Shell to Quit Up to 10 Countries, Anticipates Cutting 12,500 Jobs
Royal Dutch Shell announced that it could be vacating up to 10 countries this year, as it moves to divest up to 10 percent of its oil and gas assets and save around US$4.5 billion.
Shell said in a statement that up to 10 percent of its oil and gas production were tagged for disposal, and planned to exit five to ten countries—a plan that would unfold over the course of the next two years. The savings plan represents US$1 billion more than previously discussed.
Shell also plans to trim capital expenditure this year by US$1 billion to US$29 billion, while pressure mounts as net debt rises to nearly US$70 billion, according to the Wall Street Journal. The supermajor recently completed its US$92-billion takeover of BG Group to give the company strength in the LNG market.
According to a statement, the company sustained an 89-percent drop in profit in the first quarter of this year due to the drop in crude prices. The company anticipates cutting 12,500 jobs. Those cuts are coming as a result of the takeover, and due to the decline in oil prices.
Former Bank of England head Mervyn King joins Alan Greenspan in advocating gold ownership
In The End of Alchemy, Mervyn King, the former head of the Bank of England, writes of central banks’ frustration in dealing with the stagnant global economy. “Central banks,” he says, “have thrown everything at their economies, and yet the results have been disappointing, Whatever can be said about the world recovery since the crisis, it has been neither strong, nor sustainable, nor balanced.”
Similarly, former IMF chief economist, Olivier Blanchard was recently quoted in the Financial Times as saying: “And so the question is why is it, that with no fiscal consolidation and banks in decent shape, at least in terms of lending, and zero interest rates, we don’t have an enormous demand boom? That is now the puzzle.”
Alan Greenspan, in a recent interview with Fox Business News, offers the beginnings of an answer to Blanchard’s question – a question which happens to be on the minds of not just policy-makers but ordinary investors as well. “Our problem,” he said, “is not recession which is a short-term economic problem.
I think you have a very profound long-term problem of economic growth at the time when the Western world, there is a very large migration from being a worker into being a recipient of social benefits as it is called. And this is legally mandated in all of our countries.” The western world, he concludes, is headed to “a state of disaster.”
There's a $6.6 trillion reason the US might be nearing a recession
Talk of a recession dominated market analysts' conversations during the swoon that started 2016, but it started fading into the background after the market recovery.
According to Joe LaVorgna of Deutsche Bank, however, in addition to slowing jobs growth and weakening economic data, there is a huge reason to worry about a recession: debt.
"The corporate sector has taken on a substantial amount of debt in the current business cycle," LaVorgna wrote in a note to clients. "Non-financial corporate debt has increased by $2 trillion from its trough in Q4 2010."
A breakdown from analysts at S&P earlier this month found that corporate debt had risen at the 2,000 or so largest US firms to $6.6 trillion to end 2015, up from $3.8 trillion at the end of 2010. According to LaVorgna's breakdown, corporate debt as a percentage of gross domestic product has reached a level previously seen only just before the two most recent recessions.
Here's Why China's Economy Will Be So Hard to Fix
US Worker Productivity Slumped Again in Q1
American workers were less productive again in the January-March quarter, although the decline wasn't as severe as first thought. Meanwhile, labor costs climbed at a faster pace than initially estimated.
The Labor Department said Tuesday that productivity declined at an annual rate of 0.6 percent in the first quarter after a 1.7 percent drop in the fourth quarter. The government first estimated that productivity fell at a 1 percent rate. Labor costs for employers rose at a 4.5 percent rate in the first quarter, even faster than the 4.1 percent gain first reported.
Productivity has been weak for the past five years, a troubling development since productivity growth is the key factor that pushes up living standards. The rise in labor costs indicates that worker pay is finally climbing after an extended period of weak wage growth.
Blerina Uruci, an economist with Barclays Research, said she forecasts only modest productivity growth in the coming years, with "limited scope for an imminent return" to the stronger productivity gains that were occurring before the 2007-2009 recession. Fed Reserve Chair Janet Yellen said Monday that lackluster productivity gains represented a key uncertainty facing the economy. Productivity growth has been unusually weak over the past five years, averaging just 0.5 percent per year, just one-third of the annual gains seen from 1970 to 1990, she said.
By 2020, half the world's wealth will be controlled by millionaires
Millionaires will control more than half of the world's wealth by 2020, according to a new report, with the richest millionaires gaining the most.
The number of millionaire households in the world grew 6 percent in 2015, to 18.5 million, according to the Boston Consulting Group Global Wealth report. The increase marked a slowdown from the 11 percent millionaire growth in 2014.
