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Logos LP: Crystal Balls and Bottom Calling

Logos LP: Crystal Balls and Bottom Calling

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Logos LP

Logos LP’s monthly commentary  for the month of April 2020, titled, “Crystal Balls and Bottom Calling,” discussing the accelerated technological adoption, jobless claims and their take on the market.

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Q1 2020 hedge fund letters, conferences and more

Stocks surged on Friday after a report said a Gilead Sciences drug showed some effectiveness in treating the coronavirus, giving investors some hope there could be a treatment solution that helps the country reopen faster from the widespread shutdowns that have plunged the economy into a recession.

Stocks tumbled from record highs in February into a bear market a month later as the spread of the coronavirus roiled market sentiment and the economic outlook.  More than 2 million cases have been confirmed worldwide, including over 650,000 in the U.S., according to Johns Hopkins University. Governments urged people to stay home, effectively shutting down the global economy.

But the stock market has rallied since March 23 as new coronavirus cases in the U.S. and globally showed signs of plateauing. President Donald Trump said Thursday that “our experts say the curve has flattened and the peak … is behind us.”

He also issued guidelines to open up parts of the U.S. Thursday night, which identify the circumstances necessary for areas of the country to allow employees to start returning to work. The decision to lift restrictions will ultimately be made by state governors.

To be sure, the outbreak has already dealt a huge blow to the economy. In four weeks, about 22 million Americans have lost their jobs as the US economy has erased nearly all the job gains since the Great Recession (a 35 sigma event). The human suffering (physical, psychological, economic)  brought on by the outbreak is tragic.

Our Take

It is no secret that markets rolled over this past quarter with the outbreak creating what looks to be the deepest recession since 2008-09. As a result, Q1 was by far the most active period in the history of our fund as we experienced what we believe to be one of the greatest buying opportunities for the patient long-term investor since the Great Recession of 2008-2009 and perhaps one of the greatest buying opportunities in the history of the capital markets. 

Although it is an impossible task to time markets, understanding the temperature of the market and thereby making informed inferences as to the market’s probability of swinging from one extreme of the pendulum to the other is possible. It is during these times of great short-term pricing dislocations brought on by sudden economic shocks that high quality stocks trading at what we believe to be below their intrinsic value can be identified. While we have found several data points suggesting a possible near-term bottom, the following represent a list of those we found of most interest (courtesy of our friends at Sentiment Trader and Tom Lee from Fundstrat) during the Q1 selloff:

  1. Over 23 days in the past 7 weeks we have seen the S&P 500 move more than +/- 3%. The previous records were Oct. 1932 and Nov. 2008. In those 2 cases, the S&P 500 staged rallies of +40% and +27%, respectively, over the next 12 months.
  2. MSCI Emerging Market Index price-to-book ratio hit under 1 on April 2nd, 2020. The only other times the index hit those levels were bottoms in 2002 and 2008.
  3. March 2020 saw the 2nd largest one month change in aggregate cash holdings in AAII survey history.
  4. On March 31st, 89% of S&P 500 stocks have triggered a MACD buy signal, which at the time was the highest in recorded history. This has only occurred 10 times in the last 30 years and every time this happened, the Nasdaq Composite has rallied 6 months later by a median of +18%.
  5. As of March 20th, the average 5-week percentage change of 21 developed markets was -31.3%. This was the worst 5 weeks ever for global stock investors, beating 2008-09 Great Recession.
  6. On March 25th, more than 90% of NYSE issues were positive. The S&P 500 is up 100% of the time over the next year by a median of +29% every time this happened.
  7. The S&P 500 is at 2,845 (which is well above 50% retracement loss level). In the 1987, 2003 and 2008 crashes, “bear market rallies” fail at 33% retracement decline. For all three previous bear markets, the bottom was confirmed with a 50% retracement.

Does this mean that we have hit a bottom and things go straight up from here? Unlikely, as we have to consider the current situation in the context of unprecedented uncertainty and the weakness of analogies to the past.

