Government Watchdog
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FTC
MSFT $345 |
The FTC’s inept chairperson loses yet another case: Microsoft will buy Activision
Last December, when the FTC’s buffoonish leader, Lina Khan, sued Microsoft (MSFT $345) to stop them from buying video game publisher Activision Blizzard (ATVI $90) in a $69 billion deal, we predicted the case would be laughed out of court. That just happened, and it happened at the hands of a Biden-appointed judge. Making matters worse (for the American taxpayer), following this blistering rebuke of the FTC Khan ordered her organization to appeal the decision. On what possible grounds does she still have a job? As we were writing about the case last December, we were struck by how cavalier the respective management teams had been about the lawsuit and the current state of the commission. They offered nothing to the government other than a promise to fight—and win—the case. There was, after all, nothing anticompetitive about the deal. In a show of good faith, Microsoft even agreed in writing to continue allowing Activision’s mammoth hit, “Call of Duty,” to remain on Sony’s (SONY $94) PlayStation with the same level of availability it enjoyed on the company’s own Xbox platform. When she ascended to the spot—virtually straight out of law school, Khan sent shudders through the corporate world as many executives feared the FTC would grind M&A activity to a halt. She held up her end of the threat via the mountain of lawsuits filed by the FTC since she took the helm; they have just been shot down at a historic rate by the courts. The person they once feared is now seen as a paper tiger, and that is putting it kindly. This past February, one of the FTC commissioners resigned and expressed her dismay at Khan’s “disregard for the rule of law.” It appears the courts agree with that assessment. Khan’s latest target is another member of the Penn Global Leaders Club, Amazon (AMZN $134). She is claiming that it is too difficult for Prime members to cancel their subscription. We are not going too far out on the limb by predicting another win for corporate America and yet another black mark on Khan’s record. But how many more taxpayer dollars will be lost on yet another frivolous lawsuit? When a nation is $32 trillion in debt, we suppose few are really counting any longer. |
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CPSC
Trumka 10 Jan 2023 |
The government is coming for your gas stove
Before you label this story hyperbole, consider this: the city of Los Angeles has already banned gas appliances from being placed in new homes, and the state of California is trying to pass the same law. Let’s consider what is going on at the federal level. You may be familiar with the name Richard Trumka. Before his death last year, Trumka was an organized labor leader and head of the AFL-CIO. In 2021, President Joe Biden appointed his son, Richard Trumka Jr., to head up the US Consumer Product Safety Commission. As with the partisan hack Lina Khan at the FTC, Trumka has turned the CPSC into a political tool, which leads us to the gas stove ban. Under the ruse that gas stoves are a major source of indoor pollution and a health risk, Trumka told Bloomberg that “products that can’t be made safe can be banned.” Adding fuel to the fire, so to speak, senators Corey Booker and Elizabeth Warrant back the ban, arguing that Black, Latino, and low-income households bear the brunt of this national health crisis, as they do not have the means to properly ventilate their homes. Never mind the economic impact on these lower-income households, considering how much cheaper it is operate gas stoves as opposed to their electric counterparts. This type of government overreach is both despicable and predictable. When government agencies are not held accountable by the people they supposedly represent, they are able to get away with outrageous acts. Hopefully, there will be a large enough outcry to stop this ban from taking place, but it clearly shows the arrogance of the elite ruling class. We would expect nothing less from a Trumka. Oddly (not), the press has been quite mum on this topic. Since these individuals purport to be the spokespeople of the disenfranchised, why don’t we take a poll among ordinary Americans in the inner cities and ask them—without mentioning who proposed the ban—whether or not they support this decree? We are fairly sure how they would respond. (Around 35% of American households cook with gas stoves.) |
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MSFT $247
ATVI $75 09 Dec 2022 |
The imperial FTC will lose in court, Microsoft will buy Activision Blizzard
