Headline News Archives

Wednesday 12.14.2016

Fed raises rates, sees faster pace of increases in 2017

The U.S. Federal Reserve raised interest rates by a quarter point on Wednesday and signaled a faster pace of increases in 2017 as the Trump administration takes over with promises to boost growth through tax cuts, spending and deregulation.

The rate increase, regarded as a virtual certainty by financial markets in the wake of a string of generally strong economic reports, raised the target federal funds rate 25 basis points to between 0.50 percent and 0.75 percent.

"In view of realized and expected labor market conditions and inflation, the committee decided to raise the target range," the central bank's policy-setting committee said in its unanimous statement after a two-day meeting.

"Job gains have been solid in recent months and the unemployment rate has declined," the Fed said, noting that market-based measures of inflation compensation had moved up "considerably." More significant was a fresh batch of Fed policymaker forecasts that indicated the current once-a-year pace of rate increases will accelerate next year.

Italy's Largest Bank to Shed $18.8B in Bad Loans, Cut 14,000 Jobs

Italy's largest bank, UniCredit, said Tuesday it will unload 17.7 billion euros ($18.8 billion) in soured loans, raise billions in new money and shed thousands of jobs as it seeks to re-launch the company under new management. The move to reduce the bank's risk profile emerged in a new strategic plan that includes increasing by 6,500 — to 14,000 — the number of jobs it will cut by 2019.

It comes amid broad concerns about Italy's banking system, with speculation that one, Monte dei Paschi di Siena, might need a state bailout before the end of the year. Italy's banks are weighed down by some 360 billion euros in bad loans that won't be repaid due to the weak economy.

UniCredit is the country's biggest by assets and has significant operations outside Italy, particularly in Central Europe, but it too has large amounts of bad loans that are festering on its balance sheets. CEO Jean Pierre Mustier said the "decisive actions" to dispose of the bad loans seeks "to improve and support recurring future profitability to become one of Europe's most attractive banks."

The strategic plan announcement comes the day after Italy swore in a new government, creating hopes that a renewed period of political stability would help its troubled bank sector to tap investors to improve its capital position. UniCredit shares were trading up 3 percent at 2.49 euros in Milan after the announcement.

November Retail Hiring Falls to 6-Year Low; Down 10 Percent From Last Year

Retailers added fewer workers through the first two-thirds of the typical holiday hiring period, according to an analysis of employment data by global outplacement firm Challenger, Gray & Christmas, Inc. The latest data from the Bureau of Labor Statistics (BLS) showed that employment in retail grew by 371,500 in November. That was down 9.3 percent from a year ago, when jobs in the sector increased by 409,500. It was the lowest November employment increase since 2010.

November followed equally anemic employment gains in October, when retailers added 154,600 workers. That figure has since been adjusted even lower to 150,300, which is 23 percent lower than the 194,800 retail employment gains recorded in October 2015. Overall retail job gains for October and November totaling 521,800 are 14 percent are fewer than the 604,300 retail jobs added last year.

“As more and more shoppers move online, there is less need for extra workers in the brick and mortar stores. Even on Black Friday, once notorious for early morning mob scenes at department stores, a growing number of Americans are staying home and finding great deals on the Internet,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Indeed, Black Friday online orders grew nearly 22 percent to roughly $3.3 billion in sales, according to Adobe Digital Insights. While seasonal hiring is down in retail, it is picking up in other areas; namely, transportation and warehousing. Employment in the sector increased by 96,200 workers in October and November, according to BLS data. That was up from 71,300 a year ago.

IBM Lays Out Plans to Hire 25,000 in U.S. Ahead of Trump Meeting

IBM Chief Executive Officer Ginni Rometty said she plans to hire about 25,000 people in the U.S. and invest $1 billion over the next four years, laying out her vision for filling technology jobs in America on the eve of a meeting of industry leaders with President-elect Donald Trump.

Rometty, who is on Trump’s advisory panel of business leaders, will join Facebook Inc.’s Sheryl Sandberg, Inc.’s Jeff Bezos and Alphabet Inc.’s Larry Page and Eric Schmidt at a summit with Trump Wednesday in New York that is said to focus on jobs.

During the run-up to the election, Trump made employment issues a mainstay of his campaign, promising to scrap trade deals he viewed as draining jobs from the country and impose tariffs on imports if necessary. He has since claimed credit for preventing thousands of manufacturing jobs from moving overseas and used state incentives to strike a deal with Carrier, a unit of United Technologies Corp., to pull back on its plans to move some operations to Mexico.

