Analysts say possibility of U.S. rate hike could shake up markets
Shares in South Korea shipping giant Hyundai Merchant Marine Co. were sharply down Thursday.
Shares in Asia were choppy and shares were sliding — except in China
and Japan — as many investors grow cautious about the stronger chance
that U.S. interest rates will rise in June.
In China, the Shanghai Composite
SHCOMP, +0.14%
recently rose 0.6%, while Japan’s Nikkei Stock Average
NIK, +0.01%
opened higher but pared gains
to recently trade about flat. But Hong Kong’s Hang Seng Index
HSI, -0.64%
dropped 0.4%, Korea’s Kospi
SEU, -0.51%
fell 0.5% and Australia’s ASX/S&P 200
XJO, -0.61%
sank 0.7%.
Many
investors across the Asia-Pacific region pulled back after the U.S.
Federal Reserve’s April meeting minutes suggested a June interest-rate
increase was still in the cards if data supported the case that the
American economy was getting stronger.
The
U.S. dollar strengthened against its major peers after the minutes were
released, putting pressure on some Asia-Pacific stock markets and
prices for commodities.
“In Asia it should be quite negative —
especially in emerging markets we have seen the USD bid higher” against
Asian currencies, said Tareck Horchani, a senior sales trader at Saxo
Capital Markets. “This rate hike is not really a good sign. I believe we
might see some larger correction in Asia over the next few days.”
Investors
were initially more positive in Japan, where stocks were up as much as
0.5% in the early morning. Shares gained after the yen weakened
overnight.
A weaker currency helps Japanese exporters, who can
sell their goods at more competitive prices overseas and can increase
earnings made abroad when they are repatriated into yen.
“The
strength of the yen has been a real problem on Japanese exporters,” said
Alex Furber, senior client services executive for CMC Markets in
Singapore. The yen weakened to 110 per U.S. dollar in the early morning,
and “that’s going to ease a little bit of pressure on exporters and
potentially is good for stocks,” he said.
Japanese financial
shares were leading the market higher on expectations that higher U.S.
interest rates could boost their net interest margins. Financial stocks
had suffered in recent weeks in an ultralow interest-rate environment.
Dai-ichi Life Insurance Co.
8750, +2.80%
rose 4.3% and Mitsubishi UFJ Financial Group Inc.
8306, +0.82%
advanced 3.2%.
In China,
technology and telecom stocks rallied, with the Nasdaq-style ChiNext
board in Shenzhen up 2.4%. Trading volumes, however, were thin as
investors were uncertain about the Chinese economy.
“Weak
economic fundamentals and tightening liquidity as a result of sustained
[deleveraging] efforts prompted more investors to stay on the sideline,”
says Jacky Zhang, an analyst at BOC International.
In Korea, shares of Hyundai Merchant Marine Co.
011200, -15.04%
plummeted 11% after the
company and its creditors failed to reach an agreement Wednesday over
charter rate cuts with foreign shipowners, which is part of its debt
restructuring efforts.
The price of Brent crude oil slipped in
early Asia trading hours to $48.07 a barrel. Earlier this week, Brent
had neared the psychologically-important $50 mark but failed to breach
it.
Dramatically cut your wait times with these insider tips
Earlier this week, roughly 450 American Airlines
AAL, -0.09%
passengers trying to fly out
of Chicago’s O’Hare airport missed their flights due to serious TSA
screening checkpoint delays. And this is just the latest in a series of
security-related slowdowns that have caused thousands of consumers to
miss their flights.
For its part, the TSA plans to hire roughly
800 more officers and get more people to work part-time and overtime.
But the TSA union says it will need 6,000 more staffers to fix the
problems, which have been caused by an increase in fliers and tighter
security measures.
For consumers planning to fly this summer,
this news, no doubt, creates alarm. After all, spending the afternoon
inching forward in a jam-packed security line only to then be forced to
remove shoes, empty pockets, toss shampoo and endure a TSA pat-down is
enough to make anyone irate.
Of course, most consumers know that TSA PreCheck
— which allows vetted fliers to use special, typically speedier lines —
is a good option to help avoid the lines, and there is evidence that
it’s popularity is catching on. As of April 26, more than 2.5 million
people had enrolled, up from a little over 2.2 million on March 1st,
according to the TSA.
But there other, lesser-known ways travelers can avoid long airport security lines. Don’t travel on a Friday afternoon
On
average, security lines on Friday afternoons between about 4 p.m. and 8
p.m. local time are the slowest, as wait times tend to double then, according to custom data run for MarketWatch by WhatsBusy.com, a site that tracks airport security wait times for consumers.
“That’s
the tail-end of business travel for the week and the start of a lot of
personal travel,” explains Jordan Thaeler, the president and co-founder
of WhatsBusy;
this confluence of factors creates longer lines. The firm analyzed
security line wait times for the 20 busiest airports in the nation to
make this analysis.
You may also want to avoid traditionally busy travel days like the day before and the Sunday after Thanksgiving.
World's largest cruise ship makes maiden voyage
The Harmony of the Seas is 1,187 feet long (362 meters)
and is operated by Royal Caribbean Cruises. Its 16 decks contain over
2,500 staterooms, 20 dining venues, 23 swimming pools and a park. Get Global Entry (in some circumstances for free)
You’ve probably heard about TSA PreCheck,
which costs $85 for five years and allows flyers departing from the
U.S. to go through security quickly without having to remove their
shoes, laptops, belts and light coats. The TSA says that about 99% of
TSA PreCheck passengers wait in security lines that are under five
minutes.
But most experts recommend you get Global Entry — at
least if you ever plan to travel abroad — as it gives you the perks of
TSA PreCheck status, plus easy entry into the U.S. from abroad (you’ll
enter the country through automatic kiosks that scan your passport and
fingerprint rather than long customs lines). It costs $100. “It’s
drastically quicker,” says Brian Kelly, founder of ThePointsGuy.com. George Hobica, the founder of AirfareWatchdog.com,
says Global Entry is “the best way” to beat long lines. “The other day I
flew in from Vietnam to LA and not only was the immigration line at LAX
endless, but the line at customs was also huge,” he says. “It took me
about two minutes to get through both lines because I have Global Entry;
otherwise I’m sure I would have been waiting an hour or more to get
through both lines.”
