JPMorgan CEO Jamie Dimon is sticking with Team Trump
JPMorgan Chase CEO Jamie Dimon is sticking with President Trump. Presiding at the U.S. banking giant's annual shareholder meeting Tuesday, Dimon got an earful from investors who criticized JPMorgan's support of the new White House administration and asked whether he would step down from Trump's business advisory council. "No,'' answered Dimon.
"He is the president of the United States," Dimon added later during the session at JPMorgan's technology center in Wilmington, Del. "I believe he's the pilot flying our airplane. We're trying to help. I would try to help any president of the United States because I'm a patriot. We do not — it does not mean we agree with all the policies that the administration comes up with."
The U.S. business community and the government need to "come together and collaborate" in solving major issues facing the country, said Dimon. He cited an unusually low rate of workforce participation by men, an education system that's "leaving too many behind," lack of planned investment in infrastructure, a corporate tax system that's "driving capital and brains overseas," and "excessive regulation ... particularly for small businesses."
Nonetheless, Dimon batted away questions that suggested he and JPMorgan support efforts by the White House and Capitol Hill Republicans to roll back the Dodd-Frank act, the package of federal regulations and consumer safeguards enacted in the wake of the national financial crisis. Many of the law's provisions restrict the actions of JPMorgan and other U.S. banking and financial institutions.
Auto sales are slowing, and upheaval is next
The U.S. auto boom that fueled record sales and profits is winding down. Next up: A radical transformation that could threaten the survival of some automakers. "The auto industry is changing more today than it has in the past 50 years," General Motors CEO Mary Barra has said publicly -- more than once. "I don't make this claim lightly," she said. "I believe we are on the verge of a revolution in personal transportation."
It's true that the U.S. auto sector had a close call during the 2008 financial crisis, when both GM (GM) and Chrysler needed federal bailouts to survive bankruptcy. But that was a pretty straightforward crisis, caused by excess labor costs and a plunge in auto sales due to a wrecked economy.
The challenge today is posed by electric and self-driving cars, and it is far more fundamental. Automakers are investing billions to develop these new vehicles. At the same time, they're facing a tremendous competitive threat from upstarts like Tesla (TSLA) and Uber, as well as from tech giants with deep pockets such as Google (GOOGL, Tech30) and Apple (AAPL, Tech30).
"We're at a major crossroads in the industry," said Michelle Krebs, analyst with AutoTrader. "The nature of the vehicles will be different. The models by which we acquire transportation could be completely different."
Study: Half of college grads moved back in with parents
While it’s encouraging that more millennials are moving out of Mom and Dad’s house now, a new study is showing that a significant amount of college graduates are still moving in with their parents.
The Young Millennials and Money survey by TD Ameritrade shows that almost half of post-college millennials, 48 percent, moved back in with their parents after college. 47 percent of post-college millennials did not or do not expect to move back in with their parents after graduation.
Earlier this month, a promising report from Fannie Mae was released revealing that there’s been a steady, but gradual reduction in millennials living with their parents. For young adults aged 24-25 in 2013 to 26-27 in 2015, the percentage of millennials living with their parents fell 7.6 percent. There was only a reduction of 5.4 percent of the same cohort of young adults between 2010 and 2012.
Despite these attitudes about moving back in with their parents after graduating from college, young millennials, on average, are optimistic that they’ll be financially independent by the time they are 23 years old. For teenagers, they expect to be financially independent by the time they hit age 22.
Is Silver Proving to be the Comeback Kid?
Confidence in US Economy Dips to Post-Election Low
Americans’ optimism about the US economy has slipped to the lowest point since the 2016 presidential election, the Gallup organization reported in a release on Tuesday.
The latest score marked a sharp reversal from the Gallup score in early March, when the stock market set a new record and the index hit a nine-year high of plus-16.
Gallup bases its index on two questions that it has asked weekly since 2008: how Americans rate current economic conditions and whether they feel the economy is improving or getting worse, the release explained.
The index has a theoretical maximum of "plus 100" if everyone surveyed says that the economy is doing well and improving.
