Authored by Katabella Roberts via The Epoch Times (emphasis ours),

The owner of a gym in New Jersey who shot to national attention after defying COVID-19 restrictions by keeping his gym open has had all charges against him dropped.

Ian Smith, the co-owner of Atilis Gym in Bellmawr, said in a statement on the social media platform X on May 18 that the more than 80 charges against him and the gym’s co-owner Frank Trumbetti have been dropped with prejudice, meaning they cannot be revisited or refiled.

Among the charges levied against the two men by the state were violations of a governor’s order, public nuisance, disturbing the peace, and operating without a license.

“The support we received locally, nationally, and internationally for our stand is something I will be forever grateful for,” Mr. Smith said. “With that being said, I am thrilled to announce that we have achieved a major victory in the long, hard fight against the State.”

Mr. Smith added that the “victory opens the battlefield again and gives us options to continue to push back and bring justice to the treasonous actions of Phil Murphy and his lackies [sic],” referencing the New Jersey Governor.

He further thanked his “fearless attorneys,” adding that “some of the most high profile attorneys around the country ran from our case—knowing it would be a long, hard road and would make them a target of the stare.”

“Again, thank you to all who supported us. We could not have done it without you … Nobody is coming to save you, save yourself. Spit on your hands and hoist the black flag. No quarter,” he concluded.

Gym Owners Rack Up Millions in Fines

Mr. Smith and Mr. Trumbetti racked up hundreds of thousands of dollars in fines—including a $15,000 per day fine—for keeping their gym open in defiance of a state-wide order instructing non-essential businesses to close during the COVID-19 pandemic in May 2020.

The two men had argued that they had implemented a range of safety protocols at the gym and had only found a single case of the virus that could be traced back to the health facility, despite receiving upward of 84,000 visits.

However, state officials held steady with the fines, and in December 2021, Mr. Smith said they amounted to more than $1.2 million for violating the public health emergency rules, although he stressed he had no intention of paying them.

The two men were later arrested and charged on multiple counts, including one count of fourth-degree contempt, one count of obstruction, and one count of violation of a disaster control act, among others.

Despite the mounting charges against them, the businessman filed a federal lawsuit against the state accusing Mr. Murphy, along with then-Attorney General Gurbir Grewal and other New Jersey police officials accusing them of violating their constitutional rights by forcing them to shut down their business.

The Epoch Times has contacted the New Jersey Attorney General’s Office for comment.

Mr. Smith’s legal win comes after he tried to run for Congress in 2022, challenging two-term Rep. Andy Kim (D-N.J.).

At the time, the gym owner said he planned to run on a platform focused on “liberty, small government, and America First policies,” and vowed to fight COVID-19 mandates, soaring illegal immigration, and increased government spending.

“For too long, good people have not gotten involved in politics—whether that is because the establishment won’t open the door for them or they don’t want to participate in the foul world of politics. More than anything, this needs to change. And I will be a part of that change,” Mr. Smith said in announcing his Congressional run.

However, the businessman was ultimately defeated in the primary by businessman Bob Healey.

Lorenz Duchamps contributed to this report. 

Tens of thousands of Iranians have filled up Tehran’s streets on Wednesday for a massive funeral procession for President Ebrahim Raisi and seven other officials who died in Sunday’s helicopter crash.

Iran’s Supreme Leader Ayatollah Ali Khamenei led funeral prayers for the deceased, which also includes foreign minister Hossein Amir-Abdollahian. “Oh Allah, we didn’t see anything but good from him,” said Khamenei, reciting Islamic funeral verses.

According an Al Jazeera correspondent who is present at ‘Freedom Square’ where memorial events are taking place, “The streets are completely closed to the traffic, [with] heavy security measures here, several security checkpoints, and you can see thousands and thousands of people are already pouring into this area.”

Other cities also hosted memorial processions. The Associated Press details of the Khamenei-led prayers in Tehran:

He soon left and the crowd inside rushed to the front, reaching out to touch the coffins. Iran’s acting president, Mohammad Mokhber, stood nearby and openly wept during the service.