Some consumers can get Global Entry essentially for free by buying it using certain American Express
AXP, +1.21%
credit cards, including its
Corporate Gold Card, Consumer Platinum Card, Corporate Platinum Card,
Business Platinum Card and Centurion Card all of which give you a $100 statement credit when you pay for Global Entry. Of course, you need to pay your balance in full and make sure the annual fees are worth it for you.
Buy Clear
Fewer people have heard of Clear — a program available in 13 airports
including San Francisco, Denver, Las Vegas, and Houston that speeds you
through airport security (it promises consistent wait times of less
than 5 minutes) — but some experts say it’s worth the $179 a year price
(you can add family members for $50 each).
“Clear can save you
time,” says Kelly. “It’s in a limited number of airports but if you’re
based out of one of those airports, [consider it],” he says. Plus, Clear
is adding expedited access to sporting events to its roster.
With
Clear, rather than waiting in a line for an agent to scan your boarding
pass and ID, you instead place your finger and boarding pass saved to
your smartphone into a Clear kiosk (you can watch a video of how this works here),
and then you can go right to the screener machine (the same one that
everyone else uses). Clear is typically faster than the TSA PreCheck
line, a spokesperson for the company says, because the PreCheck lines
have become more crowded as more consumers use the service. The TSA
points out that Clear consumers — though they do get to go to the front
of the travel document check line — still have to go through the same
screening machines that everyone else does, and notes that 99% of
TSAPreCheck passengers wait in lines less than 5 minutes. Become an elite flyer (or upgrade to be one for a day)
There
are perks to staying loyal to one airline, namely all the benefits you
get with your elite status. One of the big ones is the priority security
lines, which tend to be faster and shorter than the lines that regular
Joes have to stand in.
“If you can stick to one airline, that does pay off when it comes to security lines,” says Travelzoo senior editor Gabe Saglie. “They have dedicated security lanes for their premier or elite flyers that are almost always considerably shorter.”
But
even if you aren’t an elite flyer, you can still pay to get into those
short security lines. Saglie says that when you upgrade your seat — say
to get extra legroom or to move towards the front of the plane — you can
sometimes get priority security line status as well. Sometimes, this
can cost as little as $25, though that varies depending on the airport
and where you are flying. Get savvy about which line to choose
Often,
travelers pour into whichever security line is closest to their
airline’s check-in area, but that can be a huge waste of time, says
Kelly. Instead, before you get to the airport, look at the map online if
it’s available to figure out where alternate security points might be
and/or simply ask when you are there.
Sometimes, they won’t let
you through a line in an alternate terminal, says Kelly, but if you have
an excuse like that you are meeting a client, they might. You may have
to do more walking this way, but for many, that’s a lot better than
standing still in line. Pick your airport wisely
Most
consumers don’t think about avoiding security lines when they’re
booking their flights, but it can be smart to. If you have the choice of
a smaller airport or a larger one, you may want to choose the smaller
one if you want to avoid long lines, says Hobica. (This story has been updated.)
Mounting uncertainties over a tepid economy, weak earnings, and a more hawkish Federal Reserve is making cash popular again.
Cash levels are inching toward a multiyear high
If cash positions are anything to go by, investors are bracing for a wild ride in the markets.
More
fund managers are keeping their money in cookie jars rather than
investing, pushing cash levels toward a multiyear high not seen since
earlier this year when stocks
DJIA, -0.02%SPX, +0.02%
were tumbling, according to a Bank of America Merrill Lynch survey.
Cash levels inched up to 5.5% in May versus 5.4% in April, nearing the 15-year high of 5.6% in February.
Bank of America Merrill Lynch
“If you go down to the woods
today, it will be full of bears. Investors [are] positioned for a
‘summer of shocks,” said the bank in its monthly survey of money
managers positions released Tuesday.
The survey also showed that
only 12% of the respondents were taking “higher-than-normal” risks with
most managers crowded into quality assets.
Investors and corporations tend to boost their cash hoards during times of uncertainty.
A
tepid economy, weak outlook on corporate profits, and expectations of
at least two interest rate increases by the Federal Reserve are all
forcing investment managers to be more conservative, said Michael
Hartnett, chief investment strategist at Bank of America Merrill Lynch.
On Wednesday, minutes from the policy-setting Federal Open Market Committee hinted that an interest-rate hike could come as early as June.
But the one overriding worry for fund managers this month is the risk associated with the U.K. leaving the European Union, or Brexit as it is commonly referred to as.
Bank of America, along with Goldman Sachs and J.P. Morgan Chase, earlier this week urged investors to rotate out of stocks
due to what they described as inflated stock values. The Fed tightening
U.S. monetary policy as well as uncertainties over the U.S.
presidential election are among the reasons cited by the banks as events
that could roil markets.
On Tuesday, Goldman recommended that
investors remain overweight in cash, at least for the next three months,
due to expectations of increased volatility.
“Key risks include
less China growth, a general pick-up of European political risk, a
repricing of the Fed rate hike cycle, and commodity price declines,” the
economists said in a report.
Goldman also downgraded global equities to neutral
from overweight over a 12-month period due to high valuation, noting
that unless they see sustained earnings growth, stocks aren't very
attractive for now.
Mounting uncertainties over a tepid economy, weak earnings, and a more hawkish Federal Reserve is making cash popular again.
Cash levels are inching toward a multiyear high
If cash positions are anything to go by, investors are bracing for a wild ride in the markets.
More
fund managers are keeping their money in cookie jars rather than
investing, pushing cash levels toward a multiyear high not seen since
earlier this year when stocks
DJIA, -0.02%SPX, +0.02%
were tumbling, according to a Bank of America Merrill Lynch survey.
Cash levels inched up to 5.5% in May versus 5.4% in April, nearing the 15-year high of 5.6% in February.
Bank of America Merrill Lynch
“If you go down to the woods
today, it will be full of bears. Investors [are] positioned for a
‘summer of shocks,” said the bank in its monthly survey of money
managers positions released Tuesday.
The survey also showed that
only 12% of the respondents were taking “higher-than-normal” risks with
most managers crowded into quality assets.
Investors and corporations tend to boost their cash hoards during times of uncertainty.
