MONOPOLY CAPITALI$M
The Second Breakup of AT&T

Scott Moritz
Fri, November 6, 2020


(Bloomberg) -- AT&T Inc. has been called many things over its 135-year history: Ma Bell, monopoly, media conglomerate.

The company, which traces its roots to the patent rights of telephone inventor Alexander Graham Bell, was the dominant phone company for much of the 20th century. So dominant, in fact, that it was broken up in 1982 as part of an agreement with antitrust authorities. But those businesses eventually began to merge, culminating with SBC Communications — one of the so-called Baby Bells — acquiring AT&T in 2005 and taking the name.

That wasn’t the end of it. What followed was a streak of deal-making that turned AT&T into a new behemoth spanning television, media and advertising. After a failed attempt to acquire T-Mobile, the company bought satellite-TV provider DirecTV in 2015 for $49 billion, becoming the biggest provider of pay television. It purchased Time Warner in 2018 for $85 billion, making Ma Bell the improbable parent company of HBO, CNN, Warner Bros. and DC Comics. The carrier also made smaller deals, such as the 2018 acquisition of AppNexus, an online ad platform.


And once again, AT&T was too big.

This time around, it isn’t the government pushing to slim down the company — though the Justice Department did unsuccessfully oppose the Time Warner deal — but its own investors and Chief Executive Officer John Stankey.

Stankey took the helm in July, putting him in charge of a company with heavy debt and a media business that was ravaged by the pandemic. AT&T also was shunted to No. 3 in the wireless-phone business this year, following T-Mobile US Inc.’s acquisition of Sprint Corp. The company had just launched HBO Max, an attempt to take on Netflix Inc. and Walt Disney Co. in streaming, but perhaps the most urgent matter was undoing some of the work of his predecessor.

The last CEO, Randall Stephenson, had spent much of his 13-year tenure obsessed with deals. He kept a color-coded roster of potential companies he wanted AT&T to buy, leading to 43 acquisitions.

Now Stankey has his own to-do list: things he wants to sell.

“It’s going to keep us busy for a little bit of time.”

Critics such as activist investor Elliott Management Corp. have urged AT&T to focus on its subscriber services and walk back its go-big-or-go-home M&A strategy by divesting acquisitions, including DirecTV.

“When you look at what’s worked or hasn’t worked in telecom, you see that conglomerates and empire building has not been rewarded by the marketplace,” said Todd Lowenstein, chief equity strategist with the Private Bank at Union Bank.

Stankey, who has spent his entire 35-year career at AT&T, may be an unlikely person to dismantle AT&T’s acquisition empire. He rode shotgun as a top captain during Stephenson’s decade of agglomeration. The executive had a hand in creating some of the current problems and he calls them out directly: Last month, he acknowledged that pay-TV providers like DirecTV will probably face years of cord cutting before they hit bottom.

Now, more than 100 days into the job, he says his plan of attack is to focus on three key growth areas: wireless — particularly 5G — where there’s hope for new consumer and business applications; fiber-optic network connections to accommodate surging data traffic; and HBO Max, the online streaming future of AT&T’s video ambitions.

As for new acquisitions, don’t expect much beyond opportunistic purchases, Stankey said in an interview in September. “Right now this management team is focused on getting execution right and moving the distractions elsewhere,” he said. “It’s going to keep us busy for a little bit of time.”

Last month, AT&T got $1.1 billion for its stake in Central European Media Enterprises. The company has already sold office buildings and a stake in Disney’s streaming service Hulu. It also got nearly $2 billion from the sale of its Puerto Rico phone business earlier this month.

The company is aiming to pay down debt and cut $6 billion in annual costs, partly through slashing thousands of jobs.

But AT&T still has plenty of potential businesses to sell or scale back. The question now is how big an asset sale it wants to have — and who may be interested in buying.

DirecTV

The biggest priority is DirecTV and AT&T’s other pay-TV operations, which have been hemorrhaging customers. AT&T has been exploring options for DirecTV for more than a year, but finding a buyer for the whole business seems unlikely.

A combination with Dish Network Corp., the nation’s other satellite-TV provider, is one scenario. But reducing the industry to a single player would draw antitrust scrutiny, especially since rural customers have few other options. A proposed combination of the two businesses was shot down by the Federal Communications Commission and the Justice Department in 2002.Instead, AT&T is trying to sell a stake — and possibly control of the business — to outside investors. a move that could take some of the drag off AT&T’s performance. But the ice cube is melting fast: Pay-TV revenue fell by more than $1 billion, or 10%, in the third quarter.

Apollo Global Management Inc. has been in discussions about such a transaction. And Bloomberg News reported this week that former Citigroup Inc. rainmaker Michael Klein could do a deal through his blank-check company Churchill Capital Corp. IV. Ideally, an agreement would let AT&T remove DirecTV from its books while maintaining access to some of its cash flow.

But a deal is expected to value DirecTV at only about $15 billion when final bids are accepted next month. That's less than a third of the price AT&T paid five years ago.

Vrio

AT&T’s DirecTV Latin America business suffers some of the same problems as the U.S. operations, only with an even more erratic political backdrop. The 2015 acquisition of DirecTV included satellite businesses in South America and the Caribbean — an entity that was renamed Vrio. The unit’s biggest problem was its Venezuela pay-TV business. During the country’s political turmoil, the service was shut down after getting caught between U.S. restrictions and the local government.

AT&T tried but failed to spin off part of Vrio in an initial public offering. Then, after reducing the size and price of the offer, AT&T abandoned the move. For the past two years, the falling value of the satellite-TV business has made prospects of unloading the business even dimmer.

Warner Bros. Interactive Entertainment

Unlike some of its businesses, AT&T’s video-game division would be a prized asset for a number of potential buyers. The company has reportedly explored a sale of the operations, which are estimated to be worth $4 billion. But AT&T recently pulled the business off a list of noncore assets that it's willing to part with.