People then carried the coffins out on their shoulders, with chants outside of “Death to America!” They loaded them onto a semitruck-trailer for a procession through downtown Tehran to Azadi Square, or Freedom Square, where Raisi gave speeches in the past.

Minutes ago Imam Khamenei led the funeral prayer over the bodies of President Ebrahim Raisi and his esteemed companions pic.twitter.com/eSFemTDsne

— Khamenei.ir (@khamenei_ir) May 22, 2024

Delegations and foreign ministers from various countries were in attendance, including Turkey’s vice president and even Taliban representatives, but among the more notable and controversial figures included Hamas’s political leader Ismail Haniyeh.

“I come in the name of the Palestinian people, in the name of the resistance factions of Gaza … to express our condolences,” Haniyeh told the crowds.

Hamas Chief Ismail Haniyeh attends the funeral procession of martyr President Ebrahim #Raisi and his entourage in Tehran. pic.twitter.com/RBQwDniFCf

— IRNA News Agency (@IrnaEnglish) May 22, 2024

Haniyeh at one point said he had heard the late president say that “the Palestinian issue” remains a central concern to all Muslims, which “must fulfil their obligations to the Palestinians to liberate their land”.

He said that Raisi had described the Oct.7 attacks on Israel an “earthquake in the heart of the Zionist entity”.

Hamas leader, Ismail Haniyeh, is all smiles today at Ebrahim Raisi’s funeral in Tehran. pic.twitter.com/4n1jBRGxlH

— Sarah Raviani (@sarahraviani) May 22, 2024

The bodies will later in the week be taken to South Khorasan province for additional memorial services, after which Raisi will be buried in his home city of Mashhad in the northeast the famous Shia pilgrimage site, the Imam Reza shrine.

By Momoka Yokohama, Bloomberg markets live reporter and strategist

Japan is seeing a record run of stock buybacks that’s supporting investor sentiment after a stalled rally, and accelerated repurchases ahead of upcoming shareholder meetings may provide a fresh tailwind for the market.

Topix-listed companies announced a combined ¥6.3 trillion ($40 billion) in buybacks from the start of April through May 15, the most-ever for the period, according to data compiled by JPMorgan analysts including Rie Nishihara.

Late June is the peak period for annual general shareholder meetings in Japan. Corporate managers may provide details on how buybacks have boosted stock prices at a time when policymakers have been pushing companies to improve returns.

There may also be updates on unwinding of cross-shareholdings with other firms, a tradition that critics say limited competition and aggressive investment. Share buybacks are helping support the market as selling pressure related to this trend mounts.

Analysts expect Japanese stocks to gain a bit more, with those at Mizuho and SMBC Nikko targeting 42,000 and 40,500 respectively for the Nikkei 225 by the end of the year. The average of five brokers stands at 39,640, about 1.8% higher than Tuesday’s closing level, Bloomberg-compiled data show.

“Buybacks in June could be the next point of recovery for Japan’s stock market,” said Kohei Onishi, senior investment strategy researcher at Mitsubishi UFJ Morgan Stanley Securities Co., adding that companies have tended to buy shares before AGMs to push up the stock price.

With the upswing in buybacks, Japanese companies have become the biggest purchaser of the country’s equities, according to Daiwa Securities data. The Bank of Japan was formerly the top buyer via exchange traded funds, but the central bank discontinued such purchases in March.

“For sellers, it’s profitable to sell cross-held shares now,” said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Intelligence Laboratory. Companies will use funds they raised from selling those shares to buy back their own stocks, he said.
The benefits of buybacks may be short-lived, however. Suzuki said that after AGMs, cross-held share selling tends to increase, while ETF managers may unload holdings to pay investors dividends in July.

Still, at least for the period from the second week of May, during the time when many companies announce their earnings, to mid-June before shareholder meetings, there’s been big share buying by companies in the past five years, historical data from Japan Exchange Group show. That may have helped the Topix jump 7.4% last June, though the trend isn’t consistent.

This year the market impact could expand thanks to the pullback in April. Onishi at MUMSS said companies usually hesitate to buy back shares when they are rising. That means the slowdown since April gives more incentive for company managers to carry out buybacks ahead of AGMs, he said.

