Hawkish Fed Slams Stocks To Longest Losing Streak In 20 Months

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With the stock markets vertical drops and pops this week, the following just seemed appropriate...

 

Since The FOMC Minutes, the long bond is leading the way with stocks, gold, and oil lower...

 

Post FOMC - Nasdaq and Small Caps led the gains with Dow the biggest loser...

 

Despite the best efforts to keep the S&P green for the week (with VIX slammed)...

 

The Dow closed red for the 4th week in a row - the longest losing streak since Oct 2014's Bullard Bounce lows...

 

The Dow was the week's underperformer as Trannies surged over 2%... Nasdaq broke its 5 week losing streak with AAPL up 5%!!

 

But Futures shows the chaos of the week...

 

Massive redemptions hit high yield credit markets again (yesterday was the largest daily HYG outflow ever!)

 

Treasury yields rose across the complex this week but 30Y notably outperformed...

 

With 30Y outperforming post-FOMC...

 

With 2s30s flattening a dramatic 5bps...

 

The USD Index flatlined today but ended the week up 0.7%...

 

 

The strong dollar weighed on commodities but crude rallied on the week.

 

Don't forget - it's OPEX!

 

Charts: Bloomberg



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The City of Chicago is selling vacant residential lots for $1

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The City of Chicago is selling vacant residential lots for $1. Here's how you get one.

Large Lots 5: Auburn Gresham Ended on May 15th, 2016

The fifth Large Lot Program ended in Auburn Gresham on May 15th 2016 at 11:59 p.m.

Check back soon for updates!

Have time for a 3 minute survey?
mySociety, a UK-based non-profit organization, is studying how Large Lots communicates with residents. Take the survey »

Large Lots 4: Roseland and Pullman Ended on October 31, 2015

The fourth Large Lot Program ended in Roseland and Pullman on October 31st at 11:59 p.m.

Check back soon for updates!

Large Lots 3: Austin Ended on January 31st, 2015

The third Large Lot Program ended in Austin on January 31st at 11:59 p.m.

The applications will be reviewed by the Chicago Plan Commission on September 17, 2015. Applicants should receive a letter notifying them of their application status and any necessary next steps in late September, 2015.

Large Lots 2: East Garfield Park Ended on August 4th, 2014

The second Large Lot Program ended in East Garfield Park on August 4th at 11:59 p.m. and 154 lots were sold as of April 24th, 2015. See what lots were sold »

See what lots were sold

About

The Large Lot Program is a housing land use approach that was developed as part of the Green Healthy Neighborhoods public planning process. This website was built to make the process of purchasing City-owned land through this program easier for residents. Read more »



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Google is right to ban short-term loan ads, but I won’t stop offering them

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Google is right to ban short-term loan ads, but I won’t stop offering short-term loans. Here’s why.

Sasha Orloff, CEO of LendUp

I think payday loans are deeply problematic. But my company sells short-term loans that look similar and serve the same customers. Last week, Google banned ads for payday loans. Yet earlier this year, Google Ventures (GV) invested in my company, LendUp.

Obviously, this sounds like a lot of contradiction. But the truth is even though we were surprised by the announcement and would have taken a different approach, LendUp and Google agree on a fundamental fact: The current payday loan industry is bad for Americans. Google is applying pressure from the outside, and we applaud them. Meanwhile, LendUp is trying to change the system from the inside, and we have evidence that our technology can create better products for the same customers.

Okay, I know “make the world a better place by selling short-term loans” can sound absurd. If you’re skeptical of our intentions — or just want to better understand exactly how crazy America’s credit system is — please read on.

How I got interested in credit

In 2001, I read a book called Banker to the Poor by Muhammad Yunus. Yunus pioneered the concept of microfinance — small loans for entrepreneurs who do not qualify for traditional banking. He created the Grameen Bank in Bangladesh, and then an organization called the Grameen Foundation that spread microfinance around the world. Later, he won the Nobel Peace Prize for his work.

