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Fed needs to get to inflation goal sooner: Evans

The Federal Reserve may need to keep interest rates lower for longer to convince investors and the public that the central bank is serious about reaching its 2-percent inflation target, Chicago Federal Reserve Bank President Charles Evans suggested on Monday. With inflation running too low both in the United States and globally, the Fed needs to show its commitment to achieving its inflation goal "sustainably, symmetrically, and sooner rather than later," Evans said in slides prepared for a speech in Chicago.

Doing so, he said, might require "undershooting the unemployment rate (and) overshooting the inflation target." Inflation has been running below 2 percent since 2012 and unemployment is currently at 5 percent, around where many economists believe is consistent with full employment.

Evans, who rotates into a voting spot on the Fed's policy panel next year, has been among the Fed's loudest voices for a patient and gradual approach to rate increases. He did not refer to any personally preferred pace of rate hikes in his prepared slides, and instead said he would like to see the pace of rate hikes tied to progress on inflation.

Although the near-term outlook for economic growth is "relatively good," he said, slower labor force growth and other factors are capping the potential for faster expansion in the future, forcing the Fed to keep rates low to nurture what growth there is. So while short-term rates are only just above zero, monetary policy is not as accommodative as it might appear, and the Fed has less "headroom" to raise rates, he said.

Twitter said to be preparing for more layoffs

With no acquisition deal in the cards for the struggling social media company, Twitter is planning to cut about 8% of its workforce, or 300 people, as soon as this week, according to a published report.

Bloomberg said an announcement may come before Twitter releases third-quarter financial results on Thursday. Twitter CEO Jack Dorsey made the same percentage of workforce cuts a year ago, looking to cut costs as he attempts to engineer a turnaround of the company that has seen user and revenue growth flatten.

Twitter recently hired bankers to explore a sale but would-be acquirers such as Salesforce and Walt Disney Co. backed out. Twitter declined to comment.

Twitter also rescheduled its earnings announcement for 4 am PT on Thursday. Normally Twitter announces earnings after 1 pm PT after the markets close.

How the Ballooning “Pension Crisis” Will Impact the Economy

In the very simplest terms, the Dallas Police & Fire Pension Fund is going broke, and the police who are counting on it for their retirement are beginning to panic. Police involved are retiring as early as possible and taking cash payouts because they fear that the fund will run dry and future checks may not be forthcoming. The whole thing is beginning to look like a run on a bank and it is just making matters worse.

It’s not that the DPFP is all that different from most of the public and private retirement funds; it’s just that what is happening has been noticed and made the headlines.

When you consider the number of people involved and the amount of money involved, the Dallas Police Retirement Fund is pretty insignificant considering that retirement funds in places like Chicago and the State of Illinois are probably in as bad a shape. Then there is the big daddy of all retirement funds, the Social Security Trust Fund.

Exactly why these funds are in trouble varies but the general view is that not enough contributions were collected, expected investment gains failed to materialize, and benefits were overpromised. Many of these funds also have a retiree health care component, and health care costs have risen dramatically. The bottom line is that these funds are having to pay out more than expected and they are not going to be able to deliver what they have promised without major changes of some kind.

Trump economic advisor: We are in a ‘paper bull’ market

Credit card worries weighing on consumers

Student loan debt has been a growing concern over the last three years, as the outstanding loan total has surged past $1 trillion. And make no mistake, there are plenty of young people who stay up at night worrying about how they are going to pay it back. There is also evidence it has kept young buyers out of the housing market. But is it the biggest financial worry consumers have? Not by a long shot.

A new poll conducted for the National Foundation for Credit Counseling (NFCC) has found that credit cards are the biggest financial worry for consumers, and other concerns aren't even close. When asked what financial issue caused them the most worry, 69% of consumers said credit cards. The second biggest worry concerned the inability to save for retirement or emergencies, mentioned by 13% of consumers. Student loan debt was third, at 10%.

The answers might not be all that surprising. Last month, personal finance site WalletHub reported that consumers racked up a record $34.4 billion in credit card debt in the second quarter of this year. It was the largest second quarter build-up since the government starting tracking the statistic in 1986.

“Credit cards are a useful and effective financial tool for those who keep their balances under control,” said Bruce McClary, spokesperson for the NFCC. “Balances sometimes grow beyond the point where they can easily be repaid, which is a sign that it’s time to reach out to a financial professional for guidance.”

