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Sep 23, 2020

US Market Closing Report: Dow closes more than 500 points lower as tech pressure mounts, Apple slides 4%


Fred Imbert, Maggie Fitzgerald

Stocks fell sharply on Wednesday, adding to September’s struggles, as tech shares took another leg lower and investors fretted over uncertainty around the coronavirus pandemic and further stimulus. 

The Dow Jones Industrial Average closed 525 points lower, or 1.9%. Earlier in the session, the Dow was up 176 points. The S&P 500 slid 2.4% and the Nasdaq Composite pulled back by 3%.

“Investors are being whipsawed by conflicting COVID headlines and the growth vs. cyclical debate,” said Adam Crisafulli of Vital Knowledge in a note. “The result is sentiment souring on both growth and cyclical for the moment (which obviously means stocks are for sale broadly).”

Shares of Amazon and Netflix dropped 4.1% and 4.2%, respectively, to lead Big Tech lower. Facebook slid 2.3%. Alphabet closed 3.5% lower. Apple ended the day down 4.2% and Microsoft dipped 3.3%.

Shares of Tesla fell 10.3% after Elon Musk offered new delivery predictions for 2020 and detailed a new battery design that he claims will make Tesla’s cars cheaper to produce. The stock was also under pressure after Tesla sued the U.S. government to overturn tariffs on China. 

The S&P 500 and Dow are down 7.5% and 5.9%, respectively, for the month. The Nasdaq has dropped 9.7% over that time period. Shares of Facebook, Amazon, Apple, Netflix, Alphabet and Microsoft are all down at least 11% in September. 

“This rotation out of tech and into cyclical stocks has picked up legs in September,” said Art Hogan, chief market strategist at National Securities. He added that “September is a historically tough month and this one has been a quagmire of headwinds. Today is reflective of that.”

Investors have faced a slew of headwinds this month, including a rising number of global coronavirus cases and uncertainty around new U.S. fiscal stimulus.

Earlier this week, the U.K. said it would impose stricter measures to curb the coronavirus outbreak. To be sure, President Donald Trump said the U.S. would not be implementing a second round of lockdowns. “The U.K. just shut down again. They just announced that they’re going to do a shutdown, and we’re not going to be doing that,” Trump said.

On the stimulus front, lawmakers are still struggling to move forward with a new package. Federal Reserve Chairman Jerome Powell said before Congress on Wednesday that further fiscal stimulus is still needed for the U.S. economic recovery to continue. 

“We’ve come a long way pretty quickly, and that’s great. But there’s a long way to go. So I just would say we need to stay with it, all of us. The recovery will go faster if there’s support coming both from Congress and from the Fed,” Powell said

Nike shares jumped 8.8% after the company said digital sales surged more than 80% last quarter. Earnings and sales blew past analysts expectations last quarter and the company gave a forecast for growth in the new fiscal year.

Currencies | The Dollar: Dollar gains keep gold pressured near 6-week low


2-3 minutes - Source: CNBC

A stack of U.S. $100 bills being counted.

A stack of U.S. $100 bills being counted.

Bay Ismoyo | AFP | Getty Images

Gold extended losses to its lowest since mid-August on Wednesday as the dollar advanced, with investors awaiting further response from major central banks as economic uncertainty looms.

Spot gold dipped 1.5% to $1,870.11 per ounce, having hit its lowest since Aug. 12 at $1,865.03. U.S. gold futures declined 1.8% to $1,873.20 per ounce.

“Gold is currently taking its cue from the dollar ... and the dollar strength continues to weigh on gold,” said Standard Chartered analyst Suki Cooper.
“We could see a retest of the lows from early August, the next technical support level thereafter is around $1,840 per ounce, however prices are closing in on oversold territory.” The dollar index hit an eight-week high, dimming the appeal of bullion to holders of other currencies.
Gold prices declined, despite U.S. stocks retreating after data showed U.S. business activity nudged down in September.

“Long-term uncertainties are still looming and no investor would lose the opportunity of adding gold to their portfolio when prices are low,” Phillip Streible, a senior market strategist for RJO Futures in Chicago said.

“Investors are waiting and watching what the major central banks will do next. At this moment most of the monetary and fiscal policies available have already been implemented.”

Policymakers “are not even going to begin thinking” about raising interest rates until inflation hits 2%, Federal Reserve Vice Chair Richard Clarida said on Wednesday.

Meanwhile, Cleveland Federal Reserve Bank President Loretta Mester said monetary policy will need to remain accommodative for the next several years and more fiscal stimulus is needed to support the economy.

Non-yielding gold is often seen as a hedge against inflation and currency weakening.

In other metals, silver slid 4.5% to $23.31, having hit a nearly two-month low of $22.99 earlier in the session.

Platinum shed 1.3% to $855.35 per ounce, earlier touching its lowest since July 21 at $845.50, and palladium

rose 1% to $2,242.72.

Energy | Oil Price Report: Oil posts slight gain as U.S. inventory declines


2-3 minutes - Source: CNBC

A line of oil tankers transporting fuel to the refineries located along the Mississippi River just north of New Orleans, Louisiana.

A line of oil tankers transporting fuel to the refineries located along the Mississippi River just north of New Orleans, Louisiana.

Art Wager | Getty Images

Oil rose more than 1% on Wednesday, supported by U.S. government data that showed crude and fuel inventories dropped last week, although concerns about the ongoing coronavirus pandemic capped gains.

Brent crude rose 53 cents, or 1.3%, to $42.25 a barrel. U.S. West Texas Intermediate crude settled 13 cents, or 0.3%, higher at $39.93 per barrel.

U.S. crude, gasoline and distillate inventories all fell last week, Energy Information Administration data showed. Crude inventories fell by 1.6 million barrels, less than forecast; gasoline stocks dropped more than expected, sliding by 4 million barrels; while distillate stockpiles posted a surprise drawdown of 3.4 million barrels.

“The distillate overhang that we’ve seen most of this year has been a primary bearish consideration to the energy complex and as that begins to adjust lower that can be viewed as supportive,” said Tony Headrick, energy markets analyst at CHS Hedging.

Elsewhere, better-than-expected German manufacturing data lifted some risk appetite on Wednesday.

