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Monday 05.08.2017

More than 1,900 layoffs announced this year at Strack & Van Til, Central Grocers

Highland-based Strack & Van Til has reported to Illinois that it will lay off more than 750 workers when it closes seven Ultra Fresh Foods stores, bringing the total number of layoffs at the supermarket chain and its embattled parent company to 1,935 this year.

The 58-year-old grocery store chain submitted Worker Adjustment and Retraining Notification, or WARN, Act notices to the Illinois Department of Security that it would lay off 752 workers when it closes its Ultra stores in Lansing, Chicago Heights, Crestwood, Calumet Park, Forest Park, Wheaton and Joliet.

That includes 138 layoffs at the Lansing Ultra at 16831 Torrence Ave., which it spent millions to renovate in 2015, adding a sushi bar and other modern amenities. Ultra had just opened the Crestwood store, which employed 86, in 2012.

All the Ultra stores are slated to close by June 17, which is when the layoffs are slated to take place, according to the WARN notices. Strack & Van Til earlier warned the Indiana Department of Workforce Development it would lay off 174 workers at its locations on Ridge Road in Gary and the Merrill Point shopping center in Merrillville, which are also slated to shutter by June 17.

Gander Mountain going out of business after 57 years

According to Gander Mountain's website, the company is closing all 126 stores nationwide. Including the location here in El Paso on Zaragoza Road.

Gander Mountain is a chain retailer for hunting, fishing, camping, apparel and outdoor lifestyle. The company filed for voluntary Chapter 11 Bankruptcy in March, and in May was acquired by Camping World Holdings, Inc.

The company put a statement on its' website saying, "We at Gander Mountain believe that our best days are still ahead of us and we ask that you join us in welcoming and supporting this successful transition.

Camping World shares the same passion for the outdoors as Gander Mountain and our customers, making for a great melding of businesses and outdoor communities."

Centrist Macron speaks after his victory in French election

Puerto Rico to close 184 public schools amid crisis

Puerto Rico is closing 179 public schools in a move expected to save more than $7 million amid a deep economic crisis that has sparked an exodus to the U.S. mainland in the past decade, officials said Friday.

More than 27,000 students will be moved elsewhere when their schools close at the end of May, said newly appointed Education Secretary Julia Keleher. "We have a fiscal crisis and few resources and we've spent 10 years handing out nearly $3 billion in a system that hardly has any books," she said. "We cannot keep doing what we're doing because we don't have the resources."

The news about the school closures raised concerns it could speed up the ongoing exodus from Puerto Rico. Nearly 450,000 people over the last decade have already left for Florida and other parts of the U.S. mainland to flee the worsening economic crisis.

Officials initially had said 184 schools were closing but then announced at the last minute that five of those schools would remain open. The school shutdown announced Friday will be the largest mass closure of schools in the island's history, with officials saying it will in part lead to millions of dollars in savings a year for an education department that represent nearly 30 percent of Puerto Rico's $9 billion budget. Officials shuttered 150 schools over the span of five years from 2010 to 2015.

Is America At Full Employment? Not Even Close

That April jobs report was a real humdinger, wasn't it? Businesses created 211,000 new payroll jobs, and the jobless rate fell to 4.4%, a 10-year low. The broadest measure of unemployment, the so-called labor underutilization rate, likewise fell to 8.6% from 8.9%, its lowest since November of 2007 — the month before the Great Recession began.

That's not all. A separate report released a week earlier noted that private sector wages rose at their fastest rate in a decade during the first quarter. Sure, first quarter GDP growth of just 0.7% was a disappointment, but most economists expect a pickup in the spring and summer. For example, the Atlanta Fed's widely-followed GDPNow data suggest a whopping 4.2% growth figure in the second quarter.

So, great job, Donald Trump. Maybe our long, national jobs malaise is over. As Trump himself tweeted on Friday, "Great jobs report today — it is all beginning to work." Sure looks that way. Now let's see if he can keep it up — for 10 years.

