Wells Fargo Warns a Deeper Review May Uncover More Bogus Accounts
Wells Fargo & Co., seeking to compensate customers burned by a bogus-account scandal, warned investors Wednesday that it may find more victims as it hones its internal review.
“We continue to refine our practices and methodology used to identify, prevent and remediate sales-practices-related matters,” the company said in an annual regulatory filing. “This work could lead to, among other things, an increase in the identified number of potentially impacted customers.”
Wells Fargo’s leaders have been working since September to assuage public furor after authorities fined the bank $185 million for possibly opening more than 2 million retail bank accounts without customers’ approval. The bank has vowed to investigate what happened and make customers whole.
Any additional reimbursements probably won’t “have a significant financial impact,” the company said.
McDonald's turns to technology, value to win back lost customers
McDonald's Corp later this year will give U.S. customers the opportunity to order and pay via their cell phones as it fights to win back customers lost to other fast-food rivals.
McDonald's will make so-called "mobile order and pay" available at all of its roughly 14,000 U.S. restaurants, Chris Kempczinski, president of McDonald's USA, said at the company's meeting with investors and analysts in Chicago on Wednesday.
McDonald's is shifting its multi-year turnaround effort to convenience and value to woo back lapsed diners. The company's U.S. restaurants, which contribute about 40 percent of McDonald's overall operating income, have suffered four straight years of traffic declines, resulting in 500 million fewer transactions since 2012.
McDonald's said it would use a part of the savings from refranchising restaurants outside the United States to modernize about 650 U.S. outlets, under what it calls the "Experience of the Future" plan. The plan, which aims to make visits to McDonald's restaurants more enjoyable, includes introducing table service and allowing customers to order through kiosks.
Stunning Visualizations of Gold Show Its Value and Rarity
Since Ancient times, gold has served a very unique function in society. Gold is extremely rare, impossible to create out of “thin air”, easily identifiable, malleable, and it does not tarnish. By nature of these properties, gold has been highly valued throughout history for every tiny ounce of weight. That’s why it’s been used by people for centuries as a monetary metal, a symbol of wealth, and a store of value. With all that value coming from such a small package, sometimes it is hard to put gold’s immense worth into context. The following images help to capture this about gold, putting things into better perspective.
1. The U.S. median income, as a gold cube, easily fits in the palm of your hand.
2. A gold cube worth $1 million, has sides that are 2/3 the length of a typical banknote.
3. All gold used for electrical connections in the Columbia Space Shuttle would be worth $1.6 million today
4. Trump's entire fortune of $3.7 billion as a gold cube would be shorter than Trump
...See more images
Best Buy Earnings Are Proof Amazon Is Killing Retail
When Best Buy Co. Inc. (NYSE: BBY) reported fourth-quarter results Wednesday morning, the company posted operating income of $881 million on sales totaled $13.48 billion in the quarter. That works out to an operating margin of 6.5%.
Online e-commerce giant Amazon.com Inc. (NASDAQ: AMZN) reported quarterly results in February with an enterprise-wide operating margin of 2.9% on sales of $43.7 billion and an operating profit of $1.3 billion. On just its e-commerce sales, the company’s global operating profit was $329 million on sales of $40.2 billion, an operating margin of a measly 0.8%.
So why is Amazon slaughtering Best Buy, Target Corp. (NYSE: TGT) and Macy’s Inc. (NYSE: M)? Target, which reported earnings on Tuesday, posted operating income of $821 million on sales of $20.69 billion for an operating margin about 4.0%. Macy’s reported operating margin of 9.6% on operating income of $815 million on sales of $8.52 billion.
Even given Amazon’s minuscule retail margin, the company continues to wreak havoc on traditional retailers. There are several possible factors contributing to Amazon’s growth at the expense of virtually every other retailer.
US Manufacturing Expands at Fastest Pace Since 2014
Manufacturing in the United States expanded in February at the fastest pace since August 2014 as factory managers reported stronger orders and production.
The Institute for Supply Management’s index climbed to 57.7, the sixth straight monthly advance, from 56 a month earlier, the Tempe, Arizona-based group’s report showed Wednesday. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 56.2.
