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Monday 02.27.2017

When selling starts in markets, it'll trigger an 'avalanche', Marc Faber says

The man often hailed as the original 'Dr. Doom' is warning investors that the U.S. stock market is vulnerable to a seismic sell-off—one that could start any time in a very unassuming way.

Marc Faber, the editor of "The Gloom, Boom & Doom Report," predicted the rally's disruption won't be caused by any single catalyst. His argument: Stocks are very overbought and sentiment is way too bullish for the so-called Trump rally to continue.

"Very simply, the market starts to go down. As it goes down, it will start triggering selling, and then it will be like an avalanche," said Faber recently on "Futures Now." "I would underweight U.S. stocks."

Faber, a supporter of President Donald Trump, isn't blaming the new administration for his bearish forecast. "One man alone, he cannot make 'America great again.' That you have to realize," he said. "Trump, unlike Mr. Reagan, is facing huge, huge headwinds — including a debt to GDP that is gigantic, as it is in other countries."

Half of college students think their loans will be forgiven

Owing to a serious misconception, almost half of college students recently polled believe they won’t be saddled with student loans soon after graduation.

According to a survey of 500 current college students conducted by LendEDU, a private firm that connects students and their families with student loans and loan refinancing, 49.8 percent believe they would be able to receive federal forgiveness on their student loans after graduation.

This belief is hardly justified, given the limited circumstances in which these loans can actually be forgiven. The US Department of Education says that federal direct student loan borrowers can get off the hook if they enter public service jobs for a specified period of time, agree to teach in an underserved area, die or become permanently disabled, or if the school they attended shuts down while they are enrolled or within 120 days after they leave.

“The biggest exemption is the Public Service Loan Forgiveness Program, and very few students go into public service,“ said Nate Matherson, who co-founded LendEDU in 2014. “With maybe 14 percent of the American workforce in a public service job, the actual numbers of those who may qualify for student loan forgiveness or discharge is maybe below 10 percent.

All 240 Family Christian Stores Are Closing

More than two years ago, suppliers forgave Family Christian Stores $127 million in debt so that it could remain open. Today, the chain—which bills itself as “the world’s largest retailer of Christian-themed merchandise”—announced it is closing all of its stores after 85 years in business.

Family Christian, which employed more than 3,000 people in more than 240 stores across 36 states, blamed “changing consumer behavior and declining sales.”

“We had two very difficult years post-bankruptcy,” stated president Chuck Bengochea. “Despite improvements in product assortment and the store experience, sales continued to decline. In addition, we were not able to get the pricing and terms we needed from our vendors to successfully compete in the market.

“We have prayerfully looked at all possible options, trusting God’s plan for our organization,” he stated, “and the difficult decision to liquidate is our only recourse.” Tyndale House Publishers chairman and CEO Mark Taylor called the stores “an important outlet for Christian books, gifts, and Bibles for many decades.”

David Stockman-Everything Will Grind to a Halt in 2017

Euro zone economy: real recovery or another Sirens' song?

Over the years, euro zone economic growth has been a bit like the Sirens in Homer's Odyssey: singing a song of promise, only to end up pulling you onto the rocks. Will it be different this time? The strong growth registered in numerous data releases and surveys at the beginning of this year has surprised many.

One eye-opening example was the release of flash purchasing managers indices for France, Germany and the euro zone on Feb 21. Of nine indexes, eight registered growth and six did so at a higher level than any economist polled by Reuters had imagined.

Not surprisingly, economists and policy-makers are now looking for firm proof that the euro zone's apparent rebound this year is sustainable, as well as noting a variety of potentially destructive economic and political hazards ahead.

There has not been, they say, a specific inflexion point at which it can be said that the euro zone has recovered and is off on a growth tear. Rather it has been a slow simmer. "The euro zone has been recovering steadily for three years now, helped by monetary policy stimulus, an end to fiscal austerity and a healthier financial sector," said James McCann, OECD economist at Standard Life Investments. "(It's) a steady recovery which has been trundling on."

Donald Trump Is “Most Powerful Brand In The World”

There are a number of brand valuation companies, each of which has its own elaborate set of formulas to determine its figures. Among theses is Brand Keys, which recently stated Donald Trump is ‘the most powerful brand in the world.”

For 25 years Donald Trump has been one of the most powerful brands we’ve tracked. You could add his name to anything and the increased perceived value of the products increases upwards of 30 percent. As a reference point, on average the most celebrated celebrities generally add 12-15 percent additional value to products or services they endorse or to which they lend their names.

Added-value related to the Trump brand how much more a product or service is seen to meet consumer expectations and to be worth more monetarily took a hit when the Access Hollywood tape was released, but has rebounded with his election and is up significantly in three categories that President Trump is most closely identified with: TV/Entertainment, Country/Golf Clubs and Real Estate/ Hotels.

One of the concrete examples Brand Keys gives is that a luxury condominium which can charge $1,000 per square foot under “normal” circumstances, can charge $1,450 when the owner uses the Trump name.

