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Monday 07.28.2014

Why Tyson Foods is closing three plants, employing 950 workers
Tyson Foods Inc said it will discontinue operations at three of its factories which make processed meat products such as sausages and hot dogs, affecting about 950 people. The largest U.S. meat processor, which won the bidding war for Hillshire Brands Co in June, said the closures were not related to the acquisition. "The closings were under consideration long before our decision to pursue Hillshire Brands", Tyson spokesman Gary Mickelson told Reuters. Tyson outbid Pilgrim's Pride Corp with its $63 per share offer for Hillshire, valuing the Jimmy Dean sausages maker at $8.55 billion. Hillshire Brands has been an attractive acquisition prospect for larger companies since it was created as a result of Sara Lee splitting into two companies in 2012. For Tyson, the deal will mean more established name brands and diversification into the packaged meat industry beyond chicken and other fresh meat products."

The Sweet Life: Chocolate at 3-Year High
Chocolate prices closed just short of $3,200 per metric ton last Friday, after rising to a three-year high of $3,284 on Thursday. The Hershey Co. announced the week before that it was raising its candy prices 8% due to commodity price hikes for chocolate, dairy and nuts. The privately held Mars Candy Co. raised its prices 7% last Thursday as well. In its announcement, M&M maker Mars said cocoa-bean prices have risen 18% this year as demand has outstripped supply. Dairy products and nuts are also under demand pressure and face as well drought conditions in California, which provides almost half of all U.S. production of fruits, nuts, and vegetables. The state is also the country’s leading producer of milk and dairy products, accounting for 18.6% of all dairy products in 2012. The good news for those of us with a deeply rooted sweet tooth is that the hikes to chocolate prices may be over.

Federal Reserve expected to cut billions more in stimulus

Texan Bipartisan Pair: American Public Wants an ‘Orderly Border’
With just five days until Congress adjourns for summer recess, Sen. John Cornyn, R-Texas, and Rep. Henry Cuellar, D-Texas, are attempting a bipartisan, last-ditch effort to address the border crisis in their home state – but there are few signs of support in Congress. "The American public wants us to have an orderly border,” Cuellar told ABC News’ Jonathan Karl on “This Week” Sunday. “They’re seeing chaos at the border.” The Cornyn-Cuellar bill aims to change the existing 2008 law that differentiates between the process undocumented children coming from Central America and those coming from Mexico go through if they are returned to their home countries after entering the U.S. The proposed legislation would allow the U.S. to expedite the deportation process for migrant children from Central America, which is how the U.S. currently handles Mexican immigrants. Despite the lack of strong support in favor of the proposal from congressional Democrats,...

There's no place like the economy
Forget lions, tigers, and bears. For market watchers this week it's all about the Fed, GDP, and jobs, oh my! The curtain is about to be pulled back to reveal some key economic data. Here's what you need to know. It's the economy, stupid: Investors will have to wait until Friday for the main event of the week: the all-important July jobs report. The key thing to watch is whether robust jobs growth is continuing into the second half of the year. In June, the government said 288,000 jobs were added, bringing the total number of jobs added in the first six months of 2014 to 1.4 million. That was the strongest six months for job growth since 2006. Meanwhile, the unemployment rates stands at 6.1%, which isn't far off from what many economists consider full employment. But before the jobs report, Wall Street will get a first read on second quarter gross domestic product (GDP) Wednesday morning. GDP is the most comprehensive gauge of how the economy is doing, and a majority of GDP comes from consumer spending.

Samsung Plans To Hire 'Like Crazy’ In Silicon Valley To Find The ‘Next Big Thing’
Samsung plans to open a new $300 million R&D center in Silicon Valley by summer 2015 and hire like crazy to do it. Last week, Business Insider had a chance to speak with Bob Brennan, senior vice president of Samsung’s Memory System Application Lab, and hear more about Samsung’s push to expand in Silicon Valley. “Samsung strategically determined the best pool of talent in the U.S would be in the Bay Area,” Brennan said. “We found that investment in Silicon Valley brought back some unique value to the business.” The close proximity to top startups and all the major customers made Silicon Valley an ideal location for Samsung’s new R&D center, Brennan points out. “You have proximity to, what I call, this 'technology pulse,'” he said. Brennan likes to emphasize that this proximity can lead to more collaboration and better new ideas. “It enables us to synthesize solutions that are more innovative and more compelling than we could have otherwise,” he said.

