The familiar phrase “We the People” no longer means what it used to. The majority of Americans do not understand how the law is made and assume Congress proposes all legislation and therefore makes law. That is not the case. The president can refuse to enforce any law or impose it arbitrarily under the claim of discretion, and the Judiciary is responsible for altering law every day. Judges create the majority of laws to impress their particular brand of bias in a very undemocratic manner by using their interpretation of the words written by Congress in any Act or the Constitution. So all you need is a judge to twist the words around to make new law, which is why fights erupt over appointing Supreme Court justices who can become legal unelected dictators.

Money laundering was intended for the war on drugs. Today, hiding your money from the government, which includes placing cash in a safe deposit facility, is money laundering thanks to judicial law. Judges twist the same statutes around so that the words mean whatever they want it to mean. It is your burden to appeal and prove that the judge is wrong. Good luck. Cops protect cops, and so do judges.

On March 18, 2008, the Supreme Court heard the case of District of Columbia v. Heller (07-290), regarding the Second Amendment, which reads:

“A well-regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.”

The ACLU argued in that the term “We the People” should have its definition changed to mean “We the State Militia.” Changing that definition can effectively prevent individuals from having the right to own a gun. The Constitution would become complete trash if the term was found to have different meanings, but lawyers have become wordsmiths and use this ability to create laws.

Supreme Court Cases

The Supreme Court overlooked this question of who “the people” are for 200 years (1789–1989). Since then, the Supreme Court has twice commented on the meaning of this phrase, but these two cases are in somewhat conflict with each other.

In United States v. Verdugo-Urquidez, the court said that “the people” refers to those “persons who are part of a national community,” or who have “substantial connections” to the United States. In delivering this interpretation, they were consistent with the problem that faced the question of jurisdiction at the founding of the nation.

If you were English and committed a crime in France, the French king could not punish you for you were the property or “subject” of the English king. He would send you back in chains to England with an explanation of what you did. Since the American Revolution was against the monarchy, why would they comply with international law and send someone back to England for a crime committed in America to be punished by a king they did not recognize? The American Constitution established territorial jurisdiction for the first time. So someone convicted of a crime would be punished in America for his crime in America. Now the problem became a question of rights under the Constitution. Did a foreign citizen have a right to a fair trial? The definition had to extend to any person tried in America regardless of their citizenship.

The touchstone in United States v. Verdugo-Urquidez was correct, constitutionally speaking, for it extended to one’s connection to this country in compliance with territorial jurisdiction. The court declared that this definition of “the people” applied consistently throughout the Bill of Rights and did not limit rights to citizens.

In U.S. v. Verdugo-Urquidez (494 U.S. 247, 288, 1990), Justice William J. Brennan Jr. argued: “The term ‘the people’ is better understood as a rhetorical counterpoint ‘to the government’ … that rights that were reserved to ‘the people’ were to protect all those subject to ‘the government.’ …” He continued: “The Bill of Rights did not purport to ‘create’ rights. Rather, they designed the Bill of Rights to prohibit our government from infringing rights and liberties presumed to be pre-existing.”

In United States v. Verdugo-Urquidez, the Supreme Court wrote: “The people protected by the Fourth Amendment, and by the First and Second Amendments, and to whom rights and powers are reserved in the Ninth and Tenth Amendments, refers to a class of persons who are part of a national community… The Fourth Amendment’s drafting history shows that its purpose was to protect the people of the United States against arbitrary action by their own government.”

However, in District of Columbia v. Heller, 554 U.S. 570 (2008), the court approvingly quoted Verdugo-Urquidez’s definition and similarly suggested that the term “the people” had a consistent meaning throughout the Constitution. This must be correct or the Constitution becomes chaotic. Yet, Heller also said that the term “refers to all members of the political community,” which actually changes the definition.

Heller’s interpretation contains a confusing three-part analysis: (1) it approved of Verdugo-Urquidez’s interpretation; (2) it substituted “members of the political community” for “persons who are part of a national community”; and (3) it suggested that “the people” means the same thing throughout the Constitution.

