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Ford cancels Mexico plant

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Ford CEO: U.S. plant expansion is 'vote of confidence' in Trump
Ford CEO: U.S. plant expansion is ‘vote of confidence’ in Trump

Ford cancels Mexico plant

Ford is canceling plans to build a new plant in Mexico. It will invest $700 million in Michigan instead, creating 700 new U.S. jobs.

Published at Tue, 03 Jan 2017 16:46:39 +0000

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What’s Ahead for the Fuel-Cell Industry in 2017?

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What’s Ahead for the Fuel-Cell Industry in 2017?

By Shoshanna Delventhal | January 2, 2017 — 6:35 PM EST

The fuel-cell industry, estimated to be worth a total of $3.6 billion in 2016, is expected to blossom into a $25.5 billion market by 2024, according to research from Global Markets Insight.

Yet, despite these bullish projections, major players such as Plug Power Inc. (PLUG) and FuelCell Energy Inc. (FCEL) have failed to turn a significant profit, seeing their stock slump 72% and 78%, respectively, over the course of 2016.

Uncertainty Looms

As part of the alternative-energy sector, fuel-cell companies saw their stocks peak during the emerging market hype in 2014. Despite the boom—with significant investment expenditures including R&D, and without the same government incentives for hydrogen and fuel companies as solar and wind power firms—players such as Plug Power and FuelCell have been unable to generate profitability. It’s still up in the air whether the 30% investment tax credit will be extended for fuel-cell companies, indicating a possible surge in prices in 2017. With oil prices at all time lows, this increase won’t fare well for fuel-cell firms.

To further aggravate the issue, the surprise election of Donald Trump looms over alternative energy. The Republican president-elect is an outspoken climate-change skeptic who during the campaign promised to “bring back” traditional industries like as coal mining.

Looking Abroad for Growth

With Trump in power in 2017, it’s unlikely that fuel-cell energy companies will make strides in the domestic market. But firms such as Plug Power see China as a major avenue for growth, indicating the country has invested $100 billion in fuel-cell energy thus far. Despite the market opportunity, an increase in global rivals has made it more difficult for companies to stand out against the competition. (See also: Plug Power Looks to China for Growth.)

Fuel-cell energy, and hydrogen as a segment of the market, have proved a viable, clean and sustainable energy option as organizations worldwide transition away from polluting sources such as oil and gas. Despite this long-term outlook, in the short-term investors are skeptical whether the current market players are on track to swing to profitability with a sustainable business model. (See also: Renewable Energy Suffers from Trump Win.)
Published at Mon, 02 Jan 2017 23:35:00 +0000

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How the 3D-Printing Industry Evolved in 2016

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How the 3D-Printing Industry Evolved in 2016

By Shoshanna Delventhal | January 2, 2017 — 2:52 PM EST

The 3D-printing industry experienced a year of transformation in 2016, as niche market pioneers Stratasys Ltd. (SSYS) and 3D Systems Corp. (DDD) were joined by HP Inc. (HPQ) and General Electric Co. (GE).

The entrance of larger, more-established tech players worked to legitimize an industry revival based on pushing additive manufacturing for industrial clients, in order to cut costs and improve efficiency in the production process. (See also: Time to Invest in 3D Printing?)

A Redirects From Consumer Prototyping

Rock Hill, S.C.-based 3D Systems, which saw its stock rise 62% in 2016, instated new Chief Executive Vyomesh Joshi, who decided to cut the firm’s consumer business altogether. Eden Prairie, Minn.-based Stratasys Ltd., while also bolstering its alliances with industrial clients, particularly those in auto and aerospace, continued to build out its offerings in the consumer space with products targeted at educators, engineers and designers.

Moving into 2017, we can expect prototyping and advanced digital manufacturing solutions to stay at the forefront of 3D printing growth. Regarding an overall slowdown in demand for enterprise 3D printers, which some players attribute to overcapacity in the market, analysts are uncertain when demand will revive. Players such as Stratasys will continue to focus on improving gross margins and optimizing cost structure.

New Threats to Market Pioneers

Data from HP Inc. and venture-capital-backed Carbon should also shed light on industry trends in 2017. Back in May, the PC and printing giant launched its first 3D-printing products, leveraging its Multi Jet Fusion technology. The Palo Alto, Calif.-based tech giant says its polymer 3D printers are 10 times faster and twice as cost-efficient as 3D printers currently on the market.

Another new market player, Carbon, launched its three-year subscription offering for its M1 3D printers in April. The Google Ventures (GOOG) and GE-backed company indicates that its printers, powered by Continuous Liquid Interface Production (CLIP) 3D printing technology, are 25 to 100 times faster than leading 3D-printing technologies. (See also: GE to Acquire Two 3D Printing Equipment Companies.)
Published at Mon, 02 Jan 2017 19:52:00 +0000

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Darden CEO Pins Restaurant Sector Woes on Netflix

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Darden CEO Pins Restaurant Sector Woes on Netflix

Darden Restaurants (NYSE: DRI) which owns Olive Garden, The Capital Grille, and several other restaurant chains, had a solid second quarter in its fiscal 2017.

The company reported that total sales from continuing operations increased 2.1% to $1.64 billion while diluted net earnings per share from continuing operations increased 178.3% to $0.64. In addition, it reported a system-wide same-store sales increase of 1.7%, led by Oliver Garden’s 2.6% increase, Eddie V’s 2.7% gain, and Bahama Breeze’s 2.6% rise.

“We had another strong quarter with same-restaurant sales growth significantly outperforming the casual dining industry benchmarks, especially at Olive Garden,” said CEO Gene Lee in the earnings release. “We remain laser-focused on our operating philosophy rooted in food, service and atmosphere, and creating memorable experiences for our guests.”

Despite those numbers, Lee was not without his concerns. During the company’s earnings call he expressed a worry that non-food spending, specifically paying for services like Netflix (NASDAQ: NFLX) was hurting business for restaurants.

What did the CEO say?

“There are other new necessities, whether it’s smartphones, their cable bill, their Netflix bill,” Lee said, according to Nation’s Restaurant News. “Those have all increased significantly over the years. People are making choices. They’re not just confined to food.”

That’s just a theory, but it can’t be denied that new costs have popped up for consumers over the last few years. Netflix is just one example of that. The costs of mobile phones have increased, and it’s only relatively recently that people began commonly paying for broadband at home.

Is this hurting restaurants?

Rising gas prices are one of the traditional costs that have been pointed to as a drag on the restaurant business. When people must pay more at the pump, the theory goes, it makes the idea of leaving the house (and burning gas) to eat out less palatable.

It’s reasonable to think that on some level, new bills for services like Netflix, and Hulu — along with rising other costs — could be cutting into the disposable income families might have once spent at restaurants. What those new bills do not change, however, is that people still need to eat. Lee is probably right that these issues are part of why the overall restaurant industry has suffered in 2016, but he is likely also right about the solution.

“We have to create environments people want to come to,” he said during the earnings call.

While it might be harder to win diners’ business in an era of stretched budgets, it’s still possible. That’s actually something Darden showed with its Q2 results.

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Published at Sat, 31 Dec 2016 14:35:03 +0000

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Apple to cut iPhone production in first quarter of 2017

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The new iPhone 7 smartphone goes on sale inside an Apple Inc. store in Los Angeles, California, U.S., September 16, 2016.REUTERS/Lucy Nicholson/File Photo

Apple to cut iPhone production in first quarter of 2017

Apple Inc (AAPL.O) will trim production of iPhones by about 10 percent in the January-March quarter of 2017, the Nikkei financial daily reported on Thursday, citing calculations based on data from suppliers.

The company had slashed output by 30 percent in January-March this year due to accumulated inventory, the paper said.

Apple’s shares were down 0.84 percent in midday trading, in line with the Nasdaq stock index.

An Apple spokeswoman declined to comment on the report.

(Reporting by Aishwarya Venugopal in Bengaluru and Stephen Nellis in San Francisco; Editing by Bernadette Baum)
Published at Fri, 30 Dec 2016 18:19:31 +0000

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How Symantec Transformed in 2016

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How Symantec Transformed in 2016

By Shoshanna Delventhal | December 29, 2016 — 6:12 PM EST

Shares of cybersecurity pioneer Symantec Corp. (SYMC) are trading up about 16% year to date (YTD) at a price of $24.17 per share on Thursday afternoon.

