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Royal Caribbean Customers are Mostly Happy (RCL, NCLH)

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Royal Caribbean Customers are Mostly Happy

By Dan Moskowitz | December 6, 2016 — 1:35 PM EST

Along with the other cruise lines, Royal Caribbean Cruises Ltd. (RCL) has seen its stock slide over the past 12 months. For RCL, that slide amounts to 13.45%. There is a 2.41% dividend yield, but this is still frustrating for investors since the S&P 500 has gained 6.05% over the same time frame – while offering a 2.00% dividend yield. As always, investors want to know what the future holds. For any company based in the travel industry, the biggest factor will be broader economic conditions, which will have a heavy influence on discretionary spending. Next in line—and a better indication of long-term potential—is customer reviews.

According to Cruise Critic, 71% of Royal Caribbean guests love the cruise line, which is based on 25,376 reviews. According to Yelp, Royal Caribbean sports a 3.0 of 5.0 average rating, which is based on 192 reviews. These numbers are slightly higher than Norwegian Cruise Line Holdings Ltd. (NCLH) – 69% and 2.5 of 5.0, respectively. For Royal Caribbean, happy cruisers consistently point to quality itineraries, food, entertainment options, and a family-friendly environment. The highest rated categories are Public Rooms, Service, and Cabin.

On the negative side, the biggest complaint, as well as a consistent complaint, was Royal Caribbean cancelling cruises on short notice and not offering a full refund. Other common complaints were large crowds and burnt-out employees. (See also, Royal Caribbean Targets New York Sports Fans)

The positives outweigh the negatives, and the biggest risk seems to be booking airline flights to reach the departure destination. If plans change, you could end up stuck, which leads to a poor customer experience and little chance for repeat business. On the positive side, this doesn’t happen often, the majority of guests enjoying the food is a big positive, and guests are pleased with on-board entertainment options.

Some people love to cruise and others are more hesitant due to all-too-common at-sea mishaps throughout the industry. While Royal Caribbean isn’t perfect, it seems to avoid negative news headlines related to at-sea mishaps and is known for offering good value. If Royal Caribbean guest reviews edge out Norwegian Cruise Line, then, at least at this point in time, Royal Caribbean should have more long-term potential than Norwegian Cruise Line. For a consumer-based travel business, everything begins with customer experience. We’ll take a look at Carnival next.

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Published at Tue, 06 Dec 2016 18:35:00 +0000

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Viacom CEO: We’re Not Interested In Owning Vice

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by geralt from Pixabay

Viacom CEO: We’re Not Interested In Owning Vice

Viacom (NASDAQ: VIA) (NASDAQ: VIAB) has been involved in some fairly heavy drama for the last few months.

The company saw the departure of longtime CEO Philippe Dauman after a protracted battle with the Redstone family, which owns 80% of the company’s stock through its privately held National Amusements theater chain. Viacom was also rocked by the rapid departure of Dauman’s replacement, Thomas Dooley, a well-liked figure within the company.

Now, the company has a new CEO in Bob Bakish, who is operating the media giant while speculation runs wild that it will merge with CBS (NYSE: CBS). That’s what the Redstone family wants, and given that they own about 80% of CBS’s voting stock, too, that’s what’s likely to happen.

It’s a situation which has led to instability, rumors, and a clear lack of direction. Bakish got the job partly to quell those problems, and one of his first actions has been to quash a rumor about a potential acquisition.

What is Viacom not doing?

During a speech at the annual UBS Global Media conference earlier this week, the freshly minted CEO stated very clearly that his company had no interest in buying digital media company Vice, Broadcasting & Cable reported. A growing operation, Vice has been the subject of acquisition rumors linked to a number of companies. In theory, a Viacom deal would make sense because its MTV network is in some ways Vice’s spiritual predecessor, and paved the way for the risk-taking company.

What is next for Viacom?

Bakish wants to stabilize Viacom while preparing for the possibility that the CBS merger happens, but also for a future in which it does not. It’s a difficult position to be in, but the executive has been resolute in his internal and external messaging.

“My own view is, whether or not it happens, we need to insure that Viacom is as strong as it can be and that’s what I’m focused on,” he said.”…Whether or not it happens, we need to ensure that Viacom is as strong as it can be, and that’s what I’m focused on.”

That’s a smart, no-more-drama approach, and it’s exactly what Viacom needs right now. The company must focus on improving its own operations, because it does not control what will happen regarding any possible CBS merger — that’s largely in the hands of the Redstones.