Heller’s analysis has created a conflict that has largely gone unnoticed but is already changing law. Heller could now be viewed as changing the meaning of “the people” throughout the Bill of Rights by limiting “the people” to “members of the political community,” which might be interpreted to mean, inter alia, “eligible voters.” This interpretation could have a profound consequence for individuals who have been denied the right to vote and non-American citizens. In this manner, the entire principle of territorial jurisdiction can be overturned.

Heller’s interpretation is already being applied. The Fifth Circuit previously held, “Once aliens become subject to liability under United States law, they also have the right to benefit from [Fourth Amendment] protection.” (United States v. Cortes, 588 F.2d 106, 110 (5th Cir. 1979) (citing United States v. Cadena, 585 F.2d 1252, 1262 (5th Cir. 1978))

In a recent case, US v Armando Portillo-Munoz, it was ruled that a ranch hand who lived and worked in the United States for more than 18 months, paid rent, and helped to support a family, but who committed the misdemeanor of illegally crossing the border — is not part of “the people.”  Circuit Judge Dennis in his dissenting opinion warned, “The majority’s interpretation of the “the people” has far-reaching consequences.”

“We the People” no longer means what people have always assumed: “We the People.”

The Nikkei (cash) really hit the tiles today (-2.3%) having received confirmation of the delay to the Sales Tax and its two year reschedule. The JPY saw the flight to quality resulting in a 1% rally to hit a 108.50 high. 10yr JGB’s traded from -10bp to -11.5bp. As stated yesterday it will not be long before we start to hear from concerned ratings agencies, as government debt now exceeds 200% of GDP. We did see some safe-haven moves away from Japan entirely with stronger closes in both China and Hang Seng markets. In late US futures trading the Nikkei has regained 1% while HSI and China 300 rallied 0.5%.

Poor earlier Producer Prices (est. 0.1% actual was -0.3%) and it was no surprise to anyone that the ECB left rates unchanged and warned of BREXIT risks and an ever increasing view of slowing economy. Mr Draghi did try to put an upside spin on their outlook but maybe the volume was off as the markets failed to respond. On balance the comments were tame at best!
As expected we had no earth shattering move out of OPEC.

Ahead of tomorrows US NFP’s all is still to play for as stocks continue to climb all be it slowly. Todays broader ADP number was marginally off estimate (175k est whilst 173 was released) but the April revision was adjusted from 156k to 166k. All core indices closed in higher on the day with the NASDAQ recording a slightly better (+0.4%) beat over the S+P and DOW +0.2%. Tomorrows NFP estimates are for +164k (previous was +160k) and for the rate to decline marginally from 5% to 4.9%, participation rate expected at 64.8%. The numbers will certainly set the market tone for the week ahead but will also be monitored closely by the FED as they consider their month end possible move!

In bonds the US Treasury curve continues to flatten with 2/10 closing this evening at +91.5bp; with 10’s closing 1.80% (-4bp). in Europe German 10yr Bund closed 2bp lower at 0.11%; closing the spread at +169bp. Italy 10yr closed 1.37%, Greece 7.14% (+2bp), Turkey 9.58% (-8bp), Portugal 3.14% (+4bp) and UK Gilt at 1.34%(-3bp).

 

The Swiss village of Oberwil-Lieli voted not to accept any refugees whatsoever, preferring to pay a fine of around $300,000 to the federal government of Switzerland who agreed to accept 50,000 refugees. The people of Oberwil-Lieli said they would rather pay the fine than accept these people in their small village as it would risk destroying their lifestyle because “they wouldn’t fit in.” Of course, they are saying that town was motivated by racism, but Muslim is not a race. What the governments refuse to admit is that these are not refugees from Syria, but rather they are economic migrants from other countries. The politicians will NEVER admit they have made a serious mistake.

The G20 central bank and finance ministers met in Shanghai in April and cheered the rally in the markets after patting themselves on the back. They then issued their communication, effectively blaming the private sector for not paying enough taxes for them to squander. They issued their Financial Action Task Force on Money Laundering (FATF), which is really the directive to hunt down money globally for taxes.

The G20 always blames the private sector instead of government. Their working group meeting in Shanghai were absent of any understanding of how the world economy functions or that it was the free flow of money that revived the world economy after World War II. They have not been able to come up with any constructive proposals for reviving the global economy whatsoever. Instead, they complained that the recent market turmoil just doesn’t reflect their view of the “underlying fundamentals of the global economy.”

