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Monday 02.20.2017

Harvard Poll: Americans Brimming With Confidence on Jobs, Economy

A majority of Americans say the economy is going strong – and many believe the trend will continue under President Donald Trump, according to a new poll.

The Harvard-Harris survey conducted for The Hill, found that 61 percent view the economy as strong, against 39 percent who say it is weak, while 42 percent think it's on the right track, compared with 39 percent who disagree.

Among Republicans, 60 percent are satisfied with the economic trend, while 23 percent who are dissatisfied; 33 percent of Democrats said the economy is on the right track, while 48 percent said it is headed in the wrong direction.

"It's really a surprising turnaround given how negative voters have been about the economy since 2009," Mark Penn, co-director of the Harvard-Harris poll, told The Hill.

German chancellor Angela Merkel urges Europe to take MORE refugees as she says Islam 'isn't the source of terror'

Angela Merkel has urged Europe to take in more refugees and said Islam is 'not the source of terror'. Speaking at the Munich security conference, the German chancellor said Europe has an obligation to take displaced refugees from Syria and Iraq.

Mrs Merkel, who has been critical of a U.S. ban on travel from seven Muslim-majority countries, also underlined that Islam itself was not the source of terrorism.

She added that battling extremism can only be done in cooperation with Muslim countries and vowed to work closely with Vladimir Putin's Russia to fight ISIS in the Middle East. Europe's ties with Russia are challenging, but it is important to work with them in the fight against Islamist terrorism, she said.

Germany has taken in more than one million refugees displaced by the war in Syria but the country's policy came under particular scrutiny after the Berlin Christmas market massacre last year in which 12 people died.

No...Gold Didn't Fail As Money

Fear of economic contraction sweeps Wall St. trading floors

While investors have enjoyed their portfolio gains, Wall Street pros don’t share the same high spirits.

Fear of global economic contraction that could badly derail the US recovery — and throw a monkey wrench into the trading markets — is sweeping through Wall Street boardrooms, as managers intensify technology-driven cost-cutting and rein in spending.

One big wave hit last week with stunning force, with some of the largest job-loss announcements in recent memory.

“Yes, I think there will be more layoffs on Wall Street going forward, due to continued cost-cutting and automation,” Anthony Santoliquido, a fixed-income portfolio manager at HGK Asset Management in Jersey City, told The Post, as some pros battened down the hatches for the next round. “This is happening everywhere,” Santoliquido added. “More of the processes on Wall Street have been automated, eliminating the need for human intervention.”

Mortgage payments take bigger bite out of family budgets

There's a term for it – house poor. It means after paying for your house each month, you have little money left over.

Real estate marketplace Zillow reports that it seems to be becoming the norm. Interest rates are going up, along with home values. As a result, Zillow says the average mortgage payment takes a bigger bite of household income than at any time in the last six years.

A year ago, homebuyers spent an average of 14.7% of household income on the mortgage. Now, it's 15.8%. The rise in home values has been the biggest driver, Zillow says. Average home prices nationwide are rising more than 5% a year, largely because of a prolonged drop in inventory. With fewer homes on the market, the ones that are for sale can command higher prices. They sell closer to asking prices because sellers, not buyers, have the upper hand.

At the end of last year, the average monthly mortgage payment totaled $758, an increase of about $68 over the previous year. Zillow says most of the increase is because of rising home values. Another factor is property taxes. As the value of a house increases, so do the real estate taxes, which are tacked onto the monthly mortgage payment.

Gold Gets a Shot in the Arm from Inflation and China

Inflation just got another jolt, rising as much as 2.5 percent year-over-year in January, the highest such rate since March 2012. Led by higher gasoline, rent and health care costs, consumer prices have now advanced for the sixth straight month. In addition, January is the second straight month for rates to be above the Federal Reserve’s target of 2 percent.

Air fares are also climbing, and speaking of air fares, billionaire investor Warren Buffett added to his domestic airline holdings, we learned this week. Buffett’s holding company, Berkshire Hathaway, is now the second-largest holder of American Airlines, with an 8.79 percent share of the company. It also increased its holdings in Delta Air Lines by over 800 percent, to 60 million shares. The company now owns 43.2 million shares of Southwest Airlines, and it increased its stake in United Continental to about 28 million shares.

A March rate hike now looks all but imminent. Many economists—including the Goldman Sachs economists I had the pleasure to hear speak this week—expect to see at least three such hikes this year alone.

Gold responded accordingly, closing above $1,240 for the first time since soon after the November election. Below you can see the gold price charted against the inflation-adjusted 10-year Treasury yield, which is now in subzero territory.

The question I have is: Why would an investor deliberately choose to lose money? But that’s precisely what’s happening now with inflation where it is.

Facebook’s Market Value Passes Exxon’s

Earlier this month, the market value of Facebook Inc. (NASDAQ: FB) surged past that of Exxon Mobil Corp. (NYSE: XOM) to push the social media giant to sixth in the rankings of the most valuable companies on U.S. stock exchanges. Of the top six most valuable companies, five are technology companies while just one — Berkshire Hathaway Inc. (NYSE: BRK-A) — is not, and Buffet’s company probably maintained its ranking on the strength of its latest investment in Apple Inc. (NASDAQ: AAPL).