Many low-wage workers can only dream of retiring

It was a striking image. A photo of an 89-year-old man hunched over, struggling to push his cart with frozen treats. Fidencio Sanchez works long hours every day selling the treats because he couldn’t afford to retire. The photo and his story went viral, and thousands of people donated more than $384,000 for his retirement.

His story is a window into a dark reality: Many low-wage workers say they can’t afford to retire. With no money saved for retirement, home care worker Gwen Strowbridge, 71, of Deerfield, Florida, plans to stay on the job until she can’t physically work anymore.

“I can’t see it in the future. I’ll stop working if my health won’t allow me to keep working,” said Strowbridge. Now 71, she works six days a week caring for a 100-year-old woman in Florida.

Studies have found that about one-third of low-wage workers like Strawbridge say they’ll never be able to afford retirement. The problem is particularly acute among minority women. A 2016 study by The Associated Press-NORC Center for Public Affairs Research found that one-quarter of workers 50 and older say they won’t retire. Among low-wage workers, earning less than $50,000 a year, it was 33 percent.

Wells Fargo's reputation is tanking, survey finds

Wells Fargo used to be able to brag of a superior reputation, rich in history, and mostly clean of the mud from the Great Recession. But over the past two months, the storied Wells Fargo name has been tarnished by a scandal. And unlike complex financial crisis-era crimes, this is one all Americans can understand. Wells Fargo created as many as 2 million fake bank and credit card accounts between 2011 and 2015. The bank's fumbled response in front of Congress, and alarming stories of mistreatment by workers, have only added fuel to the fire.

Now there's evidence that the scandal has inflicted serious damage on the Wells Fargo (WFC) brand. Negative perceptions of Wells Fargo have soared to 52% from 15% before the scandal, according to a survey of 1,500 bank customers conducted last week by management consultancy firm cg42. Positive perceptions fell to 24% post-scandal from 60% beforehand.

More concerning, just over half of non-Wells Fargo customers surveyed say they are unlikely to join the bank, compared with 22% previously. The results "paint a bleak picture" for Wells Fargo and suggest the "full financial impact of the scandal is yet to be felt," cg42 wrote in a report on Monday.

Even though only 3% of the Wells Fargo customers surveyed said they were impacted by the scandal, 30% claim they are actively exploring leaving the bank, the survey said. So far, 14% of Wells Fargo customers surveyed say they have already decided to switch banks due to the fake account scandal.

A Chinese company on a buying spree just took a 25% stake in Hilton

The Chinese tourism conglomerate HNA Group is buying a roughly 25% stake in Hilton. HNA is paying $26.25 a share — or about $6.5 billion — for the stake, which it is buying from the private-equity company Blackstone.

Blackstone's stake will be reduced to about 21% after the transaction, which is expected to close in the first quarter of 2017.

HNA Group has spent more than $20 billion in acquisitions this year, according to Bloomberg, including a $10 billion deal earlier in October for CIT Group's aircraft-leasing business.

Hilton had previously planned to spin off its Park Hotels & Resorts and Hilton Grand Vacations businesses. Evercore advised Hilton, while JPMorgan advised HNA. Hilton's stock was up 7% in premarket trading.

WikiLeaks reveals more Clinton Foundation emails

Phoenix-Area Home Builders Look To Refugees, Former Inmates To Fill Labor Gap

Just before the housing bubble burst in 2008, a five-bedroom house in the valley took about three to four months to finish. Today, not so much. "Our homes are being built in four to five months. Other builders are quoting people up to 10 months," explained Bob Dalton the production manager with Meritage Homes.

The housing market here is definitely in recovery mode. New home starts in the area are up by almost 250 percent from the height of the recession and demand is increasing. The only problem? "They’re selling them faster than we can build them," said Toby Thomas, the president of Austin Electric, a state based electrical subcontractor.

Right now, the workforce isn't kept up with demand, and the gap is significant. Thomas said at his current staffing levels, his company is often three days behind on jobs.

While that may not sound like a lot on the surface, when other subcontractors are on a similar delay, that slows down the overall building process. Beyond electrical workers, fields like masonry, plumbing and even framing are seeing shortages too. Part of the problem is not enough high school students are interested in these careers. But it’s more complicated than that. When the economy crashed many skilled workers left the industry. "Most of these folks moved on to different pursuits," explained Dennis Hoffman, an economist with Arizona State University.

