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  • Trump Organization found guilty in executive tax-fraud scheme

    Trump Organization found guilty in executive tax-fraud scheme

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    NEW YORK — Donald Trump’s company was convicted of tax fraud on Tuesday in a case brought by the Manhattan District Attorney, a significant repudiation of financial practices at the former president’s business.

    A jury found two corporate entities at the Trump Organization guilty on all 17 counts, including conspiracy charges and falsifying business records.

    The verdict came on the second day of deliberations following a trial in which the Trump Organization was accused of being complicit in a scheme by top executives to avoid paying personal income taxes on job perks such as rent-free apartments and luxury cars.

    The conviction is a validation for New York prosecutors, who have spent three years investigating the former president and his businesses, though the penalties aren’t expected to be severe enough to jeopardize the future of Trump’s company.

    As punishment, the Trump Organization could be fined up to $1.6 million — a relatively small amount for a company of its size, though the conviction might make some of its future deals more complicated.

    Trump, who recently announced he was running for president again, has said the case against his company was part of a politically motivated “witch hunt” waged against him by vindictive Democrats.

    Trump himself was not on trial but prosecutors alleged he “knew exactly what was going on” with the scheme, though he and the company’s lawyers have denied that.

    The case against the company was built largely around testimony from the Trump Organization’s former finance chief, Allen Weisselberg, who previously pleaded guilty to charges that he manipulated the company’s books and his own compensation package to illegally reduce his taxes.

    Weisselberg testified in exchange for a promised five-month jail sentence.

    To convict the Trump Organization, prosecutors had to convince jurors that Weisselberg or his subordinate, Senior Vice President and Controller Jeffrey McConney, were “high managerial” agents acting on the company’s behalf and that the company also benefited from his scheme.

    Trump Organization lawyers repeated the mantra “Weisselberg did it for Weisselberg” throughout the monthlong trial. They contended the executive had gone rogue and betrayed the company’s trust. No one in the Trump family or the company was to blame, they argued.

    Though he testified as a prosecution witness, Weisselberg also attempted to take responsibility on the witness stand, saying nobody in the Trump family knew what he was doing.

    “It was my own personal greed that led to this,” an emotional Weisselberg testified.

    Weisselberg, who pleaded guilty to dodging taxes on $1.7 million in fringe benefits, testified that he and McConney conspired to hide that extra compensation from his income by deducting their cost from his pre-tax salary and issuing falsified W-2 forms.

    During his closing argument, prosecutor Joshua Steinglass attempted to refute the claim that Trump knew nothing about the scheme. He showed jurors a lease Trump signed for Weisselberg’s company-paid apartment and a memo Trump initialed authorizing a pay cut for another executive who got perks.

    “Mr. Trump is explicitly sanctioning tax fraud,” Steinglass argued.

    The verdict doesn’t end Trump’s battle with Manhattan District Attorney Alvin Bragg, a Democrat who took office in January.

    Bragg has said that a related investigation of Trump that began under his predecessor, District Attorney Cyrus Vance Jr., is “active and ongoing.”

    In that wide-ranging probe, investigators have examined whether Trump misled banks and others about the value of his real estate holdings, golf courses and other assets — allegations at the heart of New York Attorney General Letitia James’ pending lawsuit against the former president and his company.

    The district attorney’s office has also investigated whether any state laws were broken when Trump’s allies made payments to two women who claimed to have had sexual affairs with the Republican years ago.

    Near the end of his tenure last year, Vance directed deputies to present evidence to a grand jury for a possible indictment of Trump. After taking office, though, Bragg let that grand jury disband so he could give the case a fresh look.

    On Monday, he confirmed that a new lead prosecutor had been brought on to handle that investigation, signaling again that it was still active.

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  • Panthers waive struggling QB Mayfield, a former No. 1 pick

    Panthers waive struggling QB Mayfield, a former No. 1 pick

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    CHARLOTTE, N.C. — The Carolina Panthers waived struggling quarterback Baker Mayfield on Monday after the 2018 No. 1 draft pick asked for his release.

    Mayfield would be subject to waivers and become a free agent if he goes unclaimed.

    The move does not come as a surprise, because Sam Darnold replaced Mayfield after his failed second stint as starting quarterback, and the Panthers like what they have in P.J. Walker. The move gives Mayfield a chance to potentially land with a team that needs quarterback help.

    San Francisco’s Jimmy Garoppolo, Jacksonville’s Trevor Lawrence and Baltimore’s Lamar Jackson all suffered injuries over the weekend.

    Mayfield was 1-5 as Carolina’s starting QB and completed just 57.8% of his passes with six touchdowns and six interceptions.

    The Panthers traded for Mayfield earlier this season and he won the job in training camp. They will send the Cleveland Browns a fifth-round pick in 2024 as compensation for the trade.

    ———

    AP NFL: https://apnews.com/hub/nfl and https://twitter.com/AP—NFL

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  • Democrats move to make South Carolina, not Iowa, first primary voting state

    Democrats move to make South Carolina, not Iowa, first primary voting state

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    Democrats voted Friday to remove Iowa as the leadoff state on the presidential nominating calendar and replace it with South Carolina starting in 2024, a dramatic shakeup championed by President Joe Biden to better reflect the party’s deeply diverse electorate.

    The Democratic National Committee’s rule-making arm made the move to strip Iowa from the position it has held for more than four decades after technical meltdowns sparked chaos and marred results of the state’s 2020 caucus.

    The change also comes after a long push by some of the party’s top leaders to start choosing a president in states that are less white, especially given the importance of Black voters as Democrats’ most loyal electoral base.

    Discussion on prioritizing diversity drew such impassioned reaction at the committee gathering in Washington that DNC chair Jaime Harrison wiped away tears as committee member Donna Brazile suggested that Democrats had spent years failing to fight for Black voters: “Do you know what it’s like to live on a dirt road? Do you know what it’s like to try to find running water that is clean?”

    “Do you know what it’s like to wait and see if the storm is going to pass you by and your roof is still intact?” Brazile asked. “That’s what this is about.”

    Following Biden’s recommendations, the committee also opted to have New Hampshire and Nevada jointly vote second, a week after South Carolina, followed by Georgia and Michigan, two critical battleground states that would round out the top five in subsequent weeks.

    All the proposed contests would likely be held in February 2024.

    That’s a change from the current calendar, with Iowa holding the first-in-the-nation caucuses since 1972, followed by New Hampshire’s first-in-the-nation primary since 1920.

    Nevada and South Carolina have gone next since the 2008 presidential election, when Democrats last did a major overhaul of their primary calendar.

    The move will still have to be approved by the full DNC in a vote likely early next year, but it will almost certainly follow the rule-making committee’s lead.

    The revamped schedule could largely be moot for 2024 if Biden opts to seek a second term, but may remake Democratic presidential cycles in 2028 and beyond.

    The president has said for months that he intends to run again, and White House aides have begun making staffing discussions for his likely reelection campaign, even though no final decision has been made.

    Biden wrote in a letter to rules committee members on Thursday that the party should scrap “restrictive” caucuses altogether because their rules on in-person participation can sometimes exclude working-class and other voters.

    He told also told party leaders privately that he’d like to see South Carolina go first to better ensure that voters of color aren’t marginalized as Democrats choose a presidential nominee.

    Four of the five states now poised to start the party’s primary are presidential battlegrounds, meaning the eventual Democratic winner would be able to lay groundwork in important general election locales.

    That’s especially true for Michigan and Georgia, which both voted for Donald Trump in 2016 before flipping to Biden in 2020. The exception is South Carolina, which hasn’t gone Democratic in a presidential race since 1976.

    The first five voting states would be positioned to cast ballots before Super Tuesday, the day when much of the rest of the country holds primaries. That gives the early states outsize influence since White House hopefuls struggling to raise money or gain political traction often drop out before visiting much of the rest of the country.

    Scott Brennan, a rules committee member from Iowa, said “small, rural states” like his “must have a voice in the presidential nominating process.”

    “Democrats cannot forget about entire groups of voters in the heart of the Midwest without doing significant damage to the party in newer generations,” Brennan said.

    The Republican National Committee has already decided to keep Iowa’s caucus as the first contest in its 2024 presidential primary, ensuring that GOP White House hopefuls — which include Trump — have continued to frequently campaign there.

    House Majority Whip Jim Clyburn, South Carolina’s lone congressional Democrat and one of Biden’s top supporters in Congress, said the president called him Thursday to inform him of his push to move his state up.

    “I didn’t ask to be first,” Clyburn said. “It was his idea to be first.”

    Clyburn’s endorsement of Biden in 2020 boosted the candidate’s flagging presidential campaign just ahead of South Carolina’s primary, which he won big. That helped Biden shake off early losses in Iowa, New Hampshire and Nevada and eventually take the White House.

    “He knows what South Carolina did for him, and he’s demonstrated that time and time again, by giving respect to South Carolina,” Clyburn said.

    Still, the vote by the rules committee has faced serious pushback, with some states vowing to ignore the changes altogether. That’s despite the panel approving language saying states could lose all of their delegates to the party’s national convention if they attempt to violate new rules.

    Iowa and New Hampshire have said laws in their states mandate them going before others, and they intend to abide by those, not DNC decrees.

    Nevada, with its heavily Hispanic population, has balked at sharing the second-place slot with New Hampshire, a state 2,500 miles away.

    Nevada committee member Artie Blanco’s voice cracked as she argued against the change.

    “If we want to build a strong relationship with Latinos,” Blanco said, “then Nevada must stand alone on a date and not have to share that date.”