We cannot say enough rotten things about current chair of the Federal Trade Commission, Lina M. Khan. She is highly unqualified for her position, a political hack with a giant chip on her shoulder, a tool for progressives…we will stop there before we make it personal. The most recent target of the FTC, which is now as anti-capitalist as it has ever been, is Microsoft (MSFT $247); specifically, the company’s bid to acquire electronic gaming company Activision Blizzard (ATVI $75) for $69 billion. Well before the agency announced its lawsuit against Microsoft to block the acquisition, we knew the legal action was coming—Khan is as transparent as cellophane wrap. Microsoft’s management team knew it as well and threw down the gauntlet earlier in the month. Instead of genuflecting before the mighty body the company did just the opposite: it offered nothing and promised a bloody fight. A smart move, as the lawsuit has no merit. The FTC claims the acquisition would stifle the competition, which is laughable considering the level of creative genius within the world of content creators and the number of Activision’s competitors, to include: Electronic Arts, Take-Two Interactive, Epic Games, Ubiosoft, and Tencent Games. Activision CEO Bobby Kotick echoed Microsoft’s comments: “…I want to reinforce my confidence that this deal will close…we’ll win this challenge.” What do investors think? The day of the lawsuit’s announcement, ATVI shares were down just 1.54%. The judicial system within the US is becoming so political that it is hard to know for sure what the ultimate outcome of this case will be, but if it is weighed by the merits of the case, the FTC’s lawsuit will be dismissed. We believe Microsoft, which is a member of the Penn Global Leaders Club, will win in court and this intelligent tactical acquisition will transpire—perhaps just a bit behind schedule. |
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Department of Labor
11 Oct 2022 |
The rotten law that California voters rejected is about to shoved down America’s throat
Think of how the likes of Uber (UBER $25) and Lyft (LYFT $12) have radically transformed—for the better—transportation in this country. Bargoers who wouldn’t have considered calling for a Yellow Taxi at two in the morning routinely hail rides on their app. Elderly shoppers in suburban regions can now get a convenient and reasonably priced ride to and from the grocery store. Apparently, that is a transformation which must not be allowed to stand. The subversive movement to halt this positive trend began, fittingly, in California. Assembly Bill 5 (AB5) said that all workers, to include drivers for ride-hailing services, had to be considered employees of the company rather than freelance “gig” workers. Never mind the fact that most of these drivers did not wish to be considered employees. Then came Proposition 22, passed by a majority of California voters, which exempted these workers from being classified as employees rather than independent contractors. Understandably, Prop 22 was a major win for the industry. Since such an important issue cannot be left to the masses to decide, the results immediately came under fire. A California judge ruled the measure unconstitutional. The battle rages on, but now the White House has chosen to take a stand on the issue. President Joe Biden has ordered his Department of Labor to review how workers are classified. In short, the administration wishes to codify, on a national level, California’s AB5. As this move would cause operating costs in the industry to skyrocket, shares of Uber and Lyft plunged on the news. Other companies in industries from trucking to construction also dropped on the DOL proposal. An attorney for the department said the move was “not intended to target any particular industry or business model.” Is anyone dense enough to believe that? As we are on the precipice of a recession, what an incredibly thickheaded time to go forward with such anti-business nonsense. There will be an endless stream of legal challenges to the coming decree, and we expect the final decision to be made by the US Supreme Court. In the meantime, we have yet another roadblock in the way of getting our economy back on track. |
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Cali
13 Sep 2022 |
California dreaming: burger flippers could soon have a $22 per hour minimum wage
On Labor Day, fittingly, California Governor Gavin Newsom signed a stunningly egregious law into effect. While its official name is the Fast Food Accountability and Standards Recovery Act, that is about as accurate as calling a trillion dollar spending bill an Inflation Reduction Act. We have a more accurate name we would like to propose: The $22 Per Hour Minimum Wage Act for Burger Flippers. There are no cutesy acronyms politicians are so fond of, but it clearly spells out the intent. The law will create a Fast Food Council in Cali, made up of a 10-person cabal of workers, state officials, and management—the latter to make it look credible. This cabal will set the “living wage” for fast-food workers employed at companies which operate at least 100 locations around the country (not the state). Clearly, the target is McDonald’s, Chick-fil-A (the one they really hate), Burger King, Chipotle, and a number of other “fat cats.” The ruling council will have the power to create a new $22 per hour minimum wage for all fast-food workers, beginning next year. The law was strongly supported by the Service Employees International Union, which has been advocating a nationwide, $15 