UNBIASED - August 5, 2024: Today's Stock Market Drop, Trump's FEC Complaint, Project 2025 Director Steps Down, Harris Secures Necessary Votes, 9/11 Terrorists' Plea Deal Revoked, and More.

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Starting point is 00:00:50 call the Conax Ontario helpline at 1-866-531-2600. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Welcome back to Unbiased, your favorite source of unbiased news and legal analysis. Welcome back to Unbiased. Today is Monday, August 5th, and this is your daily news rundown. I am so, so, so happy to be back with you. Thank you for bearing with me while I took a much-needed vacation last week. It was everything I could have hoped for every summer since I was born. I spend time with my family in a place that's very near and dear to my heart, and that's where I was. So thank you again. I'm back. I feel refreshed. I'm excited, and I hope you are too. As far as what you can expect in today's episode,

Starting point is 00:01:38 because Mondays are always a little bit slower, I figured we could use some of the time in this episode to just recap some stories that I wasn't able to cover while I was gone. So I'll first, you know, cover some top stories. I don't necessarily want to say in order of how important they are, but just some of the bigger stories from last week. Play a little catch up, if you will, and then we'll get into our usual daily news rundown. So without further ado, let's get into today's stories, starting off with Trump's FEC complaint. And by the way, I should have also said each of these stories will be a fairly brief recap. Nothing crazy because we have a lot to get through both, you know, with the recap and today's stories as well. So we'll keep these relatively short. But Trump filed an FEC complaint

Starting point is 00:02:24 last week over the attempted transfer of funds from the Biden for President Committee to the newly created Harris for President Committee. Essentially, once Biden dropped out of the race, his campaign committee filed the requisite paperwork with the FEC to change its registration from Biden for President to Harris for President. Along with that, Biden's committee sought to transfer roughly $90 million of its funds to this newly created committee for Harris. But Trump says that's not allowed. Now, to be clear, current FEC regulations and federal law do not address this issue. And what that means, similar to how we see the Supreme Court justices interpret federal law and the Constitution, the FEC commissioners will be tasked with, quote unquote, interpreting the FEC regulations and relevant law to determine whether this type of fund transfer is permissible. direct yes or no answer for when a presumptive but not yet official presidential nominee transfers

Starting point is 00:03:27 funds to his running mate, the presumptive but not yet official vice presidential nominee who becomes the new presidential nominee. It's quite a complex situation. The question that the FEC commissioners will really have to ask is, was this a campaign contribution? Because campaign contributions are capped under the Federal Election Campaign Act of 1971. But what if it's not a campaign contribution? These are two people, Biden and Harris, who are running together on the same ticket. If they're part of the same campaign, then is it really considered a campaign contribution and therefore capped? Maybe it is because now it's a different ticket entirely, but maybe it's not because they ran on the same ticket at one time. There are a lot of

Starting point is 00:04:11 questions that the FEC commissioners have to answer. But the thing with FEC complaints is that they can take years to resolve. So it's very possible, and I would say almost certain, that this doesn't get resolved before the election. And as another sort of note, FEC matters are confidential until the point of resolution. So what that means for us is we won't know the details of this matter until this is resolved. Now, the commission is made up of six commissioners. They're appointed by the president and confirmed by the Senate, and no more than three can be from the same political party. So currently, there are three Republican commissioners and three Democratic commissioners. These six commissioners will get

Starting point is 00:04:51 together and determine whether the Biden for President Committee violated any FEC laws or regulations. If they answer this question in the affirmative, the penalties range from just, you know, a letter just basically saying, hey, don't forget, you have to comply with these laws, to monetary fines and penalties. In this case, more likely than not, it would be a penalty, a monetary penalty, if a violation was found. If there's no violation, obviously this is a moot issue. There are no penalties issued. And we would just simply have a better understanding of the relevant law. Moving on, and on a related note, the Democratic National Committee chair said Friday that Vice President Kamala Harris has secured enough votes from the delegates to become the official Democratic presidential nominee. The announcement came as the virtual roll call was taking place

Starting point is 00:05:42 last week, but she had received enough votes after the first day and a half of voting to secure that nomination. You may remember I mentioned a couple of weeks ago that the Democratic National Committee was planning this virtual roll call for President Biden when he was still in the race, and that was an attempt to name him as the official Democratic nominee ahead of the August Democratic Convention because certain state ballot deadlines were approaching. Once Biden dropped out, though, it was initially up in the air whether the committee was going to go ahead with this virtual roll call, but they ended up doing so. That roll call began this past Thursday morning, and it'll officially conclude at 6 p.m. Eastern time tonight. So right after this episode goes

Starting point is 00:06:30 live tonight, once that roll call concludes, Harris will be announced as the official Democratic presidential nominee. She'll accept her nomination at some point thereafter and announce her running mate, which, according to sources, is down to either Governor Tim Walz of Minnesota, Governor Josh Shapiro of Pennsylvania, or Senator Mark Kelly of Arizona. I believe she said she's making that announcement tomorrow, Tuesday, but we'll see. Now, you may be wondering, what's the point of the upcoming DNC if, you know, she's already the nominee? Is that, is the DNC still happening? Yes, the convention will still go forward as planned. And at the convention, the delegates will hold sort of a

Starting point is 00:07:11 ceremonial and confirmatory vote in person. But Harris will have already accepted the nomination by then. So it's definitely a little different than we're used to. But remember, each party makes their own rules so they're able to conduct these processes however they wish, so long as the committee votes on these rule changes. In some other news from last week, the director of Project 2025, Paul Danz, has stepped down Trump administration as chief of staff at the Office of Personnel Management, but more recently served as director of Project 2025, which has been a big source of controversy over the last six months or so. And as an aside, if you want to know more about Project 2025 specifically, what it's all about, you know, essentially everything you need to know about it, go ahead and listen to my July 9th and 10th episodes. The July 9th episode is basically an explainer episode, and then the July 10th episode

Starting point is 00:08:10 is a follow-up Q&A. But for purposes of this story, for the sake of not repeating myself, I'm simply going to focus on Dan's actually stepping down and what that means for the project. Since Dan's stepped down and left the Heritage Foundation, there have been some conflicting storylines about what will happen to Project 2025. As examples, the president of the Heritage Foundation told CNN that Project 2025 completed exactly what it set out to do. This sort of implied that the project was now done and completed. A spokesperson for the foundation, though, said that despite Dan's exit, work will still continue on the current phase of Project 2025, which is the search for employees for a possible Trump administration.

Starting point is 00:08:53 Another source said Project 2025 would effectively be ending its policy operations with the departure of Dan's. So we don't really know what's going to happen from here. But again, for the sake of clarity, Project 2025 is a roadmap for a potential 2025 Trump administration, which Trump has tried to distance himself from. And what it would do is effectively overhaul the executive branch with the end goal of making the government and the country more in line with conservative ideals. The Heritage Foundation has been creating these quote-unquote roadmaps since the 80s, and they've always carried the same goal, which is to promote a more conservative country. But again, I do highly recommend listening to the July 9th and 10th episodes because you'll be a lot more informed as to what Project 2025 is and who is behind it. Moving on to the 9-11 plea deal. On July 31st, three of five 9-11 defendants entered into a plea deal with the government that would allow them to avoid the death penalty and instead serve life without parole in exchange

Starting point is 00:09:55 for a guilty plea. This plea deal was approved by a retired brigadier general who was overseeing the case. But then just a few days later, just a couple of days ago, Defense Secretary Lloyd Austin wrote a letter to the general, not only revoking the plea deal, but also withdrawing her authority in the case and taking responsibility himself. This revocation places the death penalty back on the table for all three defendants. The other two defendants did not participate in this trial agreement, which means they're being dealt with separately. Now, here's the thing. It has been 23 years since September 11th, 2001. These defendants still have not stood trial. That's why we're still here

Starting point is 00:10:38 talking about plea deals, because a trial hasn't even taken place. Why? Well, for one, these cases are being handled by the military tribunal at Guantanamo, which doesn't necessarily work as efficiently as courts here in the States. But in addition to that, these cases have been held up for years over concerns of the admissibility of evidence, specifically evidence which was gathered through torture methods when these defendants were previously being held at CIA black sites. So the long debate has been, can this evidence be admitted at trial or would admission of this evidence be impermissible? Because as you know, we have rules of admissibility when it comes to evidence. The White House did say it played no role in the plea agreement that was previously reached and that it was solely worked out by military prosecutors. One final note that I would like to make is that even if

Starting point is 00:11:30 these defendants were sentenced to death, federal executions are way behind schedule. The federal government actually hasn't put anyone to death since 2021. So even if there is eventually a trial for these defendants and they are sentenced to death, when they would actually be put to death is very much up in the air. But speaking of prisoners, let's switch gears a little bit and quickly talk about the largest post-Soviet prisoner swap between Russia and the United States. This swap required the cooperation of not only Russia and the United States, but also Norway, Germany, and Slovenia. In total, 24 prisoners were released, eight of those coming from the United States, Norway, Germany, and Slovenia, and 16 coming from Russia and Belarus. The prisoners released by the countries on the United States side of the deal were all Russian. Those released

Starting point is 00:12:17 by Russia and Belarus were either American, German, Russian, or dual citizens. Notably, Alexei Navalny, a Russian opposition leader and anti-corruption activist who was supposed to be part of this deal, was unfortunately killed earlier this year while in Russian prison. So he unfortunately did not make it to the point which he would have been released. And as the final story from the last week, President Biden announced a three-pronged proposal calling for 18-year term limits for Supreme Court justices, an enforceable code of ethics, and a constitutional amendment to counteract the Supreme Court's recent presidential immunity decision. If you want a bit of backstory on this, check out my July 17th episode when I first reported on this news. It was, you know, in talks that he was going to propose this sort of thing, but now we have more details. The first reform laid out in President

Starting point is 00:13:10 Biden's plan is the no one is above the law amendment. This constitutional amendment would clarify that the constitution does not offer any sort of immunity from federal criminal indictment, trial, conviction, or sentencing just because someone previously served as president. Constitutional amendments are incredibly difficult to pass, which I also discussed in that July 17th episode. So is a constitutional amendment likely? Probably not, but time will tell. We'll see what happens with that. The second reform is term limits. Biden says that just like presidents have term limits, so should justices, and he supports a system in which justices are limited to 18 active years of service on the bench. These limits would have to be passed by Congress to, enforceable conduct and ethics rules that require justices to disclose gifts, refrain from public political activity, and recuse themselves from cases in which they or their spouses have financial or other conflicts of interest. And again, you can learn more about

Starting point is 00:14:17 the current code of conduct for the justices in that July 17th episode and sort of compare and contrast as to how Biden's proposal differs. That concludes the recap portion of this episode. We can now move on to today's stories, which I really only have one main story for you and then a few quick hitters. So the main story is that it wasn't a good day for the stock market today. At the markets open, the Dow dropped 2.1%, the Nasdaq dropped 2.7%, and the S&P 500 dropped 2.3%. Now to put these numbers into perspective, the worst United States stock market crash in history was on October 19th, 1987, a day called Black Monday. And on that day, the Dow fell 22.6% in a single session. The S&P dropped 20.3%. A 2% drop like we're seeing today is bad. It's not good. Obviously,

Starting point is 00:15:07 though, nowhere near what happened in 1987. The second worst decline in history was in March 2020. The Dow dropped 12.9% and the S&P 500 dropped 12%. So these events in history can help you gain perspective on what we're seeing today. But why? What is the reason for the sell-off today? Well, for one, investors are worried that the state of the economy is worse than previously thought. And this is because Friday's job report showed that employers only hired 114,000 workers in July, which was well below economists' expectations of 185,000, and the unemployment rate rose to 4.5%, which is the highest level since October 2021 and nearly a percentage point higher than it was at the start of the year. On the coattails of these reports, Goldman Sachs economists just yesterday raised the

Starting point is 00:15:57 possibility of a U.S. recession in the next year from 15% to 25%. Now, playing into the sphere of recession is something called the SOM rule, created by an American economist named Claudia Somm who worked at the Fed for years. Under the SOM rule, whenever the unemployment rate as a three-month average rises 0.5 percentage points from the lowest point in the last 12 months, the economy is in the early signs of a recession. Now, also worth noting alongside that rule is that many economists also say that given the pandemic and the after effects of the pandemic, these rules such as the SOM rule are essentially useless. However, it's still something that people and economists are still going to consider and take into account.

Starting point is 00:16:46 But outside of the economy, another reason for today's sell-off is fear from investors that tech stocks may have been driven too high this year on hopes that AI would create this new wave of profitable technologies. Investors are now realizing that AI profits are much more distant than originally thought. But it's worth noting that it's not just the United States dealing with a market sell-off. This is actually more of a global sell-off, however, centered around United States recession fears. So Japan's Nikkei 225 fell 12% today. That is its worst day since the 1987 Black Monday crash. And Europe's stock 600 was off by 2.4%. The final number I'll give you is something called the SIBO volatility index or the VIX, which is used to measure the level of fear in the market. That was trading at a high of 55 today. That is the highest level since the early days of the pandemic in 2020. And outside of the pandemic,

Starting point is 00:17:44 the last time it hit that level was the Great Recession of 2008. By noon today, the VIX was down to 34, definitely still high, but not as high as 55. So what does all of this mean? Let me sum it up for you without all of these numbers, because if you're not well-versed in the market, these numbers can be a bit confusing. What's happening is investors in the market are worried that the U.S. economy is slowing down faster than they expected. If the economy slows down too much too fast, it enters a recession. So these investors are getting out of risky investments. That includes not only the stock market, but also cryptocurrencies. Instead, when investors are fearful like this, they turn to less risky investments like treasury bills and bonds. But when investors sell off their

Starting point is 00:18:31 stocks, it causes the market to drop and therefore negatively impacts those investing in the market that are holding out and not selling off. The reason it matters to you as a presumed non-investor is because when the stock market drops like this, it can in turn affect consumer spending, which accounts for two-thirds of the economy, and can therefore push us closer to a possible recession. It's also an indicator, not in a one-day span, but over time, an indicator of the economy. One good thing that may come from today's market action is that the Fed will likely now make its first interest rate cut next month and maybe even a bigger rate cut than anticipated.

Starting point is 00:19:11 The Fed has been holding rate study for the last year, not making any cuts. So the reason the Fed may now decide to make a cut is because a cut would get people buying again. It would put money back into the economy with better rates on things like mortgages, car loans, credit cards, etc. This in turn would hopefully allow economic conditions to improve. We could even see possibly, maybe, it's not super likely, but maybe an emergency rate cut before the Fed's September meeting. The last time the Fed issued an emergency cut was in the early days of the pandemic, and before that,

Starting point is 00:19:45 2008, and 2001, after 9-11. So it's definitely a rare move, only implemented in dire circumstances, but that option is on the table as well. So that is what you needed to know about what went on with the stock market today. Let's finish with a few quick hitters from today, the first being that Elon Musk has refiled his lawsuit against OpenAI and its CEO, Sam Altman. Musk, who was once an OpenAI board member with Altman, originally filed a lawsuit in February accusing the company of putting profits and commercial interests ahead of the public good. OpenAI sought to get the lawsuit dismissed, and just one day before the June hearing, on the request for dismissal, Musk withdrew the lawsuit dismissed. And just one day before the June hearing, on the request for

Starting point is 00:20:25 dismissal, Musk withdrew the lawsuit without explanation. This morning, Musk refiled that lawsuit, making the same arguments. The difference is that this morning's lawsuit was filed in federal court, whereas the February lawsuit was filed in state court. And staying on the topic of Elon Musk, but switching gears a little bit, five states have written Musk a letter asking him to fix X's AI chatbot named Grok. In the letter dated today, the secretaries of state for Minnesota, Pennsylvania, Michigan, Washington, and New Mexico claim that Grok incorrectly told X users shortly after Biden dropped out of the race that the ballot deadlines in nine states had passed. Those states were Alabama, Indiana, Michigan, Minnesota, Washington, New Mexico, Ohio, Pennsylvania, and Texas.

Starting point is 00:21:11 That wasn't true. GROK is a feature only currently available to ex-Premium and Premium Plus users, but this goes without saying, and as I always say, don't trust everything you read on the internet, and always double- check your information. And finally, according to the National Transportation Safety Board, which is currently investigating the January Alaska Airlines plane incident, a number of Boeing and Spirit Aerosystems executives will testify at a two-day congressional hearing starting tomorrow. The hearing will center around the blowout of the plane's door plug, but will also cover issues involving 737 manufacturing and inspections,

Starting point is 00:21:50 safety and quality management, and FAA oversight. That is what I have for you today. Thank you so much for being here. It feels incredibly good to be back, and I will be back with you tomorrow for an all-new episode of Unbiased.

UNBIASED - August 5, 2024: Today's Stock Market Drop, Trump's FEC Complaint, Project 2025 Director Steps Down, Harris Secures Necessary Votes, 9/11 Terrorists' Plea Deal Revoked, and More.

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