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  • French President visits New Orleans, Louisiana

    French President visits New Orleans, Louisiana

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    BATON ROUGE, La. — French President Emmanuel Macron will head to Louisiana on Friday to celebrate longstanding cultural ties and to discuss energy policy.

    Macron’s office said he will meet with political leaders and is scheduled to see the historic French Quarter, the heart of the city. The Advocate reported that the visit will be the first by a French president since Valery Giscard d’Estaing traveled to Lafayette and New Orleans in 1976. The only other French president to visit Louisiana was Charles de Gaulle in 1960.

    Macron is planning to go to Jackson Square in New Orleans, where he will be welcomed by Mayor LaToya Cantrell. He will then head to the Historic New Orleans Collection to discuss climate change impacts with Gov. John Bel Edwards. Macron is also scheduled to meet with energy company representatives.

    Edwards, a Democrat, has been outspoken about the perils of climate change, in a state where tens of thousands of jobs are tied to the oil and gas industry. This makes the stop to New Orleans “very emblematic” of climate-related efforts, French officials stressed.

    In addition, Macron and Edwards will sign a memorandum of understanding “to further expand and enhance the strong cultural connections between France and Louisiana in the areas of the economy, clean energy and the environment,” according to the governor’s office.

    During Macron’s visit to Washington on Thursday, he and President Joe Biden released a joint statement expressing “their deep concern regarding the growing impact of climate change and nature loss” and said they “intend to continue to galvanize domestic and global action to address it.”

    In New Orleans, Macron is expected to announce plans to expand programming to support French language education in U.S.

    “We want the French language to be a language for all and therefore give a fresh image of the French in the United States,” Macron said Wednesday in a speech to the French community in Washington D.C.

    New Orleans is where the Louisiana Purchase was finalized, transferring Louisiana from France to the United States in 1803. The state’s most populous city is also home to the French Quarter, the more than 300-year-old historic heart of New Orleans. First settled in the 1700s, ravaged by fire twice, it is 13 blocks long and roughly six blocks wide. It is best known as a tourist spot and commercial district where reimagined French Market, fine restaurants, antique shops and art galleries coexist alongside T-shirt shops, strip joints and bars blasting live music by cover bands.

    The visit will be the first by a French president since Valery Giscard d’Estaing traveled to Lafayette and New Orleans in 1976, The Advocate reported. The only other French president to visit Louisiana was Charles de Gaulle in 1960.

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  • U.S. adds 263,000 jobs in November and wages rise sharply — far too much for the Fed’s liking

    U.S. adds 263,000 jobs in November and wages rise sharply — far too much for the Fed’s liking

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    The numbers: The U.S. created a robust 263,000 new jobs in November, a historically strong pace of hiring that’s good for workers but that also threatens to prolong a bout of high U.S. inflation.

    The continued rapid gains in hiring have become a big source of angst at the Federal Reserve. Senior central bank officials worry that wage growth stemming from a tight labor market is adding upward pressure to already high U.S. inflation.

    The Fed is expected to keep raising interest rates — and pushing the economy closer to recession — until hiring slows, labor shortages ease and wage growth drops off.

    U.S. stocks fell in premarket trades and bond yields rose after the report. Economists polled by The Wall Street Journal had forecast a smaller increase in new jobs of 200,000.

    The U.S. economy created 263,000 new jobs in November — far more than Wall Street had expected.


    Justin Sullivan/Getty Images

    The unemployment rate was unchanged at 3.7%, the government said Friday, remaining close to a half-century low.

    Hourly pay, meanwhile, rose by a sharp 0.6% last month to an average of $32.82. That’s the biggest advance in 13 months and was far stronger than Wall Street expected.

    The increase in wages over the past year climbed to 5.1%, from 4.9% in the prior month. Wages are still rising much faster than they were before the pandemic, when they rose about 2% to 3% a year.

    The demand for labor is still strong,” said chief economist Steve Blitz of TS Lombard. “It’s still putting upward pressure on wages.”

    The Fed has embarked on a series of increases in U.S. interest rates to try to slow the economy just enough to tame inflation without tipping it into recession.

    The bank is trying to bring inflation back down to prepandemic levels of 2% from the current rate of 6%, based on the PCE price index.

    “The level of [hiring] is not conducive to getting the base inflation rate back to 2%,” Blitz said.

    The tough medicine, senior Fed officials figure, is likely to lift the unemployment rate to as high as 5% by 2023. Some Wall Street analysts believe the jobless rate will go even higher if a recession takes hold, as many are forecasting.

    Higher borrowing costs slow growth by depressing consumer spending and business investment, the two key pillars of the economy.

    Another potential pressure valve for the economy is also not offering any relief. The share of working-age people in the labor force — known as the labor-force participation rate — fell a tick to 62.1%, marking the third drop in a row.

    The lack of people looking for work is another big factor contributing to the labor shortage.

    Key details: The increase in employment last month was concentrated in hotels, restaurants and healthcare businesses. Americans have gone back to seeing their doctors and are spending more on travel and entertainment.

    Hiring also rose in construction and manufacturing, two areas of the economy that are under more duress, while government employment increased by 42,000.

    There were some signs of labor-market softness in the report. Retail employment shrank for the third month in a row, and warehouse and transportation jobs also declined.

    Hiring at professional businesses, a leader in employment, rose by a meager 6,000. That’s the smallest increase since April 2021.

    Hiring in October and September were little changed after government revisions. The economy added 284,000 jobs in October and 269,000 in September.

    Big picture: The economy is slowing, but the labor force is still an oasis of strength.

    For the Fed, it’s too much of a good thing. The central bank wants the demand and supply of labor to become more balanced to ease the pressure on wages.

    The ongoing labor shortage, however, might be a saving grace for the economy. Many businesses have told the Fed they plan to hold onto more workers than usual even if the economy slows, because it’s been so hard to hire people in the first place.

    If that’s the case, the economy might escape a recession altogether or only suffer a short and shallow downturn, some economists say.

    Looking ahead: “Job creation continues to top expectations, holding the unemployment rate near half-century lows,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.

    “The Fed may be closing in on a point that the pace of rate hikes could be stepped down, but the combination of tight labor markets and stubbornly elevated inflation leaves policymakers with a clear directive: keep tightening.”

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    -0.10%
    and S&P 500
    SPX,
    -0.12%
    were set to decline sharply in Friday trades.

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  • Appeals court ends special-master review of Trump documents, in win for Justice Department

    Appeals court ends special-master review of Trump documents, in win for Justice Department

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    WASHINGTON — A federal appeals court on Thursday ended an independent review of documents seized from former President Donald Trump’s Florida estate, removing a hurdle the Justice Department said had delayed its criminal investigation into the retention of top-secret government information.

    The decision by the three-judge panel represents a significant win for federal prosecutors, clearing the way for them to use as part of their investigation the entire tranche of documents seized during an Aug. 8 FBI search of Mar-a-Lag o. It also amounts to a sharp repudiation of arguments by Trump’s lawyers, who for months had said that the former president was entitled to have a so-called “special master” conduct a neutral review of the thousands of documents taken from the property.

    The ruling from the Atlanta-based U.S. Court of Appeals for the 11th Circuit had been expected given the skeptical questions the judges directed at a Trump lawyer during arguments last week, and because two of the three judges on the panel had already ruled in favor of the Justice Department in an earlier dispute over the special master.

    The special master litigation has played out alongside an ongoing investigation examining the potential criminal mishandling of national defense information as well as efforts to possibly obstruct that probe. Attorney General Merrick Garland last month appointed Jack Smith, a veteran public corruption prosecutor, to serve as special counsel overseeing that investigation.

    It remains unclear how much longer the investigation will last, or who, if anyone, might be charged. But the probe has shown signs of intensifying, with investigators questioning multiple Trump associates about the documents and granting one key ally immunity to ensure his testimony before a federal grand jury. And the appeals court decision is likely to speed the investigation along by cutting short the outside review of the records.

    The conflict over the special master began just weeks after the FBI’s search, when Trump sued in federal court in Florida seeking the appointment of an independent arbiter to review the roughly 13,000 documents the Justice Department says were taken from the home.

    A federal judge, Aileen Cannon, granted the Trump team’s request, naming veteran Brooklyn judge Raymond Dearie to serve as special master and tasking him with reviewing the seized records and filtering out from the criminal investigation any documents that might be covered by claims of executive privilege or attorney-client privilege.

    She also barred the Justice Department from using in its criminal investigation any of the seized records, including the roughly 100 with classification markings, until Dearie completed his work.

    The Justice Department objected to the appointment, saying it was an unnecessary hindrance to its criminal investigation and saying Trump had no credible basis to invoke either attorney-client privilege or executive privilege to shield the records from investigators.

    It sought, as a first step, to regain access to the classified documents. A federal appeals panel sided with prosecutors in September, permitting the Justice Department to resume its review of the documents with classification markings.

    The department also pressed for access to the much larger trove of unclassified documents, saying such records could contain important evidence for their investigation.

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  • Senate passes landmark bill protecting same-sex, interracial marriages

    Senate passes landmark bill protecting same-sex, interracial marriages

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    WASHINGTON — The Senate passed bipartisan legislation Tuesday to protect same-sex marriages, an extraordinary sign of shifting national politics on the issue and a measure of relief for the hundreds of thousands of same-sex couples who have married since the Supreme Court’s 2015 decision that legalized gay marriage nationwide.

