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Tuesday 07.12.2016

Hard drive maker Seagate is firing 6,500 employees and the stock is soaring

Data storage company Seagate announced its preliminary financial results for the fourth quarter and in addition to higher than expected revenue guidance, the firm said it was cutting 14% of its workforce.

The move is a continuation of Seagate's plan to slim down the costs of its business and provide significant savings for the firm. This is the second round of announced layoffs in a few weeks, as the firm said it was laying off 1,600 emloyees on June 29.

"In addition to the Company's restructuring actions announced June 29, 2016, the Company announced today an additional restructuring plan for continued consolidation of its global footprint across Asia, EMEA and the Americas," said Seagate in a release accompanying the announcement.

"The plan includes reducing the Company's global headcount by approximately 6,500 employees, or 14% of its global headcount by the end of fiscal year 2017. The total pretax charges for the plan will be approximately $164 million in fiscal year 2017."

Citibank to close Venezuela government accounts

Venezuela's President Nicolas Maduro said on Monday that Citibank NA C.UL, planned to shut his government's foreign currency accounts within a month, denouncing the move by one of its main foreign financial intermediaries as part of a "blockade."

"With no warning, Citibank says that in 30 days it will close the Central Bank and the Bank of Venezuela's accounts," Maduro said in a speech, adding that the government used the U.S. bank for transactions in the United States and globally.

"Do you think they're going to stop us with a financial blockade? No, gentlemen. Noone stops Venezuela."

Citibank, a unit of Citigroup Inc (C.N), could not immediately be reached for comment about the purported measure against Venezuela's monetary authority and the Bank of Venezuela which is the biggest state retail bank.

Fed’s George Resumes Her Rate-Hike Push After Strong Jobs Report

Federal Reserve Bank of Kansas City President Esther George has resumed her advocacy for interest-rate increases, citing the June rebound in U.S. hiring as a key reason to push rates further above zero.

“The economy is at or near full employment” said George, a voter this year on the policy-making Federal Open Market Committee, in a speech Monday in Lake Ozark, Missouri. “And yet short-term interest rates remain at historic lows. Keeping rates too low can also create risks.”

George, who voted with her colleagues to leave rates unchanged last month, is considered one of the most hawkish members of the FOMC. She has dissented at two of the committee’s four meetings this year in favor of higher rates. The FOMC has left the target range for the benchmark federal funds rate unchanged at 0.25 percent to 0.5 percent since December, when it hiked for the first time in almost 10 years.

George explained to the audience that she didn’t dissent at the June 14-15 FOMC meeting because a disappointing U.S. payrolls report for May, as well as Britain’s looming referendum on European Union membership, had given her pause.

HSBC avoided US money laundering charges 'because of market risk'

A US Congressional report released Monday also accused former Attorney General Eric Holder of misleading congress about the decision. In 2012 HSBC was accused of violating US sanctions and allowing drug cartels to use its branches to launder funds.

The bank paid a $1.92bn settlement but did not face criminal charges. No top officials at HSBC were charged with any crimes. The report says Mr Holder ignored the recommendations of more junior staff to prosecute HSBC because of the bank's "systemic importance" to the financial markets.

"Rather than lacking adequate evidence to prove HSBC's criminal conduct, internal Treasury documents show that DOJ [Department of Justice] leadership declined to pursue [the] recommendation to prosecute HSBC because senior DOJ leaders were concerned that prosecuting the bank 'could result in a global financial disaster'," the report said.

Instead, the Department of Justice and HSBC reached a $1.92bn (£1.48bn) settlement, which some politicians criticised for being too lenient. Testifying before Congress in 2013 Mr Holder said the size of some financial institutions can make it difficult to bring criminal charges. He later tried to clarify those remarks telling congress, "If we find a bank or a financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought."

Bubble Ready to Implode. Massive QE Coming!