Keiser Report: Greek Final Reckoning

Sears’ Empty Sales Floors May Be Turning Customers Off

It should be pretty easy to tell a fully operational department store from one that it is closing down, but some Sears shoppers have found that their local store is not doing much to alleviate concerns about the company’s death spiral.

A couple months back, Consumerist’s own Kate Cox stopped in a Sears store in northern Virginia and noticed something strange. Huge parts of the store were empty, and it was strangely arranged, with jumbled clearance sections in front of newly renovated areas. It was unnerving enough that she took a few pictures to share with us. Employees said that the store wasn’t closing, and they were half right.

That’s because Kate had visited while the store was shifting things around with the ultimate goal of consolidating the two-story store into one story. If the right opportunity with a new tenant comes along, the store will close. If you want to lease the whole thing, it’s available.

Last year, Seritage Growth Properties, the real estate investment trust that consists of current and former Sears Holdings stores, announced plans to renovate the Sears, rearranging it to include “Dave and Busters, junior box retailers, and restaurants on the second floor, while Sears Holdings [would] retain the space on the first floor.”

Now U.S. taxpayers pay to see if people like getting tax money

A project to measure Palestinian “citizen satisfaction” regarding U.S. aid, launched five weeks before Barack Obama’s departure from the White House, remains on track and will cost U.S. taxpayers millions to carry out.

On a related issue, a plan in which U.S. taxpayers will pay companies to publicize the U.S. aid given to the Palestinians was launched shortly after Obama left office.

According to a new document that WND located through routine database research, audiences targeted by the U.S. Agency for International Development, or USAID, include:

The Palestinian public, including (but not limited to): youth between ages 16-35, women and marginalized communities; Palestinian media, including both traditional (print and broadcast) and digital media; The Israeli public; and The American public. “The purpose of this contract is work with USAID on implementing the USAID West Bank and Gaza’s communication strategy that will increase public awareness and disseminate information about USAID assistance to both Palestinian and global audiences,” the solicitation said.

Will Tesla's new Model 3 be most 'Made in America' car?

For some buyers, where a car is made can be as important as the qualities of the car itself. "Made in America" can be a powerful selling point, especially after a presidential election in which domestic manufacturing jobs were a hot-button issue.

But in the age of globalization, U.S. automakers no longer have a monopoly on cars with largely American-made content. Every year, the Kogod School of Business at American University publishes rankings of the most "American-made" cars, with the top spots occupied by a mix of domestic and foreign models.

The rankings are based on such factors as the proportion of American-made parts, labor, and the amount of development work conducted in the U.S. So where might the Tesla Model 3 rank when it starts production later this year? In 2016, the Toyota Camry mid-size sedan and Sienna minivan were rated 78.5 percent American-made, while different analyses in past years have dubbed the Camry the "most American" vehicle.

The Honda Accord mid-size sedan was determined to be 81 percent American-made last year, while the Chevrolet Corvette sports car came in at 83 percent. The Ford F-150 full-size pickup truck was at 85 percent, according to the study. A trio of General Motors crossovers based on the same platform—the Chevy Traverse, GMC Acadia, and Buick Enclave—were rated 90 percent American-made.

Ben Stein: Media doing to Trump what it did to Nixon

Cash is no longer king

The idea of a cashless society is one of the topics that stirs up a heated debate when it comes to the digitalization of banking and society. On one hand, physical cash is the common denominator for corruption, tax evasion, money laundering and other various illegal activities. While the anonymity of cash acts as an enabler for the illegal economy, many fear that the lack of said anonymity will inevitably lead to an Orwellian society where individual freedom is limited.

In Sweden, which is leading the race toward a cashless society, negative attitudes toward the decline in cash usage has increased as the country progresses toward a cashless society. Although cash is still used extensively in several countries, such as Austria and Germany, the use of physical cash is diminishing across the board.

Even the U.S., where cash accounts for one-third of all purchases, the use of cash is declining. But at the same time, the amount of cash being issued is growing. Forty years ago there was approximately $80 billion of cash in circulation. Today, this number has increased nearly 20 times, to roughly $1.5 trillion in circulation. In the same period, the amount of $100 bills has increased from 25 percent in the mid-1970s to around 80 percent today.

The obvious explanation is inflation. However, the increase has exceeded inflation — with a good margin. According to economist and author Kenneth Rogoff, the world is drowning in cash, and it is making us poorer and less safe. He argues in his book The Curse of Cash that this phenomenon is not an American phenomenon, but also the case for every other widely used currency — and the primary explanation is that cash is the preferred means of value exchange in the black-market economy. His solution? Phase out the larger bills.

Buffett upbeat on American business; Berkshire operating profit down

Warren Buffett on Saturday mounted a forceful and upbeat defense of the prospects for American business, as his Berkshire Hathaway Inc (BRKa.N) reported a higher quarterly profit though operating income fell.

In his annual letter to Berkshire shareholders, Buffett said investors "will almost certainly do well" by staying with the long term with a "collection of large, conservatively financed American businesses."

Buffett puts Berkshire in that category, using the letter to tout the successes of many of his Omaha, Nebraska-based conglomerate's more than 90 operating units. These included businesses such as the BNSF railroad and Geico auto insurance that posted weaker results last quarter.