The unit, whose video games include titles like Harry Potter: Wizards Unite and Mortal Kombat 11, attracted interest from several major companies. But with the gaming industry booming during the pandemic — and AT&T facing the complications of wanting to retain licensing rights — the company may have decided the division was worth keeping for itself.

Crunchyroll

The animation video service was the first step in AT&T’s massive pivot to media six years ago. Crunchyroll was acquired through the company’s newly formed joint venture with the Chernin Group, called Otter Media. The name is derived from the abbreviation OTT, for content delivered via the internet “over the top” of a traditional platform. Since then, just “streaming” has become the more popular term.

AT&T bought out the remaining stake in Otter Media from the Chernin Group in 2018. More recently, the telecom giant has had second thoughts. Last week, the Nikkei business daily reported that Sony Corp. was in final talks to acquire the service in a deal worth close to $1 billion.

CNN

CNN is one of the more controversial businesses that AT&T acquired when it absorbed WarnerMedia in 2018, with the president regularly assailing the cable-news network on social media. It's also been the source of takeover speculation, with Jeff Bezos seen as a potential buyer. But Stankey said in September that CNN was one of the pieces of the WarnerMedia structure that are “more tightly wound together than they were before.” In other words, selling it would seem less likely.

Xandr

AT&T had high hopes for the AppNexus digital advertising unit it acquired for $1.6 billion in 2018. Named in a nod to Alexander Graham Bell, Xandr was going to be an advertising network that all pay-TV providers could use. Ad-industry veteran Brian Lesser was hired to run the operation, and Stephenson told investors that the business would bring in $2 billion in new revenue by using customer data to deliver targeted ads.

Those fortunes didn’t materialize. Lesser left, and now it’s up for sale as new WarnerMedia chief Jason Kilar brings in another ad team.

Regional Sports Networks

AT&T has four regional sports networks, or RSNs, which include rights to teams such as hockey’s Pittsburgh Penguins, basketball’s Houston Rockets and baseball’s Seattle Mariners.

Though live sports are still the closest thing to must-see TV these days, owning RSNs has increasingly become a headache. Sports leagues have sought ever-increasing sums for rights to their games, and subscribers aren’t as reliable as they once were. Sinclair Broadcast Group Inc. just wrote down its RSNs by $4.23 billion, an admission that it overpaid for the cable channels, which it only acquired last year.

Looking for cash to pay down debts, AT&T had hoped to sell its RSNs and cash in on their $1 billion in estimated value. The company sought bids last year, but a buyer didn’t materialize. This year, with sports still trying to bounce back from Covid-19, a sale seems even less likely.

Digital Life

In a bold attempt to take on home-security giant ADT Inc., AT&T launched its own “smart home” security and monitoring venture in 2013. While the effort was intended to explore opportunities beyond its wireless service, the timing and model may have been wrong. Homeowners were already moving away from expensive security services and buying do-it-yourself systems or products like Ring from Amazon.com Inc. or Nest from Alphabet Inc. Four years into the venture, AT&T started looking for ways to get out.

AT&T Mexico

Stephenson crossed borders and ended a decadeslong friendship with his onetime mentor Carlos Slim by becoming a direct competitor for mobile customers in Mexico. AT&T bought wireless carrier Grupo Iusacell SA for $2.5 billion in 2015 and expanded the service to cover most of Mexico by 2018. But Covid-19, foreign-exchange rates and the dominance of rival America Movil in Mexico has kept the investment unprofitable and difficult to justify.

“It’s going to keep us busy for a little bit of time.”

So what does Stankey do now? Holding out to get top dollar for some of these assets might not be the right approach, said Colby Synesael, an analyst at Cowen.

Stankey just needs to “rip the Band-Aid off and move on,” Synesael said. In other words, take what he can get.

“I think it has become obvious to him that he needs to do it. And the sooner he does it the better,” Synesael said. “He doesn’t want to spend his entire CEO tenure undoing what he and Randall did in the past. Get it done now so he can concentrate on other initiatives.”


©2020 Bloomberg L.P.

Shell to Shut Louisiana Refinery After Failing to Find a Buyer

Barbara Powell
Thu, November 5, 2020, 



(Bloomberg) -- Royal Dutch Shell Plc will begin shutting its Convent refinery in south Louisiana mid-month while it continues to seek a buyer for the facility, part of a plan to reduce its global sites and focus on combined oil refining and chemical plants.

With global demand and profits stung by the spread of Covid-19, the shutdown of 53-year-old Convent, which has about 675 employees, is part of Shell’s larger strategy to shrink its portfolio to six facilities from 14 by 2025, Shell said in a statement. The remaining sites will have integrated oil refineries and chemical plants.

Shell plans to “invest in a core set of uniquely integrated manufacturing sites that are also strategically positioned for the transition to a low-carbon future,” according to a statement Thursday. “A key advantage of these core sites will also come from further integration with Shell trading hubs, and from producing more chemicals and other products that are resilient in a low-carbon future.”


The decision to shut the 211,100 barrel-a-day Convent facility comes amid a spate of refinery closures in the U.S. from operators including Marathon Petroleum Corp. and Phillips 66, with some sites permanently shutting and others being converted into renewable diesel plants. Shell is trying to sell operations in Puget Sound in Washington and Saraland, Alabama. The company completed a sale of its Martinez refinery in the San Francisco Bay area to PBF Energy earlier this year.

In September, Shell said it would retain six facilities that have both an oil refinery and chemical operations, including Norco in Louisiana and Deer Park in Texas, Rheinland in Germany, Pernis in the Netherlands, Pulau Bukom in Singapore and Scotford in Canada.

In Louisiana, Shell will retain its refinery and chemical sites in Norco and Geismar, its midstream infrastructure assets, branded retail presence, Gulf of Mexico operations and offices in New Orleans.

The so-called crack spread, which measures the difference between gasoline and diesel over West Texas Intermediate, was trading around $8.75 a barrel Thursday, down from $14.67 at the same time last year.