Many borrowers still owe too much on their home

Many borrowers are catching up on their home equity, and are no longer underwater due, in part, to rising home prices, according to the latest Mortgage Monitor Report from Black Knight Financial Services. The problem, however, is that there are still many that remain underwater on their homes.

Black Knight is a provider of integrated technology, data and analytics solutions that facilitate and automate many of the business processes across the mortgage lifecycle. This month, the Mortgage Monitor leveraged data from the Black Knight Home Price Index to revisit the U.S. equity landscape in light of 48 consecutive months of annual home price appreciation.

About 425,000 borrowers regained equity in the first quarter, bringing the rate down to 5.6%. At the end of 2012, borrowers who were underwater made up 29% of the market. "As we approach the 10-year anniversary of the pre-crisis peak in U.S. housing prices, we're just under 3% off that June 2006 peak nationally, and 23 states have already passed their 2006 peaks," said Ben Graboske, Black Knight Data & Analytics executive vice president. "The result is that equity levels are rising nationwide for the most part.”

The good news is, the number of homeowners in negative equity will likely continue to decrease. Home prices in May increased both monthly and annually, according to the Home Price Index and HPI Forecast released by CoreLogic.

Important Silver Threshold Line Broken… What Next??

The important silver threshold line was broken briefly last week and continues to bump up against it in early trading today. If the silver price closes above this threshold line by a significant margin, it could mean big trouble for the bullion banks who hold record silver short contracts.

The important silver threshold line is the 50 (MA), or what is known as in technical terms, the 50 month moving average line. Because I used a 20 year monthly chart, the 50 (MA) line refers to the moving average in monthly terms. If the chart is shown in weeks, then its a weekly moving average… and if it is a daily chart, then it is a daily moving average. Here is an updated 20 year silver chart which now shows a 50 (MA) of $20.35:

Let me explain this chart, especially for new folks to the site and the industry. While I focus on the mid to long term fundamentals of the silver market, professional traders look at these charts and trend lines very carefully. Normally, I don’t spend much time looking at this info, but because we have now punctured an important silver trend line, what happens next could be very interesting.

There are two lines in this chart. The RED LINE is the 200 (MA). This is the average silver price based on a 200 month moving average. What is important about this 200 (MA) trend line is that once the silver price moved above it in 2004, it has not fallen below it, except very briefly at the beginning of 2016, when it bounced off it.

Starbucks baristas get big raises: 5% or more (Prices to go up by as much as 30 cents)

In a memo sent to all 157,000 U.S. employees, CEO Howard Schultz announced a wage hike for all store employees and managers as of Oct. 3. Starbucks will also double the company stock awards for employees who've been there two or more years. Altogether, these changes will boost total compensation between 5% to 15% for all workers.

The raise applies to workers in Starbucks' 7,600 company-operated stores, but not in the nearly 5,000 licensed locations operated by other companies. It is the latest major U.S. retailer to raise wages as it tries to fill positions in the face of an improving labor market.

Starbucks employees earn an average of $9.43 an hour, according to Glassdoor.com, which tracks salaries and surveyed 2,600 of the chain's employees. The average annual wage came to nearly $20,000, including tips, company stock, and other bonuses, according to the website.

The company would only say that its pay range depends on where an employee lives. The news of pay raises also comes the day before Starbucks institutes price hikes on many of its products. Some prices could go up by as much as 30 cents.

Many Americans Want Work, but They Don’t Want to Mow Lawns

Most American homeowners are possessive and protective of their lawns, but they are less picky about who maintains them: One in three Americans who have lawns say they hired landscapers to maintain their yards in the past year. The national obsession with manicured lawns has helped propel landscaping into a $76-billion industry that has grown about 3 percent each year. Whether it means finding the right fertilizer or bagging up stray leaves, Americans are willing to shell out about $600 a year for someone else to handle their outdoor maintenance.

But finding people willing to do yard work is getting harder and harder for professional landscapers. Owners of landscaping businesses are saying that their biggest challenge is finding people who will prune bushes in the middle of the summer, in the heat, for the wages they pay. So it's no wonder, then, that the landscaping industry has become the largest employer of foreign, non-agricultural guest workers.

