Media, Misconduct, Money

  • Microaggression much? Toobin’s “stupid mistake” 
  • Media elites collude with Wall Street insiders
  • Goldman Sachs ticks all the wrong boxes
  • Obama and Trump: Too big to jail vampire squid
  • Americans crying “uncle” 
  • TSA hits a pandemic milestone
  • A reader from “flyover country” ponders federal bankruptcy… A 1944 callback… And more!

“Was it a terrible decision? Yes, but I’m not sure it should end his career.”

Fair warning, dear reader: The main topic of today’s 5 broaches a most unsavory incident — something that’s never before turned up in the 13 and half year history of this e-letter.

But there’s a financial angle — one that you can use to your advantage in your own portfolio. Read on…

The “terrible decision” was made by the lawyer-pundit Jeffrey Toobin.

As you’re likely heard by now, Toobin is on leave from his lucrative gig at CNN… and has been suspended from his other lucrative gig at The New Yorker… after Vice reported that Toobin was caught “masturbating on a Zoom video chat between members of The New Yorker and WNYC radio last week.”

Sure enough, “Toobin” already has its own entry as a verb at the Urban Dictionary site. Meanwhile…

Toobin

Toobin owns up only to “an embarrassingly stupid mistake, believing I was off-camera.” Evidently, the thought that he should apologize for, you know, offending his colleagues was beyond the pale.

But it’s not necessarily a career-killer, in the estimation of Evan Nierman — founder of a crisis management and PR firm called Red Banyan. It’s his quote to the San Jose Mercury News with which we started today’s episode. From where Nierman sits, “Toobining” — heh — isn’t an automatic disqualifier from polite company.

Relevant background: While Toobin made his bones as a lawyer, he is first and foremost an elite media creature.

His dad, Jerome, was a founding producer of the MacNeil/Lehrer Report, which lives on today as the PBS NewsHour. His mom, Marlene Sanders, blazed trails for women on-air in network news — first at ABC, later at CBS.

A product of Harvard Law, Toobin spent a mere seven years as a law clerk and federal prosecutor before deciding to cash in as a “legal analyst” and author. Given his elite pedigree, The New Yorker picked him up in 1993. The O.J. Simpson case quickly raised his profile. TV punditry soon followed, starting at ABC and then at CNN.

How big a fortune has he amassed? A handful of garbage websites peg his net worth at $10 million. But those are just wild guesses that aim to generate clicks. Over the years, Toobin has generally been more discreet with his finances than with his nether regions.

Still, for well over two decades, his literary agent has been one of the heaviest hitters — Esther Newberg from ICM Partners. Her clients over the years have run the gamut from Tom Hanks to Chris Rock to Caroline Kennedy. That’s a financial force to be reckoned with.

Meanwhile, his fees to give a speech run between $25,000–30,000. Not nearly as good as the $70,000 that we’ve documented Bob Woodward collecting — but more than respectable.

Whatever the exact amount of Toobin’s fortune, it’s substantial.

It was 15 months ago when we began to expose how media elites and other connected insiders might be colluding with finance types on lucrative trades in the markets.

We also obtained access to a powerful data tool detecting these trades… and developed a system so you could ride the insiders’ coattails to big gains.

The results for our readers following this system have exceeded our hopes. Going back the last six months, following these trade recommendations delivered 31 winners out of 39 trades total.

And the average gain (including the losers) was 43.7% in 46 days.

Think about what you could do with the money generated by results like those — basically one percent per day. (OK, not compounded, but still!)

Now think about the fact that readers just like you have done it. “If you can beat the media,” our slogan went, “you can beat the markets.”

Since this past summer, The Profit Wire has become our most popular options trading advisory.

Too popular, we’re afraid.

We don’t want too many readers piling into the same trade recommendation at once. That creates distortions in the market that ultimately could lose readers money. Obviously that’s not what we want.

So we’re closing off access to The Profit Wire as of next Monday, until further notice. I’m sure you’ve seen this message before — you’re probably sick of seeing my mug behind that table by now — but it’s coming offline, forever, in only five more days. Here’s one of your last chances to get in before the doors close next Monday.

Oh, but we’re not done with the culture of elite impunity today. Nomi Prins, the ex-investment banker in our ranks, directs our attention to the following…

Nomi Prins

For sure. Goldman Sachs got in deep a few years ago with a corrupt government investment fund in Malaysia called 1MDB. Goldman overlooked obvious evidence of fraud because the fees were too juicy to pass up.

“All in, the 1MDB scandal will cost the firm more than $5 billion to resolve, about two-thirds of a year’s profits,” says this morning’s Wall Street Journal. “But Goldman will avoid the harshest sanctions that prosecutors had sought and has already accounted for the penalties in its financial reports to shareholders. Its shares rose 1.1% Tuesday.”

Specifically, the vampire squid will skate on all criminal penalties. “Too big to jail” is official policy under both Obama and Trump.

Per earlier reporting by Bloomberg, Attorney General William Barr personally intervened in the case. Before becoming AG last year, Barr was paid nearly $1.2 million in 2018 for serving “Of Counsel” to the white-shoe law firm Kirkland & Ellis — which happened to represent Goldman in the 1MDB affair.

As we noted last month, Kirkland & Ellis also served as outside counsel to JPMorgan Chase in its precious-metals manipulation case — which ended with a $920 million settlement and felony pleas to just two counts of wire fraud, despite tens of thousands of unlawful transactions documented by prosecutors.

At the risk of repeating ourselves, “too big to jail” is bipartisan policy.