Who Can Compete Against Amazon? (It’s an Amazon world, we just live in it)
As the price of Amazon stock climbs close to $1,000 per share, with a $464 billion market capitalization – more than twice that of Wal-Mart – a retail apocalypse is starting to become evident. Retail sales and mall traffic is declining and mainstream retailers such Macy’s badly miss their earnings estimates ( while JC Penney and Sears are seen as almost done by many). In a world where Wall Street affords Amazon a price / earnings multiple of 179 against Wal-Mart’s 17, who can possibly compete against Amazon? At Cowen’s third annual “Future of the Consumer” conference, successful retailers weighed in.
Retail traffic declined -5.58% year over year in the second week of May, a Cowen research report noted, with year to date retail traffic down -8.4%. Shopping mall REITs have been hard hit as demographic trends point to increased worldwide urbanization as benefiting Amazon.
As Cowen’s notes: April Retail Sales – Non-Store Reaches 29% of Retail Sales (ex Food and Autos). The digital assault on brick and mortar retail continues. April Adj. Retail Sales (ex-autos and gas) grew +0.3% sequentially, slightly below consensus expectations of +0.4%. The un-adjusted April Retail Sales (ex-autos and gas) grew +3.2% y/y (vs. a trailing 3-month avg. of +2.5%). YTD sales (ex-autos and gas) are +2.7% vs. +3.8% growth in 2016.
Last September, with the stock trading near the upper $700 level, RBC established a $1,000 price target. Now with Amazon recently smashing earnings by dialing up profitability, exhibiting a rare ability among retailers, the stock price is marching near $1,000. The question becomes: is there any retail market competitor that is safe? Monitoring what appears like a decided trend in retail traffic, Cowen decided to look at what it takes for a retail-facing corporation to defend themselves against Amazon.
New home construction takes a blow in April
New home construction took a blow in April as, although single-family starts saw a slight increase during the month, building permits dropped, according to the latest report from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Privately owned housing starts decreased in April to a seasonally adjusted annual rate of 1.17 million starts. This is down 2.6% from March’s estimate of 1.2 million but up 0.7% from last year’s 1.16 million.
However, single-family housing starts increased slightly in April, rising 0.4% from March’s 832,000 to 835,000. Privately owned housing units authorized by building permits also decreased in April, falling 2.5% from March’s 1.26 million authorizations to 1.23 million. But this is still 5.7% above last year’s 1.16 million.
And despite the increase in single-family starts, single-family authorizations slipped, falling 4.5% from 826,000 in March to 789,000 in April. This indicated new home starts may soon follow the downward trend.
Trump should have tackled taxes, infrastructure first: Economist ‘Dr. Doom’ Kaufman
90% Of At-Risk Student Loan Borrowers Not Signed Up For Affordable Repayment Plans
Paying back tens of thousands of dollars in student loan can be difficult, and more than 1 million Americans defaulted on their federal student loans just last year. But why are nearly all of these same borrowers failing to take advantage of programs to help them avoid defaulting again?
According to a new analysis from the Consumer Financial Protection Bureau, 9-in-10 borrowers who are exiting default on their student loans are not enrolling in federal repayment programs that base the amount they pay each month on their earnings.
The Department of Education estimates that more than eight million federal student loan borrowers have entered default — described as failing to make payment on their debts for at least 12 months. According to the report, student loan servicers — who are responsible for informing borrowers about affordable repayment options — are not holding up their end of the bargain when it comes to assisting debtors in avoiding a second default of their loans.
While many borrowers who enter default will be able to bring their accounts back into the black, according to the CFPB analysis not all of them will stay that way despite available programs intended to provide a fresh start.
Congress Is Coming After Your 401(k)
How do I despise thee, O Congress? Let me count the ways. Don’t take my word for it: 75% of Americans disapprove of the job our representatives are doing. It’s things like this that explain why: Whilst only about 13% of U.S. employees nationwide enjoy a retirement fund that assures stable, lifelong income, all 535 members of Congress do … courtesy of Uncle Sam.
Members of Congress participate in the Federal Employees Retirement System, which provides pension benefits of which most American workers can only dream. Private retirement savers often pay management fees that can exceed 1% annually on lousy investment choices. Members of Congress pay a maximum of 0.039% for funds guaranteed to match the market.