A
tepid economy, weak outlook on corporate profits, and expectations of
at least two interest rate increases by the Federal Reserve are all
forcing investment managers to be more conservative, said Michael
Hartnett, chief investment strategist at Bank of America Merrill Lynch.
On Wednesday, minutes from the policy-setting Federal Open Market Committee hinted that an interest-rate hike could come as early as June.
But the one overriding worry for fund managers this month is the risk associated with the U.K. leaving the European Union, or Brexit as it is commonly referred to as.
Bank of America, along with Goldman Sachs and J.P. Morgan Chase, earlier this week urged investors to rotate out of stocks
due to what they described as inflated stock values. The Fed tightening
U.S. monetary policy as well as uncertainties over the U.S.
presidential election are among the reasons cited by the banks as events
that could roil markets.
On Tuesday, Goldman recommended that
investors remain overweight in cash, at least for the next three months,
due to expectations of increased volatility.
“Key risks include
less China growth, a general pick-up of European political risk, a
repricing of the Fed rate hike cycle, and commodity price declines,” the
economists said in a report.
Goldman also downgraded global equities to neutral
from overweight over a 12-month period due to high valuation, noting
that unless they see sustained earnings growth, stocks aren't very
attractive for now.
Mounting uncertainties over a tepid economy, weak earnings, and a more hawkish Federal Reserve is making cash popular again.
Cash levels are inching toward a multiyear high
If cash positions are anything to go by, investors are bracing for a wild ride in the markets.
More
fund managers are keeping their money in cookie jars rather than
investing, pushing cash levels toward a multiyear high not seen since
earlier this year when stocks
DJIA, -0.02%SPX, +0.02%
were tumbling, according to a Bank of America Merrill Lynch survey.
Cash levels inched up to 5.5% in May versus 5.4% in April, nearing the 15-year high of 5.6% in February.
Bank of America Merrill Lynch
“If you go down to the woods
today, it will be full of bears. Investors [are] positioned for a
‘summer of shocks,” said the bank in its monthly survey of money
managers positions released Tuesday.
The survey also showed that
only 12% of the respondents were taking “higher-than-normal” risks with
most managers crowded into quality assets.
Investors and corporations tend to boost their cash hoards during times of uncertainty.
A
tepid economy, weak outlook on corporate profits, and expectations of
at least two interest rate increases by the Federal Reserve are all
forcing investment managers to be more conservative, said Michael
Hartnett, chief investment strategist at Bank of America Merrill Lynch.
On Wednesday, minutes from the policy-setting Federal Open Market Committee hinted that an interest-rate hike could come as early as June.
But the one overriding worry for fund managers this month is the risk associated with the U.K. leaving the European Union, or Brexit as it is commonly referred to as.
Bank of America, along with Goldman Sachs and J.P. Morgan Chase, earlier this week urged investors to rotate out of stocks
due to what they described as inflated stock values. The Fed tightening
U.S. monetary policy as well as uncertainties over the U.S.
presidential election are among the reasons cited by the banks as events
that could roil markets.
On Tuesday, Goldman recommended that
investors remain overweight in cash, at least for the next three months,
due to expectations of increased volatility.
“Key risks include
less China growth, a general pick-up of European political risk, a
repricing of the Fed rate hike cycle, and commodity price declines,” the
economists said in a report.
Goldman also downgraded global equities to neutral
from overweight over a 12-month period due to high valuation, noting
that unless they see sustained earnings growth, stocks aren't very
attractive for now.
Help wanted: Stoners need not apply.
Employers across the U.S.
are having more trouble filling job openings as applicants and current
employees refuse to take or are unable to pass drug tests, according to a
New York Times report.
The problem reflects a combination of growing drug use among adult
Americans and companies doubling down on their efforts to maintain a
safe and regulated workplace at a time when the U.S. unemployment rate
is hovering near what’s considered an ideal level of 5%.
“Political
discourse is all about bringing back high-paying manufacturing jobs,”
says Jonathan Caulkins, a professor at Carnegie Mellon University. “But
companies are saying they’re having trouble filling those positions.”
While
part of the problem lies in finding qualified and reliable workers,
Caulkins says, drug use has become a growing factor in filling
increasingly open jobs. The portion of workers testing positive for
illicit drugs increased for the second consecutive year in 2014 after
declining steadily between 1988 and 2012, according to data from Quest
Diagnostics, a testing services and health care company. The amount of
workplace urine tests that tested positive for illegal substances
increased over 9% overall, from 4.3% in 2013 to 4.7% in 2014, according
to the company.
These
trends affect some sectors more than others, decreasing the labor pool
for industries that have high turnover and relatively high risks to
worker safety, like construction and transportation, says Dale
Deitchler, a labor attorney at Littler Mendelson. “You aren’t going to
see employers in these fields move away from pre-employment drug
testing,” Deitchler says.
Despite changes in state marijuana
legalization laws, positive results increased among other drugs as well,
with cocaine up to 0.24% from 0.22%, amphetamines up to 1.04% from
0.97% and heroin up to 0.031% from 0.015%, according to Quest data.
Marijuana remained the most commonly found drug, up to 2.4% from 2.1%.
The
recent effects of marijuana legalization aren’t necessarily on access,
Caulkins says, but on the number of people who use it daily or
near-daily, increasing the chances of failing random drug tests. “The
total amount of marijuana consumed in the U.S. has doubled from 2004 to
2014,” Caulkins says, adding that the total number of daily or near
daily users has increased by nearly eight times since 1992.
Even
in states that have legalized marijuana, rates of positive marijuana
tests haven't increased significantly compared with the rest of the
country. In Colorado and Washington, which both legalized the use of
recreational marijuana in 2012, the number of tests that returned
positive marijuana results increased to 2.62% from 2.3% and 2.75% from
2.38% between 2013 and 2014, respectively, according to Quest data.
Your flight got cancelled. Now what?
Cancelled flights are the single-biggest generator of
complaints but some airlines are rolling out new systems that they think
will help.
Employers, in turn, have
been increasingly aware of the risks to maintaining a drug-free
workplace. About 16% of 2,200 companies surveyed in 2014 by HireRight,
an employee screening company, identified drug and alcohol testing as a
policy they planned to beef up in the next year, while 23% said they had
revised their testing policies in the past year.