Authored by Michael Snyder via The End of The American Dream blog,

World leaders have been targeted quite frequently this month, and that should deeply alarm all of us.  I think that all of this geopolitical instability is a sign that there is far more going on behind the scenes than we are being told.  The major powers appear to be making moves in anticipation of what they believe is coming next.  Right now, the death of Iranian President Ebrahim Raisi is dominating the news cycle, and at this stage we don’t know if that was an accident or not. 

But as a Twitter user known as “Cillian” has pointed out, there has been quite a lot of “international intrigue” during the past couple of weeks…

Over the past two weeks:

• May 7th: Assassination attempt against Saudi Crown Prince.

• May 13th: Turkish President Erdoğan holds emergency meeting following warning of possible military coup.

• May 15th: Assassination attempt on Slovak PM Robert Fico.

• May 16th: Citizen arrested for threatening to assassinate Serbian President Vučić.

• May 19th: Saudi Arabia’s King Salman hospitalised for second time in four weeks.

• May 19th: Helicopter crash involving Iranian President Raisi and Foreign Minister Amir-Abdollahian.

What is going on right now?

And I have one more item to add to the list.

On Sunday, a coup that involved at least three U.S. citizens was foiled in the Democratic Republic of Congo…

American citizens were involved in an attempted coup d’état that left at least three people dead on Sunday in the Democratic Republic of Congo, a military spokesperson told CNN Monday.

The attempted coup, which targeted the residence of Congolese politician Vital Kamerhe and the country’s presidential palace, was led by opposition leader Christian Malanga, who was killed in a gun battle between the armed putschists and the presidential guards, according to army spokesman General Sylvain Ekenge. Ekenge also claimed Malanga was a US citizen, though the State Department said later it had no records of him.

“I confirm the death of Christian Malanga neutralized during the exchange of fire at the Palais de la Nation (presidential palace),” Ekenge told CNN, adding that Malanga’s son Marcel, “was among those arrested.”

Ekenge named three other Americans, identified as Benjamin Reuben Zalman-Polun, Patrick Ducey, and Taylor Thomson were involved in the foiled coup.

It is being alleged that Zalman-Polun, Ducey and Thomson were CIA agents, but U.S. officials are denying this.

With everything that has been going on, I think that it would be wise for all world leaders to be on a heightened state of alert.

As for why Iranian President Ebrahim Raisi’s helicopter went down, that remains a mystery.

What we do know is that he was flying during heavy fog in a very remote area in the mountains, and the helicopter that he was on was very old…

Iranian state media reported that the helicopter that crashed in Iran was a Bell 212 model. It is a civilian version of the ubiquitous Vietnam War-era UH-1N “Twin Huey”. Such helicopters are in wide use globally by both governments and private operators.

It was developed for the Canadian military in the late 1960s and introduced in 1971.

Helicopter tragedies happen all the time, and we certainly cannot rule out an accident in this case.

It is also being suggested that one of Raisi’s domestic enemies could have targeted the helicopter…

According to a report in The Economist, Raisi had a long list of enemies in Iran, including relative moderates he has marginalised to the fellow conservatives who think he has been an inept president.

It said that some Iranians believe that Raisi’s enemies may have their exacted revenge. “It is not unreasonable to wonder if domestic foes conspired to kill him,” the report said.

I think that this is also a very strong possibility.

Iranian politics is a very messy business, and those that are jockeying for power can be absolutely ruthless.

Of course the dominant narrative that will eventually emerge from inside Iran is that either the U.S. or Israel is responsible.

According to Reuters, one Israeli official has already stated that “it wasn’t us”…

As conspiracy theories began to circulate online Israel – a long time foe of Iran – denied any involvement in Raisi’s death. An Israeli official told the Reuters news agency: “It wasn’t us.”

Needless to say, no matter how many times the Israelis deny responsibility most Iranian officials will never believe them.

And without a doubt, the Israelis are not sad to see Raisi go.  In fact, they were quite outraged when there was a moment of silence at the UN on Monday…

Amid the international messages of condolence and support for Iran after the death of President Ebrahim Raisi, the United Nations Security Council on Monday held a solemn moment of silence to observe his passing. Israel is outraged by the gesture, saying that it was tantamount to honoring a terrorist, or “Hitler” – as stated by Israeli Ambassador to UN Gilad Erdan.