“It's the very nature of the work. The guest workers who come over year after year are willing to put in the hours and difficult labor,” says Paul Mendelsohn, the vice president of government relations for the National Association of Landscape Professionals, a trade group. About 500 or 600 of the association’s roughly 2,500 member businesses use the H-2B visa program, which allows employers seeking seasonal help to bring foreign workers from abroad for up to 10 months at a time (and which is not to be confused with the more well-known H-2A program for agricultural workers).

The NALP and other business groups have advocated for increasing the size of the program, which has a cap of 66,000 visas each year. Last year, Congress passed a spending bill that expanded the H-2B program so that it doesn’t count returning guest workers against the 66,000-visa limit. This expansion could add up to four times as many guest workers to the American workforce this year, and the fight to renew the provision, which expires in October, is underway again. Under the H-2B visa, employers must pay travel costs, visa fees, and housing expenses for workers during their stay in the United States. In 2014, most H-2B workers came from Mexico, with Jamaica and Guatemala sending many as well. Texas is the state that brings in the most H-2B workers.

Illegals Cut the Line for Food Stamps

Due to a quirk in the way most states calculate eligibility for food stamps, some families with illegal immigrants get favorable treatment over families with only American citizens, according to a report released Monday.

Under federal law, eligibility for food stamps depends on family size and income. States administer the program, however, and have flexibility in determining how to count income.

In all but a handful of states, the income is counted in such a way that a family made up exclusively of Americans or permanent residents who have lived in the United States for at least five years are deemed ineligible — while a family with the exact same income can be eligible, as long as some of the income comes from an illegal immigrant or green card holder with fewer than five years of residency.

The Washington-based Center for Immigration Studies, which produced the report, estimates that perhaps 460,000 families are receiving food stamps as a result of this policy, at a cost to taxpayers of about $1 billion.

Interest rates: Weather may have contributed to delayed hike

Mother Nature may have played a role in Federal Reserve officials' decision last month against raising interest rates.

While Friday's jobs report soundly topped expectations, with the U.S. economy tacking on 287,000 more jobs, May's paltry gains of 38,000 were revised substantially downward, to just 11,000 jobs gained.

The Fed, when it opted last month to not raise rates, said it was looking for more consistency in key data points — like jobs — before following up on the December 2015 rate increase with the first hike for this year. But a cool start to 2016 slowed hiring in key industries, such as home building and leisure, and May's jobs report reflected it.

Goldman Sachs analysts spotted the trend. "During April and May, employment in the most weather-sensitive industries (construction, leisure and hospitality, and retail trade) increased by an average of just 4,000 per month, down from an average of about 113,000 in October through March," Goldman Sachs analysts wrote Thursday before the June jobs numbers came out.

Is more gov't the answer for America's woes?

Share of Student Loan Debt-Laden Borrowers Rising

The number of mortgage holders carrying student loan debt has increased by more than 40 percent over the past 10 years, bringing the count from 5.4 million in 2006 to 7.7 million in 2016, according to Black Knight Financial Services’ May 2016 Mortgage Monitor released Monday. The report displayed the correlation between borrowers with student loan debt and their mortgage performance.

Approximately 15 percent of active mortgages reside with borrowers who possess student loan debt. It was shown that borrowers with mortgages tend to perform better on student loan debt obligations than those without mortgages. Additionally, it was shown that fewer than one percent of all active mortgages belong to borrowers who are 90 or more days past due on their student loan debt.

The report also found the share of mortgage originations given to borrowers with student loan debt has increased to 19 percent of all originations, a new high in 2014. This information was gathered from the most recent full-year data currently available. In 2014, 23 percent of purchase originations held student loan debt compared to 14 percent of refinance originations holding student loan debt. This is noted as a direct correlation to the change from a refinance to purchase-heavy market from 2012 to 2014. According to Black Knight, is something to watch going forward if and when interest rates begin to rise again.