Clearly defined
testing policies can help employers avoid workplace incidents and
costly lawsuits, especially in states that have legalized marijuana
either medically or recreationally, according to legal experts.
(Twenty-three states have legalized cannabis for medical use and four
states and the District of Columbia have legalized recreational
marijuana.)
Implementing drug tests before hiring employees in
any industry can help increase overall workplace safety, decrease worker
compensation costs and lower the potential for unlawful activity to
occur on the job, Deitchler says.
However, if illegal drug use
continues to become more prevalent, industries with high turnover but
lower risks to worker safety, like hospitality and restaurants, and
white collar companies looking to attract a more creative workforce may
begin to move away from drug testing job applicants, Deitchler says. For
employers worrying about limiting applicants because of pre-employment
drug tests, Deitchler says it is still important to have a drug testing
program in place, but only to implement it under “reasonable suspicion”
that an employee is impaired. “You have some protection, but you’re not
going to reduce the labor pool,” he says.
Prepare to be shocked at just how little most Americans know about even the most basic financial concepts. No wonder we devote the entire month of April to boning up on financial literacy. Read:Investors need to know the answer to this key financial question.
To
get an understanding of how woefully uneducated the masses are when it
comes to money, economists from Wharton and George Washington University
have been asking three basic financial questions — very basic — for years, and the results have been rather startling.
Before you try your hand at it, here’s how others have fared: According to a working paper published last year,
only half of Americans over the age of 50 answered at least two of the
three questions correctly. Less than a third got them all right.
When breaking it down by education, only 44% of Americans with a
college degree nailed all of them. That number drops to 31% for those
with some college.
Of course, you’re a MarketWatch reader, so 100% should be a slam dunk.
Give it a shot:
Apple’s stumbles in China seem emblematic of a broader
realization: US companies have less of a future there than many had
hoped.
For many years, the vast Chinese market — more than 1 billion
consumers in a fast-growing economy — sent thrills of excitement up the
spines of corporate managers throughout the developed world. Who cares
about the stagnation in Europe and Japan, when China has many more
people than all of those markets combined?
Even as rising labor and energy costs reduced China’s advantage as a
low-cost production site, the dazzling lure of the Chinese consumer
pushed many multinationals to locate offices and factories in the
country.
Unfortunately, that promise turned out to be a mirage for many companies.
If the Chinese government ever had any intention to step back and let
foreign companies compete with domestic ones on a level playing field,
it certainly now looks like it has changed its mind. Not long after
multinationals showed up in China, they were made to hand over much of
their technology to native competitors (almost all of which are directly
or indirectly owned by the Chinese government). This was happening as
early as 2006, as the Harvard Business Review reported:
“These rules limit investment by foreign companies as well as their
access to China’s markets, stipulate a high degree of local content in
equipment produced in the country, and force the transfer of proprietary
technologies from foreign companies to their joint ventures with
China’s state-owned enterprises.”
Proprietary technology is the most valuable asset owned by many
multinationals. So China truly offered a lose-lose choice for these
companies — either they could miss out on the Chinese market in the
short term, or give away technologies that would allow Chinese
competitors to challenge them all over the world in the medium term. Of
course, given China’s high rate of industrial espionage, the penalty for
operating in China was even higher than official government policy
would suggest.
Multinational companies often think very short term, so perhaps it
isn’t surprising that many chose to make the devil’s bargain. Now the
bill is coming due, as China’s government promotes its own national
champions, many of which are now equipped with pirated foreign
technology.
Meanwhile, multinationals’ China operations have become less and less
profitable as domestic competition has intensified. The Chinese
government, of course, has aided this process by systematically
discriminating against foreign companies, enforcing laws and regulations
with regard to multinationals while looking the other way when a
domestic company commits a violation.
There are signs that some multinationals have had enough. Many are
closing offices and factories in China, as costs rise and the government
shuts foreigners out of the domestic market. Some recent examples
include Microsoft, Adobe, Panasonic, Yahoo and Adidas. Between this and the effects of China’s general economic
slowdown, foreign direct investment into the country — while volatile —
has declined in the past few years. In the short run, this clampdown by China is bad for US
companies. They’ll face Chinese competitors armed with transferred or
stolen technology. Their supply chains, which had grown dependent on
cheap Chinese production costs, may also be disrupted. And they’ll be
shut out of one of the world’s largest markets, losing much of the
investment that they plowed into expansion there. But in the long run, I suspect China will suffer even more.
When foreign companies pack up and leave, it’ll get much harder to steal
or force the transfer of their proprietary technologies — and these
companies won’t make the same mistake twice.
http://nypost.com/2016/05/17/why-us-companies-have-started-fleeing-china/
This happened before…Post 1989, after the first boom died. Companies
pulled out and said “never again” to China. Meanwhile, food companies
are moving into China in a big way and that is where the next China boom
will be…Australia already feeds 100m people in China.
“..For many years, the vast Chinese market more than 1 billion
consumers in a fast-growing economy sent thrills of excitement up the
spines of corporate managers throughout the developed world. Who cares
about the stagnation in Europe and Japan, when China has many more
people than all of those markets combined?
Even as rising labor and energy costs reduced Chinas advantage as a
low-cost production site, the dazzling lure of the Chinese consumer
pushed many multinationals to locate offices and factories in the
country….”
Bottom line is that China is not
“low cost” anymore and the “45%” tariff fixes a problem that existed 10
years ago. The other movement you want to watch is Chinese firms
pulling out of China and buying everything that is not tied down in SE
Asia, Africa and South America.
At the moment, the one thing that Trump, Clinton, Sanders and Obama
have in common is that they are “fighting the last war” over China.
Makes good sound grabs but its a waste of time and counterproductive.
OBC
The updated rule, which takes effect Dec. 1 and doubles
the salary threshold below which workers automatically qualify for
time-and-a-half wages to $47,476 from $23,660 a year, or from $455 to
$913 a week. Hourly workers are generally guaranteed overtime pay
regardless of what they make.
“We’re strengthening our overtime pay rules to make sure millions of
Americans’ hard work is rewarded,” President Obama said in a statement.
“If you work more than 40 hours a week, you should get paid for it or
get extra time off to spend with your family and loved ones.”