The ISM’s gauge of orders increased to the highest level in just over three years, while an index of production posted its best reading since March 2011. The data were preceded by recent regional indicators showing similar strength that has prevailed since the presidential election as companies begin to step up investment and the global economy stabilizes.
“Things look good at this point,” Bradley Holcomb, chairman of the ISM survey committee, said on a conference call with reporters. “I don’t see anything here, or in the winds, that would suggest we can’t continue with this kind of pace going forward in the next few months.”
Rob Kirby-World is Extremely Flush with Money
Mexicans rush money home before potential Trump tax
Mexicans in the U.S. are sending more money home and at a faster pace in part due to fears that President Trump may soon put restrictions the money transfers.
Remittances -- cash transfers from the U.S. to Mexico -- rose 6.3% in January compared to a year ago. Mexicans in the U.S. sent home $2 billion in January, according to stats released Wednesday by Mexico's central bank. January's figures reflect a rising trend. For all of 2016, remittances shot up 8.8% on the year. In 2015, remittances only increased 4.8% from the previous year.
Economists say there are two main reasons for the surge in dollars flying south of the border. First, Trump has threatened to tax or stop the flow of remittances to Mexico in order to pay for his proposed border wall. Mexicans may be trying to ship home money before Trump possibly clamps down on the transfers.
"It's strategic anticipation of potential restrictions," says Alberto Ramos, head of Latin America research at Goldman Sachs. The thinking is: "'Let me send it now before they tax it.'"
Wells Fargo Tries, Fails To Explain Why Customers Shouldn’t Be Allowed To Sue Over Fake Accounts
Wells Fargo has admitted that thousands of its employees opened fake, unauthorized accounts in customers’ names, but the bank is doing everything it can to prevent these wronged customers from having their day in court. We asked Wells Fargo to explain why it believes hundreds of thousands of Americans shouldn’t be allowed to exercise their constitutional right to sue. The bank’s response made little sense (unless you’re a Wells Fargo executive).
Just to quickly catch you up: Wells Fargo is facing lawsuits from customers who allege that the bank’s strict sales quotas created a culture that encouraged employees to game the system by opening bogus accounts. Plaintiffs have also claimed that top bank execs willingly ignored indications that this bad behavior was going on under their noses.
Even the since-“retired” CEO John Stumpf admitted before Congress that he knew of this fraudulent practice three years before the bank ever publicly acknowledged any wrongdoing.
But rather than either settle with these plaintiffs or mount a proper legal defense, Wells Fargo is attempting to shut down these lawsuits by invoking forced arbitration clauses included in customers’ account contracts.
The Fed. Has Now Set The Stage For An Ides of March Moment
Whether or not one agrees that the Federal Reserve is preparing to raise rates again at its upcoming meeting this March, one thing is certain: The Fed. has done everything shy of setting its hair-on-fire to leave little doubt that they are seriously considering it.
As of this past Friday the consensus (or odds) for such a possibility stood in the high 30’s signaling little to no chance. On Monday those odds started to nudge up ever so slightly, yet, by late Tuesday those odds were pushing past the 70’s and heading for 80. Guess what happened next?
We’re now sitting as of this writing at an 82% expectancy rate for the odds of another rate hike in about two weeks time. And the “markets” are setting ever higher records as the day progresses. It would appear the “market” either A: doesn’t believe the Fed. Or, B: no longer cares. I believe it’s A, and that’s a very big problem.
Just yesterday I wrote an article stating that the time to watch China ever-the-closer was right now in light of recent Fed. pile on for March “live” considerations. One of the references I used was the addition of two more Fed. presidents taking to the airwaves to project the idea that March indeed was, and should be, taken as “live.”
Why Central Banks Were Forced To Rig The Gold Market
According to newly uncovered information in the gold market, it provides additional evidence of why the Fed, Central Banks and the IMF were forced to RIG the gold market. Not only was the dropping of the Gold-Dollar peg going to release a great deal of pressure on the manipulated gold price, but forecasts of a massive increase in gold demand was going to totally overwhelm supply.