U.S. Shale Oil Industry May Never Regain Peak

U.S. crude oil production hit a record high of 13.1 million barrels per day as recently as mid-March, but total output since has tumbled to 11 million bpd. (©Dave Cutler)

GILLIAN RICH 06/25/2020

The biggest-ever shutdown of U.S. shale oil production sets the stage for another historic feat: turning it back on again. But for battered oil stocks, reopening the taps is the tricky part.

Shut-ins, or the closing off of wells, will hit U.S. production for years to come. So will recent halts in new drilling. The immediate fallout is clear. After hitting a record high of 13.1 million barrels per day as recently as mid-March, total U.S. crude oil production has tumbled to 11 million bpd.

Some shale oil industry leaders warn of permanent damage. Geology and Wall Street may determine the long-term effects.

"This is an unprecedented downturn," said EOG Resources (EOG) CEO Bill Thomas in an earnings call last month, a few weeks after oil prices went negative for the first time. "U.S. oil production is in severe decline, and it could take years for domestic production to turn around. We believe that the historic and prolific oil production growth by U.S. shale may have been forever altered."

Shale oil stocks have defied doomsayers before and have helped the U.S. achieve once unthinkable feats. Shale producers boosted U.S. oil production over that of Saudi Arabia and made the U.S. a net oil exporter again.

But massive economic collapse in the global coronavirus recession triggered widespread well shut-ins. The U.S. presidential election is also a concern for independent oil companies. Democratic nominee Joe Biden has outlined aggressive clean energy goals and plans to curtail new fracking permits.

The boom times for shale, and perhaps oil stocks, may be over.

Individual well shut-ins for days and weeks at a time are routine. They usually happen to perform maintenance or to fix a problem with a fracking job. Oil companies also shut in wells in times of low oil prices, such as during the Saudi price war of 1986.

But that was before the shale oil boom. The body of knowledge on prolonged shut-ins of shale wells is thin vs. conventional wells, adding to the uncertain outlook for reopening thousands of wells today.

Moreover, the scale of what's going on now is unprecedented, IHS Markit said in a May report, calling it the "Great Shut-In." The market tracker estimated 1.75 million bpd of existing U.S. oil production would be gone by early June. Other analysts have forecasts above 2 million.

"Not even the United States' huge network of storage facilities and associated infrastructure was enough of a buffer for a crisis on this scale," said Raoul LeBlanc, vice president of financial services at IHS Markit, in a statement. "Negative oil prices and the collapse of WTI futures contracts were a potent signal that stronger measures, namely shut-ins, were needed to curb oversupply."

ConocoPhillips (COP) alone is shutting in more than 2,000 wells. S&P Global Market Intelligence estimates that Conoco's shut-in production will total 420,000 barrels per day in June.

The market tracker sees Exxon Mobil (XOM) shutting in 320,000 bpd and Chevron 240,000. Among top shale oil stocks, Continental Resources (CLR) will shut in an estimated 140,000 bpd of production in June, and EOG Resources about 100,000.

IHS expects 500,000 bpd will stay off the market long term, until U.S. oil prices are above $50 per barrel again. That will likely take years. The Energy Information Administration sees U.S. oil prices averaging just $35.14 this year and $43.88 in 2021.

IHS sees most of the rest of the production coming back by the summer and fall. But a timeline of several months means trouble for shale wells.

A short shut-in may help a well come back even stronger. In its Q1 earnings call, EOG Resources said that when wells restarted, oil production increased for an average of 23 days before falling back to a typical decline rate.

But wells can suffer permanent damage in longer shut-ins.

"When you're talking about 30 days vs. 60 days vs. 90 days, there's a problem," Lyle Lehman, founder of fracking consulting firm Frac Diagnostics, told IBD.

Most of the damage during a well shut-in occurs between 30 and 60 days, he says. The geology of U.S. shale fields makes the wells especially susceptible to damage after prolonged shut-ins.

Shale is a fine-grained sedimentary rock with very low permeability. That means the liquids and so-called proppants, like sand or ceramics, that are used to crack open shale will remain stuck in the well, causing damage to the rock fractures from which oil normally would flow.

But EOG's CEO was unconcerned when speaking to analysts in May.

"On these shale wells, there's absolutely no damage when you shut them in and bring them back on for ­— whether it's two weeks or two months," Thomas said. "We feel very confident about that."

The good news for shale oil stocks is that the Permian Basin, where the vast majority of U.S. drilling activity is concentrated, has better geologic traits than other formations do.

Lehman says that the Haynesville field in east Texas and southwestern Arkansas has the worst permeability. The Bakken formation in North Dakota is in the middle, and the Permian is near the top.

But none of the plays have such great permeability that damage from shut-ins would be minimal, he warns. Such damage can hasten a well's rate of decline. More oil will be left in the ground and unrecoverable — unless more invasive and expensive methods are used.

In west Texas, the output decline rate on shale wells is already steep, at about 40% a year, according to Lehman. After shut-in damage, a reopened well could see that annual decline rate worsen to 48%.

Because shale oil wells decline quickly, companies must keep drilling new wells just to keep output from falling. During the boom years of shale oil stocks, banks were eager to offer loans, stoking production growth. That's changing now.

"Will money pour back into the sector? It's a very, very capital-intensive sector. And we don't think that's going to be the case," Energy Aspects Chief Oil Analyst Amrita Sen told Bloomberg TV in May.

If lending remains tight, "Shale growth will really never go back to a million barrels per day again," she added, echoing EOG's CEO. "You're going to look at 200,000 to 300,000 barrels per day growth. So it's a paradigm shift for now."

Meanwhile, shale oil stocks are dealing with the hangover from those debt-happy years. Low crude prices and slashed production mean little cash is coming in.

Some producers have already sought bankruptcy protection. In April, Whiting Petroleum (WLL) filed for bankruptcy. And in May, Chesapeake Energy (CHK) and Oasis Petroleum (OAS) warned about their ability to stay in business.