“What our members have told us, what many other employers
have told us, is there’s not a golden pot of money out there sitting in
employers’ pockets where they can all of a sudden pay a lot more
overtime pay,” said David French, vice president of the National Retail
Federation. “Instead, they’re going to make the rational change and
they’re going to change jobs.”
Dropping full-time workers with their costly benefits and overtime
requirements, then hiring new workers as 1099 employees, means never
having to say you’re sorry for supporting Obama.
And one more thing:
Secretary Perez says employers have a variety of ways
they can comply with the new rule when it takes effect Dec. 1. “People
are going to get at least one of three benefits,” Perez said. “They’re
either going to get more money … more time with their family, or
everybody is going to get clarity.”
by: otterwood
The April FOMC minutes were released today and the hawkish bias led
to a fall in investor risk sentiment. The minutes showed the Fed was
worried the March meeting was interpreted as too dovish by investors and
that a June rate rise would be “appropriate” if economic data continue
to strengthen.
The initial market reaction looked similar to regime that led to the
selloffs last August and at the beginning of this year, namely USD up
and emerging markets down (see below).Equities managed to finish flat
and we have yet to see how Asian markets react to the news but it may
take a few trading sessions to determine the markets interpretation of
the FOMC minutes.
If you’re feeling whipsawed you’re not alone. In March Janet Yellen’s
dovish speech at the New York economic club added to the Fed’s dovish
March statement causing risk assets to rally. Now the April meeting
minutes show the Fed’s hawkish sentiment increased just a few weeks
later at the April meeting and the press statement failed to suggest
this shift in tone. Goes to show how erratic Fed communication has been.
A woman sitting on an expensive gold chair and wearing a £1,000,000 hat has encouraged Britain to “live within its means” during times of austerity while addressing a room full of millionaires.
The Huffington Post explains:
She
also voiced support for a government imposing longer working hours with
less pay on junior doctors while wearing a hat encrusted with five
rubies, 11 emeralds, 17 sapphires, 273 pearls and 2,868 diamonds.
“One
also hopes one’s government will put superfast broadband at the top of
its agenda,” she added. “Because the Wi-Fi at Balmoral is totally
pants.”
She then left Parliament and returned to her £1 billion house. Her crown left shortly afterwards in its own horse-drawn carriage.
The sale of Time Warner Cable to Charter Communications is
completed today, and former TWC customers (including me) can probably
look forward to a whole new era of crappy service, Netflix throttling,
and horrible customer service experiences under our new broadband
overlords.
But the deal worked out pretty well for TWC's outgoing CEO Rob
Marcus, who “didn’t exactly endear himself to customers and employees
during his short tenure,” reports Fortune.
In part, because of his behavior to employees as CEO. And in part,
because he will be receiving $92 million in severance after working at
the company for a total of two and a half years. Pretty sweet deal.
[Reuters]
From Fortune:
Now with the sale of his company completed, $92 million of severance
on the way and his calendar cleared for future vacations, Marcus has
acknowledged the truth about some of his prior pronouncements to staff
that struggled with one failed mega-merger to Comcast CMCSA -0.10% and
then hung around for a second sale to Charter Communications CHTR 1.11%
to slowly but successfully conclude.
“Over the last several years, I repeatedly called upon you to stay
focused in spite of all the merger-related distractions, uncertainty and
emotional upheaval,” Marcus wrote in a final missive to his employees.
“I recognized then and now that it was an unreasonable, almost
impossible request.”
He may have forgotten to mention the “unreasonable” and “impossible”
bits while the chaos was swirling, but Marcus now praises his staff for
doing their best. “But somehow, unreasonable or not, seemingly
impossible or not, you consistently rose to the challenge, exceeding my
wildest expectations of what a motivated, passionate, unified team could
accomplish under the most difficult of circumstances,” Marcus wrote..
Charter CEO Thomas Rutledge now takes over the task of running the
newly-created, second-largest U.S. cable company in America. In his
"fuck you and farewell" note, Marcus offered his best wishes to those
who kept their jobs as he exits.
“Rest assured that I will be watching with great enthusiasm and high
expectations, confident that you will continue to make me proud,” he
wrote.
Fortune: "Outgoing Time Warner Cable CEO Admits Asking Impossible of Employees"
Congratulations, college graduates! As you enter the next phase of
life, you and your parents should be proud of your achievements.
But, I’m sorry to say, they’ve come at a price: The system is trying to squeeze you harder than any previous generation.
Many baby boomers, perhaps including your parents, benefited from a
time when higher education was seen as a shared social responsibility.
Between 1945 and 1975, tens of millions of them graduated from college
with little or no debt.
But now, tens of millions of you are graduating with astounding levels of debt.
This year, seven in 10 graduating seniors borrowed for their educations. Their average debt is now over $37,000 — the highest figure for any class ever.
(Photo: Chicago Jobs With Justice)
Already, some 43 percent
of borrowers — together owing $200 billion — have either stopped making
payments or are behind on their student loans. Millions are in default.
This debt casts a long shadow on the finances of graduates. During the last quarter of 2015 alone, the Education Department moved to garnish $176 million in wages.
There’s no economic benefit to this system whatsoever. Indebted
students delay starting families and buying houses, experience
compounding economic distress, and are less inclined to take
entrepreneurial risks.
One driver of the change from your parents’ generation has been tax
cuts for the wealthy, which have led to cuts in higher education
budgets. Forty-seven states now spend less per student on higher education than they did before the 2008 economic recession.
In effect, we’re shifting tax obligations away from
multi-millionaires and onto states and middle-income taxpayers. And
that’s led colleges to rely on higher tuition costs and fees.
In 2005, for instance, Congress stopped sharing revenue
from the estate tax — a levy on inherited wealth exclusively paid by
multi-million dollar estates — with the states. Most state legislatures
failed to replace it at the state level, costing them billions in
revenue over the last decade.
In fact, the 32 states that let their estate taxes expire are foregoing between $3 to $6 billion a year, the Center on Budget and Policy Priorities estimates. The resulting tax benefits have gone entirely to multi-millionaires and billionaires — and contributed to tuition increases.
For example, California used to raise almost $1 billion a year in
revenue from its state-level estate tax. Now that figure is down to
zero. And since 2008, average tuition has increased over $3,500 at
four-year public colleges and universities in the state.