    The bill, which would ensure that same-sex and interracial marriages are enshrined in federal law, was approved 61-36 on Tuesday, including support from 12 Republicans. Senate Majority Leader Chuck Schumer said the legislation was “a long time coming” and part of America’s “difficult but inexorable march towards greater equality.”

    Democrats are moving quickly, while the party still holds the majority in both chambers of Congress, to send the bill to the House and then — they hope — to President Joe Biden’s desk. The bill has gained steady momentum since the Supreme Court’s June decision that overturned the federal right to an abortion, a ruling that included a concurring opinion from Justice Clarence Thomas that suggested same-sex marriage could also come under threat. Bipartisan Senate negotiations got a kick-start this summer when 47 Republicans unexpectedly voted for a House bill and gave supporters new optimism.

    The legislation would not force any state to allow same-sex couples to marry. But it would require states to recognize all marriages that were legal where they were performed, and protect current same-sex unions, if the court’s 2015 Obergefell v. Hodges decision were to be overturned.

    That’s a stunning bipartisan endorsement, and evidence of societal change, after years of bitter divisiveness on the issue.

    The bill would also protect interracial marriages by requiring states to recognize legal marriages regardless of “sex, race, ethnicity or national origin.”

    A new law protecting same-sex marriages would be a major victory for Democrats as they relinquish their two years of consolidated power in Washington, and a massive win for advocates who have been pushing for decades for federal legislation. It comes as the LGBTQ community has faced violent attacks, such as the shooting last weekend at a gay nightclub in Colorado that killed five people and injured at least 17.

    “Our community really needs a win, we have been through a lot,” said Kelley Robinson, the incoming president of Human Rights Campaign, which advocates on LGBTQ issues. “As a queer person who is married, I feel a sense of relief right now. I know my family is safe.”

    The vote was personal for many senators, too. Schumer said on Tuesday that he was wearing the tie he wore at his daughter’s wedding, “one of the happiest moments of my life.” He also recalled the “harrowing conversation” he had with his daughter and her wife in September 2020 when they heard that liberal Justice Ruth Bader Ginsburg had passed away. “Could our right to marry be undone?” they asked at the time.

    With conservative Justice Amy Coney Barrett replacing Ginsburg, the court has now overturned Roe v. Wade and the federal right to an abortion, stoking fears about Obergefell and other rights protected by the court. But sentiment has shifted on same-sex marriage, with more than two-thirds of the public now in support.

    Still, Schumer said it was notable that the Senate was even having the debate after years of Republican opposition. “A decade ago, it would have strained all of our imaginations to envision both sides talking about protecting the rights of same-sex married couples,” he said.

    Passage came after the Senate rejected three Republican amendments to protect the rights of religious institutions and others to still oppose such marriages. Supporters of the legislation argued those amendments were unnecessary because the bill had already been amended to clarify that it does not affect rights of private individuals or businesses that are currently enshrined in law. The bill would also make clear that a marriage is between two people, an effort to ward off some far-right criticism that the legislation could endorse polygamy.

    Republican Sen. Thom Tillis of North Carolina, who has been lobbying his fellow GOP senators to support the legislation for months, pointed to the number of religious groups supporting the bill, including the Church of Jesus Christ of Latter-day Saints. Some of those groups were part of negotiations on the bipartisan amendment.

    “They see this as a step forward for religious freedom,” Tillis says.

    The nearly 17-million member, Utah-based faith said in a statement this month that church doctrine would continue to consider same-sex relationships to be against God’s commandments. Yet it said it would support rights for same-sex couples as long as they didn’t infringe upon religious groups’ right to believe as they choose.

    Most Republicans still oppose the legislation, saying it is unnecessary and citing concerns about religious liberty. And some conservative groups stepped up opposition in recent weeks, lobbying Republican supporters to switch their votes.

    “As I and others have argued for years, marriage is the exclusive, lifelong, conjugal union between one man and one woman, and any departure from that design hurts the indispensable goal of having every child raised in a stable home by the mom and dad who conceived him,” the Heritage Foundation’s Roger Severino, vice president of domestic policy, wrote in a recent blog post arguing against the bill.

    In an effort to win the 10 Republican votes necessary to overcome a filibuster in the 50-50 Senate, Democrats delayed consideration until after the midterm elections, hoping that would relieve political pressure on GOP senators who might be wavering.

    Eventual support from 12 Republicans gave Democrats the votes they needed.

    Along with Tillis, Maine Sen. Susan Collins and Ohio Sen. Rob Portman supported the bill early on and have lobbied their GOP colleagues to support it. Also voting for the legislation in two test votes ahead of passage were Republican Sens. Richard Burr of North Carolina, Todd Young of Indiana, Shelley Moore Capito of West Virginia, Mitt Romney of Utah, Joni Ernst of Iowa, Roy Blunt of Missouri, Cynthia Lummis of Wyoming and Lisa Murkowski and Dan Sullivan of Alaska.

    Lummis, one of the more conservative members of the Senate, spoke ahead of the final vote about her “fairly brutal self soul searching” before supporting the bill. She said that she accepts her church’s beliefs that a marriage is between a man and a woman, but noted that the country was founded on the separation of church and state.

    “We do well by taking this step, not embracing or validating each other’s devoutly held views, but by the simple act of tolerating them,” Lummis said.

    The growing GOP support for the issue is a sharp contrast from even a decade ago, when many Republicans vocally opposed same-sex marriages.

    Wisconsin Sen. Tammy Baldwin, a Democrat who is the first openly gay senator and has been working on gay rights issues for almost four decades, said this month that the newfound openness from many Republicans on the subject reminds her “of the arc of the LBGTQ movement to begin with, in the early days when people weren’t out and people knew gay people by myths and stereotypes.”

    Baldwin, the lead Senate negotiator on the legislation, said that as more individuals and families have become visible, hearts and minds have changed.

    “And slowly laws have followed,” she said. “It is history.”

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  • A Fed rate-hike cycle never hit stocks this hard before. Here’s what’s different this time.

    A Fed rate-hike cycle never hit stocks this hard before. Here’s what’s different this time.

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    Anyone watching the market knows stocks have been hammered since the Federal Reserve began in March what has turned into an aggressive series of interest rate hikes, but strategists at Deutsche Bank say they might be surprised to learn that those rate hikes probably aren’t the culprit.

    The S&P 500
    SPX,
    -0.16%
    has seen a return of negative 16.1%, at its current level, since the rate increases began. That’s the worst performance for an extended cycle of rate hikes since at least the late 1950s, according to a team led by Chief Strategist Binky Chadha in a Monday note (see chart below).


    Deutsche Bank

    The chart highlights what may be a surprise to many investors: rate hike cycles, historically, haven’t been a negative for stocks. Of the 11 previous hiking cycles dating back to 1958-59, only two (1994-95 and 1973), produced negative returns. On average, rate-hike cycles have produced a 9% return for the S&P 500.

    Any misconception that rate-hike cycles have tended to be negative for stocks was probably reinforced by the market’s ugly 2022 performance, but a closer look at the tape shows why that conclusion doesn’t hold up, Chadha and his team wrote:

    In contrast to most historical rate hiking cycles, which saw a positive correlation between Fed rates and equities (median +61%; 8 of 10 positive), this cycle has seen it run strongly negative (-68%). This negative correlation naturally suggests higher rates lowered equities, reinforcing the widely held belief. A closer look though reveals that the S&P 500 has been at current levels 4 times over the last 5 months, while rates have been successively and notably higher each time, with the 2y yield up 175bps (basis points) from the first time. This contradicts the view that higher rates drove the S&P 500 selloff, or at least show that the last 175bps higher in rates have not lowered the S&P 500.

    So if sharp interest rate rises aren’t the driver, what is behind the selloff?

    The Deutsche Bank analysts suspect it’s more about volatility in the bond market, which has seen a sustained rise since the Fed began raising rates. That’s unusual, they said, with rates volatility typically spiking in the run-up to and around the initial Fed hike and around changes in the speed of hikes during the cycle, then quickly dissipating.

    Treasury-yield volatility, as measured by the ICE BofA MOVE Index, hasn’t tended to rise in a sustained manner during rate-hike cycles, they wrote, with the one exception being the 1973 hiking cycle, which was the only one that also saw a significant stock-market selloff.

    Indeed, when rates and rate volatility have diverged in the current cycle, the stock market has inversely tracked the move in volatility rather than the level of yields, the analysts noted. For examples, they pointed to June, when volatility rose and equities fell sharply while yields rose modestly; August, when yield volatility fell even as yields rose; and the recent stretch, which has seen equities rally alongside a decline in yield volatility while yields have been rangebound (see chart below).


    Deutsche Bank

    “The selloff in equities during this rate hiking cycle has been driven, in our reading more by rising rates vol than it has by the higher level of rates, in what is a strong parallel with the only other rate hiking cycle (1973) that previously saw equities fall significantly,” the strategists wrote. “Vol” is market shorthand for volatility.

    So the key question for investors is whether yield volatility will fall. Chadha and his team think it probably will, for two reasons: a slower and more “deliberate” speed of Fed hikes ahead; and the fact that rates have already seen a significant rise, pushing them closer to where they will peak, even if they will get there only gradually.

    Volatility across asset classes tends to be highly correlated, they said, and paced by a common driver, which in this case has been the result of frequent changes in Fed guidance and the speed of rate hikes.

    That means a decline in yield volatility should see a decline in stock-market volatility, with systematic strategists set to raise equity exposure from extremely low levels and indicating the market rally has further to go, they said.