Still, millionaires currently control 47 percent of the world's wealth, and will control 52 percent by 2020, according to the report. And the richest of the rich will gain the most, especially in the U.S. Those worth more than $20 million in the U.S. will control 29 percent of the country's wealth by 2020, up from 24 percent in 2015 and 20 percent in 2010, according to the report.
Those worth less than $1 million will see their share of wealth shrink to 29 percent of the total, from 34 percent in 2015 and 40 percent in 2010. The trend will likely accelerate in the next five years, as the largest wealth gains are expected to go to those at the very top of the top. U.S. households worth $20 million or more will see their wealth growth by more than 7.6 percent over the next five years, according to the report. Those in the U.S. worth $1 million to $20 million will see there wealth grow 5.7 percent, while those worth less than $1 million will see their wealth grow 1.2 percent.
D.C. Passes $15 Minimum Wage
Washington, D.C.’s, City Council unanimously approved a bill to raise the city’s minimum wage to $15 an hour Tuesday, and District Mayor Muriel Bowser has promised to sign it.
The measure amounts to a substantial hike in America’s capital city from the current minimum wage of $10.50 per hour, which was already scheduled to increase to $11.50 in July following a measure signed by former Mayor Vincent Gray. Under the new law, the wage in D.C. will rise to $15 per hour by 2020. The law also raises the minimum hourly wage for tipped workers, such as restaurant servers, from $2.77 to $5, reports The Washington Post.
D.C. joins a short list of other major cities to have passed similar measures raising the minimum wage to $15 per hour, including Seattle, San Francisco, and Los Angeles. In April, California Governor Jerry Brown signed a bill into law that will raise the minimum wage statewide to $15 per hour by 2022. Officials in both New York City and New York state have approved similar measures.
The battle over the minimum wage has become a hot button issue nationally in recent years, as labor activists have agitated for an increase to $15 per hour nationwide, a measure Democratic presidential contender Bernie Sanders supports. Hillary Clinton, the presumptive Democratic nominee, supports a more modest increase to $12 per hour.
Consumer credit cools off in April from torrid pace in March
Consumer credit growth cooled off a bit in April from a torrid pace in March, according to the latest government estimates. Credit growth rose $13.4 billion in April, or at a seasonally adjusted annual rate of 4.5%, the Federal Reserve said Tuesday.
This is down from a revised $28.4 billion, or 9.6% pace in March. That was the largest dollar gain in consumer credit on record, indicating that consumers may be willing to run up their credit cards. Prior to March, revolving credit growth had been weak in this cycle.
Economists had expected a gain of $18 billion in April consumer credit. As a result of the gain in April, total outstanding consumer credit reached an all-time peak of $3.6 trillion. Analysts are watching consumer behavior closely because consumption is expected to be the leading engine of economic growth this year.
Fed Chairwoman Janet Yellen highlighted the pickup in retail sales in April as evidence that the economy was likely to improve in the second quarter from a weak growth rate in the first three months of the year.
Nearly 100,000 Left Without Insurance In Colorado Due To Obamacare
We have covered the complete disaster that is Obamacare in great detail recently, from premiums skyrocketing in 2017, to the largest US Health Insurer throwing in the towel on Obamacare exchanges, and even Insurance companies suing the government over subsidies the government promised if the firms lost money as a result of being in the exchange.
And now for the most recent Obamacare debacle we look to Colorado, where more than 92,000 people will be losing their Obamacare health care coverage in 2017. Four large health insurers - UnitedHealthCare, Humana Insurance, Rocky Mountain Health Plans, and Anthem Blue Cross and Blue Shield - will either not be offering individual plans or reducing offerings in 2017, leaving individuals scrambling to find another plan.
From the Colorado Division of Insurance: As noted in a May 13 release, UnitedHealthcare and Humana Insurance will not offer individual plans in 2017, which impacts approximately 20,000 consumers in Colorado (UnitedHealthcare – 10,549; Humana – 9,914). In addition, Rocky Mountain Health Plans (RMHP) determined that it will reduce individual plan offerings for 2017, offering individual plans only in Mesa County, only via its Monument Health affiliate. Approximately 10,000 people currently enrolled in an individual RMHP plan will have to find another plan for 2017.
In addition, Anthem Blue Cross and Blue Shield decided it will not offer its PPO (Preferred Provider Organization) individual plans for 2017, which impacts 62,310 people. However, Anthem will continue to offer HMO (Health Maintenance Organization) individual plans statewide, and these plans will be available to all consumers affected by the PPO decision. All of these companies will continue to offer their small and large group plans for employers.
