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Tuesday 02.28.2017

Coming to Wendy's: 1,000 Self-ordering kiosks

Wendy’s fast-food chain is set to open self-ordering kiosks at 1,000 outlets by the end of 2017. The kiosks have already been given a trial run at several locations in central Ohio – the company’s home state – but this expansion will mean about 16 percent of its restaurants boast such automated facilities. The shift represents the latest development in the wider world of automation, a phenomenon some say is a clear threat to jobs, with others arguing that the truth is far more nuanced.

"They are looking to improve their automation and their labor costs, and this is a good way to do it," Darren Tristano, a vice president with Technomic, a food-service research and consulting firm, told The Columbus Dispatch. "They are also trying to enhance the customer experience. Younger customers prefer to use a kiosk."

Three kiosks can be set up in a given restaurant for about $15,000, a cost that would likely be recouped within two years, as David Trimm, the chain's chief information officer, told investors last week, the Dispatch reports. And according to Mr. Tristano, instead of replacing jobs, the machines may simply shift labor into other areas – at least initially.

Yet the kiosks are just the beginning: Further down the line, mobile ordering and payment is expected to overtake both kiosks and cash registers. With automation apparently creeping into more and more facets of the workplace, concerns about workers’ opportunities appear to be well-grounded. But some observers say the reality is far less clear-cut.

Bill Gates says it's too early for basic income, but over time 'countries will be rich enough'

Bill Gates isn't opposed to giving people money for free — particularly as a means to lift them out of poverty — but he doesn't think universal basic income (UBI) is ready for public use quite yet.

In a February 27 AMA on Reddit, the philanthropist and co-chair of the Gates Foundation responded with some hesitation to a question about UBI, a system of income distribution in which everyone receives a set amount of money regardless of job or income level.

Proponents of UBI claim the system could close gaps in equality, as everyone's basic needs would be met through the basic income and some of the funding could come from heavy taxes at the top.

"Over time countries will be rich enough to do this," Gates said. "However we still have a lot of work that should be done — helping older people, helping kids with special needs, having more adults helping in education." It's not the first time Gates has mentioned those factors as pressing problems. In a February interview with Quartz editor-in-chief Kevin Delaney, Gates brought them up as industries currently short on staff.

20% of US Bank Branches to Disappear by 2020

The rise of internet banking and finance technology (now with a buzzword of its own: fintech) has been dramatic over the past few years. Since the financial crisis of 2009, 6% of U.S. bank branches have been closed. The total number of branches open at the end of 2015 was 93,283, and that number declined by another 1,614 in 2016. By 2020, the number of U.S. branch banks will tumble 20%, according to global outsourcing firm Intelenet.

Closing branches meant real savings to banks looking to cut costs as they faced increased regulation and low interest rates over the past several years. Setting up a new branch typically costs $2 million to $4 million, according to a report at Forbes last year. Keeping a branch running costs $200,000 to $400,000 a year, and it takes about 10 years for a branch office to reach its full potential of earning about $1 million in annual profit.

Big banks like JPMorgan Chase and Wells Fargo could arguably save a lot of money by closing more branches, more quickly. The problem is that customers won’t let them.

It’s not that customers always want a branch to walk into, but when they need to talk to someone about an unusual situation, there is no substitute for a live human. Intelenet CEO Bhupender Singh said: Although there is a rise in online banking, with fewer customers opting to go to branches, banks need to be strategic in the way they accommodate customers. Not all customers want to go solely online for the handling of such sensitive information. This is where banks can look to be really distinctive in the way they harness technology to direct financial advisers to customers’ doorsteps.

Mexico warns it will end NAFTA talks if U.S. proposes tariffs

Mexico's economy minister Ildefonso Guajardo warned that his country will break off negotiations on the North American Free Trade Agreement (NAFTA) if the United States were to propose tariffs on products from Mexico, Bloomberg reported on Monday.

"The moment that they say, 'We're going to put a 20 percent tariff on cars,' I get up from the table," Guajardo told Bloomberg in an interview.

U.S. President Donald Trump has vowed to scuttle NAFTA, the 1994 trade accord which also includes Canada, if he cannot recast it to benefit U.S. interests, raising the risk of a major economic shock for Mexico.

Mexico, which is preparing to discuss changes to some trade rules under the NAFTA, has however expressed confidence that Trump will not be able to impose harsh barriers on imports anytime soon. Mexican officials expect talks to start in June, Bloomberg reported.