Florida, meanwhile, lost $700 million a year — and raised tuition
nearly $2,500. Michigan lost $155 million a year and hiked average
tuition $2,200.
But it doesn’t have to be this way. Washington State went the opposite route.
Washington taxes wealthy estates and dedicates the $150 million it raises each year to an education legacy trust account,
which supports K-12 education and the state’s community college system.
Other states should follow this model, and students and parents should
take the lead in demanding it.
Presidential candidate Bernie Sanders said at a Philadelphia town hall that there’s one thing he’s 100 percent certain about.
If millions of young people stood up and said they’re “sick and tired
of leaving college $30,000, $50,000, $70,000 in debt, that they want
public colleges and universities tuition-free,” he predicted, “that is exactly what would happen.”
Sanders is right: Imagine a political movement made up of the 40 million households that currently hold $1.2 trillion in debt.
If we stood up and pressed for policies to eliminate millionaire tax
breaks and dedicate the revenue to debt-free education, it would change
the face of America.
Graduates, let’s get to work.
The post A Commencement Address for the Most Indebted Class Ever appeared first on OtherWords.
This piece was reprinted from Other Words by RINF Alternative News with permission.
PEROT SOUNDS LIKE TRUMP
PEROT WARNS THE AMERICAN PEOPLE ABOUT NAFTA AND FREE TRADE
Don't skip the last minute. This is a historically important clip
from the 1992 presidential debate with Clinton, George H.W. Bush, and
Ross Perot, the third party candidate. Perot was the only one of the
three who was against the trade deal, which was pending before Congress
at the time, and would be signed into law one year later by Clinton.
The following line by Perot has become famous:
'There will be a giant sucking sound going South.'
“Marginalized” and “excluded” “due to the Crisis”: EU poll
The human aspects of the European crisis, such as the effects of
horrific youth unemployment in some countries, have largely receded from
the headlines that ECB potentate Mario Draghi rules with his
beautifully concocted negative-interest-rate absurdity and his efforts
to manipulate the financial markets. Lesser ECB figures also try to get
into the headlines edgewise, including German Bundesbank president Jens
Weidmann, but no one listens to him anymore.
Yet, and despite Draghi’s bluster, the real problems in the EU,
particularly in Greece, Portugal, Cyprus, and Spain, have not been
solved – and I mean, not at all – as shown by the results of
the big poll about young people in the EU. The survey, commissioned by
the European Parliament and conducted by TNS opinion, led to an
evocatively-titled report, “Most young Europeans feel marginalized by the crisis, says Eurobarometer poll.”
For some countries, the results are outright horrifying. Young people
are the future. They’re expected to make these countries function down
the road.
In total, 10,294 young people
aged 16-30 in the 28 EU Member States were polled on a variety of
questions, ranging from participation in European parliamentary
elections to environmental behaviors, like “systematically sorting your
waste.”
But at the core were several questions whose results caused the
authors to title that section, “An Impression of Exclusion, due to the
Crisis,” with echoes of 2012. So the poll asked:
Do you have the feeling that in (our country), young people have been marginalized by the economic crisis that is to say excluded from economic and social life?
For all 28 Member States combined, an 57% of young people said “yes,” they felt marginalized, 39% said “no,” 4% didn’t know.
These EU averages are weighted by size of the population in each
Member State. The six most populous – Germany, Italy, the UK, France,
Spain, and Poland – account for about 70% of the average. But beyond the
already worrisome average are scores for individual countries that are a
terribly sad depiction of what is happening in those countries.
At the far right of the chart below, the heroes (“yes” marginalized =
red columns): Denmark (DK) where 31% of the young people feel
marginalized “from economic and social life,” Malta (MT) where 28% feel
that way, and Germany (DE) with 27%.
At the left of the chart: Greece (EL), where 93% of the young people
feel marginalized “from economic and social life”; Portugal (PT) with
86%; Cyprus (CY) with 81%, and Spain (ES) with 79%. These are the
countries whose bondholders have mostly been bailed out by the Troika
and by Draghi’s promise to do “whatever it takes” to continue to bail
them out:
Those who feel the most marginalized also feel the most frustrated
with their educational and training system. While 59% of young people in
the EU overall rate their national systems of training, school, and
university education “well adapted to the current world of work,” there
are two large divergences.
One, perhaps somewhat of a success bias. Among “Managers,” so people
who’ve made it, 64% thought their country’s system was well adapted. But
among the “Unemployed” and “House Persons” (EU-bureaucratese takes some
getting used to), only 44% thought their country’s system was well
adapted.
And two, vast differences between countries. Countries where the
fewest people felt marginalized had the highest ratings on their school,
training, and university systems — left side in the chart (“well
adapted” = blue columns). But then it deteriorates.
In France, where the official unemployment rate has been over 10% for
the last three-and-a-half years, only 42% of the young people felt
their system was well adapted, followed by Romania, Slovenia, Spain,
Cyprus, Bulgaria, and Greece with a dismal 25%. In these countries,
young people feel that their system is failing them!
Then the poll asked about mobility: 32% of the young people said they want to
study, undergo training, or work in another Member State, but only 12%
ever actually did or are doing any of these, ranging from 48% for young
people in Luxembourg to 5% for those in Italy.
And here’s the third question, concerning mobility:
Because of the crisis, you feel compelled to study, undergo training, or work in another EU country than (our country):
For the EU on average, 15% of the young people “feel compelled” to
seek their fortunes in another EU country. But the average just covers
up reality: In Germany (DE), only 1% “feel compelled” to do so, and in
Sweden (SE) only 2%, versus those in countries whose bondholders have
been bailed out: Portugal (41%), Greece (43%), and Cyprus (51%), where
hope for young people seems to have evaporated:
The countries where young people feel most “compelled” to leave –
“forced mobility,” the report calls it – are also the countries where
young people feel the most marginalized (the first chart), and where
youth unemployment is among the highest: Cyprus, Greece, and Portugal.
Despite Draghi’s bluster about saving the Eurozone economy, or
whatever, with his absurd policies, the reality for some Member States’
young people – the economy’s future – has become dismal.
But even central bankers seem to have trouble taking themselves seriously. Read… ECB Admits: “We’re the Magic People” in a Clown Show
Saudi Arabia burnt through its reserves faster than anyone thought.
