of zero cost liquidity, driving the market size to over €10 trillion. The sheer size of this market, plus the reliance on bond investment for a significant proportion of commercial bank assets means that an increase in interest rates into positive territory risks destabilising the whole system. The ECB is sitting on interest rates to stop them rising and stands ready to buy yet more members’ government bonds to stop yields rising even more. But even Germany, which is the most conservative of the member states, faces enormous price pressures, with producer prices of industrial products officially increasing by 25.9% in the year to March, 68% for energy, and 21% for intermediate goods. There can be no doubt that markets will apply increasing pressure for substantial rises in Eurozone bond yields, made significantly worse by US sanctions policies against Russia. As an importer of commodities and raw materials Japan is similarly afflicted. Both currencies are illustrated in Figure 5. The yen appears to be in the most immediate danger with its collapse accelerating in recent weeks, but as both the Bank of Japan and the ECB continue to resist rising bond yields, their currencies will suffer even more. The Bank of Japan has been indulging in quantitative easing since 2000 and has accumulated substantial quantities of government and corporate bonds and even equities in ETFs. Already, the BOJ is in negative equity due to falling bond prices. To prevent its balance sheet from deteriorating even further, it has drawn a line in the sand: the yield on the 10-year JGB will not be permitted to rise above 0.25%. With commodity and energy prices soaring, it appears to be only a matter of time before the BOJ is forced to give way, triggering a banking crisis in its highly leveraged commercial banking sector which like the Eurozone has asset to equity ratios exceeding 20 times. It would appear therefore that the emerging order of events with respect to currency crises is the yen collapses followed in short order by the euro. The shock to the US banking system must be obvious. That the US banks are considerably less geared than their Japanese and euro system counterparts will not save them from global systemic risk contamination. Furthermore, with its large holdings of US Treasuries and agency debt, current plans to run them off simply exposes the Fed to losses, which will almost certainly require its recapitalisation. The yield on the US 10-year Treasury Bond is soaring and given the consequences of sanctions on global commodity prices, it has much further to go. The end of the financial regime for currencies From London’s big bang in the mid-eighties, the major currencies, particularly the US dollar and sterling became increasingly financialised. It occurred at a time when production of consumer goods migrated to Asia, particularly China. The entire focus of bank lending and loan collateral moved towards financial assets and away from production. And as interest rates declined, in general terms these assets improved in value, offering greater security to lenders, and reinforcing the trend. This is now changing, with interest rates set to rise significantly, bursting a financial bubble which has been inflating for decades. While bond yields have started to rise, there is further for them to go, undermining not just the collateral position, but government finances as well. And further rises in bond yields will turn equity markets into bear markets, potentially rivalling the 1929-1932 performance of the Dow Jones Industrial Index. That being the case, the collapse already underway in the yen and the euro will begin to undermine the dollar, not on the foreign exchanges, but in terms of its purchasing power. We can be reasonably certain that the Fed’s mandate will give preference to supporting asset prices over stabilising the currency, until it is too late. China and Russia appear to be deliberately isolating themselves from this fate for their own currencies by increasing the importance of commodities. It was noticeable how China began to aggressively accumulate commodities, including grain stocks, almost immediately after the Fed cut its funds rate to zero and instituted QE at $120 billion per month in March 2020. This sent a signal that the Chinese leadership were and still are fully aware of the inflationary implications of US monetary policy. Today China has stockpiled well over half the world’s maize, rice, wheat and soybean stocks, securing basics foodstuffs for 20% of the world’s population. As a subsequent development, the war in Ukraine has ensured that global grain supplies this year will be short, and sanctions against Russia have effectively cut off her exports from the unfriendly nations. Together with fertiliser shortages for the same reasons, not only will the world’s crop yields fall below last year’s, but grain prices are sure to be bid up against the poorer nations. Russia has effectively tied the rouble to energy prices by insisting roubles are used for payment, principally by the EU. Russia’s other two large markets are China and India, from which she is accepting yuan and rupees respectively. Putting sales to India to one side, Russia is not only commoditising the rouble, but her largest trading partner not just for energy but for all her other commodity exports is China. And China is following similar monetary policies. There are good reasons for it. The Western alliance is undermining their own currencies, of that there can be no question. Financial asset values will collapse as interest rates rise. Contrastingly, not only is Russia’s trade surplus increasing, but the central bank has begun to ease interest rates and exchange controls and will continue to liberate her economy against a background of a strong currency. The era of the commodity backed currency is arriving to replace the financialised. And lastly, we should refer to Figure 2, of the price of oil in goldgrams. The link to commodity prices is gold. It is time to abandon financial assets for their supposed investment returns and take a stake in the new commoditised currencies. Gold is the link. Business of all sorts, not just mining enterprises which accumulate cash surpluses, would be well advised to question whether they should retain deposits in the banks, or alternatively, gain the protection of possessing some gold bullion vaulted independently from the banking system. Tyler Durden Fri, 04/15/2022 - 15:00.....»»

Category: dealsSource: nytApr 15th, 2022

Reasons Why Investing in RLI Stock is a Prudent Move Now

RLI is well poised for growth on the back of its conservative investment strategy, sufficient liquidity and prudent capital deployment. RLI Corp. RLI is well-poised for growth, driven by a rate increase, higher earned premium base, underwriting profit and effective capital deployment.Northbound Estimate RevisionThe Zacks Consensus Estimate for RLI’s 2022 and 2023 earnings has moved 1.3% and 1.2% north in the past 60 days. This should instill investors' confidence in the stock.Earnings Surprise HistoryRLI has a solid track record of beating earnings estimates in each of the last six quarters.Style ScoreRLI has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.Business TailwindsRLI’s core business, Casualty, Property, and Surety witnessed significant growth in 2021 riding higher premiums from commercial excess and personal umbrella due to rate increases and expanded distribution. Growth within existing accounts and new business benefited Commercial surety while market disruption led to increased premium for miscellaneous surety. These tailwinds are likely to drive the top line of the insurer.The Zacks Consensus Estimate for the insurer’s 2022 and 2023 revenues is pegged at $1.17 billion and $1.25 billion, respectively, indicating a year-over-year increase of 11.6% and 6.2%.RLI achieved the 26th consecutive year of underwriting profit in 2021. Positive current accident year results and favorable development in prior accident years’ loss reserves are likely to benefit the underwriting results of RLI.By virtue of a higher earned premium base, the expense ratio of RLI should continue to decrease.RLI achieved 26 straight years of a combined ratio below 100 and beat the industry ratio by an average of 11 margin points over the past 10 years. It also maintains significant reinsurance protection against large losses.Sturdy Balance SheetThe financial position of RLI was strong in 2021. The insurer expects to have sufficient sources of liquidity to meet the anticipated needs over the next 12 to 24 months. Its revolving credit facility provides for a borrowing capacity of $60 million, which can be increased to $120 million under certain circumstances. RLI posted positive operating cash flow in the last two years.Impressive Dividend HistoryRLI has a distinguished track record of success with 182 consecutive quarters of dividend increases and currently yields 0.9%, which is better than the industry average of 0.3%. In the fourth quarter of 2021, the insurer declared a special cash dividend in a bid to share the rewards of strong performance and return excess capital to shareholders.The Zacks Consensus Estimate for 2023 earnings per share is pegged at $4.10, indicating a year-over-year increase of 7.8%.Zacks Rank & Price PerformanceRLI currently carries a Zacks Rank #2 (Buy). In the past year, the stock has lost 2.4% against the industry’s increase of 17.6%. Solid segmental results and capital position are likely to help the stock bounce back.Image Source: Zacks Investment ResearchOther Stocks to ConsiderSome other top-ranked stocks from the property and casualty insurance sector are Cincinnati Financial Corporation CINF, United Fire Group, Inc. UFCS and Kinsale Capital Group, Inc. KNSL. While Cincinnati Financial and United Fire currently sport a Zacks Rank #1 (Strong Buy), Kinsale Capital carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 38.48%. In the past year, the insurer has rallied 28.5%.The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 5.7% and 5.5% north, respectively, in the past 60 days.United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, UFCS stock has declined 10.7%.The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, Kinsale Capital has rallied 39.9%.The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report RLI Corp. (RLI): Free Stock Analysis Report Cincinnati Financial Corporation (CINF): Free Stock Analysis Report United Fire Group, Inc (UFCS): Free Stock Analysis Report Kinsale Capital Group, Inc. (KNSL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksApr 6th, 2022