per hour minimum wage. Since California is already set to raise the minimum wage to $15.50 per hour in 2023, we suppose $22 would be the next common sense target. Of course, there is nothing common sense about this act or the politburo-like body it has created. Two unintended consequences immediately come to mind: $15 hamburgers and a more automated workforce. One will punish consumers who are already reeling from runaway inflation, and the other will punish the very workers who are supposed to be helped by this act. From California, which had attempted to place a cancer warning on every of coffee sold, this move is par for the course. We just can’t understand why so many companies are heading for the exits. The brilliance of our Founding Fathers in giving so much power to the states (rather than a central government) is once again on full display. Newsom can deny the fact that companies are fleeing his hammer and sickle mentality, and the Chicago mayor can proclaim that the city’s economy has never been stronger, but the evidence proves otherwise. Maybe the voters who keep them in power will see the light one of these days. But we doubt it. |
So you have a desire to have a home in New Jersey? Be prepared to pay confiscatory property taxes
(22 Apr 2021) We have long espoused the view that property taxes assessed on single-family homes should be capped at 1% per year. After all, in addition to every other tax Americans must pay, isn't $5,000 per year on a $500,000 home enough income for a homeowner's state and local government, on top of the other tax revenues generated? But in many states, the effective property tax rate is much higher than our proposed cap. Take New Jersey, for example, which happens to have the highest property tax rate in the nation. While the state's marginal rate is a sky-high 2.2%, the effective real estate tax rate is 2.47%. That equates to a $5,064 tax bill on a very modest $205,000 home. The effective taxes on a home priced at $327,900, the state's median home value, is $8,104. Perhaps what shocked us the most as we looked at each state's 2020 property tax rate was California's figure: the Golden State actually capped the rate at 1% of assessed value, with a 2% annual cap on value increases. Of course, Californians must also contend with a 9.3% income tax rate (on income between $58.6k and $299.5k—it goes up from there) and a 7.25% tax on goods purchased. The opposite end of the spectrum from New Jersey, at least with respect to property taxes, is Hawaii with its 0.28% rate. That would equate to just a $1,715 tax bill on a home valued at $615,300, the median home value in the state. While moving isn't always an option—for any number of reasons—all Americans should be aware of their individual state's property tax rate, income tax rate, and sales tax rate (the last will fluctuate within various parts of the state). Combined, these three figures represent one's overall tax burden that comes from living where they do. Of interest: Alaska has the lowest overall tax burden of any state in the union, at roughly 5.8% (the state has no sales tax); while Illinois comes in with the most burdensome rate in the country, at 15%.
(22 Apr 2021) We have long espoused the view that property taxes assessed on single-family homes should be capped at 1% per year. After all, in addition to every other tax Americans must pay, isn't $5,000 per year on a $500,000 home enough income for a homeowner's state and local government, on top of the other tax revenues generated? But in many states, the effective property tax rate is much higher than our proposed cap. Take New Jersey, for example, which happens to have the highest property tax rate in the nation. While the state's marginal rate is a sky-high 2.2%, the effective real estate tax rate is 2.47%. That equates to a $5,064 tax bill on a very modest $205,000 home. The effective taxes on a home priced at $327,900, the state's median home value, is $8,104. Perhaps what shocked us the most as we looked at each state's 2020 property tax rate was California's figure: the Golden State actually capped the rate at 1% of assessed value, with a 2% annual cap on value increases. Of course, Californians must also contend with a 9.3% income tax rate (on income between $58.6k and $299.5k—it goes up from there) and a 7.25% tax on goods purchased. The opposite end of the spectrum from New Jersey, at least with respect to property taxes, is Hawaii with its 0.28% rate. That would equate to just a $1,715 tax bill on a home valued at $615,300, the median home value in the state. While moving isn't always an option—for any number of reasons—all Americans should be aware of their individual state's property tax rate, income tax rate, and sales tax rate (the last will fluctuate within various parts of the state). Combined, these three figures represent one's overall tax burden that comes from living where they do. Of interest: Alaska has the lowest overall tax burden of any state in the union, at roughly 5.8% (the state has no sales tax); while Illinois comes in with the most burdensome rate in the country, at 15%.
