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Office Depot picking up pace of store closures To Close 400 Stores By The End Of 2016

Office Depot is accelerating its previously announced plan to close at least 400 stores as the retailer awaits its acquisition by Staples.

After shuttering a greater than expected 99 stores in the second quarter, Office Depot boosted its 2015 store closing target to 175 locations, with another 60 due to close in 2016. The closings are on top of 153 closings throughout 2014, including 108 stores in the fourth quarter of last year.

Office Depot hasn’t changed its initial 400 store closing target that it announced last year that resulted from a real estate portfolio analysis. However, the company is picking up the pace as it moves toward what it hopes is a favorable antitrust ruling by the FTC that clears the way for the acquisition by Staples.

Staples announced plans to acquire Office Depot on Feb. 4, and Office Depot shareholders approved the deal on June 19. With the fate of the merger now in the hands of the Federal Trade Commission, Office Depot is still looking to achieve cost savings and merger synergies stemming from its acquisition of OfficeMax on Nov. 5, 2013. A key aspect of the merger involves store closings, or as Office Depot calls it, “retail store portfolio optimization,” and the company’s plan from the beginning has been to close 400 of the combined companies’ stores.

GE saves $3.3 billion with cuts to retirees' benefits

General Electric booked $3.3 billion in savings last quarter by widening retiree-benefit cuts from salaried positions to hourly production jobs, prompting a backlash from former employees who believed a career with the company would guarantee a comfortable retirement.

The savings on retiree benefits is the largest for the Fairfield, Conn.-based company since the Affordable Care Act was passed in 2010. Starting Jan. 1, hourly production retirees who turn 65 by the start of 2018 will be cut off from GE's traditional retiree health plan and, instead, reimbursed about $1,000 a year on the cost of Medicare coverage supplements purchased through Towers Watson's OneExchange, the company said in a letter to employees. Current employees who retire by June 23, 2019, will be offered the same reimbursement.

The change followed three weeks of GE labor negotiations that began in early June, focusing largely on post-65 health insurance benefits. The negotiations with GE's two largest unions -- IUE-CWA and the United Electrical, Radio and Machine Workers of America -- resulted in four-year national contracts on healthcare, wages, and pensions that will be extended to additional unions that provide local coverage, according to a GE statement.

GE has also made significant cuts to retiree life insurance benefits, the company said in its quarterly filing with the Securities and Exchange Commission. Production workers who retire between Jan. 1, 2016 and June 23, 2019, will be offered reduced coverage and the plans will be eliminated afterward.

Some clear thinking about the price of gold

On April 2, 2001, the price of gold closed the market trading session at $255.30.

And that was the lowest price that gold has seen ever since.

In US dollar terms, gold closed the 2001 calendar year higher than it did in 2000. Then it did the same thing again in 2002. And again in 2003. In fact, after reaching its low in April 2001, gold closed higher for twelve consecutive years– something that had never happened before in ANY financial market with ANY asset. Then came a correction; the price started falling, and gold is now on track for 2015 to be its third down year in a row. What’s incredible is that, despite its history of gains, and 5,000 years of tradition behind it, gold is rapidly becoming one of the most widely despised assets. But before we pronounce it dead and write the final gold eulogy, however, let’s consider the following:

1) Nothing goes up (or down) in a straight line. After 12 straight years of unprecedented gains with any asset class, it’s not unusual to have a meaningful correction.

And like all frantic booms which go way past sustainable levels, corrections also overshoot fair value.

Hackers could mess with medical devices

Crashing: Apple, Twitter, Oil, Commodities, Greek Stocks, Chinese Stocks

The month of August sure has started off with a bang. Tech stocks are crashing, oil is crashing, industrial commodities are crashing, Greek stocks crashed the moment that the Greek stock market reopened for trading, and Chinese stocks continue to crash. At this point we have not seen a broad crash of U.S. stocks yet, but it is important to note that the Dow is already down more than 700 points from the peak in May. If it continues to slide like it has in recent days, it won’t be too long before we will officially reach “correction” territory. Just a few days ago, I described August as a “pivotal month“, and so far that is indeed turning out to be the case.

A full-blown financial crisis has not erupted yet, but we are well on the way. In this article, I want to look at a few of the “crashes” that are already happening…

Apple - This is more of a “correction” than a “crash”, but it is very noteworthy because it is happening to one of the most important U.S. stocks of all. The price of Apple stock has already broken through the 200 day moving average, and at this point it is down nearly 11 percent from the peak…

Shares of Apple are down 10.9% from their highest point in a year — which places the stock squarely in what’s considered to be a correction. The unofficial definition of a correction is a 10% or greater drop from a recent high. Shares of Apple hit a 52-week (and all-time) high on $134.54 on April 28.