Why 10 years? While running for president, Trump vowed to create 25 million jobs over 10 years. Do the math, and that comes out to 2.5 million jobs a year and 208,000 jobs each month. About what we did in April.

Mystery trader '50 Cent' has been unmasked

The volatility market's greatest mystery has been solved at long last. The identity of "50 Cent," the investor who earned the nickname by buying gobs of volatility contracts costing roughly that much, has been revealed.

It turns out it's Ruffer LLP, a $20 billion investment fund based in London whose client roster includes the Church of England. The fund was founded by Jonathan Ruffer.

Financial Times reporters Joe Rennison, Christian Pfrang, and Miles Johnson blew the lid off the case, citing four people from trading departments at banks who were familiar with the trades. Ruffer's investment vehicle of choice has been the CBOE Volatility Index, or VIX, a measure of expected price swings in US equities that serves as a barometer for investor nervousness. It generally climbs as stocks fall, so purchases of VIX contracts translate to bearish wagers on the S&P 500.

As of earlier this week, Ruffer had spent $119 million this year betting on a stock market shock, $89 million of which had expired worthless, according to data compiled by Macro Risk Advisors. The investor has gradually amassed holdings of about 1 million VIX calls through three occasions so far in 2017, and each time a significant portion expired at a loss.

Kids will soon get their allowance on a debit card

The lucky brats. Two million American teenagers may be pocketing a new kind of weekly allowance from mom and pop soon — an allowance that’s worth an estimated $6,000 annually each, or more than $100 weekly among affluent households, and about $18 on average across all US households measured.

And it’s all happening as the shift to digital currency, and a cashless society, is having another significant spurt of growth.

This huge number of teens taking the allowance fast lane is the goal of a New York-based fintech startup, Current, which this week enters the race to persuade more American families to switch the age-old weekly allowance from physical to digital cash. And in this latest iteration, that means a pre-loaded Visa debit card funded, and carefully monitored online, by parents for their teen kids.

“This is a massive opportunity to do the right thing for this younger generation,” said Stuart Sopp, chief executive and founder of Current, stressing multiple educational, safety and parental tracking features of his “Current Student Account” debit card.

David Stockman-Biggest Bond Bubble Ever—Buy Gold

Punching in past 65: Older-worker rate highest since 1962

Retire by your mid-60s? How 1960s. More Americans age 65 and over are still punching the clock, and the last time the percentage was this high was when John F. Kennedy was in the White House.

Last month, 19 percent of Americans age 65 and over were still working, according to government data released Friday. That's the highest rate since 1962, and it caps a long trend higher since the figure bottomed out at 10 percent in 1985.

As America grows older and as life expectancy gets longer, some workers keep heading to the office because they like it and still feel engaged. But many others are continuing to work for a simpler, darker reason: They can't afford not to.

More than a quarter of workers age 55 or older say they have less than $10,000 in savings and investments, according to the latest retirement confidence survey by the Employee Benefit Research Institute. Perhaps because of slim nest eggs, nearly a third of workers in that age group say they expect to work until at least 70, if they retire at all.

IBM Shares Down 10% In Last Month

IBM’s (NYSE: IBM) shares continue to tumble in the wake of its weak earnings and news that Warren Buffett of Berkshire (NYSE: BRK-B) has sold off some of his shares. IBM stock has dropped 10% in the last month to $155. Shares in its two major rivals have risen over the same period.

Amazon (NASDAQ: AMZN) is generally considered the global market share leader in cloud computing, a sector in which IBM is desperate for success. Amazon’s shares are up nearly 4% in the last month to $934. Microsoft (NASDAQ: MSFT), another cloud leader has posted a 5% share improvement in the last month to $69. In addition, Microsoft and Amazon trade near their all time highs. In IBM’s case, its stock is not even close. Additionally, IBM’s market cap is $146 billion. Amazon’s is $446 billion, and Microsoft’s $532 billion.

Two things happened at IBM in the last quarter that Wall St. does not like. The first was poor financial performance. The other was an attempt by Ginni Rometty, IBM chairman, president and chief executive officer to make the numbers look better than they were.