Furthermore, the answer to this question of whether we have hit a bottom should not overly pre-occupy the patient long-term investor. Why?

We never know when we have hit a bottom as a bottom can only be recognized in retrospect. As Howard Marks has recently written:

The old saying goes, “The perfect is the enemy of the good.” Likewise, waiting for the bottom can keep investors from making good purchases. The investor’s goal should be to make a large number of good buys, not just a few perfect ones.”

So it’s my view that waiting for the bottom is folly. What, then, should be the investor’s criteria? The answer is simple: if something’s cheap – based on the relationship between price and intrinsic value – you should buy, and if it cheapens further, you should buy more.”

Successful long-term investing isn’t about buying only at bottoms and selling only at tops. It is instead about the gradual re-adjustment of one’s portfolio as a function of the significant price movements of individual stocks.

This is precisely the approach we have tried our best to stick with during these unprecedented times. We were able to re-position the fund into stocks that we have been monitoring for some time at what we believe to be good prices. The future is uncertain, the economic shutdown remains a very fluid situation and the amount of unprecedented fiscal and monetary action that has occurred in such a short period of time is unlike anything we have ever seen in human history (balance sheets of G4 central banks – the Bank of England (BOE), the Bank of Japan (BOJ), the Federal Reserve (FED), and the European Central Bank (ECB) – have expanded to 40% of gross domestic product). We don’t know what the precise long-term implications of this shutdown will be past 2020, but one thing we can predict with a degree of certainty is that certain businesses will continue to thrive long after the dust has settled. Ultimately investors who stay with their plan will be rewarded. 

Stock Ideas

Currently, there are 22 names in the portfolio with our top 10 making up 65.17% of the fund’s net asset value and software now makes up over 85% of the fund’s industry exposure. Our portfolio has become more concentrated and we have now been able to take a shot at some of the highest potential growth stocks that have been on our watchlist for over 2 years. Below you will find the top 5 names in the portfolio:

  1. ALTERYX INC. (AYX)
  2. SERVICENOW INC. (NOW)
  3. TRADE DESK INC. (TTD)
  4. JOYY INC. (YY)
  5. ZSCALER INC. (ZS)

Musings On Technological Adoption

Over the past few weeks we have seen the typical torrent of crystal ball forecasting with predictions flying around on just about everything from personal consumption habits to global supply chains. It reminded us of a great quote:

He who lives by the crystal ball will eat shattered glass.” - Ray Dalio.

Looking back at all the predictions that were made during and after the crisis of 2008 that things would “never be the same” and that “things would change forever” it is important to recall one of the great lessons of this current crisis: humility has been in short supply for a while now.

Who could have predicted much of what has occurred? Just like who can predict much of what will occur?

Instead, we will be modest with our outlook and focus only on one high-conviction trend we believe will have a large impact on the post COVID business climate: the accelerated adoption of new technologies. The planet is currently having a crash course in remote working, digital productivity and automation, e-commerce, digital payments and online social interaction. Technological adoption in such areas is still quite low and thus the growth in these areas which were fueling the bull market pre COVID still has plenty of room to run.

As mentioned in our COVID-19 update on March 19th, 2020 we are thinking of this accelerated technological adoption through the following 3 key themes:

  1. The rise of the emerging market Millenial/Gen Z -- ie. Joyy Inc, Baozun, MasterCard, Baidu etc.;
  2. The continued expansion of the ‘virtual’ economy as certain transformative digital workflows are likely to stick (fintech, video, e-commerce, virtual purchasing, cloud networking, IT management) – ie. Atlassian, Adobe, Paycom, Zscaler, Trade Desk etc.;
  3. Mission critical cloud computing and related applications as well as advanced artificial intelligence (and quantum computing) for the enterprise – ie. Alteryx, Anaplan, ServiceNow, F5 Networks etc.

