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Let’s take a look at the rotation of stock markets around the world. The Relative Rotation Graph above shows the rotational patterns for some major stock market indices worldwide. An interesting thing we see here is that there is a high concentration of tails inside the leading and the lagging quadrant, while there are only a handful inside improving and weakening.

Shift in Leadership

This type of rotation is typical for a shift in leadership. The strong moves in India, Brazil, Japan, and the US have now rolled over, and all four markets are showing a tail that is moving lower on the JdK RS-Momentum axis. Not so much (yet) on the JdK RS-Ratio axis.

The lagging quadrant is a bit cluttered, but when we isolate the tails (you can do that by selecting the symbol in the table below the RRG chart), you can see that only the Korean $KOSPI index is continuing further into the lagging quadrant at a negative RRG-Heading. All others have curled upward, or are in the process of doing so, and are subsequently heading towards improving.

Hong Kong ($HSI), Australia ($AORD), and Indonesia ($IDDOW) have just crossed over into the improving quadrant. Indonesia shows the more interesting rotation, as its tail has rapidly rotated back from a negative RRG-heading into a positive one. Out of the indices on the right-hand side, it’s obviously the S&P 500 we want to keep an eye on.

Probably a Temporary Setback in the S&P

On the RRG, the tail for the S&P 500 is still inside the leading quadrant, but is rolling over and close to crossing into weakening.

The chart above shows the S&P on a weekly scale, in combination with raw Relative Strength and the RRG-Lines. So far, the technical support and resistance levels are respected quite well. After breaking 4.325 in an upward direction, $SPX rallied to the level of the March 22 peak near 4.600, where a new high was put into place, indicating that supply got the upper hand in that area.

At the moment, the market is back to the breakout level and starting to test the area around 4.325 as support. The overhead pressure has caused relative strength to lose momentum and flatten out a bit over the last few weeks, which is causing the RRG-Lines to roll over. With the RS-Ratio still at fairly high levels, this tail still has the room to complete a rotation leading-weakening-leading.

In an ideal scenario, the market should now find support near 4.325 and start building a new base (higher low), out of which a new rally can start for a new attempt to move past 4.600. Without damaging the current trend, it would even be possible for $SPX to move back to the 4.200 area and find support there. Below 4.200, the current trend will get into serious trouble.

From a relative perspective, a break of relative strength above the late 2023 high will put the US back on the international map as one of the leading markets. This will need to happen in the next few weeks, say 4-6, in order for the RS-Ratio line to put in a new low above 100 and cause that leading-weakening-leading rotation.

Indonesia Ready to Rally?

The tail on the DJ Indonesia index on the left-hand side of the graph shows a rapid rotation back into a positive RRG-Heading and a push into the leading quadrant. This suggests that more improvement is underway. The big question is whether this will also only be a temporary move or be more sustainable.

Looking at the price graph above shows that the Indonesian market has been trading in an ascending triangle formation since the start of the year, with the horizontal (resistance) side around 1.360. As soon as that barrier gives way, new upside potential will be unlocked that could push $IDDOW up to the area between 1.450-1.500.

That area is particularly important, as it is the region where major highs have been formed since 2018. This means that, for more than five years now, massive supply has hit the market between 1.450-1.500. Imagine what could happen when the market has fully absorbed that supply…

I always compare these setups with a spring that has been put under pressure for a long time. A lot of energy is then contained, and when that spring gets let loose, it will unleash a lot of power. In other words, once $IDDOW is able to clear the 1.450-1.500 range, a lot of upside potential will get unlocked. Definitely a market to watch.

US investors can use the iShares MSCI Indonesia ETF (EIDO) to get exposure to the Indonesian market.

#StayAlert and have a great weekend, –Julius

It was one month ago that I discussed the serious (short-term) warning signs that the stock market faced. I summed it up pretty well on a “Your Daily 5” recording that aired on July 19th. Calling weakness after it hits is easy, but discussing objectively the warning signs BEFORE the market drops is where our value at EarningsBeats.com begins. If you didn’t get a chance to see this Your Daily 5 video, then click on this link:

Tom “The Bull” Bowley is Bearish? What?!?!