China is Spending 11.6 Million Annual Incomes Per Day Propping Up Stocks

For years now China has been heralded as an economic miracle that will drive the global economy towards growth and eventually eclipse the US as THE superpower in the world.

This theme was driven by the view that somehow China had obtained the magic balance between free-market capitalism and Central Planning. Globally analysts breathlessly talked about China’s insatiable demand for commodities as its economy grew by double digits for three decades straight.

Unfortunately all of this overlooked basic common sense… that China was actually just one giant debt-fueled fraud in which the politically connected got rich skimming off the top of an endless sea of loose money funneled into dodgy investments and projects.

For example, let’s say that China built a city. Regardless of whether any of the buildings are ever purchased or leased, China will count the entire city in its GDP growth. As one can imagine, this has highly incentivized China’s government to build “bridges to nowhere” or economic projects that are never actually used.

Hedge funds want Puerto Rico to close schools

Hedge funds have a message for Puerto Rico: school is out

Puerto Rico went into default Monday for the first time in its history. The island's governor, Alejandro Garcia Padilla, has announced a "working group" to figure out a plan by the end of the summer.

But a group of 34 hedge funds, led by Fir Tree Partners, already have a recommendation. They funded a report by three economists that calls for Puerto Rico to close some schools, reduce university subsidies and fire teachers so it can pay back its debt.

It might sound cruel, but the hedge funds have a point. One of the central criticisms of Puerto Rico's debt crisis has been the government's tendency to spend and borrow way beyond its limits.

Consider this: Puerto Rico's student population has declined 25% -- or almost 200,000 students -- between 2004 and 2013. But government spending on schools rose 39% -- or $1.4 billion -- during that time, according to the report sponsored by the hedge funds and authored by three former International Monetary Fund economists.

Venezuelan Inflation Soars to 800%

If Venezuelans thought their inflation woes couldn’t get any worse, they were wrong. While the regime has failed to report inflation beyond 2014, contravening the law, the Troubled Currencies Project estimates the annual rate now at 808 percent, as of July 25.

The figure from Steve Hanke of the libertarian Cato Institute, deduced from the black-market exchange for US dollars, is more than 10 times the official rate of 68.5 percent for 2014. Further, the monthly rate of 20.2 percent pushes the Venezuelan bolívar deathly close to hyperinflation.

One now needs 687 bolívares to buy a single US dollar. In other words, the highest denomination bill available, 100 Bs., is now worth a mere 14.6 US cents. This black-market rate comes from DolarToday, an outlet censored by the regime. However, they calculate the going value of the bolívar from the Colombian city of Cúcuta, located on the Venezuelan border.

In the face of constituent need, Chavista officials have resisted printing 500 or 1,000 Bs. notes — perhaps because they do not want to acknowledge the disparity between official numbers and the reality on the ground. For example, the official headline exchange rate of 6.3 Bs. per US dollar, available to the chosen few, overvalues the the bolívar by more than 100 times.

Social Security Administration Overpaid $371.5 Million in Disability Benefits

The Social Security Administration (SSA) overpaid individuals a total of $371.5 million in disability benefits from fiscal year 2009 through fiscal 2013, according to a Government Accountability Office (GAO) report.

These overpayments are cause for concern, as the Social Security’s Disability Insurance Trust Fund is expected to go broke by 2016, according to SSA’s 2015 annual report.

“During a time of growing concern about the solvency of the DI trust fund, it is important for SSA to take every opportunity to help improve the financial status of the program,” the GAO said. The report examined how these concurrent Federal Employees’ Compensation Act (FECA) payments affect Disability Insurance (DI) overpayments.

The GAO found that SSA did not detect concurrent FECA payments for about 1,040 individuals during at least one month from July 1, 2011, through June 30, 2014.

Summer Solutions

Gas Prices Could Drop $1 From Last Year

Gasoline prices are down $0.85 from last year to $2.65 for the average gallon of regular nationwide, and they have fallen for 19 straight days. The trend, likely to continue to take prices down, could push gas $1 lower year over previous year. After a few months of increase, the drop could produce another advantage for the typical American driver.k

According to analysts at the AAA, drivers are paying the lowest averages since 2009. They say:

The national average has steadily dropped, yet volatility continues to characterize several regional markets due to unexpected drawdowns in supply. While some states may not experience significant price drops as a result of regional supply and distribution issues, the national average is expected to keep moving lower leading up to the Labor Day holiday, barring any unexpected spikes in the price of global crude oil or unexpected disruptions to domestic production.

In the past, these events primarily have been trouble in Middle East oil producers and gas prices low enough to undermine the profits of fracking companies in the United States.