Kansas Ends Bad Economic News by Not Reporting It

“What’s measured, improves.” So said management legend and author Peter F. Drucker about the value of using metrics to define specific objectives within an organization.

Drucker is no longer with us; if he were, he might want to have a few words with Republican Governor Sam Brownback of Kansas. Brownback, despite promising to measure the results of a “real life experiment” in cutting taxes, has decided to cancel a quarterly report on the status of the state’s economy.

Although Brownback’s spokeswoman said “a lot of people were confused by the report,” no one has been fooled. The problem was that the reports didn’t match the governor’s predictions for the state’s soon-to-be-booming economy. Local news media, including the Topeka Capital-Journal and the Kansas City Star, flagged the abandonment of the reports as evidence not only of policy failure, but as an attempt to hide that fact from the public.

A quick refresher: In 2010, Brownback, a U.S. senator, ran for governor on an economic platform created by the American Legislative Exchange Council, a conservative group that specializes in promoting draft legislation. He promised to slash taxes on business owners and lower personal income tax rates, unleashing an economic renaissance in Kansas.

Shocking News About Social Security

Last week, the Social Security Administration announced some really bad news for retirees… The 2017 Social Security Cost of Living Adjustment is going to be a paltry 0.3%. That’s about $5 per month. That’s far less than the current inflation rate of 1.5%, which is expected to move even higher. Plus, Medicare premiums are set to jump as high as 22% next year for many seniors. In short, Social Security recipients are getting the shaft. But that’s just the tip of the iceberg. Things get really scary when you start digging into the numbers…

For years, the political establishment has been telling us that Social Security is doing gangbusters—it’s awesome! Not. But propaganda spins nonetheless. Here’s what Democrat Senator Harry Reid said on “Meet the Press” in 2011: “Social Security is a program that works. It’s fully funded for the next 40 years. Stop picking on Social Security.”

My most charitable reaction to that statement is to say Harry’s full of crap. The “fully funded” lie is floated because the Social Security “trust fund” is supposed to have roughly $2.7 trillion to pay out as benefits. But there is no cash in the Social Security trust fund. There never has been. Here’s the best description of the “trust fund” scheme by David C. John of The Heritage Foundation:

“In short, the Social Security trust fund is really only an accounting mechanism. The trust fund shows how much the government has borrowed from Social Security, but it does not provide any way to finance future benefits. The money to repay the IOUs will have to come from taxes that are being used today to pay for other government programs. For that reason, the most important date for Social Security is 2018, when taxpayers must begin to repay the IOUs, not 2042, when the trust fund is exhausted.”

How Does the Minimum Wage Work?

The Next President May Wield More Power Than Usual

The 45th President of the United States will enter office with a chance of gaining more power than the president usually has, according to constitutional scholar Bernadette Meyler. Meyler, a professor at Stanford Law School, spoke to The Washington Post, elaborating on how much power the president has, and how much the next could gain.

"People definitely imagine the president has more authority than he or she actually does," Meyler said. "At the same time, we're at a particular moment when whoever is elected president may wind up having more power than a normal president would. That's partly because the Supreme Court still has a vacancy from this past term."

After the death of Associate Justice Antonin Scalia, President Barack Obama nominated Chief Judge Merrick Garland of the U.S. Court of Appeals to succeed him, but his appointment has yet to be confirmed by the Senate. Without a ninth member, the Court is prone to split decisions.

"The Supreme Court, which is usually the final check on a lot of executive action, is not exercising its functions in a normal way right now," Meyler continued. "We see this with a decision like the United States vs. Texas, where the court was split 4-4. In the case of the Supreme Court being equally divided, the lower court opinion is just affirmed."

Hedge Fund Manager Sees $1,400 Gold By 2017

Gold prices are expected to push past $1,400 an ounce in 2017, according to one billion-dollar hedge fund.

In a recent interview with Bloomberg, Mark Mobius, executive chairman of Templeton Emerging Markets Group – which has assets under management of more than £1.6 billion -- said that he could see gold prices rallying 15% in 2017 as he expects the Federal Reserve to keep interest rates low next year.

“The Fed is going to increase the rates by a little bit but not excessively and there is no guarantee that a rise in interest rates will put people off. A lot will depend on the real rates,” said Mobius, in the interview, on the sidelines at an event in Mumbai, India.

December gold futures last traded $1,262.60 an ounce, down 0.40% on the day. However, if Mobuis’ forecast proves right then gold at current levels could push to $1,451 an ounce next year. The biggest hurdle to higher gold prices continues to be the U.S. dollar, which continued to trade at its highest level since March.

