james22

Investment firms really can’t lose. If the Biden administration is successful, or if cities like Atlanta voluntarily adopt these rules, as Minneapolis and the entire state of Oregon already have, it is a win. Investment firms can carve up single-family properties and add additional units of varying sizes and shapes to them. Depending on local rules, the new housing will be sold or rented. In cases where an entire development is purchased, as it was outside Houston, investment firms can knock them down, build high-density apartment buildings, and create an endless income stream. If the Biden plan fails, they still have long-term investment rental properties. https://pjmedia.com/news-and-politics/stacey-lennox/2021/07/01/atlanta-is-a-preview-of-what-joe-bidens-prefered-housing-policies-intend-for-the-suburbs-n1458831

Crypto makes pretty meaningless the historical relationship between Gold and anything, I believe.

Thanks.

Got it. Just believed a rational outcome was more reliable than fundamentals. But that was obviously naive. Skol!

Nice summary: I had been highly confident that plaintiffs would prevail on the APA claim. I did not, though, count on all of the justices agreeing on a strained reading of the statute, nor on their giving no weight to the background facts on the case presented by plaintiffs (and me, in my amicus curiae brief). Yet that is what occurred. Thanks.

Really? Didn't think rationality was to much to ask.

Yeah, how could you? Grouch: The Court points to not a single precedent in 230 years of history for the distinction it would have us draw. Nor could it. The course it pursues today defies our precedents. ... Instead of applying our traditional remedy for constitutional violations like these, the Court supplies a novel and feeble substitute. ... Not only is this “relief ” unlike anything this Court has ever before authorized in cases like ours; it is materially identical to a remedial approach this Court previously rejected.

Consider the guidance the Court offers. It says lower courts should examine clues such as whether the President made a “public statement expressing displeasure” about something the Director did, or whether the President “attempted” to remove the Director but was stymied by lower courts. Ibid. But what if the President never considered the possibility of removing the Director because he was never advised of that possibility? What if his advisers themselves never contemplated the option given statutory law? And even putting all that aside, what evidence should courts and parties consult when inquiring into the President’s “displeasure”? Are they restricted to publicly available materials, even though the most probative evidence may be the most sensitive? To ascertain with any degree of confidence the President’s state of mind regarding the Director, don’t we need testimony from him or his closest staff? The Court declines to tangle with any of these questions. It’s hard not to wonder whether that’s because it intends for this speculative enterprise to go nowhere. Rather than intrude on often-privileged executive deliberations, the Court may calculate that the lower courts on remand in this suit will simply refuse retroactive relief. See, e.g., ante, at 6 8 COLLINS v. YELLEN GORSUCH, J., concurring in part (KAGAN, J., concurring in part and concurring in judgment in part). But if this is what the Court intends, why not just admit it and put these parties out of their misery? https://www.supremecourt.gov/opinions/20pdf/19-422_k537.pdf

This has hurt: ~8% of portfolio and significant opportunity cost. But still unsure what my takeaway should be. I tend to believe it was a good bet, based on precedent. But we have had recent examples of SCOTUS shying away from difficult decisions. As a value investor, I've been trying to remember John Templeton's When people say things are different, 20 percent of the time they are right. I'd assumed stare decisis was more reliable than mean reversion, but I guess the Rule of Law is something I have to now question. Maybe I can recoup my losses by looting? Or shoplifting?

Gorsuch: Today, the Court sounds the call to arms and declares a constitutional violation only to head for the hills as soon as it’s faced with a request for meaningful relief. But as we have seen, the Court has in the past consistently vindicated Article II both in reasoning and in remedy. These cases—involving appointment and removal defects alike—remain good law. So what are lower courts faced with future removal defect cases to make of all this? The only lesson I can divine is that the Court’s opinion today is a product of its unique context—a retreat prompted by the prospect that affording a more traditional remedy here could mean unwinding or disgorging hundreds of millions of dollars that have already changed hands. The Court may blanch at authorizing such relief today, but nothing it says undoes our prior guidance authorizing more meaningful relief in other situations. For my part, rather than carve out some suit-specific, removal-only, money-in-the-bank exception to our normal rules for Article II violations, I would take a simpler and more familiar path. Whether unconstitutionally installed or improperly unsupervised, officials cannot wield executive power except as Article II provides. Attempts to do so are void; speculation about alternate universes is neither necessary nor appropriate. In the world we inhabit, where individuals are burdened by unconstitutional executive action, they are “entitled to relief.”