In 2016, the industry leader restructured its business in order to meet the demands of a new cloud-based economy, posting consecutive earnings beats despite swinging to a loss.

Buyouts Boost Enterprise, Consumer Segments

The global leader in cybersecurity saw its stock start to take off back in June, after it announced plans to acquire cloud-security company Blue Coat Systems. After the $4.65 billion acquisition, Symantec continued its buyout spree with the announcement of a $2.3 billion deal to take over identity- and fraud-protection firm LifeLock Inc. (LOCK). In the most recent six-month period, investors have rallied to Symantec’s stock, lifting it over 17.5%.

Analysts have also applauded Symantec’s latest acquisition targets, maintaining an average one-year price target estimate on the stock at $26.43. Bulls see the integration of Blue Coat bolstering Symantec’s enterprise security segment, which comprised 60% of the firm’s total sales in the most recent quarter. The takeover of LifeLock is set to strengthen the Mountain View, Calif.-based firm’s position in the consumer cybersecurity space, as its traditional Norton Suite has been heavily focused on the declining PC segment. (See also: Behind Symantec’s Recent Buyout Spree.)

What’s Next for the Cybersecurity Industry Pioneer

In Symantec’s most recent fiscal 2017 second-quarter earnings, released at the beginning of November, the firm posted a loss due to expenses linked to the Blue Coat acquisition. Management also highlighted product milestones including its next-gen Symantec Endpoint Protection 14 model, which integrated artificial intelligence with high-demand endpoint security. Moving ahead in 2017, Symantec will focus on gaining share in emerging markets such as the high-growth cloud and Internet of Things (IoT) spaces.

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Recommended article: The Guardian’s Summary of Julian Assange’s Interview Went Viral and Was Completely False.
Published at Thu, 29 Dec 2016 23:12:00 +0000

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New York eases proposed cyber regulations after industry complaints

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A lock icon, signifying an encrypted Internet connection, is seen on an Internet Explorer browser in a photo illustration in Paris April 15, 2014.REUTERS/Mal Langsdon

New York eases proposed cyber regulations after industry complaints

By Jim Finkle

New York state’s financial regulator on Wednesday issued a revised proposal for the nation’s first cyber security rules for banks and insurers, loosening some security requirements and delaying implementation by two months to March 1.

The rules from the New York State Department of Financial Services are being closely because they lay out unprecedented requirements on steps that financial firms must take to protect their networks and customer data from hackers and disclose cyber events to state regulators.

“Many organizations are going to have a lot of work to do to come into compliance with these revised regulations,” said Jed Davis, a partner with law firm Day Pitney and former U.S. federal cyber crimes prosecutor.

The state revised the rules in response to more than 150 comments on its initial proposed regulations.

The New York Insurance Association in one letter called the regulation “too much of a ‘one size fits all’ rule” that was overly specific and too broad. A New York Bankers Association letter warned of unintended consequences that would “hamper efforts to protect the public and may defy its purpose of preventing cyber attacks.”

The revised regulations include easing some timelines and requirements, including standards for encrypting data and authenticating access to networks. They also provide more time for compliance, expanding the transition from six months to as long as two years.

The agency said it would finalize the rules after a 30-day comment period.

“This updated proposal allows an appropriate period of time for regulated entities to review the rule before it becomes final and make certain that their systems can effectively and efficiently meet the risks associated with cyber threats,” Financial Services Superintendent Maria Vullo said in a statement.

The American Bankers Association, a critic of the original draft, praised the revisions.

“Some good work has been done,” association Senior Vice President Doug Johnson said in a phone call. “Once we have in-depth conversations with our membership, there may still be some operational concerns we will want to express.”

Reuters first reported on the agency’s plan to delay the regulations last week.

(Reporting by Jim Finkle in Boston; Editing by Richard Chang and Lisa Shumaker)

Published at Wed, 28 Dec 2016 22:43:01 +0000

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Behind First Solar’s More Than 50% Decline in 2016

Behind First Solar’s More Than 50% Decline in 2016

By Shoshanna Delventhal | December 28, 2016 — 7:26 PM EST

Shares of First Solar Inc. (FSLR) are down about 51% over the course of 2016, due to a variety of factors including an overall difficult alternative-energy market, the announcement of a massive company restructuring alongside a major layoff and the surprise election of a president-elect, Donald Trump, who is seemingly hostile to support for renewable energy. (See also: Renewable Energy Suffers From Trump Win.)

With oil prices hovering around 10-year lows, energy companies in general have found it tough to turn a profit amid ultralow pricing. The market reacted poorly to First Solar’s report in mid November, as management slashed guidance in light of plans to accelerate the production of a more cost-competitive model. The Tempe, Ariz.-based firm said it would phase out its current model Series 4 solar panels, scrap plans for a Series 5 and go ahead with fast-tracking the production of a Series 6.

New Model to Provide Returns in 2019

Despite disappointment regarding a $500 million to $700 million cost in impairments, along with a 25% trim of the firm’s employees, many analysts foresee the changes as a necessary step for the solar leader to stay ahead in the market as panel prices decline.

A reduction in the price of solar systems, while a great incentive for adoption on the consumer side, is difficult for companies such as First Solar attempting to stay above water with funds to invest in the future. Guggenheim Securities analysts foresee the sale price of S6 modules falling 25%, while the cost of producing them will drop 40% over the same period. This gives First Solar the upper hand as organizations around the world wean off reliance on fossil fuels and other low-cost traditional power sources. First Solar foresees its more cost competitive offering paying off big time in 2019. (See also: First Solar Initiates Restructuring Plans to Place it at Back on Top of Industry .)
Published at Thu, 29 Dec 2016 00:26:00 +0000

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Good News in Battle Against Public Union Greed and Corruption

Good News in Battle Against Public Union Greed and Corruption

The election of Donald Trump is likely to do at least one good thing for the country (and that’s at least one more good thing than we would have seen had Hillary won).

Trump gets to make the next Supreme Court appointments and he has a great chance to clobber the public unions.

Already the SEIU is putting out warnings. An internal memo outlines plans to slash budgets by 30 percent at SEIU, the group behind the Fight for $15.

McDonalds Protest for $15 Wage

Please consider Fear of Trump Triggers Deep Spending Cuts by Nation’s Second-Largest Union.

“Because the far right will control all three branches of the federal government, we will face serious threats to the ability of working people to join together in unions,” SEIU President Mary Kay Henry wrote in an internal memo dated Dec. 14. “These threats require us to make tough decisions that allow us to resist these attacks and to fight forward despite dramatically reduced resources.” After citing the need to “dramatically re-think” how to implement the union’s strategy, Henry’s all-staff letter announces that SEIU “must plan for a 30% reduction” in the international union’s budget by Jan. 1, 2018, including a 10 percent cut effective at the start of 2017.

SEIU, which represents nearly 2 million government, health-care, and building-services workers and wields an annual budget of $300 million, is the nation’s second-largest union and arguably the most politically significant. In the past few years, SEIU has mounted organized labor’s most effective political intervention with the “Fight for $15,” a campaign that’s dragged Democrats—from city council members to presidential candidates—further left on the minimum wage. At the same time, it cultivated close ties with President Obama, played a key role in passing Obamacare, and worked hard to elect Hillary Clinton.

SEIU, like most of its peers, was already in a state of slow-motion crisis before Trump’s victory. Things will only get worse after inauguration, when organized labor will find itself without a friend in the White House. Unions will instead be up against unified Republican control of the federal government and of half the nation’s state governments, where labor organizers have already suffered some severe blows.

In Michigan, for example, Republicans in 2012 passed a private sector “Right to Work” law that let workers decline to fund the unions representing them, a public sector law doing the same for government employees, and a third law stripping University of Michigan graduate student researchers and home-health aides of their collective-bargaining rights. Afterwards, SEIU’s Michigan health-care local lost most of its membership.