Trump's Fed Can Start a Central Bank Revolution

President Donald Trump will select three members of the Federal Reserve board during his term in office, including a replacement chair for Janet Yellen when her appointment expires early next year. He should seize the chance to refresh the Fed with faces from the business community, adding executives to the roster of PhD economists who currently run monetary policy in most of the world.

The Fed appointments come at a key juncture in U.S. economic policy, one that makes business knowhow an even more valuable commodity for a rate-setter than usual. Trump's fiscal policies will set a new backdrop for the monetary policy environment, given his intention to cut personal and business tax rates and boost investment in the nation's infrastructure.

So appointing executives to the Fed who've had to take fiscal and monetary policy into account when making decisions on where and when to build new factories or make other capital expenditure decisions makes sense. Torsten Slok, the chief international economist for Deutsche Bank AG, sent around a chart last week showing how the composition of the Fed has become increasingly focused on PhD economists:

It's little wonder that in this populist age central bank independence is under attack. As Bloomberg News reported on Monday, the rise of populism is putting pressure on central banks as "institutions stuffed with unelected technocrats wielding the power to affect the economic fate of millions." Leavening the boards of policy makers with executives who've made hiring and firing decisions and have helped build companies would be a way to address the perception that decisions about borrowing costs are made in ivory towers by economists who've all read the same textbooks but don't inhabit the same world as the people they're supposed to serve.

Number of distressed U.S. retailers at highest level since Great Recession

The number of U.S. retailers ranked at the most-distressed level of the credit-rating spectrum has more than tripled since the Great Recession of 2008-2009 and is heading toward record levels in the next five years, Moody’s Investors Service said Monday.

The rating agency is the latest to weigh in on the state of the sector, and has 19 names in its retail and apparel portfolio, 14% of which are now trading at Caa/Ca. That’s deep into speculative, or “junk,” territory. It’s also a percentage close to the 16% considered distressed during the 2008/2009 period, said a Moody’s report led by retail analyst Charles O’Shea. The rise is part of a wider trend affecting sectors across Moody’s coverage that has retail replacing oil and gas as the most-troubled industry.

Retailers are in the midst of a secular shift to online sales led by juggernaut Amazon.com Inc. and that’s forcing many of them to spend heavily on their e-commerce operations. At the same time, mall traffic has slowed dramatically as consumer behavior changes, forcing many to discount heavily, hurting profit margins.

The 19 issuers on Moody’s list have more than $3.7 billion of debt maturing in the next five years, with about 30% of that total coming due by the end of 2018. The number is even higher when private credit is included.

The odds of an interest rate hike have begun to shift in a new direction

Just as Washington is gearing up to goose the economy, the Federal Reserve could be teeing up an interest rate increase that could put a damper on things.

The chances that the Fed will hike rates at its March 14-15 meeting have been creeping higher in recent days. By at least one estimate, the probability is now at 50 percent, after being in the teens just last week.

"This is what the Fed wanted," said Peter Boockvar, chief market analyst at The Lindsey Group. "Now, the Fed may not raise, but they wanted at least the flexibility to do it."

Central bank policymakers in the past have been loathe to tighten policy when the market is not anticipating such a move. The Fed last hiked in December, at a time when officials had telegraphed a move and the market had almost completely priced it in. Hawkish statements in recent days appear to have pushed up the chances.

Scraping by on six figures? Tech workers feel poor in Silicon Valley's wealth bubble

I didn’t become a software engineer to be trying to make ends meet,” said a Twitter employee in his early 40s who earns a base salary of $160,000. It is, he added, a “pretty bad” income for raising a family in the Bay Area.

The biggest cost is his $3,000 rent – which he said was “ultra cheap” for the area – for a two-bedroom house in San Francisco, where he lives with his wife and two kids. He’d like a slightly bigger property, but finds himself competing with groups of twentysomethings happy to share accommodation while paying up to $2,000 for a single room.

“Families are priced out of the market,” he said, adding that family-friendly cafes and restaurants have slowly been replaced by “hip coffee shops”. Silicon Valley’s latest tech boom has caused rents to soar over the last five years. The city’s rents, by one measure, are now the highest in the world.