Yunus believes that it’s possible to eliminate poverty around the world. When I read his book (it’s excellent, and I highly recommend it), I decided to get involved. I joined the Grameen Foundation and moved to rural Honduras.

It was supposed to be a six-month volunteer stint, but it ended up being a full-time job for three years as we replicated the Grameen Bank model in other parts of Latin America. While microfinance is not without its flaws, I saw firsthand how well-structured credit helped entrepreneurs start and grow their businesses.

The almighty American credit score

I wanted to see if well-structured credit could similarly change people’s lives here in the United States. When I returned, I interned at the World Bank and then worked at Citigroup’s Consumer Lending division. One thing quickly became clear: the power of the credit score.

In the U.S., your credit score decides whether you have access to bank credit, insurance, apartments, even jobs. And your credit score dictates how much you’ll pay. The average person with a low credit score will spend $250,000 more on interest and fees over the course of their life. That’s insane.

And we’re not talking about some tiny sliver of the population. A full 56% of Americans — more than half! — can’t get access to traditional banks because their credit score is too low. Instead, their options are limited to payday loans, title loans, and other dangerous products. This shadow world of lenders has astronomical rates and hidden fees, and doesn’t report to the credit bureaus. If your score is below 680 and you don’t already have a “respectable” credit line, there are few paths for you to get ahead.

So why don’t the banks step up and offer services to this majority of Americans? After the 2008 financial meltdown, “subprime” lending became a dirty word, and banks grew even more hesitant to develop products at the lower end of the credit market. Meanwhile, thanks to the same banking crisis, even more people were now considered subprime.

For people who need to pay a bill right away, payday loans solve a real problem. These borrowers have jobs and make enough to pay the bills, but they don’t have any financial slack. When a medical expense or car repair comes up, they can hit a shortfall.

So if the electricity bill is due on the 13th, and payday is on the 15th, what do you do? If you don’t have a credit card, you’re in trouble. Banks can’t or won’t help, and in that market — especially since 2008 — payday lenders have prospered to fill this growing need.

There needs to be a scalable, self-sustaining solution

I wanted to do something about the credit problem, and I talked over the challenges with my stepbrother, Jake Rosenberg. Jake, who was Zynga’s CTO of Platform at the time, saw the situation as especially frustrating because technology had actually made things worse. Payday lenders were using the internet to set up online businesses outside of state-level consumer protection laws. As someone who thinks software should make the world more efficient, not less, Jake found this offensive.

Jake believed that better tech could change the dynamics of the industry. Payday lenders always offered the same terrible rates indefinitely. But with better underwriting and more sophisticated technology, borrowers could be offered better rates over time.

So Jake and I decided to found LendUp. The idea was simple: We’d offer loans and credit to people who couldn’t qualify for normal banks. We’d charge interest — in some cases, high interest — but unlike payday lenders, we’d offer a path to better credit scores, better rates and real banking. We’d also offer financial education, and move customers who took those courses along the path faster. We’d have to build all of our own banking and risk-assessment technology from scratch, but with Jake as CTO, I believed we could do it.

Making positive change as a for-profit company is complex, and we knew that going in. We set up four simple principles, and agreed to follow them to the letter, with absolutely no exception — even if it hurt our business.

LendUp Principles

  1. Ladders: LendUp’s goal is to provide an actionable path for customers to access more money at a lower cost.
  2. Not chutes: Our business model is based on customers succeeding — repaying their loans on time and paying off their credit card balances. No rollovers, no debt traps. Ever.
  3. Transparency: We strive to make our products as easy to understand as possible.
  4. Building credit scores matters: While we don’t require good credit, our products encourage and reward actions that result in higher credit scores.

Basically, we want our customers to stop needing us for emergencies and give us less short-term business over time — with the plan to eventually offer credit cards, savings, and investment products as they gain more financial slack.