Strategies for Companies Seeking Debt in Rising Rate Environments

Small and medium-sized companies are the pillar of the American economy. They create jobs, drive innovation, and support local communities. According to the 2021 Small Business Profile, small businesses account for 99.9% of all US businesses and employ 46.8% of the total workforce. Yet, many small businesses find it difficult to secure business loans from […] Small and medium-sized companies are the pillar of the American economy. They create jobs, drive innovation, and support local communities. According to the 2021 Small Business Profile, small businesses account for 99.9% of all US businesses and employ 46.8% of the total workforce. Yet, many small businesses find it difficult to secure business loans from traditional lenders. Banks are becoming more conservative in their lending practices, and as interest rates rise and the economy slows down, it is becoming increasingly difficult to obtain favorable loan terms. However, with the proven strategies outlined in this article, small businesses can make themselves more attractive to lenders and improve their chances of securing business funding. 5 Strategies for Securing a Small Business Loan Be Realistic: Lenders are looking for companies with a clear understanding of their financial situation. These companies have a realistic idea of how much money they need to sustain growth. When requesting a loan, it is advisable to include a thorough plan of how the funds will be used and ensure that the requested amount is justified. It also helps to answer the following questions: What are the short-term and long-term goals of the business? What are the company’s current financials? What is the company’s history of profitability? Why does the company need the loan? What is the repayment plan?   Use the “Insurance as Capital” Financing Strategy: Businesses that already have some traction (but may still be pre-revenue) can make themselves more attractive to lenders through an insurance strategy that helps de-risk their business model. Some experts call it “insurance as capital”.    This financing strategy entails obtaining a specific type of insurance policy called Performance Guarantee Insurance. Under this policy, the insurance company is insuring a company’s financial performance up to a certain amount. Nemo Perera who runs Edge Management, a firm specializing in helping clients employ the strategy says, “by leveraging an insurance company’s balance sheet through a meaningful risk transfer mechanism (policy), that mitigates the most pressing concerns of investors. We are able to enhance the creditworthiness of the entity with a billion dollar insurance company’s balance sheet.” A significant advantage of this financing strategy is that it helps businesses obtain loans with more favorable terms. The lenders become favorable because they are protected against the risk of default, which allows them to offer better terms to the borrower. Companies in higher-risk sectors like Greentech, ESG, and Cleantech can benefit from this policy. Businesses interested in using this financing strategy should speak with an insurance broker specializing in Performance Guarantee Insurance.   Get an SBA-Guaranteed Loan: The Small Business Administration (SBA) is a government agency that assists small businesses. One of the many ways they do this is by guaranteeing loans made by traditional lenders. When a lender considers a company too risky for a loan, the SBA can step in and secure a portion of the loan. Getting an SBA-guaranteed loan can be beneficial because it reduces the risk for the lender, which often results in more favorable loan terms for the borrower. After applying for a business loan with a participating lender, the SBA reviews the application and determines if they will provide a guarantee. Interested companies must meet certain requirements and use the loan proceeds for specific purposes such as working capital, inventory, or equipment purchases.   Use a Well Prepared Business Plan: It is vital to have a well-prepared business plan when applying for a business loan. This document should outline the company’s goals, financials, and repayment plan. It should be clear, concise, and provide enough detail for the lender to get a good understanding of the business. Also, include information on the target market, sales and marketing strategy, competitive landscape, and management team. This information will help lenders understand that there is a well-thought-out plan for growing the business.   Apply with a Good Credit History: Lenders consider the business’s credit history when making a loan decision. They will want to see that the company has a good track record of repaying debts on time. Businesses can develop a good credit history by paying all bills on time and maintaining an excellent credit-to-debt ratio. Experts also advise against using too much of the available credit, as this can hurt the credit score. Summary Despite the immense contributions of small and medium-sized businesses to the American economy, they often face significant challenges in securing loans. Fortunately, there are several strategies that business owners can use to increase their chances of being approved for a loan.  By being realistic about the company’s goals and prospects, using a performance guarantee insurance policy, and having a well-prepared business plan, small business owners can make their company more attractive to lenders, improving their chances of securing business funding. Updated on Apr 1, 2022, 7:44 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkApr 1st, 2022

4 Energy Stocks From the Promising Integrated Oil Industry

With economies reopening and people socializing & going to work, the outlook for the Zacks Oil & Gas Integrated International industry is brightening up. ExxonMobil (XOM), Chevron (CVX), BP (BP) and Eni (E) are well positioned to make the most of the highly favorable business environment. Oil price has returned to its glorious days and global fuel demand has recovered significantly from the coronavirus-hit low level. Thus, with economies reopening and people socializing and going to work, the outlook for the Zacks Oil and Gas Integrated International industry is brightening up.It is now a clear picture that the business prospects for upstream, midstream and downstream operations of international integrated energy players are improving at a significant pace. Among the players, Exxon Mobil Corporation XOM,Chevron Corporation CVX, BP plc BP and Eni SpA E are well positioned to make the most of the highly favorable business environment.About the IndustryThe Zacks Oil and Gas Integrated International industry covers companies primarily involved in upstream, midstream and downstream operations. These companies have upstream businesses in the United States (including prolific shale plays and the deepwater Gulf of Mexico), Asia, South America, Africa, Australia and Europe. Midstream operations of energy companies entail transporting oil, natural gas liquids and refined petroleum products. Under downstream businesses, the firms buy raw crude to produce refined petroleum products. The companies’ downstream activities involve chemical businesses that manufacture raw materials used for making plastics. The integrated players are now gradually focusing on renewables, leading to energy transition. In fact, the firms aim to lower emissions from operations and cut the carbon intensity of the products sold.4 Trends Shaping the Future of the Oil & Gas Integrated International IndustryOil Price Skyrockets: The price of West Texas Intermediate crude, trading at more than $100 per barrel, has improved drastically over the past year. The significant rise in oil price is owing to Russia’s violent and unprovoked invasion of Ukraine. The crude price rally is also being backed by a strong recovery of global energy demand with the reopening of economies, as coronavirus cases are quite low across the world and vaccines are being given at a massive scale. Overall, a favorable business scenario will continue to aid the upstream business of international integrated energy players.Sturdy Midstream Demand: With the possibility of upstream energy companies adding more rigs, oil and gas production is expected to increase further. This will likely boost the demand for pipeline and storage assets since more commodities will be needed to be transported and stored. Importantly, the midstream business has lower exposure to commodity price volatility since shippers generally book pipeline assets for the long term, thereby generating stable fee-based revenues.Recovered Downstream Business: Since the countries have been ramping up the rollout of coronavirus vaccines, this will encourage more people to go to offices and travel. With social-distancing measures becoming flexible, the demand for gasoline, diesel fuel and jet fuel will increase.Business Diversification: International integrated energy companies are gradually investing money in the renewable business. Thus, by diversifying operations, companies will be able to capitalize on the mounting demand for cleaner energy.Zacks Industry Rank Indicates Encouraging OutlookThe Zacks Oil and Gas Integrated International industry is part of the broader Zacks Oil - Energy sector. It carries a Zacks Industry Rank #18, which places it at the top 7% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates impressive near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Before we present a few international integrated energy stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock market performance and current valuation.Industry Outperforms Sector and S&P 500The Zacks Oil and Gas Integrated International industry has outperformed the broader Zacks Oil - Energy sector as well as the Zacks S&P 500 composite over the past year.The industry has gained 31.9% over this period compared with the S&P 500 and the broader sector’s growth of 8.7% and 25%, respectively.One-Year Price PerformanceIndustry's Current ValuationSince oil and gas companies are debt-laden, it makes sense to value them based on the Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA) ratio. This is because the valuation metric takes not just equity into account but also the level of debt.On the basis of the trailing 12-month EV/EBITDA, the industry is currently trading at 4.78X, lower than the S&P 500’s 14.10X. It is also below the sector’s trailing-12-month EV/EBITDA of 4.90X.Over the past five years, the industry has traded as high as 8.84X, as low as 2.92X, with a median of 5.16X.Trailing 12-Month EV/EBITDA Ratio4 Integrated International Stocks Moving Ahead of the PackBP plc: The British energy giant has been generating handsome returns from refining and marketing operations, thanks to the reopening of the economies. On the dividend front, BP expects that if the oil price trades around $60 per barrel, it will be able to hike dividend per ordinary share by around 4% annually through 2025. Investors applaud BP since it also expects to reward shareholders with stock buybacks. BP, currently carrying a Zacks Rank #3 (Hold), believes that it will be able to buy back shares worth $4 billion annually through 2025, if oil price hovers around $60 per barrel.Price and Consensus: BPChevron Corporation: Chevron is also a leading integrated energy player, with operations across the world. Apart from a strong balance sheet, Chevron has a solid capital discipline that will help it tide over volatile commodity prices. The energy major’s conservative capital spending will probably help the company generate considerable cash flow, even if the business scenario is unstable. The primary growth driver for Chevron, at least in the near term, is its low-cost Permian projects. Chevron, presently sporting a Zacks Rank #1 (Strong Buy), has seen upward earnings estimate revisions for 2022 in the past seven days. You can see the complete list of today’s Zacks #1 Rank stocks here. Price and Consensus: CVXEni SpA: Eni’s energy business is spread worldwide, with a strong upstream presence. In the Ivory Coast, Eni made major oil and gas discoveries. The #3 Ranked company’s refining and marketing business is recovering, with the reopening of economies across the world. Eni has set an ambitious goal to fully decarbonize its products and processes. Over the past seven days, Eni has witnessed upward estimate revisions for 2022 earnings per share.Price and Consensus: EExxon Mobil Corporation: ExxonMobil is among the largest integrated energy companies in the world. The energy major can rely on its strong balance sheet to withstand any business turmoil. ExxonMobil is banking on low-cost project pipelines centered around Permian — the most prolific basin in the United States — and offshore Guyana resources. ExxonMobil, having a Zacks Rank of 1 at present, has seen upward estimate revisions for 2022 earnings in the past seven days.Price and Consensus: XOM Just Released: Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022? From inception in 2012 through 2021, the Zacks Top 10 Stocks portfolios gained an impressive +1,001.2% versus the S&P 500’s +348.7%. Now our Director of Research has combed through 4,000 companies covered by the Zacks Rank and has handpicked the best 10 tickers to buy and hold. Don’t miss your chance to get in…because the sooner you do, the more upside you stand to grab.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Exxon Mobil Corporation (XOM): Free Stock Analysis Report BP p.l.c. (BP): Free Stock Analysis Report Chevron Corporation (CVX): Free Stock Analysis Report Eni SpA (E): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksMar 11th, 2022

Mobo and graphics card makers turn cautious amid demand uncertainty

Taiwan-based main motherboard (mobo) and graphic card vendors including Asustek Computer, Gigabyte Technology and Micro-Star International (MSI), as well as smaller peers Rock and TUL, have turned conservative about their business prospects for 2022 amid uncertainty over end-market demand, but they remain confident their sales for the year will improve from pre-pandemic levels, according to industry sources......»»