If U.S. oil prices stay at $30 per barrel, 70 companies could file for bankruptcy, Rystad Energy has predicted. And if oil falls to $20 per barrel, that number could double to 140.

Even when U.S. oil prices climb back toward 2019 levels, "very few" shale producers will be able to expand production because of their high debt levels, Pioneer Natural Resources (PXD) CEO Scott Sheffield said on an investor call in May.

Some shale production has continued despite low oil prices, especially when companies have lease contracts that require them to continue pumping no matter what. Diamondback Energy (FANG) said in May it's keeping one completion crew active in Q2 to meet its current lease obligations.

Other companies don't want to cut shale oil production before rivals do and help them out, says Ryan Giannotto, director of research at GraniteShares.

"So it's this big game where everyone says, 'If I can just last one day longer than the competition, then I'm all set,'" he said.

With oil prices rebounding and holding above $30 a barrel lately, some shale oil stocks are taking early steps to open the tap again. In June, Parsley Energy (PE) said it will bring back the "vast majority" of the 26,000 barrels per day it shut in just a month prior.

EOG also said in early June it plans to "accelerate our production into what we see as a price recovery in the second half of the year."

That doesn't mean boom times are ahead. While reopening existing wells, Parsley is not doing any new drilling or fracking. EOG is similarly bearish on new drilling.

"We see very little capital flowing into the industry. And we see higher declines from all the shale players throughout the rest of the year," EOG exploration chief Ken Boedeker told an RBC Capital Markets conference. "Starting to drill in the high $30s? I'm not sure I see that."

The Supreme Court heard a case concerning LGBTQ rights and religious liberty about one week after Amy Coney Barrett joined the bench

Kelsey Vlamis,
INSIDER•November 5, 2020

SCOTUS hears case concerning LGBTQ rights and religious liberty about a week after Amy Coney Barrett joined the bench


About one week after Justice Amy Coney Barrett joined the bench, the Supreme Court heard arguments in a case concerning discrimination against LGBTQ people on the basis of religious liberty.

The case involves the right of a Catholic group working as a city contractor to not place foster children into homes with same-sex couples. During arguments today, the court appeared likely to side with the group, CNBC reported.

"This is really as big as they come I think in terms of legal battles," one expert told Insider. He said the case could be "a serious blow to the rights of Obergefell," referring to the 2015 case that legalized same-sex marriage in the US.

About one week after Justice Amy Coney Barrett joined the bench, the Supreme Court heard arguments in a case concerning discrimination against LGBTQ people on the basis of religious liberty.

Related video: What’s at stake with Amy Coney Barrett as SC justice
https://news.yahoo.com/supreme-court-heard-case-concerning-080028722.html

The case involves Catholic Social Services, a group that worked as a contractor for the city of Philadelphia to place children into foster homes, but would not work with same-sex couples. The city of Philadelphia stopped working with the group, saying they were violating an anti-discrimination law, prompting the group to sue the city.

The case, Fulton v. City of Philadelphia, represents a "legal supernova clash" between the rights of LGBTQ people and the First Amendment right to religious liberty, according to Doron Kalir, professor at Cleveland-Marshall College of Law.

"This is really as big as they come I think in terms of legal battles," Kalir told Insider. He said the case could be "a serious blow to the rights of Obergefell," referring to the 2015 case that legalized same-sex marriage in the US.

It is also the first major Supreme Court case to come before Barrett, whose record has raised concerns among LGBTQ advocates. During today's arguments, Barrett, along with other conservative-leaning justices on the court, appeared likely to side with Catholic Social Services, according to CNBC.

"If we are honest about what's really going on here, it's not about ensuring that same-sex couples in Philadelphia have the opportunity to be foster parents," Justice Samuel Alito said, according to The Wall Street Journal. "It's the fact that the city can't stand the message that Catholic Social Services and the archdiocese are sending by continuing to adhere to the old-fashioned view about marriage."

Alito's remarks were among other doubts raised by conservative justices, including Justice Brett Kavanaugh who said the city was "looking for a fight," and Barrett who proposed a hypothetical where the government takes over hospitals and asked whether it could then force doctors to perform abortions, CNBC reported.

The court's liberal-leaning judges raised different concerns. Justice Sonia Sotomayor said the case could severely weaken laws against discrimination, including against people of a different faith or race, The Journal reported.

Kalir said the court is likely to side with Catholic Social Services. But he said for Barrett, it would mean overturning an opinion written by her mentor, the late conservative Justice Antonin Scalia.

The 1990 opinion, Employment Division v. Smith, held that when there is a generally applicable rule that is applied neutrally to everyone, the fact that it offends someone's religious belief is not enough to disqualify the law.

He said for the court to rule in favor of Catholic Social Services, it would likely mean the 30-year-old opinion, authored by Scalia, would be overruled.

"It would be very strange if her first case on the court will be overturning one of Scalia's most famous opinions," he said.

He also said there could be political consequences as a result of the case, saying that Democrats could use the outcome to justify increasing the number of justices on the Supreme court.

Kalir said Democrats could say: "Look, religious liberty has run amok, they are now reversing or overruling established precedent by Justice Scalia. That's how much they went to the right, Justice Scalia is too center for them."

He also said the justices may not come to a precedent-setting conclusion, as is what happened in 2018, when the court heard a case about a Colorado baker refusing to bake a wedding cake for a same-sex couple. In that case, Kalir said the court "punted," deciding in favor of the baker but on terms that did not set a precedent for future cases.

A decision is expected in the case before July, CNBC reported.

Read the original article on Insider

Nithya Raman, Progressive Hollywood Favorite, 

Wins Los Angeles City Council Seat

Marc Malkin,
Variety•November 6, 2020


Nithya Raman has won a fiercely contested race for Los Angeles City Council, beating incumbent council member David Ryu.

“The voters of district four have spoken, and I respect the outcome of this election,” Ryu said in a statement Friday.