$6 eggs could be coming: Analyst

Egg sticker shock at the grocery store could soon get even worse, one analyst warns.

Squeezed by limited supply because of the worst avian flu outbreak in three decades, egg prices have already risen sharply this year. But BB&T Capital Markets analyst Brett Hundley said retail prices could surge even higher.

An uptick to more than $6 for a dozen "would not surprise" him if bird flu returns later this year, something he predicts will occur as early as fall.

As of Friday, prices to consumers for New York large shell eggs stood at a range of $1.99 to $4.49 per dozen, USDA data showed.

"It's almost scary to think about what could happen to egg prices," Hundley said.

Budget guru: The odds of a government shutdown just surged

The odds of a federal-government shutdown this fall climbed significantly in the past week, according to a top expert on the federal budget.

Stan Collender, who has worked on both the House and Senate Budget Committees, now puts the odds of a shutdown at 60% — up from 40% last week. In his weekly running column on Forbes, he wrote that the uptick was due to the “craziness going on in Washington.”

The federal government will shut down on Oct. 1 if Congress does not pass a spending bill to keep the government funded. And with the House of Representatives already in recess for the entire month of August, Congress only has 10 scheduled legislative days in September to figure out a solution.

Congressional Republicans and President Barack Obama had already been at impasse over spending levels for both military and domestic programs. But the introduction of a new, divisive issue is what led Collender to increase the odds of a shutdown.

Freddie Mac posts $4.2 billion second quarter profits

Mortgage giant Freddie Mac reported net income of $4.2 billion for the second quarter, up sharply from the same period of 2014, as it increased its purchases of home loans and sold off greater volumes of riskier mortgages.

The April-through-June results posted Tuesday marked the government-controlled company's 15th straight profitable quarter. Freddie also benefited from rising interest rates.

The McLean, Virginia, company will pay a dividend of $3.9 billion to the U.S. Treasury next month. Freddie will have paid $96.5 billion in dividends, exceeding its government bailout of $71 billion.

The government rescued Freddie and larger sibling Fannie Mae at the height of the financial crisis in September 2008, after they suffered huge losses from risky mortgages in the housing market bust.

Together the companies received taxpayer aid totaling about $187 billion. The housing market's gradual recovery has made Freddie and Fannie profitable again, and they have fully repaid their taxpayer aid.

The Royal Bank of Scotland Sell Off Begins

Why the Government Hates Gold

“It’s a total disaster. It’s like hell here.”

Thus did a trader describe the reopening of the Greek stock market.

The main Athens stock market index, the Athex, ended the day down 16%, after trading was allowed for the first time in five weeks.

And it was down by more than 23% just minutes after the opening bell.

Down and out… despised… scorned – the situation in Greece is excellent.

For investors with ultra-long-term time horizons and strong constitutions, it may be a great time to buy Greek stocks…Yes, prices are being discovered again… by free declaration of buyers and sellers.

Owners of Greek stocks are discovering that their equity stakes aren’t as valuable as they believed.

Goldman Is Confused: If The Economy Is Recovering, Then How Is This Possible

Following last week's news that household formation jumped and was revised higher, the logical consequence is that young Americans living in their parents' basement must finally be moving out.

They are not.

In fact, as the chart below from Goldman shows, Millennials are doing anything but moving out, a development that has left Goldman's economists stumped.

Below is a chart showing that the share of young people (18-34) living with parents has held steady over the last half year, and close to the highest since the financial crisis.

This is how Goldman frames its confusion:

"The share of young people living with their parents--which rose sharply during the recession and its aftermath--finally began to decline in 2014. But over the last six months, this decline seems to have stalled."

Labor Department ruling broadens definition of 'employee'

It likely will become more difficult for businesses to classify workers as freelancers rather than employees — a more expensive proposition for employers — as a result of a Labor Department opinion issued last month.

The opinion written by David Weil, administrator of the department's Wage and Hour Division, broadened the definition of what an employee is, and concluded that most workers are employees under the Fair Labor Standards Act. Workers cannot be classified as freelancers, or independent contractors, unless the circumstances of a job show they're economically independent of an employer, Weil said.

Unless circumstances show workers are truly in business for themselves, they're employees, he said.

Previously, the Labor Department, the IRS and courts had focused on who had control over a worker — whether the work took place on the employer's premises, the hours the worker spent on the job, who supplied tools the worker uses. Weil's opinion said control shouldn't be over-emphasized in analyzing the circumstances of a job. Factors like permanence of a job and whether a worker is employed by others must be considered, he said.

Has Greece crisis created a two-speed Europe?

