No Holds Barred (RESTRICT Act)

  • “This bill isn’t about banning TikTok”
  • De-tangling the RESTRICT Act of 2023
  • A new and improved Patriot Act (Banning VPNs?)
  • Greg Guenthner: The surprisingly selective tech snapback
  • When the gubment says “Jump”… “Free and open communication”: Priceless… “Pink like Floyd”… And more!

“This bill isn’t about banning TikTok, it is never about what they say it is,” warns Fox News host (and China hawk!) Tucker Carlson.

After Dave deftly defended TikTok yesterday, it’s my task today to (partly) untangle the Gordian knot that is the RESTRICT Act of 2023, sponsored by Sen. Mark Warner (D-VA) — which *wink wink* never names TikTok or its parent company, ByteDance.

The bill’s acronym? Stands for “Restricting the Emergence of Security Threats that Risk Information and Communications Technology.” In typical fed fashion, that’s about as clear as dishwater…

This might not make it any less opaque, but here goes. According to an enthusiastic White House briefing on March 7: “This [bipartisan] legislation would empower the United States government to prevent certain foreign governments from exploiting technology services operating in the United States in a way that poses risks to Americans’ sensitive data and our national security.”

Critics of the bill, however, observe its similarity to a civil liberties despoiler…

greg tweet

Just as the Patriot Act shredded American freedoms — arguably, more than any terrorist could — the RESTRICT Act could swiftly recoil on everyday citizens.

“[It] allows the director of national intelligence and secretary of commerce the authority to universally designate new ‘foreign adversaries’ without notifying congress and a 15-day window to notify the president. It also requires a joint resolution of Congress to overturn,” the Libertarian Party Mises Caucus (LPMC) says.

[Sidebar: The director of national intelligence is a presidential appointee, confirmed by the U.S. Senate; the secretary of commerce is a White House Cabinet appointee, also confirmed by Senate majority. Respectively, Avril Haines and big stick-wielding Gina Raimondo hold these federal-level positions in 2023.]

“‘Foreign individuals’ can now also be U.S. citizens that are deemed a national security threat,” the Mises Caucus says. “Once designated, the bill grants authority to enforce any action deemed necessary to mitigate the threat, with no due process and few limits on punishments.

“So what happens if you are designated a national security threat? What can they access… to confirm it? Everything.”


Without due process, the feds could mine your or my digital data, everything from “payment applications” (we see you, Canadian truckers) to “quantum encryption” (i.e., cryptocurrency).

At a granular level, the bill might even be used to crack down on efforts to protect digital privacy…

The “insanely far-reaching” legislation could have “a huge range of deleterious effects,” says Elizabeth Nolan Brown at Reason, including criminalizing the use of VPNs.

“VPN stands for virtual private network,” she says. “Using a VPN with your computer, phone or another internet-enabled device can do things like mask your IP address and encrypt your internet connection.

“It’s a great way to get around… forms of internet censorship. For this reason, VPNs are popular in countries that exercise authoritarian control over what their citizens can access online.”

According to TrueList this year, there are 1.48 billion VPN users worldwide; Indonesia, India, Saudi Arabia, Malaysia and UAE round out the top five VPN usage per country. (“Authoritarian”? You get the idea.)

Ms. Nolan Brown admits: “Warner’s office has said his bill wouldn’t [criminalize VPNs].” However: “The commerce secretary would be authorized to take steps to address risks posed by ‘any covered transaction by any person,’ right? So what counts as a covered transaction?” Say, a citizen using a VPN to access a banned app?

“Hence anyone using a VPN to access TikTok would be in trouble.” And per the RESTRICT Act: “subject to up to $1 million in fines, 20 years in prison or both.

“We’ve seen many times the way federal laws are sold as attacks on big baddies like terrorists and drug kingpins yet wind up used to attack people engaged in much more minor activities,” Nolan Brown concludes.

Tucker Carlson concurs: “We’ve seen this before from the national security state again and again,” he says. “This is not an effort to push back against China, it is part of a strategy to make America much more like China, with the government in charge of what you read and see and with terrifying punitive powers at their fingertips.”

And at last tally, 25 U.S. senators — including 13 Republicans, 11 Democrats and one independent — have now co-sponsored the RESTRICT Act.

Sen. Rand Paul (R-KY) says: “These censors might want to [consider] that China’s government already bans TikTok… Do we really want to emulate China’s speech bans?”

Paul quotes Drs. Milton L Mueller and Karim Farhat of Georgia Institute of Technology: “If nationalistic fears about Chinese influence operations lead to a departure from American constitutional principles supporting free and open political discourse, we will have succeeded in undermining our system of government more effectively than any Chinese propaganda could do.”

Put another way, we’re now on the brink of becoming more China… than China.