Raman, an urban planner who also co-founded SELAH Neighborhood Homeless Coalition, mobilized an estimated 2,000 young and progressive voters to work on her campaign in a rare show of enthusiasm for a city council race.

Former councilman and supervisor Zev Yaroslavsky told the L.A. Times that her election represents “a political earthquake” for City Hall.

With her platform, she argued that the council, which is made up of 13 Democrats and one independent, has failed to make significant changes to policing, homelessness, rent control and clean energy.

Raman is also the former director of Time’s Up’s entertainment division, which attracted a slew of celebrity and industry endorsements to her campaign.

Natalie Portman and Jane Fonda were both featured in videos supporting her candidacy. Mike Schur, Nick Offerman, Adam Scott and Aubrey Plaza took part in a virtual fundraiser in early September.

“Girls” writer Jenni Konner tweeted “The Nithya Raman win makes me feel so hopefully for the city.”

“I think I was guilty like a lot of people of focusing a bit too much on national-level issues,” Jesse Zwick, a film and TV writer who has volunteered on Raman’s campaign, told Variety in September. “But as the homelessness crisis kept getting worse, I felt I had to do something. Nithya has done a good job of showing how much we could be doing if we paid attention and expected more of city officials.”

Ryu was first elected five years ago, becoming the first Korean American on the city council. He captured 44.7% of the vote in the March primary, while Raman came in second with 41.1%.

The City Council 4 district runs from Silver Lake to Sherman Oaks, covering many wealthy neighborhoods popular with industry insiders.

MIGRANT INDO AMERICAN 

Nithya Raman

Nithya Raman is an American urban planner and activist. Raman co-founded a homelessness nonprofit in Los Angeles, and was the executive director of Time's Up Entertainment. She is running against incumbent David Ryu for Los Angeles City Council in the 4th District in 2020.

• 
  Wikipedia
• 
  Official site

• Birthplace: Kerala, India
• Education: Harvard University · Massachusetts Institute of Technology
• Born: Kerala · India

5 states just passed ballot measures to legalize marijuana, but policy experts say people already in prison on drug convictions have a hard path to freedom

Kelly McLaughlin,
Business Insider•November 4, 2020

Hollis Johnson/Business Insider

Five states — New Jersey, Mississippi, Arizona, Montana, and South Dakota — voted to legalize marijuana in ballot measures during Tuesday's election.

Arizona, Montana, and New Jersey voted to legalize the recreational possession of marijuana by adults, while Mississippi voted to legalize the medical use of marijuana. South Dakota voted to legalize both.

Marijuana legalization policy experts told Insider that while the votes are a "huge step" toward national legalization, the decisions might have little impact on people behind bars on marijuana convictions.



Five states voted to legalize marijuana in ballot measures during Tuesday's election, though the decisions might have little impact on people behind bars facing drug convictions.

Marijuana legalization policy experts told Insider that the votes in New Jersey, Mississippi, Arizona, Montana, and South Dakota were a "huge step" toward national legalization, but said the laws don't do enough to help criminal justice reform.

"It doesn't make sense for people to be rotting in jail for crimes that are now legalized," Morgan Fox, media relations director at the National Cannabis Industry Association, told Insider.

Arizona, Montana, and New Jersey voted to legalize the recreational possession of marijuana by adults in Tuesday's election, while voters in Mississippi approved the legalization of medical marijuana. Voters in South Dakota, meanwhile, approved both medical and recreational use of marijuana.

With Tuesday's votes, 35 states and Washington, DC, have now passed or voted to pass medical marijuana access laws, while 15 and Washington, DC, have passed or voted to passed recreational marijuana access laws.

But in many states, there isn't an automatic process to expunge — or seal — prior marijuana convictions from a person's criminal record. Further, some states require inmates behind bars to file petitions for re-sentencings or dismissals of marijuana charges.
Getting a marijuana conviction expunged is difficult in many states where the drug is legalized

Sixty-seven percent of Americans polled by Pew Research last year said marijuana should be legalized, and while the legal marijuana industry could be a multi-billion dollar industry in the US, Insider reported last year that it's currently costing Americans billions of dollars annually through possession arrests, court cases, and incarceration rates.

The National Organization for the Reform of Marijuana Laws (NORML) reports on its website that only five states — New Jersey, California, Illinois, New York, and Vermont — have an automatic expungement process, which allows people with prior marijuana convictions to have the charges sealed on their criminal record. Other states require people to petition the conviction in court.

A woman holds marijuana for sale at the MedMen store in West Hollywood Reuters

Arizona and Montana provided language about expungement or re-sentencings in their ballot measures for Tuesday's election, both require petitioning.

Sarah Gersten, executive director and general counsel at the Last Prisoner Project, an organization dedicated to bringing restorative justice to the cannabis industry, told Insider that the process of getting re-sentenced or having a retroactive release is also difficult because of petition laws.

She said privacy laws create further barriers between inmates and re-sentencing and retroactive release programs, and petitions are made more difficult for inmates to understand through legal jargon, language barriers among inmates for which English is not their first language, and by a lack of finances among inmates that could help fund legal representation.

"If you're currently incarcerated, especially right now during the pandemic, there are so many restrictions on communication, on accessing this type of information," Gersten added. "It might be really, really difficult to know what you would be eligible for with this type of law."
New legalization laws could help communities disproportionately impacted by marijuana arrests

While it could take a long time for prisoners charged with marijuana crimes to feel the impact of the new laws, Gersten and Fox said that legalizing marijuana can help prevent arrests in marginalized and minority areas.

They said states should use tax revenue from newly legal cannabis industries to provide capital and programs to people in communities disproportionately impacted by marijuana arrests so they can actually access the legal industry.

"The best way to address that is making sure there are low barriers to entry like low license fees, no license caps, which introduce competition in the license phase instead of the market where it belongs, and investing in community programs and providing resources," Fox said.

Federal laws still prohibit interstate commerce of marijuana, but Fox said that it will be interesting to watch how more rural states like South Dakota and Montana take on their marijuana market.