Uber and Lyft Team Up To Deliver for Wal-Mart
Wal-Mart Stores Inc. has enlisted ride-hailing companies Uber and Lyft to help it battle rising grocery competitor Amazon.com Inc. The two San Francisco firms will partner with Wal-Mart to get last-mile grocery deliveries to customers as part of a test program starting in two weeks. Uber will deliver for Wal-Mart in Phoenix, while Lyft will do the same in Denver. The two firms generally compete against each other for business in both cities.
Customers can order certain goods online and select a window for same-day or scheduled delivery. Then Wal-Mart employees will summon a driver from a ride-hailing firm to pick up the shipment and take it to the customer, who will be notified the delivery is on its way.
Wal-Mart will charge the company's standard priority delivery fees of $7 to $10. Customers will not pay the drivers. Company Chief Executive Doug McMillon is expected to give more details at Wal-Mart's shareholders meeting Friday.
"We'll start small and let our customers guide us," Wal-Mart Executive Vice President Michael Bender said in a blog post. "But testing new things like last-mile delivery allows us to better evaluate the various ways we can best serve our customers how, when and where they need us." In March, Sam's Club started a similar pilot program with same-day delivery company Deliv to take merchandise to business members in Miami.
Former Old Country Buffet Employees Sue Company After Abrupt Closures
Earlier this year, the owner of Hometown Buffet, Ryan’s Buffet, Fire Mountain, and Old Country Buffet abruptly closed ore than 160 restaurants without giving any advance notice to employees and then filed for bankruptcy — but not before hiring auctioneers to sell anything in the restaurants that wasn’t leased or nailed down. Now, a group of former employees have filed a lawsuit seeking class-action status against Food Management Partners, the company that once ran the buffet restaurants, for not giving them a heads up as required by federal law.
Four former employees of an Illinois Old Country Buffet filed the suit [PDF] against Food Management Partners in federal court recently, accusing the company of violating the Worker Adjustment and Retraining Notification (WARN) Act by failing to provide 60-day notice of the closures.
Under the Act, companies are required to provide 60 calendar-day advance notification of plant closings and mass layoffs of employees if 50 or more workers will lose their jobs.
According to the lawsuit, Food Management Partners, which operated the buffet restaurants under the Ovation Brands name, gave no notice on March 7 before closing 92 locations. Prior to these closures, the lawsuit claims the company failed to give advance notice to employees of 74 locations that were closed in February. The employees cite their specific restaurant closures as being in violation of the WARN Act, claiming that at least 50 full-time employees were affected by the abrupt closure.
Puerto Rico's air ambulance company ends service over debt
Puerto Rico's only active air ambulance company announced Tuesday that it has suspended its services, blaming a multimillion-dollar government debt.
Aeromed said in a statement that it has been negotiating with the U.S. territory's government for nearly three years, but that government officials last week rejected a deal to pay $4.4 million, a portion of a much larger overall debt.
"We acknowledge the government's fiscal situation ... but there is no way we can continue to offer our services with inconsistent payments and fees that are unsustainable," said Aeromed director Jose Hernandez.
A growing number of companies in Puerto Rico are suspending services because of mounting government debt amid a 10-year economic slump.
The best places to live if you make a lot of money
Should we raise the minimum wage to $15 nationwide? Should we give every American a minimum income for life — perhaps $13,000 a year, as conservative pundit Charles Murray suggested in the Wall Street Journal last week?
These ideas, which are being debated with escalating excitement, have the allure of being dead simple. As a rallying cry, “Fight for fifteen!” sounds a lot better than, “Let’s raise the minimum wage to a reasonable level commensurate with the strength of different regional economies.”
The latter is, more or less, what New York state did when it passed its $15 wage law last year. Politicians hiked the minimum wage faster in New York City, but slower in other, less bustling, parts of the state. Obviously, a dollar goes a lot farther in Albany than it does in Manhattan.
If the nation gave everyone a basic minimum income, people might start to think more seriously about geographic arbitrage: migrating where the cost of living is cheaper. A frugal person could head to Beckley, W.Va.; or Danville, Ill.; or Rome, Ga. — which the Bureau of Economic Analysis says are some of the least expensive places to live, taking into account average local rents and prices. Of course, you could move to these places right now, but you might have trouble finding a job that pays enough to make it worthwhile. With the boost of a minimum basic income, you could afford to take a bigger pay cut yet still end up feeling richer.
Major League Baseball could be Eyeing Mexico City for Expansion Plans
Major League Baseball (MLB) Commissioner Rob Manfred told Associated Press sports journalists that he wants to expand the league to include 32 teams, according to Sports Illustrated.
Over the years, Manfred has made no secret of his desire to include Mexico in the mix, highlighting the country’s potential to be included in the sport.
“We see Mexico as an opportunity internationally. We also think a team in Mexico and a larger number of Mexican players in the big leagues could really help us continue to grow the Hispanic market in the United States,” Manfred told Forbes last fall.