A proposal floating around in Republican circles in Washington would add insult to injury: They want to end the tax-deductibility of your pension contributions so they can give a $1.5 billion tax break to U.S. corporations. Oops.
Congress is reportedly considering whether to reduce the benefits of contributing to a 401(k) and similar retirement plans. That’s because it wants to reform corporate taxes, cutting the rate from 35% to 15%. That blasts a meteor-sized hole in the federal budget. Cue the pension police. According to the latest report from the Joint Committee on Taxation, the exclusion of contributions to and earnings of defined contribution plans will cost the federal government more than $584 billion over the next five years.
U.S. Retailers Urge Trump's New Trade Envoy to Save Nafta
The largest U.S. retail associations called on new Trade Representative Robert Lighthizer to support the North American Free Trade Agreement, aiming to salvage an accord that has come under fire from his boss.
Leaders of the American Apparel & Footwear Association, the National Retail Federation, Retail Industry Leaders Association and U.S. Fashion Industry Association sent a letter to Lighthizer on Tuesday urging him to tread lightly on the 23-year-old pact. Nafta supports hundreds of thousands of U.S. textile and clothing jobs, along with retail operations in all 50 states, the organizations said.
“We agree that the agreement should be updated to reflect today’s business reality and better prepare for future trade patterns,” the groups said in the letter. “However, we ask for support from the administration to ensure that renegotiation will ‘do no harm’ to the successful supply chains that we rely on today.”
Lighthizer was sworn in Monday, clearing the way for the administration to seek an overhaul of Nafta. President Donald Trump called the treaty a “disaster” during the election campaign and has threatened to withdraw from the agreement with Mexico and Canada if renegotiated terms aren’t favorable enough.
Yahoo to buy back $3 billion shares in tender offer
Yahoo Inc said on Tuesday it would buy back up to $3 billion shares through a tender offer to provide liquidity to stockholders looking to sell the stock ahead of the company's pending deal with Verizon Communications Inc.
Shares in Yahoo, which has a 15 percent stake in Chinese e-commerce company Alibaba Group Holding Ltd, were up 2 percent at $50.81.
Yahoo said it would determine a single purchase price after the expiry of the Dutch auction tender offer on June 13 and that the price would not be less than $37 per share.
The company said its directors and executive officers will not tender any shares in the buyback. Verizon agreed to buy Yahoo's core internet properties last year for $4.83 billion in cash. It lowered the original offer by $350 million in February following two massive cyber attacks at the internet company.
Are Salespeople Becoming Obsolete?
Sales professionals usually fall into one of three groups: The Order Takers, The Salespeople and The Experts. The Order Taker, as the name suggests, is the sales associate who takes the customer’s order when he or she calls-in to place that order. Think Zappos, Amazon and Papa John’s Pizza.
The Salespeople are the people we think of as the stereotypical sales knucklehead — the ones who boast that they can “sell ice to an Eskimo.” Salespeople thrive off ‘getting the sale’ and convincing customers to buy what they’re selling even if it’s not the right fit or solution for the client.
Finally, there are The Experts. The experts know the business trends, industry details, and their potential solutions inside and out. They love working with clients to uncover their challenges. Subject-matter experts, as I call them, will not up-sell to increase the size of an order. Instead they devise a solution that uniquely addresses the client’s needs, regardless of the source.
As technology evolves, so too does the role of the sales person and how they engage with customers. Companies around the world are substituting functions traditionally carried out by live sales reps with artificial intelligence. Some experts even predict that eventually sales teams will be replaced by automation.
Amid Puerto Rico’s Fiscal Ruins, a New Push for Statehood
It is a proudly Spanish-speaking territory at a time when the White House has taken down the Spanish version of its website. It is as materially poor as it is culturally rich. And Puerto Rico has entered a new and exotic version of bankruptcy, facing a staggering $123 billion in debt and pension obligations.
In short, it is difficult to imagine a worse time for governing-party officials in this struggling Caribbean commonwealth to persuade Washington it is ready to become the 51st American state. But they have pledged to make their case anyway.