With Republican dominance in Washington, the threats to SEIU will get more grave: Everything from slashing health-care spending to passing a federal law extending “Right to Work” to all private-sector employees could be on the table. One of the most widely expected scenarios is that a Trump appointee will provide the decisive fifth vote on the Supreme Court’s labor cases. The court already ruled in 2014 that making government-funded home health aides pay union fees violated the First Amendment, and a future case could apply the same logic to all government employees, effectively making the whole public sector “Right to Work.” SEIU was bracing for such a ruling earlier this year, in a case called Friedrichs v. California Teachers Association, but got an unexpected reprieve when Justice Antonin Scalia’s death left the court tied, four to four. With several similar cases brought by union opponents already making their way through lower courts, it may not last for long.

Even before Trump’s win, the prospect of a Friedrichs loss and the array of attacks facing unions had some skeptics wondering how long SEIU could afford to keep funding the $15 wage push without any matching influx of fast-food union dues.

Right-to-Work and Bankruptcy Needs

This country seriously needs two things at the nation level.

  1. Right to work legislation
  2. Bankruptcy law that supersedes all state laws

Currently, bankruptcy law at the municipal level is a Hodge-podge. Once municipalities file for bankruptcy, they are under a federal process, not a state process.

However, it is up to the states to decide whether or not they allow municipal bankruptcies.

Many states, including Illinois, do not allow municipal bankruptcy. There are a number of cities in Illinois that would likely file right now if they could.

Trump has a chance to put this country back on track in a much needed move to curtail union power as well as corrupt officials in states like Illinois.


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Mike Shedlock

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Michael “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Visit http://www.sitkapacific.com/ to learn more about wealth management for investors seeking strong performance with low volatility.

Copyright © 2005-2016 Mike Shedlock

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Published at Wed, 28 Dec 2016 17:18:15 +0000

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SEC says it charges lawyer with stealing investor money in EB-5 offerings

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A general exterior view of the U.S. Securities and Exchange Commission (SEC) headquarters in Washington, June 24, 2011.REUTERS/Jonathan Ernst

SEC says it charges lawyer with stealing investor money in EB-5 offerings

The U.S. Securities and Exchange Commission charged a California lawyer on Tuesday with defrauding people who signed up for an immigrant investor program aimed at creating jobs for Americans.

Emilio Francisco raised $72 million from investors in China, the SEC said in a statement. He and his marketing firm, PDC Capital, “diverted investor funds from one project to another and outright stole at least $9.6 million that was used to finance Francisco’s own businesses and luxury lifestyle,” it said.

The EB-5 immigrant investor program allows foreigners to apply to permanently live and work in the states by investing money in certain projects that create U.S. jobs, it said.

(Reporting by Doina Chiacu; Editing by David Gregorio)

Published at Tue, 27 Dec 2016 18:50:40 +0000

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Iran says it sealed Boeing plane deal at half price

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A model of Boeing 747 passenger plane is displayed at the Asian Aerospace Expo in Hong Kong September 8, 2009.REUTERS/Bobby Yip/File Photo

Iran says it sealed Boeing plane deal at half price

Iran said on Sunday it had negotiated to pay only about half the announced price for 80 new Boeing (BA.N) airliners in an order that the American planemaker had said was worth $16.6 billion.

Boeing and its European rival Airbus (AIR.PA) have both signed huge contracts this month to supply airliners to Iran, the first such deals since international sanctions were lifted under a deal to curb Tehran’s nuclear program.

Replacing Iran’s antiquated civil aviation fleet is one of the biggest economic opportunities of the 2015 accord to lift sanctions, which was negotiated by the outgoing administration of U.S. President Barack Obama. President elect Donald Trump is a vocal critic of the pact.

Despite Iran’s great need for new planes to replace those from the sanctions era, it has entered the market at a time when Boeing, Airbus and smaller planemakers have all faced a downturn in orders, and are therefore expected to offer deep discounts.

Boeing said this month it was cutting production of its 777 long-haul jet due to a drop in demand.

“Boeing has announced that its IranAir contract is worth $16.6 billion. However, considering the nature of our order and its choice possibilities, the purchase contract for 80 Boeing aircraft is worth about 50 percent of that amount,” said Deputy Transport Minister Asghar Fakhrieh-Kashan, quoted by Iran’s IRNA state news agency.

A Boeing spokesman in Dubai was not available to comment.

Airbus’s (AIR.PA) contract to sell 100 jets to IranAir, signed on Thursday, would be worth $18-$20 billion at list prices, but the head of IranAir has been quoted as saying the value of the contract would not exceed $10 billion.

The government of President Hassan Rouhani, a pragmatist, has pushed to finalize aircraft deals to show results from the nuclear accord with world power to end sanctions. He faces criticism at home from hardliners over the cost of the purchases.

Fakhrieh-Kashan also said on Sunday that IranAir may exercise an option to buy 20 more aircraft from ATR, a European maker of regional turboprops, in addition to a planned firm order of 20. A team from the planemaker would arrive in Tehran next week for final talks.

“The final round of talks will be held with ATR representatives (next) week and we expect the IranAir contract to be signed … in the following week,” he told IRNA.

“The purchase of 20 planes has been finalised and Iran may buy 20 more planes,” said Fakhrieh-Kashan, adding that the contract for 20 planes was worth less than $500 million.

In February, ATR, co-owned by Airbus (AIR.PA) and Italy’s Finmeccanica (LDOF.MI), reported preliminary orders from Iran for 20 ATR 72-600 aircraft and options for another 20. IranAir said on Twitter that a new ATR turboprop would join its fleet “soon”.

(Reporting by Dubai newsroom, additional reporting by Tim Hepher in Paris; editing by Peter Graff)

Published at Sun, 25 Dec 2016 12:24:32 +0000

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Just how far will Trump go on China and Mexico?

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America's complicated, critical trade relations with China
America’s complicated, critical trade relations with China

China and Mexico have been put on notice once again: President-elect Donald Trump’s new trade team doesn’t like how they deal with America.

Peter Navarro, the economist tapped to to lead Trump’s newly created White House Trade Council, directed a documentary titled: “Death by China: How America lost its manufacturing base.”

And Commerce Secretary nominee and hedge fund billionaire Wilbur Ross once supported TPP, or the Trans-Pacific Partnership, because he believed it would isolate China economically.

“China…could be heading for some difficulties if the Trans-Pacific Partnership gets approved,” he said in August 2015. Ross has also said negotiating a new trade deal with Mexico is a Day 1 priority for the Trump team.

The two also co-authored a paper where they called China “the biggest trade cheater in the world.”

Now, the president-elect is said to be considering a 10% tariff on all imports or changes to tax policy that could possibly level the playing field.

China and Mexico are among America’s top three trade partners (along with Canada). There’s concern that a tough stance would cause those countries to retaliate with similar measures and spark a trade war.

Remember: America imports lots of everyday items. The top imports from China this year are cell phones and laptop computers, according to Panjiva, a firm that tracks global trade data. From Mexico, it’s cars.

Some see Trump’s trade team as protectionist — putting up hurdles on other countries to shield U.S. businesses.

“They want to get rid of existing trade agreements [and] put up tariffs…Those are all protectionist moves,” says Douglas Holtz-Eakin, president of the American Action Forum, a right-leaning think tank.

A lot will depend on the details.

“If they come in with a 5% [tariff], that’s very different than 35%,” says Derek Scissors, a China expert at the American Enterprise Institute. Scissors also thinks the response from Mexico and China will depend a lot on whether the Trump team takes specific action against those nations or does something across the board on all countries.

At the end of the day, Trump wants U.S. companies to bring production and jobs back to America. Navarro and Ross appear to be considering at least two main options to accomplish that.

One involves taxes, the other tariffs. It’s unclear if Navarro and Ross would use both or just one or even explore others. Here’s an explanation of the two main options:

us china trade

Option A: Put up tariffs on other countries.

Trump’s transition team is floating the idea of a 10% across-the-board tariff on all imports from all countries, sources told CNN.

Several trade experts say tariffs would raise prices on goods in America and risk U.S. jobs that depend on trade.

However, Trump’s team emphasizes that they’re using the threat of tariffs to get better trade deals — they just haven’t said what a better deal looks like. So it’s unclear if the tariff talk is more bark than bite.