In signs of a huge liquidity crunch, at best, the country has delayed
paying contractors and now considers paying them in IOUs and tradable
bonds.
In retrospect, the Saudi threat to dump US assets looks more ridiculous than ever.
Saudi Arabia has told banks in the country that it is
considering giving contractors IOUs to settle some outstanding bills,
according to people with knowledge of the discussions.
A projected budget deficit this year is prompting the government to
weigh alternatives to limit spending. Contractors would receive
bond-like instruments to cover the amount they are owed by the state
which they could hold until maturity or sell on to banks, the people
said, asking not to be identified because the information is private.
Contractors have received some payments from the government in cash
and the rest could come in “I-owe-you” notes, the people said. The government started delaying payments last year to prevent the budget deficit from exceeding $100 billion after the oil slump.
Beyond a Liquidity Crisis
Deficits don’t shrink if you delay paying the bills. Deficits arose because more money was spent than collected.
On May 17, the Senate Passed a Bill Allowing 911 Victims to Sue Saudi Arabia.
Obama threatens a veto. Meanwhile, Saudi threatens to dump $750
billion in U.S. securities and other American assets if the bill becomes
law.
Does Saudi Arabia even have $750 billion. Color me skeptical.
Saudi Arabia’s bluff that it would sell US assets if the Obama signed the bill seems more ridiculous than ever.
For discussion of Saudi involvement in 911 and the alleged dumping threat please see Understanding the Saudi, Chinese “Economic Nuclear War” Threat; Saudi 911 Round-Up.
For discussion of Saudi Treasury holdings, please see Treasury Department Finally Discloses Saudi Treasury Holdings – Incorrectly?
There is no “nuclear” economic threat by Saudi Arabia or China as some have proclaimed.
Mike “Mish” Shedlock
Central banks are dumping America's debt at a record pace.
China, Russia and Brazil sold off U.S. Treasury bonds as they tried to
soften the blow of the global economic slowdown. They each sold off at
least $1 billion in U.S. Treasury bonds in March.
In all, central banks sold a net $17 billion. Sales had hit a record $57 billion in January.
So far this year, the global bank debt dump has reached $123 billion.
It's the fastest pace for a U.S. debt selloff by global central banks
since at least 1978, according to Treasury Department data published
Monday afternoon. Related: Saudi Arabia owns $117 billion in U.S. debt
Treasuries are considered one of the safest assets in the world, but some experts say a sense of panic about the global economy drove the selloff.
"It's more of global fear than anything," says Ihab Salib, head of
international fixed income at Federated Investors. "There's still this
fear of 'everything is going to fall apart.'"
Judging by the
selloff, policymakers across the globe were hitting the panic button
often and early in the year as oil prices fell, concerns about China's
economy rose and stock markets were very volatile.
In response,
countries may be selling Treasuries to prop up their currencies, some
of which lost lots of value against the dollar last year. By selling
U.S. debt, central banks can get hard cash to buy up their local
currency and prevent it from losing too much value.
Also, as investors have pulled money out of developing countries,
central bankers seek to replenish those lost funds by selling their
foreign reserves. Related: China posts worst economic growth in 7 years
The leader in the selloff: China.
"We've seen Chinese central bank foreign reserves fall dramatically,"
says Gus Faucher, senior economist at PNC Financial. "Their currency is
under pressure."
Between December and February, China's central bank sold off
an alarming $236 billion to help support its currency, which China is
slowly letting become more controlled by markets and less by the
government. In March, China sold $3.5 billion in U.S. Treasury bonds,
Treasury data shows.
Experts say the sell off may be slowing down now that global concerns have eased.
If anything, demand is still high for U.S. Treasury bonds -- it's just
coming from private investors. The yield on a typical 10-year bond is
just 1.76%, which is very low.
"While central banks may be
selling Treasuries to support their currencies, investors seek the
safety of Treasuries at the same time," says Jeff Kleintop, chief global
investment strategist at Charles Schwab. --Sophia Yan contributed to this article
ROCKLIN, Calif. (AP) — Perry Lutz says his struggle to survive as a
small businessman became a lot harder after California voters reduced
theft penalties 1½bd} years ago.
About a half-dozen times this year, shoplifters have stolen expensive
drones or another of the remote-controlled toys he sells in HobbyTown
USA, a small shop in Rocklin, northeast of Sacramento. "It's just pretty
much open season," Lutz said. "They'll pick the $800 unit and just grab
it and run out the door."
Anything below $950 keeps the crime a misdemeanor — and likely means the
thieves face no pursuit and no punishment, say retailers and law
enforcement officials. Large retailers including Safeway, Target, Rite
Aid and CVS pharmacies say shoplifting increased at least 15 percent,
and in some cases, doubled since voters approved Proposition 47 and
ended the possibility of charging shoplifting as a felony with the
potential for a prison sentence.
Shoplifting reports to the Los Angeles Police Department jumped by a
quarter in the first year, according to statistics the department
compiled for The Associated Press. The ballot measure also lowered
penalties for forgery, fraud, petty theft and drug possession.
Public Policy Institute of California researcher Magnus Lofstrom noted a
troubling increase in property crime in California's largest cities in
the first half-year after Proposition 47 took effect. Preliminary FBI
crime reports show a 12 percent jump in larceny-theft, which includes
shoplifting, but he said it is too early to determine what, if any,
increase is due to the ballot measure.
The increase in shoplifting reports set up a debate over how much
criminals pay attention to penalties, and whether law enforcement is
doing enough to adapt to the legal change.
Prosecutors, police and retailers, including California Retailers
Association President Bill Dombrowski and CVS Health spokesman Mike
DeAngelis, say the problem is organized retail theft rings whose members
are well aware of the reduced penalties.
"The law didn't account for that," said Capt. John Romero, commander of
the LAPD's commercial crimes division. "It did not give an exception for
organized retail theft, so we're seeing these offenders benefiting and
the retailers are paying the price."
Lenore Anderson, executive director of Californians for Safety and
Justice, who led the drive to pass Proposition 47, said law enforcement
still has plenty of tools, including using the state's general
conspiracy law and proving that the same thief is responsible for
multiple thefts that together top $950.
