Thursday, July 2, 2020

Stunning Surge In New CMBS Delinquencies Heralds Commercial Real Estate Disaster

From Zero Hedge:

Two months ago, we thought that the unprecedented implosion in US commercial real estate in the month of April following the near-uniform economic shutdown following the coronavius pandemic, manifesting in the surge in newly delinquent CMBS loans would be one for the ages, even though as we predicted May would likely be worse as a result of the spike in specially services loans. 
And indeed while April was ugly, May was even worse. But both pale in comparison to what the latest June remittance data.
First, the good news: as Trepp writes in its latest monthly CMBS remittance report, at one point in June, it appeared that a new all-time high for CMBS delinquencies would be reached. However, when the final numbers were posted, the 2012 high of 10.34%, a fraction higher than the current level, remains the peak for the time being.
Next, the not so good news: the latest, June, Trepp CMBS Delinquency Rate was 10.32%, a jump of 317 basis points over the May number. About 5% of that number represents loans in the 30 days delinquent bucket while another 3.2% are now 60 days delinquent. And while the 2012 high remains the record for now, it won't be for long, as the numbers are headed still higher in July.
That’s because 4.1% of loans by balance missed the June payment but remained less than 30 days delinquent.  That percentage of loans in or beyond grace period (the A/B loans) has fallen from 8.1% in April and 7.6% in May.
An optimistic take on the data is that perhaps we have reached terminal delinquency velocity – meaning most of the borrowers that felt the need for debt service relief have requested it. (Put another way, if a borrower didn’t need relief in April, May, or June there is a good chance the borrower won’t be needing it), although maturity defaults could still be an issue.) If that is the case, the expectation would be that the increases in the delinquency rate going forward should be smaller than what we saw in May and June. Alternatively, if the fiscal cliff hits at the end of July without a replacement stimulus, expect a second wave - if not of virus infections - then certainly of new commercial real estate delinquencies.

Some other overall statistics:
The percentage of loans with the special servicer grew from 6.07% in May to 8.28% in June. According to June servicer data, 20.5% of all lodging loans were in special servicing, up from 16.2% in May, which is why some have suggested that the next Big Short in CRE will be the CMBX Series 9 which is especially heavy on hotel loans.
2020-06-27
In addition, 14.3% of retail loans are with the special servicer, up from 9.3%.
The Overall Numbers
  • The overall US CMBS delinquency rate climbed 317 basis points in June to10.32%. (The all-time high on this basis was 10.34% registered in July 2012.)
  • The % ofA/B loans (i.e. loans in grace period or beyond grace period) was 4.1% in June.
  • Year over year, the overall US CMBS delinquency rate is up 748 basis points.
  • The percentage of loans that are seriously delinquent (60+ days delinquent, in foreclosure, REO, or non-performing balloons) is now 6.25%, up 408basis points for the month.
  • If defeased loans were taken out of the equation, the overall 30-day delinquency rate would be 10.88%, up 332 basis points from May.
  • One year ago, the US CMBS delinquency rate was 2.84%.
  • Six months ago, the US CMBS delinquency rate was 2.34%.
The CMBS 2.0+ Numbers
  • The CMBS 2.0+ delinquency rate jumped 317 basis points to 9.36% in June. The rate is up 840 basis points year over year.
  • The percentage of CMBS 2.0+ loans that are seriously delinquent is now 5.27%, which is up 417 basis points from May.
  • If defeased loans were taken out of the equation, the overall CMBS 2.0+ delinquency rate would be 9.85%, up 331 basis points for the month.