IBM’s revenue for the period dropped 3.1% to $18.2 billion. Revenue among its strategic imperatives business, which IBM sales are essential to its future rose only 12% to $7.8 billion. Cloud revenue was up 33% to $3.5 billion. The cloud sector is exploding, so the IBM numbers are modest.

US stock futures point to higher open after Macron's widely anticipated French presidential win

U.S. stock futures were steady on Sunday as traders breathed a sigh of relief after the French presidential election concluded with centrist Emmanuel Macron defeating far-right candidate Marine Le Pen, as was widely expected.

Futures for the Dow Jones industrial average, S&P 500 and Nasdaq traded marginally lower after opening slightly higher at 6 p.m. ET. The implied open was still higher for all three benchmarks

The euro climbed to its highest level in six months, breaking above $1.10 for the first time since the U.S. presidential election. With more than 44 million of France's 47 million registered voters accounted for, official Interior Ministry figures on Sunday confirmed Macron had been elected president with 65.31 percent of valid votes cast so far. Polls leading up to the vote also had Macron winning by a large margin.

"We've been pricing in this thing for about two weeks now," said Peter Boockvar, chief market analyst at The Lindsey Group. "Just look at Friday's trading action; we surged into the close."

US consumer borrowing rises solid $16.4 billion in March

American consumers stepped up their borrowing in March, taking out more loans for cars and school. The Federal Reserve reported Friday that total consumer borrowing rose by $16.4 billion, or 5.2 percent, in March, up from a $13.7 billion increase in February and the biggest uptick since November's $25.5 billion jump.

The category that includes student and auto loans jumped by nearly $14.5 billion, or 6.2 percent -the most in five months. The category that covers credit cards rose more modestly, up by $2 billion or 2.4 percent.

Economists watch consumer borrowing closely. Consumer spending accounts for about 70 percent of U.S. economic activity. The government reported earlier this week that consumer spending was flat in February and March, one reason the economy grew at a lackluster 0.7 percent annual pace in the first quarter of 2017. Still, most economists expect growth to pick up in the spring and summer.

The Fed decided this week to leave interest rates unchanged but signaled that it expects economic growth and hiring to be strong enough to justify rate hikes later this year.

America’s Treasury ponders issuing 40-, 50- or 100-year bonds

How can governments borrow most cheaply? The answer matters hugely for taxpayers. Take America: it has $14trn in outstanding national debt, fully three-quarters of GDP. Interest payments alone are expected to reach $280bn this fiscal year—ie, more than three times the combined budgets of the Departments of Education, Labour and Commerce.

The problem largely comes down to deciding how much long, medium and short-dated debt to sell. Almost every country issues a combination of these maturities. In the current low interest-rate environment, however, many argue that governments should sell proportionately more long-dated bonds to make sure they are able to pay historically low rates for many decades to come, thereby saving taxpayers money in the long run.

Some countries have already ploughed ahead. In recent years Britain, Canada and Italy have sold 50-year bonds; Mexico, Belgium and Ireland have issued 100-year debt. The latest country to flirt with the idea is America: last month the Treasury sent out a survey to bond-dealers to gauge market appetite for 40-, 50- and 100-year bonds. On May 3rd officials said that Steve Mnuchin, the treasury secretary, had set up an internal working group to take a look at ultra-long bonds. Mr Mnuchin has expressed the view that they could “absolutely” make sense.

Not everyone agrees, including, it seems, the private-sector financiers who make up the Treasury’s own borrowing advisory committee, which met this week. Long-term rates are at historic lows but short-term rates are even lower. The weighted average maturity (WAM) of outstanding Treasury debt is 5.7 years, and the effective interest rate paid on the total pile of debt is 2.03%. The yield on 30-year Treasuries is 3%, so selling even longer-dated debt will raise the overall cost. Even a 0.1 percentage-point rise would add roughly $14bn to the taxpayer’s burden.