“You read correctly, the UN Security Council today held a moment’s silence to remember a mass murderer, Iranian President Raisi,” Erdan said in a video published to social media.

“This body, which makes no effort to free our hostages, tipped their heads today to a man who was responsible for the deaths of thousands in Iran, in Israel, and around the world.”

It is well known that Raisi was responsible for the deaths of vast numbers of people, and under his rule the persecution of Christians in Iran got even worse…

Christians in Iran faced intensified persecution in 2023, as highlighted in a joint annual report by advocacy groups Article 18, Christian Solidarity Worldwide, Open Doors, and Middle East Concern.

The report, released on Monday, revealed a surge in arrests, with 166 documented in 2023 compared to 134 in the previous year. Disturbingly, one-third of those arrested were targeted for possessing multiple copies of the Bible.

The arrests unfolded in waves, increasing over the summer and spiking during Christmas, creating a higher number of “faceless victims” as fewer cases were publicized. By the end of the year, 17 Christians faced prison sentences or punitive measures for “propaganda against the state.”

The Biden administration was also not very fond of Raisi, but on Monday U.S. Secretary of Defense Lloyd Austin denied that the United States had anything to do with his death…

United States Defense Secretary Lloyd Austin on Monday denied Washington’s involvement in the tragic helicopter crash that killed Iranian President Ebrahim Raisi and the country’s Foreign Minister Hossein Amir-Abdollahian.

The defense secretary, however, declined to comment on the reporter’s question about whether Tehran would blame Israel for the helicopter crash. “They have to conduct an investigation to see what the cause of the crash was, it could be a number of things,” Austin added.

This is a mystery that may not be solved any time soon.

But the Iranians will inevitably want to blame someone, and that will bring us even closer to all-out war in the Middle East.

I don’t think that all-out war is coming immediately.

But emotions on both sides are reaching a fever pitch, and I fully expect the conflict in the Middle East to go to an entirely new level by the end of this calendar year.

*  *  *

Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

An ugly home sales print (but record April home prices) combined with declining traffic and smaller spend data from Target threw some shade on the market early on but it was the FOMC Minutes that sparked the waterfall with their more hawkish comments.

For any and all that say “yeah but they’re stale, we had CPI and Retail Sales since”, see the chart below which shows growth macro data disappointing since the last FOMC and inflation macro data rising still – no let up in the stagflation scenario…

Source: Bloomberg

Plenty of FedSpeak again today left stocks red by the close (despite a late day rebound attempt) with Small Caps lagging. Nasdaq was the prettiest horse in today’s glue factory managing to ramp into the close and end unchanged…

Goldman’s trading desk noted that volumes were elevated +15% vs the trailing 2 weeks with S&P top of book +50% (we have continued to see this strengthen).

Our floor is skewed 3% better to buy led by HF demand in Tech + Discretionary names.  HF’s are small for sale in Industrials and Hcare, led by long sales.

L/O passive demand remains consistent (mostly concentrated in tech and HC), but overall activity feels extremely muted.  

Corporates are large buyers and CTAs are small buyers.

Traders still tilted towards defensives over cyclicals but both were hit today…

Source: Bloomberg

The basket of Mag7 stocks were weak today ahead of tonight’s NVDA earnings…

Source: Bloomberg

Treasury yields were mixed today with the short-end lagging notably (2Y +5bps, 30Y unch)…

Source: Bloomberg

Which flattened the yield curve (2s30s) to its most inverted since April’s CPI plunge…

Source: Bloomberg

Rate-cut expectations dropped (hawkishly) after the Fed Minutes…

Source: Bloomberg

The dollar extended its latest rebound, erasing all the post-CPI losses…

Source: Bloomberg

Gold was clubbed like a baby seal today for its worst day since April…

Source: Bloomberg

Cryptos actually held up well today – after another solid net inflow yesterday into BTC ETFs, and further hope for the approval of ETH ETFs…