After this period of “forced” adoption or large-scale “testing” of such technologies, individuals from managers, shareholders, employees to citizens will realize that they had much more to offer than previously thought. Restrictions put in place during the SARS outbreak of 2003 helped accelerate China’s embrace of e-commerce and COVID is having a similar effect globally. The pandemic will highlight the convenience and ease of online life and will expose opportunities for cost savings through increased technological adoption that will be too difficult for managers and shareholders to ignore.

Charts of the Month

Jobless claims have been a 35 sigma event.

Logos LP Technological Adoption

BoFA stats suggesting that pessimism is still the consensus view along with a U-shaped recovery

Logos LP Technological Adoption

Thought of the Month

"Nature does not hurry, yet everything is accomplished.” — Lao Tzu

Articles and Ideas of Interest

  • The Coronavirus in America: The Year Ahead. There will be no quick return to our previous lives, according to nearly two dozen experts. But there is hope for managing the scourge now and in the long term. One of the more interesting predictions is “Goodbye America First” as global collaboration will be more of a must. Seems a bit contrarian…
  • An artificial intelligence arms race is coming. It is unlikely to play out in the way that the mainstream media suggest, however: as a faceoff between the United States and China. That’s because AI differs from the technologies, such as nuclear weapons and battleships, that have been the subject of arms races in the past. After all, AI is software—not hardware. Because AI is a general purpose technology—more like the combustion engine or electricity than a weapon—the competition to develop it will be broad, and the line between its civilian and military uses will be blurry.
  • Software stocks emerge as downturn winners. Share in cloud groups prove more resilient then overall market - and some have risen to new records. Investors accustomed to looking to history as a guide have had to think again. In the meltdown that followed the 2008 financial crisis, the revenue multiples on software stocks contracted by 75 per cent. This time, according to Goldman Sachs, they had fallen back only about 30 per cent by the time the market bottomed in the middle of March — before a rebound over the next three weeks that saw them expand again by 18 per cent.
  • Once safer than gold, Canadian real estate braces for reckoning. Canadian housing once seemed so infallible that the head of the world’s biggest asset manager in 2015 described Vancouver condos as a better store of wealth than gold. The coronavirus is putting that theory to the test. While lockdowns, job losses and uncertainty are roiling property markets from the U.K. to Australia to Hong Kong, Canada’s situation is more precarious than most. As its oil sector shriveled in recent years, Canada’s economy became ever more driven by real estate, an industry now in a state of paralysis. Nearly one in three workers have applied for income support. What’s more, its households are among the world’s most indebted, poorly placed to weather the storm. Bloomberg digs in with a well researched piece.
  • The price of the Coronavirus pandemic. When COVID-19 recedes, it will leave behind a severe economic crisis. But, as always, some people will profit. Interesting piece from the New Yorker outlining the stories of those who are profiting handsomely from the chaos.
  • WeWork’s lessons for US real estate in a post-Covid-19 world. The company’s troubles hint of what is to come - a long period of falling property prices in global cities. The Financial Times digs into the broader lessons WeWork’s travails provide — especially for a post-Covid-19 world. Among them: debt matters; corporate valuations were unsustainable even before the crisis; nobody is going to be rushing to lease office space anytime soon; and real estate in many parts of both the residential and commercial sectors has far, far further to fall.
  • Time alone (chosen or not) can be a chance to hit the reset button. Steadily, slowly, research interest in solitude has been increasing. Note, solitude – time alone – is not synonymous with loneliness, which is a subjective sense of unwanted social isolation that’s known to be harmful to mental and physical health. In contrast, in recent years, many observational studies have documented a correlation between greater wellbeing and a healthy motivation for solitude – that is, seeing solitude as something enjoyable and valuable.
  • The woman who lives 200,000 years in the past. As we confront the reality of COVID-19, the idea of living self-sufficiently in the woods, far from crowds and grocery stores, doesn't sound so bad. Lynx Vilden has been doing just that for decades, while teaching others how to live primitively, too.
  • Cal Newport on surviving screens and social media in isolation. A computer scientist on why the quality of your quarantine may come down to how you use your technology. Right now, for so many people self-isolating in the face of the escalating coronavirus pandemic, technology is the main link to the outside world. It’s allowing us to maintain crucial contact with friends, family, and coworkers, and providing information and much-needed outlets for joy, amusement, and creativity in a rather bleak time. However, it can also be the source of deep anxiety and distraction: never has it been easier to stress-refresh your Twitter timeline looking for the latest Covid-19 numbers, or pick up your phone to text a friend only to fall into a mindless internet black hole.