"American business -- and consequently a basket of stocks -- is virtually certain to be worth far more in the years ahead," Buffett wrote. "Ever-present naysayers may prosper by marketing their gloomy forecasts. But heaven help them if they act on the nonsense they peddle." For the fourth quarter, Berkshire's net income rose to $6.29 billion, or $3,823 per Class A share, from $5.48 billion, or $3,333 per share, a year earlier, helped by a $1.1 billion increase in gains from investments and derivatives.

Store closings are part of the business, but is this business as usual?

2017 is just two months old, but we have already experienced what feels like a year’s worth of major store closing and liquidation announcements from national brands. This spike in store closings seems to have rattled retail industry professionals, and has gotten retail analysts and observers talking about big shifts – and thinking not only about what comes next, but how painful the transition might be in the meantime.

J.C. Penney just announced it will take out 140 stores by June. Over the past few weeks The Limited has closed its doors, liquidating its assets and filing for bankruptcy, American Apparel is closing all of its 110 stores, BCBG is closing stores and restructuring, The Andersons is closing down its stores and going out of business, Wet Seal is closing down all of its locations, Macy’s announced the closure of 68 more stores, and Sears announced that it will be closing 150 Sears and Kmart locations.

To be fair, the first few weeks of the new year are always a turbulent time, when post-holiday closing announcements come out in a flurry of activity. But the dramatic uptick in closings feels different this time, and there seems to be an air of concern – perhaps even bordering on panic–across the industry. The topic is dominating conversation in and around the industry.

What’s happening with Macy’s? What’s next for Sears? This seems to be all that people are talking about. It’s almost as if, for the first time, these announcements have prompted a broad-scale realization of the fact that shopping patterns are changing in fundamental ways.

Deutsche Bank Cuts 2016 Bonus Pool by Almost 80%

Deutsche Bank AG cut its bonus pool for 2016 by almost 80 percent, Frankfurter Allgemeine Sonntagszeitung reported, a figure unmatched in the bank’s recent history as it tries to counteract the impact of low interest rates and legal expenses.

Germany’s largest lender is reducing the payments with an eye toward shareholders and is aware it will be “frustrating” for employees, Chief Administrative Officer Karl von Rohr told the German Sunday newspaper. The measures will affect about a quarter of the 100,000 staff. Some workers in key positions -- about 5,000 in all -- will get a special long-term incentive tied to the bank’s performance and paid out after as long as six years, von Rohr said.

Though Deutsche Bank told employees last month that bonuses would be reduced, the full magnitude of the cuts hadn’t been reported. The German bank saw its shares sink 23 percent last year amid rising court costs and concerns about its capital adequacy. In an effort to boost profitability and build a capital buffer, Chief Executive Officer John Cryan has eliminated jobs, suspended dividends and auctioned off risky assets.

The lender last year cut bonuses 17 percent, arguing at the time that deeper reductions would compromise its ability to hold on to top talent. The 2016 cuts outpace those of competitors.

How do Americans feel about the future of our country?

Millennials wonder: 'Where's my money going?'

Millennials could be risking their financial future as they craft ways to tackle their student loans, car payments and credit card debt. New research indicates that many are overusing credit cards, racking up fees with late payments or overdrawing checking accounts and, in some cases, even taking loans against 401(k) plans.

What's worse: Millennials may have less wiggle room for financial mistakes. In many cases, Millennials could be earning about 20% less than their parents did when they were in the 25- to 34-year-old age range, according to a generational comparison by the nonprofit the Young Invincibles.

Millennials — defined for this study as those who are ages 23 to 35 — may be experiencing a disconnect with their money, according to new research funded by the National Endowment for Financial Education and conducted by George Washington University. More than 70% have at least one long-term debt — be it a student loan, home mortgage, car loan. And 34% of Millennials are juggling two or more loans.

Yet many Millennials are taking on extra costs and risks as they juggle the bills. A quarter of those with checking accounts, for example, had overdrawn their account in the prior 12 months, according to the survey for the National Endowment for Financial Education.

Barclays apologises to angry customers who couldn't use debit cards in shops or withdraw cash from machines

Barclays has apologised after customers vented their anger or frustration over a "technical" fault that prevented them from making purchases or disrupted their weekend plans. The bank was flooded with tweets, emails and phone calls after a glitch in its computer system made it impossible for customers to use their debit cards in shops or withdraw cash from machines.

Customers wrote on Twitter that they were left embarrassed after they were unable to pay things such as groceries, while one complained that her payment at a letting office agency was declined. In-branch, online and telephone banking services were also affected, with some customers still reporting problems on Saturday night and some branches forced to close early.

Earlier in the day Barclays reported that "technical issues" were affecting some digital services, and the problem was being investigated.

Shortly after 4pm it tweeted: "We’re still experiencing issues affecting Barclays Debit Card and ATM transactions. Our teams are working to get this restored." By 8pm it reported that services had returned to normal, tweeting: "Our Debit Card services are now restored. We apologise to all affected, and for any inconvenience caused by this technical issue."

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