Source: Bloomberg

ETH tagged $3800 and hovered just below it…

Source: Bloomberg

Bitcoin oscillated around the $70,000 level all day ending practically unch…

Source: Bloomberg

Oil prices slipped back towards 3 month lows (despite a crude draw)…

Source: Bloomberg

Today’s drop sent WTI back below its 100- and 200DMA…

Source: Bloomberg

Finally, the FOMC Minutes showed some Fed members feared that despite a ‘restrictive’ monetary policy, financial conditions were too easy…

Source: Bloomberg

They are right!! And the reason financial conditions are so easy is because of the constant pivot jawboning about a possible rate-cut and premature victory celebrations by The Fed for vanquishing inflation… instead they conjured stagflation back to life, with stocks at record highs.

A trove of new whistleblower documents provided to House GOP investigators reveal, among other things, that the CIA prevented federal investigators from pursuing Hollywood lawyer Kevin Morris as a witness in their investigation of Hunter Biden.

Morris, a Hollywood entertainment lawyer who has ‘long supported’ Hunter (and why?) has loaned the First Son more than $6.5 million, according to a January letter to the House oversight committee.

We’ve known about the CIA connection since March, when the Chairmen of the House Judiciary and Oversight Committees, Jim Jordan (R-OH) and James Comer (R-KY) said that a whistleblower has brought them information that ‘seems to corroborate our concerns’ that the CIA directly interfered with DOJ and IRS investigations of Hunter Biden.

According to a whistleblower, the CIA “intervened in the investigation of Hunter biden to prevent the Internal Revenue Service (IRS) and the Department of Justice (DOJ) from interviewing a witness,” the letter, addressed to CIA Director William Burns, reads.

Specifically, the Committees were concerned at how “the DOJ deviated from its standard processes to afford preferential treatment to Hunter Biden,” which they learned “after two brave whistleblowers testified to Congress” that the Justice Department had done just that.

“DOJ officials restricted what investigative steps the investigators could pursue, tipped off Hunter Biden’s attorneys about investigative steps, and even prevented investigators from conducting witness interviews. The whistleblowers’ testimony about the preferential treatment provided to Hunter Biden has been corroborated by testimony from other witnesses and documents the Committees have received.”

And now we know who that witness is…

In a Wednesday statement, the House Ways and Means Committee wrote that whistleblower documents indicate “In 2021, Assistant U.S. District Attorney Leslie Wolf told investigators they could not pursue Hollywood lawyer Kevin Morris as a witness based on information she received from the CIA. Investigators were never provided the same information that AUSA Wolf received.”

“From whistleblower-provided evidence, we know Hunter Biden and his business associates made millions from selling access to Joe Biden and the quote ‘brand’ that is Joe Biden around the world. We know President Biden’s denials of any knowledge or involvement are not true,” reads the letter. “We know the Department of Justice tried to undermine, stonewall, and block the investigation into the Biden family, including President Biden.“

Well, isn’t this cozy … Interesting how CIA “summoned” prosecutors and that they followed the directive to be hands off on Hunter Biden’s lawyer – looks like the agency doesn’t want anyone snooping around …

Informant? https://t.co/2vQz8MYfYp

— Sara A. Carter (@SaraCarterDC) May 22, 2024

The letter also details several lies Hunter told to Congress:

“Hunter Biden’s deposition is key to understanding the attempts to conceal how the family made millions from selling access. Yet, new documents provided by the whistleblowers show that Hunter Biden repeatedly lied to Congress in his February deposition to distance his involvement in what should be considered a clear scheme to enrich the Biden family.”

• First, Hunter Biden lied about the recipient of a WhatsApp message sent with the apparent intention to threaten a business associate and demand payment.
• Second, Hunter Biden lied when he claimed he was not the corporate secretary of Rosemont Seneca Bohai and that the shell company he established with Devon Archer and its associated bank accounts were not under his control nor affiliated with him.
• Third, Hunter Biden lied during his deposition when he said he never helped individuals obtain U.S. visas.

Why would the CIA protect Morris?