"There might be a lot of people that are very interested in getting into the cultivation side in all of these states, but it's limited in that they can only operate in that state market. It's limited to the consumer base," he said.

Ultimately, the legalization in five new states is a sign of what could come, Paul Armentano, Deputy Director of NORML, told Insider in a statement.

"Voters' actions last evening were an unequivocal rebuke to the longstanding policy of federal marijuana prohibition, and is an indication that marijuana legalization is far from a 'fringe' issue, but rather one that is now embraced by mainstream America," he said. "For over two decades, the public has spoken loudly and clearly. They favor ending the failed policies of marijuana prohibition and replacing it with a policy of legalization, regulation, taxation, and public education. Elected officials — at both the state and federal level — ought to be listening."

The ultimate guide to marijuana legalization

Jeremy Berke,Yeji Jesse Lee,
Business Insider•November 5, 2020

 

Shayanne Gal/Business Insider


Five states voted on Tuesday to loosen restrictions on marijuana.


New Jersey, Arizona, South Dakota, and Montana all voted to legalize cannabis for all adults over the age of 21.


South Dakota and Mississippi voted to establish medical-marijuana programs.


Business Insider has put together a comprehensive ballot tracker, based on a variety of sources, to explain the various ballot measures. It's available exclusively to subscribers.

Cannabis legalization racked up a slew of victories in Tuesday's elections.

New Jersey, Arizona, South Dakota, and Montana voted to legalize cannabis for all adults over the age of 21. South Dakota also voted to create a medical-cannabis program, as did Mississippi. It will take time for legalization to take effect in each of the states.

Colorado and Washington broke ground in 2012 as the first US states to legalize recreational cannabis. Thirteen states and Washington, DC, have now joined them. Medical marijuana will be legal in 35 states, meaning a majority of Americans will have some form of access to legal marijuana.

Ballot initiatives have played a major role in the spread of legal cannabis, and 13 of the states that legalized recreational marijuana did so through referendums.

Business Insider put together a ballot tracker to help you understand everything you need to know about the far-reaching implications of the cannabis measures voters approved.

To put the tracker together, we tapped a variety of sources to explain the nuances of each state's ballot measures, including analysts from the investment bank Cowen.
Click here to see the full map, along with insights like the timelines for legalization, market-size predictions, and exclusive analysis.

This article was updated on November 4 with election results.

Read the original article on Business Insider

Read more:

All the states where marijuana is legal — and 5 more that just voted to legalize it

The racist origins of marijuana prohibition

Cannabis stocks drop as the possibility of a Republican Senate dims federal legalization hopes

Edmonton unemployment rate highest among Canada's major cities again at 12 per cent

UCP AUSTERITY IS AN OXIDIZER FOR THIS

Jeff Labine EDMONTON JOURNAL

 

© Provided by Edmonton Journal

 Canada added 84,000 jobs last month, significantly lower than September's 378,000 gains.

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Edmonton’s unemployment rate was the highest among major Canadian cities in October, the second time the city has reached that milestone in four months.

The city gained roughly 6,800 jobs last month, causing the unemployment rate to drop 0.6 per cent to 12 per cent, Statistics Canada reported Friday in its Labour Force Survey Friday . However, it wasn’t enough to put the city below any other major municipalities. Peterborough, Ont. had the second-highest unemployment rate in the country at 11.7 per cent.

In June, Edmonton had an unemployment rate of 15.7 per cent, the highest for a major Canadian city at the time and on record, but it has dropped over the past four months.

Janet Riopel, president and CEO of the Edmonton Chamber of Commerce, said in an email the city’s slow employment growth is a major cause for concern.

“We still have the highest unemployment rate of any major city in Canada and our members are telling us they’ve only had a trickle of customers returning,” she said. “We continue to urge Edmontonians to wear a mask and support our job creators by shopping safely at your favourite local retailers and service providers. It’s the best thing you can do to help boost our economic recovery.”

In total, Edmonton has added 60,000 jobs since the summer while Calgary has gained more than 101,000.

Edmonton’s acting chief economist Felicia Mutheardy said the consecutive job gains show the city is still on the path to recovery. She said June had the highest unemployment rate on record.

“In terms of where we saw growth, initially we saw more strength in part-time employment but the latest data in October suggests some increases in terms of full-time employment, which we see as a positive signal,” she said. “I’ve been encouraged by four consecutive months of employment gains. However, there still remains risks that could hold back employment recovery, especially as we’re looking at rising case counts.”

Meanwhile, Alberta added 23,400 jobs in October, continuing a six-month streak, which brought the unemployment rate down a whole percentage point to 10.7 per cent.

Jobs were spread across several sectors, including the health care, social assistance, transportation and warehouse industries.

Wholesale and retail did particularly well, with Alberta contributing 7,100 of Canada’s 15,000 total last month. This was offset somewhat in the information, culture and recreation industry, which lost 7,200 jobs in Alberta.

Although Alberta has consistently been adding jobs over the past few months, the province continues to be the farthest away from its pre-COVID levels.

Calgary, which added 17,000 jobs in October, has the fourth-highest unemployment at 11.3 per cent, down by 1.3 per cent.

NDP Leader Rachel Notley said she was happy to see Albertans are getting back to work.

“I’m pleased to see we’re moving upwards but I’m concerned they (will) undo that progress if this government doesn’t address the very real health effects of COVID-19,” she said. “We have not recovered the vast majority of jobs lost from COVID-19.”

Jobs, Economy and Innovation Minister Doug Schweitzer said in an email statement the numbers show the province is on the road to recovery although more work is still needed. He said the province has recovered 258,400 jobs that were lost during the pandemic, the majority of which were full time.

“Alberta’s recovery plan is a bold vision to create jobs, diversify our economy, and build Alberta to a better future,” Schweitzer said. “In the weeks and months to come, our government will continue our tireless work to ensure that we are creating the best conditions to get Albertans back to work.”