Investors are comforted by Biden's early cabinet picks
(24 Nov 2020) It certainly could have gone in a different direction, but that is not what we were expecting. In an attempt to assuage the radical wing of his party, President-Elect Joe Biden could have offered plum positions to the likes of Elizabeth Warren and Bernie Sanders—moves that would have sent the markets reeling. Instead, the stock market rallied on the news that he would nominate former Fed Chair Janet Yellen as Secretary of the Treasury, and Antony Blinken as Secretary of State. Yellen has a proven and well-known history after serving as an effective Fed Chair, and Blinken's work in the corporate world (as opposed to the fanciful world of "what-ifs" at a think tank) points to a sober domestic and foreign policy approach by the new administration. The far left wing of the party won't celebrate the moves, but the markets sure did. With a divided government, we are hoping for enough bipartisanship to get the needed work done, but a lack of votes to pass any earth-shattering agenda items. That would be a Goldilocks scenario for the stock market and, dare we say, the economy. Maybe we will even get an infrastructure-light bill drafted and implemented.
(24 Nov 2020) It certainly could have gone in a different direction, but that is not what we were expecting. In an attempt to assuage the radical wing of his party, President-Elect Joe Biden could have offered plum positions to the likes of Elizabeth Warren and Bernie Sanders—moves that would have sent the markets reeling. Instead, the stock market rallied on the news that he would nominate former Fed Chair Janet Yellen as Secretary of the Treasury, and Antony Blinken as Secretary of State. Yellen has a proven and well-known history after serving as an effective Fed Chair, and Blinken's work in the corporate world (as opposed to the fanciful world of "what-ifs" at a think tank) points to a sober domestic and foreign policy approach by the new administration. The far left wing of the party won't celebrate the moves, but the markets sure did. With a divided government, we are hoping for enough bipartisanship to get the needed work done, but a lack of votes to pass any earth-shattering agenda items. That would be a Goldilocks scenario for the stock market and, dare we say, the economy. Maybe we will even get an infrastructure-light bill drafted and implemented.
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NYC
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Nightmarish New York fiscal situation: MTA may issue low-denomination bonds to raise more cash
(18 Nov 2020) Who should be held accountable for the freakishly-mismanaged New York Metropolitan Transportation Authority: New York or taxpayers across the country? The organization can blame the pandemic all they want, but their financial situation was dire long before the Wuhan-borne virus ever came along. Now, the largest public transportation agency in the country said it will cut 9,400 jobs and drastically reduce its subway, train, and bus services in New York if the federal government doesn't send them $12 billion immediately. That won't happen, at least not this year, so the agency has announced plans to potentially issue $3 billion in "deficit bonds." To attract everyday commuters, they will even (potentially) come in $1,000 denominations so all can participate. Just last month the agency sold $257 million of "green bonds" (how did the environment get involved?), with the proceeds going to pay down bonds that are maturing now. Apply this situation to the common American household. It is akin to maxing out the credit cards, getting a home equity line-of-credit to pay off the balances, re-maxing out the cards, and then demanding that mom and dad (the federal government using taxpayer funds) pony up! Yikes. Our only question is who the hell would invest in these Frankenstein bonds? New York, like Chicago, like San Francisco, like any other ineptly-run major city government in the US, was on tenuous ice before the pandemic, and they will learn nothing from the hell they are going through. It will always be someone else's fault, and they will always be the victim of circumstances. The federal government needs to stop enabling and demand these cities fix their own problems. |
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CalPERS
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In intriguing turn of events, the CalPERS CIO abruptly resigns
(06 Aug 2020) The California Public Employees' Retirement System, or CalPERS, is the state-run pension and health benefits agency of California, responsible for the retirement plans of nearly 2 million California public employees, retirees, and there families. The organization manages roughly $400 billion in assets. Based on the nature of the business and the state in which it sits, one can only imagine the level to which politics permeates the body. Against that backdrop, we have Chief Investment Officer Ben Meng, who has served in that role for the past two years. It wasn't his first stint at the organization, however, as he worked at the agency from 2008 to 2015—before leaving to become deputy chief investment officer for China's State Administration of Foreign Exchange, in charge of China's $3 trillion or so in foreign reserves. Meng abruptly "resigned" his CIO role this week, citing a desire to spend more time with his family. California State Controller Betty Yee, however, said in a statement that she was "incredibly disappointed" to hear about Meng's lapse in judgment and failure to adhere to standard conflict-of-interest policies. While that cryptic message tells us Meng didn't leave on his own accord, it certainly raises more questions than it answers. Adding to the intrigue, Indiana Rep. Jim Banks recently wrote a letter to California Governor Gavin Newsom requesting a thorough investigation into Meng's relationship to the Chinese Communist Party. CalPERS added roughly 100 Chinese firms to the stock portion of its portfolio over the past year. Against a stated target return of 7% per year, the fund has underperformed under Meng, notching a return of just 4.7% for the 2019-20 fiscal year. As of now, CalPERS has just 71% of the assets it needs to meet the pension requirements of its members. |
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Dodd-
Frank |
Disastrous Dodd-Frank isn't dead, but at least it is about to be clipped
(23 May 2018) If you want an understanding of the disastrous Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, you really need go no further than looking at the two clowns whose names adorn the legislation. Barney Frank was a far-left congressman whose mate was busted for running a male prostitution ring out of the congressman's Capitol Hill Apartment. Senator Christopher Dodd was the other piece of "bread" in the infamous Kennedy-Dodd Waitress Sandwich (the two senators would corner an unsuspecting waitress at a local establishment and make her the "meat" in the sandwich). If that's not enough, consider the Consumer Financial Protection Bureau (CFPB), which was created from the legislation. In 2016, a DC Circuit Court found the CFPB's structure to be unconstitutional, as its director, for all intents and purposes, answered to no one. While the court later changed its mind on that decision, it is easy to see how this government agency could run amuck, unconstrained by Congressional oversight. While the CFPB was not stripped of its power, Congress did just take a big bite out of Dodd-Frank. In a 258-159 tally, lawmakers voted to water down the law, giving smaller banks a bit of relief from the onerous and costly burdens foisted upon them by the legislation. The bill should pass the US Senate for ultimate approval by the president. More conservative members of the senate, who claim this bill does not go far enough, have been given assurances that a broader set of rollbacks will be introduced for a vote later this year, ahead of the mid-terms. |
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CA
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It's funny unless you live there: California to mandate solar panels on all new homes built
(09 May 2018) At what point does comic relief from the most communist-like state in the union stop becoming funny and start becoming a real threat to the people? It wasn't enough that California ruled that Starbucks (SBUX) and other coffee houses must place cancer warnings on each cup of joe sold; now, the California Energy Commission has mandated—in true Marxist form—that virtually all new homes built in the state after 01 Jan 2020 must be equipped with solar panels. Forget the added cost that mandate will add to the price of every new home sold, what about the freedoms afforded to individuals over a tyrannical government via the US Constitution? That document means nothing to most of the judges on the 9th Circuit Court of Appeals in San Francisco, so why should it mean anything to the absolute clowns entrenched in local governments throughout the state? Californians are showing their disapproval for this kind of thugocracy by becoming ex-Californians at a record clip, but at some point a stand must be made against these New-Age "enlightened" bullies within the state. We are all for solar panels and alternative energy. We are also all for rice cookers (of the type that Fidel Castro gave to every mother in Cuba about a decade ago). We just disagree as to who should be making the decisions—the individual or a nanny government worker. |
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NY
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He may have resigned, but NY Attorney General Schneiderman's troubles are just beginning
(08 May 2018) Like so many who held that office prior to him, New York Attorney General Eric Schneiderman wanted to make a name for himself—and gain a higher position—by attacking and demonizing the business community. Instead, he fell "victim" to the same moral failings as peers Eliot Spitzer and Anthony Weiner. Schneiderman resigned his post on Monday night, following allegations of sexual and physical abuse levied by a number of different women. There goes his third term in that position, not to mention his stepping stones to the New York governor's mansion...and perhaps beyond. A criminal probe into the former AG is expected to begin soon. |
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California
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California wants to do what, now?