Wait. Wait. So Hunter Biden’s sugar daddy—the weirdo who paid off Hunter’s tax bills and paid for his lawyers and apparently bankrolled Hunter’s documentary—is a CIA asset? Which means the CIA has been protecting Hunter the whole time? https://t.co/L92vu0kHZn

— Sean Davis (@seanmdav) May 22, 2024

While much of the world was still snoring in the post-labor day hangover on May 2nd of 2022 – and markets were even more devoid of liquidity than usual – early in the morning Europe’s stock market suddenly puked following a flash-crash in Stockholm, which as we reported at the time was sparked by some shitty math by a London-based Citi index trader.

Source: Bloomberg

The flash-crash was caused by “an inputting error”, according to the UK’s Financial Conduct Authority (FCA) – or what most of us call a ‘fat finger’ – which at the time reportedly cost the bank around $50 million.

The trader had intended to sell a basket of equities valued at $58 million but made an error while inputting the order that resulted in a basket valued at $444 billion being created instead, according to the FCA.

Today, the costs of ‘fat fingers’ increased further as Citigroup was fined £61.6 million ($79 million) (the FCA fined Citigroup £27.77 million for the blunder, while the Prudential Regulatory Authority saddled the bank with a £33.88 million penalty), stating that the bank’s systems were poorly designed and its real-time monitoring was “ineffective.”

“Some primary controls were absent or deficient,” the FCA said in its statement.

“In particular, there was no hard block that would have rejected this large erroneous basket of equities in its entirety and prevented any of it reaching the market.”

“Due to poor design, the trader was also able to manually override a pop-up alert, without being required to scroll down and read all the alerts within it,” the FCA added.

“These failings led to over a billion pounds of erroneous orders being executed and risked creating a disorderly market,” said Steve Smart, the FCA’s co-head of enforcement and market oversight.

“We are pleased to resolve this matter from more than two years ago, which arose from an individual error that was identified and corrected within minutes,” Citigroup said in a statement.

“We immediately took steps to strengthen our systems and controls, and remain committed to ensuring full regulatory compliance.”

It is not the first time Citigroup has blundered.

In 2020, the bank accidentally wired $900 million in interest payments to the lenders of cosmetics company Revlon – more than 100 times the intended amount.

Some lenders returned the money, but others did not.

A US district court judge ruled in 2021 that the bank would not be allowed to recover the outstanding $500 million.

For context with regard the fine – Citi made $4.037 Billion in Equities trading in 2023…

Authored by Chase Smith via The Epoch Times (emphasis ours),

Rep. Elise Stefanik (R-N.Y.) has submitted a formal complaint to the New York State Commission on Judicial Conduct, alleging a conflict of interest involving the judge overseeing former President Donald Trump’s ongoing New York City trial.

The complaint, sent on May 21, centers on Acting Supreme Court Justice Juan Merchan’s role in the criminal case against President Trump and the professional activities of Justice Merchan’s daughter on behalf of Democratic politicians.

Ms. Stefanik publicly chastised the judge before filing the official complaint. Last week in a statement she stated that Justice Merchan “who donated to Biden and whose adult daughter is raising millions” from the trial “knows he must recuse under New York statute.”

“[The] New York State Commission on Judicial Conduct just reprimanded Merchan for his inappropriate political donations in 2020,” she said in a May 17 statement. “America is starting to understand Merchan is a corrupt judge, presiding over blatant Biden Democrat lawfare and election interference against Trump—that is lining his family’s pockets. Merchan has disgraced our justice system in New York.”

Conflict of Interest Allegations

In her letter to the Commission, Ms. Stefanik highlighted that Justice Merchan presides over the case where President Trump faces a potential 136 years’ imprisonment if convicted. Ms. Stefanik argued that this case has far-reaching implications, not just for President Trump, but for the broader political landscape, as President Trump is the presumptive Republican nominee for the upcoming presidential election.

Ms. Stefanik raised concerns about Justice Merchan’s impartiality due to his daughter’s position as president of Authentic Campaigns, a firm representing prominent Democrat politicians and political action committees (PACs).

According to the complaint, these clients have capitalized on President Trump’s indictment for fundraising purposes.

For instance, Rep. Adam Schiff (D-Calif.), a client of Authentic Campaigns, used the indictment to solicit donations of $10, raising approximately $20 million. Similarly, the Senate Majority PAC raised around $73.6 million following the indictment.