Rometty is continuing what is emerging as a formula among technology companies: in conjunction with meetings with Trump in his Manhattan tower, pledge to create jobs and invest billions of dollars in the U.S., even if the plans had already been in the works since before he was elected. The advantage for companies is that it can deflect criticism from the new administration that the industry is shifting jobs offshore, while also giving Trump a way to take credit for job creation goals that may have little to do with his election.

Stein Spent Nearly $1 Million of Recount Funds on Consultants, Staff, Admin Expenses

Green Party nominee Jill Stein spent nearly $1 million of the funds she raised for recount efforts in three battleground states on consultants, staff, and administrative costs.

Stein, who pushed for recounts in Wisconsin, Pennsylvania, and Michigan, raised $7.3 million for the efforts and said that “every dollar” went towards costs associated with the recount efforts. The group, which claimed costs associated with the recounts hit $7.4 million, upped their fundraising goal four times since first calling for recounts.

According to a breakdown of expenses contained on the fund’s website, Stein paid nearly $1 million on consultants and staff. The staff payroll tallied $212,500 while consultants pocketed $364,000. Administrative expenses, such as travel costs, ran $353,618. In all, $930,118 was used to pay consultants, staff, and administrative costs.

Filing fees in the three states cost $4,488,939, the group says. Wisconsin filing fees totaled $3,499,689, Pennsylvania fees were $16,000, and Michigan filing fees ran the group $973,250. Legal expenses cost the group $1.6 million. Stein’s recount efforts hit roadblocks in both Michigan and Pennsylvania after being blocked by courts in both states. A federal judge on Monday rejected Stein’s recount request in Pennsylvania. Another federal judge put an end to Stein’s recount efforts in Michigan last week.

San Francisco doubles down on sanctuary status

GM Inventory Levels at 8-Year High; More Jobs Threatened?

At the end of November, General Motors Co. (NYSE: GM) reported a total of 834,200 cars and light trucks in its inventory. According to the company, that’s an 84-day supply, based on an adjusted selling day basis. GM’s inventory has risen 28% over the past four months.

What that gross number doesn’t reveal is which models are taking up all the space on the lot. According to a Monday report in Automotive News, GM had a 177-day supply of Chevy Camaro on December 1, up from a 74-day supply last year. That’s nearly six-months worth (34,600 units), compared with an ideal inventory level of 60.

Last year the Buick Enclave luxury sport utility vehicle (SUV) had a 60-day supply on December 1, compared with a 114-day supply this year (16,000 units). The Chevy Cruze had a 121-day supply and the GMC Terrain also had a 114-day inventory supply. The industry average was 73 days of supply on December 1.

GM has already said it would eliminate jobs in two plants — one in Ohio and one in Michigan — that manufacture the Cruze and the Camaro, as well as two Cadillac models. Cutting production again almost inevitably means even more workforce reductions, although GM has not announced any plans to do so.

US Population 65 and Older to Surge in Next 20 Years

The number of Americans aged 65 and older will rise from its current level of 48 million to 79 million by 2035. One in every three U.S. households -- a total of nearly 50 million -- will be headed by someone who is 65 or older.

The Joint Center for Housing Studies of Harvard University released a report Tuesday that notes that the aging population will "increase demand for affordable, accessible housing that is well connected to services far beyond what supply can meet."

Homeownership among older (65+) Americans is expected to soar from 24 million in 2015 to 32 million by 2025 and to 38 million by 2035, an overall increase of 62%. Homeowner households headed by someone aged 80 or older will more than double, from 7.8 million today to 16.2 million in 2035, and represent 11% of all U.S. households.

Demand for rental housing is also expected to rise as renter households nearly double from 6 to 11 million in the next 20 years. Multigenerational households, with older people living with family members (primarily children) currently account for about 8% of all U.S. households with that share rising to 14% for people over the age of 80.

The European Union Initiates Cashless Society Project

A few months back The Guardian ran an article stating that “Swedes are blazing a trail in Europe, with banks, buses, street vendors and even churches expecting plastic or virtual payment” as if the cashless society was something to be celebrated by modern society. “I don’t use cash any more, for anything,” said Louise Henriksson, 26, a teaching assistant. “You just don’t need it. Shops don’t want it; lots of banks don’t even have it. Even for a candy bar or a paper, you use a card or phone.”