But COVID-19 infections in countries including India, France and Spain and new restrictions in Britain have renewed worries about demand, just as more supply may come from Libya. In the United States, the death toll has passed 200,000.

Oil collapsed as the pandemic decimated demand, with Brent falling below $16, a 21-year low, in April. A record output cut by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, has helped revive prices.

OPEC faces a new challenge in that Libya, an OPEC member exempt from the supply cut, is aiming to boost supply after an easing of the country’s conflict. An oil tanker is expected to load crude at Libya’s Marsa el-Hariga terminal this week, the first since January.

Commodities | Gold Price Report: Gold slips to over two-month low as dollar gains


2-3 minutes - Source: CNBC

A gold bar is wrapped in a financial newspaper.

A gold bar is wrapped in a financial newspaper.

GSO Images | Getty Images

Gold prices slumped more than 2% on Wednesday to the lowest level in over two months as the dollar advanced, with investors awaiting further response from major central banks at a time of economic uncertainty.

Spot gold dipped 1.9% to $1,862.56 per ounce, having hit its lowest since July 22 at $1,861.60. U.S. gold futures settled down 2.1% at 1,868.40 per ounce.

“Gold is currently taking its cue from the dollar ... and the dollar strength continues to weigh on gold,” said Standard Chartered analyst Suki Cooper.

“We could see a retest of the lows from early August, the next technical support level thereafter is around $1,840 per ounce, however prices are closing in on oversold territory.”

The dollar index hit an eight-week high, dimming the appeal of bullion to holders of other currencies.

Gold prices declined, despite U.S. stocks retreating after data showed U.S. business activity nudged down in September.

“Long-term uncertainties are still looming and no investor would lose the opportunity of adding gold to their portfolio when prices are low,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

“Investors are waiting and watching what the major central banks will do next. At this moment most of the monetary and fiscal policies available have already been implemented.”

Policymakers “are not even going to begin thinking” about raising interest rates until inflation hits 2%, Federal Reserve Vice Chair Richard Clarida said on Wednesday.

Meanwhile, Cleveland Fed President Loretta Mester said monetary policy will need to remain accommodative for the next several years and more fiscal stimulus is needed to support the economy.

Widespread stimulus measures have bolstered gold’s appeal as a hedge against inflation risk and currency weakening.

Silver slid 6.2% to $22.91, having hit a near two-month low of $22.81 earlier in the session.

Platinum shed 3.1% to $839.88 per ounce, earlier touching its lowest since July 20 at $836.50, and palladium rose 0.5% to $2,232.07.

European Markets at Close Report: European stocks close higher with key euro zone data in focus


Elliot Smith, Holly Ellyatt

European stocks closed higher Wednesday as investors reacted to key data releases from the euro zone.

.FTSEFTSE 100FTSE5914.8685.401.46507097400
.FCHICAC 40 IndexCAC4819.6746.830.9860333423

The pan-European Stoxx 600 closed 0.7% higher provisionally, with travel and leisure stocks bouncing 2.3% as most sectors and major bourses held in positive territory.

Euro zone business activity growth slowed in September, with IHS Markit’s preliminary euro zone composite purchasing manager’s index (PMI) reading coming in below expectations at 50.1, down from 51.9 in August. A reading above 50 represents expansion.

The services sector went into reverse in September, offsetting the strongest monthly manufacturing growth for two years, as governments across Europe reintroduced partial restrictions to curb a rise in coronavirus cases. 

Ahead of that data, Spain revised its second-quarter GDP (gross domestic product) contraction to 17.8% quarter-on-quarter, less severe than the initial estimate of 18.5%. Meanwhile the U.K.’s flash composite PMI for September came in at 55.7, below expectations of 56.3 and down from 59.1 in August.

Stocks in Asia-Pacific mostly rose Wednesday as investors reacted to recent comments from Federal Reserve Chairman Jerome Powell on Tuesday, with the S&P/ASX 200 in Australia jumping 2.42% to close at 5,923.90.u

Biggest movers

British technical products company Diploma saw its stock surge more than 24% by mid-afternoon trade, after raising £190 million ($241 million) in a share placing. 

Adidas shares climbed 5.4% and fellow German sportswear brand Puma added 4.6%, buoyed by a strong earnings report from U.S. rival Nike. French engineering group Alten jumped 10%.

At the bottom of the European blue-chip index, Danish biotech firm Genmab dropped 9.8%.

- staff contributed to this market report.

Bonds: Treasury yields rise slightly on vaccine optimism


Yun Li, Elliot Smith

Treasury yields gained slightly on Wednesday as investors digested positive news on the vaccine front.

The yield on the benchmark 10-year Treasury note rose one basis point at 0.6782% and the yield on the 30-year Treasury bond also climbed the same magnitude to 1.4304%. Yields move inversely to prices.


US3MU.S. 3 Month Treasury0.0990.000.00
US1YU.S. 1 Year Treasury0.1220.000.00
US2YU.S. 2 Year Treasury0.1390.0030.00
US5YU.S. 5 Year Treasury0.2760.0160.00
US10YU.S. 10 Year Treasury0.6840.020.00
US30YU.S. 30 Year Treasury1.4390.0240.00

Johnson & Johnson has begun its phase three trial testing its potential coronavirus vaccine, marking the fourth drug maker to enter late-stage testing. The other companies are ModernaPfizer and AstraZeneca. The trial will enroll up to 60,000 adult volunteers across 215 locations in the U.S. and other countries, according to the National Institute of Allergy and Infectious Diseases.

The U.S. death toll from the coronavirus pandemic topped 200,000 on Tuesday with cases nearing 6.9 million, according to data compiled by Johns Hopkins University. Wisconsin declared a public health emergency on Tuesday and extended its mask mandate through November to combat a spike in cases in the state.

On Tuesday, The House of Representatives passed a stopgap federal funding bill, with Democrats and Republicans agreeing on a deal on farming aid and nutritional help for children, that will keep the federal government operating through Dec. 11.

Investors will also monitor September’s Markit Flash PMI (purchasing managers’ index) readings, released at 9:45 a.m. ET, for indications as to the pace of economic recovery. Powell testifies before Congress at 10 a.m. ET.