Shoplifting rings generally recruit society's most vulnerable — the
homeless, low-end drug users, those living in the country illegally — to
steal merchandise that can be sold for a discount on the streets or
over the Internet, said Joseph LaRocca, a Los Angeles-based
theft-prevention consultant and formerly the National Retail
Federation's vice president of loss prevention.
While misdemeanors, in theory, can bring up to a year in county jail,
Fresno Police Sgt. Mark Hudson said it's not worth it to issue a
citation or arrest a suspect who would likely be immediately released
because of overcrowding.
"We've heard of cases where they're going into stores with a calculator
so they can make sure that what they steal is worth less than $950,"
said Robin Shakely, Sacramento County assistant chief deputy district
attorney.
Adam Gelb, director of the public safety performance project at The Pew Charitable Trusts, disputes those sorts of anecdotes.
"The vast majority of offenders just aren't fine-tuning their behavior that way," Gelb said.
His organization recently reported finding no effect on property crimes
and larceny rates in 23 states that increased the threshold to charge
thefts as felonies instead of misdemeanors between 2001 and 2011.
California raised its threshold from $400 in 2010.
"It's hard to see how raising the level to $950 in California would
touch off a property crime wave when raising it to $2,000 in South
Carolina six years ago hasn't registered any impact at all," Gelb said.
The study did not include the effects of Proposition 47, but Gelb and
other Pew researchers said there is no reason to believe adding
shoplifting to the list would spark an increase in thefts.
California is among 17 states without an organized retail crime law that
specifically targets shoplifting rings with tougher penalties,
according to the Organized Retail Crime Resource Center. Results vary:
Of the top five states for shoplifting last year, three — Florida,
Pennsylvania and Texas — had such laws, while California and New York
did not.
For his part, Lutz, the hobby shop owner, has provided police with
surveillance videos, and even the license plate, make and model of the
getaway vehicles.
"They go, 'Perry, our hands are tied because it's a misdemeanor,'" Lutz
said. "It's not worth pursuing, it's just a waste of manpower."
At last year’s WEC, we warned that the collapse of the euro was
underway. We achieved the Yearly Bearish Reversal on the close of 2015,
but we did so far below the number. We had been waiting for the rally to
retest the 11600 level, which we finally achieved. The ECB monetary
policy has been typical banker nonsense and has brought Europe closer to
a major financial crash. Draghi has applied the unsupported quantity of money theory
and assumes he will simply buy in the debt and the cash will
miraculously be spent wildly by consumers. Trading volumes and the
velocity of money have been falling in general since 1996-1998. The low
to negative interest rate policy of the ECB has endangered pensions and
ailing banks, and this is just now beginning to push pensions and banks
over the edge. Draghai will not admit he is wrong, so he will blame
everyone other than himself.
We are looking at a complete
global financial meltdown of the world financial system, which we will
focus on at this year’s WEC. The construct of the common European
currency is no longer sustainable. A completely new monetary system will
be introduced as early as 2018. The fiscal mismanagement of government
perpetually borrowing money they have no intention to pay back threatens
a complete collapse of the world financial system.
The survivability of the euro has now crossed the point of no return.
A daily closing in the cash euro back below 11215 will warn that the
high of May could stand as the end of the reaction from the March 2015
low. A monthly closing back below 10520 level would signal that the
collapse is underway.
At this year’s WEC, we will be focusing on the pension crisis,
sovereign debt crisis, rising pressures for separatist movements, civil
wars, and financial chaos. When will it end? We will explain how to
recognize it from the signs of the past.
The remarkable number of Massachusetts Institute of Technology connected
economists heading central banks appears set to expand once again.
Haifa, Israel-born Ilan Goldfajn, formerly director of economic policy
for the Central Bank of Brazil, is said to be the front-runner to
replace outgoing bank chief Alexandre Tombini, reports Israel Hayom. Brazil's interim President Michel Temer is likely to make a decision by June 8.
Goldfajn earned his undergraduate and graduate degrees in economics from
the Pontifical Catholic University of Rio de Janeiro, and his doctorate
from MIT .
Ben Bernanke, former chairman of the Federal Reserve Bank is an MIT grad.
Current European Central Bank president Mario Drgahi is an MIT grad.
Stanley Fischer, who was the head of the central bank of Israel and who
is the current vice-chairman of the Federal Reserve, studied at the
London School of Economics and obtained his B.Sc. and M.Sc. in economics
from 1962–1966. Fischer then moved to the United States to study at
MIT and earned a Ph.D. in economics in 1969.
He was a professor at the MIT Department of Economics from 1977 to 1988.
While at MIT, he was also Ben Bernanke's and Mario Draghi's Ph.D. thesis advisor.
Rob Kirby arranges gold sales between buyers and sellers by the ton.
Kirby says the biggest concern for his customers is the U.S. dollar.
Kirby says, “The dollar is going to be kicked off its perch. That is a
guarantee. It’s only a matter of time . . . The universal message is
people are trying to get, for the most part, as much of their assets
into physical precious metals as they can. Precious metal is getting
increasingly hard to buy.”
Has Kirby seen demand for precious metals higher than right now?
Kirby says, “No, I haven’t. I also have never seen this much interest to
procure or own physical precious metal. Up until 2010, central banks
were net sellers of gold, and since 2010, they have been net buyers of
physical precious metal, and they never bought more than last year,
except this year will be bigger than last year.
Join Greg Hunter as he goes One-on-One with macroeconomic analyst Rob Kirby of KirbyAnalytics.com.
Bank of America Merrill Lynch
![[Reuters]](http://i1.wp.com/media.boingboing.net/wp-content/uploads/2016/05/24comcast-web-master1050.jpg?resize=930%2C651%20930w,%20http://i1.wp.com/media.boingboing.net/wp-content/uploads/2016/05/24comcast-web-master1050.jpg?resize=300%2C210%20300w,%20http://i1.wp.com/media.boingboing.net/wp-content/uploads/2016/05/24comcast-web-master1050.jpg?resize=600%2C420%20600w,%20http://i1.wp.com/media.boingboing.net/wp-content/uploads/2016/05/24comcast-web-master1050.jpg?resize=768%2C538%20768w,%20http://i1.wp.com/media.boingboing.net/wp-content/uploads/2016/05/24comcast-web-master1050.jpg?w=1050%201050w)
[Reuters]