(25 Jan 2018) Just a few days ago we told readers about a plan by lawmakers in The OC (Old California, as opposed to New California) to confiscate 50% of the tax reform "windfall" made by companies based in the state. As if that couldn't be topped, today we hear news from the state which has coffee companies steaming. Lawmakers want to force that ubiquitous "Prop 65 Warning: May cause cancer" sign on every cup of coffee sold in the state, and the likes of Starbucks (SBUX) and Keurig Green Mountain (Jab Holdings) have been fighting the case in court for the past seven years. At issue is the chemical Acrylamide, which is naturally produced during the roasting process—and during the cooking process for potato chips, bread, and the like. Californians overwhelmingly find this attempt outrageous, but what do we expect from the same cabal which banned toys in Happy Meals? (San Francisco, 2011, though the move was ultimately thrown out by a judge.) The coffee case is now in the hands of a state judge in Los Angeles. If it ever makes it up the chain to the 9th Circus Court of Appeals, forget about it—common sense will lose for sure. |
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California
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California legislators propose a 50% tax on corporations' tax savings
(23 Jan 2018) California is such a beautiful state, making it all the more sad that a bunch of socialist dunderheads have risen to high levels of power in Sacramento. The latest? California legislators, upset with the new 21% corporate tax rate, are pushing for a fix to punish any California-based company with an annual net income in excess of $1 million. With the simpleminded and convoluted thinking that the corporate tax rate was reduced by 14% (from 35% to 21%), the lawmakers propose taking half of that amount (7%) as a "surcharge" for operating in the state. Will this sick-minded plan, which will drive even more businesses out of the Golden State, go anywhere? Fortunately, it will have to go before California voters to gain approval. Another formality the socialists in Sacramento would love to do away with. Maybe they can take a taxpayer-funded trip to Venezuela for some tips on how to make that happen from their buddy Nicolas Maduro. |
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Net
Neutrality |
What will the end-of-the-world cabal say when Americans can still access the Net?
(14 Dec 2017) Is it comical, or just sad? The frenetic hyperbole and outright lying about the consequences of ditching the two-year-old net neutrality regulation is stunning. One major newspaper’s headline read: “The End of the Internet as we Know it.” The final FCC vote had to be delayed because someone called in a bomb threat. The level of mania should be unsettling to common-sense Americans. Calling net neutrality net neutrality was typical Washington double-speak. Name a reg the polar opposite of its intended purpose and hope enough suckers out there can push your lies. But it’s dead now. In a 3-2 vote, along party lines, the misnamed net neutrality was killed by the FCC. Despite that fact, we will still wake up tomorrow and have almost-instant access to all of the sites proclaiming the end of the Internet has arrived. |
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Chicago
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Another win for the little guy: Chicago's soda tax is dead
(11 Oct 2017) After progressive cities got a taste of the money they were reaping from the tax on cigarettes (and it has always been more about the tax revenue than the health concerns), soda pop came into focus as the next major target. Now, the efforts of these local governments are backfiring big-time. Take Philly. After an onerous tax was placed on soda, sales inside the city limits plummeted 55%, while sales just outside the city limits grew 38%. Ditto New York. Now, in a major reversal, the Cook County (Chicago) Finance Committee voted 15-1 to repeal their soda tax just two months after it went into place. The reason? Committee members who changed their minds on the tax cited an incredibly boisterous outcry from constituents. And all of this despite the $10 million Chicago ad campaign for the tax, funded by our national nanny, Michael Bloomberg. |
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Philly
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(08 Mar 2017) Pepsi makes job cuts in Philly after city's draconian sugar tax takes effect. Philadelphia, the "city of brotherly love" (what a joke), has long been a bastion of big-government activism, just like Chicago in the midwest and San Francisco on the left coast. That is why it came as little surprise when the city became the first in the nation to pass a soda tax last summer. And the tax wasn't just limited to sodas; it included any sugary drinks, such as tea, energy drinks, flavored water, even Gatorade. How onerous is the tax? A 10-pack of Propel flavored water rings up at $5.99, but add the $3.04 Philly beverage tax on the receipt and you get a 51% tax rate (a true and actual example). Sick. Beverage giant Pepsi (PEP $99-$109-$111) saw a 40% drop in sales in the city after the tax was imposed. Their response? They are cutting their workforce in the city by about 25%. Nice job, government Soda Nazis.
(Left: The image you must see to believe; a 51% tax on Propel water in Philly. Courtesy: Zero Hedge.) |