Category: topSource: digitimesMar 11th, 2022

Highlights of the day: IT firms turning conservative about 2022

With the war between Russia and Ukraine not likely to cease any time soon, IT firms have turned cautious about their operation in 2022. Notebook ODMs, despite still having robust orders for the first half, visibility of orders is weak for the second half. Motherboard and graphics card vendors are also cautious about their business prospects for 2022 as the market's conditions are still worrisome. Some IC design houses have already seen a disappointing first half of 2022 because of weak smartphone demand......»»

Category: topSource: digitimesMar 11th, 2022

Eni (E) Acquires Solar Konzept Greece Amid Clean Energy Plan

With the acquisition, Eni (E) extends its renewable energy footprint to Greece as it aims to reach carbon neutrality by 2050. Eni E, through its retail gas and power division Eni gas e luce, acquired Solar Konzept Greece (“SKGR”) from Solar Konzept International for an undisclosed amount.The acquisition marks Eni’s entry into the renewable electricity generation market of Greece. Eni extends its renewable energy footprint to the country as it aims to reach carbon neutrality by 2050.SKGR has a development platform for photovoltaic plants in Greece. Its portfolio involves a pipeline of projects at various development stages. The portfolio of projects is said to have a capacity of nearly 800 megawatts. The projects will constitute the basis for further development in the country.Eni gas e luce, which will be renamed as Plenitude, has been contributing to the Greek retail energy market since 2000. The company has about 500,000 retail customers in the country. Eni gas e luce owned an operating renewable energy portfolio, with a capacity of 1.2 gigawatts (GW) at 2021-end. It aims to increase the capacity to more than 6 GW by 2025 and 15 GW by 2030.Eni focuses on capitalizing on the mounting demand for renewables and green energy products. The company focuses on creating more value through energy transition. Notably, the latest acquisition is part of Eni’s plans to expand its renewable capacity along with vertically integrated activities in the power retail business. The agreement fits well with Eni’s goal of being a leader in the production and marketing of decarbonized products.Company Profile & Price PerformanceHeadquartered in Rome, Italy, Eni is one of the leading integrated energy players in the world.Shares of Eni have outperformed the industry in the past six months. The stock has gained 30.9% compared with the industry’s 26.9% growth. Image Source: Zacks Investment Research Zacks Rank & Key PicksEni currently carries a Zack Rank #3 (Hold).Investors interested in the energy sector might look at the following companies that presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Patterson-UTI Energy, Inc. PTEN is one of the largest North American land drilling contractors, having a large, high-quality fleet of drilling rigs. The company’s technologically advanced ‘Apex’ rigs are the key to its success. Patterson-UTI’s proprietary design makes the rigs move faster than conventional ones, drill quicker and more efficiently than conventional ones, and allows for a safer operating environment.Patterson-UTI’s long-term debt is around $902 million. Importantly, the company's debt-to-capitalization at the end of the third quarter was 34.3%, quite conservative versus 39.4% for the sub-industry to which it belongs. Apart from low leverage for its industry, PTEN has ample liquidity with cash and cash equivalents of $956 million, and $600 million available under the revolving credit facility. Also, the company has a comfortable debt maturity profile with no major debt outstanding until 2028.Transocean, Inc. RIG, based in Switzerland, is the world’s largest offshore drilling contractor and leading provider of drilling management services. Despite the struggles with the coronavirus-induced price and demand slump, Transocean's backlog of $7.1 billion reflects steady customer demand, and offers earnings and cash flow visibility.RIG reported revenue efficiency of an impressive 98.1% in the third quarter of 2021. This is an indication of a minimal loss of revenues due to downtime and Transocean’s superior efficiency in translating its industry-leading backlog into cash.PetroChina Company Limited PTR is the largest integrated oil company in China. PetroChina is one of the largest producers of crude oil and natural gas in the world. The company’s natural gas business offers lucrative growth prospects in the coming years as China moves from coal to natural gas.PetroChina currently has a Zacks Style Score of A for both Value and Momentum. In the first six months of 2021, PTR's upstream segment posted an operating income of RMB 30.9 billion, nearly tripling from the year-ago profit of RMB 10.4 billion. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Transocean Ltd. (RIG): Free Stock Analysis Report PattersonUTI Energy, Inc. (PTEN): Free Stock Analysis Report Eni SpA (E): Free Stock Analysis Report PetroChina Company Limited (PTR): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJan 14th, 2022

Republicans should run a policy-free 2022 campaign that highlights Biden blunders and conservatives" social grievances: top GOP strategist

"There is no reason to expect they'll do big conservative policy," said a former top aide to GOP House speakers John Boehner and Paul Ryan. House Speaker Paul Ryan of Wisconsin, center, walks with his chief communications adviser Brendan Buck, left, on the way to meet with reporters on Capitol Hill in Washington, Thursday, Feb. 4, 2016.J. Scott Applewhite/AP Photo Republicans are poised to take back the House in 2022.  They haven't made big, conservative policy promises.  But a former top GOP aide says that may be key to securing victory. Republicans aren't making any major promises or releasing a bold conservative agenda heading into the 2022 midterm elections — but that may be their "glidepath" to victory, said a longtime Capitol Hill veteran who worked under two GOP House speakers. "That is probably the right move. I don't think you need to present yourself as the focus in this election," said Brendan Buck, who worked as a top aide under GOP House speakers John Boehner of Ohio and Paul Ryan of Wisconsin. Buck, who is now a partner at the strategic communications firm Seven Letter, said Republicans should keep focusing on angst and dissatisfaction voters have on issues ranging from inflation to issues related to the seemingly never-ending COVID-19 pandemic. On top of that, Buck said, the GOP electorate had changed to focus more on culture wars and "fighting woke-ism" rather than on whether their elected leaders would deliver policy victories. "I don't know that Republican voters care too much about policy as much as they used to," he said. "It's much more of a cultural fight that they're waging and that is really what motivates people." Republicans are poised to take back the House in 2022, and maybe even the Senate. Their hopes were bolstered this past week when a new Quinnipiac University poll showed President Joe Biden's approval ratings cratered to 33%.Historically, members of the opposing party tend to do well at the ballot when a president is unpopular. And the math is also easier for Republicans this election cycle because they only have to win five seats to take the House majority. Twenty-six House Democrats have already announced they're retiring, a sign that typically signals a party expects to lose control of their chamber. While Democrats are stumping on numerous policy positions from improving voting access to extending the child tax credit, and combating the climate crisis to enacting paid sick and family leave, Republicans have focused on attacking Biden on everything from a COVID testing shortage to the US hitting the highest inflation it has in 40 years. What they haven't done is release a plan for how they'd tackle it all differently if they were in charge."There isn't a groundswell of opposition for Biden or groundswell of support for Republicans," Buck said. "But the bar is so low and the environment so bad that that will do the trick."  Part of the problem with making big promises on policy is expectation setting: If Republicans control the House — or even the Senate, too — they still won't be able to accomplish much legislatively with a Democrat in the White House.The party also may be trying to avoid the same trap it fell into over several election cycles, when members promised to repeal the Affordable Care Act, President Barack Obama's signature healthcare law, and then failed when they held a majority in Congress and with Donald Trump in the White House. Absent working on rare bipartisan issues, a Republican majority in the House would be left with power to act as a check against the White House. Some House Republican leaders already have told Insider they're eager to launch investigations into the Biden administration and into some of the business dealings of the president's son, Hunter Biden. It's the same pitch to voters that Democrats made when they ran successful campaigns under Trump in 2018, though at the time they also leaned heavily on protecting and expanding the Affordable Care Act. If Republicans win the majority, Buck said, "there is no reason to expect they'll do big conservative policy." President Joe Biden.John Tully/Getty ImagesDemocrats, in contrast, are running on policy promisesA Republican-controlled House seems likely, but isn't guaranteed. Buck said Democrats' electoral prospects could improve if inflation dissipates and the coronavirus pandemic comes to a halt. "I don't want to say it's hopeless for Democrats," Buck said, "but they have to hope some things turn around and some of these things they don't have full control of themselves."Buck also said a GOP-controlled House might help Biden "get his mojo back" if he were to embrace the role of an "independent moderate healer." "When you no longer have Congress," he said, "you no longer have these demands to pass a far-left sweeping agenda that I think is not a good fit for him." Democrats' focus on sweeping progressive priorities will hurt them at the ballot box, Buck predicted.  Voters elected Biden to govern with competence and establish, in the aftermath of the ever-erratic Trump administration, that "the chaos is coming to an end," Buck said.Biden's mandate didn't include him enacting sweeping, generational change, Buck said, echoing a dispute that has paralyzed progress between centrist and progressive Democrats in Congress. "They just wanted the end of the stress of the Trump era," Buck said of voters' support for Biden. "They wanted COVID to recede into the background and they wanted the economy to chug along." Yet nearly a year after taking office, the COVID pandemic is still raging, inflation is high, and Biden's climate and social safety net bill is on life support. "That all flows up to the issue of competence and the issue of normalcy," Buck said. "Biden was elected with the spirit of allowing people to get back to feeling comfortable" and show the "chaos was coming to an end." "People," he added, "don't feel that way." Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 14th, 2022