Facebook beat fourth-quarter estimates for both revenues and earnings primarily on the strength of its mobile advertising dominance. Some 84% of the company’s ad revenues were generated by mobile ads.

Exxon was less successful, turning in a report that missed on both revenues and earnings. The energy giant took a $2 billion impairment charge in the fourth quarter, but even factoring that out its fourth-quarter results were not impressive.

Facebook’s rise has not only been impressive, it is expected to continue. Here’s an assessment from Merrill Lynch which raised its price target on the stock from $150 to $165 and reiterated its Buy rating.

Wells Fargo’s New Account Openings Down 30% After Fake Account Fiasco

Despite overhauling its teller pay system and ditching a high-pressure sales goal incentive program, Wells Fargo continues to face the consequences of its fake account fiasco perpetrated by employees who opened more than two million unauthorized accounts, as customers continue to avoid opening new accounts and credit cards with the banking biggie.

The number of customers opening new checking accounts was down 31% in the last month compared to the same time last year, the company said in its January retail banking customer activity report released today.

As for credit card applications, the company says they have dropped 47% from the same time last year.

Customers also appear to be avoiding the bank, even if they have accounts there, as branch bankers had 14% fewer interactions with customers, according to the report.

Alan Greenspan: The US cannot afford to spend on infrastructure like it wants to because it's not on the gold standard

Former Federal Reserve Chairman Alan Greenspan has again defended the gold standard monetary system that the US dropped in the 1930s. The gold standard pegged the value of the dollar to the precious metal at $35 an ounce, and the US central bank promised other central banks to exchange dollars for gold.

Last July, after the UK voted to leave the European Union, Greenspan warned of a forthcoming debt crisis that would be averted if the US was on the gold standard. Proponents of the gold standard argue that it would help limit the amount of debt that governments can issue, as there's a finite amount of gold that exists in the world.

President Donald Trump's infrastructure-spending plans, coupled with lower revenues from taxes, could drive up the already-ballooning US government debt. In an interview with the World Gold Council, Greenspan said the gold standard would avoid this.

"I view gold as the primary global currency," Greenspan said in the February edition of Gold Investor. He also said: "Today, going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today we would not have reached the situation in which we now find ourselves. We cannot afford to spend on infrastructure in the way that we should. The US sorely needs it, and it would pay for itself eventually in the form of a better economic environment (infrastructure). But few of such benefits would be reflected in private cash flow to repay debt.

Farmer speaks out about ridiculous EPA regulation

Citigroup cuts CEO Corbat's compensation 6 percent to $15.5 million

Citigroup Inc (C.N) cut Chief Executive Officer Michael Corbat's compensation by 6 percent to $15.5 million in 2016, a year in which the bank fell short of profitability and efficiency goals and saw one-third of voting shareholders disapprove of the company's prior executive compensation.

Corbat got a base salary of $1.5 million, a $4.2 million cash incentive and $9.8 million of deferred stock and instruments tied to stock prices, according to a filing by the company on Friday.

Directors said in the filing that they considered Corbat's success in winning Federal Reserve approval for the company's capital plan, as well as positive feedback from its resolution plan, and the continued wind down of troubled assets left from the financial crisis.

However, they also said Corbat's compensation should reflect company performance against its financial targets. They also said they had made changes since last year in their formula for determining executive pay, putting more emphasis on return on equity and earnings per share.

The Four Horsemen of the Retirement Apocalypse

There are close to 76 million baby Boomers (born between 1946 and 1964) alive today representing 28% of the total US population. Starting in 2011, an estimated 10,000 Boomers have been retiring every day and that trend will continue for at least another 10 years. They represent the largest retirement contingent in US history placing strains on both Social Security and Medicare.

If current laws generally remain unchanged, the US government deficit will increase nearly every year over the next decade and, according to the Congressional Budget Office, rise to the highest average level in the last 50 years. The reason is growth in Federal revenues will be outpaced by spending, particularly for Social Security, Medicare and interest payments on government debt. Whether you refer to it as an approaching fiscal crisis or retirement crisis, the Baby Boomer retirement wave is the country’s biggest and most predictable train wreck.

Unlike their parents’ generation, who had guaranteed pensions and Social Security, Boomers are less fortunate. Most defined benefit pension plans have been replaced by defined contribution plans that offer no set guarantees in salary replacement. Boomers will be more reliant and dependent on their own savings and Social Security.

Unfortunately, Boomer savings fall short of meeting retirement expectations. According to recent survey results from the Insured Retirement Institute, Boomer satisfaction, confidence, and retirement preparedness have fallen steadily since the survey's inception in 2011 despite positive equity returns, low market volatility, and improving consumer sentiment.