Thus, this new information provides clear evidence that the gold market was being assaulted on “two fronts.” Not only was the gold market suffering from a decades of price suppression schemes via the Fed and Central Banks, but also that surging gold demand in the jewelry and industrial sectors was going to lead to severe shortages in the gold market.
Which means, the gold market was experiencing a great deal more stress than complications stemming from the debasement of the U.S. Dollar due to massive money printing. Actually, looking at this new information, I had no idea of the amount of Fed, Central Bank and IMF gold market intervention until I put all the pieces together.
Now, when I say “new information”, it pertains to new information and data that I dug up from older official documents. While most of the folks in the precious metals community realize that the Fed and Central Banks have sold gold into the market to depress the price, this new evidence puts the gold market it in an entirely DIFFERENT LIGHT.
Uber CEO Will Seek 'Leadership Help' Amid Challenges
Venezuela is down to its last $10 billion
Caracas is running out of cash. Venezuela only has $10.5 billion in foreign reserves left, according to its most recent central bank data. For rest of the year, Venezuela owes roughly $7.2 billion in outstanding debt payments.
In 2011, Venezuela had roughly $30 billion in reserves. In 2015, it had $20 billion. The trend can't persist much longer, but it's hard to know exactly when Venezuela will run completely out of cash.
"The question is: Where is the floor?" says Siobhan Morden, head of Latin America fixed income strategy at Nomura Holdings. "If oil prices stagnate and foreign reserves reach zero, then the clock is going to start on a default."
According to the country's recently released 2016 financial report, about $7.7 billion of its remaining $10.5 billion of reserves is in gold. To make debt payments in the past year, Venezuela shipped gold to Switzerland. The thinning reserves paint a scary financial picture as the country faces a humanitarian crisis sparked by an economic meltdown. Venezuelans are suffering massive food and medical shortages, as well as skyrocketing grocery prices.
Crocs CEO to leave post, will shutter 160 stores
Reporting another quarterly loss, Crocs Inc. also said its CEO will leave his post later this year and the shoemaker will close more than 28 percent of its retail stores.
Niwot-based Crocs (Nasdaq: CROX) said Gregg Ribatt will step down on June 1, to be replaced by Andrew Rees, who is currently president and will hold both president and CEO roles. Ribatt will remain on the company's board. In addition, Crocs said it will close about 160 of its 558 retail stores by the end of 2018, leaving it with about 400 stores.
Crocs reported a fourth-quarter loss of $44.4 million, or a loss of 60 cents per share, and revenues fell to $187.4 million from $209 million a year earlier.
For fiscal 2016, Crocs reported a $31.7 million loss, or a loss of 43 cents per share, and revenues fell to $1.04 billion from $1.09 billion in 2015.
Yahoo’s Marissa Mayer Loses Bonus Due To Hacks
The board’s Independent Committee investigating the hack — which took place while Mayer was CEO — decided that she should not receive her cash bonus for last year. In addition, after “discussions with the board,” Mayer “offered to forego” her 2017 annual equity award. The board accepted her offer.
Yahoo has not yet disclosed executives’ compensation for 2016. In 2015, Mayer made about $36 million, including a $12.4 million annual equity award. Her deal with the company says that she’s to receive at least $12 million in the annual awards.
The company says that Bell resigned today, and “No payments are being made to Mr. Bell in connection with his resignation.” He received $4.5 million in 2015. The Independent Committee found that Yahoo’s information security team had “contemporaneous knowledge” of the 2014 state-sponsored attacks, “as well as incidents by the same attacker involving cookie forging in 2015 and 2016.”
It adds that “it appears certain senior executives did not properly comprehend or investigate, and therefore failed to act sufficiently upon, the full extent of knowledge.” For example, the information security team knew that the attacker had “exfiltrated copies of user database backup files containing the personal data of Yahoo users” — although it’s “unclear whether and to what extent such evidence of exfiltration was effectively communicated and understood outside the information security team.”
GM, Ford Beat February Sales Expectations but Industry Sales Seen Down
General Motors Co., the top automaker in the U.S. market by sales, said the industry will show a 1 percent decline but still post a robust 17.5 million in sales on a seasonally adjusted annualized basis. That is less than the 17.7 million expected by 38 economists polled by Thomson Reuters.