In testimony before the House of Representatives Financial Services Committee on Tuesday, Jerome Powell and Treasury Secretary Steven Mnuchin said they were exploring more ways to extend aid to shore up small businesses amid the coronavirus-induced recession, but practical details for how this might be delivered were scarce.

Auctions will be held Wednesday for $25 billion of 105-day Treasury bills, $30 billion of 154-day bills, $53 billion of 5-year notes and $22 billion of 2-year FRNs (floating-rate notes).

Market Insider | Biggest Moves Premarket: Stocks making the biggest moves in the premarket: Nike, General Mills, J&J, KKR, KB Home & more


Peter Schacknow

Take a look at some of the biggest movers in the premarket:

Nike (NKE) – Nike reported quarterly earnings of 95 cents per share, more than doubling the consensus estimate of 47 cents. Revenue also beat forecasts, with online sales surging 82 percent and now making up nearly a third of the athletic apparel and footwear maker’s total revenue.

General Mills (GIS) – The food producer earned $1.00 per share for its latest quarter, beating estimates by 13 cents a share. Revenue also beat forecasts as demand for at-home packaged foods remained elevated due to the Covid-19 pandemic. General Mills also announced a 4% hike in its quarterly dividend to 51 cents per share.

Johnson & Johnson (JNJ) – J&J’s Covid-19 vaccine candidate has entered late-stage testing, making it the fourth company backed by the White House’s “Operation Warp Speed” program to achieve that status following Moderna (MRNA), Pfizer (PFE) and AstraZeneca (AZN).

KKR (KKR) – The private-equity firm struck a deal to buy contact lens seller 1-800 Contacts from current owner AEA Investors. Terms were not disclosed, but Bloomberg had reported that the two sides were discussing a price higher than $3 billion.

Gores Holding (GHIV) – The special purpose acquisition company will merge with wholesale mortgage originator United Wholesale Mortgage and take it public. The deal values United Wholesale at $16.1 billon, a record high for a SPAC-related transaction.

KB Home (KBH) – KB Home beat estimates by 30 cents a share, with quarterly profit of 83 cents per share. The home builder’s revenue also came in above Wall Street forecasts. Net new orders were up 27% from a year earlier, as the pandemic and an increase in stay-at-home workers boost demand for homes.

Stitch Fix (SFIX) – Stitch Fix lost 44 cents per share for its latest quarter, wider than the 16 cents a share loss anticipated by analysts. The online clothing styling company’s revenue beat estimates, with a 9% increase in active clients compared to a year earlier.

Shopify (SHOP) – Shopify disclosed a data breach which it said affected fewer than 200 merchants who use its e-commerce platform. Shopify said the breach was an attempt by two now-fired workers to gain transaction records, and that so far, it has not found any evidence of the data being utilized for any purpose.

Cubic Corp. (CUB) – Cubic received a takeover bid of an undisclosed amount from Elliott Management and buyout firm Veritas Capital, according to people familiar with the matter who spoke to Reuters. The bid follows weeks of private talks with the provider of defense and transportation technology. Earlier this week, Cubic announced the adoption of a so-called “poison pill” after Elliott took a 15% stake.

Tesla (TSLA) – The stock was named a “bearish Fresh Pick” at Baird, which said that although the advancements announced at Tesla’s “Battery Day” were impressive, the stock’s current price already reflects Tesla’s disruption potential. However, Deutsche Bank is taking an opposite view, upgrading Tesla to “buy” from “hold” and saying the “Battery Day” presentation showcased an impressive trajectory for Tesla’s technology.

3M (MMM) – 3M is exploring the sale of its food safety business, according to a Bloomberg report. The unit could draw up to $3.5 billion in a sale, according to people with knowledge of the matter.

Walmart (WMT) – Walmart plans to hire more than 20,000 holiday season workers for its e-commerce fulfillment centers, anticipating a significant increase in online holiday shopping.

Oracle (ORCL) – Oracle did not engage in intentional compensation discrimination, according to a ruling from a Labor Department Administration Law judge. The case against the business software giant took four years to resolve, with the business software giant saying it should not have been brought in the first place.

Lululemon (LULU) – Lululemon resumed a stock buyback program that had been halted due to the COVID-19 pandemic. The athletic apparel maker’s buyback program has $263.6 million left in a program that is due to expire on January 31.

News | Business | European Economy: Eurozone recovery stalls after virus 'wake-up call'


Tom Rees 

The eurozone’s recovery suffered a major setback in September after more pressure was piled on face-to-face consumer services by a second wave of Covid cases.

Economists warned the region was at risk of a double dip recession after the services industry slipped back into reverse gear in the purchasing managers’ index (PMI) as new restrictions are imposed.

The spike in infections across the eurozone pushed the composite output PMI to within a whisker of contraction territory at 50.1, down from 51.9 the previous month. Any reading above 50 indicates growth.

The survey found that consumer-facing services - such as restaurants, bars and hairdressers - had been particularly hard hit by rising virus worries as reopenings reverse and more cautious consumers dampen activity.

Even Germany, which has seen a smaller second wave, saw its services sector contract this month, but the stagnant readings were still well above the record lows seen at the height of lockdown earlier this year.

Bert Colijn, ING economist, said the renewed weakness was a “wake-up call” for policymakers and showed that virus fears would be an important factor in the recovery.

The services PMI tumbled from 50.5 to 47.6, the lowest since May, but the rebound in factories continued to gather pace to the highest level in almost three years. 

Businesses also became more optimistic on the outlook with the pace of job losses easing and expectations for the next 12 months climbing to a post-pandemic high. 

Chris Williamson, economist at IHS Markit, said rising business hopes rest on virus cases slipping back again.

“The main concern at present is therefore whether the weakness of the September data will intensify into the fourth quarter, and result in a slide back into recession,” he said.

Governments are beginning to roll back reopenings across Europe, with Spain and France hardest hit by a second wave of cases as winter approaches.

Parts of Spain, including Madrid, have been put back into a partial lockdown in recent weeks, piling the pressure on the worst-affected economy in the first half of 2020.

News | Business | Stocks: PayPal and Square get buy ratings from Loop Capital. Here's the one two traders prefer


Lizzy Gurdus

Two top digital payment plays are popping.