The LendUp model is already working

What bothers us the most about payday loans is how sticky they are. Even if you pay back a loan, you’re stuck: You’re always going to be offered the same expensive rate. If you don’t pay back the loan, it gets incredibly expensive: fees on top of fees with no end in sight. In states where rollovers are allowed, payday loan rates can climb above 1000% APR.

So we decided to start in the short-term market. We thought we could turn these loans into an access point for traditional financial services. Our first product was an alternative called the LendUp Ladder, and it fixes what’s broken about payday loans in a few important ways:

  • When customers repay their loans, they can be eligible for larger loans at lower rates (it is almost unheard of for payday lenders to offer better terms).
  • In the top half of our Ladder, customers have the option to have their payments reported to the credit bureaus (payday lenders don’t report).
  • When customers need more time to repay, we don’t charge them extra (payday lenders use rollovers to make more money when their customers struggle).
  • When customers make successful repayments, many can become eligible for a credit card (which is essentially an interest-free short-term loan, if paid on time and in full).

As you probably guessed, payday lenders wouldn’t dream of offering a credit card to their customers. A credit card, which many take for granted, is essentially a month-long, zero interest loan. It’s the surest way to immediately transform the industry — which is exactly what we want to do.

The early results are encouraging. We estimate we saved our customers more than $16 million in 2015, and we’ve already saved them another $16 million in 2016. More than 90 percent of our active users have access to credit-building loans within two years. And we’ve taken customers from having credit scores in the 300s two years ago to having a credit card today.

Yes, we charge high interest rates for first-time customers

First-time borrowers regularly pay more than 250% APR — which sounds crazy, and it is expensive, but it’s risk-adjusted. If you mainly use credit cards, you’re probably familiar with APRs between 7% and 36%. But remember, if you have a credit card, you have a track record with the credit bureaus. In order to serve our customers, we take on a lot more uncertainty and risk in the name of helping them take that first step towards elusive credit building. Some customers do not pay us back and, like insurance, the interest rates covers what we lose. But when customers do pay us back, as the vast majority do, they de-risk themselves. Where the Ladder is available, customers move up automatically through repayment, and become eligible for loans at a fraction of former rates.

We saw ourselves as having to make a choice between access and cost, because lowering one means lowering the other. So, first we chose access, focusing on new customers. Then, we built the Ladder to drive down costs for existing customers. Now, as our technology improves, we will continue to make credit more affordable while maintaining accessibility. Today, we regularly approve customers with credit scores in the 300s — people who banks and credit unions don’t serve.

Also, to add context to those APRs, in California (rates vary by state), we charge around 16% (or a fee of $32) to borrow $200 with our short-term loans. The average loan lasts 22 days, so when you annualize our rate, you get a whopping 270% APR.

Our short-term loans are on Google’s blacklist, but we’re cool with that

So there’s the rub. Because we offer short-term loans and charge high interest rates in the beginning, the entry point to the LendUp Ladder will be blocked from paid advertising on Google.

Does it feel good to be lumped in with the industry? Well, not exactly. But the marketing of these products has to change to better protect consumers from deceptive practices, illegal products and identity theft. If effectively enforced, Google’s ban will push the payday loan marketing competition away from ads and toward natural search, where safer alternatives with quality content can shine. Obviously, I think that’s good for LendUp — and good for Americans who are locked out of the banking system. We’re proud of our work, and we’re very happy to take the fight to a more reputable arena.



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Obama: Worst President In U.S. History?

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Bush was a horrible president. At the time, I thought he was the worst president in American history.

But Obama has made a lot of firsts himself …

For example, Obama:

  • Sentenced whistleblowers to 31 times the jail time of all prior u.s. presidents combined
  • Has granted less pardons than any president since Garfield, who served only 200 days as president before being assassinated in 1881
  • May be the only U.S. president in history who failed to deliver a single year of at least 3% economic growth (when adjusted for inflation)

In addition, Obama has presided over:

And as the New York Times notes this week, Obama has been at war longer than any president in history.

Worst ... president ... ever.



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Libertarian Candidates, Moderated by Penn Jillette, Debate in Las Vegas

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The Nevada Libertarian Party worked hard to put together a prominent forum for the three leading presidential hopefuls in a debate held yesterday in Las Vegas. The debate, featuring former Republican Gov. Gary Johnson, movement activist and Libertarian Republic founder Austin Petersen, and antivirus software legend John McAfee, was moderated by noted stage magician and libertarian Penn Jillette, known professionally as just "Penn." (The event, whose attendance I estimate at around 300, was also a fundraiser for Penn's favorite charity, Opportunity Village, which provides opportunities and aid for the intellectually disabled.)

McAfee, after patiently and effectively participating through the multi-hour four-part debate, chose in his closing remarks to attack the very concept of it. "You may think you learned something by watching this debate. I assure you you have learned nothing at all." He then attacked the polished soundbite culture and canned answers of debates and hinted at the complicated truths they obscured. (He also used language unfit for most TV twice in this closing statement.)

I disagree with McAfee that the average viewer would "learn nothing" from the debate.

It is scheduled to be aired later this week on Glenn Beck's The Blaze network—numerous times, Nevada's L.P. Chair Brett Pojunis, who wrangled the event, tells me. That audience in particular may learn of an interesting political universe they barely knew existed. One longtime L.P. national committee member told me he hopes via The Blaze that this debate can become a moment of historical signficance for the L.P. and even emulate the political ferment caused by Rick Santelli's famous summoning of a new "Tea Party" movement in 2009 on CNBC.

The debate's four parts allowed the candidates to answer questions from Penn while alone on stage in "town hall" style; from local and state party members and politicos in the crowd; from famous people from afar; and to issue quick lightning round responses to various policy issues.

McAfee flashed his libertarian hard core in the lightning round and won frequent audience applause with answers in the style of: Should we end the war on drugs? We should end the war on everything. Should birth control be available without a prescription? Everything should be available without a prescription. Would you have invaded Iraq? Why invade anyone?

In his "town hall" portion conversing with Penn, McAfee jumped right in discussing his latest media controversy—being called a liar by Gizmodo over claims his compatriots hacked WhatsApp's encryption. McAfee insists that publicity only helped the stock price of the company he was recently named CEO of, MGT Capital Investments, whose stock price has more than quintupled this week, with the rise continuing after the Gizmodo article.

This seemed part of his general strategy of making sure no one can say anything bad about him he hasn't already said himself. McAfee also called himself a "walking revolution" and for those who doubt sudden and extreme change can come from unexpected places, reminded us of a couple of fellows named Lenin and Gandhi.

Penn asked McAfee to explain the most likely troubling part of his career, his eventual flight from Belize in 2012 tailed by accusations of possible complicity in the murder of a neighbor there. McAfee reiterated his innocence in the death of Gregory Faull, and he said his Belizean troubles were really a story of a "man willing to stand up to corruption at the risk of his life," one that should be a plus on his resume, not a minus. He reiterated his epigram summing up his vision of libertarianism: "our bodies and minds belong to ourselves." 

Austin Petersen in his "town hall" segment discussed his pride in his own campaign's progress from scrappy outsider to seeming contender. (We won't really know for certain what's going on with L.P. delegates until they vote over Memorial Day weekend.) Petersen thinks libertarianism is a core belief of most Americans once they understand it. He instructs Libertarians to stop feeling snobbishly superior to the average American if they aren't already on board the L.P. train.

While Libertarians cannot promise a utopia on earth or that government can solve all their grievances, as he thinks your Trumps and Sanders try to do, Petersen announced that Libertarians do understand that no one knows how to live your life better than you do. (When he opined that some on the youthful Social Democratic side might want to vote for him just because he's the youngest candidate, it seemed overly optimistic.)

Gary Johnson also seems to think Libertarian views already do represent a majority of Americans, though that can never be apparent unless the party gets into the presidential debates. He hyped his New Mexico gubernatorial record of vetoes and acknowledged that he "got his ass kicked" in 2012 when he was the L.P.'s candidate, but insists his people are "a team of winners" who just happened to be beat, and are ready to redeem themselves if given the chance.

The celebrity questioners (not actually present at the debate), whose common denominator seemed to be a relationship with Penn, included Dee Snider asking how they plan to save America from Trump and Clinton, comedian/roaster Jeff Ross on what the candidates would build a wall around (Petersen repeated his quip, "Donald Trump, and get Bernie Sanders to pay for it!" which got some laughs), Drew Carey on how they'd make the L.P. relevant, Larry "Ratso" Sloman on what regulations they think should be placed on legal weed, Greg Gutfield wondering why these Libertarians don't love the American military as much as he does, and Arsenio Hall on their thoughts on Black Lives Matter. (To that Petersen made a rather tone-deaf call for blacks to be more vigorous in understanding and asserting their constitutional rights when dealing with cops, and McAfee mentioned his black wife.) Clay Aiken asked their stances on transgender bathroom regulations. (McAfee noted his times in third world countries where the streets are used as toilets and wondered how an issue like this became a national worry.)

None of the debaters made any major flubs or said anything that might seem shockingly out of line to most libertarians. (Though this particular libertarian isn't as enthusiastic as all three were about ensuring all otherwise unregulated political donations are public and transparent, since such reporting requirements for campaign donations can create mischief and disincentive effects worth considering, including wrecking innocent citizens' lives for daring to participate in politics.)

Johnson was, as usual, the least doctrinaire in Libertarian terms. He was unwilling to be across-the-board against government funding of scientific research, or to rule out foreign interventions not in defense of the homeland. He said a President Johnson should not be expected to be asleep at the wheel if a holocaust were occurring somewhere on the globe. Johnson was also, unlike the others, willing to say our involvement in the United Nations was a positive good. And in a movement where lots of people seem to think our country is suffering unprecedented destructive depredations at the hands of out-of-control government, Johnson was willing to say that in most senses he thinks that life has never been better in the United States.

A typical Blaze audience of conservatives who might be looking for a non-Trump option would at the very least from this debate become aware these Libertarians don't look for government solutions to any problem. When it comes to veterans, though, they all agreed government needed to spend on their care. They all also thought that something more like a voucher system for purchasing health insurance or care in the private market would be better than the Veterans Administration as it exists.

Some other aspects of the debate that stood out: although Austin Petersen often frames himself as the Libertarian most likely to appeal to disenchanted conservatives (largely in how he combines strict constitutionalism with a pro-life stance), today he also sounded the most left libertarian with the most frequent stabs at crony capitalism and a system whose regulations and income-shifting often reward the powerful and connected at the expense of the powerless. He also issued the movement-centric crowdpleaser most likely to confuse a normal TV watcher on The Blaze when he shouted "Austrian economics for the win!"

John McAfee is settling more and more comfortably into the position of "notorious crazy man," using terms redolent of insanity to either describe himself or his proposed strategies for libertarian communication well over five times during the debate, including calls for ranting naked libertarians in the street as a way to get earned media.

I've spent some time with McAfee and do not in any way think he's crazy, nor do I think he thinks he's crazy. But he does seem to have decided in the year of Trump that a reputation for wild thought and behavior won't be a political minus.

Another curiosity about McAfee's performance was that, even when given a perfect tee-up to talk about it, he never once mentioned cybersecurity, the issue that first got him interested in running for president last year with his aborted "Cyber Party" before seeking the L.P. nod.

When asked the greatest threat to national security, he merely quipped "Laziness." When I interviewed him for my forthcoming July Reason feature on the L.P. presidential race, he was quite set on discussing the existential threat that Chinese cyberattacks posed to the U.S. Johnson gave a legit foreign policy answer to that question: North Korea. Petersen gave the Libertarian-pleasing quip: "The U.S. federal government."

The most heat in the debate came when Petersen and Johnson went at it on an issue they first made famous during their first nationally televised debate which aired in April on John Stossel's Fox Business Network show. Petersen, in a move that had become a common reference point/running gag in the Libertarian social network world, got Johnson to say that his vision of anti-discrimination law could justify legally requiring a Jewish baker to bake a "Nazi cake." 

Petersen stressed that priests should not be forced to marry people they don't want to marry; we should all have such freedom of conscience, though he himself approves of love in all varieties. They began talking over each other about whether Nazis were a protected class under American civil rights law. (Johnson never explicitly said they were, but Petersen was steamed that his "Nazi cake" answer seem to imply it.) Johnson insisted that he would have signed the 1964 Civil Rights Act and said the Libertarian Party should not seem to support legislation that would allow discrimination that is not currently legally allowed.

In essence, Johnson thinks it's important for Libertarians to not seem to condone intolerant discrimination of any kind, especially emphasizing modern debates about intolerance of gays and LGBT folk. Petersen wants to stress the distinction between government, which should and must treat us all equally, and private citizens who should have freedom to decide who they want to deal with or do business with.

Petersen told me in an interview after the debate he thinks this discrimination law matter can be the issue that sinks Johnson with the L.P.'s delegates at their nominating convention in May.

From chatting with some people in the crowd, I learned that McAfee's reputation can indeed, in the case of a couple of local software engineers I met, bring in curious non-Libertarians to just see what's going on with the wild man. I found only one Libertarian who admitted that he's "petrified" at the thought of what a general election crowd would make of the eccentric McAfee if he's the party's standardbearer. No one I talked to said they had been completely turned around on their favorite by this debate, though many said they gained new respect for contenders not their first choice.

The Nevada L.P.'s electoral crown jewel was there: John Moore, a former Republican who switched parties in the middle of his state Assembly term, currently the only sitting state legislator for the L.P. Moore will be a delegate in Orlando; he was not yet willing to say who his presidential choice is.

The fight for delegate's hearts and minds between these three, and any of the many other contenders, seems as if it will be a heated one down to the wire. Libertarians' concerns, one learns from random chatting and eavesdropping, can be huge and systemic, like the Federal Reserve leading to a currency collapse; and as prosaic and personal as being steamed when a 99 cent soda can't be bought with a dollar because of sales taxes.



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Marco Rubio Lets It All Out in an Epic Tweetstorm

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Democratic presidential candidate Sen. Bernie Sanders after a news conference on November 4, 2015 in Washington, DC. Democratic presidential candidate Sen. Bernie Sanders after a news conference on November 4, 2015 in Washington, DC. Win McNamee/Getty Images

Senator Bernie Sanders’ presidential campaign is threatening to take the Democratic National Committee to court after the Committee suspended the campaign’s access to valuable voter data. The DNC accuses the campaign of exploiting a technical breach to obtain information collected by Hillary Clinton’s campaign.

The data breach was discovered Wednesday by the Democratic party’s voter data software vendor, NGP VAN. The glitch broke down the firewall between the Sanders campaign and Clinton operation. According to The Washington Post, at least four Sanders staffers took advantage, briefly viewing data the Clinton campaign had collected.

As a reprimand, the DNC has cut the Sanders campaign off from its voter list until it can prove that any data that was accessed inappropriately has been disposed of, and a thorough audit has been conducted by NGP VAN.

“We are working with our campaigns and the vendor to have full clarity on the extent of the breach, ensure that this isolated incident does not happen again, and to enable our campaigns to continue engaging voters on the issues that matter most to them and their families,” said DNC spokesperson Luis Miranda in a statement.