Overall Property Type Analysis (CMBS 1.0 and 2.0+)
  • The industrial delinquency rate fell 25 basis points to 1.57%.
  • The amount of industrial loans categorized as A/B in June: 1.55%.
  • The lodging delinquency rate jumped 517 basis points to 24.3%.
  • The amount of lodging loans categorized as A/B in June: 7.91%.
  • The multifamily delinquency rate rose four basis points to 3.29%.
  • The amount of multifamily loans categorized as A/B in June: 1.45%.
  • The office delinquency rate moved up 26 basis points to 2.66%.
  • The amount of office loans categorized as A/B in June: 1.92 %
  • The retail delinquency rate spiked 793 basis points to 18.07%.
  • The amount of retail loans categorized as A/B in June: 5.42%.
Property Type Analysis CMBS 2.0+:
  • Industrial delinquency rate: 0.67% (down 24 basis points month over month)
  • Lodging delinquency rate: 24.11% (up 522 basis points)
  • Multifamily delinquency rate: 3.24% (up 14 basis points)
  • Office delinquency rate: 1.29% (up 16 basis points)
  • Retail delinquency rate: 16.07% (up 788 basis points)
Property Type Analysis CMBS 1.0:
  • Industrial delinquency rate: 43.35% (up 29 basis points month over month)
  • Lodging delinquency rate: 40.76% (up 31 basis points)
  • Multifamily delinquency rate: 11.71% (down 678 basis points)
  • Office delinquency rate: 38.56% (up 328 basis points)
  • Retail delinquency rate: 78.02% (up 1179 basis points)

    "Great Job Numbers" Trump Booms As Payrolls Soar By Record 4.8 Million, Crushing Expectations

    From Zero Hedge:

    In our preview of today's job's report, we remarked that the only thing that was certain about the June payrolls number is just how uncertain it was: dropping the top and bottom 10% of payrolls forecasts still leaves a range of 1.65-5.00 million jobs, "an extremely wide band that reflects the multiplicity of shocks hitting US labor markets", according to Steven Englander. Art Cashin echoed just how much confusion there was by noting that "most traders are somewhat sceptical of all payroll data, feeling that the sharp reopenings and then reopening rollbacks have distorted the data."
    So with much confusion out there, and nobody really sure what to expect, moments ago the BLS reported that in keeping with the huge band of possibilities, in June the US economy added a whopping - record - 4.767 million jobs, crushing expectations of 3.058 million, and indicating that the V-shaped recovery, if only in the BLS' servers, is well on track.
    Somewhat paradoxically, the massive beat took place even as we got another week of initial claims missing, with the latest print of 1.427MM above the 1.35MM expected, while continuing claims of 19.29MM was also above the 19.0MM expected.
    The change in total nonfarm payroll employment for April was revised down by 100,000, from -20.7 million to -20.8 million, and the change for May was revised up by 190,000, from +2.5 million to +2.7 million. With these revisions, employment in April and May combined was 90,000 higher than previously reported.
    Just as shocking is that the unemployment rate which was expected to surge to a record 19.1% in May from 14.7% in April, actually declined in May to 13.3% and dropped further to 11.1% in June, far better than the 12.5% expected. Both Hispanic and Black unemployment rates dropped.
    Commenting on the number, the BLS said that "total nonfarm payroll employment rose by 4.8 million in June, and the  unemployment rate declined to 11.1 percent. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it. In June, employment in leisure and hospitality rose sharply. Notable job gains also occurred in retail trade, education and health services, other services, manufacturing, and professional and business services."
    Total employment, as measured by the household survey, rose by 4.9 million to 142.2 million in June. The employment-population ratio, at 54.6 percent, rose by 1.8 percentage points over the month but is 6.5 percentage points lower than in February. The labor force participation rate increased by 0.7% in June to 61.5%, but is 1.9% points below its February level.
    The number of persons employed part time for economic reasons declined by 1.6 million to 9.1 million in June but is still more than double its February level. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. This group includes persons who usually work full time and persons who usually work part time.
    The number of persons not in the labor force who currently want a job, at 8.2 million, declined by 767,000 in June but remained 3.2 million higher than in February. These individuals were not counted as unemployed because they were not actively looking for work during the last 4 weeks or were unavailable to take a job.
    Continuing last month's trend, the average hourly earnings dropped from April's revised 8.0% to 6.7% in May and to 5.0% in June, below the expected 5.3% print.
    According to the BLS, average hourly earnings for all employees fell by 35 cents to $29.37. Average hourly earnings of private-sector production and nonsupervisory employees decreased by 23 cents to $24.74 in June. The decreases in average hourly earnings largely reflect job gains among lower-paid workers; these changes put downward pressure on the average hourly earnings estimates. So how did average hourly earnings rise? Simple: the average workweek for all employees - i.e., the denominator - decreased even more, or by 0.2 hour to 34.5 hours in June, while the average workweek for production and nonsupervisory employees on private nonfarm payrolls fell by 0.2 hour to 33.9 hours. That said, even the BLS admitted that the recent employment changes, especially in industries with shorter workweeks, "complicate monthly comparisons of the average weekly hours estimates."
    Today's report also noted that the number of unemployed persons who were on temporary layoff decreased by nearly 5 million, to 10.565 million from 15.3 million, a second consecutive decline from 18.1 million in April. Among those not on temporary layoff, the number of permanent job losers continued to rise, increasing by 295,000 in May to 2.3 million.
    And one red flagaccording to the BLS, the number of permanent job losers continued to rise, increasing by 588,000 to 2.9 million in June. The number of unemployed reentrants to the labor force rose by 711,000 to 2.4 million.
    Also in June, the number of unemployed persons who were jobless less than 5 weeks declined by 1.0 million to 2.8 million.  Unemployed persons who were jobless 5 to 14 weeks numbered 11.5 million, down by 3.3 million over the month, and accounted for 65.2 percent of the unemployed. By contrast, the number of persons jobless 15 to 26 weeks  and the long-term unemployed (those jobless for 27 weeks or more) saw over-the-month increases (+825,000 to 1.9 million and +227,000 to 1.4 million, respectively).
    Looking at a breakdown by industry:
    • Employment in leisure and hospitality increased by 2.1 million, accounting for about two-fifths of the gain in total nonfarm employment. Over the month, employment in food services and drinking places rose by 1.5 million, following a gain of the same magnitude in May. Despite these gains, employment in food services and drinking places is down by 3.1 million since February. Employment also rose in June in amusements, gambling, and recreation (+353,000) and in the accommodation industry (+239,000).
    • Employment in retail trade rose by 740,000, after a gain of 372,000 in May and losses totaling 2.4 million in March and April combined. On net, employment in the industry is 1.3 million lower than in February. In June, notable job gains occurred in clothing and clothing accessories stores (+202,000), general merchandise stores (+108,000), furniture and home furnishings stores (+84,000), and motor vehicle and parts dealers (+84,000).
    • Employment increased by 568,000 in education and health services in June but is 1.8 million below February's level. Health care employment increased by 358,000 over the month, with gains in offices of dentists (+190,000), offices of physicians (+80,000), and offices of other health practitioners (+48,000). Elsewhere in health care, job losses continued in nursing care facilities (-18,000). Employment increased in the social assistance industry (+117,000), reflecting gains in child day care services (+80,000) and in individual and family services (+28,000). Employment in private education rose by 93,000 over the month.
    • Employment increased in the other services industry in June (+357,000), with about three-fourths of the increase occurring in personal and laundry services (+264,000). Since February, employment in the other services industry is down by 752,000.
    • In June, manufacturing employment rose by 356,000 but is down by 757,000 since February. June employment increases were concentrated in the durable goods component, with motor vehicles and parts (+196,000) accounting for over half of the job gain in manufacturing. Employment also increased over the month in miscellaneous durable goods manufacturing (+26,000) and machinery (+18,000). Within the nondurable goods component, the largest job gain occurred in plastics and rubber products (+22,000).
    • Professional and business services added 306,000 jobs in June, but employment is 1.8 million below its February level. In June, employment rose in temporary help services (+149,000), services to buildings and dwellings (+53,000), and accounting and bookkeeping services (+18,000). By contrast, employment declined in computer systems design and related services (-20,000).
    • Construction employment increased by 158,000 in June, following a gain of 453,000 in May. These gains accounted for more than half of the decline in March and April (-1.1 million combined). Over-the-month gains occurred in specialty trade contractors (+135,000), with growth about equally split between the residential and nonresidential components. Job gains also occurred in construction of buildings (+32,000).
    • Transportation and warehousing added 99,000 jobs in June, following declines in the prior 2 months (-588,000 in April and May combined). In June, employment rose in warehousing and storage (+61,000), couriers and messengers (+21,000), truck transportation (+8,000), and support activities for transportation (+7,000).
    • Wholesale trade employment rose by 68,000 in June but is down by 317,000 since February. In June, job gains occurred in the durable goods (+39,000) and nondurable goods (+27,000) components.  
    • Financial activities added 32,000 jobs in June, with over half of the gain in real estate (+18,000). Since February, employment in financial activities is down by 237,000.
    • Government employment changed little in June (+33,000), as job gains in local government education (+70,000) were partially offset by job losses in state government (-25,000). Government employment is 1.5 million below its February level.
    • Mining continued to lose jobs in June (-10,000), with most of the decline occurring in support activities for mining (-7,000). Mining employment is down by 123,000 since a recent peak in January 2019, although nearly three-fourths of the decline has occurred since February 2020.
    * * *
    How "political" was today's report? We will leave it to readers to decide especially when moments after the report Trump, who knew the numbers yesterday, praised the "Great Job Numbers" and held a press conference at 930am for a victory lap. That said, it was a modest downgrade from last month's Trump Tweet that "THESE NUMBERS ARE INCREDIBLE."
    So does this record jobs report, the second in a row, mean the Fed has to hike soon? Yeah, right.