Shares of PayPal and Square closed nearly 2.5% and 3% higher on Tuesday, respectively, following a bullish call from Loop Capital Markets. The firm initiated coverage of both stocks with buy ratings, citing their recent outperformance and flagging “multi-faceted opportunity” in consumer and merchant markets as catalysts. Loop analysts wrote that PayPal was their “favorite name in our coverage universe.”

PayPal is rated buy or overweight by nearly 84% of analysts with an average price target of $222, according to FactSet. The stock closed at $187.78 on Tuesday. Appetite for Square is more mixed, with about 43% of analysts rating it buy or overweight and an average $157.31 price target for the $155.59 stock.

With both stocks already up big this year — PayPal by almost 74% and Square by 148.5% — Loop has already missed a lot of the move, Mark Tepper, president and CEO of Strategic Wealth Partners, told CNBC’s “Trading Nation” on Tuesday.

“The call seems to be a day late and a dollar short,” Tepper said. “I feel like the easy money’s already been made.”

Even so, he remained bullish on the payment plays’ long-term prospects, pointing to the rise of e-commerce, cashless payments and contactless transactions, all partially accelerated by consumers’ psychological aversion to cash during the pandemic.

“Those trends are sticky,” Tepper said. “Now, when it comes down to PayPal vs. Square, I prefer PayPal.”

While Square may have more growth potential, the stock is “just too expensive” to justify buying at these levels, particularly considering the fact that 75% of its revenues still stem from in-store transactions, Tepper said.

“When I think of Square, I think of ... the mom-and-pop shops that were hurt the most during this crisis” and other “banged-up” service businesses, he said. “I’d rather own the pure play on e-commerce — and e-commerce has almost doubled since the beginning of the crisis. And I also want the diversification of [business to business] and [business to consumer]. That’s PayPal.”

Tepper added that while he wishes his firm hadn’t sold its position in PayPal on the stock’s way up, it would need to fall into the $140s to consider getting back in.

“Look, this is going to be the first holiday shopping season during the pandemic and I think we all agree that most of that shopping’s going to be done online. So, PayPal should do very well here,” he said.

In the same “Trading Nation” interview, founder Todd Gordon agreed that PayPal was the better bet.

“To any viewers who don’t have it, I like the pullback here and I actually would consider adding more,” Gordon said, adding that a number of firms have raised their price targets on PayPal slightly in the last several weeks.

“If you want to take a look at the chart, we dropped below the 50-day moving average at 190, give or take, but the decline that we saw was only 19% compared to a 34% drop in early 2020, yet the [relative strength index] is retesting those support lows. That’s encouraging,” Gordon said.

The index is a momentum indicator that tracks when a given stock is overbought or oversold. The above chart shows PayPal is more oversold than usual after its recent decline, which may signal the stock is headed for a bounce, according to Gordon.

“From a fundamental point of view, the sales and [earnings per share] are supposed to grow 20% next year,” Gordon said. “So, PayPal’s not just a Covid, work-at-home, stay-at-home name. They were increasing their payment volumes, which is a key indicator, even before Covid. They have a lot of fixed costs, so their free cash flow is free to grow to become a higher percent of their revenue. So, I like it.”

Disclosure: Gordon owns shares of PayPal.


Analysis | The Cybersecurity 202: This was the month cyberattacks turned fatal

Joseph Marks

It was the most concrete evidence to date of the real-world consequences of digital hacking. And it’s a scenario that’s likely to play out again and again as technology becomes more deeply entwined in people’s daily lives and security protections fail to keep up. 

This is something people have been warning about for a long time now and you’re going to see more and more of it,” Peter Singer, a senior fellow at the New America think tank who focuses on cybersecurity, told me. 

The case is especially noteworthy because after years of fears about potential life-threatening cyberattacks from Russia, Iran or North Korea that could resemble a “cyber 9/11” or “cyber Pearl Harbor,” the first attack directly linked to a death came from common criminals who may not even have known they were targeting a hospital. 

Indeed, the hackers who locked up the hospital’s IT systems seem to have been targeting Heinrich Heine University, which is affiliated with the hospital, rather than the hospital itself, according to a note the hackers sent demanding a ransom payment, the Associated Press reported

That scenario of a criminal hack accidentally cascading into a life-threatening situation is only going to become more common

“Human life is more tied up with cyberspace now than it was before because of this ongoing march of digitization and the interconnection of networks with all human activities,” Jon Bateman, a former Defense Intelligence Agency analyst and now a cybersecurity fellow for the Carnegie Endowment for International Peace, told me. “Hospital are more online than they were before, and that’s true of many industries. So it stands to reason that cyber incidents with life-and-death consequence will be happening more and more.” 

Just because this death was probably an accidental consequence of a cyberattack doesn’t mean future such deaths won’t be deliberate. 

That will become especially likely with the proliferation of a slew of things connected to the Internet and vulnerable to hacking such as medical devices, driverless cars and connected home features. 

“People may want to think of a world where someone is murdered in their smart home by a cybercriminal or where a city’s entire water system is sabotaged as science fiction. But the reality is it’s coming,” said Singer, who has written novels speculating about the dangers of cyberattacks, artificial intelligence and Internet-connected systems.  

It’s likely that other deaths have indirectly resulted from earlier cyberattacks — but this is the first time there was a direct link. 

A massive 2017 wave of ransomware attacks, known as WannaCry, for example, crippled parts of the United Kingdom’s National Health Service. But prosecutors and researchers there never tied the attacks to any particular patient’s death. U.S. officials blamed North Korea for the attacks, which affected more than 230,000 computers across 150 countries and cost billions of dollars. 

A surge in ransomware attacks in recent years has also dramatically increased the likelihood of such deaths.  

Ransomware is specifically designed to make computers stop operating, making those attacks far more disruptive than hacks aimed simply at stealing victims’ money or personal information. 

Such attacks have been increasing exponentially since about 2015, and the growth seems to have spiked further during the pandemic. A report from the cybersecurity company Bitdefender this month tallied a 700 percent increase in ransomware attacks this year over last year. 

Ransomware hackers also frequently target industries that perform vital functions, such as hospitals, schools and city governments

Yet it’s not clear whether U.S. law enforcement is on the lookout for similar cyber-enabled killings in the United States.

Or if authorities will be prepared to investigate and prosecute them.