Even with the substantial increase, this does not mean that all mortgages will be successfully fulfilled to borrowers holding student loan debt. Borrowers severely delinquent on their student loan debts are five times more likely to be delinquent on their mortgage as well compared to those who are current on student loan debt. As well, these borrowers are nearly six times more likely to be delinquent than the average borrower without any student loan debt.

California Testing 'Pay-Per-Mile-Fee' For Drivers

California may soon have another way to squeeze money out of their drivers, as the Golden State is looking at replacing its gas tax with a pay-by-the-mile-fee.

The state already has one of the highest gas taxes in the nation, and according to Forbes is already one of the priciest places to own a car.

Right now, California gets most of its road upkeep funding from its high gasoline tax, which buyers pay at the pump. But that money has not been enough to keep up with the state's crumbling infrastructure. Some blame the funding deficit on the rise in popularity of more fuel efficient cars, while others point to the fact that the tax has not been adjusted for inflation since 1994.

California currently has the most registered cars of any state in the nation. If electric cars become even more popular, the deficit could become even larger. The pay-per-mile fee assuems those who drive the most use more state infrastructure, and therefore should be the ones who pay for its repair. Proonents say gasoline consumption is no longer the best method for determining who uses the roads the most due to the rise in hybrids and other fuel-efficient cars.

Is the economy shortening Americans' lives?

It has long been known that high-income people in the U.S. tend to live longer than those lower down the income ladder. But a growing body of research shows that millions of Americans are, for the first time in more than a century, seeing their life expectancy slip. And, while the reasons for that decline are complex and not yet fully understood, the contours of an explanation are starting to take shape: Despair is shortening their lives.

"One thing we're seeing is that people who are poor live a lot less -- a striking amount less -- than the rich," said Diane Whitemore Schanzenbach, an economist with Northwestern University and director of The Hamilton Project, a think tank focused on boosting the country's economic prosperity. "There are real disparities across the income distribution."

Schanzenbach is co-author of a paper that explores why some Americans are seeing their longevity decline and mortality rates increase. Specifically, over the past three decades the life expectancy of low-income workers has stagnated or even declined. (Life expectancy is an estimate of how many more years a person has to live at a given age, while the mortality rate refers to the number of deaths over a given period of time.)

Beyond the simple issues of social justice around why some Americans are dying sooner than others, these trends have enormous implications for everything from how the U.S. seeks to reduce poverty, to Social Security costs, to public investment in health care. More broadly, they demand answers to a key question: Are the eroding financial security, diminishing job opportunities and generally grim economic prospects facing many Americans putting them into an early grave?

Bernanke’s Japan Visit Unveils “Helicopter Money”, Sparks Monster Rally

When we first heard this past Thursday that private blogger and Citadel employee Ben Bernanke was going to “secretly” meet with both the BOJ’s Haruhiko Kuroda and Japan PM Abe, we warned readers that “something big was coming.”

As noted late last week, “Bernanke will be in Japan next week. It has been arranged for him to meet officials including Abe and Bank of Japan Governor Haruhiko Kuroda, according to a government official speaking on condition of anonymity. Bernanke is expected to discuss Brexit and the BOJ’s negative interest rate policy with Abe and Kuroda, the official said.” Reuters also added that “some market players speculate Kuroda might decide, in a surprise, to provide “helicopter money.”

We concluded as follows: So is it time? Is Bernanke about to unleash the next, and final, monetary policy evolutionary step, one which launches “helicopter money” in Japan, and if successful, brings it across the Pacific to the US?

We don’t know, but if anyone is still holding on to USDJPY shorts, now may be a good time to quietly close them out, because if Reuters is right, and a “helicopter money” is about to be served for the first time in modern history, things are about to get very volatile, very fast.


The 2016 presidential campaign has inspired voter strong interest, but as the two major political parties prepare for their respective nominating conventions, satisfaction with the candidates is the lowest it's been in decades, the Pew Research Center said Thursday.