We hope that you and your families are safe and healthy and that optimism and hope for the future remains strong. On our end this health crisis has reminded us that we all too often try to insulate ourselves against any discomfort before it even arrives. We seek to avoid pain by trying to control our external conditions to suit our comfort zones. This perception of control is alluring yet we risk losing the potential joy of discovery and the freedom of finding that we can learn and even be happy, within a much greater range of experiences than we thought. This period of pain has been challenging for us, but we are confident that we will look back upon it fondly as a period of exceptional personal growth.

All the best for a month filled with resilience, equanimity and gratitude,

Logos LP

Interdisciplinary Value Investing.

www.logoslp.com/

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President Biden Delivers The “Darkest, Most Un-American Speech Given By A President”

President Biden Delivers The "Darkest, Most Un-American Speech Given By A President"

Having successfully raged, ranted, lied, and yelled through…

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President Biden Delivers The "Darkest, Most Un-American Speech Given By A President"

Having successfully raged, ranted, lied, and yelled through the State of The Union, President Biden can go back to his crypt now.

Whatever 'they' gave Biden, every American man, woman, and the other should be allowed to take it - though it seems the cocktail brings out 'dark Brandon'?

Tl;dw: Biden's Speech tonight ...

  • Fund Ukraine.

  • Trump is threat to democracy and America itself.

  • Abortion is good.

  • American Economy is stronger than ever.

  • Inflation wasn't Biden's fault.

  • Illegals are Americans too.

  • Republicans are responsible for the border crisis.

  • Trump is bad.

  • Biden stands with trans-children.

  • J6 was the worst insurrection since the Civil War.

(h/t @TCDMS99)

Tucker Carlson's response sums it all up perfectly:

"that was possibly the darkest, most un-American speech given by an American president. It wasn't a speech, it was a rant..."

Carlson continued: "The true measure of a nation's greatness lies within its capacity to control borders, yet Bid refuses to do it."

"In a fair election, Joe Biden cannot win"

And concluded:

“There was not a meaningful word for the entire duration about the things that actually matter to people who live here.”

Victor Davis Hanson added some excellent color, but this was probably the best line on Biden:

"he doesn't care... he lives in an alternative reality."

*  *  *

Watch SOTU Live here...

*   *   *

Mises' Connor O'Keeffe, warns: "Be on the Lookout for These Lies in Biden's State of the Union Address." 

On Thursday evening, President Joe Biden is set to give his third State of the Union address. The political press has been buzzing with speculation over what the president will say. That speculation, however, is focused more on how Biden will perform, and which issues he will prioritize. Much of the speech is expected to be familiar.

The story Biden will tell about what he has done as president and where the country finds itself as a result will be the same dishonest story he's been telling since at least the summer.

He'll cite government statistics to say the economy is growing, unemployment is low, and inflation is down.

Something that has been frustrating Biden, his team, and his allies in the media is that the American people do not feel as economically well off as the official data says they are. Despite what the White House and establishment-friendly journalists say, the problem lies with the data, not the American people's ability to perceive their own well-being.

As I wrote back in January, the reason for the discrepancy is the lack of distinction made between private economic activity and government spending in the most frequently cited economic indicators. There is an important difference between the two:

  • Government, unlike any other entity in the economy, can simply take money and resources from others to spend on things and hire people. Whether or not the spending brings people value is irrelevant

  • It's the private sector that's responsible for producing goods and services that actually meet people's needs and wants. So, the private components of the economy have the most significant effect on people's economic well-being.