“I’d hope the U.S. would take this as a precedent. But we’ve been through so many times where we’ve gone over some line or other and we just say, ‘Oh, my God, why isn’t anyone doing anything about this?’ ” Columbia University senior research scholar Jason Healey told me. 

Healey, a former government cybersecurity official, warned on Twitter in March that ransomware attacks against hospitals were likely to turn deadly during the coronavirus pandemic. 

In a Council on Foreign Relations blog post with Columbia graduate student Virpratap Vikram Singh, he urged U.S. officials and officials from foreign governments to preemptively declare such attacks would be “prosecuted to the maximum extent of the law, not just as computer crimes but reckless endangerment and even manslaughter or murder.”

Such declarations may have limited impact, however, against ransomware hacking gangs that are often spread across different nations and have shown little concern for the damage they cause. 

Indeed, a group of ransomware hackers pledged to steer clear of hospitals during the early days of the pandemic, but there’s little evidence they followed through. 

And victims aren’t doing as much as they should to defend themselves. 

The hospital in Germany, for example, was compromised because the hackers were able to exploit a well-known computer bug that Germany's cybersecurity agency warned hospitals to protect against more than six months ago. Most ransomware attacks against U.S. hospitals have similarly exploited bugs that were well known and warned about. 

In the wake of the homicide investigation being opened, Germany's top cybersecurity officer, Arne Schoenbohm said, “I can only urge you not to ignore or postpone such warnings but to take appropriate action immediately. This incident shows once again how seriously this danger must be taken.” 

The keys

Facebook announced its first takedown of Chinese accounts targeting the 2020 election.

The 10 accounts and five pages the company removed promoted and criticized both President Trump and Democratic presidential nominee Joe Biden, Craig Timberg reports. Other accounts supported former Democratic presidential candidate Pete Buttigieg. 

It's unclear if the accounts had any affiliation with the Chinese government, Facebook says. The inauthentic groups had fewer than 2,000 members in total. One pro-Trump group had only three members.

Overall from China, Facebook removed 155 accounts, 11 pages, and nine groups from its main platform. It also removed six accounts from Instagram. The operation largely focused on influencing audiences in Taiwan and the Philippines on Chinese policy concerns such as the U.S. presence in the South China Sea. 

“The U.S.-focused content was the least and last part of the operation,” said Ben Nimmo, head of investigations for Graphika. “Most of the U.S.-focused assets were taken down when they were a few months old, so they didn’t have time to build a substantial audience.”

The takedowns were announced the same day the FBI and the Department of Homeland Security's cybersecurity division issued a warning that foreign actors are seeking to spread disinformation regarding 2020 election results. Here's more DHS's top cybersecurity official Chris Krebs:

Lack of leadership at the White House is putting U.S. cyber defenses at risk, a government watchdog says. 

The Government Accountability Office report slams the Trump administration for not fully implementing its cybersecurity strategy and warns it's unclear who in the executive branch is responsible for managing cybersecurity after the White House eliminated a cybersecurity czar role in 2018.

“Without a clearly defined central leader to coordinate activities … [the] White House cannot ensure that entities are effectively executing their assigned activities intended to support the nation’s cybersecurity strategy and, ultimately, overcome this urgent challenge,” the report says.

The report recommends Congress consider legislation to reinstate the White House cybersecurity coordinator role. A congressionally led panel called the Cyberspace Solarium Commission made a similar recommendation in its report earlier this year.

“Today’s GAO report is further confirmation of the Solarium Commission’s conclusion that strong, central leadership is needed to address increasing cyber threats,” the commission's co-chairs, Sen. Angus King (I-Maine) and Rep. Mike Gallagher (R-Wis.), and two commissioners, Sen. Ben Sasse (R-Neb.) and Rep. Jim Langevin (D-R.I.), said in a statement following the GAO report.

The CIA is limiting Russian intelligence that reaches the White House.

The shift was confirmed by nine current and former agency officials, Politico’s Natasha Bertrand and Daniel Lippman report. It comes after Trump has repeatedly expressed doubt about Russian interference in the 2016 election and is stoking fears among critics that intelligence is being suppressed to please the president, they report. 

CIA Director Gina Haspel has also tasked General Counsel Courtney Elwood with reviewing virtually all intelligence from the agency’s Russia division before it goes to the White House, Politico reports. 

“Four of the [sources] said the change has resulted in less intelligence on Russia making its way to the White House, but the exact reason for that — whether Elwood has been blocking it, or whether Russia officers have become disillusioned and are producing less, or even self-censoring for fear of being reprimanded — is less clear,” Politico reports. 

Policing the dark Web

International law enforcement made 179 arrests in a massive crackdown on opioid traffickers on the dark web. 

Those arrested allegedly engaged in tens of thousands of sales of illicit goods across the United States and Europe, the Justice Department said. Authorities seized over $6.5 million in cash and virtual currencies and about 500 kilograms of drugs, making it one of the biggest dark net busts to date. 

Of the 179 arrests made in “Operation DisrupTor,” 121 were in the United States. The dark Web is a network of secret Internet sites uses for illicit purposes that are hidden from public view.

“Operation DisrupTor demonstrates the ability of DEA and our partners to outpace these digital criminals in this ever-changing domain, by implementing innovative ways to identify traffickers attempting to operate anonymously and disrupt these criminal enterprises,” acting Drug Enforcement Administration administrator Timothy J. Shea said. 

The operation also involved the FBI, Immigration and Customs Enforcement and the U.S. Postal Inspection Service.

Chat room

The Justice Department boasted the dark web takedowns were the biggest in history. But new markets are likely to spring up quickly. MIT Technology Review's Patrick Howell O'Neill:

Forbes's Thomas Brewster:

Some crazy details from Wired's Brian Barrett:

Securing the ballot

Pennsylvania Republicans are asking the Supreme Court to block mail ballots received after Election Day.

They're asking the court to delay implementing a recent state court ruling that upheld an effort by Democrats to allow ballots to be returned up to three days after Election Day, Amy Gardner reports. They argue the decision would allow votes to be cast after Election Day.

More election news:

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The Department of Housing and Urban Development is putting the data of tens of millions of Americans at risk.