The prohibitive costs have displaced teachers, city workers, firefighters and other members of the middle class, not to mention low-income residents. Now techies, many of whom are among the highest 1% of earners, are complaining that they, too, are being priced out. The Twitter employee said he hit a low point in early 2014 when the company changed its payroll schedule, leaving him with a hole in his budget. “I had to borrow money to make it through the month.”

Two Retailers, One Big Worry

Two retailers moving in different directions have at least one thing in common: They are terrified of a border-adjusted tax.

Target Corp. and Best Buy Co., both set to report earnings this week, are among a group of retailers that sent executives to meet with President Donald Trump earlier this month, lobbying against higher taxes on imports. They are likely to speak out against Mr. Trump's plans in their respective analyst calls.

Retailers have plenty to lose should the Trump administration act on its plans, mainly because many rely substantially on imported wares. Mr. Trump, who is scheduled to speak before a joint session of Congress on Tuesday, has said the plan would operate like a tax on the trade deficit. It also could act as one on retailers, though, forcing them to raise prices and lose some customers.

That would make life even more difficult for Target. It warned last month of weaker-than-expected profits and sales during its holiday reporting period so its actual fourth-quarter results Tuesday shouldn't contain too many surprises.

Is Gun Ownership a Right?

Why men are having problems getting married

If it’s universally acknowledged that a single man with a good fortune needs a wife, the American economy may be now illustrating the inverse of that corollary: Poor men with dwindling job prospects are going to lack marriage prospects.

The decline of the institution of marriage has been studied by social scientists and policymakers, but new economic research from MIT economics professor David Autor and his colleagues points to labor issues that helped Donald Trump win the presidential election: The decline of American manufacturing and the rise of Chinese imports.

As manufacturing jobs dried up over the last few decades, blue-collar men have suffered from lower income, fewer job opportunities and the increased likelihood of risky behavior, which in turn has hurt their marriage prospects, Autor and his co-authors wrote in a paper published at the National Bureau of Economic research.

Trade shocks to the manufacturing sector are “particularly destabilizing to marriage-markets,” they wrote, although they caution that heightened trade competition from China isn’t the sole or even the main catalyst for the trends. “Trade shocks reduce the availability and desirability of potentially marriageable young men along multiple dimensions,” wrote Autor and his co-authors, David Dorn of University of Zurichand and Gordon Hanson of University of California, San Diego.

JPMorgan, Microsoft, Intel and others form new blockchain alliance

JPMorgan Chase & Co, Microsoft Corp, Intel Corp and more than two dozen other companies have teamed up to develop standards and technology to make it easier for enterprises to use blockchain code Ethereum in the latest push by large firms to move toward distributed ledger systems.

The Enterprise Ethereum Alliance (EEA) will work to enhance the privacy, security and scalability of the Ethereum blockchain, making it better suited to business applications, according to the founding companies, which said they plan to announce the initiative on Tuesday.

Members of the 30-strong group also include Accenture Plc, Banco Santander, BP Plc, Credit Suisse Group AG, UBS Group AG, Banco Bilbao Vizcaya Argentaria, ING Groep NV, Bank of New York Mellon Corp, Thomson Reuters Corp and startups ConsenSys and BlockApps.

The EEA joins a growing list of joint initiatives by large companies aiming to take advantage of blockchain, a shared digital record of transactions that is maintained by a network of computers rather than a centralized authority. Companies in a wide range of industries are hoping that it can help them streamline some of their processes, such as the clearing and settling of financial securities.

You Rang? I Called Hotel Room Service—And Got A Robot

It’s midnight. I’m on a business trip in Cupertino, California and after sending off a few final emails, I change into my pajamas, and then it hits me: I’ve forgotten my toothbrush.

This is not the first time I've done this and most of the time, when I do, I swing by the front desk and grab one. But when it's really late and I'm in my pajamas, I’m a little less inclined to head downstairs to model my choice in sleepwear for the folks still at the hotel bar.

So I call the Aloft Hotel's front desk for room service, and a few minutes later open my door to get my toothbrush from Botlr, the hotel’s robotic butler.

Botlr, who has been on staff since 2014 and looks a tiny bit like a rolling trash can, works 24/7 delivering everything from extra towels to snacks and drinks. When a guest calls the front desk, the attendant places the requested item inside of the head of the bellhop on wheels, programs in the room number, and off it goes. And Botlr knows its way around. It even takes the elevator on its own. A phone call to the guest is made when Botlr arrives at your door.