On that minor key, we turn to the market… where the three major stock indexes are in the green today. The techie Nasdaq’s in the lead, up 0.35% to 11,965; at the same time, the S&P 500 Index is up 0.20% to 4,035 while the Dow’s gained about 0.10% to 32,730.

Checking on the commodities complex, crude’s up 1.30% to $73.92 for a barrel of West Texas Intermediate. Precious metals? Gold’s up 0.70%, just $2 under $2,000 per ounce; silver, too, is gaining traction — up 2%, a hair under $24.

In contrast, crypto’s in the red: Bitcoin and Ethereum are currently both down 2% to $27,835 and $1,770 respectively.

We briefly mention jobless claims for the week ending March 25 were up 7,000 from the previous week; at 198,000, that’s slightly higher than the 195,000 the BLS wonks anticipated. And while it’s an abstraction, we note the final GDP reading for Q4 2022 shows the economy grew at a 2.6% annualized rate.

“While industrials, metals and value names were in focus late last year, tech snapbacks stole the show in January,” says Paradigm analyst and charthound Greg Guenthner. “No one was ready for it…”

Then? “Following a rocky February, semiconductors, the crypto-sphere and mega-cap tech (consisting of most of the former FANG-plus complex) were once again attracting eager buyers.

“Against all odds, market leadership remained firmly in the tech sector as regional banks imploded,” Greg adds. “Except for one little problem… Many of the tech-growth leadership during the frothiest period of the COVID Bubble wasn’t keeping pace.

“Despite continued outperformance from the greater tech sector, our favorite tech-growth proxy” — Cathie Wood’s ARK Innovation Fund (ARKK) — “hasn’t played nice since the January snapback rally

“Yes, ARKK managed to jump nearly 50% off its lows by early February,” says Greg. “But it hasn’t been able to recapture that momentum following the February pullback. In fact, ARKK continues to pull back…


“The ETF failed to hold a brief breakout back above its 200-day moving average last week, retreating to its choppy trading range,” he notes.

“Remember, semiconductors, Big Tech and crypto have all pushed to new year-to-date highs. ARKK has not.

“ARKK remains dangerously close to slipping back into a bigger downtrend if it fails to push higher out of its incredibly choppy March performance,” Greg says.

“Why does this matter?

  • “For starters, using ARKK as a ‘hype proxy’ for the tech market could tell us if there’s ample risk appetite for the more speculative tech-growth names — out of favor for the better part of the past two years
  • “Then there’s the matter of ARKK’s biggest holdings. TSLA is the fund’s top dog, which hasn’t exactly had an amazing March, despite a strong start to the year,” says Greg. “But it’s ARKK’s other major holdings (ZM, SQ, U, TDOC, etc.) that remain stuck in their respective downtrends. Many of these stocks are still lingering near their lows.

“That’s where we’re finding trouble,” he says. “Some of these stocks will eventually find a bottom and begin carving out bases. Others might get bought or go to zero. But we’re still early in this process.

“My concern here is that a bigger breakdown in these names might lead to corrective action that reverberates across the tech space — including the stocks that have contributed to a majority of the market’s gains so far this year.

“Despite the positive developments in the tech sector, many of these tech-growth ARKK components remain a complete mess,” Greg concludes. “If it is time for yet another tech-growth gut check, investors should pay close attention.

“The outcome could have major implications for stocks as the second quarter quickly approaches.”

Back to Dave’s TikTok-centric issue yesterday, a reader writes: “Might these hearings have something to do with TikTok being the only major social media platform that doesn’t respond, ‘How high, Sir?’ when various three-letter agencies whisper, ‘Jump’?

“As the Twitter Files make clear, all the U.S.-based social media companies have eagerly cooperated with federal requests to censor or otherwise control speech on their platforms.

“TikTok, as a Chinese company, doesn’t, as I understand it.

“This doesn’t mean TikTok doesn’t have its own algorithms that control and direct speech, nor is it clear who may direct those algorithms or what their ends may be. But the simple lack of submission to U.S. authorities is certain to rile the powers that be.

“Regardless of any government influence, all social media companies do everything within their power to make their platforms addictive, and I do not participate on any of them.”

“If these past three years have taught us anything, it’s that free and open communication is essential. So much valuable information was censored, and it ruined many lives directly or indirectly.

“The likely real reason for stifling TikTok is that it is not under the thumb of the U.S. government. (Full disclosure: I don’t use or work for TikTok. Leave it alone!)”

Finally today, a reader adds: “If your concerns about government types trying to grab more power — a là the TikTok ban — make you a ‘commie pinko,’ then I suppose I’m there with you: pink like Floyd.”

Heh, that tracks… because the current vibe in America is very “dark side of the moon.”

Take care! And join us tomorrow for another episode of The 5.

Best regards,

Emily Clancy
The 5 Min. Forecast

Emily Clancy

Emily Clancy

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