Recently, government spending and hiring has accounted for a larger than normal share of both economic activity and employment. This means the government is propping up these traditional measures, making the economy appear better than it actually is. Also, many of the jobs Biden and his allies take credit for creating will quickly go away once it becomes clear that consumers don't actually want whatever the government encouraged these companies to produce.

On top of all that, the administration is dealing with the consequences of their chosen inflation rhetoric.

Since its peak in the summer of 2022, the president's team has talked about inflation "coming back down," which can easily give the impression that it's prices that will eventually come back down.

But that's not what that phrase means. It would be more honest to say that price increases are slowing down.

Americans are finally waking up to the fact that the cost of living will not return to prepandemic levels, and they're not happy about it.

The president has made some clumsy attempts at damage control, such as a Super Bowl Sunday video attacking food companies for "shrinkflation"—selling smaller portions at the same price instead of simply raising prices.

In his speech Thursday, Biden is expected to play up his desire to crack down on the "corporate greed" he's blaming for high prices.

In the name of "bringing down costs for Americans," the administration wants to implement targeted price ceilings - something anyone who has taken even a single economics class could tell you does more harm than good. Biden would never place the blame for the dramatic price increases we've experienced during his term where it actually belongs—on all the government spending that he and President Donald Trump oversaw during the pandemic, funded by the creation of $6 trillion out of thin air - because that kind of spending is precisely what he hopes to kick back up in a second term.

If reelected, the president wants to "revive" parts of his so-called Build Back Better agenda, which he tried and failed to pass in his first year. That would bring a significant expansion of domestic spending. And Biden remains committed to the idea that Americans must be forced to continue funding the war in Ukraine. That's another topic Biden is expected to highlight in the State of the Union, likely accompanied by the lie that Ukraine spending is good for the American economy. It isn't.

It's not possible to predict all the ways President Biden will exaggerate, mislead, and outright lie in his speech on Thursday. But we can be sure of two things. The "state of the Union" is not as strong as Biden will say it is. And his policy ambitions risk making it much worse.

*  *  *

The American people will be tuning in on their smartphones, laptops, and televisions on Thursday evening to see if 'sloppy joe' 81-year-old President Joe Biden can coherently put together more than two sentences (even with a teleprompter) as he gives his third State of the Union in front of a divided Congress. 

President Biden will speak on various topics to convince voters why he shouldn't be sent to a retirement home.

According to CNN sources, here are some of the topics Biden will discuss tonight:

  • Economic issues: Biden and his team have been drafting a speech heavy on economic populism, aides said, with calls for higher taxes on corporations and the wealthy – an attempt to draw a sharp contrast with Republicans and their likely presidential nominee, Donald Trump.

  • Health care expenses: Biden will also push for lowering health care costs and discuss his efforts to go after drug manufacturers to lower the cost of prescription medications — all issues his advisers believe can help buoy what have been sagging economic approval ratings.

  • Israel's war with Hamas: Also looming large over Biden's primetime address is the ongoing Israel-Hamas war, which has consumed much of the president's time and attention over the past few months. The president's top national security advisers have been working around the clock to try to finalize a ceasefire-hostages release deal by Ramadan, the Muslim holy month that begins next week.

  • An argument for reelection: Aides view Thursday's speech as a critical opportunity for the president to tout his accomplishments in office and lay out his plans for another four years in the nation's top job. Even though viewership has declined over the years, the yearly speech reliably draws tens of millions of households.

Sources provided more color on Biden's SOTU address: 

The speech is expected to be heavy on economic populism. The president will talk about raising taxes on corporations and the wealthy. He'll highlight efforts to cut costs for the American people, including pushing Congress to help make prescription drugs more affordable.

Biden will talk about the need to preserve democracy and freedom, a cornerstone of his re-election bid. That includes protecting and bolstering reproductive rights, an issue Democrats believe will energize voters in November. Biden is also expected to promote his unity agenda, a key feature of each of his addresses to Congress while in office.