Trump admin looks at ways to hire more border agents

The Department of Homeland Security is exploring ways to make it easier to hire agents to help fulfill President Donald Trump's ambitious border security plans, the agency confirmed Monday.

The move comes after Trump has called for the hiring of an additional 5,000 Customs and Border Protection agents -- a tall task as the agency struggles to even fill its ranks at current levels due to stringent requirements and talent pool difficulties.

A Customs and Border Protection spokesman told CNN in a statement that while CBP would maintain "high standards" in recruiting personnel, it is looking for ways to beef up its staffing. The hiring process can take roughly 18 months.

"US Customs and Border Protection will maintain our current high standards of recruiting the best America has to offer," spokesman Michael Friel said. "To meet our critical hiring needs, we are exploring ways to recruit individuals that the federal government has already vetted to work in sensitive positions, such as military and federal law enforcement officers while also working to omit redundancies in the hiring process."

Is the End Near for Fast-Food Workers?

Wendy's has become the latest fast-food chain to partially replace its order-taking employees with a digital alternative. The company plans to add self-ordering kiosks at 1,000 locations by the end of the year, and executives noted during an analyst/investor day earlier this month that one benefit will be reducing labor costs.

Chief Information Officer David Trimm also noted that kiosks would allow the company to serve more people during busier times. He said the kiosks pay for themselves in less than two years. "They are looking to improve their automation and their labor costs, and this is a good way to do it," Darren Tristano, vice president with Technomic, a food-service research and consulting firm, told The Associated Press. "They are also trying to enhance the customer experience. Younger customers prefer to use a kiosk." Trimm said during the analyst/investor day that "... everybody, whether you're a millennial or not, is now expecting to interact with brands via digital channels."

Be it kiosks, mobile ordering via smartphone, or something else, it's very clear that in a number of fast-food and even fast-casual chains, technology can make it unnecessary to speak to a human being when placing an order. That will not only save money, it should also improve customer satisfaction.

Kiosks have many advantages over humans. Kiosks don't call in sick, require breaks, or mishear an order. They also can't be rude to customers, steal from the register, or intentionally screw up the order of a rude customer. Most importantly, though digital ordering technology requires an up-front investment, kiosks, smartphones, and other non-human ordering stations don't get paid hourly wages.

U.S. Military spending

Retail Apocalypse Gains Momentum As David Stockman Warns ‘Everything Will Grind To A Halt’ After March 15th

J.C. Penney and Family Christian Stores are the latest retail giants to announce widespread store closings. As you will see below, J.C. Penney plans to close between 130 and 140 stores, and Family Christian is closing all of their 240 stores. In recent months the stock market has been absolutely soaring, and so most people have simply assumed that the “real economy” must be doing well. But that is not the case at all. In fact, the retail apocalypse that I have been documenting for quite some time appears to be gaining momentum.

J.C. Penney is not in as rough shape as Sears is just yet, but it is definitely on a similar trajectory. In the end, they are both headed for bankruptcy. That is why it wasn’t too much of a surprise when J.C. Penney announced that they are getting rid of about 6,000 workers and closing at least 130 stores…

J.C. Penney (JCP) plans to close 130 to 140 stores and offer buyouts to 6,000 workers as the department-store industry sags in competition with online sellers and nimble niche retailers.

The company said Friday that it would shutter 13% to 14% of its locations and introduce new goods and services aimed at the shifting preferences of its customer base.

President Trump: Dodd-Frank keeps banks from lending

Regulatory reform is a hot topic for the current administration as the president and members of his cabinet seek to cut back on regulations and ease lending standards.

On Friday President Donald Trump continued his criticism of the Dodd-Frank Wall Street Reform and Consumer Protection Act, saying that the law prevents banks from lending, according to an article by Jim Puzzanghera for the Los Angeles Times.

From the article: “We expect to be cutting a lot out of Dodd-Frank because, frankly, I have so many people, friends of mine that had nice businesses, they can't borrow money," Trump told leading corporate chief executives, including Jamie Dimon of JPMorgan Chase & Co. and Larry Fink of money management giant BlackRock Inc., meeting at the White House earlier this month

"They just can't get any money because the banks just won't let them borrow it because of the rules and regulations in Dodd-Frank," Trump said.

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