Former ACLU lawyer running for Texas Attorney General on a pro-choice platform says her pregnancy inspired her campaign

Rochelle Garza tells Insider that her pregnancy helped inspire her bid for Texas attorney general, an office Republicans have held for 30 years. Former ACLU lawyer Rochelle Garza is running to be the first Latina attorney general in Texas.Verónica G. Cárdenas for Insider Rochelle Garza tells Insider that her pregnancy helped inspire her bid for Texas attorney general.  If she wins, the former ACLU lawyer could become the first Latina elected to statewide office in Texas.  Republicans have held the office for 30 years.  In early November, former civil liberties attorney Rochelle Garza went from vying for an open congressional seat in a safe Democratic district along the U.S.-Mexico border in South Texas to entering the race for Texas Attorney General,  an office that Republicans have held for 30 years. A political novice, Garza is best known as the former American Civil Liberties Union attorney who successfully sued the Trump administration on behalf of a detained teenager who was seeking an abortion, and for testifying against Justice Brett Kavanagh, who had ruled against her in that case, at his Supreme Court confirmation hearing.Weeks earlier, in October, Republican lawmakers in Texas had seemingly upended Garza's political prospects when they unveiled new redistricting maps that diluted the power of communities of color, which accounted for 95% of the state's population growth, and increased the number of majority-white Republican districts. The newly drawn maps made the neighboring seat more competitive, leading the Democrat who represented that district, Rep. Vicente Gonzalez, to run in Garza's home turf. (In early December, the U.S. Department of Justice sued Texas over the maps, calling them discriminatory.)In response, Garza decided to aim for an even bigger job. Garza reached the decision, she told Insider, after discovering she was pregnant. "It's so much more personal. I think a lot about what the future holds and what's at stake for democracy, civil rights, the Constitution," said Garza. News of the pregnancy, which she and her husband welcomed as a "blessing," only strengthened Garza's conviction that abortion is a healthcare issue between a person and their doctor. "I don't think anyone understands pregnancy unless they have gone through it. That is a lesson learned from all the things that are happening to my body," said Garza.Texas Attorney General Ken Paxton (right) at his 2015 swearing-in, alongside outgoing Attorney General Greg Abbott (seated) who is now the Texas governor.Robert Daemmrich Photography Inc/Corbis via Getty ImagesShe describes choice as an issue of respecting a pregnant person's humanity, adding, "I can't imagine what some of my clients were going through."  For decades, the Texas attorney general has been at the forefront of conservative and right-wing policy priorities nationally. Attorney General Ken Paxton, who's in his second term, has waged legal battles against vaccine and mask mandates; challenged the 2020 presidential election results, with tactics that included suing other states; and defended Texas' the states' recent abortion law, the nation's most restrictive, which bans abortion after six weeks, before most people know they are pregnant, and allows private citizens to sue anyone who "aids and abets" someone getting the procedure. Paxton took office in 2015 after Greg Abbott, who became Texas governor. Paxton has faced felony fraud charges for thr past six years, but has not yet faced trial. Jane Doe and the 'Garza Notice'In 2017, Garza represented a 17-year-old immigrant teenager, later known as Jane Doe, who was seeking a legal abortion while in government detention. After officials with U.S. Health and Human Services, which oversees the shelter system, refused to release her to undergo the procedure, Garza sued on the teen's behalf. A federal judge ruled in favor of Jane, but the Trump administration appealed. A panel of judges at the D.C. Circuit Court of Appeals sided with the government, but when the case was heard by the full appeals court, Garza's side prevailed.  Paxton, the Texas attorney general, would later argue to the U.S. Supreme Court that the appeals court had been wrong and that immigrants have no constitutional right to abortion. One of the judges who had ruled against Garza was Brett Kavanaugh, who argued that at issue was allowing access to "a new right" for unlawful immigrant minors. The following year, Trump nominated Kavanaugh to the Supreme Court.Garza's client underwent the procedure. The case also led to the establishment of what is now known the "Garza notice," a government policy for informing pregnant teens in shelters and detention centers of their rights to abortion services and regulations for abiding by the court ruling in the context of Texas' restrictive abortion ban. Rochelle Garza testifying at Brett Kavanaugh's confirmation hearing before the Senate Judiciary Committee about how she helped an undocumented teenage girl fight for an abortion.J. Scott Applewhite/AP PhotoTo Garza, a clear line connects her work with teenage immigrants and the abortion cases the Supreme Court has considered this session."The erosion of rights begins with the most marginalized. With the Jane case, she was someone who, clearly, the Trump administration, Ken Paxton, and Brett Kavanaugh, did not think she mattered, and that her rights didn't matter, but they did," Garza told Insider. "And that's what we have to focus on, because if we don't protect someone like her who is the most vulnerable, what chance is there for the rest of us?"On Friday, the Supreme Court ruled that abortion providers could challenge the Texas law, which is considered the most restrictive in the nation, but left it in effect. A 'women's full pursuit'A recent Politico article drawn from interviews with dozens of Democratic strategists suggested that abortion rights are unlikely to galvanize the party's base "unless — and perhaps not even then — Roe is completely overturned."Until then, voters are more motivated on issues of employment and healthcare, and wealthy people in states that have blocked abortion access will be able to travel out of state for services. A recent Texas Tribune poll found that 46% of Texas voters disapproved of how "state leaders have handled abortion policy, while 39% approved. Garza disclosed her pregnancy on the day the U.S. Supreme Court heard oral arguments in a challenge to Mississippi's abortion law, which bans abortion services after 15 weeks. Unlike the Texas law, which was written to evade federal review by placing the onus on private citizens, advocates believe the Mississippi case could lead to the court overturning Roe v. Wade. In a court briefing, Mississippi Attorney General Lynn Fitch wrote that the precedent protecting abortion "out-of-date.""Innumerable women and mothers have reached the highest echelons of economic and social life independent of the right endorsed in those cases," Fitch continued. "Sweeping policy advances now promote women's full pursuit of both career and family."Protesters march down Congress Ave outside the Texas state capitol on May 29, 2021, after the governor signed a bill banning most abortions.Sergio Flores/Getty ImagesGarza seemingly embodies Mississippi's argument. With a supportive husband, she has leveraged her legal practice into a political career. All while pregnant.But in Garza's view, individual success does not erase the constitutional right to reproductive care or persistent systemic inequities. For Garza, abortion rights go hand in hand with expanding access to healthcare, child care,  and family leave. Texas has one of the highest rates of uninsured and one of the highest rates of children living in poverty. The maternal mortality rate is above the national average. After a state committee recommended the state expand Medicaid coverage to pregnant people from 60 days to one year, the state legislature extended coverage to six months.  At Kavanaugh's confirmation hearing, Garza invoked her client, Jane Doe: "She was alone and completely under the physical control of the federal government and at the mercy of decision-makers that knew nothing of what it was like to be her." 'They have the confidence'Garza hails from one of the poorest counties in Texas, the daughter of two teachers. Her father, the son of farmers, later became a state district judge. Her great-grandmother was a mid-wife and country doctor, informally trained to attend to people living on nearby farms. At Garza's ancestral house where red chili plants bloom in the front yard and pomegranates ripen from the vine, Garza's uncle Jesus Reyes Garza, a Vietnam Veteran, searches for a thread about the women in his family, and says matter-of-factly, "legends."Garza's campaign is built around taking on what she views as the entrenched structural inequities that transfer power into the hands of the few. Jesus Reyes Garza, the candidate's uncle.Verónica G. Cárdenas for InsiderJust one Latina, Lena Guerrero Aguirre, has ever held statewide office in Texas, according to the National Association of Latino Elected and Appointed Officials – and she was appointed. Most of the state's top officials are white, even though white and Latino Texans account for about the same percent of the population.There are structural impediments to any Latina who seeks office in Texas, and researchers have found that women of color "fare worse" in statewide contests. In addition to the redistricting maps that come from the Republican-controlled state legislature, politics experts say that Latina Democrats who run for office must also overcome a host of impediments, including from their own party. "Democratic party leaders may not coalesce around a candidate of color out of fear of alienating white voters,." she writes, Kira Sanbonmatsu, a senior scholar at the Center for American Women and Politics in "Why Not a Woman of Color?: The Candidacies of US Women of Color for Statewide Executive Office." Texas Democratic consultant, James Aldrete, places Garza among the small but growing ranks of Latina maverick candidates that also includes Harris County judge Lina Hidalgo, who unseated a veteran incumbent to become the administrator of a county that includes Houston. "No one encouraged Lina, no one recruited her. She won and she is amazingly talented," said Aldrete. "If we are going to change things in Texas, it's going to take courage." There are also generational differences at play that can impede Latina voters from coalescing being a Latina candidate.Sharon A. Navarro, a professor of political science at the University of Texas at San Antonio, says some of this harkens back to the civil rights era, before Roe vs. Wade, when Latinas were expected to volunteer with grassroots causes while the men ran for political office. "When they meet older generation Latinas they often get asked the question, 'who is taking care of your children?'" she said. "The younger Latinas are ready. They have that confidence, they have law degrees. They are just the missing support and that structure."Rochelle Garza (second from right) talks to voters in Brownsville, Texas during her congressional campaign on Sept. 24, 2021.Eric Gay/AP PhotoGarza is the only woman and only Latina in a crowded March 1 Democratic primary. She is expected to face off against Galveston mayor, Joe Jaworski, who launched his campaign a year ago, and civil rights attorney Lee Merritt who represented the family of Ahmaud Arbery, a Black man who was murdered by white vigilantes while he was jogging in Georgia. While right-to-life groups that have sounded the alarm about Garza's candidacy, Garza is likely the least well-known. This week, Emily's List, which supports candidates who back abortion rights, endorsed Garza.  Former state supreme court justice Eva Guzman, also a Latina, is running on the Republican ticket. Guzman has billed herself as a tough law enforcement officer whose life history is rooted in an aspirational immigrant story. She is challenging Paxton, alongside candidates that includes George P. Bush, the Latino son of former Florida Governor Jeb Bush and the nephew of George W. Bush, the former president and Texas governor. University of Houston researcher Brandon Rottinghaus, author of the report "Six Myths of Texas Latinx Republicans," says the party has expanded its Latino constituency, in part, by side-stepping issues of inequity, to appeal to aspirational and pro-business sentiment. "Republicans never talked about racial impact of policy or how structural racism exists in many policies that exist," he said. Garza says that her pregnancy has made the disparities more evident. She noticed the pregnant women working at the grocery store, the ice cream shop, the fast-food drive thru. In them she thought about issues of access to health care, family leave, and child care that cut across class and race. "We expect women to bear children, rear children and maintain jobs," said Garza. "But we don't expect that job to be Attorney General of Texas and that's obviously wrong and that's why we get laws that are harmful to women and that's what I'm trying to change." Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 12th, 2021