Legal Basis for Recusal

Ms. Stefanik cited a section of the New York State Unified Court System’s Rules of Judicial Conduct, which mandates a judge’s disqualification from a case if a close relative stands to benefit substantially from the proceedings.

Ms. Stefanik asserted that the professional engagements of Justice Merchan’s daughter constitute such a conflict of interest, as her clients’ fundraising efforts are directly linked to the case over which her father presides.

In the complaint, Ms. Stefanik emphasizes, “It is common sense that, if these groups make no money, they cannot afford to pay for services provided by individuals such as Ms. Merchan. The more money raised, the more it can be spent on services.”

Ms. Stefanik’s complaint also referenced comments from U.S. District Judge Shira Scheindlin, a retired federal judge, who expressed concerns in a media interview last month about the potential for perceived bias.

The complaint also pointed to a history of alleged judicial misconduct by Justice Merchan. Recently, media reports asserted that the Commission had privately cautioned him for making political donations to President Joe Biden and other Democrats in 2020. This prior reprimand is cited by Ms. Stefanik as further evidence of partisanship influencing Justice Merchan’s judicial conduct.

Ms. Stefanik asserted, “This private caution has not deterred Judge Merchan’s judicial misconduct, as evidenced by this current complaint. Judge Merchan appears driven by Democrat partisanship and financial gain for his daughter. This caution, as reported by the New York Times, ‘can be considered in any future cases reviewed by the state’s Commission on Judicial Conduct.’”

Call for Action

Ms. Stefanik concluded her letter by calling for an investigation into Justice Merchan’s conduct and appropriate disciplinary action. She stressed the importance of maintaining public confidence in the judiciary, particularly in politically sensitive cases.

“It is imperative that New Yorkers and all Americans have confidence that justice is being dispensed fairly in New York,” she wrote in the complaint. “This is especially true in politically sensitive cases where bias is most likely to rear its ugly head. Here, we are in the middle of a presidential election campaign. The circumstances are unprecedented: President Trump, a former president and the likely nominee of a major party for the presidency, is on trial. These proceedings are under a microscope. Judge Merchan’s clear conflict of interest, based upon his adult daughter’s financial state in this unprecedented criminal trial, has badly damaged the court’s appearance of impartiality.”

The defense rested on May 21, and closing arguments will be heard as court resumes in New York next week.

“Given Judge Merchan’s daughter’s clientele—and the vast sums of money that these individuals have raised and will continue to raise off of President Trump’s charges—Judge Merchan’s daughter stands to benefit the more legally imperiled President Trump is,” Ms. Stefanik added. “She is well within the sixth degree of relation to Judge Merchan; indeed, as his daughter, she falls within the first degree. A straightforward application of [a section of the rules on judicial conduct] requires recusal. As Judge Merchan has declined to do so, I request that you investigate his conduct and impose whatever discipline is required.”

The Epoch Times has reached out to the New York State Commission on Judicial Conduct but the agency has not yet publicly responded to Rep. Stefanik’s complaint.

Authored by Robert Burrows via BondVigilantes.com,

Consumption spending accounts for approximately two-thirds of the US economy. It is vital that we understand the dynamics of the consumer because if the consumer falters, so does the US economy, which has far-reaching consequences. The surprising resilience of the US consumer in the face of a pandemic and then rising interest rates has surprised many. This resilience is a function of multiple factors, including a strong labour market, accumulated savings, wage growth, and government support, to name a few. The first and most important factor is the labour market, which has remained robust with low unemployment and steady job creation.

Source: Bloomberg, M&G, May 2024

The pandemic brought about a worryingly sharp, yet short, increase in unemployment. With the relatively brief period (didn’t feel like it though) of lockdown and government support, the unemployment rate fell back extremely quickly as pent-up demand was unleashed on the economy. Unemployment now sits at the lows. A tight labour market is often a contributing factor to higher inflation. Interest rates were raised aggressively to combat and stem the recent rapid increase in inflation, for reasons we are all too familiar with. The expectation was that increases in interest rates would have a contractionary impact on corporates as the cost of financing increased. By and large, corporates have managed to term out debt and seemingly will not have to worry about higher rates for some time.