Other cities rumored to be contenders for the expansion are Montreal, Vancouver, Charlotte, Portland and Austin, with Las Vegas, Ohio, Nashville, Columbus, New Orleans, San Antonio and Monterrey also being brought up in similar discussions.
The Illusion Of Falling Official “Unemployment Rate” Fades
Friday’s employment report featured the headline unemployment rate falling from 5.0% to 4.7% – which is a huge move lower. About the only encouraging aspect of the report is that markets largely ignored the fantasy headline for a change and focused on the ugly details. Nearly everyone acknowledged the report as bad news and markets reacted accordingly.
But not all. Janet Yellen and her crew at the Fed must see through the phony statistics because they are so reluctant to tighten monetary policy. Publicly, however, they talk about job growth and the wonders their stimulus policies have worked.
President Barack Obama and Hillary Clinton also talk triumphantly about putting people back to work. Obama has been parading around the country talking about the fabulous economic recovery he has led. Hillary takes credit for a recovery as well, but promises she can do even better.
They prefer people focus on the headline number and not ask too many questions. After all, their people at the Bureau of Labor Statistics have been hard at work “seasonally adjusting,” modifying the formulas, and otherwise massaging the data. They are painting such a lovely picture for voters to enjoy. The “unemployment rate” has fallen to levels not seen since before the 2008 financial crisis. It’s like magic. And just about as real as when David Copperfield made the Statue of Liberty disappear.
Gold Prices Prepare For The FOMC
The New Economics of Cybercrime
It’s a good time to be a cybercriminal. There are more victims to target, there is more data to steal, and there is more money to be made from doing so than ever before.
It would seem to follow, then, that there’s been very little progress since 2007, when hackers stole at least 45.6 million credit-card numbers from the servers of TJX, the owner of TJ Maxx and Marshalls, catapulting the now-commonplace narrative of the massive data breach to national prominence.
But the truth is that the forces of cyber law and order have made lots of headway in the past decade. There are still large-scale data breaches, but credit-card companies are getting better at detecting them early and replacing customers’ cards as needed, payment networks are pushing microchip-enabled cards that render transaction data worthless to criminals, and law enforcement has gotten smarter and savvier. Just ask Albert Gonzalez, who masterminded the TJX breach and is currently serving a 20-year prison sentence.
The biggest shift in the past decade is that it has gotten much less profitable to do what Gonzalez did—namely, steal millions of payment-card numbers and sell them to fraudsters. According to the cybersecurity firm Intel Security, the price of a stolen payment-card record has dropped from $25 in 2011 to $6 in 2016. “We’re living through an historic glut of stolen data,” explains Brian Krebs, who writes the blog Krebs on Security. “More supply drives the price way down, and there’s so much data for sale, we’re sort of having a shortage of buyers at this point.”
People cannot wait to pay $800 for a laundry-folding robot
For every problem, someone is trying to sell a solution. No matter is too trivial to be monetized, even folding laundry.
FoldiMate, a California-based startup, plans to sell a robot costing between $700 and $850 whose primary purpose is to fold your freshly laundered shirts and pants twice as fast as you could do it yourself. It can also “de-wrinkle” them with steam, and “perfume” them as it goes. It’s a pricey answer to a routine chore, yet folding laundry is evidently so odious that the FoldiMate is attracting serious attention, the Wall Street Journal reported.
The company, which includes several engineers with robotics experience, says next year it will take pre-orders, and it expects the first units to ship in 2018. About 50,000 people as of this writing have registered to be notified when pre-orders begin, though that doesn’t offer a clear indication of how many will actually purchase it.
A commercial version has been available since 2014, according to The Telegraph. The UK newspaper polled readers on whether they would pay £600 to never fold laundry again. Currently, 84% of respondents selected the response, “Shut up and take my money.” Just 16% went with, “What a ridiculous waste.”
Ralph Lauren to close 50 Stores - 1,000 Jobs Lost
Ralph Lauren needs to start making money again, and CEO Stefan Larsson's plan to do it includes restructuring in a move aimed at saving $220 million over the next year.
It will mean closing at least 50 stores and cutting 8% of the full-time workforce, or about 1,000 employees, in order to create a leaner business that operates with fewer layers of management. Larsson also wants to bring the brand more in line with today's trends and better cater to what shoppers want, taking a page out of his time at fast-fashion brands Old Navy and H&M. He will reduce inventory and focus more on the company's core brands.
Larsson, who took over from founder Ralph Lauren in November, is expected to present the details of the plan at an investor and analyst meeting Tuesday.
"The business has struggled over the last three years," he said during the presentation. "We have to do a better job to give the consumer something really exciting."