Cash transactions are already outdated in Sweden. According to central bank the ‘Riksbank’, cash transactions will make up up barely 0.5% of the value of all payments made in Sweden by 2020. Likewise and according to The Independent, Denmark has moved one step closer to becoming the world’s first cashless society, as the government proposes scrapping the obligation for retailers to accept cash as payment – because, as they say, its to do with the “burden of managing change and notes.”

Strange then that all this is happening in an environment where EUR bank note circulation is still rising. The European Payments Council (EPC), a subdivision of the European Central Bank, are taking steps in their quest to fully eliminate all cash. The reason is not to lift the burden off retailers or to make transactions more convenient but in reality to raise desperately needed taxes.

Highly respected ‘ArmstrongEconomics‘ reports that the EPC are going full steam ahead to enable immediate payment systems throughout not just the Eurozone but the entire European Union. The Single European Payments Area (SEPA) has been devised with the ultimate goal of eliminating ATM cash machines and force everyone to use their mobile phones or plastic cards, the project starting as early as November 2017. In the absence of confirmed information on this point, it is likely that tourists and business people will be forced to pre-pay Euro’s onto an App if they come from a country outside the eurozone, currently made up of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

Disney IT workers, in lawsuit, claim discrimination against Americans

After Disney IT workers were told in October 2014 of the plan to use offshore outsourcing firms, employees said the workplace changed. The number of South Asian workers in Disney technology buildings increased, and some workers had to train H-1B-visa-holding replacements. Approximately 250 IT workers were laid off in January 2015.

Now 30 of these employees filed a lawsuit on Monday in U.S. District Court in Orlando, alleging discrimination on the basis of national origin and race.

The Disney IT employees, said Sara Blackwell, a Florida labor attorney who is representing this group, "lost their jobs when their jobs were outsourced to contracting companies. And those companies brought in mostly, or virtually all, non-American national origin workers," she said.

The people who were laid off were multiple races, but the people who came in were mostly one race, said Blackwell. The lawsuit alleges that Disney terminated the employment of the plaintiffs "based solely on their national origin and race, replacing them with Indian nationals." Disney responded to the lawsuit with this statement sent by a spokeswoman: "Like the two other dismissed cases brought by this lawyer, this latest lawsuit is nonsense and we will defend it vigorously.”

$3 gas? Pump prices heading back up after oil deals

After hitting lows earlier this year, gasoline prices are on the march upward again and are poised to approach $3 per gallon in parts of the country in early next year following multiple deals to cut oil production, analysts said.

Oil prices have jumped well above $50 per barrel after the Organization of the Petroleum Exporting Countries and several non-member states agreed to slash oil output, pointing to higher costs for U.S. motorists.

Fuel typically slumps during the low-demand winter months, but the opposite has occurred since OPEC’s output-cutting deal Nov. 30 assured investors that oil's global glut would soon ease. After non-OPEC countries, including Russia, struck a deal Saturday to slash nearly 600,000 barrels per day, gas prices continued their upward trajectory.

Gas averaged $2.21 per gallon nationwide Monday morning, according to GasBuddy. That was up 3.8 cents from November's average and up 19.8 cents from a year ago. But if it heads to $3 a gallon, it could have major impact on family budgets. For those driving 12,000 miles a year, the difference can add up. Using last month's average of 24.9 miles per gallon among new cars, as found by the University of Michigan Transportation Research Institute, the additional cost would be $381 at today's gas prices compared to $3 a gallon.

Average American Household With Credit Card Debt Owes $16,061

Debt is American as apple pie, with overall U.S. household debt growing 11% in the past decade. Today, the average household with credit card debt has balances totaling $16,061, and the average household with any kind of debt owes $132,529, including mortgages.

While “don’t spend above your means” will always be sound advice, NerdWallet’s annual survey of household debt and its costs makes clear that increasing debt loads aren’t just a case of lifestyle creep. The rapid growth in medical and housing costs is dwarfing income growth, making it challenging for many families to make ends meet without leaning on credit cards and loans.

But this doesn’t mean Americans are doomed to be indebted for life. Careful spending and steady debt eradication can go a long way toward getting people to financial freedom. Before we begin getting rid of our debt, it’s important to know how much we’re working with. Here’s what the typical household is carrying, as well as total consumer debt balances in the U.S.:

NerdWallet analyzed data from several sources, including the Federal Reserve Bank of New York and the U.S. Census Bureau, to determine how much debt Americans are carrying, why they have so much debt and how this debt will grow and affect the U.S. economy in the future.

