Rabo: This Seems To Be A Clear Victory For The First Amendment And Unfettered Online Freedom Of Speech

Rabo: This Seems To Be A Clear Victory For The First Amendment And Unfettered Online Freedom Of Speech

Tyler Durden

Fri, 05/29/2020 – 10:50

Submitted by Michael Every of Rabobank

Pres Pressing ‘Press’; And Pres Presser

US President Trump has just signed an executive order which forces federal agencies to reinterpret section 230(c) of the Communications Decency Act, which until now has allowed YouTube, Twitter, Instagram, and Facebook to say they are platforms rather than publishers, and hence not hold any liability for content they hold. The threat is that if these US ‘platforms’ decide to censor certain opinions, or to demonetise them to the same effect, or to allow political bias to come into play then they will now be seen as breaking section 230. This would involve them being forced to become publishers and taking liability for ALL of their online content even if user-created – which would be vastly expensive, if not impossible.

I will leave the inevitable wrangling to the inevitable expensive lawyers, who must be rolling up their sleeves; to the expensive software engineers, who will have to try to work out how the algorithms that determine what a user sees and doesn’t isn’t political bias; and to the expensive politicians, where the initial reaction from the Democrats appears to be that social media controls need to be tightened rather than loosened. Nonetheless, this does seem to be a clear victory for the US first amendment and unfettered online freedom of speech – although of course the quid pro quo is that the social consequences of that freedom are likely to get even shriller.

So that’s the Pres pressing the ‘press’. Today’s other huge market focus is the Pres presser. Trump will be holding a press conference to announce a new set of US policies towards China following the inevitable passage of the agreement to impose a national security law at the National People’s Congress in Beijing yesterday. What will he say?

  • We have the optimist camp: Trump won’t want to rock markets. Trump won’t want to rattle big business. Trump needs Hong Kong. Trump needs the Chinese market. Trump is all talk and no action. Trump wants his phase one trade deal. Trump doesn’t need hassle before the election. Trump can’t win if he takes on China. Trump needs Chinese capital inflows.
  • Then we have the pessimist/realist camp: Trump needs a new narrative vs. China domestically, where he is being called soft on Beijing. Trump’s phase one trade deal is finished (China is buying Brazilian soy) and phase two was never going to happen. Trump needs to send a clear message to Beijing over the red lines it has crossed. Trump won’t look good if he has the whole world watching him and produces a small water pistol and not a bazooka. Trump has finally got allies like the UK and Australia moving in his direction on China (the UK is talking about extending visa rights for hundreds of thousands of Hong Kongers), with even the EU seemingly moving against China, so he can’t afford to go soft for fear that they will falter. Trump’s ideological weather vanes like Steve Bannon are calling for aggressive actions vs. China as a si vis pacem, para bellum. Trump doesn’t really care what US businesses think about China because he wants them to focus on the US market. Trump can bail out US farmers now that federal money seems to be no object. Trump has the Fed behind him to prop up markets anyway.

Surely there must be a healthy risk (>50%?) that today will see significant US action vs. China in the form of sanctions beyond merely not allowing key members of the Hong Kong government to vacation in Hawaii or California from now on. If this is not the case, why hold a press conference: wouldn’t it be easier to slip a token measure out with a simple press release?

The most optimistic outcome must be Trump signs the recently-passed Uyghur Human Rights Policy Act imposing sanctions on some Chinese officials and entities, but then does not act on Hong Kong. The more realist case is Trump signs that Uyghur Act and revokes Hong Kong’s favoured status, and imposes separate sanctions on China over that issue. The most pessimistic case is if Trump also mentions the China-India border clash and takes India’s side and/or if he brings up the Chinese red line of Taiwan.

Yet as we all wait let me add that talking of algorithms and political bias, when I typed “Trump China press conference” into one search engine this morning (which rhymes with sing), I got no news of today’s event at all, just a summary of weeks’ old events. Luckily another search engine was able to provide me with news of what is happening today and what it had already seen happen in late US trading yesterday – stocks selling off.

Meanwhile, yesterday saw an exclusive report from MNI on the CNY, the headline of which was “PBOC To Permit Broader Yuan Band, 7.2 Key Level”, the sub-headline was “The PBOC Will Permit A Wider Band, But Will Act Against Volatility, Sources Say” and the substantive take-aways were that: the PBOC still has no wish for one-way CNY trading; it expects more volatility; it will ensure both by a willingness to raise rates for CNH and/or intervene in CNY with counter-cyclical fixing again; 7.20 is now the short-term line in sand; they fear capital flight(!) and that a weaker CNY would prompt it to occur; weaker CNY is not needed to boost exports at a time when there is simply no demand – and Beijing is seen subsidising exports anyway(!); and that CNY could trade as low as 7.40 this year.

That is a huge step from a central bank that was recently saying 6.90 was the line in the sand; then 7.0; then 7.10; now 7.20. In short, CNY is going lower. Much lower. The PBOC just wants to try to control the descent and avoid markets pushing it too far too fast.

Yet that was before Trump announced his press conference for today. More ‘press’ ahead.


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