Trump and Gaetz"s rejected complaints show conservative attempts to punish Big Tech via the Federal Election Commission are doomed

Republican politicians say that social media companies have an "anti-conservative bias," but the Federal Election Commission doesn't care. Then-President Donald Trump holds up a printed-out tweet about Rep. Ilhan Omar during a cabinet meeting at the White House on July 16, 2019.Jabin Botsford/The Washington Post via Getty Images Conservatives filed several FEC complaints in recent years alleging anti-conservative bias on social media. But the commission has been unanimously siding with companies like Twitter and Snapchat in each case. "It really is the wrong vehicle to go after social media companies," says one GOP commissioner. In the last three years, conservatives have lodged a series complaints with the Federal Election Commission charging social media companies with anti-conservative bias over content moderation that have seemingly affected Republican politicians more than Democrats.But they've been unanimously rebuked each time."We just kind of got a flurry of complaints, and we considered a bunch of them together," said Democratic Commissioner Ellen Weintraub in a telephone interview with Insider. Alongside five other commissioners, she's been in charge of weighing the merits of each case and ultimately taking a vote.As the agency tasked with overseeing the nation's campaign finance laws, the FEC has been asked by a myriad of conservatives to decide whether these content moderation decisions can be classified as corporate in-kind contributions, which are illegal under federal election laws.In the Trump era especially, these companies became a primary venue for political rhetoric and debate, with growing concerns that they could be a mouthpiece for then-President Donald Trump and others who promoted conspiracy theories and raised the risk of violence.But whether it's temporarily shadow-banning Rep. Matt Gaetz, affixing a fact-check label to Trump's tweets, removing Trump's content from a curated Snapchat news feed, or refusing to verify a candidate with a history of extreme statements, the commission has continually sided with social media companies.Among the more high-profile cases involved Twitter's throttling of a New York Post story about Hunter Biden. Lawyers for the Republican National Committee argued that the social media giant had broken federal election laws by essentially making a corporate in-kind contribution to then-candidate Joe Biden.But in response, Twitter cited their 2018-era "Distribution of Hacked Materials Policy," and the commission bought their argument.Republican Commissioner Trey Trainor appeared on Glenn Beck's talk show a few days after the rulings were first reported by the New York Times where he sought to explain his decision in conservative terms."If we were to say that the decision to throttle the Hunter Biden story was a violation of campaign finance, then we would have a flood of complaints," said Trainor, who serves with two other Republican commissioners. "Everybody on the right would've gotten a complaint filed against them immediately."'That's not what we do'Meeting room at the Federal Election Commission headquarters in Washington, DC.Sarah Silbiger/CQ Roll Call via Getty ImagesAt the heart of each of these disputes is a portion of federal campaign finance law governing how politicians, parties, and PACs can interact with corporations — a category that now includes social media companies, despite the fact that the law was designed for more traditional providers of goods and services."Corporations are prohibited from making contributions to candidates or political parties, but corporations interact with campaigns and political parties in any number of different ways," said Brendan Fischer, director of federal reform at Campaign Legal Center.That dynamic, he says, makes the question of whether a corporation is making a decision for legitimate commercial reasons — rather than simply influencing an election — an especially important one.Charlie Spies, a prominent GOP lawyer who represented Florida Republican congressional candidate Anna Paulina Luna in an FEC complaint over Twitter's refusal to verify her, told Insider that he believes that social media platforms are obligated to give candidates equal access to corporate resources — in this case, a blue check on Twitter — lest they run afoul of those rules."You can't pick and choose who you're going to give corporate resources to," said Spies.But Weintraub disputed Spies's assertion, pointing to FEC precedents that ensure companies can take actions that may sway an election as long as they have a legitimate business reason to do so."What he's talking about are situations where there isn't a bona fide commercial reason and it's just a purely political call, that they only want to support one side," she said. "We generally will not second-guess the business purpose of a business entity. That's not what we do."What's new in these cases, says Fischer, is the application of decades-old laws to "social media companies that are increasingly adopting stricter content moderation policies."Social media companies have come under pressure from both sides, given their outsize role in shaping public debate.While liberals have pushed for tighter regulation around hate speech, extreme content and conspiracy theories, conservatives have increasingly come to view social media platforms — and Big Tech generally — as being biased towards the left. As platforms have opted to take more responsibility for content published on their sites, conservatives have cried foul."I'm not sure the issue was raised before with respect to social media companies," said Weintraub.Trainor told Beck that it's understandable for conservatives to be calling on the FEC to help, noting that it's "easiest to go after." But, he cautions, federal campaign finance law hasn't been updated in nearly 20 years."They're trying to apply a statute that deals with technologies that no longer exist, and apply them to technologies where today, people get all of their news," said Trainor.'We'll see what kind of reaction that gets'Republican FEC Commissioner James E. “Trey” Trainor III speaks at his confirmation hearing at the US Senate on March 10, 2020.Caroline Brehman/CQ-Roll Call via Getty ImagesSpies, the prominent Republican attorney in seeking to illustrate his point further, posed a hypothetical situation in which a liberal files a complaint against an openly right-wing social media network — think Parler, Gab, or Trump's forthcoming "TRUTH Social" — that relies on ad revenue from fossil fuel companies, an industry that benefits from Republican rule."They could say, well, we think allowing Democrats to have accounts on our site is against our commercial interests," said Spies. "We'll see what kind of reaction that gets."But the reaction, it seems, would likely be a simple thumbs-up from the commission."If they had a business reason for leaning one way or the other, we would probably respect that," said Weintraub, again referring to a passage in the commissioner's statement of reasons in Luna's case clarifying that the FEC doesn't care if the outcome of a legitimate business practice is nonpartisan. "They can have a partisan slant," she said."Parler or Gab could likely make a similar commercial argument that their business model is premised on appealing to particular audiences with a particular ethos," said Fischer, echoing Weintraub. "Then their application of these pre-existing rules against a Democratic candidate would be made for commercial reasons, rather than political reasons."Trainor, who is otherwise sympathetic to conservatives when it comes to claims that the 2020 election was illegitimate, underscored that it's just not the FEC's job to get involved with how social media platforms are governed."We don't want to be in the business of regulating how businesses are run and what editorial decisions they make," he told Beck. "It really is the wrong vehicle to go after social media companies."With the FEC taking an agnostic approach to social media platforms' content moderation practices, and the prospects for any successful bipartisan initiatives on Big Tech remaining dim, the status quo seem likely to maintain intact despite simmering conservative anger over perceived mistreatment by tech platforms.And it may only get more tense, given intensifying conservative suspicion of Twitter's new CEO, Parag Agrawal, after an 11-year old tweet condemning Islamophobia surfaced on Twitter this week.—Parag Agrawal (@paraga) October 26, 2010 Trump, fully banned from Twitter, is now attempting to create a successful right-wing alternative to the company that Spies deemed a "new public square" in his complaint on behalf of Luna last year. But at any rate, Spies says he sees Twitter's "bona fide commercial reasons" justification as nothing more than a "post-hoc rationalization" by a company run by liberals."Twitter's not charging their favorite liberals to have blue checkmarks that expand their reach," he said. "They're giving them out for free, but they're just picking and choosing who they give them to."But again, Weintraub insisted that it's not the FEC's job to make that call."We're not going to weigh in on that," she said, laughing.Read the original article on Business Insider.....»»

Category: smallbizSource: nytDec 1st, 2021

Republicans eyeing a 2023 majority say they"re eager to grill Biden"s Cabinet secretaries, investigate Hunter, and (maybe) impeach the president

Insider asked Republicans poised to take charge what they'd do if American voters decide to put them back in the majority in Congress. Congressional Republicans have big plans to thwart the Biden administration's agenda.AP Photo/Evan Vucci Republicans have big plans to thwart Joe Biden if they reclaim the US House. Biden foes like Reps. Jim Jordan and Marjorie Taylor Greene would get more powerful. The GOP can't wait to grill Cabinet secretaries and investigate Hunter Biden. Republicans can't wait to make Joe Biden's life miserable if they take back control of the US House in the upcoming midterm elections. Odds are high that the GOP will wrest control of the House from Democrats in 2022. They've got a decent shot of winning back the Senate, too. And House Republicans are feeling so confident that they're already drafting their playbook for taking on the Biden administration once they've got more power on Capitol Hill. Insider asked some of the very Republicans poised to take charge what they'd do if American voters decide to put them back in the majority in Congress. Their plans: theatrical oversight hearings, investigations into Hunter Biden's art sales, and maybe even one or more Biden impeachments. "No government agency will want to receive a letter from us," said Rep. James Comer, a Kentucky Republican who is now the top Republican on the House Oversight and Reform Committee and is in position to become its next chairman if the GOP takes the majority. Republicans are making the case that handing them majorities in the House and Senate would allow them to provide a check against the Biden administration. They argue that Democratic leadership in both chambers of Congress has failed to hold the administration accountable so far. Democrats made the same pitch in the midterm elections during President Donald Trump's administration, and their House takeover in 2019 dramatically shifted the power dynamic in Washington and paved the way for Trump's two impeachments. "Everyone's frustrated with the Biden administration," Comer told Insider in a recent interview on Capitol Hill. "What they see in Congress now is absolutely no oversight to the Biden administration. Like who was held accountable for Afghanistan? Who's held accountable for the lack of border security? No one," he added. "Someone needs to hold them accountable and provide oversight, and we're going to do that."House Republicans want to investigate Hunter Biden's art sales.Paul Morigi/Getty ImagesClear your calendars, Cabinet secretariesComer expects a GOP-led Oversight Committee to be ground zero for GOP spats with the Biden administration, and that means the president's Cabinet secretaries should expect regular grillings on Capitol Hill. "We've got problems with just about every one of them with respect to oversight," Comer said. Another top target for GOP investigations: Hunter Biden. The president's son is a favorite target for Republicans who want to investigate Hunter Biden's international business dealings as well as his recent art sales. Comer has questioned whether would-be art buyers might try to seek improper influence over the White House by purchasing Hunter Biden's work. White House press secretary Jen Psaki told reporters in October that the White House wouldn't know who was buying the art. "Hunter Biden is at the top of the list," Comer told Insider recently. "All I want to know is who bought that original art. And that's not being nosy, that's based upon a pattern of bad behavior for Hunter Biden." The Biden White House would undoubtedly shift into a defensive posture if it's dealing with an antagonistic GOP majority from either chamber of Congress that suddenly has the power to issue subpoenas. The Trump and Obama administrations both made personnel changes, altered their legislative agendas, and braced for regular oversight hearings when the House switched parties after those administrations' first two years in office. The White House did not respond to Insider's request for comment for this story. Biden impeachment prospects Republicans also have big plans to overhaul the House Judiciary Committee, which counts some of the Biden administration's most vocal critics as its members. That committee is also typically where impeachment investigations and hearings take place. Rep. Jim Jordan — an Ohio Republican who's a leader of the House's most conservative GOP faction and is one of Trump's staunchest defenders on Capitol Hill — stands to become the chairman of the powerful panel if his party takes the House. "Lord willing, I think we're going to take back the majority and I want to be the chair of the Judiciary Committee," Jordan told Insider in a November interview. Rep. Kevin McCarthy, the top Republican in the House, could have a tough time mustering enough votes to become the next House speaker if the GOP clinches the chamber. Jordan challenged McCarthy for the minority leader slot in 2018, but the Ohio Republican said there's "zero" chance that he'll be the next House speaker and that he's focused on becoming Judiciary chairman. Some House Republicans are already trying to impeach Biden, but the effort is entirely symbolic with Democrats in the majority. Several Republicans filed impeachment articles in September, for example, criticizing Biden's withdrawal of US forces from Afghanistan, his immigration policies, and his administration's eviction moratorium. Rep. Marjorie Taylor Greene of Georgia filed articles of impeachment against Biden the day after he was sworn in, calling him "unfit" for the presidency. Impeachment talk could gain traction if Republicans are in the majority, but the GOP might risk blowback if they pursue a move that the public perceives as overtly political. And even if Biden were impeached in the House, he's unlikely to be ousted by a Senate where two-thirds of the chamber would need to support his removal — something that's never before happened in US history.Asked whether Republicans would pursue impeachment against Biden, Jordan said, "I don't know. What I do know is that he's had the worst presidency in history. It's been a complete disaster." Reps. Jim Jordan of Ohio and Matt Gaetz of Florida will get more powerful if Republicans take back the US House.Tom Williams/CQ-Roll Call, Inc via Getty ImagesChairman Matt Gaetz? Biden won't just be dealing with committee leaders who have power. Some of the far-right GOP gadflies who are often treated as Hill sideshows would be emboldened to make problems for the Democratic administration.For starters, Jordan wants to elevate Rep. Matt Gaetz, a Florida Republican who is another staunch Trump defender and who is the subject of a federal sex-trafficking investigation. Gaetz has denied any wrongdoing. In a recent interview on Gaetz's podcast, Jordan said he wants to see Gaetz chairing a Judiciary subcommittee, "whichever one he wants." McCarthy has also vowed to put flame throwing Republican Reps. Paul Gosar of Arizona and Greene of Georgia back on committees if the GOP takes the majority. The current Judiciary Committee chairman, Rep. Jerry Nadler of New York, said he thinks Democrats will hold onto the House in the midterms. But as for a potential Jordan chairmanship, Nadler said, "Jordan frightens me. He's off the wall." Gaetz, Nadler told Insider, "is a little more sensible." Rep. Steve Cohen, a Tennessee Democrat who also serves on the Judiciary Committee, predicted "chaos" if Republicans retake the House. Emboldening conservatives in the House like Jordan, Gaetz, and Greene is a "dreadful" prospect, Cohen told Insider. "My father was superintendent of a mental institution," he said, "so I think about things like this." Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 30th, 2021

Anticipating a majority after the 2022 midterms, House Republicans are eager to grill Biden"s Cabinet secretaries, investigate Hunter and (maybe) impeach the president

Insider asked Republicans poised to take charge what they'd do if American voters decide to put them back in the majority in Congress. Congressional Republicans have big plans to thwart the Biden administration's agenda.AP Photo/Evan Vucci Republicans have big plans to thwart Joe Biden if they reclaim the US House. Biden foes like Reps. Jim Jordan and Marjorie Taylor Greene would get more powerful. The GOP can't wait to grill Cabinet secretaries and investigate Hunter Biden. Republicans can't wait to make Joe Biden's life miserable if they take back control of the US House in the upcoming midterm elections. Odds are high that the GOP will wrest control of the House from Democrats in 2022. They've got a decent shot of winning back the Senate, too. And House Republicans are feeling so confident that they're already drafting their playbook for taking on the Biden administration once they've got more power on Capitol Hill. Insider asked some of the very Republicans poised to take charge what they'd do if American voters decide to put them back in the majority in Congress. Their plans: theatrical oversight hearings, investigations into Hunter Biden's art sales, and maybe even one or more Biden impeachments. "No government agency will want to receive a letter from us," said Rep. James Comer, a Kentucky Republican who is now the top Republican on the House Oversight and Reform Committee and is in position to become its next chairman if the GOP takes the majority. Republicans are making the case that handing them majorities in the House and Senate would allow them to provide a check against the Biden administration. They argue that Democratic leadership in both chambers of Congress has failed to hold the administration accountable so far. Democrats made the same pitch in the midterm elections during President Donald Trump's administration, and their House takeover in 2019 dramatically shifted the power dynamic in Washington and paved the way for Trump's two impeachments. "Everyone's frustrated with the Biden administration," Comer told Insider in a recent interview on Capitol Hill. "What they see in Congress now is absolutely no oversight to the Biden administration. Like who was held accountable for Afghanistan? Who's held accountable for the lack of border security? No one," he added. "Someone needs to hold them accountable and provide oversight, and we're going to do that."House Republicans want to investigate Hunter Biden's art sales.Paul Morigi/Getty ImagesClear your calendars, Cabinet secretariesComer expects a GOP-led Oversight Committee to be ground zero for GOP spats with the Biden administration, and that means the president's Cabinet secretaries should expect regular grillings on Capitol Hill. "We've got problems with just about every one of them with respect to oversight," Comer said. Another top target for GOP investigations: Hunter Biden. The president's son is a favorite target for Republicans who want to investigate Hunter Biden's international business dealings as well as his recent art sales. Comer has questioned whether would-be art buyers might try to seek improper influence over the White House by purchasing Hunter Biden's work. White House press secretary Jen Psaki told reporters in October that the White House wouldn't know who was buying the art. "Hunter Biden is at the top of the list," Comer told Insider recently. "All I want to know is who bought that original art. And that's not being nosy, that's based upon a pattern of bad behavior for Hunter Biden." The Biden White House would undoubtedly shift into a defensive posture if it's dealing with an antagonistic GOP majority from either chamber of Congress that suddenly has the power to issue subpoenas. The Trump and Obama administrations both made personnel changes, altered their legislative agendas, and braced for regular oversight hearings when the House switched parties after those administrations' first two years in office. The White House did not respond to Insider's request for comment for this story. Biden impeachment prospects Republicans also have big plans to overhaul the House Judiciary Committee, which counts some of the Biden administration's most vocal critics as its members. That committee is also typically where impeachment investigations and hearings take place. Rep. Jim Jordan — an Ohio Republican who's a leader of the House's most conservative GOP faction and is one of Trump's staunchest defenders on Capitol Hill — stands to become the chairman of the powerful panel if his party takes the House. "Lord willing, I think we're going to take back the majority and I want to be the chair of the Judiciary Committee," Jordan told Insider in a November interview. Rep. Kevin McCarthy, the top Republican in the House, could have a tough time mustering enough votes to become the next House speaker if the GOP clinches the chamber. Jordan challenged McCarthy for the minority leader slot in 2018, but the Ohio Republican said there's "zero" chance that he'll be the next House speaker and that he's focused on becoming Judiciary chairman. Some House Republicans are already trying to impeach Biden, but the effort is entirely symbolic with Democrats in the majority. Several Republicans filed impeachment articles in September, for example, criticizing Biden's withdrawal of US forces from Afghanistan, his immigration policies, and his administration's eviction moratorium. Rep. Marjorie Taylor Greene of Georgia filed articles of impeachment against Biden the day after he was sworn in, calling him "unfit" for the presidency. Impeachment talk could gain traction if Republicans are in the majority, but the GOP might risk blowback if they pursue a move that the public perceives as overtly political. And even if Biden were impeached in the House, he's unlikely to be ousted by a Senate where two-thirds of the chamber would need to support his removal — something that's never before happened in US history.Asked whether Republicans would pursue impeachment against Biden, Jordan said, "I don't know. What I do know is that he's had the worst presidency in history. It's been a complete disaster." Reps. Jim Jordan of Ohio and Matt Gaetz of Florida will get more powerful if Republicans take back the US House.Tom Williams/CQ-Roll Call, Inc via Getty ImagesChairman Matt Gaetz? Biden won't just be dealing with committee leaders who have power. Some of the far-right GOP gadflies who are often treated as Hill sideshows would be emboldened to make problems for the Democratic administration.For starters, Jordan wants to elevate Rep. Matt Gaetz, a Florida Republican who is another staunch Trump defender and who is the subject of a federal sex-trafficking investigation. Gaetz has denied any wrongdoing. In a recent interview on Gaetz's podcast, Jordan said he wants to see Gaetz chairing a Judiciary subcommittee, "whichever one he wants." McCarthy has also vowed to put flame throwing Republican Reps. Paul Gosar of Arizona and Greene of Georgia back on committees if the GOP takes the majority. The current Judiciary Committee chairman, Rep. Jerry Nadler of New York, said he thinks Democrats will hold onto the House in the midterms. But as for a potential Jordan chairmanship, Nadler said, "Jordan frightens me. He's off the wall." Gaetz, Nadler told Insider, "is a little more sensible." Rep. Steve Cohen, a Tennessee Democrat who also serves on the Judiciary Committee, predicted "chaos" if Republicans retake the House. Emboldening conservatives in the House like Jordan, Gaetz, and Greene is a "dreadful" prospect, Cohen told Insider. "My father was superintendent of a mental institution," he said, "so I think about things like this." Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 30th, 2021

Why Joe Biden"s life will quickly get miserable if Republicans take over the House

Republicans eyeing a 2023 House majority say they're eager to grill Cabinet secretaries, investigate Hunter Biden, and (maybe) impeach the president. Congressional Republicans have big plans to thwart the Biden administration's agenda.AP Photo/Evan Vucci Republicans have big plans to thwart Joe Biden if they reclaim the US House. Biden foes like Reps. Jim Jordan and Marjorie Taylor Greene would get more powerful. The GOP can't wait to grill Cabinet secretaries and investigate Hunter Biden. Republicans can't wait to make Joe Biden's life miserable if they take back control of the US House in the upcoming midterm elections. Odds are high that the GOP will wrest control of the House from Democrats in 2022. They've got a decent shot of winning back the Senate, too. And House Republicans are feeling so confident that they're already drafting their playbook for taking on the Biden administration once they've got more power on Capitol Hill. Insider asked some of the very Republicans poised to take charge what they'd do if American voters decide to put them back in the majority in Congress. Their plans: theatrical oversight hearings, investigations into Hunter Biden's art sales, and maybe even one or more Biden impeachments. "No government agency will want to receive a letter from us," said Rep. James Comer, a Kentucky Republican who is now the top Republican on the House Oversight and Reform Committee and is in position to become its next chairman if the GOP takes the majority. Republicans are making the case that handing them majorities in the House and Senate would allow them to provide a check against the Biden administration. They argue that Democratic leadership in both chambers of Congress has failed to hold the administration accountable so far. Democrats made the same pitch in the midterm elections during President Donald Trump's administration, and their House takeover in 2019 dramatically shifted the power dynamic in Washington and paved the way for Trump's two impeachments. "Everyone's frustrated with the Biden administration," Comer told Insider in a recent interview on Capitol Hill. "What they see in Congress now is absolutely no oversight to the Biden administration. Like who was held accountable for Afghanistan? Who's held accountable for the lack of border security? No one," he added. "Someone needs to hold them accountable and provide oversight, and we're going to do that."House Republicans want to investigate Hunter Biden's art sales.Paul Morigi/Getty ImagesClear your calendars, Cabinet secretariesComer expects a GOP-led Oversight Committee to be ground zero for GOP spats with the Biden administration, and that means the president's Cabinet secretaries should expect regular grillings on Capitol Hill. "We've got problems with just about every one of them with respect to oversight," Comer said. Another top target for GOP investigations: Hunter Biden. The president's son is a favorite target for Republicans who want to investigate Hunter Biden's international business dealings as well as his recent art sales. Comer has questioned whether would-be art buyers might try to seek improper influence over the White House by purchasing Hunter Biden's work. White House press secretary Jen Psaki told reporters in October that the White House wouldn't know who was buying the art. "Hunter Biden is at the top of the list," Comer told Insider recently. "All I want to know is who bought that original art. And that's not being nosy, that's based upon a pattern of bad behavior for Hunter Biden." The Biden White House would undoubtedly shift into a defensive posture if it's dealing with an antagonistic GOP majority from either chamber of Congress that suddenly has the power to issue subpoenas. The Trump and Obama administrations both made personnel changes, altered their legislative agendas, and braced for regular oversight hearings when the House switched parties after those administrations' first two years in office. The White House did not respond to Insider's request for comment for this story. Biden impeachment prospects Republicans also have big plans to overhaul the House Judiciary Committee, which counts some of the Biden administration's most vocal critics as its members. That committee is also typically where impeachment investigations and hearings take place. Rep. Jim Jordan — an Ohio Republican who's a leader of the House's most conservative GOP faction and is one of Trump's staunchest defenders on Capitol Hill — stands to become the chairman of the powerful panel if his party takes the House. "Lord willing, I think we're going to take back the majority and I want to be the chair of the Judiciary Committee," Jordan told Insider in a November interview. Rep. Kevin McCarthy, the top Republican in the House, could have a tough time mustering enough votes to become the next House speaker if the GOP clinches the chamber. Jordan challenged McCarthy for the minority leader slot in 2018, but the Ohio Republican said there's "zero" chance that he'll be the next House speaker and that he's focused on becoming Judiciary chairman. Some House Republicans are already trying to impeach Biden, but the effort is entirely symbolic with Democrats in the majority. Several Republicans filed impeachment articles in September, for example, criticizing Biden's withdrawal of US forces from Afghanistan, his immigration policies, and his administration's eviction moratorium. Rep. Marjorie Taylor Greene of Georgia filed articles of impeachment against Biden the day after he was sworn in, calling him "unfit" for the presidency. Impeachment talk could gain traction if Republicans are in the majority, but the GOP might risk blowback if they pursue a move that the public perceives as overtly political. And even if Biden were impeached in the House, he's unlikely to be ousted by a Senate where two-thirds of the chamber would need to support his removal — something that's never before happened in US history.Asked whether Republicans would pursue impeachment against Biden, Jordan said, "I don't know. What I do know is that he's had the worst presidency in history. It's been a complete disaster." Reps. Jim Jordan of Ohio and Matt Gaetz of Florida will get more powerful if Republicans take back the US House.Tom Williams/CQ-Roll Call, Inc via Getty ImagesChairman Matt Gaetz? Biden won't just be dealing with committee leaders who have power. Some of the far-right GOP gadflies who are often treated as Hill sideshows would be emboldened to make problems for the Democratic administration.For starters, Jordan wants to elevate Rep. Matt Gaetz, a Florida Republican who is another staunch Trump defender and who is the subject of a federal sex-trafficking investigation. Gaetz has denied any wrongdoing. In a recent interview on Gaetz's podcast, Jordan said he wants to see Gaetz chairing a Judiciary subcommittee, "whichever one he wants." McCarthy has also vowed to put flame throwing Republican Reps. Paul Gosar of Arizona and Greene of Georgia back on committees if the GOP takes the majority. The current Judiciary Committee chairman, Rep. Jerry Nadler of New York, said he thinks Democrats will hold onto the House in the midterms. But as for a potential Jordan chairmanship, Nadler said, "Jordan frightens me. He's off the wall." Gaetz, Nadler told Insider, "is a little more sensible." Rep. Steve Cohen, a Tennessee Democrat who also serves on the Judiciary Committee, predicted "chaos" if Republicans retake the House. Emboldening conservatives in the House like Jordan, Gaetz, and Greene is a "dreadful" prospect, Cohen told Insider. "My father was superintendent of a mental institution," he said, "so I think about things like this." Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 30th, 2021