Canada added 84,000 jobs last month, significantly lower than September’s 378,000 gains. The national unemployment rate remained relatively unchanged at 8.9 per cent. The gains in October continue to fill the employment gap caused by the pandemic with hundreds of thousands of jobs yet to be recovered.

Full-time employment made up the majority of the gains in Canada while the number of people working part-time stayed nearly the same from September.

Self-employment also rose by 33,000 or 1.2 per cent in October for the first time since the initial economic shutdown in March. There were some jobs recovered over the spring and summer but the number of self-employed workers remained flat.

jlabine@postmedia.com

Twitter.com/jefflabine


TOPICS FOR YOU

(WSJ) WASHINGTON—The Small Business Administration must release detailed information for all Paycheck Protection Program loans, including names of borrowers and precise loan amounts, a federal judge ruled Thursday.

The SBA had previously released detailed information only for PPP loans above $150,000, a fraction of the loans issued. The ruling also applies to loans under the SBA’s Economic Injury Disaster Loan program.

Private Equity Fortunes Soar on Prospect of Washington Gridlock

Tom Maloney
Thu, November 5, 2020


(Bloomberg) -- For some, gridlock isn’t always bad news.

Private equity managers and their investors, who were concerned about progressive plans to increase taxes and regulation on their industry, are relieved the expected “blue wave” scenario that would have handed Democrats control of the presidency and both chambers of Congress now looks unlikely.

That’s led to jumps in the fortunes five of the wealthiest private equity titans at publicly traded firms since the election as stock prices rose. Apollo Global Management Inc.’s Leon Black, Blackstone Group Inc.’s Steve Schwarzman, Carlyle Group Inc.’s David Rubenstein, Ares Management Corp.’s Tony Ressler and KKR & Co.’s Henry Kravis all saw gains.

The combined increase of the stakes of those five was worth $2.2 billion, according to the Bloomberg Billionaires Index. The firms’ share prices increased anywhere from 6% to 12% since Tuesday, outperforming the 3.3% advance of the Russell 1000 Index Financials index.

“Part of the reason why some may view the potential for a Joe Biden presidency and a GOP-controlled Senate as a positive for the private equity industry is because that scenario brings gridlock,” Bloomberg Intelligence analyst Nathan Dean said. “And gridlock may not be a bad thing when you look at the potential policies that could have happened under a blue wave.”

In that scenario, a sweeping overhaul of private equity regulation -- including elimination of interest tax deductability and carried interest --probably won’t happen, Jefferies Financial Group Inc. said Thursday in a report.

Earnings ‘Bite’

Regulatory changes and tax increases favored by Democrats could have hurt buyout firms in multiple ways, said Bloomberg Intelligence analyst Paul Gulberg. Raising corporate taxes for private equity managers “would bite into their earnings,” he said, but also “hit portfolio companies they own in their funds, who’d be taxed at a higher rate.”

Capital gains tax increases could also have had implications for fund returns, he said.

Some private equity founders spent big this election cycle, with Schwarzman donating $30.5 million to conservative causes, making him the fifth-largest individual GOP donor.

Still, support for conservatives wasn’t universal. Jonathan Gray, Blackstone’s president and chief operating officer, gave about $3.1 million to Democrats, and also hosted a Biden fundraiser.


©2020 Bloomberg L.P.

THIRD WORLD USA

Roubini lashes out at post-election gridlock: No stimulus means 'lots of people are going to suffer'

'Lots of people are going to suffer': Nouriel Roubini on the possibility of a double dip recession and its impact on the labor market

Julia La Roche
·Correspondent
Fri, November 6, 2020

Famed economist Nouriel Roubini warned on Friday that legislative gridlock and an inadequate fiscal stimulus package — at a time when coronavirus cases are climbing — may tip the economy into a double-dip recession.

VIDEO https://finance.yahoo.com/news/nouriel-roubini-sees-risk-of-double-dip-recession-223038346.html

As of late Friday, former Vice President Joe Biden appeared increasingly likely to prevail in his quest for the White House, with President Donald Trump lagging in both the popular vote and Electoral College numbers as key states finalize ballot counts. Meanwhile, Republicans appear to have an edge on retaining the Senate majority.

Some on Wall Street have suggested Trump and the Senate GOP could hash out a “lame duck” stimulus before the January inauguration.

However, Roubini suggested the incumbent has “no incentive” to relent on Republican demands for a smaller bill — especially if Biden is formally declared the election’s winner.

“Remember, when [former President Barack] Obama came to power during a severe recession, there was not a single Republican who voted for that stimulus. This time around, the Republicans are going to say, 'We're not going to help Biden. Let the economy rot because we are going to have a chance in 2022,’” the New York University economist told Yahoo Finance in a wide-ranging interview.

Roubini — widely known as “Dr. Doom” for his dark prognostications — cast doubt on prospects for bipartisan accord on a fresh injection of cash for the winded economy. He added that any stimulus would need to be "well-above a trillion to make a difference."

In light of that, “we are going to have gridlock like the past — we're not going to have enough fiscal stimulus, the economy is going to weaken, and that's going to be something that eventually is going to bear negatively on the market," he added.
Market defies uncertainty, but lots will ‘suffer’

The United States Capitol Building at night in Washington DC

As investors began to digest the election, the S&P 500 posted its best week since April, largely because Biden’s narrow Democratic majority means less prospect for major tax hikes and expensive government initiatives, if he’s formally declared the winner.

"In the short-run, of course, this week the stock market rallied because they believe that divided government is good and whey they believe the divided government is good is because Biden wanted to increase taxes,” Roubini said.

Those initiatives include hiking corporate taxes from 21 to 28 percent, closing favorable tax loopholes, and raising taxes on those who make more than $400,000, among other things. Those proposals would be anathema to Congressional Republicans, and would come as the economy suffers the after-effects of the COVID-19 crisis.

As the virus spreads, the prospects for the economy look increasingly dim. Roubini estimated that Europe is already going into a double-dip recession in the fourth quarter, and the first quarter of 2021.