The price of oil has collapsed some 70% since June 2014, and has hurt emerging markets like Brazil, whose currency plummeted by 50%, and the Russian ruble which is down by 60%. Yet in their own communication, they promote more investment in “green” energy to reduce fossil fuel consumption while embracing the climate change agenda. Of course, they fail to see the conflict there.

The global economy is moving into another recession. To explain their own failure to ignite the economy, they pinned all the blame on psychological problems of the people. They do not understand that they are too incompetent to generate confidence. Additionally, they employ negative interest rates without realizing that they are wiping out pensions, life insurance companies, and accelerating unfunded pensions in government. Their solution? More taxes. They actually laid it out in the Finance Minister & Central Banker communication (April 14-15 Communiqué_ G20 Finance Ministers and Central Bank Governors Meeting):

“The G20 reiterates the high priority it attaches to financial transparency and effective implementation of the standards on transparency by all, in particular with regard to the beneficial ownership of legal persons and legal arrangements.  Improving the transparency of the beneficial ownership of legal persons and legal arrangements is vital to protect the integrity of the international financial system, and to prevent misuse of these entities and arrangements for corruption, tax evasion, terrorist financing and money laundering. 

The G20 reiterates that it is essential that all countries and jurisdictions fully implement the FATF standards on transparency and beneficial ownership of legal persons and legal arrangements and we express our determination to lead by example in this regard.   We particularly stress the importance of countries and jurisdictions improving the availability of beneficial ownership information to, and its international exchange between, competent authorities for the purposes of tackling tax evasion, terrorist financing and money laundering. We ask the FATF and the Global Forum on Transparency and Exchange of Information for Tax Purposes to make initial proposals by our October meeting on ways to improve the implementation of the international standards on transparency, including on the availability of beneficial ownership information, and its international exchange.”

 

The Dalai Lama is warning that Germany cannot become an Arab country. The Dalai Lama apparently said that “too many” refugees are seeking asylum in Europe. The pretend refugee crisis is really an economic migration, bordering on an invasion, which is not unlike the Mongol invasion under Attila the Hun (reigned 434-453 AD) some five intervals before of 309.6 years.

As rumored, Japan’s PM Mr. Abe announced today that the Sales Tax increase is to be delayed for the second time. This will very likely have an impact on Ratings Agencies who will be waiting more details in regards to any change on fiscal impacts and their possible reaction. As a result the JPY moved stronger – touching an intraday high of 109.04 as the Nikkei cash closed down 1.6%. In late US futures trading the Nikkei has lost an additional 0.65%. China PMI was almost unchanged but most of the day was speculating over the possible MSCI inclusion and the effects thereof. HSI drifted in quiet trading awaiting further confirmation of the trend.

BREXIT remains one of the top discussion points still in Europe and that is very unlikely to change until after the vote (June 23rd). From the open GBP was under pressure and that did not change for the rest of the day. Falling over 1% we saw a low of 1.4385 before a little bit of book-squaring at the end of the day took us back above 1.44. FTSE was off over 1% but managed to close just -0.65% lower. DAX and CAC also closed around that level. IBEX lost 1.3% as banks and miners suffered most of the pressure after Spain’s Manufacturing Sector slowed in May compared to April data – Banco Popolare and Banca Popolare di Milano were both down around 3.5% each.

After a very shaky start to the US market with stocks nearly 0.7% down the market managed a recovery which resulted in all indices closing higher on the day. The mood was helped mid-session when the ISM Manufacturing data released better than expected. ISM Manufacturing PMI was expected at 50.4 but was released at 51.3 whilst Prices Paid expected at 59.8 came in at 63.5. Still, we have lots more data tomorrow along with the ECB meeting as so there is plenty to play for.

US Bond Market resumed the curve flattening theme today with 2’s losing 2bp (last seen 0.9%) while 10yr notes closed 1.84%. That puts 2/10 at +94bp. In Germany the market is still happy Mr Draghi accepts most of its bonds and is actually searching around for more paper to deposit. 10yr Bund closed 0.135% closing the US/Bund spread at +170.5bp. Italy closed 1.38% (+3bp), Greece 7.12% (+3bp), Turkey 9.66% (+1bp), Portugal 3.09% (+6bp) and UK Gilt 10yr at 1.37% (-5bp).