The center's analysis offers a bleak picture of voters' impressions of the presidential campaign and the choices they face in November. While both Hillary Clinton and Donald Trump continue to draw thousands to their respective campaign rallies, fewer than half of registered voters in both parties — 43% of Democrats and 40% of Republicans — say they are satisfied with their choices for president, the Pew Research Center said.

What's more, the center found that about four-in-10 voters (41%) say they will have a difficult time choosing between Trump and Clinton because they believe neither would be a good president. That's the highest level of dissatisfaction in the Democratic and Republican nominees since Vice President Al Gore faced then-former Texas Gov. George W. Bush in 2000 -- an election ultimately decided by the U.S. Supreme Court’s controversial Bush v. Gore (pdf) decision.

By comparison, only 11 percent of voters contacted by Pew researchers believe either candidate would make a good president -- the lowest percentage in five presidential election cycles. Plumbing the reasons behind these woeful numbers, the Pew researchers found -- no surprise, really -- that this year's presidential contest is widely viewed as being excessively negative with little, if any focus on the concerns of real Americans.

MIT robot schedules baby deliveries

Kimberly-Clark Suspending Venezuela Operations Amid Crisis

Kimberly-Clark Corp. (IW 500/60), the consumer-products giant that owns Kleenex and Huggies, said it will shutter its Venezuela operations after years of grappling with soaring inflation and a shortage of hard currency and raw materials.

The South American nation’s deteriorating economic situation had made “it impossible to continue our business at this time,” the company said on June 9.

The decision is likely to add to shortages that have gripped Venezuela for the past few years after the ruling socialists capped the price on many consumer basics below production costs.

Desperate shoppers now routinely spend long hours in front of stores to purchase essential products ranging from toilet paper to rice. At the same time, companies face hefty losses on price-controlled goods, while the products are often flipped on the black market for many times their sticker price.

Department Stores Don’t Draw Customers, Malls Don’t Want ‘Em Anymore

What actually draws you to the mall, when you go there? A generation ago, you might have headed to your nearest mall to buy a refrigerator from Sears or a dress from JC Penney. Today, though, customers are less interested in hulking department stores, and more likely to visit their local mall to have dinner at a Cheesecake Factory or shop at an Apple Store, and skip the department store. Mall owners are noticing.

As anchor tenants leave, instead of replacing them with another anchor, malls are simply replacing them with things that aren’t traditional anchors. Replacements for department stores at malls owned by high-end mall developer Simon, for example, include Forever 21, Target, and European fast-fashion shop Primark, which has entered the U.S. market by slipping in former Sears stores.

“Cheesecake Factory does as much business as Sears used to do,” the chief executive at giant mall operator CBL & Associates Properties Inc. told the Wall Street Journal. Yet if you put a Cheesecake Factory in the space where a Sears used to be, you’ll have room for a few more medium-sized stores that will actually draw shoppers.

General Growth Properties, a mall owner that you may have heard of after its CEO let slip speculation about Amazon’s mall retail plans during an earnings call, has replaced traditional anchors in its malls with other draws, like gyms, H&M clothing stores, and even a Wegmans supermarket.

Report: 1,200 women assaulted on New Year's Eve in German cities

More than 1,200 women were sexually assaulted in German cities on New Year's Eve, including more than 600 in Cologne and about 400 in Hamburg — far more than initially reported, according to German news media.

Authorities believe 2,000 men were involved in the assaults, and 120 suspects — many of them foreigners — have been identified, The Sueddeutsche Zeitung newspaper reported Sunday, based on a leaked police document.

In January, at least 90 women filed police reports alleging they were sexually assaulted, including one report of rape, and police initially identified up to 1,000 men as suspects.

Four men have been convicted of crimes related to the New Year's Eve assaults, and more trials are underway. A Cologne court sentenced two men Thursday, an Iraqi and an Algerian, who were given suspended one-year sentences, according to The Washington Post.

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.