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Published at Tue, 06 Dec 2016 18:04:02 +0000

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How Uber Is Betting on AI

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How Uber Is Betting on AI

By Charles Bovaird | December 5, 2016 — 8:20 PM EST

Uber Technologies Inc. recently bet on artificial intelligence (AI) by purchasing AI startup Geometric Intelligence so the transportation company can develop an in-house AI research lab. Uber is not the only large technology company that has been venturing into the AI space, as social media giant Facebook Inc. (FB), chip maker Intel Corporation (INTC) search engine operator Google, which is owned by Alphabet Inc. (GOOGL), according to the New York Times.

Self-Driving Cars

Uber, whose new research arm will be called Uber’s AI Labs, hopes that a team led by co-directors Gary Marcus and Zoubin Ghahramani will be able to leverage the transportation company’s vast data in order to make progress toward vehicles that will be able to drive themselves. Geometric Intelligence’s data scientists have harnessed several different techniques to conduct AI research, including the “evolutionary” and Bayesian methods. (For more, see also: How Intel Is Betting on Artificial Intelligence.)

This represents a different approach from the path that many Silicon Valley giants have taken, as these larger companies have so far relied on a method called deep learning. This particular approach involves developing algorithms primarily based on how the human mind works. Since these technology companies hold significant data, these algorithms can leverage the information in order to conduct simple tasks such as identifying patterns or faces.

Sustained Investment

Uber’s purchase of Geometric Intelligence only represents one investment the transportation company has made into developing self-driving cars, according to Bloomberg. Earlier in 2016, Uber acquired self-driving trucking company Otto Trucking Inc. in an all-stock deal valued at up to $680 million. The transportation company has also created a significant research hub in Pittsburg called Uber Advanced Technologies Center. (For more, see also: An Uber IPO May Happen Sooner Rather Than Later.)

In addition to working toward creating self-driving cars, Uber hopes to use its new in-house AI research lab to improve its algorithms that pair riders up with drivers, according to Bloomberg. Uber’s UberPOOL service, for example, may sometimes need to perform particularly sophisticated calculations in order to pair drivers up with multiple riders going to varying locations.

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Published at Tue, 06 Dec 2016 01:20:00 +0000

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Adidas CEO Has “Words” for Nike’s HyperAdapt 1.0 (NKE, ADDYY)

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Adidas CEO Has “Words” for Nike’s HyperAdapt 1.0 (NKE, ADDYY)

By Dan Moskowitz | December 5, 2016 — 9:02 PM EST

If you have ever run in a race, caught ground on the person leading that race, and then fell back into the pack again, then you know how frustrating this experience can be. No matter what you do, no matter how hard you try, catching that superior competitor is just not possible. Based on what Adidas AG (ADDYY) Chief Executive Officer Kasper Rorsted recently told The Wall Street Journal, this is how he must feel. Referring to NIKE, Inc.’s (NKE) new HyperAdapt 1.0, Rorsted stated, “I don’t know if that’s a save-the-world product.”

Prior to the $720 self-lacing HyperAdapt 1.0, Adidas had stolen Nike’s thunder thanks to its classic Stan Smith shoes becoming popular again. Consumers are currently finding style in simplicity. These same consumers aren’t likely to go out and buy the $720 HyperAdapt 1.0, which are obviously expensive as well as difficult to purchase. Rorsted’s comment didn’t indicate fear about the current version of the HyperAdapt, but the future versions of that shoe, which are highly likely to be more affordable in order to target the masses. Since Nike has been working on the technology for more than a decade, it would be nearly impossible for Adidas to catch up if self-lacing sneakers became a trend. (See also, Adidas Takes on Nike & Under Armour in U.S.)

Rorsted is also likely frustrated because Adidas is focused on sustainability. According to Business Insider, Adidas is making sneakers from ocean plastic and biodegradable silk. Sustainability will play a role in future consumer decisions, but it unfortunately will not be as impactful as a new technology like self-lacing shoes. Once a few young consumers sport the cheaper version of these shoes in the future, everyone else is going to want them. That’s not going to happen with shoes that are made from ocean plastic. If self-lacing shoes resonate with consumers over the next several years, then Nike will once again run far ahead of the competition.

NKE has depreciated 23.31% over the past 12 months and currently offers a dividend yield of 1.43%.