HUD failed to report all its external vendors that are receiving sensitive information and how they're securing it, a new GAO report says. The agency's privacy gaps could expose the personal information of tens of millions of Americans, including their Social Security numbers.

HUD said in a letter in response to the agency that it is “taking actions to correct the noted deficiencies in the draft report” but did not elaborate on which of the GAO's recommendations it was adopting, if any.

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  • The Senate Commerce Committee will hold a hearing, “Revisiting the Need for Federal Data Privacy Legislation,” today at 10 a.m.
  • The Senate Homeland Security Committee will hold a hearing on the nomination of Chad Wolf to be the next homeland security secretary today at 10 a.m.
  • The Senate Homeland Security Committee will hold a hearing on threats to the homeland with FBI Director Christopher A. Wray as a witness at 10 a.m. Thursday.
  • New America’s Open Technology Institute will hold a virtual panel exploring how Internet platforms are addressing the spread of election-related misinformation on Oct. 1 at 1:30 p.m.

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News | US Politics: Election and Supreme Court Fight Will Decide Trump’s Environmental Legacy


By Lisa Friedman and John Schwartz

Credit...Stefani Reynolds for The New York Times

WASHINGTON — President Trump has initiated the most aggressive environmental deregulation agenda in modern history, but as his first term drives to a close, many of his policies are being cut down by the courts — even by Republican-appointed jurists who the administration had hoped would be friendly.

Those losses have actually heightened the stakes in the election and the fight over a replacement on the Supreme Court for Justice Ruth Bader Ginsburg: A second term, coupled with a 6-3 conservative majority on the high court, could save some of his biggest environmental rollbacks.

Since January courts have dealt a series of blows to the Trump administration’s plans to ramp up fossil fuel development and undo decades of environmental protections. On Thursday, a federal appeals court temporarily blocked implementation of a major rollback of methane emissions standards for the oil and gas industry while it considers permanent action. That followed decisions by judges that have thrown the future of the Dakota Access Pipeline into doubt, struck down the relaxation of protections for migratory birds and vacated the rollback of an Obama-era rule to reduce waste from natural gas flaring on federal lands.

Five recent unfavorable rulings came from Republican-appointed judges, including a 6-3 clean water decision in April by the Supreme Court with Justice Ginsburg in the majority. A panel of three judges appointed by President Trump unanimously overturned a policy that would have suspended hefty new penalties for automakers who failed to meet fuel efficiency standards.

According to a database kept by New York University’s nonpartisan Institute for Policy Integrity, the Environmental Protection Agency has won only nine out of 47 cases in court under Mr. Trump, while the Interior Department has won four of 22. The Trump administration’s overall win rate hovers just under 16 percent, the group said, compared to win rates of about 70 percent for both the Obama and Bush administrations.

But the courts have in most cases given the administration an opportunity to go back and revise their work. The future of those rules may then rest on whether Mr. Trump is re-elected, with a 6-3 conservative majority on the Supreme Court ready to hear his fresh attempts.

“If there is a second Trump administration they may have time to go back and do it right,” said Michael B. Gerrard, the director of the Sabin Center for Climate Change Law at Columbia Law School.

Trump administration officials and supporters dispute the institute’s statistics and contend they have obtained mostly favorable outcomes. On Sept. 11, for example, the United States District Court for the Western District of Virginia declined to block the Trump administration’s overhaul of the National Environmental Policy Act from taking effect, pending an ultimate decision on the legality of the regulatory changes.

But even conservative legal scholars said the mounting losses are impossible to ignore.

“There is a sense that the administration has been in a hurry and has been sloppy,” said Jonathan H. Adler, a conservative legal expert and professor of environmental law at Case Western Reserve University in Cleveland.

Courts have yet to rule on Mr. Trump’s biggest rollbacks of clean water rules, curbs to greenhouse gas emissions in automobiles and power plants, and environmental reviews of infrastructure projects. But activists and Democratic attorneys general expressed confidence that judges would find the unwinding of even those environmental protections illegal, despite the work that went into them.

Early in the administration, a number of courts ruled that agencies acted illegally by providing little or no justification when they rewrote, weakened or repealed regulation.

Now courts are increasingly telling the E.P.A. and Interior Department that their legal, scientific and economic analyses upholding rollbacks directly violate underlying laws.


Credit...Brandon Thibodeaux for The New York Times

Some of the decisions have been scathing.

“It is not only a sin to kill a mockingbird, it is also a crime. That has been the letter of the law for the past century. But if the Department of the Interior has its way, many mockingbirds and other migratory birds that delight people and support ecosystems throughout the country will be killed without legal consequence,” Judge Valerie Caproni of United States District Court for the Southern District of New York wrote in an August ruling that blocked the Trump administration’s relaxation of protections for migratory birds.

In a statement, the Interior Department said it still intended to move forward with a final rule on the changes.

In the case overturning the Trump administration’s relaxation of penalties for automakers, the three Republican judges found “no ambiguity” in the statute that Congress passed in 2015 ordering federal agencies to adjust a wide range of civil penalties to account for inflation.

And in August a panel of two judges appointed by Republicans and one appointed by a Democrat on the United States Court of Appeals for the Third Circuit rejected the E.P.A.’s 2019 approval of an air pollution rule for Pennsylvania that would have allowed coal-fired power plants in that state to exceed pollution limits.

The court typically gives the federal agency deference in decision-making, the judges wrote. But they said, “To receive such deference, the agency cannot reach whatever conclusion it likes and then defend it with vague allusions to its own expertise; instead, the agency must support its conclusion with demonstrable reasoning based on the facts in the record.”

The E.P.A. contends it has been successful in the majority of its significant cases. In an opinion article for Bloomberg Law, the agency’s general counsel, Matthew Z. Leopold, pointed to cases like a federal court ruling in August that rejected a request from 17 states to block the Trump administration’s revisions to a rule that significantly narrows the definition of which bodies of water are federally regulated, and a 2019 federal appeals court ruling that upheld the E.P.A.’s decision not to finalize an Obama-era requirement that mining operators prove they can pay for cleanup in the event of a disaster.

Jeffrey H. Wood, who served as acting assistant attorney general for the Justice Department’s environment and natural resources division under Mr. Trump, agreed: “The current record shows that D.O.J. and E.P.A. are making a solid defense of the Trump administration priorities.”