The Sanders campaign, however, is framing this as an “unprecedented” overreaction by the Democratic party and an effort to give Clinton’s campaign an unfair advantage. “By their action, the leadership of the Democratic National Committee is now actively attempting to undermine our campaign,” campaign manager Jeff Weaver told reporters outside the campaign’s Washington DC headquarters. “This is unacceptable. Individual leaders of the DNC can support Hillary Clinton in any way they want, but they are not going to sabotage our campaign – one of the strongest grassroots campaigns in modern history.”

Weaver said this was not the first time that such a breach has occurred. He said that two months ago, the Sanders campaign discovered another glitch that caused the firewall between campaigns to break down and notified the DNC about it. NGP VAN CEO Stu Trevelyan denies the company ever received word of that breach, however, and the DNC has not yet responded to WIRED’s request for comment on it.

The Sanders campaign has already fired its data chief Josh Uretsky, who was among those who looked at the data. In an interview with CNN, Uretsky said his team was “just trying to understand it and what was happening.”

“To the best of my knowledge,” he said, “nobody took anything that would have given the (Sanders) campaign any benefit.”

For now, however, the Sanders campaign is at a standstill, unable, Weaver says, to even generate phone numbers of potential donors and voters. Weaver stressed the fact that much of the data being withheld is data that the campaign’s own volunteers collected and that its own donors supplied. “It’s impossible to mobilize the kind of grassroots campaign we have without access to that data,” he said.

Weaver also said that “[I]f the DNC continues to hold our data hostage, and continues to try to attack the heart and soul of our campaign, we will be in federal court this afternoon seeking an immediate injunction.”

Such a move may sound drastic, but it reflects just how a huge a problem this could be for Sanders. The Iowa Caucus, the first electoral event of the campaign season, is less than two months away. The New Hampshire primary takes place shortly after that. One-to-one communication with voters in key districts is more crucial than ever, and these voter data files are the only way for campaigns and volunteers to know which voters to target.

While the breach is, no doubt, troublesome for the Sanders campaign, it’s equally scary for the party as a whole. NGP VAN is the lifeblood of Democratic campaigns. It has been building tools to manage the entire party’s data for nearly two decades, a consolidation of information that has become a major strategic advantage for Democrats. A technical glitch like this reveals the risks associated with entrusting all that sensitive data to just one vendor.

According to a blog post written by Trevelyan, shortly after the breach was fixed, the company audited its system and determined that only the Sanders campaign, and no other outside parties, could have possibly retained any of the exposed data. On Thursday, the DNC requested that NGP VAN suspend the Sanders campaign’s access to its records. “We will continue to work with and report to the DNC regarding this issue to ensure that this isolated incident does not recur,” Trevelyan wrote. “We have and will do better.”

That won’t, however, do much to help the Sanders campaign. At this point, it’s unclear how or when it will regain access to the data. The DNC is even considering contracting an independent security firm to conduct an audit, a move that could further delay the campaign’s access to the voter file. Meanwhile, Weaver says the campaign is carefully combing through staff emails, Google Docs, even emails that were deleted at the time of the glitch to find out who was implicated and ensure no records have been retained. While Weaver laid much of the blame on the party and on NGP VAN, he acknowledged that the staff was wrong to look at the information in the first place.

“In the heat of these campaigns,” he said, “sometimes young people make misjudgments.”

Go Back to Top. Skip To: Start of Article.


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LendingClub tries to buck up its troops!

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At the risk of stating the obvious, it’s been a pretty tough week for LendingClub. In the six days since announcing on May 9 that CEO Renaud Laplanche was suddenly stepping down, the stock has dropped nearly 50%.

So one might understand why executives there might need some bucking up. Thankfully, that was delivered yesterday in the 10-Q that the company filed late yesterday, clear as day on pg. 68! Here’s a snip:

On May 11, 2016, the compensation committee of the board of directors approved incentive compensation packages and salary adjustments for certain named executive officers. Specifically, Carrie Dolan, the Company’s Chief Financial Officer, was granted $3.5 million in restricted stock units…and a $500 thousand cash award, payable twelve months from the grant date. The compensation committee also approved an increase to Ms. Dolan’s base salary to $400 thousand per year, with a 75 percent bonus target. John MacIlwaine and Sandeep Bhandari, the Company’s Chief Technology Officer and Chief Risk Officer, respectively, each received $500 thousand in RSUs, which fully vest twelve months from the grant date, and a $500 thousand cash award, payable twelve months from the grant date.