Now we are beginning to see refugees taking off for England. Some are swimming across the channel while others are trying to make it in dinghies. Five others have been rescued sailing from France to Britain. If Britain stays in the EU, they will be fined 250,000 euros for rejecting each refugee. The channel is becoming the new Mediterranean.

Crooked Hillary, as she is starting be known as even behind the curtain, is really helping Trump because many Republicans who did not like Trump see her as just outright evil. Hillary is now falling behind Trump in national opinion polls. She is so out-of-touch that her age group may want to see a woman in the White House, but the under-40 women make no distinction as that being somehow a significant qualification any more than being black defined Obama. Falling behind Trump is breaching a very critical, symbolic threshold that may pick up momentum as our model has been projecting.

Then came a damning report by OIG (Office of Inspector General). Not only did this demonstrate that staff questioned Hillary about the legality of her private server, but she told them to shut up and stop asking questions. The OIG report contradicted her claims, showing she lied once again, as she had been allowed to use a private email server for official business while serving as the nation’s chief diplomat. I found directives issued directly to her to stop such activity, and then upon leaving office the Obama administration introduced a new law to make sure nobody plays this game ever again. Once more, things did not conform to her statements. She lies and she always gets caught.

Clinton allies desperately try to argue that the report also shows that other former secretaries of state pulled the same tricks. I suppose if your neighbor kills their spouse it is ok for you to do the same. However, none of those former officials started foundations to take money from foreign governments nor are they running for president — just Hillary. Yes, the FBI is still investigating whether she broke federal law. I, quite frankly, do not know what the problem is. The plain language says she did it and cannot hold any office in government. At a press conference in Japan, Barack Obama outright refused to take any question from a journalist asking whether the email scandal undermined Clinton’s “trustworthiness.” She sold influence, and why would foreign governments donate heaps of money to the Clinton Foundation anyway with no track record?

The Democratic Party did not have 17 candidates like the Republicans. Everyone assumed Hillary was applying for a coronation, not a candidate position. The problem they now have is simple; if Hillary is going down in flames, that means Bernie Sanders is the only candidate standing. What will the Democrats do? Talk is circulating about a drafting Joe Biden. What will that do to Bernie supporters?

To make matters far worse, the California primary has the largest number of delegates up for grabs on June 7. Bernie is neck and neck with Hillary in the polls proving this is not a coronation. Hillary refused to debate Sander on TV in California because she cannot answer his questions. Where everyone assumed Trump would be the divider, it now looks like it is Hillary.

The news keeps moving from just outright bad to worse. A federal investigation into campaign contributions of her long-time confidant and the governor of Virginia, Terry McAuliffe, has been unleashed. The FBI is now investigating both the candidate and an elected official with perhaps the closest ties to Hillary. So far, May has been a terrible month for Hillary. On top of all of this, the Democratic Convention looks like it could turn out to be far more colorful than the Republican Convention since the polls show 86% of Republicans demand the party supports Trump.

The “Never Trump” effort has died a cruel death. Even the staged protests are now dying off. Suddenly, the cry that Trump is a racist doesn’t stick since Islam is a religion and not a race. Bernie has yet to surrender. He vowed to go all the way because Hillary has so much baggage that it is unbelievable she is still standing for any office, be it dog-catcher or president. With Hillary at the head of the Democratic ticket, Trump may be able to transform previously safe Democratic territory in the rust belt, Pennsylvania, Michigan and Ohio, given his position on trade. Bernie is going all the way because he know she is “crooked Hillary” and could be taken away in chains.

How Hillary handles Bernie is also critical for the youth who support him do not see themselves as Democrats at all. Politics is shifting away from “party” politics and is embarking on independence.

Obama took a swipe at Hillary at the Correspondent’s Dinner: “You’ve got to admit it though, Hillary trying to appeal to young voters is a little bit like your relative who just signed up for Facebook. ‘Dear America, did you get my poke? Is it appearing on your wall? I’m not sure I’m using this right. Love, Aunt Hillary.’ It’s not entirely persuasive.” Obama then took a shot at her Goldman Sachs’ speeches: “Here we are, my eighth and final appearance at this unique event and I am excited. If this material works well I’m going to use it at Goldman Sachs next year. Earn me some serious Tubmans.”