GM beat most analysts' expectations with a 4.2 percent gain in new vehicle sales. Ford Motor Co., No. 2 in the U.S. market by sales, said sales declined by 4 percent, but still beat most analysts' expectations. Sales for its F-Series pickup trucks rose 9 percent, SUVs were up 6 percent but car sales fell 24 percent from a year ago, the automaker said.
Nissan Motor Co. also beat expectations, showing a 3.5 percent gain, led by a 54 percent surge for its Rogue small SUV.
Consumer discounts, which cut into corporate profits, rose in February, third-party industry watchers said, but the average new car selling price also was higher.
Pepsi is laying off up to 100 workers in Philadelphia and blaming a 2-month-old soda tax
PepsiCo is laying off 80 to 100 workers at distribution plants serving Philadelphia. According to the company, a soda tax that is cutting the area's soda consumption is to blame. The layoffs, which account for roughly 20% of Pepsi's 423 Philadelphia employees, will begin Wednesday and be spread out over the next few months, the Philadelphia Inquirer reported.
"Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80-100 positions, including frontline and supervisory roles, in Philadelphia over the next few months, beginning today," Pepsi said in a statement to Business Insider.
Philadelphia's soda tax passed in June 2016 and went into effect in January of this year. The 1.5-cent-per-ounce soda tax is expected to raise about $91 million annually. As the tax went into effect, local businesses and shoppers reportedly quickly felt the results. Customers apparently began changing their purchasing habits, as the price of two-liter bottles and 12 packs of cans nearly doubled.
In mid-February, Bloomberg reported that some soda sellers in Philadelphia said that beverage sales had dropped up to 50% in 2017. Operators of local supermarkets have reported significant drops in revenue, something executives say will result in their cutting of jobs in the near future and have already forced them to slash employees' work hours. The tax is currently under appeal with arguments expected to begin in April. A Pepsi spokesperson told the Philadelphia Inquirer that if the tax is repealed, the jobs will return.
Dow breaks 21,000
Some Younger People Are Buying Cars So They Can Drive For Ride-Sharing Services
For many drivers, the best part of having your own car is that you don’t have to deal with anyone else — you can blast your music, sing at the top of your lungs, or eat a tuna sandwich, and there’s no one to judge you. But some younger drivers now may have a new reason to buy a car: To become a driver for Uber or Lyft.
A recent report from market research company Mintel that says 15% of millennial car buyers plan to use those vehicles to drive for a ride-sharing service, in comparison to about 9% of the total population.
“A lot of millennials have the mind-set that they’ve got to have a side hustle, something like Uber to supplement their income,” Buddy Lo, an automotive analyst for Mintel, told The Washington Post. “And now that the recovery is taking hold, they’re starting to buy new cars.”
Millennials are also more into buying new cars these days than they may have been in the past: After years of delaying such big life moments in response to the difficult job market that met them upon graduating college, they’re now catching up, as Lo notes, “There was a lot of pent-up demand from the recession.”
Bank Profits Rise 7.7% to $43.7 Billion in Q4
The number of financial institutions on the FDIC’s “problem list” fell to the lowest level in more than seven years. U.S. banks posted a 7.7% jump in profit in the fourth quarter while the number of unprofitable banks and “problem banks” continued to fall.
In its latest Quarterly Banking Profile, the Federal Deposit Insurance Corp. said federally-insured commercial banks and savings institutions reported aggregate net income of $43.7 billion in the third quarter, up $3.1 billion from a year earlier.
For the most part, the increase reflected a $8.4 billion (7.65%) gain in net interest income. Fifty-nine percent of all banks reported year-over-year increases in quarterly earnings, while 8.1% were unprofitable for the quarter, down from 9.6% the previous year. The number of financial institutions on the FDIC’s “problem list” fell to 123 from 132 the year before, the lowest level in more than seven years.
“The banking industry had another largely positive quarter,” FDIC Chairman Martin J. Gruenberg said in a news release, noting that “Revenue and net income were higher, loan balances grew, asset quality improved, and the number of unprofitable banks and ‘problem banks’ continued to fall.”