Fast food workers to step up protests over low pay
Comparing their campaign to the civil rights movement, fast food workers from across the country voted Saturday to escalate their efforts for $15-an-hour pay and union membership by using nonviolent civil disobedience. More than 1,300 workers gathered in a convention in center in suburban Chicago to discuss the future of a campaign that has spread to dozens of cities in less than two years. Wearing T-shirts that said "Fight for $15" and "We Are Worth More," the workers cheered loudly and said they would win if they stuck together. "People are just fed up," said Cindy Enriquez, 20, of Phoenix. The $8.25 an hour she makes working for McDonald's is not enough to go to college and become a police officer and barely enough to pay her rent, Enriquez said. While the vote didn't list any specific acts of civil disobedience, Enriquez said some workers suggested sit-ins and perhaps blocking businesses.

Michelle Wolf: From Bear Stearns to Comedy

Elite oil fields redefine meaning of crude's 'Big Three'
Move over ExxonMobil, Chevron and ConocoPhillips—there's a new "Big Three" in U.S. energy production. And they're not companies. In a new update to its drilling productivity report from last week, the Energy Information Agency said North Dakota's Bakken and Texas' Permian Basin and Eagle Ford Shale are quietly generating more than a million barrels of oil per day each–comprising at least a third of total U.S. daily oil production. Shale oil drilling generated the equivalent of nearly 90 percent of the U.S.'s total energy needs in 2013, according to EIA figures. Mark Perry, an economist at the University of Michigan and a scholar at the American Enterprise Institute, crunched the EIA's numbers even further. His analysis suggests the output of the combined three oil fields is actually exceeding 4 million bpd, which would make them the world's fifth largest oil producer by volume.

The Typical Household, Now Worth a Third Less
Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too. The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially. The Russell Sage study also examined net worth at the 95th percentile. (For households at that level, 94 percent of the population had less wealth and 4 percent had more.) It found that for this well-do-do slice of the population, household net worth increased 14 percent over the same 10 years.

Gary Shilling: "Q2 GDP Was Closer To 1% Than To 3%. It Could Even Be A Negative Number"
This week, in the aftermath of the Q1 -2.9% GDP disaster, the biggest "non-recessionary" drop in 67 years which was blamed on harsh weather (because there have never been harsh winters in the past 67 years), we get the first glimpse of what Q2 GDP was in the US economy. It is expected to print just shy of 3%. However, one person disagrees: Gary Shilling believes that not only will Q2 GDP be closer to 1% than to 3%, there is a fairly good chance it could be negative, which of course would mean that the US economy has officially entered a recession. The consensus of economists looks for second quarter real GDP growth, which will be released July 30, of 3% vs. the first quarter at annual rates. It believes the 2.9% drop in the first quarter was cold weather-driven, and a rebound in the second quarter is the prelude to 3%-plus growth in the second half of the year. As in the last several years, the herd is likely to be disappointed.

Treasury pushes to reduce student-loan defaults
The U.S. Treasury, which finances more than 90 percent of new student loans, is exploring ways to make repayment more affordable as defaults by almost 7 million Americans restrain economic growth. Leading the effort is Deputy Secretary Sarah Bloom Raskin, who joined the department in March after more than three years as a Federal Reserve governor. As higher-education debt swells to a record $1.2 trillion, Raskin is alert to parallels to the mortgage crisis. Back then, “we would see signs on telephones polls with 1-800 numbers urging homeowners to call to stop foreclosures. People generally got into more trouble when they used those services,” she said in an interview. Driving past the same telephone poles recently, she saw signs “urging people to call a 1-800 number for helping paying student loans.” Raskin has reason to worry: Most of those loans are backed by the federal government.