“The tariff is not an end game, it’s a strategy — a strategy to renegotiate trade deals,” Navarro told CNNMoney earlier this year. “Tariffs wouldn’t put U.S. jobs at risk.”

Option B: Use taxes to make trade fair

The other leading idea is a border adjustment tax (BAT). It’s different from a tariff, which only affects imports. The BAT affects imports and exports. But it may serve the same purpose of making trade fairer for America.

“If you think about it from a policy and objective standpoint it’s addressing a lot of the same trade issues that were brought up on the campaign trail,” says Bill Methenitis, director of global trade at tax consulting firm EY.

In its simplest form, a BAT makes it more expensive for U.S. firms to import goods and less expensive to export by giving companies a tax adjustment.

However, the U.S. imports far more than it exports and this would many of the goods on the shelves of Walmart (WMT) and Best Buy (BBY) more expensive.

But those in favor of this strategy bet that it will increase the value of the U.S. dollar because foreign companies will buy more American goods and fewer foreign goods will be sold here.

A stronger dollar will in turn make it cheaper to buy goods from overseas so it will cancel out any price increases on goods available in Walmart and Best Buy. In theory, you wouldn’t see any difference in your grocery bill.

But of course, the dollar trades in the free market and there’s no guarantee the dollar reacts that way. Some experts say the BAT won’t get passed because the World Trade Organization would oppose it.

“There would potentially be big winners and losers,” says Paul Ashworth, chief U.S. economist at Capital Economics.

 CNNMoney (New York)First published December 23, 2016: 1:28 PM ET

Published at Fri, 23 Dec 2016 18:28:34 +0000

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Corning Inc. Acquires STRAN Technologies

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Corning Inc. Acquires STRAN Technologies

By Shoshanna Delventhal | December 23, 2016 — 5:29 PM EST

High-tech class specialist Corning Inc. (GLW) recently announced its acquisition of STRAN Technologies, a Connecticut-based manufacturer of rugged fiber optic and hybrid fiber/power connectivity solutions.

STRAN offers products and services primarily for military and aerospace clients along with leaders in the oil and gas industries.

Aerospace and Beyond

Corning has solidified its leadership position in the consumer electronics space with its Gorilla Glass products, with its latest SR+ model targeted at the wearable tech space. The Corning, N.Y.-based glass manufacturer has recently pushed to expand its glass offerings in a range of markets from clean automobiles, life sciences, communications and so on.

The new deal to buy STRAN will help the firm bolster its position in new industries. Corning also says the STRAN team’s “exceptional” engineering, installation and maintenance services, along with design and manufacturing expertise will help the firm reach new customers.

“The acquisition of STRAN Technologies enhances Corning’s market access to military and aerospace, and oil and gas segments through the addition of harsh environment optical and power connectors and cable assemblies,” stated Clark S. Kinlin, executive vice president of Corning Optical Communications. “It also augments our innovation product and technology portfolios, strengthening our ability to deliver new integrated solutions to network operators worldwide.”

Beyond Consumer Electronics

Corning also recently invested in GE-backed Menlo Micro in order to accelerate production of next-generation electronic switching solutions. The firm intends its minority stake in the company to help open up possibilities across industries including medical, military, mobile communications and consumer electronics. (See also: Corning Invests in GE-Backed Menlo Micro.)

Back in late October, Corning reported third-quarter earnings that beat analyst’s expectations, driven by success of its cutting-edge Gorilla Glass technology, which is used in a variety of applications including automobiles. At a price of $24.74 per share Friday afternoon, Corning’s stock reflects a $23.45 billion market cap. Shares have gained about 36% year over year (YOY). (See also: Corning’s Q3 Results Beat Estimates.)
Published at Fri, 23 Dec 2016 22:29:00 +0000

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How to Get Your Student Loans Forgiven

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How to Get Your Student Loans Forgiven

Student debt has reached an all-time high, with an estimated 40 million people now owing an average balance of $29,000, according to credit report company Experian. With student loans soaring, debt-saddled students and graduates are desperate for any strategy that may help them escape their burden. The latest wrinkle is the possibility that federal loans could be forgiven if a school has used illegal recruiting tactics – for example, promising the student a well-paid career.

According to The Wall Street Journal, more than 7,500 borrowers (with collective debt of $164 million) have applied for debt relief under a 1994 regulation including violation of applicable state law via an act or omission of the school as a defense against repayment. In June 2015, the U.S. Department of Education promised debt relief to students of the bankrupt for-profit Corinthian Colleges schools (click here for more information on how to apply). The Department has already agreed to cancel nearly $28 million of Corinthian students’ debt, the Journal reported.

The prospect of debt forgiveness may seem like a dream come true. In reality, though, not that many people end up being eligible. Let’s look at various options for dealing with student debt: forgiveness, repayment, debt consolidation – and finally, the worst that can happen if you simply don’t pay.

How Public Service Forgiveness Works

Forgiveness can be earned in two ways: by working in public service or by making payments through income-contingent payment plans for a (long) period of time. Each has its own conditions, requirements and limitations. Neither route is quick or easy.

The Public Service Loan Forgiveness Program is designed specifically for people who work in public service jobs, either for the government or for a nonprofit organization. If you have a federal loan, you may also be able to get all or part of your loan forgiven through certain types of volunteer work, military service or medical practice. In order to get some debt forgiven under the public service program, you must first make 120 qualifying payments (meaning, the minimum amount due, on time). These payments must be made while you are working for a qualified employer – generally, a federal, state or local government organization or a nonprofit organization with tax-exempt status: In effect, you qualify after 10 years on the job and 10 years of payments. Potentially-eligible positions include those in nursing, government, police, fire and social work. Only payments made after October 1, 2007, qualify towards earning eligibility, so borrowers won’t reach the 120-payment milestone to qualify for forgiveness until 2017.

If you aren’t working in a public service position, you may still be able to get some of your student debt forgiven – but it will take longer. Federal income-based repayment plans allow for some debt forgiveness after a minimum of 20 years (terms and conditions vary by program).

Onlydirect loans made by the federal government are eligible for student loan forgiveness. Non-federal loans (those handled by private lenders and loan companies) aren’t part of this program.

As with anything related to the federal government, the terms related to student loan forgiveness are subject to change. Regardless of any changes that may be on the horizon, Mark Kantrowitz, senior vice president and publisher of Edvisors.com and author of “Filing the FAFSA,” warns borrowers against betting their financial future on the hope of debt forgiveness, especially the kind that’s tied to public service. For one thing, there’s a rigid time limit: “Public service loan forgiveness occurs after 10 years of full-time service. It is an all-or-nothing benefit, so borrowers who stop working before reaching the 10-year mark will get no forgiveness.”

What Service Qualifies for Student Loan Forgiveness?

Your eligibility for student loan forgiveness depends on the type of student loan in question, as well as the type of service, as noted above. Here are some further particulars about the sort of work that qualifies:

By volunteering through AmeriCorps VISTA, AmeriCorps NCCC or AmeriCorps State and National programs, you can receive up to $5,775 toward repaying qualified student loans (loans backed by the federal government) through the Segal AmeriCorps Education Award.

Another option for student forgiveness is the Army National Guard’s Student Loan Repayment Program, which can help you earn up to $50,000 toward loans. Covered loans include Federal Direct Loans, Perkins Loans and Stafford Loans.

By volunteering with the Peace Corps, 15% of your Perkins Loan balance will be forgiven for each year of service.

As a full-time elementary or secondary school teacher in a low-income community, you can have 15% of your Perkins Loan forgiven for years one and two of employment, 20% in years three and four, and the remaining 30% in year five. Federal Direct Subsidized and Unsubsidized Loans – and Subsidized and Unsubsidized Federal Stafford Loans – may also be forgiven if you teach an understaffed subject such as math, science, or special education or work in a school in a low-income neighborhood. Click here for the latest details on these programs.

For medical school graduates and nurses, working in underserved areas can qualify you for student loan forgiveness under state programs.