    Stocks were slightly lower in lackluster trade Tuesday, with the S&P 500 down 0.2%, while the Dow Jones Industrial Average
    DJIA,
    +0.01%
    was off around 25 points, or 0.1%.

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  • Dow down by more than 500 points as Fed officials point to more rate hikes, China protests rattle markets

    Dow down by more than 500 points as Fed officials point to more rate hikes, China protests rattle markets

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    U.S. stocks tumbled on Monday as protests in China raised the risks to global growth and Federal Reserve policy makers said more interest-rate increases are needed to control inflation.

    How stocks are trading
    • The Dow Jones Industrial Average was down 523 points, or 1.5%, at 33,824, near its session low.

    • The S&P 500
      SPX,
      -1.65%
      retreated 68 points, or 1.7%, to 3,958.

    • The Nasdaq Composite shed 195 points, or 1.7%, dropping to 11,031.

    U.S. stocks had notched weekly gains last week for the second time in three weeks. The Dow rose 1.8%, the S&P 500 advanced 1.5% and the Nasdaq gained 0.7%.

    What’s driving markets

    Wall Street started the week in a downbeat mood as traders absorbed the impact of unrest in China and assessed interest-rate commentary by a pair of Fed officials on Monday.

    St. Louis Fed President James Bullard told MarketWatch that he favors more aggressive interest-rate hikes to contain inflation, and that the central bank will likely need to keep interest rates above 5% into 2024. Meanwhile, his colleague John Williams, president of the New York Fed, said that U.S. unemployment could climb to as high as 5% next year, versus October’s rate of 3.7%, in response to the central bank’s series of rate hikes.

    Overseas, Hong Kong’s Hang Seng Index
    HSI,
    -1.57%
    closed down by 1.6% and most equity indexes across Asia also fell, with the exception of India’s, on concerns about unrest in China. Those concerns also spilled over into commodity markets, where West Texas Intermediate crude for January delivery
    CLF23,
    +0.93%
     briefly fell to less than $74 per barrel before recovering and settling at $77.24 a barrel on the New York Mercantile Exchange. Meanwhile, copper prices HG00 were off 0.9% at $3.594 per pound.

    “What people are worried about is the potential for protests in China to spread and whether the population is reaching its breaking point,” said Derek Tang, an economist at Monetary Policy Analytics in Washington. “At the same time, Fed speak is ramping up and the message is there’s more hikes to come. So investors aren’t finding relief.”

    Signs that economic activity in China will continue to be disrupted by the protests or by additional anti-COVID measures will likely continue to weigh on commodity prices, analysts said. Meanwhile, concerns about global growth helped to support government bond markets earlier on Monday, when the yield on the 10-year note
    TMUBMUSD10Y,
    3.693%
    briefly traded at its lowest level since October.

    The unprecedented waves of protest in China “have caused ripples of unease across financial markets, as worries mount about repercussions for the world’s second-largest economy,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “As demonstrations spread across the country from Beijing to Xinjiang and Shanghai, reflecting rising anger about the zero-Covid policy, a sustained recovery in demand across the vast country appears even further away.”

    But the news wasn’t all bad: Reports of strong online Black Friday sales helped boost shares of Amazon.com Inc.
    AMZN,
    +0.29%    ,
    which were up 0.6%.

    Investors can expect more information about the health of the U.S. economy in what’s shaping up to be a busy week for U.S. economic data: Later this week, investors will receive the ADP employment report followed by the November jobs report. Revised data on third-quarter gross domestic product is due on Wednesday, along with the Fed’s Beige Book report. Federal Reserve chair Jerome Powell is set to speak publicly on Wednesday, and a closely watched gauge of inflation is due on Thursday.

    Read: ‘We see major stock markets plunging 25% from levels somewhat above today’s,’ Deutsche Bank says

    Single-stock movers

    — Jamie Chisholm contributed to this article.

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  • Bear markets come in three stages; and we’ve only just started the second, says veteran analyst.

    Bear markets come in three stages; and we’ve only just started the second, says veteran analyst.

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    Stocks will start the Black Friday half-session near 10-week highs, having rebounded partly on hopes the Federal Reserve will be slowing the pace of interest rate rises as it waits to see how much previous tightening has impacted the economy.

    Investors are thus looking ahead to when the Fed eventually pivots and borrowing costs can start coming down again. For now, they are displaying few concerns about how much damage any economic slowdown may do to corporate earnings.

    It’s all too rosy, reckons Peter Boockvar, chief investment officer of Bleakley Financial Group. In an interview with Magnifi+, an AI investing and trading platform, the veteran analyst warns that stocks will grind lower next year, and we have not seen the bottom of a bear market still in its middle phase.

    “Bear markets usually come in three stages. The first one is we take a lot of the frothy excesses and euphoria out of the market in terms of the sexy names that we saw in 2021 and we take a PE ratio down. We’ve done that, we went from 22 times earnings, call it 16 to 17,” says Boockvar.

    In the second phase, he adds, investors start calculating the economic and company earnings consequences of the ongoing rises in interest rates…”and then the third phase is everyone throws in the towel. No one wants to own a stock again, and that’s your bottom and that’s when you need to be buying stocks hand over fist.”

    “I feel like we’re really just only beginning to start that second phase,” he said.

    Still, there will be opportunities. It all depends on your time scale, according to Boockvar.

    “If you have a big purchase that you have to make within the next year or two, whether it’s a kid going college or it’s a wedding, a bar mitzvah or some other expense like a home that you have put aside money for, it should not be in the stock market. It should be in the bank it should be in short-term T-bills. It should be in cash equivalents because the next couple of years are going to be challenging for those with shorter-term time horizons,” he said.

    So, what assets is he interested in? Bonds are attractive, but it’s important to stick to quality.

    “You have investment-grade bonds that are yielding 6% and you can do that without taking much duration risk by buying shorter-term durations….And you can buy a short-term, two-year treasury and get a yield of four and a half percent and get some attractive Munis too. So fixed-income land, with shorter durations, I believe, is more attractive. Longer-term trade durations, I’m still more suspect on,” says Boockvar.

    And in equities? “Value stocks are much more attractive than growth, the tech stocks. I think commodity stocks are much more attractive than they’ve been over the past five years. Certainly energy, precious metals, even industrial metals like copper stocks.”

    If the dollar has peaked and pulls back as the Fed gets closer to the end of its hiking cycle, then Boockvar likes the look of foreign markets, particularly in Asia, and gold and silver once the central bank begins cutting rates.

    Finally, the one thing he’s certainly not keen on are techs former darlings. “Just buying Google
    GOOGL,
    +1.45%
    and Amazon
    AMZN,
    +1.00%
    and Apple
    AAPL,
    +0.59%    ,
    while they’re all great companies, that ship has sailed and the baton in terms of market leadership is going to be passed to other parts of the market,” says the analyst.

    Markets

    Stocks were in line to start the last trading of the week on the front foot, with S&P 500 futures
    ES00,
    -0.14%
    up 0.2% to 4039 and 10-year Treasury yields
    TMUBMUSD10Y,
    3.732%
    were little changed at 3.709%. U.S. crude futures fell 0.7% to $79.50 a barrel.

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

    The buzz

    It’s a half-day of trading for Wall Street as many traders also extend their Thanksgiving break. Expect very thin volumes.

    Still, analysts and investors are on the lookout for guidance on how the Black Friday sales are going. How is the U.S. consumer holding up in the face of high inflation and sharp increases in borrowing costs? Shares in Amazon
    AMZN,
    +1.00%
    and Walmart
    WMT,
    +0.48%
    were relatively steady.

    Shares in Tesla
    TSLA,
    +7.82%
    are up about 2% in premarket action despite news the car company is recalling around 80,000 cars in China.

    Activision Blizzard shares
    ATVI,
    +0.94%
    are off more than 3% after a report late on Wednesday that the Federal Trade Commission might block Microsoft’s purchase of the videogame maker.

    Fed’s Bullard set to talk inflation, interest rates in MarketWatch Q&A Monday. Sign up here to watch the program and pose a question. 

    China’s central bank eased monetary policy as the country struggles with further COVID-19 outbreaks.

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    The chart

    Here’s an interesting observation on stock volatility from Benedek Vörös, director of Index Investment Strategy at S&P Dow Jones Indices.

    “It has been a turbulent year, but a degree of relative calm has returned to U.S. equity markets in the past few weeks, and participants in the options market look even more relaxed than their cash counterparts,” Vörös writes in his latest bulletin.  “VIX, having averaged 3 points above the 21-day realized S&P 500 volatility over the past year, has slipped 6 percentage points below it as of yesterday’s close. Historically, that has had some predictive power for lower volatility to come.”


    Source: S&P Dow Jones Indices

    Top tickers

    Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

    Ticker

    		 Security name
    TSLA,
    +7.82%         		Tesla
    GME,
    +1.52%         		GameStop
    AMC,
    +4.37%         		AMC Entertainment
    NIO,
    +5.49%         		NIO
    COSM,
    -2.29%         		Cosmos Holdings
    AAPL,
    +0.59%         		Apple
    APE,
    -3.97%         		AMC Entertainment preferred
    BBBY,
    +4.88%         		Bed Bath & Beyond
    AMZN,
    +1.00%         		Amazon.com
    MULN,
    -10.01%         		Mullen Automotive
    Random reads

    Japan fans show the world how it’s done.

    Coin study suggests ‘fake emperor’ was real.

    Someone’s been going on a gold-buying bender.