Biden is also expected to give remarks on border security while the invasion of illegals has become one of the most heated topics among American voters. A majority of voters are frustrated with radical progressives in the White House facilitating the illegal migrant invasion. 

It is probable that the president will attribute the failure of the Senate border bill to the Republicans, a claim many voters view as unfounded. This is because the White House has the option to issue an executive order to restore border security, yet opts not to do so

Maybe this is why? 

While Biden addresses the nation, the Biden administration will be armed with a social media team to pump propaganda to at least 100 million Americans. 

"The White House hosted about 70 creators, digital publishers, and influencers across three separate events" on Wednesday and Thursday, a White House official told CNN. 

Not a very capable social media team... 

The administration's move to ramp up social media operations comes as users on X are mostly free from government censorship with Elon Musk at the helm. This infuriates Democrats, who can no longer censor their political enemies on X. 

Meanwhile, Democratic lawmakers tell Axios that the president's SOTU performance will be critical as he tries to dispel voter concerns about his elderly age. The address reached as many as 27 million people in 2023. 

"We are all nervous," said one House Democrat, citing concerns about the president's "ability to speak without blowing things."

The SOTU address comes as Biden's polling data is in the dumps

BetOnline has created several money-making opportunities for gamblers tonight, such as betting on what word Biden mentions the most. 

As well as...

We will update you when Tucker Carlson's live feed of SOTU is published. 

Tyler Durden Fri, 03/08/2024 - 07:44

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International

What is intersectionality and why does it make feminism more effective?

The social categories that we belong to shape our understanding of the world in different ways.

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Mary Long/Shutterstock

The way we talk about society and the people and structures in it is constantly changing. One term you may come across this International Women’s Day is “intersectionality”. And specifically, the concept of “intersectional feminism”.

Intersectionality refers to the fact that everyone is part of multiple social categories. These include gender, social class, sexuality, (dis)ability and racialisation (when people are divided into “racial” groups often based on skin colour or features).

These categories are not independent of each other, they intersect. This looks different for every person. For example, a black woman without a disability will have a different experience of society than a white woman without a disability – or a black woman with a disability.

An intersectional approach makes social policy more inclusive and just. Its value was evident in research during the pandemic, when it became clear that women from various groups, those who worked in caring jobs and who lived in crowded circumstances were much more likely to die from COVID.

A long-fought battle

American civil rights leader and scholar Kimberlé Crenshaw first introduced the term intersectionality in a 1989 paper. She argued that focusing on a single form of oppression (such as gender or race) perpetuated discrimination against black women, who are simultaneously subjected to both racism and sexism.

Crenshaw gave a name to ways of thinking and theorising that black and Latina feminists, as well as working-class and lesbian feminists, had argued for decades. The Combahee River Collective of black lesbians was groundbreaking in this work.

They called for strategic alliances with black men to oppose racism, white women to oppose sexism and lesbians to oppose homophobia. This was an example of how an intersectional understanding of identity and social power relations can create more opportunities for action.

These ideas have, through political struggle, come to be accepted in feminist thinking and women’s studies scholarship. An increasing number of feminists now use the term “intersectional feminism”.

The term has moved from academia to feminist activist and social justice circles and beyond in recent years. Its popularity and widespread use means it is subjected to much scrutiny and debate about how and when it should be employed. For example, some argue that it should always include attention to racism and racialisation.

Recognising more issues makes feminism more effective

In writing about intersectionality, Crenshaw argued that singular approaches to social categories made black women’s oppression invisible. Many black feminists have pointed out that white feminists frequently overlook how racial categories shape different women’s experiences.

One example is hair discrimination. It is only in the 2020s that many organisations in South Africa, the UK and US have recognised that it is discriminatory to regulate black women’s hairstyles in ways that render their natural hair unacceptable.

This is an intersectional approach. White women and most black men do not face the same discrimination and pressures to straighten their hair.