Senate Moves to Stop $2.8 Billion Cash Infusion to Iran
Senators are moving to block the White House from giving Iran another $2.8 billion in cash assets until the administration can assure lawmakers that Tehran will not use the money to fund terrorism, according to a copy of new legislation obtained by the Washington Free Beacon. The legislation, which will formally be filed early next week, comes in response to the Obama administration’s decision to grant Iran access to another $2.8 billion in currently frozen cash assets in exchange for agreeing to stay in nuclear negotiations through November. As with the previous release of $4.2 billion to Tehran over the past several months, the money comes with no strings attached, meaning that Iran could potentially use the cash to finance its terror operations, which includes Hamas, Hezbollah, and other rogue activities. Senators are now moving to prevent the next cash infusion unless the White House can certify that the money will not be used to support terrorist activities or groups...

Wage growth picking up in some sectors
Wage growth is accelerating in several key industries, foreshadowing stronger gains across the economy, experts say. Pay hikes have picked up in sectors such as leisure and hospitality, business services, construction and retail, Labor Department figures show. "There is evidence that a cyclical upturn in wage growth is underway," says economist Paul Dales of Capital Economics. Despite monthly job growth that has surged well over 200,000 this year, average annual wage gains remain stuck at 2% — barely enough to keep pace with inflation. Employers' failure to provide bigger raises has crimped consumer spending, which makes up 70% of the economy. But there are mounting signs that pay hikes are poised to gain momentum in the second half of the year, Dales and other economists say. Wages in leisure and hospitality were up 2.7% in June from a year ago, vs. a 0.6% annual increase in June 2013.

Costa Concordia wreck docks in Genoa

Things Americans Have Suddenly Stopped Buying
For a variety of reasons—including but not limited to increased health consciousness, the harried pace of modern-day life, and plain old shifting consumer preferences,—Americans have scaled back on purchases of many items, sometimes drastically so. Here’s a top 10 list of things we’re not buying anymore, at least not anywhere near as frequently as we used to. 1. Cereal. In one recent four-week period, cereal sales were down 7%, and cereal giant Kellogg’s sales decreased 10%. The reasons for cereal’s declining dominance at the breakfast table are many. As the Wall Street Journal reported, consumers are more apt nowadays to turn to yogurt or fast food in the morning, and they’re less likely to have time to eat breakfast at home at all—not even if it’s a simple bowl of cereal. Consumers also want their breakfast to pack more punch, protein-wise. “We are competing with quick-serve restaurants more, but the bigger driver is that people want more protein,..

Marijuana Legalization Would Be 'a Health Catastrophe'
A leading drug policy researcher, David Murray, has a must-read piece up at the Hudson Institute website, "Comparing Marijuana and Alcohol: Seriously." Murray's article is a devastating deconstruction of claims that marijuana is relatively safe, or at least safer than alcohol. And, as he points out, it thereby undermines much of the basis of the New York Times's blithely irresponsible editorial endorsement of marijuana legalization. Here are highlights: It’s a remarkable weekend when one finds the Grey Lady arguing for state’s rights, and worrying huffily about arbitrary Presidential powers. But when it comes to smoking dope, the mind of the New York Times has fully boggled. Against careful science, sound public policy, and even liberal politics that defends the vulnerable, the venerable editors have decided that what America needs now is marijuana, and more of it. ... Entranced by the specter of Al Capone, the Times embraces the wrong-headed idea that marijuana is less dangerous than alcohol.