Hillary has no agenda. She is just regurgitating the same socialist talking points that have been said by every Democratic candidate. She claims she is the “only one” with a plan to deal with Wall Street, but Goldman Sachs showers her with money and says Trump and Bernie are dangerous — but for who exactly? Other Democrats assumed Hillary would release her transcripts of speeches at Goldman Sachs. Her refusal to release the transcript means only one thing — they are damning. If there was nothing there but the standard speech nonsense, then the transcripts would have been released by now. Sources have all said she sounded like one of the managing directors at Goldman. She most likely defended them with something like bankers are not villains. She even was there with the shovel breaking ground for the new Goldman Sachs tower. Goldman Sachs & Hillary Clinton are a marriage made in Washington. Hillary & Goldman Sachs have had a 20+ year relationship.

Clinton keeps trying to define her own news agenda by dodging the criticism. Hillary has clearly distorted the degree to which the rules have changed since previous secretaries of state were in office. The press is not doing their job because they want Hillary to win. On August 24, 2012, Obama signed a directive to the heads of the executive departments, which would have included Hillary (Directive to Hillary 2012 m-12-18). Hillary was Secretary of State between 2009 and 2013. Therefore, Obama knew she had a private email server or else there would have been no reason to issue this directive, which she IGNORED. Then, after Hillary left, Congress passed the bipartisan act, which made it very specific that ALL emails are the property of the government and “empowers the National Archives to safeguard original and classified records from unauthorized removal.” Hillary never turned them over under subpoena since that did not include her private server during the Benghazi affair. Her defense was always that Republicans were on a witch-hunt, not that she should have produced them from the start.

Despite everything else, this all suggests that it remains the FBI, rather than Sanders or Trump, who could really rain on her parade. She has been slick at every possible turn. One must wonder what national assets or influence she will sell to the highest bidder if she were president given her track record as secretary of state. The Clinton Foundation is a real joke and is becoming more of a slush fun.

Now we have Bill just being Bill, but handing out $2 million from the Clinton Foundation to a woman who the Secret Service dubbed his “Energizer,” Julie Tauber McMahon. The NY Post has reported the story how the buzz has been all about Julie McMahon who visits Bill when Hillary Clinton isn’t around. Look, she is very attractive and he and Hillary have long been said to be just a political marriage. But this is not about a blue dress. Bill gave her $2 million from the Clinton Foundation to her Energy Pioneer Solutions. Just what kind of a first lady would Bill Clinton make? This could be more scandalous than Trump. Would this new role allow Bill to hit on the wives of world leaders? The leader of the free world will never be the same.

Well the mess just keeps getting messier. There is no question Hillary would be indicted in the real world under Racketeer Influenced and Corrupt Organizations Act (RICO) for accepting bribes and selling her influence. You have a direct link between her approving arms deals and foreign countries donating to her sham charity. They do not donate such money to any other private charities in the USA. Hillary represents everything that the people voting for Trump and Bernie have had enough of. Indeed, 2016 is going down in history when third party movements overthrow party politics. Trump has remade the Republicans, forcing them to realize the people are angry with party politicians.

Our computer may be right again. Trump could win really big and this may be the biggest turnout in recent history since 1924.

According to our sources in Britain, it appears that the BREXIT camp should actually win if they allow a fair referendum, which is highly debatable. The Guardian has conducted a poll that, astonishingly, does not seem to be directed by the government. Their latest poll, unlike the Telegraph, puts the BREXIT camp at a slight advantage. The Guardian reported: “45% said they favoured leaving the EU, and 42% remaining, with 13% saying they did not know. Once the “don’t knows” were excluded, that left 52% in favour of Brexit, against 48% for remain.”

Our computer is projecting the probability of reach a minimum of 65% voter turnout. So the Cameron-EU camp is going to have a lot of rigging and fake votes they will need to count as mail-ins to win. The likelihood of BREXIT winning against the EU-rigged game is not easy. Let’s face reality. Based on the government’s track record during any democratic process in Europe, if the government cannot rig the outcome, they will just flat out declare voting illegal to start with.