Nancy Pelosi privately criticized the billionaires" tax plan as a PR stunt, prompting pushback from the Senate"s top tax-writing Dem who argues it"s a "big mistake" to scrap it

Ron Wyden's billionaires' tax lasted less than 24 hours before Joe Manchin shot it down. Pelosi was skeptical of it behind closed doors. Speaker of the House Nancy Pelosi (D-CA) takes questions from reporters at her weekly news conference on Capitol Hill on Thursday, Nov. 4, 2021. Kent Nishimura / Los Angeles Times via Getty Images Pelosi privately criticized Ron Wyden's billionaires' tax as a measure that stood little chance of becoming an enduring law, per two people familiar. She was concerned about whether it would get 50 Senate Democratic votes and withstand legal challenges. Wyden, the Democrats' chief tax writer in the Senate, told Insider it'd be a 'big mistake' to not pursue it. House Speaker Nancy Pelosi assailed the idea of a billionaires' tax on late October call with senior Democratic lawmakers, saying it amounted to little more than a public relations stunt, per two people familiar with the matter.Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee, unveiled a plan last month to hit billionaires like Tesla CEO Elon Musk with a new tax on their growing pile of wealth. Only hours after it was rolled out, the measure crashed into resistance from Sen. Joe Manchin of West Virginia, a conservative Democrat who viewed it as punitive towards business and corporate leaders.Many Democratic senators have treaded cautiously around the concept of a billionaires' tax, which Wyden has been working on since 2019. Yet the party turned to Wyden's idea after resistance from Sen. Kyrsten Sinema of Arizona to raising corporate and income tax rates forced them to shelve their other revenue-raising plans to pay for affordable childcare, expand Medicare so it covers hearing services, renew the child tax credit for an extra year, and more.Pelosi was sour on the Wyden legislation's prospects behind closed doors, The Washington Post was first to report.A senior Democratic aide familiar with the matter said Pelosi criticized the plan on the call because it lacked legislative text as the White House raced to finalize negotiations on their social spending bill. The California lawmaker was also concerned whether it could win the support of all 50 Senate Democrats - and withstand a Supreme Court challenge.Democrats want to finance all of President Joe Biden's economic agenda with tax hikes on the richest Americans and large corporations. But their narrow majorities in the House and Senate have prompted Democratic infighting on the scale of the tax increases. Manchin and Sinema have compelled the party to scale back their planned hikes.House Democrats recently advanced a $1.75 trillion social spending plan with a new 5% surtax on people with incomes above $10 million. That's dialed up to 8% for rich Americans with incomes higher than $25 million. Their package also includes a 15% domestic minimum tax. But it excluded the billionaire tax."The House had the courage and the determination to raise rates on the wealthy and build consensus that the Senate has been unable to achieve," the senior Democratic aide told Insider.Wyden said last week he would continue working with Manchin on other tax proposals aimed at billionaires. The Oregon Democrat has swiped at the House tax plan, arguing that focusing on rich people's income instead of wealth held in assets like stock allows "billionaires to literally skate to tax avoidance." The nonpartisan Joint Committee on Taxation recently projected the provision would raise $557 billion over a decade, making it the single-largest revenue raiser if it was included."In a package that's supposed to be about giving everybody a shot to get ahead, it would be a big mistake, from both a policy and political perspective, not to ensure billionaires pay any taxes at all," Wyden said in a statement to Insider. "This is about fairness and showing the American people taxes aren't mandatory for them and optional for the wealthiest people in the country."Read the original article on Business Insider.....»»

Category: smallbizSource: nytNov 11th, 2021

Republican-Led Attempt To Legalize Cannabis Could Reignite Pot Stocks

Republican-Led Attempt To Legalize Cannabis Could Reignite Pot Stocks Cannabis stocks could become hot again on Wall Street Bets after Marijuana Moment reported Friday a new Republican-led congressional marijuana legalization bill is "imminent."  The text of the draft legislation, obtained by Marijuana Moment, specifies Rep. Nancy Mace (R-SC) leads the attempt to legalize pot. The measure, titled States Reform Act, is being examined by stakeholders for feedback and is subject to change before its official filing later this month.  This is yet another development in what's proved to be an active year cannabis reform on Capitol Hill. But the GOP angle is notable, as many have raised doubts about the prospects of Congress passing the far-reaching, large-scale marijuana bills that Democrats are leading in the House and Senate. Getting Republican buy in could prove critical to getting something over the finish line, and the Mace measure seems aimed at appealing to the states' rights and business interests of conservative colleagues on her side of the aisle while also incorporating some restorative justice and tax elements largely favored by progressives. The freshman congresswoman, who was the sole GOP vote in favor of a cannabis research bill for veterans during a committee markup on Thursday, aims to deschedule marijuana and create a regulatory scheme federally—but still ensure that existing state markets are not unduly burdened or undermined by new rules. - Marijuana Moment The cannabis news website published a breakdown of the draft legislation and summary documents:  -Cannabis would be federally descheduled and treated in a manner similar to alcohol. -A 3.75 percent excise tax would be imposed on cannabis sales. Revenue would support grant programs for community reentry, law enforcement and Small Business Administration (SBA) aid for newly licensed businesses. -The Treasury Department's Alcohol and Tobacco Tax and Trade Bureau (TTB) would be the chief regulator for marijuana with respect to interstate commerce. -The Food and Drug Administration (FDA) would be limited in its regulatory authority, with the intent being that it would have no more control over cannabis than it does for alcohol except when it comes to medical cannabis. The agency could prescribe serving sizes, certify designated state medical cannabis products and approve and regulate pharmaceuticals derived from marijuana, but could not ban the use of cannabis or its derivates in non-drug applications, like in designated state medical cannabis products, dietary supplements, foods, beverages, non-drug topicals or cosmetics. -Raw cannabis would be considered an agricultural commodity regulated by the U.S. Department of Agriculture (USDA). -The legislation would grandfather existing state-licensed cannabis operators into the federal scheme to ensure continued patient access and incentivize participation in the legal market. -As federal agencies work to promulgate rules, there would be safe harbor provisions to protect patients and marijuana businesses acting in compliance with existing state laws. -People with certain federal cannabis convictions that were non-violent would be eligible for expungements. -To prevent youth use, there would be a mandatory 21 age limit for recreational cannabis, and the bill also prescribes certain restrictions on things like advertising. -SBA would need to treat marijuana businesses the same as other regulated markets, like it does for alcohol companies, for example. -The measure also stipulates that veterans can't face discrimination in federal hiring due to cannabis use, and doctors with the U.S. Department of Veterans Affairs (VA) would be specifically authorized to issue recommendations for medical cannabis for veterans. -Federal agencies could continue to drug test for marijuana. -The Bureau of Labor Statistics (BLS) would be required to issue a report to Congress on the marijuana industry. Bloomberg quoted the U.S. Cannabis Council who said it welcomes the "growing bipartisan effort in Congress to end federal cannabis prohibition" and is reviewing the legislative text.  "It is encouraging to see more Republicans embracing cannabis legalization and putting forward comprehensive frameworks for reform," U.S. Cannabis Council CEO Steve Hawkins said.  News of the bipartisan efforts to legalize marijuana may have sparked some positive sentiment among the WSB crowd on Friday. There's a notable positive sentiment spike in positive conversations surrounding ETFMG Alternative Harvest ETF (MJ). But there is a caveat for WSB or other investors piling into MJ - that is, the ETF, which holds notable pot companies such as GrowGeneration Corp, Tilray Inc, and Canopy Growth Corp, has seen its outstanding shares balloon 5x since mid-2018 as shares were more than halved.   So the point is, if new legalization is filed in the near term, WSB will be all over pot stocks, and our warning is, MJ's issuance of shares could be a hindrance to sustaining an uptrend.  Tyler Durden Sun, 11/07/2021 - 18:30.....»»

Category: smallbizSource: nytNov 7th, 2021