    Wednesday, July 1, 2020

    Make the Truth Irrelevant, by Robert Gore

    Our rulers believe their Holy Grail is in sight.
    But there’s always a purpose in nonsense. Don’t bother to examine a folly—ask yourself only what it accomplishes.
    Ellsworth Toohey to Peter Keating, The Fountainhead, Ayn Rand, 1943
    What do the follies of Russiagate and the Ukraine impeachment controversy accomplish?
    Truth is always the enemy of power. Exposure of power’s motivations, depredations, and corruption never serves power’s ends. Truth is often suppressed and those who disclose it persecuted. Any illegitimate government (currently, all of them) that fails to do so risks its own termination.
    What if, instead of suppressing the truth, a regime could render it irrelevant and not have to worry about it? That prospect is the Holy Grail for those who rule or seek to rule.
    Imagine an announcement to the populace: We rule you and every aspect of your life. Your wishes, desires, and plans are immaterial to us. You will do as we tell you or you will be severely punished or eliminated. Our sole end is power and we will be its corrupt and criminal beneficiaries. You are our slaves. Imagine that the announcement was not met with outrage and resistance, only quiet acceptance, even approval. The regime has disclosed the horrifying truth about itself, and nobody protests or cares. It has rendered the truth irrelevant. What future disclosure could threaten it in any way?

    Amazon Paperback

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    That is the purpose of Russiagate and now the Ukraine impeachment controversy—they are part of a long running project to render the truth about our rulers irrelevant. That project is well advanced. Contrary to Toohey’s admonition, let’s examine the follies to understand what’s happening and what they accomplish.
    The key assertion upon which Russiagate rested was that a Democratic National Committee (DNC) computer server was hacked by Russian operative named Guccifer 2.0, who then turned the data obtained over to Wikileaks. In that data were DNC emails that indicated the DNC’s strong pro-Clinton bias. Wikileak released the emails three days before the Democratic convention in 2016.
    Hack in this context means that the DNC server was accessed over the Internet, its cyber-defenses penetrated, and information was transmitted back to the hackers over the Internet. After Julian Assange announced that WikiLeaks would be publishing “emails related to Hillary Clinton,” but before those emails were released, DNC contractor CrowdStrike claimed it had found malware on the server and evidence that it was put there by Russians.
    Guccifer 2.0 stepped forward the next day and claimed responsibility for the hack. With that, the actual content of the emails was virtually ignored by the mainstream media. Instead, there was a never-ending drumbeat of stories about Russia’s “hacking” of the 2016 election, which either implied or asserted as fact such hacking cost Hillary Clinton her rightful victory. That drumbeat has gone on for over three years, diminished but not completely quieted by Robert Mueller’s report and widely panned congressional testimony.
    The crucial problem with the hacking narrative is that there was no hack. The Veteran Intelligence Agents for Sanity (VIPS) performed an analysis of the metadata—information about a computer’s operations—linked to that alleged hack. A report on the analysis was published at the consortiumnews.com website about a year after the alleged hack.
    The Key Event
    July 5, 2016: In the early evening, Eastern Daylight Time, someone working in the EDT time zone with a computer directly connected to the DNC server or DNC Local Area Network, copied 1,976 MegaBytes of data in 87 seconds onto an external storage device. That speed is much faster than what is physically possible with a hack.
    It thus appears that the purported “hack” of the DNC by Guccifer 2.0 (the self-proclaimed WikiLeaks source) was not a hack by Russia or anyone else, but was rather a copy of DNC data onto an external storage device.
    Consortiumnews.com, “Intel Vets Challenge ‘Russia Hack’ Evidence,” July 24, 2017
    VIPS has impeccable credentials. As its name states, all of its members are intelligence professionals, including William Binney, formerly with the NSA and Co-founder of its Signals Intelligence Automation Research Center. The FBI or NSA could have performed the same analysis as VIPS, but didn’t do so. They never even tried to take possession of the server to examine it. Both agencies accepted DNC contractor CrowdStrike’s conclusions at face value.
    This glaring failure to investigate bolsters VIPS’ conclusion: the DNC was not hacked, its email files were obtained by a much faster download than was possible by hacking, a download onto an external storage device, perhaps a thumb drive, by someone who had physical access to the server. In other words, it was an inside job. Speculation has been that the download was by DNC staffer Seth Rich, whose murder not long afterward has never been solved.
    With this one fact the entire Russiagate narrative should have collapsed. That it ultimately did collapse with the release of the Mueller report and his testimony can be regarded as a failure by Trump’s many enemies. However, from the standpoint of the ultimate mission—rendering the truth irrelevant—it has been a shining success.
    The promoters kept a narrative balloon afloat for two years after it was decisively punctured and they endlessly harassed Trump. Not only that, but even after the Mueller report and testimony fiascos—admissions the story was groundless—almost half the populace still believes it and the mainstream media continues to circulate it as if it were true!Which is why the Democrats feel they can get away with an attempt to impeach President Trump over a phone call he had with Ukraine’s president, Volodymyr Zelensky.
    Ostensibly, Ukraine is a minefield for Democrats. In 2014, the US sponsored a coup against Ukraine’s duly elected president, Viktor Yanukovych, who had aligned the country with Russia rather than the EU. That coup has not worked out well for the US. Russia quickly annexed Crimea, which had been part of Ukraine, and has aided a eastern Ukrainian separatist movement that favors Russia and bitterly resents the coup.
    The puppet Ukraine government has been a corrupt money pit for Western aid, loans, and loan guarantees, featuring, among many questionable characters, a coterie that reveres Nazi Germany and the role it played in World War II. The Ukrainian government is a loser, but it’s our loser and Trump has doubled down on Obama’s failure, backing monetary aid and weapons shipments to the beleaguered nation.
    Russiagate was launched by Ukrainian officials who disseminated rumors in 2016 that Trump was in league with Russia and later, openly questioned his suitability for the presidency. The DNC dispatched a contractor, Alexandra Chalupa, to Ukraine to search for compromising material on Paul Manafort, then Trump’s campaign chairman. In other words, the Democrats sought information from a foreign power to influence the 2016 election, precisely what they groundlessly accuse Trump of doing.
    CrowdStrike, the firm that investigated the server the DNC wouldn’t let the FBI or NSA touch, was founded by Ukrainian Dmitri Alperovitch, a senior fellow of the anti-Russian Atlantic Council think tank, and funded by a fanatically anti-Russian oligarch, Victor Pinchuk, who donated at least $25 million to the Clinton Foundation before the 2016 election. CrowdStrike never even produced a final report on its Russian hacking investigation, and had to revise and retract statements it used to support its conclusion.