The company also disclosed additional RSUs and compensation for acting CEO Scott Sanborn, who had been president prior to last week’s news. Sanborn will get $5m in RSUs and an additional $500K, if he remains at the company for the next year. His base salary was also increased to $500K, a 40% increase over what he had been making before.

But wait…that’s not all as they used to say in the old Ginsu Knife commercials. The board also gave one of their own a VERY hefty raise. Previously, board members had been paid $40K a year, according to the most recent proxy. But after naming Hans Morris Executive Chairman, they raised his fee to $250K and gave him an additional stock grant of $1m, which appears to be a five-fold increase.

Is it any wonder that this was buried on pg. 68?



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The "Longest Uninterrupted Smart Money Selling Streak In History" Extends To 16 Weeks

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Last night, following 15 consecutive weeks of client selling, we asked - rhetorically - if today the selling by BofA's smart money clients would stretch to a new record 16 consecutive weeks.

Earlier today we received the BofA update, as well as the answer: a resounding yes.

Here is BofA:

Last week, during which the S&P 500 fell 0.5%, BofAML clients were net sellers of US stocks for the 16th consecutive  week—continuing the longest uninterrupted selling streak in our data history (since ’08).

 

There was some good news: the magnitude of outflows has been lessening for the past three weeks, with last week’s $1.2bn in net sales the smallest in ten weeks. Then again, the selling had declined on 5 previous occasions in the past 4 months and never actually broke to the positive.

Net sales were led by hedge funds, a reversal from institutional client-led selling in the prior nine weeks. As we speculated last month, we wonder how much of this is forced selling as a result of inbound and rising redemption requests. If that is the case, it sets up hedge funds for an unpleasant feedback loop where more redemptions force lower prices, leading to more redemptions and so on.

BofA continues:

Institutional and private clients were still sellers as well, but sales by these groups were both their smallest since Feb. Net sales were entirely in large caps last week, as both small and mid-caps saw net buying. Buybacks by our corporate clients decelerated last week, and month-to-date are tracking below typical May levels. Year-to-date, buybacks are tracking slightly above 2015 levels but below 2014 levels.

What did the smart money sell (and in some cases buy)?

Net sales were led by Consumer Discretionary stocks, where misses from several retailers caused a sell-off in the sector last week. Health Care saw the next-largest outflows; this sector continues to have the longest selling streak at eleven consecutive weeks, hurt by a positioning unwind and political uncertainty in an election year Financials and Telecom stocks, plus ETFs, saw net buying last week; Telecom has the longest buying streak of any sector at three consecutive weeks (and is the only sector which has seen cumulative inflows year-to-date). Based on four-week average trends, where flows are less volatile, in addition to Telecom, Energy is now also seeing net buying after clients had sold this sector since late February.

 

Next, the rolling 4 week average trends by sector:

  • Net buying: Telecom since late April
  • Net selling: Tech since late Jan.; Staples since early Feb.; Industrials since mid-Feb.; Financials since late Feb; Materials and Health Care since mid-March; Consumer Discretionary since late March, Utilities since early April, ETFs since late April.
  • Notable changes in trends: Energy saw a reversal to net buying after net sales since late Feb.

 

Finally, on the topic of slowing down corporate buybacks, BofA confirms this.

The four-week average trend for buybacks by corporate clients suggests a bigger seasonal slowdown in buybacks than what we have seen the last few years at this time.

Now that even buybacks are slowing down, just who is it that is offsetting the relentless selling by not only the smart money, but also retail investors which as we showed last week sold the most US stocks in the past month since the August 2011 US downgrade?



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