Election 2024: Catching Up

I’ve been on vacation for the past two weeks, without the capability of posting any blog entries during that time. As such this post’s purpose is to summarize a variety of recent developments on various fronts of interest:

Primaries. By now, both Trump and Biden have mathematically clinched their party’s nominations. Even so, the results from the most recent set of primaries — three days ago, or thirteen days after Haley dropped out — are a little surprising: Trump managed only 81% of the vote in Florida and Illinois, 79% in Arizona and Ohio, and 75% in Kansas (whose ballot offered an explicit ‘none of the above’ option).

Shortly after Super Tuesday, Biden gave a very effective State of the Union address that doubled as the kickoff of the Presidential campaign, although he took pains to never mention Trump by name, referring only to “my predecessor.” Biden also previewed in that speech a strategy to deflect criticisms of his age not only with humor, but also with an argument that Trump’s agenda of “hate, anger, revenge and retribution” represents “the oldest of ideas”.

Congress. As I write this we are less than 1 hour away from a potential partial government shutdown, a can that has been continually kicked down the road through the entirely of Mike Johnson’s speakership. Today Speaker Johnson managed to cobble together the required two-thirds majority for a $1.2 trillion spending package to avoid the shutdown, even though more Republicans voted against the bill than voted for it. However, there may be some technical impediment preventing the Senate from getting the bill passed prior to midnight tonight.

As the Speaker’s reward for attempting to actually govern, radical MAGAite Representative Marjorie Taylor Greene today filed a motion to once again vacate the Speakership. Moreover, with an upcoming resignation in the Republican ranks taking place next week, the Republican majority will soon drop to 217-213 (with 5 vacant seats), meaning that with unified Democratic opposition two Republican defections would be enough to defeat the Speaker on anything.

Trump v. U.S. (SCOTUS). This week Trump submitted his merits brief for the presidential immunity SCOTUS case (his interlocutory appeal from the Jan 6th federal case), accompanied by what struck me as a surprisingly large number of amicus briefs taking his side. The government’s merit brief (and briefs from amici supporting the government) isn’t due until April 8th, and oral argument has been set for April 25th.

New York v. Trump (criminal). Until recently the trial in the New York hush money case was set to commence this Monday, but delays have arisen. Instead a hearing will occur on Monday that is expected to set a revised trial date, quite possibly April 15th.

Georgia v. Trump, et al. Fulton County D.A. Willis recently survived the effort to have her removed from the case over a perceived conflict of interest, but the distraction probably hasn’t helped her ability to swiftly bring the case to trial. Also, Judge McAfee has dismissed a subset of the charges against Trump on the grounds that they were too vaguely stated to allow for the preparation of a defense; it is unclear whether Willis will seek to re-file those charges or simply proceed with the remainder of the case, which still includes the RICO charges.

U.S. v. Trump (Florida). While it is difficult to concisely summarize recent developments given the flurry of legal documents flying back and forth, Judge Cannon’s management of the trial in the Mar-a-Lago documents case continues to leave many observers on the left half of the political spectrum believing that she’s in the tank for Trump.

Carroll v. Trump I. Trump successfully arranged for a major insurer, Chubb, to post a $91.6 million surety bond while he appeals the jury’s verdict.

New York v. Trump, et al (civil). However, Trump has been unable to arrange for Chubb, or any other party, to post a $464 million appeal bond while he appeals Judge Engoron’s verdict in the Trump Org fraud case. Trump attempted to get the amount of the necessary bond reduced to $100 million, without success. Monday is the deadline. Among the difficulties here is an apparent lack of completely unencumbered assets that could be pledged as collateral.

Absent some deus ex machina solution, it is imaginable that New York could start seizing some of Trump’s assets next week…

TMTG. Did someone say deus ex machina?

We haven’t talked before about TMTG, which stands for Trump Media & Technology Group. This company was founded by Trump in 2021 to launch a Twitter competitor called Truth Social (recall this was before Musk’s takeover of Twitter, during a period where Twitter had banned Trump in light of Jan 6th), under the leadership of former Representative Devin Nunes. Almost two-and-a-half years ago, during the height of the SPAC (special purpose acquisition corporation) craze, TMTG had announced plans for it to be purchased by a SPAC called DWAC, or Digital World Acquisition Corp.

Although Truth Social is itself unprofitable, DWAC in effect became a meme stock, a means for investors market participants to signal their support for Trump. Like any other SPAC, DWAC stock was initially worth $10 per share, but it closed at $45 the day after the deal was announced in October 2021, and by March 2022 it had reached a high of $98.

However, for a variety of reasons the merger’s closure kept getting delayed, and for a while it was unclear whether the merger would ever occur. For most of 2023 DWAC traded in a tight range around $15 per share, reflecting the risk that the merger would get called off and DWAC’s investors would simply receive a $10 per share payout instead. In recent months things had regained momentum, with DWAC trading in the vicinity of $40 per share since mid-January. And then, today, the merger was finally approved.

What this means is that, by early next week, Donald J. Trump will own a majority of the shares in a newly public company, and at the current stock price Trump’s stake will be worth approximately $3 billion, on paper.

However, there appear to be lock-up restrictions on Trump’s ability to sell his TMTG stock, or even to pledge those shares as collateral, over the next six months. It will be interesting to see if Trump can come up with a plan to overcome those restrictions and find a way to monetize his TMTG holdings in order to alleviate his imminent liquidity crisis.

Having said that, It is important to note that there is a massive difference between having $3 billion in the bank, versus having a majority position in an illiquid investment that has little or no tangible value but that, measured at its current market price, is theoretically worth $3 billion. (Just ask Sam Bankman-Fried.)

Even if Trump were able to sell TMTG stock into the market, how realistic is it that he could swiftly raise $500 million in cash via stock sales without completely tanking the stock price? By the same token, if Trump were able to pledge TMTG shares as collateral, how much of his total holdings would a lender seek as collateral for a $500 million loan, given the risk of a collapse in the stock’s value (particularly in the event that Trump defaulted on the loan and the lender sought to monetize the collateral)?