Similarly, a spokesman for the Department of Interior said the agency’s success rate has been “impressive,” pointing to a March decision in which a federal judge upheld a decision to repeal Obama-era standards for hydraulic fracturing on public lands.

Mr. Leopold and Mr. Wood, in interviews, both said the N.Y.U. rating system wrongly classified a case as “unsuccessful” for the administration if the court identified any flaw in the agency’s work. They argued that courts often find defects in government actions but allow the policy to go into effect.

Patrick J. Morrisey, the attorney general of West Virginia who relentlessly sued the Obama administration over coal regulations, said administration critics had left out important wins, like a Supreme Court decision that declined to block a pipeline delivering natural gas from West Virginia to North Carolina.

“The Trump administration, along with allies like me, wins on big-picture issues at the highest levels,” Mr. Morrisey said.


Credit...Al Nash/Bureau of Land Management, via Associated Press

Xavier Becerra, California’s attorney general, who recently filed his 100th lawsuit against the administration, said the flaws in this administration’s regulatory efforts were consistent.

“The Trump administration is impatient,” he said. “The Trump administration is sloppy. The Trump administration doesn’t like to do its homework.”

He argued Democratic attorneys general, who have been pounding the administration with lawsuits, have three things on their side: “The facts, the science and the law.”

Mr. Gerrard said one notable trend in the administration’s losses was that courts are objecting to regulatory analyses that are supposed to back up policies but make no mention of the policies’ impact on climate change. In May, the United States District Court for the District of Montana vacated 287 oil and gas leases issued by the Bureau of Land Management in 2017 and 2018 because the agency had failed to examine the leases’ cumulative climate impacts.

Similarly, a federal court ruling in July 2019 granted a preliminary injunction to conservation groups that challenged the renewal of grazing permits in Oregon because, the judges found, the Bureau of Land Management had failed to consider the effects of climate change.

And, in 2018, a federal judge in Montana ordered the Trump administration and TransCanada to stop work on the Keystone XL pipeline, saying Mr. Trump’s approval of the project violated laws by ignoring facts about climate change.

“The administration is so reluctant to mention climate change that they get in trouble for not even mentioning it,” Mr. Gerrard said.

He and other regulatory experts noted that if Joseph R. Biden Jr. gets into the White House in January, he will have to provide a written explanation of the reasons he wants to roll back each Trump administration action. Eliminating Trump’s executive orders will be relatively easy, but going through the regulatory process all over again on issues like fuel efficiency standards will take time.

That would make lawsuits brought by Democratic attorneys general all the more important because they will have kept many rules from going into effect while their replacements wind their way through the regulatory process.

“A lot of these rollbacks are going to have very shallow roots, and perhaps no roots as all,” said David Hayes, executive director of the State Energy and Environmental Impact Center.

James E. Tierney, a former Maine attorney general who now teaches courses at Harvard Law School on the role of attorneys general, said that they are “institutionally designed to be independent watchdogs, independent brakes on power.”

Their relative independence from executive power, whether in their own state or the federal government, goes back to the thirteen original colonies, and, before that, English common law.

“If there’s a Democratic president, roll up your sleeves and wait for Texas to file lawsuits against President Biden,” he said.

News | US Politics: Lagoa’s Role in Florida Could Be a Factor in Trump’s Supreme Court Pick


Patricia Mazzei and Adam Liptak

Judge Barbara Lagoa lacks some of the usual credentials of a Supreme Court justice, but her roots in the Cuban-American community could make her an attractive choice for President Trump.

Credit...Wilfredo Lee/Associated Press

MIAMI — As a young associate in a prestigious Miami law firm, Barbara Lagoa took on an unusual pro bono case, one without a supervising partner and against a formidable adversary: the Clinton administration.

Ms. Lagoa represented a relative of a 5-year-old boy found off the Florida coast after his mother had drowned trying to cross over from Cuba. His name was Elián González.

Federal agents would eventually seize Elián and return him to his father in Cuba, setting off political shock waves that arguably cost former Vice President Al Gore the 2000 presidential election when he lost Florida.

“After six months, countless briefs, a few all-nighters, two oral arguments and one midnight raid by armed commandos, we learned what it was like to lose,” Eliot Pedrosa, another lawyer on the team, said at a ceremony last year when Judge Lagoa joined the Florida Supreme Court. The experience of “watching armed federal agents use force to pre-empt process,” he said, was “seared into her soul.”

That formative episode helped shape Judge Lagoa’s career as a federal prosecutor and appellate judge and thrust her into South Florida’s political culture, dominated by Cuban-American Republicans.

It is an electoral dynamic that remains powerful two decades later and has helped Judge Lagoa, who now sits on the United States Court of Appeals for the 11th Circuit, emerge as an attractive choice for President Trump as he considers whom he will name to replace Justice Ruth Bader Ginsburg on the Supreme Court.

“She’s highly thought of,” Mr. Trump, who is scheduled to travel to Miami this week, told reporters on Monday. “I’m getting a lot of phone calls from a lot of people. She has a lot of support. I don’t know her, but I hear she’s outstanding.”

Judge Lagoa, 52, does not have some of the traditional credentials for a justice. But as the U.S.-born daughter of Cuban exiles who has risen to the highest echelons of her profession, she embodies Miami’s longstanding version of the American dream.

The Cuban-American community admired her work on Elián’s case, taking issue with the federal government’s position that the boy’s father, Juan Miguel González, was his sole legal guardian and had the right to make the decision to have him returned to Cuba. Also playing a role was a young lawyer named Brett M. Kavanaugh, now a Supreme Court justice himself, who represented the boy’s Miami relatives when they needed someone to work on a federal appeal.

Almost all of Judge Lagoa’s judicial service has been on a midlevel state appeals court in Miami, where she heard mostly routine cases from 2006 to 2019. Asked to list her most significant opinions, she noted ones on employment discrimination, blood alcohol tests, car insurance, personal jurisdiction, statutes of limitations and arbitration.

In her next two judicial jobs, though, she participated in consequential cases on whether hundreds of thousands of people with felony convictions in Florida were eligible to vote. Lawyers for the former felons have argued that Judge Lagoa should have recused herself the second time around.