I discussed two sentiment indicators:

Volatility Index ($VIX), highlighting the positive correlation with the S&P 500, suggesting a market downturn approaching.Equity only put call ratio ($CPCE), pointing out that the 5-day moving average had dropped to a 15-month low. Extremely low readings on this moving average have historically coincided with market tops.

I also discussed the bearish historical time of the calendar month (the 19th to the 25th has proven to be EASILY the worst time of ALL calendar months), negative divergences everywhere on daily charts. I even suggested that Tesla (TSLA), which was trading at 293 at the time, could fall to 230. It’s actually at 216 this morning (last time I checked). These are “before the market drops” calls.

So where do we stand now? Well, Volatility ($VIX) has pretty significant resistance at 20 and that’s where I thought the VIX could run – in a worst-case scenario. Here’s the VIX chart:

We’re getting close to where the VIX has failed over the past 4-5 months. Could the VIX rally past this level? Sure, anything is possible. But if I’m right about this secular bull market, then I doubt we see a close above 20. We’ll see.

How about that 5-day moving average of the put call ratio ($CPCE)? Well, we’ve gone from extreme complacency in mid-July to extreme pessimism currently. This moving average has reached .85 as of yesterday’s close. I believe this is THE most telling indication of how stretched we are right now to the downside. Check out this turnabout:

A little over a month ago, this 5-day moving average was below .50, its lowest reading since April 2022 during the height of the cyclical bear market. And in just a few weeks, bearishness has sent our 5-day moving average of the CPCE to .85, its HIGHEST level since March. If you recall, that level of extreme pessimism helped to launch the massive rally we experienced over the summer. Don’t fear what others fear. Take advantage of it.

One final note on the CPCE. Here’s the table of cumulative half-hour readings of the CPCE over at CBOE.com. To move the cumulative reading like it moved in the final 3 readings is EXTRAORDINARY. Retail traders were buying puts hand over fist in the final hour or so of trading on Thursday. The masses rarely get it right. Check out this table:

This is CENTRAL TIME, one hour behind those of us on the east coast. So the 2pm reading CT is 3pm ET. So in that half hour from 3:00pm-3:30pm ET yesterday, the individual half hour readings came in at 3.45!!!! That smells like capitulation to me! I’ll be watching these half-hour readings throughout the day today.

Next, it’s always important to watch negative divergences. These warnings should never be taken lightly as they typically precede more significant selloffs during secular bull market advances. Here is how the S&P 500 ($SPX) and NASDAQ 100 ($NDX) looked on July 19th, the day I recorded my last Your Daily 5:

S&P 500:

The RSI was at 75, indicative of very overbought conditions, and the negative divergence suggested slowing momentum. This combination, along with the sentiment issues, didn’t guarantee us that prices would drop, but they certainly SCREAMED at us that the risk of a drop had increased significantly. Now we know the result.

NASDAQ 100:

This negative divergence was even more pronounced. Again, we now know the result of these warning signs.

It’s important to note that we’re also in the worst calendar period of the year. Unlike those spewing “Go Away in May”, I’ve actually done the research to correctly point out that the worst period of the year is from July 17th (close) to September 26th (close). All of this current weakness has been during this weak summer period – once again.

So do the technical indications support a potential reversal back to the upside? I say yes. When I pointed out the potential for selling a month ago, I indicated that my “worst-case scenario” for a continuing secular bull market advance would be retesting the August breakout on the S&P 500 at 4305, while simultaneously testing the rising 20-week EMA. Here’s a current view of the longer-term weekly chart, highlight the last 3 years:

If I didn’t listen to any news stories and this chart was the only thing I had to look at, I’d say the following:

Volume trends are strong (rises have been on heavy volume, currently selloff on lighter volume)Weekly PPO has been accelerating to the upside throughout 2023, right up until the July highWeekly RSI became overbought at the July high, suggesting a possible pullback to relieve overbought conditionsWe’ve pulled back to test the rising 20-week EMA, which has a history of support market advances

But here’s the problem. Nothing is rational when big selloffs approach bottoms. Volatility sends stocks gaining and losing much higher percentages on a daily basis and the whipsaw action can be very alarming. And, if you’re off by 1-3 days on a bottom, it can mean another 5% or more to the downside, which makes you question your signals.