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton

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  • Fed eyes slower rate hikes as recession threat grows

    Fed eyes slower rate hikes as recession threat grows

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    Senior officials at the Federal Reserve expect smaller increases in interest rates will “soon be appropriate” as the threat of recession grows.

    Although the Fed still expects rates to rise higher than previously forecast, senior officials are unsure just how much further they will go. Slower rate hikes, they say, would give them more time to evaluate the “lagging” effects on the economy amid the rising threat of a recession.

    “Short of some wild inflation report before the next meeting, 50 basis points sounds very reasonable in December. But the Fed is clearly not finished yet.”

    The Fed’s economic staff for the first time said a recession was possible in the next year, according to a detailed summary of the bank’s last strategy session in early November.

    The bank’s previous minutes have not mentioned the possibility of a recession.

    The main U.S. stock gauges
    SPX,
    +0.59%

    DJIA,
    +0.50%
    extended gains after the release of the Fed minutes.

    The Fed has quickly raised a key U.S. interest rate to a top range of 4% from near zero last spring in an effort to tame high inflation. Rising rates tend to reduce inflation by slowing the economy and depressing demand for goods and labor.

    Yet some economists and senior officials at the Fed also worry the central bank could spark a recession or a period of prolonged economic weakness if rates go too high.

    Some members said there was an increasing risk that the Fed’s actions “would exceed what was required” to bring inflation down to acceptable levels.

    In recent speeches, a few have suggested a “pause” in rate hikes might be warranted by early next year to see how they affect the economy. A rapid easing of inflationary pressures could strengthen their case.

    The rate of inflation exploded earlier this year to a 40-year high of 9.1% from almost zero during the early stages of the pandemic. It has since slowed to 7.7%.

    Earlier this month, the bank lifted the so-called fed funds rate by three-quarters of a point to a range of 3.75% to 4% — the third big rate increase in a row. Most U..S. loans such as mortgages and car loans are tied to the fed fund rate.

    In December, the Fed is likely to raise rates again, but markets are betting on a smaller 1/2-point increase. The minutes also suggest a smaller rate hike is likely.

    “Short of some wild inflation report before the next meeting, 50 bps sounds very reasonable in December,” senior economist Jennifer Lee of BMO Capital Markets said. “But the Fed is clearly not finished yet.”

    Senior Fed officials have repeatedly said they plan is to further raise rates in 2023 and then keep them high for an unspecified period of time to make sure inflation declines.

    Officials are less unified on just how high rates will go. Some want to stop at around 5% while others suggest they might need to go higher.

    Wall Street expects the Fed to raise its benchmark rate to 5% by next year.

    The Fed’s aggressive posture stems from the biggest surge in prices since the early 1980s.

    The Fed is aiming to bring down inflation to pre-pandemic levels of 2% or so, but they acknowledge it could take a while.

    Several Fed members also expressed worries that non-traditional financial institutions could amplify the problems for the U.S. economy if higher rates exposed them to greater instability.

    The troubles at the crypto-currency firm FTX were emerging just as the Fed meeting took place.

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  • New Zealand hikes interest rate to 4.25% to fight inflation

    New Zealand hikes interest rate to 4.25% to fight inflation

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    WELLINGTON, New Zealand — New Zealand’s central bank hiked interest rates Wednesday by a record amount as it tries to get inflation under control.

    The Reserve Bank of New Zealand increased its benchmark rate by three-quarters of a point to 4.25%.

    It’s the first time the bank has raised rates by more than a half-point since introducing the Official Cash Rate in 1999. The new rate is the highest in New Zealand since early 2009.

    New Zealand’s inflation rate is currently 7.2%, well above the bank’s target of 1% to 3%. The nation’s unemployment rate is 3.3%.

    The bank also sharply revised upwards its projected peak for its benchmark rate, which it now expects it to reach 5.5% next year before it decreases. It predicted a sharp rise in unemployment next year and for the economy to dip briefly into a shallow recession.

    The New Zealand dollar rose on the news and was trading at around 62 U.S. cents.

    The U.S. Federal Reserve and other central banks around the world have been aggressively hiking interest rates to battle inflation. The Fed’s key short-term rate is now set at 3.75% to 4%, up from near zero as recently as last March.

    New Zealand Reserve Bank Governor Adrian Orr had a message for consumers.

    “Think harder about your spending. Think about saving rather than consuming, I know that’s a strange concept,” he said. “Just cool the jets.”

    Orr said the bank’s monetary policy committee had agreed that interest rates needed to go higher, and sooner than previously indicated, to ensure inflation returned to its target level.

    “Core consumer price inflation remains too high, employment is beyond its maximum sustainable level, and near-term inflation expectations have risen. So this is quite a heightened inflation environment,” Orr told reporters.

    He said the committee had considered raising rates even more on Wednesday, by a full 1%, before settling on the 0.75% hike.

    He said inflation was “no-one’s friend” and that a small recession might be needed to get it down.

    “In order to rid the country of inflation we need to reduce spending levels. That means that we will have a period of negative GDP growth, we think to the tune of around 1 percent of GDP,” Orr said. “So in that sense it’s a shallow period and at the moment, we’re saying that’s around the second half of next year.”

    Orr said he expects house prices to decrease by a total of 20% by the middle of next year from their peak last November. House prices are currently down by about 11% from their peak.

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  • Bill protecting same-sex and interracial marriages clears key Senate hurdle

    Bill protecting same-sex and interracial marriages clears key Senate hurdle

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    WASHINGTON — Legislation to protect same-sex and interracial marriages crossed a major Senate hurdle Wednesday, putting Congress on track to take the historic step of ensuring that such unions are enshrined in federal law.

    Twelve Republicans voted with all Democrats to move forward on the legislation, meaning a final vote could come as soon as this week, or later this month. Senate Majority Leader Chuck Schumer said the bill ensuring the unions are legally recognized under the law is chance for the Senate to “live up to its highest ideals” and protect marriage equality for all people.

    “It will make our country a better, fairer place to live,” Schumer said, noting that his own daughter and her wife are expecting a baby next year.

    Senate Democrats are quickly moving to pass the bill while the party still controls the House. Republicans are on the verge of winning the House majority and would be unlikely to take up the issue next year.

    The bill has gained steady momentum since the Supreme Court’s June decision that overturned Roe v. Wade and the federal right to an abortion. An opinion at that time from Justice Clarence Thomas suggested that an earlier high court decision protecting same-sex marriage could also come under threat.

    The legislation would repeal the Clinton-era Defense of Marriage Act and require states to recognize all marriages that were legal where they were performed. The new Respect for Marriage Act would also protect interracial marriages by requiring states to recognize legal marriages regardless of “sex, race, ethnicity, or national origin.”

    Congress has been moving to protect same-sex marriage as support from the general public — and from Republicans in particular — has sharply grown in recent years, as the Supreme Court’s 2015 Obergefell v. Hodges decision legalized gay marriage nationwide. Recent polling has found more than two-thirds of the public supports same-sex unions.

    Still, many Republicans in Congress have been reluctant to support the legislation. Democrats delayed consideration until after the midterm elections, hoping that would relieve political pressure on some GOP senators who might be wavering.

    A proposed amendment to the bill, negotiated by supporters to bring more Republicans on board, would clarify that it does not affect rights of private individuals or businesses that are already enshrined in law. Another tweak would make clear that a marriage is between two people, an effort to ward off some far-right criticism that the legislation could endorse polygamy.

    Three Republicans said early on that they would support the legislation and have lobbied their GOP colleagues to support it: Maine Sen. Susan Collins, North Carolina Sen. Thom Tillis and Ohio Sen. Rob Portman.

    “Current federal law doesn’t reflect the will or beliefs of the American people in this regard,” Portman said ahead of the vote. “It’s time for the Senate to settle the issue.”

    The growing GOP support for the issue is a sharp contrast from even a decade ago, when many Republicans vocally opposed same-sex marriages. The legislation passed the House in a July vote with the support of 47 Republicans — a larger-than-expected number that gave the measure a boost in the Senate.

    On Tuesday, The Church of Jesus Christ of Latter-day Saints became the most recent conservative-leaning group to back the legislation. In a statement, the Utah-based faith said church doctrine would continue to consider same-sex relationships to be against God’s commandments, but it would support rights for same-sex couples as long as they didn’t infringe upon religious groups’ right to believe as they choose.

    Wisconsin Sen. Tammy Baldwin, a Democrat who is the first openly gay senator and has been working on gay rights issues for almost four decades, said the newfound openness from many Republicans on the subject reminds her “of the arc of the LBGTQ movement to begin with, in the early days when people weren’t out and people knew gay people by myths and stereotypes.”

    Baldwin said that as more individuals and families have become visible, hearts and minds have changed.

    “And slowly laws have followed,” she said. “It is history.”

    Schumer said the issue is personal to him, as well.

    “Passing the Respect for Marriage Act is as personal as it gets for many senators and their staffs, myself included,” Schumer said. “My daughter and her wife are actually expecting a little baby in February. So it matters a lot to so many of us to get this done.”

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  • Opinion: No, an indictment wouldn’t end Trump’s run for the presidency – he could even campaign or serve from a jail cell

    Opinion: No, an indictment wouldn’t end Trump’s run for the presidency – he could even campaign or serve from a jail cell

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    Donald Trump announced his 2024 run for the presidency on Nov. 15. In his address he railed against what he perceived as the “persecution” of himself and his family, but made scant mention of his legal woes.

    There is also the not-so-small matter of a Justice Department investigation into the Jan. 6 storming of the Capitol.

    The announcement has led some to speculate that Trump may be hoping that becoming a presidential candidate will in some way shield him from prosecution.

    Donald Trump has announced his bid to run in the 2024 presidential race. WSJ’s Alex Leary breaks down the challenges the former president will face on the campaign trail, including new political rivals and a waning influence among voters. Photo Composite: Adele Morgan

    So, does an indictment—or even a felony conviction—prevent a presidential candidate from running or serving in office?

    The short answer is no. Here’s why:

    The U.S. Constitution specifies in clear language the qualifications required to hold the office of the presidency. In Section 1, Clause 5 of Article II, it states: “No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been fourteen Years a Resident within the United States.”

    These three requirements—natural-born citizenship, age, and residency—are the only specifications set forth in the United States’ founding document.

    Congress has ‘no power to alter’

    Furthermore, the Supreme Court has made clear that constitutionally prescribed qualifications to hold federal office may not be altered or supplemented by either the U.S. Congress or any of the states.

    Justices clarified the court’s position in their 1969 Powell v. McCormack ruling. The case followed the adoption of a resolution by the House of Representatives barring pastor and New York politician Adam Clayton Powell Jr. from taking his seat in the 90th Congress.

    The resolution was not based on Powell’s failure to meet the age, citizenship and residency requirements for House members set forth in the Constitution. Rather, the House found that Powell had diverted Congressional funds and made false reports about certain currency transactions.

    When Powell sued to take his seat, the Supreme Court invalidated the House’s resolution on grounds that it added to the constitutionally specified qualifications for Powell to hold office. In the majority opinion, the court held that: “Congress has no power to alter the qualifications in the text of the Constitution.”

    For the same reason, no limitation could now be placed on Trump’s candidacy. Nor could he be barred from taking office if he were to be indicted or even convicted.

    But in case of insurrection…

    The Constitution includes no qualification regarding those conditions—with one significant exception. Section 3 of the 14th Amendment disqualifies any person from holding federal office “who, having previously taken an oath…to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof.”

    The reason why this matters is the Justice Department is currently investigating Trump for his activities related to the Jan. 6 insurrection at the Capitol.

    Under the provisions of the 14th Amendment, Congress is authorized to pass laws to enforce its provisions. And in February 2021, one Democratic congressman proposed House Bill 1405, providing for a “cause of action to remove and bar from holding office certain individuals who engage in insurrection or rebellion against the United States.”

    Even in the event of Trump being found to have participated “in insurrection or rebellion,” he might conceivably argue that he is exempt from Section 3 for a number of reasons. The 14th Amendment does not specifically refer to the presidency and it is not “self-executing”—that is, it needs subsequent legislation to enforce it. Trump could also point to the fact that Congress enacted an Amnesty Act in 1872 that lifted the ban on office holding for officials from many former Confederate states.

    He might also argue that his activities on and before Jan. 6 did not constitute an “insurrection” as it is understood by the wording of the amendment. There are few judicial precedents that interpret Section 3, and as such its application in modern times remains unclear. So even if House Bill 1405 were adopted, it is not clear whether it would be enough to disqualify Trump from serving as president again.

    Running from behind bars

    Even in the case of conviction and incarceration, a presidential candidate would not be prevented from continuing their campaign—even if, as a felon, they might not be able to vote for themselves.

    History is dotted with instances of candidates for federal office running—and even being elected—while in prison. As early as 1798—some 79 years before the 14th Amendment — House member Matthew Lyon was elected to Congress from a prison cell, where he was serving a sentence for sedition for speaking out against the Federalist Adams administration.

    Eugene Debs, founder of the Socialist Party of America, ran for president in 1920 while serving a prison sentence for sedition. Although he lost the election, he nevertheless won 913,693 votes. Debs promised to pardon himself if he were elected.

    And controversial politician and conspiracy theorist Lyndon LaRouche also ran for president from a jail cell in 1992.

    A prison cell as the Oval Office?

    Several provisions within the Constitution offer alternatives that could be used to disqualify a president under indictment or in prison.

    The 25th Amendment allows the vice president and a majority of the Cabinet to suspend the president from office if they conclude that the president is incapable of fulfilling his duties.

    The amendment states that the removal process may be invoked “if the President is unable to discharge the powers and duties of his office.”

    It was proposed and ratified to address what would happen should a president be incapacitated due to health issues. But the language is broad and some legal scholars believe it could be invoked if someone is deemed incapacitated or incapable for other reasons, such as incarceration.

    To be sure, a president behind bars could challenge the conclusion that he or she was incapable from discharging the duties simply because they were in prison. But ultimately the amendment leaves any such dispute to Congress to decide, and it may suspend the president from office by a two-thirds vote.

    Indeed, it is not clear that a president could not effectively execute the duties of office from prison, since the Constitution imposes no requirements that the executive appear in any specific location. The jail cell could, theoretically, serve as the new Oval Office.

    Finally, if Trump were convicted and yet prevail in his quest for the presidency in 2024, Congress might choose to impeach him and remove him from office. Article II, Section 4 of the Constitution allows impeachment for “treason, bribery, and high crimes and misdemeanors.”

    Whether that language would apply to Trump for indictments or convictions arising from his previous term or business dealings outside of office would be a question for Congress to decide. The precise meaning of “high crimes and misdemeanors” is unclear, and the courts are unlikely to second-guess the House in bringing an impeachment proceeding.

    For sure, impeachment would remain an option—but it might be an unlikely one if Republicans maintained their majority in the House in 2024 and 2026.

    Stefanie Lindquist is Foundation Professor of Law and Political Science at Arizona State University. She previously taught at Vanderbilt University, the University of Georgia and the University of Texas.

    This commentary was originally published by The Conversation—No, an indictment wouldn’t end Trump’s run for the presidency—he could even campaign or serve from a jail cell

    More on Trump’s legal problems

    Trump Organization executive says he helped colleagues dodge taxes

    Judge says he’ll appoint monitor to oversee Donald Trump’s company

    Justice Department weighs appointing special counsel if Trump runs in 2024, report says

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  • Dow ekes out gain, stocks end higher on signs of easing inflation, but Russia’s war in Ukraine intensifies

    Dow ekes out gain, stocks end higher on signs of easing inflation, but Russia’s war in Ukraine intensifies

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    U.S. stocks closed higher Tuesday, but off the session’s best levels, after more data suggested inflation may be slowing and mega-retailer Walmart offered a rosier annual forecast.

    The Dow turned negative earlier in the session after the Associated Press reported that Russian missiles crossed into Poland and killed two people, ratcheting up geopolitical tension given Poland is a NATO country.

    How stocks traded
    • S&P 500 index
      SPX,
      +0.87%
      rose 34.48 points, or 0.9%, to close at 3,991.73.

    • Dow Jones Industrial Average
      DJIA,
      +0.17%
      climbed 56.22 points, or 0.2%, ending at 33,592.92, after touching a nearly three-month high of 33,987.06 earlier.

    • Nasdaq Composite
      COMP,
      +1.45%
      climbed 162.19 points, or 1.5%, closing at 11,358.41.

    On Monday, U.S. stocks finished near session lows after early gains evaporated. The Dow Jones Industrial Average fell 211 points, or 0.6%, while the S&P 500 declined 36 points, or 0.9% and the Nasdaq Composite dropped 226 points, or 2%.

    What drove markets

    U.S. stocks closed higher Tuesday, after another batch of inflation data showed that whole prices rises were slowing in October for the second straight month.

    The Dow’s brief negative turn came after reports that Russian military bombarded Ukraine Tuesday. In the attack, missiles reportedly crossed into Poland, a member of NATO, the Associated Press said, citing a senior U.S. intelligence official.

    “Geopolitical concerns obviously are never positive for the market,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

    On Tuesday, oil futures settled higher. West Texas Intermediate crude for December delivery rose to $1.05, or 1.2%, reaching $86.92 a barrel.

    While markets had started to price in the toll of Russian’s nearly nine-month invasion of Ukraine, it had not priced in an potential escalation of the war, said Kent Engelke, chief economic strategist at Capitol Securities Management.

    “Talk about geopolitical angst returning,” Engelke said, later adding, “If there were really missiles shot to Poland and that was really not an accident, wow, that is really  increasing the scope of the war.”

    A U.S. National Security Council spokesperson said the agency was aware of the news reports out of Poland, but that it cannot confirm the reports or any details at this time.

    While international worries clouded the session, there was also encouraging domestic news.

    The U.S. producer-price index climbed 8% over the 12 months through October, the Labor Department said Tuesday, easing from September’s revised 8.4% increase. Last week, stocks surged after the October consumer-price index rose more slowly than expected.

    See: Wholesale prices rise slowly again and point to softening U.S. inflation

    Tuesday’s PPI report helped support the notion that inflation has peaked, at least for now.

    “Today, it’s really about the PPI and the market reaction to it,” Steve Sosnick, chief strategist at Interactive Brokers
    IBKR,
    +3.45%    ,
    said in a Tuesday morning interview before the reports of missiles crossing into Poland.

    Markets ripped higher last Thursday after October’s consumer-price index showed signs of easing. The same dynamic was playing out Tuesday, but the response now has been “a bit more muted” because it’s an iteration on inflation data that investors already had been starting to see, Sosnick said.

    So, is the economy really at peak inflation? It’s too early to say for sure, according to Sosnick. Still, the PPI numbers, paired with last week’s CPI reading “does add evidence to that narrative,” he added.