Repayment Plans

Income-driven repayment plans, designed to help graduates who are having trouble making payments on the standard 10-year repayment plan, also include forgiveness for borrowers not in the public sector after a certain period of time. While it takes decades for forgiveness to happen, borrowers have rushed to get on board. According to figures released by the Department of Education in August 2015, nearly 3.9 million Americans were enrolled in an income-based or income-contingent repayment plan, a 56% increase since June 2014, to deal with a collective total of more than $108 billion in outstanding debt. The plans have a two-pronged appeal: the possibility of lower monthly payments now, plus the chance for balances to be forgiven later.

These plans include:

  • Income-Based Repayment (IBR): Maximum monthly payments will be 15% of discretionary income. Forgiveness eligibility after 25 years of qualifying payments.
  • Income-Contingent Repayment: Payments are recalculated each year based on gross income, family size and outstanding federal loan balance. Forgiveness eligibility after 25 years of qualifying payments.
  • Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE): Maximum monthly payments will be 10% of discretionary income. Forgiveness eligibility after 20 years of qualifying payments. The government may even contribute part of the interest on the loan.
  • If you work for a federal agency, your employer may repay up to $10,000 of your loans per year, with a maximum of $60,000, through the Federal Student Loan Repayment Program. Also, by working full-time for 10 years in certain public service jobs and making at least 120 loan payments on your own, your remaining student loan debt may be forgiven.

Your student loan servicer handles the repayment for your federal student loans, so work with the servicer to enroll in a repayment plan or change your current plan. You can usually do this online via the company’s website. To apply for the public service forgiveness program, both you and your employer need to complete and file a specified form.

Forgiveness and Repayment Plans: The Cons

Income-based repayment can also have a downside: More interest will accrue on your loan, because the repayment is stretched over a longer period of time. “Loan payments under IBR and PAYER can be negatively amortized, digging the borrower into a deeper hole,” Kantrowitz notes. “Borrowers who expect to have a significant increase in their income a few years into repayment should perhaps prefer a repayment plan like extended repayment or graduated repayment, where the monthly payment will be at least as much the new interest that accrues and the loan balance will not increase.”

“Remember, payments change annually based on income. When your income rises, your payment can, too,” notes Reyna Gobel, author of CliffsNotes Graduation Debt: How to Manage Student Loans and Live Your Life. Even if you succeed in lowering monthly payments, don’t go on a spending spree with the newly available funds, she adds. “If you’re currently racking up more debt because you expect these plans in the future: stop! You never know what will or won’t exist for graduates if the law changes in the future. Ask yourself, ‘Could I afford to repay this on a regular extended repayment plan?’ If not, you could be getting yourself into very high debt and a difficult situation.”

All is not perfect with forgiveness plans, either. The sort of service jobs that offer student loan forgiveness often come with lower pay than than regular, private-sector positions. You might be able to repay your loans more quickly through a job with greater earning potential, even if it doesn’t offer loan forgiveness.

If you do have all or part of your student loans forgiven, be aware that the IRS may consider the forgiven debt as income and you may have to pay tax on that amount. Also, if you choose to participate in any loan-forgiveness program, make sure to obtain written verification before you begin of what amount will be forgiven and under what circumstances.

Student Loan Consolidation

If you have more than one student loan, you may have heard about or considered consolidating your loans. Consolidating student loans is a process where you take out a new loan, which is then used to pay off your other existing student loans. You can consolidate all federal student loans and most private student loans.

Eligibility Requirements
In most cases you are considered eligible to consolidate your loans if you are:

  • not currently in school or are enrolled at less than part-time status
  • currently making loan payments or are within the loan’s grace period
  • have a good repayment history (meaning you are not in default on your loans)
  • carrying at least $5,000-$7,500 in loans

When it comes to private lenders and loan companies,each lender has its own minimum loan balance. You do not need to meet any minimum for loans consolidated under the federal Direct Consolidation Loan program.You cannot consolidate private student loans with federal student loans, and you can only consolidate the loans you hold in your name; this means that you cannot consolidate your own loans with your spouse’s or with loans your parents may have taken out to finance your college education.

Advantages of Consolidating
The pros of consolidating your student loans include:

1. Streamlining your bill payment process. With just one loan, you have only one repayment due date to remember and one check to write.

2. Extending your repayment term. With a new loan, you can lengthen the amount of time you have to repay, often between 12 and 30 years (up from the standard 10).

3. Lowering your interest rate. If you have one or more private student loans and have improved your credit score since obtaining your loan, you may be able to qualify for a consolidated loan with a lower interest rate.

4. Switching from a variable to fixed-rate loan. If you have private student loans at differing variable rates of interest, you may be able to consolidate and get one new loan with a fixed rate of interest – a good move if rates have dropped significantly since you were in school.

5. Lowering the monthly payment amount. Lengthening the term of your loan means that you will be paying less each month.

6. Getting into an alternate repayment plan. Consolidation offers a way to select a different payment schedule, such as:

  • Graduated repayment, which allows you to begin payments at a lower monthly amount and then gradually increases that repayment amount each two years.
  • Income-sensitive repayment, which calculates your monthly payment amount as a percentage of your pretax monthly income.

7. Getting borrower benefits. Lenders will often offer loan holders certain benefits (discounts for auto-payments, a record of on-time payments, etc.) for being a good borrower. If your lender does not provide any benefits, you may want to consider consolidating your loans with a lender who does.

Potential Disadvantages of Consolidating
The cons to consolidating your student loans include:

  • paying more in total interest
  • having a larger total loan repayment amount
  • being in debt longer (if you extend your loan period)
  • losing borrower benefits from your current lender (i.e. interest-rate discounts, rebates)
  • having to repay borrower benefits (i.e. rebates, fee waivers)
  • possible prepayment penalties
  • loss of grace period (if you consolidate loans during their initial grace period)

Beware of Fraud

Unfortunately, there are plenty unscrupulous lenders offering to consolidate student loans. You should be wary if a lender promises to dramatically lower your interest rate by consolidating your federal student loans. The truth is that lenders weight the average of the interest rates you’re currently paying on your existing federal student loans and then round that number up to the nearest one-eighth of a percentage. While the interest rate on the new loan may be lower than the higher interest rate, it will also be higher than the lower interest rate you’re currently paying. So overall you’ll be paying about the same or perhaps just slightly more for your new, consolidated loan. Let’s look at an example.

Marisa is paying 3.6% on a $3,500 Stafford loan and 6.8% on a $6,500 Stafford loan. If she were to consolidate those loans, a legitimate lender would calculate her new interest rate using the following formula:
($3,500 x 3.6%) + ($6,500 x 6.8%) / ($3,500 + $6,500) = 5.68%. This would be rounded up to 5.75%.
While the overall interest rate on the consolidated loan is less than the 6.8% Marisa was paying on the $6,500 loan, it’s significantly more than the 3.6% she was paying on the $3,500 loan.

You should also be skeptical if a lender charges you an upfront fee (or fees) that you need to pay out-of-pocket to consolidate federal loans. Fees and/or expenses associated with federal loans should be deducted from the new loan check, not charged to the borrower.

Lastly, be cautious if a lender states that you have to choose a repayment plan with a different term limit to consolidate. If you have a Perkins, Stafford or PLUS loan you can always choose to stick with the 10-year repayment plan for your consolidated loan.

Before you consolidate your student loans, you should crunch numbers: Consider how much longer you will need to repay the loan and how much more in total interest you will have to pay as a result, and weigh that against the benefit of a lower interest rate and smaller monthly payments.

What Happens if You Don’t Pay?

If you fail to pay your student loan, you probably won’t find a team of armed U.S. marshals at your front door, as one Texas man did recently. But it’s still a very bad idea to ignore that debt.

In most respects, defaulting on a student loan has exactly the same consequences as failing to pay off a credit card. But in one key respect it can be much worse. Most student loans are guaranteed by the federal government, and the Feds have got powers that debt collectors can only dream about. It probably won’t be as bad as armed marshals at your door, but it could get very unpleasant.

Here’s what happens.

First You’re ‘Delinquent’

When your loan payment is 90 days overdue, it is officially “delinquent.” That fact is reported to all three major credit bureaus. Your credit rating will be hit.

That means that any new applications for credit may be denied, or given only at the higher interest rates available to risky borrowers. A bad credit rating can follow you in other ways. Potential employers often check the credit ratings of applicants, and use it as a measure of your character. So do cell phone service providers, who may deny you the service contract you want. Utility companies may demand a security deposit from customers they don’t consider credit worthy. A prospective landlord might reject your application, too.

Next You’re ‘In Default’

When your payment is 270 days late, it is officially “in default.” The financial institution you owe the money to refers the problem to a collection agency. The agency will do its best to make you pay up, short of actions that are prohibited by the Fair Debt Collection Practices Act. Debt collectors also may tack on fees to cover the cost of collecting the money.

It may be years down the road before the federal government gets involved, but when it does, its powers are considerable. It can seize any tax refund you may receive, and apply it to your outstanding debt. It can also garnish your paycheck, meaning it will contact your employer and arrange for a portion of your salary to be sent directly to go towards repayment.

What You Can Do

A good first step is to contact your lender as soon as you realize that you may have trouble keeping up your payments. It may be able to work with you on a more doable repayment plan, or steer you toward one of the federal programs. It is important to remember that none of the programs are available to people whose student loans have gone into default.

You may be sure the banks and the government are as anxious to get the money as you are about repaying it. Just make sure you alert them as soon as you see potential trouble ahead. Ignoring the problem will only make it worse.
Published at Sat, 24 Dec 2016 09:50:00 +0000

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World’s oldest bank seeks government bailout in Italy

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Italian banks are drowning in bad debt
Italian banks are drowning in bad debt

  @CNNMoneyInvest

The world’s oldest operating bank needs a government bailout.

Italy’s Monte dei Paschi di Siena (BMDPF) said early Friday it’s seeking “extraordinary and temporary financial support” after an effort to raise funds from private investors fell flat.

The Italian government has been preparing for this situation by arranging a €20 billion ($20.9 billion) rescue fund to help prop up the country’s struggling banks.

But Monte dei Paschi didn’t specify how much money it’s asking for. It had previously tried to persuade investors to put in €5 billion ($5.2 billion), but political and economic uncertainty following the resignation of Prime Minister Matteo Renzi made many of them wary of signing on the dotted line.

Any bailout plan would need approval from the European Central Bank.

If it’s approved, the Italian government won’t be the only one whose finances would be affected by the bailout.

Related: Italy wants $21 billion to prop up its wobbly banks

Under new European rules, investors must take a financial hit before a government can step in with rescue money. That has raised fears that small-time, individual savers could suffer.

But at a news conference early Friday, Italian Finance Minister Pier Carlo Padoan said the bailout for Monte dei Paschi would “safeguard” the interests of mom and pop savers and shareholders.

The bank, which was founded in 1472, has roughly €28 billion ($29.3 billion) in bad debts that it has been trying to spin off into a separate entity as part of a turnaround plan.

Its share price has plunged 88% since the start of the year. Trading in the bank’s shares was suspended Friday.

Related: India’s central bank says cash crisis is hurting the economy

Based on the European bailout rules, junior bondholders are supposed to take a financial hit.

But the Italian government said under the plan for Monte dei Paschi, bonds held largely by institutional investors will be converted at 75% of their face value into shares, while those held mainly by retail customers will be converted at their full value.

The retail investors’ shares would eventually be turned back into bonds of the same value as those they held originally, according to Padoan.

Italy’s banks have been struggling with high costs and low returns for years. Billions of euros in loans have soured due to economic stagnation. The country’s economy has barely grown for a decade.

The country’s lenders are saddled with about €360 billion ($376 billion) in non-performing loans, roughly a third of the eurozone total.

It’s expected that a number of other small Italian banks will soon seek government help to rebuild their financial position. They’ll also look to draw from the €20 billion rescue fund.

Earlier this month, Italy’s biggest bank, UniCredit, announced plans to raise €13 billion ($13.6 billion) and slash thousands of jobs to shore up its finances.

–Chris Liakos and Marta Colombo contributed to this report.

Published at Fri, 23 Dec 2016 11:49:25 +0000

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How Deutsche’s big bet on Wall Street turned toxic

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A statue is pictured next to the logo of Germany’s Deutsche Bank in Frankfurt, Germany September 30, 2016.REUTERS/Kai Pfaffenbach/File Photo

How Deutsche’s big bet on Wall Street turned toxic

By Edward Taylor | FRANKFURT

Deutsche Bank’s pursuit of success on Wall Street has come at a high price, a $7 billion plus penalty illustrating the extent of its decline since 2008 when its then chief executive claimed it was one of the “strongest banks in the world”.

Expanding from its roots in Germany dating back to 1870, Deutsche (DBKGn.DE) transformed itself into a major player on Wall Street over the past two decades, often taking extravagant bets to do so.

But it is now set to cut back its activities in the world’s biggest economy after a penalty for the sale of toxic mortgage securities that contributed to the biggest economic crash in a generation.

“The strategic options open to Deutsche Bank in the U.S.A. are clearly restricted because the profitability of the business will be weakened,” said Ingo Speich, a fund manager at Union Investment, a shareholder in Deutsche.

German regulators also want Deutsche, the country’s largest bank which employs around 100,000 people around the world, to rein itself in.

“Size in itself is no sign of success,” said one senior official in Germany, where the mood among regulators has hardened towards the bank. “They now want to curtail their ambitions.”

Last year, the bank’s U.S. arm, where roughly one in ten of its staff are based, racked up a loss of 2.8 billion euros ($2.9 billion) – almost half the total loss made by the group.

That was a swing from a profit of more than 1 billion euros in the previous year. Much of the damage was done by a writedown on the value of Bankers Trust, while tighter regulation has made it more expensive to trade.

EXPANSION PHASE

The $7.2 billion penalty for the sale of toxic mortgage securities closes a sobering chapter in the bank’s international drive, launched in 1989 by the then chief executive, Hilmar Kopper, when he bought lender Morgan Grenfell in London.

Kopper is remembered for his public description of a multi-million Deutsche mark sum as “peanuts” – opening a divide between an increasingly Anglo-Saxon bank and the prevailing frugal culture among ordinary Germans.

A decade later, Deutsche bought Bankers Trust, paying $10 billion for the American bank and an estimated severance of $100 million to its chief executive. Management even discussed a takeover of Lehman Brothers, which later collapsed at the lowest point in the global financial crisis in 2008.

This strategy of buying to expand in shares and bonds was expanded to add outsized bets on toxic derivatives – and the lender’s total assets swelled to more than 2 trillion euros in 2007.

One former senior Deutsche executive, who asked not to be named and who was instrumental in building the bank’s U.S. business, said he had preferred using leverage to sell more structured debt and derivatives to buying a Wall Street rival.

“Buying a U.S. firm is like climbing Everest without oxygen. It is risky, and the achievement is substantial, but is it really worth it?” the former executive said, asking not to be named. “You may find that the view from the summit is quite cloudy.”

Yet this alternative route proved perilous.

WORLD’S STRONGEST

As the bank placed large trades at the end of 2011, its leverage ratio, which divides the value of assets by equity, reached around 21 – measured by U.S. accounting standards.

As a rule of thumb, the higher this leverage, the steeper the risks. JPMorgan (JPM.N), a much larger bank, had a lower ratio of around 17.

There was another important difference between Deutsche and its U.S. rivals. They had been able to improve their capital with a compulsory $700 billion “Troubled Assets Relief Programme” (Tarp). Rivals JP Morgan Chase, Morgan Stanley (MS.N), Goldman Sachs (GS.N) and Bank of America (BAC.N) all took the money.

At that time, in October 2008, Deutsche Bank’s then Chief Executive Josef Ackermann described the bank as one of the “strongest and best capitalized banks in the world,” privately saying he would have been “ashamed” if it needed state help.

However, analysts and regulators have since bemoaned Deutsche’s thin capital cushion.

NEW MOOD

Encouraged by its apparent success in the early years of the crisis, the bank’s management focused on structured finance and securitization, credit and equity derivatives, distressed debt and leveraged lending.

But the mood in the United States had changed towards banks that juiced profits with large punts.