"In the United States, even if you don't have Draconian lockdowns like they're going to have in Europe,” surging infections means people and companies “are more risk-averse, more uncertain, they spend less, they save more,” he said. The uncertainty weighs on employment, personal spending and business investment.

In the U.S., without adequate fiscal stimulus, "that could be bearing negatively on the market over time, not in the short-run, but over time once we realize that we have a ‘V’ that becomes more like a ‘U’ with a risk of a double-dip recession," Roubini added, referencing the pace and scope of a recovery.

For now, his baseline is "mediocre, anemic, subpar, below-trend recovery that means lots of people are going to suffer."

While the October jobs report on Friday showed the economy added 638,000 jobs, and the unemployment rate dropped to 6.9% from 7.9% a month ago, 10 million people are still out of work since the beginning of the pandemic.

To be sure, while the economy has improved, for many Americans, it's "not a good economy," the economist said.

One of the challenges out-of-work Americans might face, according to Roubini, is when companies rehire, rather than bringing back full-time jobs with full wages and benefits. Once they do, they'll likely opt for more part-time, freelancer, contractor, and gig workers, with low wages, he estimates.

"The corporate sector wants to have flexibility. That means that these precarious jobs will become the new norm, leading to economic fragilities, more uncertainty, more income and wealth insecurity,” Roubini said.

• STOCK MARKET TODAY

Dow Jones Stalls As McConnell Resists Bigger Stimulus

MICHAEL LARKIN
 11/06/2020

The Dow Jones Industrial Average rally stalled Friday as Senate Majority Leader Mitch McConnell said stronger-than-expected jobs data justifies a smaller stimulus relief bill. But indexes continued to rise from session lows. Meanwhile, Joe Biden looks on the verge of winning the White House. Leaderboard stock Nvidia (NVDA) passed a buy point.

New Labor Department figures showed the U.S. jobless rate slid by a percentage point to 6.9% in October. The U.S. economy added 638,000 jobs in the month, with private-sector payrolls growing by 906,000. This was better than analysts expected.

"That clearly ought to affect the size of any additional stimulus package we do," McConnell told reporters in Kentucky Friday. Senate Republicans have mooted a $500 billion relief plan.

The Trump administration is also against a bigger stimulus. White House economic advisor Larry Kudlow also said the jobs report is a reason to oppose a bigger coronavirus relief package.

House Democrats had been pushing for a $2.4 trillion package before the election. Negotiations between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin repeatedly failed to bear fruit.

America’s divisiveness will 'make it a lot harder on the working class': Ian Bremmer

Akiko Fujita
·Anchor/Reporter
Fri, November 6, 2020

VIDEO https://finance.yahoo.com/news/americas-divisiveness-will-make-it-a-lot-harder-on-the-working-class-ian-bremmer-143656282.html

The U.S. presidential election exposed deep divisions among voters, on the issues of the economy, coronavirus, and social justice. Now, that division is likely to weigh on the working class, as a new wave of coronavirus cases threatens to slow the economic recovery.

Speaking to Yahoo Finance Live, Eurasia Group founder and President Ian Bremmer said a divided electorate coupled with a divided Congress will make the passage of additional fiscal relief an uphill battle.

“I think it's going to make it a lot harder for the working class for those who have been furloughed and those furloughs are being made permanent, because the amount of stimulus that will be on offer, will be so much less,” he said. “There's the ability to start to bring red and blue together, but that's not what we just saw.”

More than three months after the expiration of federal enhanced unemployment benefits, Congress remains at a stalemate over a coronavirus stimulus package, even as more than 20 million Americans remain unemployed. And recent data suggests the pace of the economic recovery is slowing.

The Labor Department’s monthly jobs report Friday showed, that 638,000 jobs were added in the month of October, down from 661,000 in the previous month. Private payrolls slowed to 365,000 jobs in October, well below the 600,000 estimate.

But reaching a compromise on a larger fiscal stimulus appears unlikely, with an increasingly divided Congress. Democratic lawmakers, who pinned their hopes for a “blue wave” in Tuesday’s election, faced a stunning disappointment, after the party lost more than half a dozen seats in the House of Representatives. They failed to re-take the majority in the Senate.

The results came as the U.S. reported a record 100,000 new coronavirus cases in a single day Thursday, for the first time since the pandemic began.

Bad for a lot of Americans

“In Europe, you have pretty much the same coronavirus crisis. The case levels in hospitalizations are higher right now per capita than the United States. But in Europe, unlike in 2008 or 2010, they are responding to this crisis, collectively,” Bremmer said. “In fact, 27 European countries voted unanimously for a massive relief package that will take money from the wealthy countries and send it to the poorest countries, and that will actually start to address the kind of issues in Europe that... [would help] people that otherwise would be hardest hit by this crisis.”

People wait in line at a free COVID-19 testing site provided by United Memorial Medical Center, at the Mexican Consulate, Sunday, June 28, 2020, in Houston. Confirmed cases of the coronavirus in Texas continue to surge. Texas Gov. Greg Abbott, on Friday, shut down bars again and scaled back restaurant dining as cases climbed to record levels after the state embarked on one of America's fastest reopenings. (AP Photo/David J. Phillip)More

The lack of fiscal relief threatens to push millions of Americans into poverty. Still, the U.S. electorate remains fundamentally divided on how to pursue financial and economic reforms and tackle the public health crisis. Exit polls from Tuesday showed the opinions differed right along political fault lines, with 51% of the voters, saying it was more important to contain the coronavirus now, even if it hurts the economy, according to Edison Research for the National Election Pool. Forty-two percent of voters said rebuilding the economy should be a priority, even if it hurts efforts to contain the virus.

“The fact is that 2008 feels quaint,” Bremmer said, referring to the Great Financial Crisis. “It's a memory that feels like it's not just from a different time but from a different country... 2021 I think is going to feel very bad for an awful lot of Americans.”

Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita