2023-05-11 06:35:01 ET
It has been called a humanitarian crisis, an economic crisis and a national security crisis as the border policy known as Title 42 comes to an end on Thursday. President Biden has even warned that the border will probably be "chaotic for a while," and has sent an additional 1,500 active-duty troops there to help with the fallout. A significant surge in migration and illegal border crossings is expected, while lengthier processing times may result in dangerous overcrowding inside Border Patrol stations.
Backdrop: Title 42 is part of the Public Health Service Act, which was enacted by FDR in 1942. The measure was intended to suspend entries and imports from designated places to prevent the spread of communicable diseases, like tuberculosis, which was a big health concern at the time. It was later invoked in 2020 during the coronavirus pandemic, and essentially suspended immigration at U.S. land borders, by expelling many migrants who crossed the border illegally with the intention to ask for asylum or without proper documentation.
Publicly-traded operators of illegal immigration detention centers, CoreCivic ( NYSE: CXW ) and GEO Group ( NYSE: GEO ), are in the spotlight on the news, climbing 2.5% and 1% , respectively, in the premarket session. The Title 42 reversal is expected to result in more migrants entering the U.S. to claim asylum, and could result in additional people being detained by Immigration and Customs Enforcement. Others point to the stocks' flagging performance over past years, or political risk and lawsuits, while some even distinguish between the two companies, like SA analyst Double S Capital in article Short CoreCivic Against GEO: Both An Alpha Source And A Natural Hedge .
Go deeper: Going into effect will be tougher deportation consequences under Title 8 immigration law, a parole program with rigorous background checks, as well as higher standards for asylum seekers like forcing them to request protection in third countries on their way to the border. There are also plans to open dozens of regional processing facilities in Latin America, and pushing people to use the notably backlogged CBP One app for streamlining appointments at ports of entry. "I think that there is no question that this is going to be extremely challenging," said Homeland Security Secretary Alejandro Mayorkas. "I do not want to understate the severity of the challenge that we expect to encounter."
More on Title 42
- The GEO Group: The Stock Looks Cheap With Title 42 Upside Optionality
- CoreCivic: Great Opportunity To Go Long Here
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CoreCivic and GEO Group in the spotlight as Title 42 expires