    That conclusion was based in part on purported telltale Cyrillic characters it said it found when it examined the purported hack, left on the server by the purported hackers. In March 2017, WikiLeaks released Vault 7, which detailed the CIA’s own hacking capabilities, among which is the ability to disguise its hacks and make them look like they came from somewhere else, like Russia. The Cyrillic characters could have been put on the server by the CIA. Or they may only exist in CrowdStrike’s imagination, as nobody else has been allowed to look at it.
    In his phone call with President Zelensky, President Trump elliptically mentions CrowdStrike, from which it can be inferred he wanted CrowdStrike investigated: “I would like you to find out what happened with this whole situation with Ukraine, they say Crowdstrike.” He implied that Ukriane might have the DNC server: “The server, they say Ukraine has it.” It was in this context that he first mentioned having Ukrainian officials work with Rudy Guliani and Attorney General William Barr. Only later in the call did he turn to the Bidens.
    The other thing. There’s a lot of talk about Biden’s son, that Biden stopped the prosecution and a lot of people want to find out about that so whatever you can do with the Attorney General would be great. Biden went around bragging that he stopped the prosecution so if you can look into it…It sounds horrible to me.
    Joe Biden did what the Democrats accuse President Trump of doing—interfering in Ukraine’s investigative and judicial processes for political benefit. He threatened to withhold US aid to Ukraine if then president Petro Poroshenko didn’t fire Viktor Shokin, Ukraine’s Prosecutor General. Shokin was investigating Burisma, an energy company that had given Biden’s son, Hunter, a seat on its board of directors that paid him at least $50,000 a month. Hunter Biden had no connection to Ukraine and knew nothing about the energy business. These facts are not in disputer—Joe Biden bragged about what he had done to a Council on Foreign Relations gathering. Poroshenko fired Shokin in May 2016 and replaced him with Yurly Lutsenko.
    A mere recitation of the known, indisputable facts makes out a prima facie case of influence peddling and bribery, and had Shokin been allowed to pursue his investigation, he might well have launched criminal proceedings against Burisma and perhaps Hunter Biden. That would not have redounded to Joe Biden’s benefit, so squelching the investigation was indisputably in his political interest. He may have had another reason for squelching the investigation that strikes even closer to home. A member of Ukraine’s parliament has alleged that Joe Biden received $900,000 as a lobbyist for Burisma.
    In 2000, the US Senate ratified a treaty negotiated by the Clinton administration between the US and Ukraine, “Mutual Legal Assistance in Criminal Matters,” providing, in the words of Bill Clinton, “for a broad range of cooperation in criminal matters.” This gave President Trump, charged with executing the law, all the authority he needed to ask Ukraine’s president for assistance in investigating a prima facie case of influence peddling, bribery, and Biden’s pressure on Ukraine’s president to fire the Prosecutor General. That Joe Biden is Trump’s political rival is absolutely irrelevant, unless anyone who announces they’re running against a sitting president somehow becomes automatically immune from prosecution, that is, above the law.
    Suppose it was a Trump crony and his son, not Joe and Hunter Biden, at the center of this farce. If Trump said nothing about the matter to Ukraine’s president, didn’t insist that he investigate the crony, the Democrats would make out a strong case that Trump was not interfering in Ukraine’s judicial and investigative processes for political gain, although he had a Constitutional and legal duty to do so as the president and under the 2000 treaty. That case would be far stronger than the case they’re now trying to foist on the American public.
    One can hardly imagine a more inauspicious set of circumstances for the Democrats to launch an impeachment investigation and potentially a vote by the Democratic-majority House of Representatives to impeach, followed by a Senate impeachment trial. So why are they doing it?
    Because they can, and because they have nothing to lose and everything to gain. Nancy Pelosi and the rest of the Democratic leadership will try to employ the procedural shenanigans similar to those they used to pass Obamacare without a single Republican vote to get an impeachment vote without an adversarial proceeding. Republicans wouldn’t be able to issue subpoenas, question adverse witnesses or call their own; the vote will essentially be based on partisan assertions—hearsay from one, two, or perhaps three whistleblowers whose identities and testimony the Democrats may try to keep secret. So much for the right to confront one’s accusers. Perhaps the Democrats see due process as a white, patriarchal tool of oppression, not the embodiment of an individual right to fundamental procedural fairness in an individual’s dealings with the government. To their credit Trump and his legal team are balking.
    Things will be different in the Senate, but the worst case for the Democrats is the Republicans conduct a short, pro forma trial and vote not to convict.
    Many of the traditional Republican rank and file have an unshakeable belief, firmly held through eight years of Bill Clinton and eight years of Barack Obama, that if some supposedly decisive swath of the electorate only knew the illicit things those two, and Democrats in general, have done, they would rise up and electorally smite them. It didn’t happen during the Clinton and Obama administrations and it won’t happen now.
    The only thing left of Russiagate is Trump and company’s investigation of its genesis and development, which may result in criminal prosecutions against some of its sponsors. Other than that possibility, which will take years to play out in the courts, the sponsors have paid no price for Russiagate. It was a non-issue for most voters, and those who thought it important were primarily party partisans on both sides, among whom the Mueller report and testimony didn’t change a single vote.
    The Democrats are simply going to rerun the Hillary Clinton email scandal playbook. There, they shifted the focus from what the emails revealed to their phony Russian hacking story of how they were revealed. The switch this time is from the Democrats’ malodorous associations with Ukraine—from their sponsored coup in 2014 to Ukrainian interference on behalf of the Democrats in the 2016 election to CrowdStrike to Burisma and the Bidens—and instead to the perfectly legitimate phone call between Presidents Trump and Zelensky.
    On its face this looks ludicrous, but it worked for Hillary. She is free, hasn’t been indicted, and floats trail balloons about getting into the 2020 race. If the Democrats can generate enough sound and fury about that call, especially in the mainstream media, and draw out the proceedings into next summer, they can divert attention from the Russiagate investigation and perhaps deflect or even stop it all together. Check out their records: Michael Horowitz  and William Barr are savvy Washington political players at best, paid up members of the Deep State at worst (see here for Horowitz, and here and here and here for Barr).
    The brass ring for the Democrats would be a Senate vote to convict, and there may be enough Mitt Romney-type Republican turncoats that the possibility cannot be dismissed out of hand. Failing that, the Democrats would settle for winning the 2020 presidential election. They’re hoping the impeachment trial yields dirt they can use against Trump. Articles proclaiming that the impeachment gambit dooms the Democrats next year are wildly premature. Obamacare was supposedly doomed in 2016 after Republicans won the presidency and both branches of Congress and yet, here we are and Obamacare is still with us.
    The Republican candidate for president has won the popular vote once in the last seven elections (2004). The only memorable thing Mitt Romney ever said was his 47 percent comment. Roughly that percentage of the electorate really does draw its sustenance from the government—by now it may be 48, 49, or 50 percent—and it will mostly vote for the party of government. Couple that bought, built-in base with what’s been happening at the margins since the last election.
    No wall has been built and the illegal immigrant flood has not abated. That group is heavily Democratic and may be decisive in Arizona and Florida. Even Texas could be in play. Trump’s base is older, and some of them have died. Democrats are younger, and a substantial percentage of millennials now call themselves socialists. Democratic candidates are falling all over themselves promising freebies, including free college and health care and student loan forgiveness, to win their vote. Trump’s trade war hasn’t gone down well in farm states as agriculture bears the brunt of China’s retaliation. That could cost him Wisconsin, Georgia, and North Carolina.
    Social mood drives both stock markets and politics. Should social mood turn more sour than it already is and the stock market and economy tank, Trump is probably toast, even if he escapes an impeachment conviction.
    A Democratic victory next year would be a giant victory for the truth irrelevance project. Two scandals manufactured out of whole cloth will not only not have cost them anything electorally, they will have further solidified their base, most of whom quit caring about the truth long ago. There’s probably no chance that Horowitz, Barr, and their colleagues would stand against a Democratic tide. Investigations will go to the bottom of their To Do lists, then get tossed down the memory hole sometime after the new president takes office.
    And without saying a word, the Democrats will be screaming to all those who saw Trump as a symbol of their own resistance: YOU THOUGHT YOU WERE MAKING AMERICA GREAT AGAIN, BUT WE’VE MADE THE TRUTH IRRELEVANT! The opposition’s demoralization and anger will be off the charts.
    Whether the truth is irrelevant is a metaphysical debate. To skip to the ultimate conclusion: it’s always and everywhere relevant. Whether a political entity or government can act as if the truth’s irrelevant and neutralize or eliminate those who oppose it is a propaganda and tactical issue.
    The US is well down the road to stifling dissent and the truth. The Democrats are disregarding the truth and putting their chips on kangaroo justice. Republicans are rightfully outraged, but what kind of justice has the US meted out to truth-tellers and true whistleblowers Edward Snowden, Julian Assange, and Chelsea Manning? Are there any prominent Republicans who have spoken out in defense of their truth telling or right to fair judicial processes? The truth irrelevance project is bipartisan.
    In 2016, the resistance to Government As Currently Constituted And The Powers That Be got behind Bernie Sanders and Donald Trump. Sanders got screwed by his own party; Trump won the presidency. Whether Trump is more a symbol of resistance than the real thing is a topic for another essay. The important point is that his voters constructively channeled their frustrations, played by the rules, and voted him into office.
    If House Democrats conduct their kangaroo proceedings and Trump is convicted by the Senate, or if he stays in office but the impeachment and attendant media circus cost him the election, his supporters will stare at three relevant truths: the government, its string pullers, and its sycophants and toadies in the media, business, academia, Hollywood and elsewhere are completely corrupt; voting is useless, the only choices allowed are those approved by the powers; the system will never be reformed from the inside. Some of the resistance, disillusioned, will give up. The rest will continue to resist, but they won’t be playing by the rules anymore.