What the Layoffs at Ford’s Medium-Duty Truck Plant Mean

These particular layoffs aren’t happening because consumers are strung out and have trouble getting financing or are switching down to used vehicles or whatever. They’re happening because demand from commercial customers that ply their trade in the real economy is slumping.

Ford announced that it will lay off 130 hourly workers and eliminate one shift from May 8 until the end of September at its Ohio Truck Plant that makes medium-duty F-650 and F-750 trucks. They’re are used by businesses such as… Dump-truck operators… Companies that operate cargo box trucks… Companies that need boom and bucket trucks, such as utilities…

These trucks are used by construction contractors, oil field companies, and myriad of other types of businesses that ply their trade in the real economy. The F-Series medium-duty class 6 and class 7 trucks – just below the class 8 trucks you see hauling trailers across the country – are among Ford’s more profitable product lines.

They’re an expression of business capital expenditures. They’re considered a gauge of economic activity in the US. Demand had been strong, unlike demand for class 8 trucks which had gotten mauled by the transportation recession and for which orders had plunged in late 2015 and much of 2016. But now, it’s demand for Ford’s medium-duty trucks that is slumping.

Could Oil Drop To $42?

The 5 percent selloff in oil prices on May 4 serves as a painful reminder that the oil market is still woefully oversupplied. But why such a deep and sudden decline in prices on a single day? Of course, things are not looking great for oil, with inventories still at such extraordinary levels. But the size of the price decline on May 4 was made much larger because of technical moves in the market.

The initial spark is thought to come from the poor EIA report and growing worries about Chinese demand for all sorts of commodities. But oil prices broke through key resistance levels – 50 and 200-day moving averages – which tend to spark deeper selloffs. Over Thursday night, WTI saw a flash crash, a sudden plunge from $45.36 per barrel to just $43.76 in a matter of minutes, according to CNBC. Prices moved back up a few hours later but remained at $45 per barrel when trading opened on Friday on the U.S. East Coast.

High-volume trading can commence after prices passed a certain threshold, automatic selling that kicks in when prices become too volatile. But with resistance levels broken, further declines to $42 per barrel are possible, according to John Kilduff of Again Capital. Seaport Global Securities echoed that sentiment, arguing in a research note that WTI faces technical resistance at $45.90 per barrel, but that the next level lower would be at $42.70.

Others went further. "That opens the door to not only lower $40s, but possibly into the $30s," Todd Gordon of TradingAnalysis.com said Thursday on CNBC's "Trading Nation." His voice is notable because in November 2015 he predicted that oil would drop to $26 per barrel, which it did early last year.

The Coming Debt Reckoning

American workers, as a whole, are facing a disagreeable disorder. Their debt burdens are increasing. Their incomes are stagnating. There are many reasons why. In truth, it would take several large volumes to chronicle all of them. But when you get down to the ‘lick log’ of it all, the disorder stems from decades of technocratic intervention that have stripped away any semblance of a free functioning, self-correcting economy.

The financial system circa 2017, and the economy that supports it, has been stretched to the breaking point. Shortsighted fiscal and monetary policies have propagated it. The result is a failing financial order that has become near intolerable for all but the gravy supping political class and their cronies.

Take consumer spending. This is the primary driver of the U.S. economy. Yet it requires vast amounts of credit. In fact, American consumers presently hold $1 trillion in revolving credit. At the same time, they have nowhere near the income needed to finance these debts, let alone pay them off.

Remember, the flipside of credit is debt. Obviously, the divergence of increasing debt and stagnating incomes is a condition that cannot go on forever. But it can go on much longer than any sensible person would consider possible. If you haven’t noticed, the financial services industry is extremely accomplished at compelling people to go whole hog into debt. Moreover, the entire fiat based financial system, which depends on ever increasing issuances of debt, hinges on it. Just a slight contraction of credit, like late 2008, and the whole debt repayment structure breaks down.

Fed Dismisses Weak Data to Posture for Another Rate Hike

Chinese demand for gold rises 8% in Q1

China's consumer demand for gold rose 8 percent year on year to 282.4 tons in the first quarter of 2017, compared with an 18 percent drop in global demand due to a slower pace of central bank buying and a previous high base, the World Gold Council said yesterday.