    Walmart’s third quarter earnings also were buoying markets, Sosnick said. The massive retailer’s beat on earnings offers a glimpse at the minds and wallets of many American consumers. For anyone who worries about consumers “getting highly defensive” and not spending, Walmart’s numbers are “counter evidence.”

    In other news, the first face-to-face meeting between President Joe Biden and President Xi Jinping helped support stocks listed in China and Hong Kong, as some of the tensions between the world’s two largest economies were seen to be easing.

    The upbeat tone from Asia, which included Taiwan Semiconductor Manufacturing Company
    TSM,
    +10.52%
    jumping 7.7% on news Warren Buffett had bought a $5 billion stake, underpinned European bourses, which closed higher for a fourth session in a row.

    Read also: Warren Buffett’s chip-stock purchase is a classic example of why you want to be ‘greedy only when others are fearful’

    Analysts increasingly expect stocks to enjoy a positive end to the year. “The near-term picture still looks positive for U.S. benchmark indices and while momentum has reached intra-day overbought levels, this doesn’t imply a selloff has to happen right away,” said Mark Newton, head of technical strategy at Fundstrat.

    Philadelphia Federal Reserve President Patrick Harker said Tuesday that he favored a 50 basis-point hike to the Fed’s benchmark rate in December. Atlanta Fed President Raphael Bostic said more rate hikes will be needed, even through there have been “glimmers of hope” on inflation.

    Fed Vice Chairman for Supervision Michael Barr said Tuesday that the U.S. economy is likely to slow in coming months, and more workers will lose their jobs, in Senate testimony. The Fed is working with regulators to assess risks tied to cryptocurrency markets, following the collapse of FTX and its associated companies.

    In other U.S. economic data, the New York Empire State manufacturing index for November showed a gauge of manufacturing activity in the state rose 13.6 points to 4.5 this month.

    The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.774%
    was down 6.7 basis points at 3.798%. Bond yields move inversely to prices.

    Companies in focus
    • Walmart
      WMT,
      +6.54%
      shares jumped after the giant retailer swung to a net third-quarter loss, due to $3.3 billion in charges related to opioid legal settlements, but reported adjusted profit, revenue and same-store sales that were well above expectations and a full-year outlook that was above forecasts. Walmart shares opened Tuesday at $145.61 and closed at $147.48, or 6.57% higher.

    • Home Depot
      HD,
      +1.63%
      rose after the home improvement retailer reported fiscal third-quarter earnings that beat expectations, citing strength in project-related categories, but kept its full-year outlook intact. Home Depot shares opened Tuesday at $304.06 and closed at $311.99.

    • Chinese-listed technology traded sharply higher on Tuesday, including U.S.-traded ADRs for Alibaba Group Holding
      BABA,
      +11.17%      ,
      Baidu Inc.
      BIDU,
      +9.02%
      and JD.com Inc.
      JD,
      +7.14%
      The KraneShares CSI China Internet exchange-traded fund
      KWEB,
      +9.56%
      also traded substantially higher.

    —Jamie Chisholm contributed reporting to this article

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  • Katie Hobbs wins Arizona governor’s race, flipping state for Democrats

    Katie Hobbs wins Arizona governor’s race, flipping state for Democrats

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    PHOENIX — Democrat Katie Hobbs was elected Arizona governor on Monday, defeating an ally of Donald Trump who falsely claimed the 2020 election was rigged and refused to say she would accept the results of her race this year.

    Hobbs, who is Arizona’s secretary of state, rose to prominence as a staunch defender of the legitimacy of the last election and warned that her Republican rival, former television news anchor Kari Lake, would be an agent of chaos. Hobbs’ victory adds further evidence that Trump is weighing down his allies in a crucial battleground state as the former president gears up for an announcement of a 2024 presidential run.

    She will succeed Republican Gov. Doug Ducey, who was prohibited by term limit laws from running again. She’s the first Democrat to be elected governor in Arizona since Janet Napolitano in 2006.

    “For the Arizonans who did not vote for me, I will work just as hard for you — because even in this moment of division, I believe there is so much more that connects us,” Hobbs said in a statement declaring victory. “This was not just about an election — it was about moving this state forward and facing the challenges of our generation.”

    Lake did not immediately comment after the race was called.

    The Associated Press called the governor’s race for Hobbs after the latest round of vote releases gave her a big enough lead that the AP determined she would not relinquish it. The AP concluded that, even though Lake had been posting increasingly larger margins in vote updates from Maricopa County, she was not gaining a big enough share to overtake Hobbs and was running out of remaining votes.

    Vote counting had gone on for days since the Tuesday election, as officials continued to tally massive amounts of late-arriving ballots.

    A onetime Republican stronghold where Democrats made gains during the Trump era, Arizona has been central to efforts by Trump and his allies to cast doubt on Joe Biden’s 2020 presidential victory with false claims of fraud. This year, many Trump-endorsed candidates faltered in general elections in battleground states, though his pick in the Nevada governor’s race, Republican Joe Lombardo, defeated an incumbent Democrat.

    Before entering politics, Hobbs was a social worker who worked with homeless youth and an executive with a large domestic violence shelter in the Phoenix area. She was elected to the state Legislature in 2010, serving one term in the House and three terms in the Senate, rising to minority leader.

    Hobbs eked out a narrow win in 2018 as secretary of state and was thrust into the center of a political storm as Arizona became the centerpiece of the efforts by Trump and his allies to overturn the results of the 2020 election he lost. She appeared constantly on cable news defending the integrity of the vote count.

    The attention allowed her to raise millions of dollars and raise her profile. When she announced her campaign for governor, other prominent Democrats declined to run and Hobbs comfortably won her primary.

    She ran a cautious campaign, sticking largely to scripted and choreographed public appearances. She declined to participate in a debate with Lake, contending that Lake would turn it into a spectacle by spouting conspiracy theories and making false accusations.

    She bet instead that voters would recoil against Lake, who picked verbal fights with journalists as cameras rolled and struck a combative tone toward Democrats and even the establishment Republicans who have long dominated state government.

    Pre-election polls showed the race was tied, but Hobbs’ victory was still a surprise to many Democrats who feared her timidity would turn off voters. She overcame expectations in Maricopa and Pima counties, the metro Phoenix and Tucson areas where the overwhelming majority of Arizona voters live. She also spent considerable time in rural areas, looking to minimize her losses in regions that traditionally support Republicans.

    Lake is well known in much of the state after anchoring the evening news in Phoenix for more than two decades. She ran as a fierce critic of the mainstream media, which she said is unfair to Republicans. She earned Trump’s admiration for her staunch commitment to questioning the results of the 2020 election, a stand she never wavered from even after winning the GOP primary.

    She baselessly accused election officials of slow-rolling the vote count this year and prioritizing Democratic ballots as she narrowly trailed Hobbs for days following the election.

    She has cited a problem with printers at about a third of Maricopa County vote centers that led on-site tabulators to reject some ballots. Election officials told voters to put ballots in a separate box to be counted later, but Republican leaders told their supporters to ignore that instruction and lines in some places backed up.

    The problem affected about 7% of ballots cast in person on Election Day and about 1% of the total cast in the county.

    Maricopa County Sheriff Paul Penzone said he increased security around the elections center Monday in anticipation that the race would be called and emotions could run hot, though he said there was no specific threat. Demonstrators have gathered outside the building for several days but have remained peaceful, he said.

    “I think we’re getting close to the end game so I want to be sure that we’re prepared,” Penzone told reporters in a news conference hours before the race call.

    The sheriff’s office was caught off guard two years ago when armed and angry protesters descended on the elections building in downtown Phoenix after Fox News and the AP called Arizona for Biden, marking the first time a Democrat won the state in more than two decades.

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  • No criminal charges planned in Rudy Giuliani-Ukraine probe, prosecutors say

    No criminal charges planned in Rudy Giuliani-Ukraine probe, prosecutors say

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    NEW YORK — Prosecutors in New York do not plan to bring criminal charges against Rudy Giuliani in connection with a probe into his interactions with Ukrainian figures, they revealed in a letter to a judge Monday.

    They said they made the decision after a review of evidence resulting from raids on his residence and law office in April 2021. Federal prosecutors ware investigating whether Giuliani’s dealings with figures in Ukraine in the run-up to the 2020 election required him to register as a foreign agent.

    Prosecutors said a grand jury probe that led to the issuance of warrants that resulted in the seizure of Giuliani’s electronic devices had concluded.

    They said that based on information currently available, criminal charges would not be forthcoming.

    “In my business, we would call that total victory,” Giuliani’s lawyer, Robert Costello, told The Associated Press. “We appreciate what the U.S. attorney’s has done. We only wish they had done it a lot sooner.”

    Sixteen of Giuliani’s devices were seized as part of a federal investigation into Giuliani’s interactions with Ukrainian figures to see whether he violated a law governing lobbying on behalf of foreign countries or entities.

    Giuliani is an attorney and a former personal lawyer for ex-President Donald Trump. His communications with clients are generally protected by law, though there are exceptions.

    Giuliani maintained throughout the probe that he had done nothing wrong. At the time of the filing by prosecutors, Giuliani was on a talk show and apparently unaware of the development.

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  • Lavrov taken to hospital at G20 meeting, officials say

    Lavrov taken to hospital at G20 meeting, officials say

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    NUSA DUA, Indonesia (AP) — Russian Foreign Minister Sergey Lavrov was taken to the hospital after suffering a health problem following his arrival for the Group of 20 summit in Bali, multiple Indonesian authorities said Monday.