    HALL investors have until July 6, 2020 to file lead plaintiff motion to recover lost funds

    From Glancy Law:

    Glancy Prongay & Murray LLP (“GPM”) reminds investors of the upcoming July 6, 2020 deadline to file a lead plaintiff motion in the class action filed on behalf of Hallmark Financial Services, Inc. (“Hallmark Financial” or the “Company”) (NASDAQ: HALL)  investors who purchased securities between March 5, 2019 and March 17, 2020, inclusive (the “Class Period”)
    If you suffered a loss on your Hallmark Financial investments or would like to inquire about potentially pursuing claims to recover your loss under the federal securities laws, you can submit your contact information https://www.glancylaw.com/cases/hallmark-financial-services-inc/. You can also contact Charles H. Linehan, of GPM at 310-801-2829, or via email at shareholders@glancylaw.com to learn more about your rights.
    On March 2, 2020, Hallmark Financial announced that it had decided to exit from its Binding Primary Commercial Auto business and reported a $63.8 million loss development for prior underwriting years.
    On this news, the Company’s share price fell $2.10, or more than 14%, to close at $12.23 per share on March 3, 2020, on unusually heavy trading volume.
    On March 11, 2020, Hallmark Financial disclosed that it had dismissed its independent auditor, BDO USA, LLP (“BDO”), due to a disagreement regarding estimates for reserves for unpaid losses, among other things.
    On this news, the Company’s share price fell $2.39, or over 29%, to close at $5.71 per share on March 12, 2020, on unusually heavy trading volume.
    On March 17, 2020, Hallmark Financial filed with the SEC a letter from BDO in which BDO stated “BDO expanded significantly the scope of its audit on January 31, 2020, with respect to which a substantial portion of the requests had not been received and/or tested prior to our termination.”
    On this news, the Company’s share price fell $0.08, or 2.5%, to close at $3.12 per share on March 18, 2020.
    The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company lacked effective internal controls over accounting and financial reporting related to reserves for unpaid losses; (2) that the Company improperly accounted for reserve for unpaid losses and loss adjustment expenses related to its Binding Primary Commercial Auto business; (3) that, as a result, Hallmark Financial would be forced to report a $63.8 million loss development for prior underwriting years; (4) that, as a result, Hallmark Financial would exit from its Binding Primary Commercial Auto business; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
    Follow us for updates on LinkedInTwitter, or Facebook.
    If you purchased or otherwise acquired Hallmark Financial securities during the Class Period, you may move the Court no later than July 6, 2020 to request appointment as lead plaintiff in this putative class action lawsuit. To be a member of the class action you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the class action. If you wish to learn more about this class action, or if you have any questions concerning this announcement or your rights or interests with respect to the pending class action lawsuit, please contact Charles Linehan, Esquire, of GPM, 1925 Century Park East, Suite 2100, Los Angeles, California 90067 at 310-801-2829, by email to shareholders@glancylaw.com, or visit our website at www.glancylaw.com.  If you inquire by email please include your mailing address, telephone number and number of shares purchased.
    This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
    Contacts
    Glancy Prongay & Murray LLP, Los Angeles
    Charles Linehan, 310-801-2829