China’s investment in gold bars and coins jumped 30 percent to 105.9 tons in the first quarter, the fourth-highest on record, while jewelry demand fell 2 percent year on year.

Global demand for bars and coins rose 9 percent to 289.8 tons in the same period, said the WGC in a report. Chinese investors reignited their passion for bullion in the past two quarters, as “concern over the weakness of the yuan lingers, outlook for the property market is gloomy, and the stock market looks weary,” said Roland Wang, WGC’s managing director for China.

“Gold was one of the few investment options for Chinese investors under the circumstances,” Wang added. Global central banks bought 76.3 tons in the quarter, down from 104.1 tons in the same period of last year, with China, one of the biggest buyers apart from Russia and India, said Wang.

The Analyst Who Nailed the 2008 Financial Crisis Has a New Warning

Since the Berlin Wall came down, the world has not experienced the end of history, as Francis Fukuyama arrogantly proclaimed. Rather, sovereign states have seen the rise of globalization—that is, the suppression of the sovereign state by the economy in the form of the markets. The 2008 financial crisis has been one of the effects of this phenomenon.

Is it any wonder that politics—ever more unrecognizable from economics—promotes the one percent? That’s why people should heed the next financial crisis prediction. The billionaires have gotten more billions in the past nine years, but nothing has changed. The one percent, the global elite that is the product of globalization, has not suffered during the Great Recession. Thus, they have gone on doing exactly the same things that led to the Lehman Brothers Holdings, Inc. implosion in 2008.

Nouriel Roubini, the man who predicted the 2008 financial crisis, fears that Wall Street has ignored the negative impact of President Donald Trump’s agenda. In fact, Roubini, whose bearish—and eerily correct—predictions have earned him the nickname “Dr. Doom,” says it could happen again. He agrees with those who expect the next financial crisis in 2017.

Roubini simply believes that President Trump and his policies have reached the top of the list of threats to the world economy. Trump, says Roubini, is the world’s biggest risk. Roubini has given Trump a semi-failing grade for his first 100 days. And that was the most generous comment the famous economist and professor from NYU had for President Trump.

America’s economy has been made adequate again

It's almost time to party like it's 2007.

By most measures, the economy is finally back to where it was before the Great Recession hit. All it took was eight years of slow-and-steady job growth. Which, of course, is exactly what we got in April. The economy added 211,000 jobs, bringing both the unemployment rate and the broader one that includes people who can only find part-time jobs — or have taken a break from looking — to 10-year lows, respectively, of 4.4 and 8.6 percent.

But our "new normal" hasn't returned us to normalcy just yet. Take what are called "prime-age" workers. These are 25- to 54-year-olds who, for the most part, should be too old to still be in school but too young to be retired. Before the crash, 80.2 percent of them were working, but afterward, that fell to 74.8 percent. Today, that has rebounded to 78.6 percent, which is about three-quarters of the way back to where it was — or, in other words, about two years away from the recovery reaching its final destination. You can see the same sort of thing in wages. Those are rising a bit more, especially when you account for the fact that productivity growth has basically been nonexistent, but the 2.5 percent wages have gone up the past year isn't what we would expect for an economy nearing full employment.

So, maybe the economy isn't. Maybe the unemployment rate can go even lower before the inflation monster comes out from under the bed, if it ever does. The Federal Reserve, of course, thinks that lower unemployment will turn into higher wages, and then — this is the important part — into higher inflation, but there isn't as much empirical support for that as you might think. Indeed, before the tech bubble burst, workers were getting big raises with unemployment at just 3.9 percent, but prices were pretty much under control. Core inflation, which strips out volatile food and energy prices that the Fed can't do anything about, was right at its 2 percent target even then. Could the same thing happen again? Maybe! Predictions are hard, especially about the future of prices, but there's very little evidence of the kind of inflationary pressure in the economy that would scream for the Fed to start raising rates faster, if much at all.

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