Rule of Law Guy Quick Reaction: I was shocked that SCOTUS did not permit the APA statutory claim to go forward. The constitutional claim portion of the case was presaged by oral argument questioning, so while I do not agree with that outcome either, I cant say that I was totally surprised. On a day on which SCOTUS states that a farmer can exclude from his private property union organizers, SCOTUS also decides that the conservator has the statutory authority to appropriate over $100 billion of shareholder property. Going forward on remand, Collins Ps should argue that all senior preferred distributions from the time Director Watt came on board are subject to invalidation. There is some question whether Ps can only argue that the excess of distributions over the 10% dividend amount should be voided…but I would argue that the POTUS unremovable Director Watt did not have the authority to make any and all distributions on the senior preferred. This remanded portion of the case goes to the Houston federal district court, and however that court decides, it will be appealed to the 5th Circuit, which is already on record as believing that SCOTUS is wrong as to the merits of the APA claim. So while SCOTUS’s decision prevails for pre-2014 distributions, one might think that the 5th Circuit will be solicitous of the Collins Ps argument with regard to the post 2014 distributions. The Lamberth trial goes forward, with Ps arguing that the NWS breached the implied duty of FHFA/Treasury to deal in good faith which was owed to public shareholders. Judge Lamberth has already essentially stated that there was no APA claim, so having SCOTUS agree with him doesnt affect the case moving forward as is. To my mind, Ps should argue that there are exactly zero instances in the history of shareholder capitalism where the terms similar to the NWS have been implemented and upheld…so how could public shareholders have expected the NWS as a possible outcome…and if this is right (and it is), how can the public shareholders have expected that the NWS would comply with this fair dealing duty (understanding that expectations as to what is fair are based in major part on what history and custom informs one to expect). The court of federal claims case survives with added urgency. If congress is permitted to authorize the conservator to appropriate shareholder wealth, then shareholders should receive the fair value of their expropriated wealth as damages. A major issue in this case is whether this claim “runs with the shares”, or whether only 2012 shareholder can assert this claim. TINA (There Is No Alternative to the GSEs) still exists but the public shareholders ownership claims to the GSEs in the future have taken a hit. Dont ask me how the Biden administration can expect to recapitalize the GSEs given this outcome…and therefore one might expect that the GSEs will simply limp along in conservatorship for the next three years, building capital albeit with the Treasury having the right to all of that capital as its senior preferred stock preference increases.

And others are seeing their rights expanded. Maybe I can recoup my losses by looting? Or shoplifting?

Neither Gaby or AGC Analytics have tweeted yet. Sure they're in shock.

LOL

Annual oil extraction CapEx is ~$600 million short. https://wattsupwiththat.com/2021/06/20/the-looming-oil-shock/

[Tepper] said that the day Exxon added activist investors to its board was the day to buy oil stocks. He said the addition signaled that drilling "will eventually decrease over time" and supply will follow. https://www.zerohedge.com/markets/david-tepper-says-oil-stocks-are-cheapest-equities-every-measure

Yeah, Vanguard has poor timing. They've done this before with VGPMX, selling at the bottom and missing the rally. So much for Bogle's advice to "stay the course." But the Utility component is party what makes VGELX interesting to me. That much more diverse. Vanguard's Energy Index ETF/Fund would probably make for a better Energy bet. But active management might better take advantage of the ESG issue?

ESG investing has had a profound effect on the financial activities of energy companies. By driving down equity prices and raising bond yields, ESG investors have sharply raised the cost of capital for these firms, making it difficult for them to operate. The good news? This is being done by the private sector and is a reflection of market discipline, rather than by some top-down ukase by the federal government, although that may be coming soon. The energy companies that survive will be well-positioned to take advantage of a bull market. Add inflation to that bull market, and energy will be just one of the big beneficiaries. https://www.mauldineconomics.com/the-10th-man/antisocial I've been out for some time, but just got back in (VGELX).

But there might be a brief window to buy or sell immediately after the decision.

Opinions on Mon and Thurs next week.

Same here. Initially 10% back in early 2019, half that now. Think of doubling bet again as we seem so close, but my faith in the Rule of Law has been sorely tested of late.

Elusive.

Looks like we might get a SCOTUS ruling 10am ET tomorrow. *fingers crossed*

Berkowitz went into these lawsuits hearing that it was going to be a brutal fight but even he underestimated how bad it would be: https://seekingalpha.com/article/4417293-tim-pagliara-stands-tall-gse-shareholder-golden-era Tooth Fairy, Santa Claus, Rule of Law...

PLTR