Carnival's Strange IT Job Transfer Situation - employees participating in “knowledge transfer activities”

Carnival Corporation (CCL) is no stranger to drama on the high seas. However, there are news reports of changes that may produce drama at corporate headquarters, with the potential to lead to negative consumer perception of the brand.

According to CBS4 News—a news outlet based in Miami—Carnival is eliminating 200 jobs from its IT department. On the surface, this would be bad news for workers and potentially good news for investors if they are cost-cutting measures. However, there is much more to the story. One, slashing headcount usually only has a positive impact for the short term. Over the long haul, it negatively impacts company morale, leads to reduced production, and market share losses. Two, in this specific case, the people losing their jobs are being guaranteed six months of employment with Capgemini – a French firm that describes itself as a “global leader in consulting, technology and outsourcing services.” The catch is that if the Carnival employees don’t sign, they will lose their jobs, and if they do sign, they will be participating in “knowledge transfer activities.”

A Carnival employee told CBS4 News: “Essentially, we were told we would be training our replacements in India how to do our jobs.” Carnival denied that jobs were being outsourced and released the following statement to CBS4 News: “The company is transitioning its shore-side IT operations, maintenance and support in North America to an outside firm, Capgemini, to help the company keep pace with the evolving technology environment. All impacted individuals will become employees of Capgemini.”

Sara Blackwell, a labor attorney who is advising the Carnival employees, released this statement: “Capgemini stated to the fired Americans at a town hall meeting that Capgemini was outsourcing the work to India because that was the only way it could provide the IT services to Carnival at the rate paid to them by the company. The Carnival executives dumped oil in the ocean with the Princess Cruise line and now they are throwing away American workers for foreign slave labor. The executives of Carnival should be ashamed and should have to face the families that they have destroyed merely days before Christmas.”

Records: Too many votes in 37% of Detroit’s precincts

Voting machines in more than one-third of all Detroit precincts registered more votes than they should have during last month’s presidential election, according to Wayne County records prepared at the request of The Detroit News.

Detailed reports from the office of Wayne County Clerk Cathy Garrett show optical scanners at 248 of the city’s 662 precincts, or 37 percent, tabulated more ballots than the number of voters tallied by workers in the poll books. Voting irregularities in Detroit have spurred plans for an audit by Michigan Secretary of State Ruth Johnson’s office, Elections Director Chris Thomas said Monday.

The Detroit precincts are among those that couldn’t be counted during a statewide presidential recount that began last week and ended Friday following a decision by the Michigan Supreme Court.

Democrat Hillary Clinton overwhelmingly prevailed in Detroit and Wayne County. But Republican President-elect Donald Trump won Michigan by 10,704 votes or 47.5 percent to 47.3 percent.

Could IMF Director Christine Lagarde Go to Jail?

Janet Yellen needs to announce resignation — not a rate hike

If Janet Yellen had any class, she wouldn’t just be announcing an interest rate hike this week — she would also be offering her resignation.

Yellen was appointed chair of the Federal Reserve by President Obama in 2014. While most heads of government agencies will soon be offering their resignations to President-elect Donald Trump, the Fed is not a government agency. It’s an independent entity.

Which means Yellen doesn’t have to resign. Her term as chair — which makes her, perhaps, the second-most powerful person in Washington — doesn’t end until January 2018.

And even then, she can hang around as a mere board member — one of 14 — until 2024. So, although Yellen and her colleagues have screwed things up, they get to keep their jobs. And boy has the Fed screwed things up — both before and since the financial crisis that started in 2007. It’s clear that Trump doesn’t like Yellen. And she hasn’t said anything nice about the incoming president or his policies either. So the two aren’t likely to get along.

Outlook for early 2017 shows good jobs still hard to find

Economic and market enthusiasm has been on the rise, but hiring plans remain muted, as shown by a survey of more than 11,000 employers. The net portion of companies expecting to increase their hiring in the first quarter of 2017 actually is slightly lower than it has been for anytime during 2016, according to results from ManpowerGroup's employment outlook survey released Tuesday.

Nineteen percent of firms said they plan on increasing employment, 6 percent expect to decrease it, and 73 percent see no change. The net of 13 percent is the lowest since the first quarter of 2015.