The 11th Circuit decision this month to uphold a law enacted by the Florida Legislature that requires former felons to pay court fines and fees before they can register “silenced hundreds of thousands of voters,” Desmond Meade, the executive director of the Florida Rights Restoration Coalition, said in a statement.

“That decision demonstrated why we are fighting so hard for people’s lives to be placed over politics,” he added, “and the desire to put people over politics should be the attitude of anyone who aspires to serve on the highest court in the land.”

It is precisely a political calculation about how the president might secure his re-election by ensuring that he carries Florida that could bolster Judge Lagoa’s chances. Democrats have been struggling to match Hillary Clinton’s popularity among Hispanics in Miami-Dade County, where the election could be won or lost. The optics of Senate Democrats pressing hard against a Latina on national television would seem unlikely to help.

And while Mr. Trump’s standing with conservative Cuban-Americans is solid, nominating Judge Lagoa could still appeal emotionally to some voters, said José Félix Díaz, a former state representative and consultant with Ballard Partners, a lobbying firm.

“I think Cuban-American abuelos and abuelas will care,” he said. “It speaks to how well Cuban-Americans have assimilated to the United States. Every time there’s a new first, it’s seismic.”

Some on the political right, however, are troubled by the fact that Judge Lagoa does not appear to have a record on any abortion cases.

Leading anti-abortion activists say they would support Judge Lagoa’s nomination, but they favor Judge Amy Coney Barrett because of her clearer record on Roe v. Wade, the 1973 decision that established a constitutional right to abortion. They worry a nominee whose jurisprudence on the issue is unknown could jeopardize a decades-long campaign to end the right to abortion, which now appears finally within their reach.

Though she is lesser known in Washington than Judge Barrett, Judge Lagoa has been someone to watch for veteran Florida lawyers for years.

A graduate of Columbia Law School, where she was an editor of The Columbia Law Review, Judge Lagoa worked at various Miami law firms, including Greenberg Traurig, before joining the United States attorney’s office for the Southern District of Florida in 2003. Three years later, Gov. Jeb Bush, a Republican, named her to the Third District Court of Appeal.

Judge Lagoa is married to Paul C. Huck Jr., a partner at the Jones Day law firm and a fellow member of the Federalist Society. Mr. Huck served as general counsel to former Gov. Charlie Crist and as deputy attorney general of Florida. The couple has three daughters, including fraternal twins. Judge Lagoa’s father-in-law, Paul C. Huck, is a senior federal judge in the Southern District of Florida, appointed by President Bill Clinton.

Last year, in his second day in office, Gov. Ron DeSantis of Florida, a Republican, elevated Judge Lagoa to the state’s Supreme Court. He announced his nomination in downtown Miami at the Freedom Tower, a building steeped in exile symbolism, where many Cubans first entered the United States. Speaking in Spanish, Judge Lagoa thanked her parents, noting that her father’s unrealized dream in Cuba was to become a lawyer.

Eight months later, Mr. Trump nominated her to the 11th Circuit, where she quickly encountered for a second time the question of the former felons’ voting rights. Legal experts were divided over whether Judge Lagoa’s failure to disqualify herself ran afoul of ethics rules.

“This is a clear case in which recusal is necessary to preserve public confidence in the fairness and impartiality of the judiciary,” said Deborah L. Rhode, an authority on legal ethics at Stanford Law School. “Failing to recuse herself creates both the fact and appearance of impropriety.”

Lawrence J. Fox, who teaches legal ethics at Yale Law School, was more tentative. “This situation presents a serious example of the appearance of impropriety, if not impropriety itself,” he said.

Bruce A. Green, an expert in legal ethics at Fordham Law School, said that Judge Lagoa had explained her position in ruling on a recusal motion from the former felons.

“Judge Lagoa issued a detailed, well-considered opinion, supported by case law, explaining why she did not have to recuse herself,” he said. “The opinion seems pretty convincing, and in any case, it certainly was not a slam dunk for recusal.”

The two cases concerned a 2018 ballot measure that amended the state’s Constitution to end the disenfranchisement of people convicted of felonies, except for murder and sexual offenses, “upon completion of all terms of sentence, including parole or probation.”

The next year, the state’s Republican-controlled Legislature enacted a law that defined that phrase to include the payment of fines, restitution, costs and fees.

Judge Lagoa was an active participant when the case on former felons was argued before the Florida Supreme Court on Nov. 6, 2019. But she said she took her recusal obligations seriously.

“The impartiality of judges, and the appearance of impartiality, are key to ensuring public confidence in our courts,” she had told the Senate Judiciary Committee in October.

She was confirmed to the 11th Circuit two weeks later.

The Florida Supreme Court issued its decision in January, ruling against the former felons. Judge Lagoa did not participate in the decision.

In the meantime, a separate federal suit challenging the state law under the federal Constitution was moving forward.

In July, though, the full 11th Circuit agreed to hear the case, and lawyers for the former felons asked Judge Lagoa and two other judges to recuse themselves.

Judge Lagoa and another former Florida Supreme Court justice, Judge Robert J. Luck, rejected the motion.

“We did play a role, we were involved in, and we did participate in the advisory opinion to the governor proceeding,” they wrote in a 25-page decision. “We sat during oral argument, and we asked questions to the lawyers appearing before that court.”

But the state case, they said, “was a separate proceeding involving different persons, different issues and different courts.”

This month, by a 6-to-4 vote, with Judges Lagoa and Luck in the majority, the 11th Circuit ruled against the former felons. Had they recused themselves, the appeals court would have deadlocked, a victory for the former felons.

For the people trying to promote her nomination in South Florida, though, Judge Lagoa’s life story as the daughter of immigrants matters just as much as her record.

Her friends mention her modest upbringing in the blue-collar city of Hialeah. She rode her bike and roller skated around the neighborhood. Her parents saved up to send her to Catholic school. It was a big deal when she went away to New York for law school.

“In the country my parents fled, the whim of a single individual could mean the difference between food or hunger, liberty or prison, life or death,” Judge Lagoa said last year, when she was nominated to the Florida Supreme Court. “Unlike the country my parents fled, we are a nation of laws — not of men.”

Patricia Mazzei reported from Miami, and Adam Liptak from Washington. Elizabeth Dias contributed reporting from Washington.