View from behind of a young, black woman speaking to female colleagues in an office
Intersectionality can lead to more inclusive organisations, activism and social movements. Rawpixel.com/Shutterstock

“Abortion on demand” in the 1970s and 1980s in the UK and USA took no account of the fact that black women in these and many other countries needed to campaign against being given abortions against their will. The fight for reproductive justice does not look the same for all women.

Similarly, the experiences of working-class women have frequently been rendered invisible in white, middle class feminist campaigns and writings. Intersectionality means that these issues are recognised and fought for in an inclusive and more powerful way.

In the 35 years since Crenshaw coined the term, feminist scholars have analysed how women are positioned in society, for example, as black, working-class, lesbian or colonial subjects. Intersectionality reminds us that fruitful discussions about discrimination and justice must acknowledge how these different categories affect each other and their associated power relations.

This does not mean that research and policy cannot focus predominantly on one social category, such as race, gender or social class. But it does mean that we cannot, and should not, understand those categories in isolation of each other.

Ann Phoenix does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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International

Biden defends immigration policy during State of the Union, blaming Republicans in Congress for refusing to act

A rising number of Americans say that immigration is the country’s biggest problem. Biden called for Congress to pass a bipartisan border and immigration…

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President Joe Biden delivers his State of the Union address on March 7, 2024. Alex Brandon-Pool/Getty Images

President Joe Biden delivered the annual State of the Union address on March 7, 2024, casting a wide net on a range of major themes – the economy, abortion rights, threats to democracy, the wars in Gaza and Ukraine – that are preoccupying many Americans heading into the November presidential election.

The president also addressed massive increases in immigration at the southern border and the political battle in Congress over how to manage it. “We can fight about the border, or we can fix it. I’m ready to fix it,” Biden said.

But while Biden stressed that he wants to overcome political division and take action on immigration and the border, he cautioned that he will not “demonize immigrants,” as he said his predecessor, former President Donald Trump, does.

“I will not separate families. I will not ban people from America because of their faith,” Biden said.

Biden’s speech comes as a rising number of American voters say that immigration is the country’s biggest problem.

Immigration law scholar Jean Lantz Reisz answers four questions about why immigration has become a top issue for Americans, and the limits of presidential power when it comes to immigration and border security.

President Joe Biden stands surrounded by people in formal clothing and smiles. One man holds a cell phone camera close up to his face.
President Joe Biden arrives to deliver the State of the Union address at the US Capitol on March 7, 2024. Chip Somodevilla/Getty Images

1. What is driving all of the attention and concern immigration is receiving?

The unprecedented number of undocumented migrants crossing the U.S.-Mexico border right now has drawn national concern to the U.S. immigration system and the president’s enforcement policies at the border.

Border security has always been part of the immigration debate about how to stop unlawful immigration.

But in this election, the immigration debate is also fueled by images of large groups of migrants crossing a river and crawling through barbed wire fences. There is also news of standoffs between Texas law enforcement and U.S. Border Patrol agents and cities like New York and Chicago struggling to handle the influx of arriving migrants.

Republicans blame Biden for not taking action on what they say is an “invasion” at the U.S. border. Democrats blame Republicans for refusing to pass laws that would give the president the power to stop the flow of migration at the border.

2. Are Biden’s immigration policies effective?

Confusion about immigration laws may be the reason people believe that Biden is not implementing effective policies at the border.

The U.S. passed a law in 1952 that gives any person arriving at the border or inside the U.S. the right to apply for asylum and the right to legally stay in the country, even if that person crossed the border illegally. That law has not changed.

Courts struck down many of former President Donald Trump’s policies that tried to limit immigration. Trump was able to lawfully deport migrants at the border without processing their asylum claims during the COVID-19 pandemic under a public health law called Title 42. Biden continued that policy until the legal justification for Title 42 – meaning the public health emergency – ended in 2023.

Republicans falsely attribute the surge in undocumented migration to the U.S. over the past three years to something they call Biden’s “open border” policy. There is no such policy.