"Looking at the backdrop following a period of political uncertainty not just in the U.S. but around the world, from our standpoint it's a signal of stability," said Chris Layden, managing director of ManpowerGroup's Experis business. "It's not a robust hiring report."

The report's authors called the trend "a positive sign," though underlying numbers show that some of the issues bedeviling the U.S. jobs market are likely to continue. The biggest area of hiring will be leisure and hospitality, a growth area for jobs during the recovery but one that doesn't help fix the stagnant wages that have been prevalent throughout. Some 30 percent of employers in the profession intend to increase hiring, while just 7 percent expect cutbacks, according to numbers not seasonally adjusted.

Feds propose connected-car technology standards

Federal safety regulators today proposed new connected-car technology that would enable cars and trucks to "talk" to each other in an attempt to reduce accidents and help traffic move more smoothly.

“We are carrying the ball as far as we can to realize the potential of transportation technology to save lives,” said U.S. Transportation Secretary Anthony Foxx. “This long promised V2V (vehicle-to-vehicle) rule is the next step in that progression. Once deployed, V2V will provide 360-degree situational awareness on the road and will help us enhance vehicle safety.”

In February 2014, Foxx directed the National Highway Traffic Safety Administration (NHTSA) to begin work on the rulemaking. “Advanced vehicle technologies may well prove to be the silver bullet in saving lives on our roadways,” said NHTSA Administrator Mark Rosekind. “V2V and automated vehicle technologies each hold great potential to make our roads safer, and when combined, their potential is untold.”

The proposed rule announced today would require automakers to include V2V technologies in all new light-duty vehicles. The rule proposes requiring V2V devices to “speak the same language” through standardized messaging developed with industry.

Debunking liberal myths about mass immigration

Colorado Topped $1 Billion in Legal Marijuana Sales in 2016

It only took Colorado 10 months to pass $1 billion in legal cannabis sales in 2016, one year after the state came up just shy of that milestone revenue figure.

Marijuana businesses in Colorado, which voted to legalize the drug recreationally in 2012, reported roughly $1.1 billion in legal sales of medical and recreational marijuana and related products this year through the month of October, according to the latest batch of tax data from the state’s Department of Revenue. That number easily tops the roughly $996 million in total marijuana revenue the state reported in 2015.

The Denver Post first reported the state’s record sales figures, noting that Colorado saw $82.8 million in retail cannabis sales in October alone, along with more than $35 million in medical marijuana sales. With two months left in 2016, The Denver Post also notes that the state’s legal marijuana market could hit $1.3 billion for the year, which would represent a 30% spike in sales over the previous year. In 2015, the state saw a 42% bump in legal cannabis sales from 2014, which was the year the state’s legal recreational pot market opened for business. Medical marijuana has been legal in the state since 2000.

Through October, Colorado has collected more than $150 million in taxes from legal marijuana sales, including nearly $50 million from a specific excise tax that directs funds to school construction projects. The first $40 million collected annually from the excise tax is earmarked for the school projects.

Court Rules That Police Can Force You To Tell Them Your Phone’s Passcode

Smartphones have taken over our lives faster than the law is able to deal with. For a few years now, it’s been kind of an open legal question whether or not law enforcement can force you to provide them with the password or PIN you use to unlock your phone. A few previous courts have ruled no, that having to provide your passcode is tantamount to self-incriminating testimony. But recently, an appeals court in Florida has found the other way.

In this particular case, as Courthouse News reports, the phone is a significant part of the alleged crime in question. A woman out shopping in Florida saw a man crouch down and aim a phone under her skirt, presumably to snap photos. She confronted the man, who then ran out of the store. However, police were later able to track him down based on his car’s license plate number.

When police picked up the suspect and arrested him for voyeurism, he agreed that they could search his phone — an iPhone 5 that would, presumably, have any illicit photos he’d snapped on it. Before they actually could, however, he revoked consent and refused to tell police his four-digit passcode. The police eventually went and got a search warrant but, without the passcode, were still unable to search the device.

Conceptually, it’s a similar situation to what the FBI and Apple argued out this spring, in the wake of the San Bernardino mass shooting. Law enforcement could in theory attempt to brute force the password — there are only 10,000 possible combinations between 0000 and 9999, after all — but entering the wrong one more than 10 times will force the phone to permanently erase any data it has stored.

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