Banks Scapegoat Regulations for More Costly Loans Post Crisis
Banks and their allies have been using every opportunity possible to blame regulations for changes in their business models after the crisis, particular if they can make it sound like the broader public, as opposed to their bottom lines, is what is suffering. Normally this messaging effort stays at the background noise level, but sometimes the lobbyists succeed in getting their message treated as a story in its own right. A recent example is a Financial Times story early this week: “Dodd-Frank has made banks safer but slowed economy, data show.” An alert reader could easily use this story as a “Where’s Waldo” test for finding how many bogus arguments are packed in a single piece. Let me give you a few. 1. The story line comes from a single source, the faux objective “Goldman Sachs Global Markets Institute, a public policy research unit.” 2. The article, and therefore presumably the Goldman paper, does not out the claim that regulations hurt the economy.

New Fannie Mae Data Hints at ‘Steady but Unspectacular’ Recovery of Housing Market
The latest quarterly Mortgage Lender Sentiment Survey from Fannie Mae, which covers the June ending quarter of 2014, has proven to be in line with a number of other statistical reports, hinting at a satisfactory recovery pace for the U.S. housing market, but not a particularly rapid one. For the March and June quarters of 2014, Fannie Mae’s analytics revealed increases in consumer demand for mortgages in quarter two (June ending), and a greater bifurcation between smaller and larger mortgage lenders in terms of underwriting criteria. Going forward, Fannie Mae expects the mortgage market to continue its steady pace of recovery, as purchase mortgage demand experienced a nice uptick from the March to June 2014 quarter. “Regarding the near-term outlook, lenders surveyed continue to report positive expectations, although expected growth remains modest,” said Fannie Mae senior vice president and chief economist Douglas Duncan in an official press release regarding the analytics.

American doctor infected with Ebola

Los Angeles Times Suggests Illegal Immigrants Have Civil 'Right' to Work Permits
In a story about President Barack Obama's potential executive actions, the Los Angeles Times suggested that illegal immigrants have a "right" to work permits even though that is not allowed under U.S. law. The headline of the Los Angeles Times story about Obama potentially granting temporary amnesty and work permits to five million illegal immigrants blares, "White House pursuing plan to expand immigrant rights." Last week on the Senate floor, Sen. Jeff Sessions (R-AL) blasted the Obama administration for declaring amnesty "as a civil right." Bewildered, Sessions, the former U.S. attorney, wondered how Attorney General Eric Holder could "assert that people have a Constitutional right to enter unlawfully and be given amnesty." "That's an argument against the very idea of a nation state and the idea of a nation's borders," he continued. "Of course, there is and can be no civil right to enter a country unlawfully and then to demand lawful status and equal citizenship. Of course there is not."

Mountain Lion Bridge To Built With $2 Million Of Federal Funds In Southern California
Mountain lions will soon be able to cross one of California’s busiest freeways in safety, if the state gets a $2 million grant it is now seeking to build a special bridge for the big cats across U.S. Highway 101 as it runs through the western suburbs of Los Angeles. While mountain lions have occasionally been killed by cars as they attempt to cross the freeway in Agoura Hills, California, scientists say the main reason to construct the new mountain lion bridge is to allow mating to keep the local population of mountain lions healthy. The most recent death of a mountain lion in the area due to a collision with a moving vehicle came last October. The state’s transportation agency, CalTrans, believes that building the bridge will reduce the number of accidents involving mountain lions and other wild animals that live in the area west of California’s most populous city. But biologists also say that with no safe route across the 101, mountain lions have been inbreeding for years,..

Aladdin: Another Wyoming town goes up for sale
Here’s a gift for someone who has everything: A tiny town in far northeastern Wyoming named Aladdin. You won’t need a genie in a bottle to buy it. Just $1.5 million gets you 30 acres and 15 buildings, including a 118-year-old general store that’s still operating. Rick and Judy Brengle bought the town 28 years ago and now want to move on from the full-time job of running it. “We bought this place because I had empty-nest syndrome,” Judy Brengle said. “All our kids had gone to college, so my husband bought me a town.” Aladdin doesn’t have a government population count but about 15 people live in the town on a state highway midway between Devils Tower National Monument and Sturgis, South Dakota, famous for its huge annual motorcycle rally. Recreation opportunities abound in the nearby Black Hills and Bear Lodge Mountains.

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