In September 2016, Federal Reserve Governor Daniel Tarullo demanded a new capital buffer from investment banks, and, crucially for Deutsche, that it be held locally – in the United States.

“Financial regulation should be progressively more stringent for firms of greater importance,” Tarullo said at the time.

Other problems were also brewing. Deutsche had been singled out in a 2011 U.S. Senate committee report that said one of its traders had called reparcelled mortgage debt “crap” or “pigs”.

That trader, Greg Lippmann, who the committee said in its investigation had also described such securities as a “Ponzi scheme”, took a $5 billion short position on behalf of the bank, betting that mortgage related securities would fall in value.

That inspired ‘The Big Short’ film, where actor Ryan Gosling played a character inspired by Lippmann.

Lippmann has declined to answer questions from Reuters on the subject.

The U.S. market no longer has pride of place for the bank, which has begun to lay more emphasis again on its German roots.

People with knowledge of the bank’s strategy have recently said it is looking to cut its loan securitization business, starting with repackaged U.S. mortgages.

A final decision about this core business is set to come early next year, the people said, with a rolling back of the repackaging and resale of U.S. mortgages also expected as Chief Executive John Cryan seeks to move the business ahead.

(Additional reporting by Arno Schuetze; Writing By John O’Donnell; Editing by Keith Weir)

Published at Fri, 23 Dec 2016 11:17:40 +0000

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Be ‘very afraid’ about globalization’s next phase

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by pexels from Pixabay

Be ‘very afraid’ about globalization’s next phase

2016 has been a wake-up call in the U.S., U.K. and beyond on the pain felt by many people from global trade. But this could be just the beginning.

“What comes next in globalization? Be very afraid,” says economist Richard Baldwin, who worked on trade negotiations for President George H.W. Bush and has just published “The Great Convergence: Information Technology and the New Globalization.”

President-elect Donald Trump is focused on the 5 million U.S. manufacturing jobs lost since 2000 due to globalization and technology. That was the Phase 1 of globalization.

Now get ready for Phase II when robots and low-cost workers abroad replace service sector jobs too. Phase II could have an even bigger impact on jobs. Consider that the U.S. has created about 12 million service sector jobs under President Obama alone.

“We could have hotel rooms in New York cleaned by people sitting in Guatemala driving robots,” Baldwin says. “This isn’t Star Trek.”

Higher skilled jobs won’t be immune either. Already surgeons can perform operations by directing robots from remote locations. It doesn’t matter if the doctor is a few feet away or thousands of miles away. He calls it Remote Intelligence or RI.

“I’m amazed people haven’t caught onto it yet,” says Baldwin. “Everyone is fascinated with Artificial Intelligence. What we should be worrying about is Remote Intelligence.”

How to help workers hurt by globalization

This next phase of globalization is “wilder” and “generally less fair” warns Baldwin. He predicts the anger and frustration already felt in many blue collar communities in the U.S. and Europe is only likely to spread.

So what should we do about it?

“You should help individual workers adjust,” says Baldwin. “That means…providing training, relocation support, income support and continuing education.”

The U.S. has some programs like this, especially at community colleges, but overall, the nation spends very little on worker re-training compared to Europe and Japan.

Even poorer nations like Chile spend a greater share of the country’s annual income (known as GDP) on worker aid and training than the United States.

chart trump trade

Baldwin argues that President-elect Trump’s tactic of saving jobs at the Carrier plant in Indiana is a Band-Aid approach. Globalization isn’t going to stop.

“Shutting off trade abroad won’t save workers’ jobs. They might just bring jobs back for robots at home,” Baldwin says. (Already Carrier has said it plans to invest in upgrading technology at the plant in Indianapolis, which may mean machines can eventually perform more tasks that humans once did).

What Trump should do

In his new book, Baldwin makes the case that globalization is still good, but governments and society have to do a far better job of helping workers.

Here are his recommendations for Trump:

Step 1: Accept the 21st Century reality that low-skilled manufacturing jobs are not coming back.

Baldwin says using tariffs (a plan the Trump team is considering) to try to stop factory jobs leaving won’t work.

“If Trump shuts off trade flows, that will just lead to more automation,” he says.

Furthermore, it’s not just blue collar work moving overseas now, but technology and ideas. That’s even harder to stop with tariffs, he argues.

Step 2: Help workers retrain — or even relocate.

“We shouldn’t try and protect jobs; we should protect workers,” he says, which means helping workers transition to jobs where their jobs won’t be immediately under threat again from robots and lower costs abroad.

Step 3: Make the political case that trade can help everyone. Trump can still pursue free and “fair” trade by being the president who enacts policies to help workers retool.

Baldwin says the U.S. may need programs like “Tennessee Valley Authority,” which was started in the Great Depression to revive the economy in and around Tennessee. The TVA ended up building dams and playing a large role in modernizing America’s electric grid.

Such a scheme could bring economic activity back to depressed areas in Appalachia. Otherwise some workers — and their children — may need to move to places that are creating the jobs of tomorrow.

Baldwin isn’t just another academic. He worked in the first Bush Administration as the U.S., Mexico and Canada were putting together key trade deals, including NAFTA. He also spent a lot of time figuring out how to react to the rise of Japan, which was producing a lot of TVs and other electronics that U.S. workers once did (today China plays that role).

He still believes that global trade is the right path, but he does have one regret: The U.S. didn’t have a safety net for the losers.

“I don’t think NAFTA needed to change. It’s the domestic laws that need to help workers whose jobs were destroyed,” he says.

Published at Fri, 23 Dec 2016 17:23:31 +0000

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Wall Street holiday parties are back…but don’t tell anyone

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A holiday decoration is seen over Wall St. sign outside the New York Stock Exchange, November 27, 2012.REUTERS/Brendan McDermid

Wall Street holiday parties are back…but don’t tell anyone

By Lawrence Delevingne and Olivia Oran | NEW YORK

Wall Street holiday parties this year took place in luxury venues like the Waldorf Astoria, featured women dressed as glowing angels, and had fine wine, scotch and bourbon on hand.

But organizers of the soirées, conscious of tighter budgets and public scrutiny, are not eager to discuss the merriment.

Big financial firms started curtailing year-end bashes in 2008 as taxpayer bailouts, populist outrage and weak profits created an environment where lavish celebrations were frowned upon. Some investment banks stopped sponsoring corporate holiday parties altogether, advising individual teams to use their own budgets for more intimate gatherings.

Catering managers and event planners said that while holiday party spending is still down relative to its pre-financial crisis peak, Wall Street is starting to come back on the scene.

“It’s a more optimistic climate,” said Bill Spinner, director of catering at The Pierre, a Taj Hotel in New York.

The number of Wall Street firms with holiday events at The Pierre was steady this year, he said, but more people attended.

Other planners said the atmosphere was lighter in 2016, with winter wonderland and carnival themes featuring such flourishes as giant snow globe photobooths and game stations.

A Reuters review of the financial industry holiday scene found parties sponsored by Credit Suisse Group AG, Bank of New York Mellon Corp, Moelis & Co, BlackRock Inc, Blackstone Group LP, KKR & Co LP, Apollo Global Management Inc, PIMCO, AQR Capital Management LP, Bain Capital, York Capital Management LLC and Chilton Investment Management, among others.

Employees enjoyed themselves at swanky venues in New York, London, Boston, Chicago, Southern California, Sydney and Wroclaw, Poland, according to attendees and Instagram photos.

Representatives of some firms said they were reticent to discuss the parties because they have tried to keep such events out of the news since the financial crisis. One argued his firm’s party was more austere than in prior years, and that festive Instagram photos with ostentatious hashtags misrepresented it. Others declined to comment at all.

B. Allan Kurtz, managing director at New York events venue Gotham Hall, which hosts about half a dozen Wall Street holiday gatherings each year, said the standard budget is $100,000 to $200,000.

Spending is similar to what it was in the years leading up to the crisis but then the money went further, Kurtz said. It works out to about 20 percent more than today’s dollars adjusted for inflation. One expensive feature that has been absent since 2008 is a hired celebrity entertainer or singer.

Private-equity firm KKR used Gotham Hall for its party, which Kurtz declined to comment on.