If I’m being totally objective, again ignoring the short-term volatility and emotional toll, mid-July’s story was one of caution and suggested to minimize risk. The current environment, however, is the mostly opposite of what we saw one month ago. This is the time to hold your nose and buy.

Just my opinion.

Happy trading!

Tom

Homebuilders have been on an unbelievably big run. Looking at two relevant ETFs, we can see that one is at prior highs, while the other broke out to fresh new highs. Let’s start there.

XHB was recently at a prior high, and the ITB made newer highs. Amazingly, XHB — the homebuilders ETF — got within 0.01 cent of the prior high, then pulled back below the 10-week moving average on Thursday. Everything is still in an uptrend! The only real sign of weakness is the potential for a sell signal on the PPO.

The SCTR is still at 97.0, which is very strong.Relative strength compared to the $SPX is in purple, and is still near the highs. If it started to break the trend line from early April, that would be another signal of weakness.Price stalled at the prior high.Volume has been strong. This is after Thursday’s move, and Friday’s volume will be an Options Expiration, so it could have a big volume bar to finish the week.Full stochastic shows price still trading in the top of the range for the last 3 months of the year, so no real new news there.PPO is trying to hold on the uptrend, but will be very close to a sell signal.

That’s a pretty strong basket of signals.

ITB, the home construction ETF, looks a little different this week. Namely, this is the first red week on the price panel since the lows of last October! Price is still holding on the trend line, but the red bar is a warning.

All of the other trends recorded on the chart above are intact, with one exception: the PPO is already on a sell signal.

The real question to ask for me is whether or not this is the end of this big trend. I don’t know if it is or not, but all the trends are being tested. It’s a good time to be careful, in case it starts to break down.

Lawyers for former President Donald Trump are seeking a trial date of April 2026 to face charges that he conspired to overturn the 2020 election. 

The suggested date would be years after the Justice Department’s recommendation last week that the trial should begin Jan. 2, 2024.

In a filing, Trump’s lawyers say the years-long delay is necessary both because of the unprecedented nature of the case and the ‘massive’ amount of information — 11.5 million pages — that they have to review. They said they would have to review about 100,000 pages per day in order to meet the Justice Department’s proposed trial date.

‘If we were to print and stack 11.5 million pages of documents, with no gap between pages, at 200 pages per inch, the result would be a tower of paper stretching nearly 5,000 feet into the sky. That is taller than the Washington Monument, stacked on top of itself eight times, with nearly a million pages to spare,’ the defense lawyers wrote.

The question of when the trial will begin is ultimately up to U.S. District Judge Tanya Chutkan, who is expected to set at least a tentative trial date during an Aug. 28 court hearing.

Trump’s 2024 calendar was already expected to be packed with court dates and campaign appearances.

He is confronting both a presidential primary season and four criminal cases in four different cities. Next March 25, he is set for trial in a New York state case related to an alleged hush money payment to a porn actor. 

Trump and 18 others were charged in Fulton County, Georgia earlier this week with trying to undo the results of that state’s presidential election. Prosecutors there have proposed a March 4 trial date — a day before Super Tuesday when the most delegates are at stake in the primary contest to decide the next Republican presidential nominee. 

Additionally, a federal judge in Florida has set a May 20 trial date on charges that Trump illegally hoarded classified documents and concealed them from investigators.

Later Thursday, Trump canceled a planned press conference in Bedminster, New Jersey on Monday. The former president said he was going to present a report vindicating his claims that the 2020 election was stolen. 

The Associated Press contributed to this report. 

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Maui’s Emergency Management Agency administrator announced his resignation Thursday, a day after getting questioned about why the sirens did not sound during the devastating Lahaina wildfires, according to reports.

Hawaii News Now reported that Herman Andaya claimed he was resigning for health reasons.

When the death toll rose to 111 on Wednesday, Andaya defended not sounding the sirens during the blaze, saying authorities were ‘afraid that people would have gone mauka,’ a Hawaiian navigational term that could mean toward the mountains or inland.

‘If that was the case, then they would have gone into the fire,’ he added.

Honolulu Civil Beat reported Wednesday that Andaya was not an expert in emergency management when he was brought on in 2017 to lead the Maui Emergency Management agency.

The article claimed his educational background is in political science and the law, not disaster preparedness or response. He also never worked a full-time job in emergency management.

On Tuesday, he told Civil Beat as chief of staff to former mayor Alan Arakawa, he assisted in emergency operations.

When he was hired in 2017, Andaya edged out 40 other candidates for the position, Maui Now reported.

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The Federal Election Commission (FEC) must consider whether it needs to set rules to prevent political campaigns from using artificial intelligence to create ads intended to deceive voters as the 2024 election cycle moves into full swing, an AI image analyst said.

‘The FEC will need to consider whether and how to regulate a campaign’s use of manipulated media in the service of its own candidate,’ Hany Farid, a University of California, Berkeley professor, wrote in a recent opinion piece for The Hill. ‘Manipulating the photographic record is only the first step in spreading lies.’

Presidential campaigns have already started using artificial intelligence to deceptively manipulate their campaign ads. Most notably, Florida Gov. Ron DeSantis’ campaign used AI-generated audio and video to criticize former President Trump’s policies, such as one portraying a fictional image of Trump affectionately hugging Anthony Fauci. 

U.C. BERKELEY PROFESSOR WARNS ABOUT DEEPFAKE AI IMAGES AND VIDEOS: 

‘The issue, however, is not fundamentally one of AI or technology, but of the standards to which we want to hold our current and future leaders,’ Farid said. ‘To this end, it seems eminently reasonable to insist that our politicians be truthful.’

A PAC supporting DeSantis created an ad with AI-generated audio mimicking Trump’s voice criticizing Iowa Gov. Kim Reynolds. The AI voice appears to have been based on comments Trump wrote on Truth Social but never said aloud.

Another video, distributed by Trump’s campaign, used artificial intelligence to recreate DeSantis’ 2024 presidential announcement on Twitter. The parody featured a Twitter Space with fictional guests, including billionaire Democratic donor George Soros, World Economic Forum Chair Klaus Schwab, former Vice President Dick Cheney, Adolph Hitler, the devil and the FBI.

‘The disinformation campaigns are now going to be fueled with generative AI audio, images and videos,’ Farid told Fox News in April. ‘Anytime I see the president speak or a candidate speak or a CEO speak or a reporter speak, now there’s this lingering doubt.’

The FEC advanced a petition last week, filed by the nonprofit Public Citizen, which seeks to include deceptive AI-generated content in the commission’s ban against ‘fraudulent misrepresentation’ in campaign ads. The FEC will consider additional action after the public comment period ends Oct. 16.

Lawmakers have also told Fox News they are concerned over how AI will influence elections, particularly the 2024 presidential race. 

‘Right now, we’re in the Wild West,’ Connecticut Democrat Sen. Richard Blumenthal told Fox News in late July. ‘AI enables, not only in effect, appropriation of creative products … but also impersonation, deepfakes, a lot of bad stuff.’

Meanwhile, the AI Accountability Act is making its way through the House. The bill, if it becomes law, would direct Commerce Department officials to meet with industry stakeholders and produce a report within 18 months of passage regarding threats from AI systems.

‘The landscape of photographic manipulation is long and varied and will continue to evolve beyond today’s generative AI,’ Farid wrote. ‘The power of generative AI, when coupled with the reach and speed of social media’s distribution and amplification, is a real threat to an information ecosystem already polluted with half-truths, lies and conspiracies.’

To watch Digital Originals’ latest interview with Farid, click here. 

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This is the third of a three-part series breaking down the Fox News Power Rankings ahead of the first 2024 GOP presidential debate. Read part one and part two here.

This edition of the Fox News Power Rankings for the GOP primary looks closely at each candidate’s early state polling, visits and field operations, then their national polling and fundraising positions. Today: ‘The outsiders.’

Asa Hutchinson

Asa Hutchinson lacks goodwill with both the moderate wing of the party and the hard-right base, leaving him without a constituency.

The former governor of Arkansas has a long list of conservative credentials. He was a U.S. House Republican, served in the George W. Bush administration and once chaired a National Rifle Association task force about school shootings. His occasional Trump criticism, however, and a decision to veto a bill outlawing transgender surgery for minors, have shut him out from Trump-friendly voters.

The Trump criticism should earn him some praise from moderate or persuadable Republicans (and some crossover donors), but his comments lack the frequency and punch of Chris Christie, or the authority of Mike Pence.

Hutchinson has gained a minimum of 1% in enough RNC-approved polls to make it to the August debate, but that 1% is frequently his ceiling as well. In fact, Hutchinson has only received more than 1% in one national poll, from any public pollster, since July.

More troubling is the lack of donor enthusiasm. He told CBS News last week he was ‘close to halfway there’ on reaching 40,000 donors, indicating limited grassroots support, even though he was among the earliest candidates to announce a presidential run.

Will Hurd

Will Hurd fits neatly into the moderate lane of the party and has an impressive résumé, but the lane isn’t wide enough for him to get significant support.

One of the last candidates to join the race, the former Texas congressman is a bona fide center-right candidate with moderate positions on spending, immigration and health care. He once livestreamed a road trip across America with Democrat Beto O’Rourke. He brings foreign policy experience to the table as a former CIA officer and was once the only Black Republican in the lower house.

The problem is that Hurd’s brand of solutions-based centrism has fallen out of favor in the modern GOP, with only about a quarter of the party identifying themselves as moderate. Even fewer favor working with the Democrats to find common ground.

There is also significant overlap between moderate and non-Trump primary voters, which leaves Hurd lurking in Christie’s shadow.

Like Christie, Hurd’s best pathway goes through New Hampshire, but he received just 1% in the July UNH poll and has shown no signs of growth since then. He also lacks the donors and the bankroll to improve his name awareness.

Francis Suarez

Francis Suarez might be the kind of candidate to take the GOP into the future, but his inexperience is an issue. 

The 45-year-old mayor of Miami is running on his work in the Magic City, calling out its economic growth, low unemployment and balanced budget. He is also the only Latino candidate in the race, making him an ideal ambassador for the party as it courts more Hispanic voters in 2024.

Since joining the field, Suarez has faced allegations of corruption related to his real estate investments and questions about the scope of his mayoral work since the city is largely run by the Miami-Dade County government.

It culminated in a damaging interview with Hugh Hewitt in July, when Suarez shrugged off a question about the Uyghur population in China. He later said he didn’t recognize the pronunciation.

Suarez reached 1% in our Fox Business Poll last month in Iowa, the state where he has also spent the most time on the ground since announcing. He is also sending $20 gift cards to new donors, which helps get him to the debate but depletes his war chest.

Larry Elder

Larry Elder has the messaging and skills to make a serious bid for the nomination but isn’t invested in this race. 

The longtime talk radio host has a story to tell about ‘liberal city values,’ using his show as a launching pad to talk about rising crime and the high cost of living under President Biden. These are popular themes among GOP primary voters, and as a longtime resident of Los Angeles, he can speak about them with more authority than any other candidate.

But Elder is doing that from the city itself, where he is tied down with a full-time broadcasting job. He has barely traveled to the early voting states and only has five staff members across the country. His strongest competitors have hired dozens in those early states alone.

This lack of investment is reflected in his polling and second-quarter cash-on-hand figures, which are the weakest in the field.

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FIRST ON FOX: Rep. Matt Gaetz, R-Fla., is calling on Congress to investigate Judge Tanya Chutkan of the U.S. District Court for the District of Columbia, accusing her of conducting her court with open bias and partisanship in handling the cases of people linked to the Jan. 6, 2021, riot at the U.S. Capitol.

Chutkan is also the judge overseeing the U.S. government’s case against former President Trump for allegedly attempting to overturn the results of the 2020 election.

Before that, she made headlines for dealing out sentences to members of the Jan. 6 crowd that were higher than those recommended by federal prosecutors. In his resolution, Gaetz also accused her of supporting the 2020 Black Lives Matter protests, some of which were violent, while at the same time openly criticizing the Capitol riot.

He’s introducing a resolution in the House to both censure Chutkan and direct the House Judiciary Committee to probe her conduct.

‘It is deeply concerning to see a United States District Court judge show such blatant impropriety from the bench,’ Gaetz told Fox News Digital. ‘Judge Tanya Chutkan’s impracticality of her tough sentencing of Jan. 6th defendants, despite openly supporting the violent Black Lives Matter protests of 2020, showcases not only a lack of impartiality but also a disregard for the sacred duty of a judge to uphold justice fairly.’

One of the instances that Gaetz’s resolution zeroes in on is an Oct. 4, 2021, sentencing hearing during which Chutkan disagreed with a comparison made between the Capitol riot and the protests after George Floyd was killed by a Minneapolis police officer in 2020.

‘People gathered all over the country last year to protest the violent murder by the police of an unarmed man … to compare the actions of people protesting, mostly peacefully, for civil rights to those of a violent mob seeking to overthrow the lawfully elected government is a false equivalency and ignores a very real danger that the Jan. 6 riot posed to the foundation of our democracy,’ Gaetz cited Chutkan as saying.

Fox News Digital reached out to the D.C. court for comment but did not immediately hear back.

Gaetz also said the man she was sentencing at the time, Matthew Mazzocco, ‘was a nonviolent offender who spent merely 12 minutes on Capitol grounds and who urged others to remain peaceful on January 6, 2021,’ according to the resolution text. Chutkan had sentenced Mazzocco to 45 days in jail over the misdemeanor charge.

Trump and his allies in Congress and elsewhere have accused Chutkan of behaving politically as the former president continues to deny guilt in all of the four criminal indictments against him. They have lodged similar accusations against Special Counsel Jack Smith and Biden administration officials in the Justice Department.

Tensions around the case are flaring; a Texas woman was arrested recently for threatening to kill Chutkan if Trump was not reelected in 2024, according to multiple reports.

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Presidential candidate Vivek Ramaswamy shared a list of what he called 10 truths to social media Thursday, with references to faith, gender, and capitalism.

Ramaswamy, a biotech entrepreneur who is seeking the Republican nomination, shared the ideals on X, starting with, ‘God is real’ and ‘There are only two genders’ — the latter being a contentious claim by those on the Left.

The list also promotes the importance of fossil fuels, condemns ‘reverse racism,’ defends the role of parents in choosing their own children’s education, and boasts the U.S. Constitution as the ‘strongest guarantor of freedoms in history.’

While many voters may have started the 2024 presidential campaign unfamiliar with Ramaswamy, some polls have the rising Silicon Valley star in the top three among GOP candidates, behind former President Donald Trump and Florida Gov. Ron DeSantis.

‘TRUTH,’ Ramaswamy said in all-caps, starting the post on X.

His list followed:

1. God is real.
2. There are two genders.
3. Human flourishing requires fossil fuels.
4. Reverse racism is racism.
5. An open border is no border.
6. Parents determine the education of their children.
7. The nuclear family is the greatest form of governance known to mankind.
8. Capitalism lifts people up from poverty.
9. There are three branches of the U.S. government, not four.
10. The U.S. Constitution is the strongest guarantor of freedoms in history.

He posted the list ahead of an event in California and as he continues a barnstorming blitz in several states before next week’s first Republican primary debate in Wisconsin, which will be hosted by Fox News.

During the event at the Richard Nixon Presidential Library and Museum located in Yorba Linda, Ramaswamy shared details of his upbringing and his concern that the American Dream may not exist for further generations.

‘My parents came to this country 40 years ago with no money in a single generation,’ he said at the event. ‘I have gone on to found multi-billion dollar companies and did it while marrying my wife, Apoorva, and raising our two sons. That is the American dream, and I am deeply worried that that American dream will not exist for my two sons and their generation.’

Ramaswamy also said the country was in ‘the middle of a national identity crisis’ where traditional ideals of ‘Faith, patriotism, hard work and family… have disappeared only to be replaced by new secular religions in American life [such as] wokeism, transgenderism, climate-ism, chauvinism, globalism, depression, anxiety, fentanyl, [and] suicide.’

‘These are symptoms of a deeper void of purpose and meaning in our country,’ he added.

Ramaswamy, 38, also said he and other millennials were ‘hungry for a cause.’

‘We are starved for purpose and meaning and identity at a time in our national history when the things that used to fill our void. Faith, patriotism, belief in God, nation. The things we talked about when those have disappeared. That leaves a moral vacuum in its wake. And I think that that presents our opportunity, not speaking to conservatives, I’m speaking to Americans. That is our opportunity to step up and to fill that void with a vision of what it means to be an American today,’ the candidate said in California.

Ramaswamy will join his other 2024 contenders for the Republican debate at Fiserv Forum in Milwaukee on August 23, 2023. The debate will be moderated by Bret Baier and Martha MacCallum.

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The firearms industry took a blow Thursday when a federal court ruled that New Jersey can sue gun manufacturers under the state’s ‘public nuisance’ law. 

A three-judge panel on the 3rd U.S. Circuit Court of Appeals unanimously ruled that a legal challenge brought against the law by the National Sports Shooting Foundation (NSSF) was premature. Though the court acknowledged the law is somewhat vague about what conduct can trigger a lawsuit from the state, it nevertheless said the firearms industry ‘jumped the gun’ by filing a legal challenge before demonstrating injury. 

‘The National Shooting Sports Foundation challenges a new state gun law as violating its members’ constitutional rights. But we see little evidence that enforcement is looming,’ wrote Judge Stephanos Bibas, a former President Trump appointee. 

New Jersey Gov. Phil Murphy, a Democrat, signed the ‘public nuisance’ law in July 2022, clearing a path for the state’s attorney general to file lawsuits against local gun businesses based on an exception to the federal Protection of Lawful Commerce in Arms Act (PLCAA), which broadly protects the industry from liability.

Four months after it took effect, NSSF sued to block it, claiming the law runs afoul of the federal statute. In January, a district court granted the NSSF’s bid for a preliminary injunction, saying the law was in ‘direct conflict’ with the PLCAA.

However, since NSSF sued before New Jersey had a chance to enforce its law, the 3rd Circuit panel held that NSSF’s complaint was hypothetical.

‘With so much still vague and uncertain, a court should not weigh in,’ Bibas wrote.

In a statement, New Jersey Attorney General Matthew Platkin said he was ‘thrilled’ with the court’s decision. 

‘Our law never should have been enjoined, and now it will be back in effect in its entirety,’ Platkin said. ‘This law is an important public safety tool, which is why I created the Nation’s first statewide office dedicated to holding accountable those whose unlawful conduct causes bloodshed, and fuels the gun violence epidemic, for the sake of their bottom line.’

NSSF General Counsel Lawrence Keane said in a statement the group will file another complaint against New Jersey should the ‘public nuisance’ law be enforced against the gun industry. 

‘While we respectfully disagree with the court’s decision on our pre-enforcement challenge, it is important to note the court did not say New Jersey’s law does not violate the Protection of Lawful Commerce in Arms Act; it clearly does,’ Keane said.

New Jersey was among the first states to pass a law opening the gun industry up to litigation in response to several mass shootings and the Supreme Court’s landmark 2022 decision broadly expanding gun rights. Blue state governors in Colorado, Hawaii, Washington and Illinois have signed similar laws in recent months.

The 3rd Circuit’s ruling is the first time a federal appellate court has weighed in on one of these laws.

Reuters contributed to this report. 

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