Multiple factors are driving increased migration to the U.S.

More people are leaving dangerous or difficult situations in their countries, and some people have waited to migrate until after the COVID-19 pandemic ended. People who smuggle migrants are also spreading misinformation to migrants about the ability to enter and stay in the U.S.

Joe Biden wears a black blazer and a black hat as he stands next to a bald white man wearing a green uniform and a white truck that says 'Border Patrol' in green
President Joe Biden walks with Jason Owens, the chief of the U.S. Border Patrol, as he visits the U.S.-Mexico border in Brownsville, Texas, on Feb. 29, 2024. Jim Watson/AFP via Getty Images

3. How much power does the president have over immigration?

The president’s power regarding immigration is limited to enforcing existing immigration laws. But the president has broad authority over how to enforce those laws.

For example, the president can place every single immigrant unlawfully present in the U.S. in deportation proceedings. Because there is not enough money or employees at federal agencies and courts to accomplish that, the president will usually choose to prioritize the deportation of certain immigrants, like those who have committed serious and violent crimes in the U.S.

The federal agency Immigration and Customs Enforcement deported more than 142,000 immigrants from October 2022 through September 2023, double the number of people it deported the previous fiscal year.

But under current law, the president does not have the power to summarily expel migrants who say they are afraid of returning to their country. The law requires the president to process their claims for asylum.

Biden’s ability to enforce immigration law also depends on a budget approved by Congress. Without congressional approval, the president cannot spend money to build a wall, increase immigration detention facilities’ capacity or send more Border Patrol agents to process undocumented migrants entering the country.

A large group of people are seen sitting and standing along a tall brown fence in an empty area of brown dirt.
Migrants arrive at the border between El Paso, Texas, and Ciudad Juarez, Mexico, to surrender to American Border Patrol agents on March 5, 2024. Lokman Vural Elibol/Anadolu via Getty Images

4. How could Biden address the current immigration problems in this country?

In early 2024, Republicans in the Senate refused to pass a bill – developed by a bipartisan team of legislators – that would have made it harder to get asylum and given Biden the power to stop taking asylum applications when migrant crossings reached a certain number.

During his speech, Biden called this bill the “toughest set of border security reforms we’ve ever seen in this country.”

That bill would have also provided more federal money to help immigration agencies and courts quickly review more asylum claims and expedite the asylum process, which remains backlogged with millions of cases, Biden said. Biden said the bipartisan deal would also hire 1,500 more border security agents and officers, as well as 4,300 more asylum officers.

Removing this backlog in immigration courts could mean that some undocumented migrants, who now might wait six to eight years for an asylum hearing, would instead only wait six weeks, Biden said. That means it would be “highly unlikely” migrants would pay a large amount to be smuggled into the country, only to be “kicked out quickly,” Biden said.

“My Republican friends, you owe it to the American people to get this bill done. We need to act,” Biden said.

Biden’s remarks calling for Congress to pass the bill drew jeers from some in the audience. Biden quickly responded, saying that it was a bipartisan effort: “What are you against?” he asked.

Biden is now considering using section 212(f) of the Immigration and Nationality Act to get more control over immigration. This sweeping law allows the president to temporarily suspend or restrict the entry of all foreigners if their arrival is detrimental to the U.S.

This obscure law gained attention when Trump used it in January 2017 to implement a travel ban on foreigners from mainly Muslim countries. The Supreme Court upheld the travel ban in 2018.

Trump again also signed an executive order in April 2020 that blocked foreigners who were seeking lawful permanent residency from entering the country for 60 days, citing this same section of the Immigration and Nationality Act.

Biden did not mention any possible use of section 212(f) during his State of the Union speech. If the president uses this, it would likely be challenged in court. It is not clear that 212(f) would apply to people already in the U.S., and it conflicts with existing asylum law that gives people within the U.S. the right to seek asylum.

Jean Lantz Reisz does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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