Said Obama’s first AG Eric Holder in 2013: “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.”

Holder worked for a different white-shoe law firm, Covington & Burling, both before and after his time as AG. Its clients have included most of the large banks Holder refused to prosecute.

Can you just imagine the conversations in Washington the last few weeks? “How can we pursue a criminal case against Goldman? The economy’s a wreck already and now we’re going to crash the financial system?”

What can we say, other than burn it all down? Figuratively, of course…

To the markets, which are treading water amid the spellbinding “stimulus” negotiations between the White House and Congress.

At last check, all the major indexes have added to yesterday’s gains, the S&P 500 oscillating around 3,450. The precious metals are perking up — gold to $1,929 and silver to $25.17.

The standout earnings report is from Netflix — down nearly 6.5% after delivering a “miss” on subscriber growth, the only metric Wall Street analysts seem to pay attention to. But for whatever it’s worth, profits fell short of expectations, too.

For the record: Seven months into the lockdowns, the numbers show people are just plain giving up looking for work.

The Labor Department released state-by-state job figures yesterday. Of the 30 states where unemployment fell last month… the size of the labor force shrank in more than half of them.

A shrinking labor force means fewer people working or looking for work. That’s one reason the official unemployment rate has fallen from a peak of 14.7% in April to 7.9% in September.

Economists don’t see any obvious reason. School closings keeping moms at home? California has many schools shut down and Florida does not, but labor force participation is flat in both states. Nor does there seem to be any evidence of more people looking for work in states where job searches are a condition for collecting extended unemployment benefits.

Yet another 2020 head-scratcher…

Meanwhile, one metric of “reopening” just hit a milestone.

On Sunday, the TSA screened 1 million passengers at airport checkpoints. That hadn’t happened since March 17.

Million Milestone

But passenger traffic remains far below the pre-pandemic normal…

Which brings us to a reader email with the subject line “Notes from the flyover country”…

“A couple of comments. We live in a very rural area. We are 90 miles from any city with over 15,000 population. In the last few weeks the number of COVID cases has been increasing rapidly. There are no ICU beds closer than the aforementioned larger cities. I know several people who have been heliflighted from the small, rural hospitals to receive care. Up until the COVID increase the economy of our area seemed to be doing well.

“The first crack I noticed was when my wife came back from a shopping trip to Walmart and said there were some items out of stock and others of which she got the last one on the shelf. I don't know if they just hadn't restocked the shelves or if they were actually running out of some items. The next shopping trip will tell.

“The other thing I have been mulling over is whether the U.S. can be bankrupt. Since the federal government is the largest landowner in the country and owns who knows how many buildings along with all the desks, chairs, filing cabinets, computers, etc., and vehicles and military equipment, they can't be bankrupt in the normal sense. There are more than enough assets to cover the liabilities even though many of the assets could not be readily converted.

“I agree the printing of more and more dollars can (and will) only end poorly. In the interim I will hold onto the farmland we own free and clear while looking for other opportunities for our farm to grow.”

The 5: We too thought for a long time that federal asset sales would be more than enough to retire the national debt. That was one of the major campaign planks of the late Harry Browne — the newsletter guru who ran for president on the Libertarian ticket in 1996 and 2000.

But according to the most recent Financial Report of the United States Government, issued each year by the Treasury Department, assets total $3.99 trillion while liabilities total $26.94 trillion.

Gulp. And that doesn’t account for fiscal 2020’s spend-a-palooza. We’ll get those numbers late this year or early next.

“After reading Jim Rickards’ comments Monday regarding the U.S. debt-to-GDP ratio exceeding 100%, I wondered if there is not another way out of the debt death spiral.

“Recently I have read and listened to information suggesting a global reset pushed by the World Economic Forum possibly involving a debt jubilee and digital currency. I think your publication may have mentioned this as well. [We did.] The IMF statement days ago suggesting a new Bretton Woods renegotiation seems to validate this premise.

“I appreciate the work your publishers do in trying to bring clarity to these financial times during such a polarized political landscape.”

The 5: You’re correct. Last week, IMF chief Kristalina Georgieva — a Bulgarian who took over a year ago from Christine Lagarde — spoke of a “new Bretton Woods moment.” (Bretton Woods, New Hampshire, is where global powers agreed in 1944 to make the dollar the global reserve currency.)

She was short on specifics but long on world-improving ambitions. “We will have a chance to address some persistent problems — low productivity, slow growth, high inequalities, a looming climate crisis. We can do better than build back the pre-pandemic world – we can build forward to a world that is more resilient, sustainable and inclusive.”

Exactly how the pretty words translate to the way you and I live our lives day to day she left unsaid. But we’ll find out soon enough, right?

Best regards,

David Gonigam

Dave Gonigam
The 5 Min. Forecast

P.S. We took our most recent winner in The Profit Wire two days ago — a clean 100% on Tapestry, the maker of luxury brands like Coach and Kate Spade.

Took a little longer than usual to pay off — almost four months — but we haven’t heard any complaints. As noted above, the typical trade pays off in 46 days — just over six weeks.

Again, we need to move quickly to limit the ranks of Profit Wire subscribers and stay under a strict membership cap. We bumped up against that cap a few weeks ago, only to find we were able to keep the doors open just a little while longer.

But now really is the endpoint. The doors close to new members next Monday.

This won’t be one of those situations where the sales promotion goes offline for a few days only to surface again. No, this really is it. This message really will disappear after next Monday — forever. Please, check it out while you still can.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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