Daily Comment (March 29, 2019)

by Bill O’Grady and Thomas Wash

[Posted: 9:30 AM EDT] Good morning, all! Equity markets are higher on progress being made in U.S./China trade talks. The overnight news was a bit quiet, but here are the stories we are following today:

Social media bias: On Thursday, Facebook (FB, $165.55) was accused of violating the Fair Housing Act by the Department of Housing and Urban Development.  Allegedly, Facebook targeted real estate advertisements to people based on their race and color; Twitter (TWTR, $32.87) and Google (GOOGL, $1,172.27) are also being reviewed by HUD for similar violations.[1]  The Trump administration has frequently criticized social media companies for being biased.  Accordingly, we view this conflict as an escalation in tensions between the administration and the tech giants.  Earlier this week, Facebook stated it would ban content from groups that are associated with “white nationalism” and Twitter announced it was considering labeling tweets from the president and other politicians if they violate its rules.[2],[3]  Although we can’t say for certain that all these actions are related, the timing does seem to match up.  Conservatives have long harangued social media platforms for promoting views that the platforms support while censoring views they don’t.  If the contentious relationship between social media companies and this administration continues to escalate we would expect the president to become more vocal about breaking up some of these firms.

Guaido ineligible?  The Maduro regime stepped up its war against the opposition by declaring Juan Guaido ineligible to take office for 15 years.  The announcement came from state comptroller Elvis Amoroso, who claimed there were “inconsistencies” found in Guaido’s personal finances.  We view the ruling as a way for the Maduro regime to undermine Guaido’s popularity in Venezuela and to delegitimize his claim as the leader of the country.  Following a controversial election that saw Maduro win in a landslide, Juan Guaido was recognized by the U.S., Canada and several South American countries as Venezuela’s interim president.  Since then, Guaido and his supporters have been trying to wrest power away from the Maduro regime.  The move to delegitimize Guaido likely signals that Maduro believes he can wait out the opposition in order to maintain power, in much the same way Bashar Assad was able to do in Syria.  If this is his plan, we do not expect the stalemate between Maduro and his opposition to end anytime in the near future.

Brexit Day deal: Today, U.K. Prime Minister Theresa May will attempt, for a third time, to pass her Brexit deal through parliament.  PM May has done everything possible to get this deal through parliament, even agreeing to resign following its passage, but it appears she still does not have enough support.  The EU has shown little patience with the U.K. and has stated that if the deal fails to pass today then the U.K. will have until April 12 to secure another deal or risk leaving the EU with no deal.  It is unlikely the EU would choose a no-deal Brexit if the sides were close to an agreement, but it seems the EU is getting a bit fed up.   

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[1] https://www.washingtonpost.com/business/2019/03/28/hud-charges-facebook-with-housing-discrimination/?utm_term=.4dadfb701b95

[2] https://www.axios.com/facebook-ban-white-nationalist-separatist-content-hate-speech-1b899bde-93ee-41e5-8acf-d1622331a560.html

[3] https://thehill.com/policy/technology/436218-twitter-considering-labeling-trump-tweets-that-violate-rules