Workers will simply try to survive, rather than prosper, as tech takes over the economy

For most people, a secure, well-paid job is the difference between a reasonable life and penury. Today, changes in the structure of the work force driven by globalization and technology make this objective increasingly elusive.

Technology has exacerbated declines in employment and incomes by eliminating tasks and “de-skilling” many jobs.

Robotics and complex computerized equipment has successfully replaced skilled labor. Computer software is now replacing journalists, synthesizing news items electronically by crawling the internet. Even traders in financial markets are being replaced by automated algorithms.

In the late-20th century, global supply chains allowed lower-paid workers to displace expensive counterparts in more developed countries. Initially, this occurred in manufacturing industries requiring limited skills. Over time, it encompassed more skilled jobs, spreading to services and professional work.

Yellen seen resisting pressure to resign if Trump wins election

Federal Reserve Chair Janet Yellen will resist pressure to step down should Donald Trump be elected president next month. That's the firm conviction of people who've known and worked with her over the years. They described speculation in financial markets to the contrary as off base.

"It's ridiculous," former Fed Vice Chair Alan Blinder said of suggestions Yellen would leave the central bank if Trump wins the Nov. 8 election. "I'm just as sure as I can be that she would never do that," added Blinder, who worked with Yellen at the Fed from 1994 to 1996.

Trump, who is running well behind Hillary Clinton in many opinion polls, has slammed the Fed chief for keeping interest rates low, a policy he says is designed to help cement departing President Barack Obama's legacy. While he could make it very uncomfortable for her to stay, Trump as president would not have the authority to fire Yellen because the central bank is an independent institution within the government. Members of the Fed board may not be removed from office for their policy views.

Trump's scathing criticism has nevertheless led to some speculation that Yellen might step down before her four-year term ends in February 2018 if the billionaire Republican triumphs. Paul Ashworth, chief U.S. economist at Capital Economics in Toronto, said Yellen could resign if Trump were elected. Morgan Stanley strategists included a Yellen resignation as a possible post-election outcome in their election briefing earlier this year, though they rated it low-probability.

AT&T – Time Warner merger faces questions from all sides

Obama administration confirms double-digit premium hikes

Premiums will go up sharply next year under President Barack Obama's health care law, and many consumers will be down to just one insurer, the administration confirmed Monday. That will stoke another "Obamacare" controversy days before a presidential election.

Before taxpayer-provided subsidies, premiums for a midlevel benchmark plan will increase an average of 25 percent across the 39 states served by the federally run online market, according to a report from the Department of Health and Human Services. Some states will see much bigger jumps, others less.

Moreover, about 1 in 5 consumers will only have plans from a single insurer to pick from, after major national carriers such as UnitedHealth Group, Humana and Aetna scaled back their roles.

"Consumers will be faced this year with not only big premium increases but also with a declining number of insurers participating, and that will lead to a tumultuous open enrollment period," said Larry Levitt, who tracks the health care law for the nonpartisan Kaiser Family Foundation.

School district asks for tax hikes, spends $48K on sushi

As Lower Merion School District asked to hike property taxes by 4.4 percent last school year, invoices reveal it spent $47,918 on sushi for high school lunches. Doug Young, a spokesman for the school district, told the district earns $26,000 in annual profits after students spend $6.50 for each sushi meal.

“Our school cafeterias operate as a business, so it’s actually a self-sufficient program, so revenues directly fund operations,” Young said. “When we sell sushi, it’s actually the biggest revenue-generating day for the cafeteria.” The suburban Philadelphia school had a $55.9 million fund balance in 2014-15 — the highest among Pennsylvania school districts after Pittsburgh. Lower Merion has raised taxes by 53.3 percent since 2006.

The invoices from Sushi Tokyo, a restaurant in Lansdale, Pennsylvania, span from November 2015 to August 2016. The documents were obtained by Arthur Wolk, whose law firm filed a lawsuit against the school district. Wolk did not immediately respond to a request for comment.

On Aug. 31, a Montgomery County judge ordered the district to revoke the 4.4 percent tax hike, saying the district misled taxpayers into expecting budget deficits while it built up large reserves. The ruling determined the district could not raise taxes above the Act 1 index of 2.4 percent for the current school year. The decision found the district falsely claimed it would accumulate tens of millions in deficits due to spiraling pension and special education costs.

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.