Bill Gates: the robot that takes your job should pay taxes

Yellen Can't Halt Trump Gold Rally That Hedge Funds Bet Against

Gold bulls are acting as if they can’t believe a good thing when they see it. They should’ve had more faith. Hedge funds reduced their wagers on a bullion rally for the first time in three weeks, just before prices neared a two-month high and capped a third straight week of gains.

Not even Federal Reserve Chair Janet Yellen’s outlook for higher U.S. interest rates has been enough to disrupt the gold party. Investors snapped up the metal as a store of value amid concern that President Donald Trump’s fiscal policies will bloat government debt. There’s also anxiety over anti-establishment candidates in this year’s elections in the Netherlands, France and Germany, who favor exiting the European Union.

“Any indication that there could be more exits from the EU could make money come into gold -- any sign of potential European instability,” said Walter “Bucky” Hellwig, who helps manage $17 billion as senior vice president at BB&T Wealth Management in Birmingham, Alabama. “There are also concerns about the U.S. deficit because Trump’s fiscal policy is going to be very aggressive, and that could also benefit gold.”

Funds reduced their gold net-long position, or the difference between bets on a price increase and wagers on a decline, by 10 percent to 67,982 futures and options contracts in the week ended Feb. 14, according to U.S. Commodity Futures Trading Commission data released three days later. The wagers are still up about 65 percent this year.

Goldman Sachs: Mortgage interest rates will rise to 5.5% by 2019

The most recent data from Freddie Mac shows that the average interest rate for a 30-year, fixed-rate mortgage is around 4.15%, but interest rates are going to increase by a significant margin over the next few years, analysts from Goldman Sachs said in a new report.

The report, recapped by Reuters, shows that Goldman Sachs’ analysts are predicting that the 30-year mortgage rate will rise to 5.5% by 2019, representing an increase of roughly 150 basis points, or 1.5%, over the next couple of years.

The analysts cite the potential for Fannie Mae and Freddie Mac reform as a reason for the expected increase, noting that previous housing finance reform legislation may be used as a guide for future reforms.

From the Reuters report: If mortgage finance reform undergoes the changes similar to the Johnson-Crapo plan, mortgage rates may climb 50 basis points due to higher costs to compensate private sector guarantors for the loans.

Auto Market Facing Oversupply And Lower Prices

For a long time, I have had a problem with those pointing to the auto industry as proof that the American economy is on the mend. The auto market is facing oversupply and this means lower prices. This has been predicted by many of us for some time; however, it has been postponed by a wave of subprime auto loans that have allowed a buyer to purchase a car even when it makes no sense financially.

Years of rising auto sales driven by artificially low interest rates have driven sales and leases. While we hear claims that the auto market is hitting on all cylinders, we also hear of far too many unemployed students buying new cars. Failure to focus on where the sales are coming from or originating is a mistake and a clear sign this industry is creating its own problems in future years. Recently, we have heard about sales, not about soaring profits. Record levels of channel stuffing will often produce sales gains, but no profits.

The lower prices have taken longer to arrive than many of us have anticipated; however, the facts behind what has held up prices and pushed this market forward are very disturbing. More of all new auto loans have been going to subprime borrowers. Subprime currently makes up about a third of overall car loans.

The easiest way to become a subprime borrower is by defaulting on previous debt obligations. Auto loan delinquencies have been surging, this means subprime loan delinquencies now stand at 18%. Pretending to sell automobiles to people either dependent on money from the government or no means to pay for that automobile is not a good business idea. When you have huge financial lenders and the rest of the Wall Street banking consortium doling out 7-year 0% loans and subprime loans as if it were candy, it's easy to move inventory.

Rush Limbaugh: Media cannot destroy Donald Trump

Bank of America CEO Moynihan gets 25 percent pay raise

Bank of America CEO Brian Moynihan is getting a big pay raise this year.

The Charlotte, North Carolina-based bank said Friday that its board of directors awarded Moynihan a pay package of $20 million for 2016, up from his package of $16 million for his work in 2015.

Most of that pay package will come in the form of stock, roughly $18.5 million, compared with Moynihan's $1.5 million base salary.

The board said the pay was reflective of the big jump in profits the bank experienced in 2016. BofA earned $17.9 billion in full-year profits last year, up 13 percent from 2015. It was Bank of America's second-largest full-year profit ever.

Employees Across U.S. Fired After Joining Day Without Immigrants Protest

More than 100 employees across the country were fired from their jobs after skipping work to take part in last week's "Day Without Immigrants" demonstration.

Restaurants and day cares were among the businesses in states like Florida, Tennessee, Oklahoma and New York where bosses fired workers after they didn't show up for work in order to protest.

In Nolensville, Tennessee, nearly 20 employees at Bradley Coatings, Incorporated — a commercial painting company — were laid off after participating in the nationwide strike on Thursday, NBC4 reported.

The company's attorney, Robert Peal, said in a statement obtained by the news station that all employees were told they risked termination if they skipped work on Thursday, but 18 did so anyway.

NEWS to Disturb the Comfortable...

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