Whatever they spend, most firms want to keep their events out of the public eye, he said. “They don’t want people to know they are hosting a party.”

GATSBY, CARNIVAL THEMES

Parties thrown by PIMCO in London and Credit Suisse in Poland, where the bank has one of its largest back office operations, this year each had Great Gatsby themes, recalling the 1920s era of decadence and social change.

PIMCO’s featured a “flash mob” of dancers from a company called Brazilian Fantasy, while Credit Suisse’s was full of young men and women in “Roaring 20s” garb, according to Instagram posts.

The dance floor at Credit Suisse’s party was backed by a digital image of actor Leonardo DiCaprio holding a cocktail while portraying Jay Gatsby. DiCaprio played Gatsby in the 2013 film version of American author F. Scott Fitzgerald’s 1925 novel, “The Great Gatsby” set on New York’s Long Island.

PIMCO’s other holiday party near its Newport Beach headquarters featured women in bedazzled snow-white angel costumes whose wings glowed with LED lights.

Private equity firm Apollo’s party, hosted in a Greek restaurant near Central Park, featured “live statues”: humans standing completely still, painted to look like marble. They evoked images of Greek gods such as Adonis, Aphrodite – and, of course, Apollo.

AQR Capital, the hedge fund firm run by Cliff Asness, had a carnival-themed bash at luxury Manhattan event venue Cipriani. One attendee’s photo showed champagne being poured into a glass through a poof of nitrogen steam, and carried the caption: “Snakes, clouds, swords, oh my!”

Blackstone’s fête was held in a Waldorf Astoria ballroom whose balconies were decked with red, green and white boughs. Hundreds of partygoers were making merry in formal attire. There were a few dresses, too, but the New York crowd appeared to mostly be men.

The Pierre’s Spinner said the typical Wall Street holiday party has changed from stuffy buffet-style dinners with seating arrangements to networking events where guests mingle while drinking wine and noshing on high-end appetizers.

“There was a real emphasis on making events different but watching costs at the same time,” he said.

(Reporting by Lawrence Delevingne and Olivia Oran; Writing by Lauren Tara LaCapra; Editing by Grant McCool)

Published at Thu, 22 Dec 2016 13:21:59 +0000

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Heading off a housing crisis for U.S. seniors

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A sign advertising a home for sale at a reduced price is shown in Pacifica, California December 31, 2008.REUTERS/Robert Galbraith

Column: Heading off a housing crisis for U.S. seniors

By Mark Miller | CHICAGO

Debates about improving America’s infrastructure typically focus on projects like bridges, roads, railroads and power grids. But with President-Elect Donald Trump calling for $1 trillion in infrastructure spending over the next 10 years, here is an item that should be added to that list: affordable housing for seniors.

By 2035, one of every three U.S. households will be headed by someone aged 65 or older, according to a new study by the Harvard Joint Center for Housing Studies (JCHS) – an increase of a whopping 66 percent to 50 million households. Households headed by people aged 80 and older will increase at the fastest rate – more than doubling to 16 million.

We are not ready for this dramatic transformation – not even close, the Harvard researchers conclude.

Wealthier people will have the means to adapt their housing to fit their needs – although signs suggest few are laying the groundwork for that. Less than 5 percent of homes have elements such as zero-step home entrances, single-floor living and wide halls and doorways that can accommodate wheelchairs, according to JCHS.

But the biggest problem will be a bulging population of low-income seniors.

The number of seniors earning less than 80 percent of their area median income will nearly double by 2035, to 27 million, according to the report. These households will face enormous challenges paying for housing and supportive services, with housing expenses sapping resources bad needed for food and healthcare.

JCHS defines any housing cost higher than 30 percent of income as a “burden,” and the number of burdened households will rise sharply over the coming two decades: by 2035, some 8.6 million people will be paying more than half their income for housing.

“Our shifting demographic outlook really brings with it a lot of housing needs that we haven’t figured out how to fill,” said Jennifer Molinsky, a senior research associate at JCHS and the report’s lead author.

DEMOGRAPHIC TRENDS

Along with affordability, there will be a huge need for housing that is physically accessible as the number of older Americans with disabilities and dementia soars. Social isolation is another concern, especially as baby boomers move into their eighties and beyond. The country’s over-80 population is forecast to double by 2035 to 24 million; 70 percent of

that growth will take place after the year 2025.

The demographic trends driving these numbers have been evident for decades. But a problem that once seemed far off in the future is now on our doorstep, argues Linda Couch, director of housing policy and priorities at Leading Age, an association representing 6,000 aging services agencies. “We’re at a moment where we have to decide how we are going to address the housing needs of seniors,” she said.

The federal government provides rental assistance to low-income seniors through public housing, housing choice vouchers and subsidized affordable housing, but only a third of eligible seniors receive help due to funding problems. “The waiting lists are very long,” Couch said.

The U.S. Department of Housing and Urban Development (HUD) has a program – known as Section 202 – that funds development of rental housing for very low-income elderly households, but funding has been falling since 2008, and Congress has not appropriated any new funding for housing unit construction under the program since fiscal year 2011.

MAJOR INVESTMENT

The JCHS report recommends increasing the amount of accessible housing units for disabled seniors, and creating programs to help older owners shoulder housing cost burdens, such as property taxes and utility bills. It also calls for increased subsidies to older renters, and strengthened ties between housing and delivery of community-based healthcare services.

Leading Age is calling for a major housing investment – perhaps the advocates should call it infrastructure – of $600 million in fiscal 2018. A new HUD-administered housing fund would be the initial source of dollars that could leverage tax credits and state and local resources to help fund nonprofit development for very-low income seniors.

Leading Age also advocates expansion of the existing Low-Income Housing Tax Credit, which provides dollar-for-dollar tax credits for investments in affordable housing. The group also is pushing for creation of a “special purpose voucher” that would provide rental assistance to low-income seniors.

Good ideas, all – and they should be put in motion now, before the senior housing crisis is in full bloom. Says Couch: “The challenges of an aging population are upon us – no longer in the future. How we address these needs will be a true test of our moral character.”

(The opinions expressed here are those of the author, a columnist for Reuters.)

(Editing by Matthew Lewis)

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Published at Wed, 21 Dec 2016 12:11:50 +0000

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Nordstrom and Peers Fall on Bleak Analyst Comments

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Nordstrom and Peers Fall on Bleak Analyst Comments

Shares of Nordstrom plunged nearly 9% on Friday after JPMorgan downgraded the stock from neutral to underweight with a price target of $48. JPMorgan analyst Matthew Boss claimed that the struggling department store chain had “no silver bullets in the barrel” to revive its stagnant sales, and that it had “yet to find an equilibrium” between brick-and-mortar stores and e-commerce efforts.

The key facts

Nordstrom has aggressively expanded its e-commerce ecosystem with e-gifting options on its website, its flash sale site HauteLook, and its styling service Trunk Club. Nordstrom’s e-commerce businesses now generate over 20% of its revenues, but its investments in those businesses are causing its expenses to outpace its sales growth.

Nordstrom management also told JPMorgan that its brick-and-mortar traffic levels had dropped to their lowest levels since 1972, and that it expects its comparable sales to stay nearly flat on an annual basis through 2018. Wall Street expects Nordstrom’s revenue to rise 2.5% this year, but earnings are expected to fall 11% due to its higher e-commerce investments.

Co-President Blake Nordstrom told JPMorgan that the chain’s bottom line would continue declining if comps remained flat. This strongly indicates that Nordstrom will likely follow Macy’s lead and close many more stores in the near future.

Dragging down its peers

JPMorgan’s downgrade of Nordstrom also sank most of its industry peers. Macy’s and JCPenney both fell about 7% after the downgrade, and Kohl’s slumped 8%. All three companies are also struggling to grow their e-commerce ecosystems to offset sluggishness in their brick-and-mortar sales.

Despite the bearish sentiment regarding Nordstrom, the high-end department store has actually posted better sales growth than many of its rivals. Nordstrom’s sales rose annually in three of its past four quarters, in contrast to Macy’s, for example, which has posted seven straight quarters of year-over-year declines.

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Published at Mon, 19 Dec 2016 14:23:02 +0000

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