Tell them that it seems impossible, and they will conjure the long moral arc of the universe and how it bends toward Puerto Rican statehood. “That’s what they told the blacks,” an indignant Ramón Rosario Cortés, Puerto Rico’s public affairs secretary, said in an interview last week. “That they were wasting their time attending the marches of Martin Luther King Jr. because nobody was ever going to hear the cry of the people!”
A vigorous push for statehood was a central campaign promise of Gov. Ricardo Rosselló, 38, who was inaugurated in January. Next month, he will ask residents to vote, in a nonbinding referendum, for statehood as part of a long-term fix for a commonwealth facing a period of severe austerity that is likely to include shuttered public schools, frozen salaries, slashed pensions and crimped investments in public health. The island remains in the grip of a recession that has lingered for much of the past decade.
Famous Dave’s may close more restaurants
Famous Dave’s of America Inc. is getting out of the business of running restaurants, even if it can’t sell them. The Minneapolis-based barbecue chain said earlier this month that it plans to sell all 33 company-owned units to franchisees over the next year or two. But during an earnings call on Monday, Famous Dave’s CEO Mike Lister suggested that another strategy is on the table, too.
“We may close some underperforming locations,” Lister said. Famous Dave’s has already closed four company-owned restaurants this year as weak sales sap stores of profits. Systemwide same-store sales fell 4.5 percent in the first quarter ended April 2, and have declined 10.8 percent on a two-year basis. Famous Dave’s reported a loss of $1.2 million, or 18 cents per share, during the quarter.
Lister said the company can no longer focus both on running a franchise system and operating its own restaurants, and would be better off concentrating on franchising. “We simply cannot sustain the corporate structure required to manage both our company-owned and franchise operations,” Lister said. “We believe it’s time to shift our focus to supporting our talented franchisees.”
“We believe in this strategy,” he added. “It will allow us to redirect our support center resources and greatly enhance our franchise services, which helps franchisees run their businesses.” Refranchising has become more common in the restaurant industry over the years as companies seek the higher profits associated with franchising. But closures have also become more common recently as companies struggle to generate consistent sales. Ruby Tuesday, Joe’s Crab Shack and Noodles & Company, among others, have closed locations over the past 12 months.
Retail CEOs Renew Border-Tax Fight
Despite Promises, Car Makers Are Set on Job Cuts
Faced with softening U.S. car sales and mounting investor skepticism about Detroit's ability to weather the first industry downturn in nearly a decade, auto executives are facing a tough choice in who to please -- Wall Street or the White House.
Detroit has been an engine of growth for U.S. employment since the financial crisis, with General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV adding tens of thousands of jobs to keep pace with growing demand and fund autonomous-car engineering and other moonshot programs. Earlier this year, the auto makers have promised to add head count at certain factories in response to criticism from President Donald Trump.
Those executives are quickly retreating. GM and Ford are making cuts to American workforces that could far outpace the job commitments made in recent months amid political pressure. Armed with union contracts that were reworked a decade ago, domestic car companies can respond more rapidly to investor concerns.
"There is a lot of a balancing act going on," said LMC Automotive senior vice president of forecasting, Jeff Schuster. "We're finally at the point where we're likely to see a contraction in demand (and) obviously the new administration pushing for jobs." Mr. Schuster said with "pressure on both sides of the equation, something has to give."
Rue21 files for Chapter 11 bankruptcy as shopping mall stores suffer
Fashion and accessories retailer Rue21 filed for Chapter 11 bankruptcy protection late Monday after its budget-conscious customers migrated to fast-fashion competitors and nimbler online sellers, closely resembling the struggles of other mall chains.
The company had already begun closing nearly 400 of its 1,179 stores in 48 states and warned Tuesday in a court filing that it may shutter additional locations to shore up its finances.
Those moves include cuts to Rue21's workforce of 15,800 employees, of which 12,300 are part-time workers.
But the privately held retailer is not bleeding cash, and it secured support for its debt-cutting plan from multiple key creditors. Those factors suggest that Rue21 may avoid liquidation, a fate that has recently befallen mall clothing store chains Bebe, The Limited and Wet Seal.