The high-yield market, which we have discussed before (here), has remained incredibly resilient. Despite the rate increases, high yield credit spreads trade at multi-year tights and are only about 100bps higher in absolute yield than before the pandemic. Most companies should be able to absorb 100bps in increased financing costs. As a result, firms have not needed to lay off staff, keeping the unemployment rate low. With a tight labour market, employees have been in a good position to demand pay increases, which has helped to offset the pernicious effects of inflation. However, policymakers need to be careful as increasing wages ultimately leads to ever-higher inflation. Trying to find the balance is critical.  The consumer has been in a very similar situation to corporates which have termed out their debt. With the mortgage market being fixed for 30 years, increasing interest rates have little effect on existing homeowners.

The average mortgage rate has barely budged from the lows. Only those who wish to move or get on to the housing ladder for the first time suffer at the hands of a higher mortgage rate. The inability to port one’s mortgage could lead to interesting developments, both good and bad, and will be worth keeping an eye on in the coming months and years.

Source: Bloomberg, M&G, May 2024

Savings accumulated during the pandemic, courtesy of government stimulus programs and reduced opportunities to spend due to shutdowns, have also contributed to the strong growth in recent quarters. Overall, this is a relatively positive backdrop for the consumer. 

Is this all about to change?

The above-mentioned savings rate has indeed been run down, as expected. In times of hardship, we run down our savings and then accumulate them again in better times. However, if savings have been run down, are we increasingly vulnerable to further shocks?

Source: Bloomberg, M&G, May 2024

While savings have been run down to the lows, there has also been a meaningful increase in expensive credit card debt. The outstanding level of credit card debt recently crossed $1 trillion. The picture may not be so rosy.

Source: Bloomberg, M&G, May 2024

It appears to me that the consumer is extremely vulnerable and is doing what they can to hang on, as evidenced by a significant increase in people working two jobs, likely trying to make ends meet.

Source: Bloomberg, M&G, May 2024

Another development in the market has been the concept of ‘Buy Now Pay Later’ (BNPL). This model allows consumers to purchase goods and pay them down in instalments over several months. The amounts are difficult to quantify as it’s a fledgling industry, but a little digging would suggest that this has contributed somewhat to the economy’s strong growth and supported the consumer’s resilience.

Source: Bank for International Settlements, May 2024

The problem with ultra-loose credit is that someone always gets burned.  We are familiar with Klarna, one of the main BNPL firms in Europe. In the US, they have Affirm.

Source: Bloomberg, M&G, May 2024

Judging by the share price, I suspect an impressive growth story initially lured in investors, who then realized that ultra-loose credit lending is a recipe for disaster. 

Finally, the 401(k), America’s defined contribution scheme. Vanguard, a titan in the asset management industry with $7.2 trillion of assets under management, has highlighted a recent increase in 401(k) withdrawals and loans against the 401(k). Withdrawals are allowed before retirement age but are subject to an income tax and a 10% penalty charge. One can make a hardship withdrawal under certain circumstances to avoid the penalty charge, but would still be subject to income tax. Recent regulatory changes have made this process a little easier and more accessible. Hardship withdrawals are at a 19-year high,  admittedly from a low level but increasing and concerning none the less.

Putting all of this together, it would seem that cracks are starting to show for what has been a resilient consumer.

In the week’s only coupon auction, moments ago the Treasury sold $16bn in 20Y paper in a solid auction.

The high yield of 4.635% was down from last month’s 4.818% and also stopped through the When Issued 4.637% by 0.2bps, the third consecutive non-tailing auction in a row.

The bid to cover was on the light side, dropping to 2.51 from 2.82 in April and below the six-auction average of 2.61.

The internals were solid with Indirects awarded 70.8%, above the recent average of 68.3% but the lowest since February (April was 74.7%). And with Directs taking down 19.2%, the most since February, Dealers were left holding 10.1%, also the most since February.

Overall this was a solid if hardly spectacular auction, and predictably there was virtually no market reaction, with the 10Y trading unchanged at 4.42% on the results.