    Russia’s top diplomat arrived on the resort island the previous evening ahead of the meeting, which begins Tuesday.

    Russian Foreign Ministry spokesperson Maria Zakharova later denied that Lavrov had been hospitalized but did not address whether he had received treatment.

    She posted a video of Lavrov, looking healthy in a T-shirt and shorts, in which he was asked to comment on the report of his treatment.

    “They’ve been writing about our president for 10 years that he’s fallen ill. It’s a game that is not new in politics,” Lavrov says in the video.

    Russia’s state news agency Tass cited Lavrov as saying, “I’m in the hotel, reading materials for the summit tomorrow.”

    Lavrov is the highest-ranking Russian official at the gathering, which U.S. President Joe Biden, China’s Xi Jinping and other leaders are attending.

    Four Indonesian government and medical officials told The Associated Press that Lavrov was receiving treatment at the Sanglah Hospital in the provincial capital, Denpasar.

    All of the officials declined to be identified as they were not authorized to discuss the matter publicly.

    The hospital did not immediately comment.

    Two of the people said Lavrov had been treated for a heart condition.

    Russian President Vladimir Putin’s attendance at the G-20 had been uncertain until last week, when officials confirmed he would not come and that Russia would be represented by Lavrov instead.

    Fallout from Russia’s invasion of Ukraine is expected to be among the issues discussed at the two-day G-20 meeting, which brings together officials from countries representing more than 80% of the world’s economic output.

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  • Ukraine troops prepare to reclaim city abandoned by Russians

    Ukraine troops prepare to reclaim city abandoned by Russians

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    Russia relinquished its final foothold in a major city in southern Ukraine on Friday, clearing the way for victorious Ukrainian forces to reclaim the country’s only Russian-held provincial capital that could act as a springboard for further advances into occupied territory.

    Russia’s Defense Ministry said its troops finished withdrawing from the western bank of the river that divides Ukraine’s Kherson region at 5 a.m. The area they left included the city of Kherson, the only provincial capital Russia had captured during its nearly nine-month invasion of Ukraine.

    Videos and photos on social media showed residents jubilantly taking to the streets and a Ukrainian flag flying over a monument in a central Kherson square for the first time since the city was seized in early March. Some footage showed crowds cheering on men in military uniform.

    Ukrainian officials have not confirmed the city was back in Ukrainian hands. A spokesperson for Ukraine’s military intelligence agency said “an operation to liberate Kherson” and the surrounding region of the same name was underway.

    “It will be possible to talk about establishing Ukrainian control over the city only after an official report by the General Staff” of the Ukrainian army, Andriy Yusov told The Associated Press.

    Ukrainian intelligence urged Russian soldiers who might still be in the city to surrender in anticipation of Ukrainian forces arriving. “Your command left you to the mercy of fate,” it said in a statement. “Your commanders urge you to change into civilian clothes and try to escape from Kherson on your own. Obviously, you won’t be able to.”

    A Ukrainian regional official, Serhii Khlan, disputed the Russian Defense Ministry’s claim that the 30,000 retreating troops took all 5,000 pieces of equipment with them, saying “a lot” of hardware got left behind.

    The final Russian withdrawal came six weeks after Russian President Vladimir Putin illegally annexed the Kherson region and three other Ukrainian provinces, vowing they would remain Russian forever.

    Moscow’s forces still control about 70% of the Kherson region following the pullback ordered amid a Ukrainian counteroffensive.

    The Kremlin remained defiant Friday, insisting the withdrawal in no way represented an embarrassment for Putin. Moscow continues to view the entire Kherson region as part of Russia, Kremlin spokesman Dmitry Peskov told reporters.

    He added that the Kremlin doesn’t regret holding festivities just over a month ago to celebrate the annexation of occupied or partially occupied regions of Ukraine.

    Shortly before the Russian announcement, the office of Ukrainian President Volodymyr Zelenskyy described the situation in the province as “difficult.” It reported Russian shelling of some villages and towns Ukrainian forces reclaimed in recent weeks during their counteroffensive in the Kherson region.

    The General Staff of Ukraine’s army said the Russian forces left looted homes, damaged power lines and mined roads in their wake. Ukrainian presidential adviser Mykhailo Podolyak predicted Thursday the departing Russians would seek to turn Kherson into a “city of death” and would continue to shell it after relocating across the Dnieper River.

    Ukrainian officials were wary of the Russian pullback announced this week, fearing their soldiers could get drawn into an ambush in Kherson city, which had a prewar population of 280,000. Military analysts also had predicted it would take Russia’s military at least a week to complete the troop withdrawal.

    Without referencing events unfolding in Kherson, Zelenskyy said in a video message thanking U.S. military personnel on Veterans Day that “victory will be ours.”

    “Your example inspires Ukrainians today to fight back against Russian tyranny,” he said. “Special thanks to the many American veterans who have volunteered to fight in Ukraine and to the American people for the amazing support you have given Ukraine. With your help, we have stunned the world and are pushing Russian forces back.”

    However, some quarters of the Ukrainian government barely disguised their glee at the pace of the Russian withdrawal.

    “The Russian army leaves the battlefields in a triathlon mode: steeplechase, broad jumping, swimming,” Andriy Yermak, a senior presidential adviser, tweeted. Social media videos showed villagers hugging Ukrainian troops.

    Recapturing Kherson city could provide Ukraine a strong position from which to expand its southern counteroffensive to other Russian-occupied areas, potentially including Crimea, which Moscow seized in 2014.

    From its forces’ new positions on the eastern bank, however, the Kremlin could try to escalate the war, which U.S. assessments showed may already have killed or wounded tens of thousands of civilians and hundreds of thousands of soldiers.

    Gen. Ben Hodges, former commanding general of U.S. Army forces in Europe, described the retreat from Kherson as a “colossal failure” for Russia, and said he expects Ukrainian commanders will work to keep the pressure on Russia’s depleted forces ahead of a possible future push for Crimea next year.

    “It’s too early to be planning the victory parade, for sure. But I would expect by the end of this year — so in the next, let’s say, eight weeks — the Ukrainians are going to be in place to start setting the conditions for the decisive phase of this campaign, which is the liberation of Crimea, which I think will happen by the summer,” he said in a telephone interview.

    Meanwhile, a Russian S-300 missile strike overnight killed seven people in Mykolaiv, about 68 kilometers (42 miles) from Kherson’s regional capital, Zelenskyy’s office said Friday morning. Rescue crews sifted through the rubble of a five-story residential building in search of survivors.

    Standing in front of what used to be his family’s apartment, Roman Mamontov, 16, awaited news about his missing mother. Mamontov said he found “nothing there” when he opened the door to look for his mother after the missile struck. Friday was her 34th birthday, the teenager said.

    “My mind was blank at that moment. I thought it could not be true,” he said. “The cake she prepared for the celebration is still there.”

    Zelenskyy called the missile strike “the terrorist state’s cynical response to our successes at the front.”

    “Russia does not give up its despicable tactics. And we will not give up our struggle. The occupiers will be held to account for every crime against Ukraine and Ukrainians,” Zelenskyy said.

    The Russian Defense Ministry didn’t acknowledge striking a residential building in Mykolaiv, saying only that an ammunition depot was destroyed “in the area of the city.”

    Mykolaiv mayor Oleksandr Sienkevych told the AP that Russia could step up its shelling of his city in light of Ukraine’s advances. “The more success the Ukrainian army has, Russia lowers its bar of terrorism,” he said.

    Sienkevych said that S-300 missiles launched from the Kherson region can reach Mykolaiv within one minute. Some 149 civilians have been killed and 700 people seriously wounded in the city since the Feb. 24 start of the war.

    The president’s office said Russian drones, rockets and heavy artillery strikes across eight regions killed at least 14 civilians between Thursday morning and Friday morning.

    The state of the key Antonivskiy Bridge that links the western and eastern banks of the Dnieper in the Kherson region remained unclear Friday. Russian media reports suggested the bridge was blown up following the Russian withdrawal; pro-Kremlin reporters posted footage of the bridge missing a large section.

    But Sergei Yeliseyev, a Russian-installed official in the Kherson region, told the Interfax news agency the bridge hadn’t been blown up.

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  • Federal judge strikes down Biden administration’s student-debt forgiveness plan

    Federal judge strikes down Biden administration’s student-debt forgiveness plan

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    A federal judge in Texas on Thursday struck down the Biden administration’s student-debt forgiveness plan, imperiling a key administration priority that would have canceled up to $20,000 in student loans for tens of millions of borrowers.

    The Biden administration’s plan is an “unconstitutional exercise of Congress’s legislative power” that also failed to go through normal regulatory processes, Judge Mark Pittman of the Northern District of Texas wrote in a 26-page opinion.

    “No one can plausibly deny that it is either one of the largest delegations of legislative power to the executive branch, or one of the largest exercises of legislative power without congressional authority in the history of the United States,” Pittman, an appointee of former President Donald Trump wrote.

    The Biden administration can appeal the verdict. The White House didn’t immediately respond to a request for comment.

    Two borrowers—supported by the Job Creators Network, a conservative group—were granted standing in the case because they didn’t qualify for the program. One plaintiff had private student loans that weren’t eligible for forgiveness, while the other wasn’t the recipient of a Pell Grant, meaning he didn’t qualify for an extra $10,000 in forgiveness for which only Pell Grant recipients are eligible. The court ruled that they had been deprived of their right to voice their disagreement with the contours of the program through the usual regulatory process.

    An expanded version of this report appears on WSJ.com.

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