Deutsche Bank AG (USA) To Be Probed By Department Of Justice

Deutsche Bank AG has been probed by US federal prosecutors, for billions of dollars worth of trades conducted, reported Bloomberg. The Department of Justice is investigating the bank on behalf of Russian clients. Sources privy to the matter told Bloomberg that the Justice Department’s probe wasn’t previously reported, and that the Russian clients may have been allowed to move funds out of the US without official disclosures. This includes the violation of the foreign exchange benchmark rate.

The authority is also looking into the bank’s mortgage and asset securities. The trade with Russian clients involved the examination of stock trading at Deutsche Bank. This new reported inquiry adds to the existing litigation woes at the bank. Over time there have been a variety of probes and investigations by regulators against Deutsche Bank. These multiple investigations have led to fines, and even resignations at the bank.

In April, the bank entered a combined settlement with authorities in the US and the UK over issues concerning the rigging of LIBOR markets. Earlier this month, Deutsche Bank singled out executives that were involved in the manipulation of rates; German regulators had doubts over some of its management positions as the bank was imposed a fine of $2.50 billion. These litigation headaches have affected the bank's operations just when it is bringing in a new, strategic revamping process.

Go-go economy becomes so-so economy: U.S. faces dimmer future absent big fixes

Millions of Americans who want a full-time job still can’t find still one. Worker paychecks are barely keeping ahead of inflation. And governments at all levels are struggling to prevent future costs from spiraling out of control.

All of these ailments can be traced to one malady: slow economic growth.

The U.S. is in a straitjacket. Sure, the economy has been growing steadily at a 2% clip since a recovery began in mid-2009. But the U.S. is expanding well below its historic growth rate of 3.3%. And it hasn’t topped the 3% mark in a decade — the longest barren stretch in modern times.

Politicians have taken notice. They’ve seized on the dull performance of the U.S. economy as they jockey to capture the White House in 2016. Republican contender Jeb Bush has publicly made the goal of a 4% economy the early rallying cry of his campaign.

Blue Shield of California owes $82.8 million in Obamacare rebates

Health insurance giant Blue Shield of California owes $82.8 million in rebates to consumers and small employers under requirements of the federal health law.

The majority of that money, $61.7 million, will be divvied up among 454,000 individual policyholders who had Blue Shield coverage in 2014. The average rebate is $136.

The remaining rebates of $21.1 million are owed to about 19,000 small employers. Customers will receive their money by the end of next month, according to the San Francisco insurer.

California's two other big health insurers, Anthem Inc. and Kaiser Permanente, said they won't have to issue rebate checks this year under the Affordable Care Act.

The refunds are required when insurers fail to spend a minimum of 80% of premiums on medical care for individual and small-business customers.

U.S. Economic Confidence Index Drops to -12 in July

Gallup's Economic Confidence Index declined to an average of -12 in July from -8 in June. This is the lowest monthly average since last October, and is a noticeable departure from the +3 average in January.

After six consecutive months of improvement beginning in August 2014, Gallup's Economic Confidence Index averaged +3 in January, the first time it was in positive territory since Gallup began tracking it daily in 2008. However, the index began dropping in February as gas prices start to rise, and dropped further to -7 in May after reports of disappointing economic growth in the first quarter.

The U.S. saw still more erosion in Americans' economic confidence in July as the Greek economic crisis played out and the U.S. stock market reacted to it and to drops in the Chinese stock market. Confidence averaged -11 during the last week of the month, July 27-Aug. 2.

RAY DALIO: 'If you don’t own gold, you know neither history nor economics'

The leveraged gold futures derivatives market is knocking down the precious metal, yet in massive contrast, this drop has ignited a shopping frenzy according to gold coin dealers. I spoke with several friends and industry experts last week who confirmed the record sales numbers for the month. In fact, American Gold Eagle sales reached 161,500 ounces in July, the highest monthly figure since April 2013. What gives?

Gold often attracts conspiracy theories when it falls so abruptly, especially on Mondays. Interestingly, in a recent article on Zero Hedge, ABC Bullion out of Sydney, Australia, details some of the speculation behind the precious metal’s beatdown, which I’ve also discussed in my blog.

Price manipulation, or a “bear raid,” could be a factor. Last week, gold prices experienced a mini “flash crash”—the first one in 18 months—after five tonnes of the metal appeared on the Shanghai market. Whether front-running or fat fingers are to blame, the sell order for what many are calling a bear raid was initially thought to have originated in China, but we now believe it came from New York City.

Did investors anticipate China’s negative flash purchasing managers’ index (PMI) last week? China is the largest consumer of gold, and the PMI is a useful leading indicator of commodities demand as well as job growth.

Wednesday 08.05.2015

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.