ADDYY has appreciated 46.98% over the past 12 months and currently offers a dividend yield of 1.23%.

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Published at Tue, 06 Dec 2016 02:02:00 +0000

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Fitbit Is Still the King of Wearables

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Fitbit Is Still the King of Wearables

New data from IDC proves Fitbit (NYSE: FIT) is still the king of wearables. In a press release issued earlier today, the market research firm reported Fitbit was not only the third-quarter market leader in wearables shipments, but also one of the fastest growers.

“Despite recent negativity surrounding the company’s long-term strategy and stock price, IDC expects Fitbit to continue leading the pack in the near term,” the researcher commented. “The acquisition of Coin and the potential to expand into the smartwatch category present an opportunity for the company to be more than just a fitness brand.”

Overall, Fitbit shipped 5.3 million units in Q3, a 11% year-over-year increase, and good enough to account for 23% of the worldwide wearables market, IDC says. Fitbit accounted for 21.4% of the market last year at this time. Only Samsung, Garmin (NASDAQ: GRMN), and the “Others” category grew faster — up 89.9%, 12.2%, and 26.1%, respectively. Apple took the biggest hit, suffering a 71% drop in unit shipments on slowing sales of the Apple Watch.

Why should investors care? As a stock, Fitbit has taken a beating and is now down more than 72% year to date. IDC’s data suggests that may have been too big a haircut. So does the company’s earnings multiple. According to S&P Global Market Intelligence, Fitbit trades for less than 20 times earnings, a low never before seen in the short history of the stock trading on public markets.

Some may find it interesting that Garmin was in this same position at one point, as well, and has since stabilized its business enough to push the stock up over 40% year-to-date. Either IDC has it wrong and Fitbit is about to be decimated by rivals, or bearish investors who’ve shorted an estimated 25% of the company’s shares outstanding are due for a costly backlash. Either way, it’s an interesting time to be tracking Fitbit.

Tim Beyers owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Fitbit. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

My Trading Journal: 30 Day Trading Journal

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Published at Mon, 05 Dec 2016 20:25:03 +0000

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CNN’s Plans for Video-Sharing Startup Beme (TWX, DIS)

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CNN’s Plans for Video-Sharing Startup Beme (TWX, DIS)

By Richard Saintvilus | December 5, 2016 — 5:10 AM EST

In an effort of lure in the millennial audience and perhaps stunt the cord-cutting phenomenon, Time Warner Inc.’s (TWX) cable news network CNN has acquired video-sharing startup Beme, founded by popular YouTube personality Casey Neistat, which boasts six million subscribers.

As part of the deal, the terms of which were not publicly disclosed, Beme’s 12 employees will join CNN. With millions of people regularly tuning in to Neistat’s YouTube video blogs each morning, this move by CNN could pay off, given that Neistat’s youthful audience and millennial fan base are coveted by marketers and media companies. It’s possible that CNN, and essentially Time Warner, wanted Beme before a rival like The Walt Disney Company (DIS) or CBS Corporation (CBS) stepped in. (See also: Disney Exploring 24-Hour Digital News Channel.)

In an internal memo to employees, General Manager of CNN Digital Worldwide Andrew Morse said, “Together we are launching a new media company dedicated to timely and topical video content powered by bleeding edge mobile technology.”

Morse is one of several CNN managers who will serve as an executive officer for a new entity that will be formed within CNN with Beme employees. As the new company forms, expected to launch by the summer of 2017, CNN will invest plenty of resources, including hiring dozens of producers, builders, developers, designers and content creators of every mold, CNN told TheStreet.

Described as a “more authentic” way of putting video out into the social sphere, Beme is a social sharing application that distributes four-second bursts of video clips without giving users the ability to edit or tweak the content. The company was founded on the premise that the camera was an extension of a person’s chest. CNN seems to appreciate that idea and believes the authenticity will enhance its news and media environment. More importantly, CNN sees an untapped millennial audience for its cable news network.

The deal for Beme, which comes as Time Warner is being acquired by AT&T, Inc. (T) for $85.4 billion, continues the trend of traditional TV cable news networks looking for new ways to draw in younger audiences. While it’s early, it seems that Time Warner and CNN have found a winner. (See also: AT&T Execs Expect Trump OK of TWX Deal.)

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Published at Mon, 05 Dec 2016 10:10:00 +0000

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Donald Trump doubles down on 35% tax for businesses that ship jobs out of U.S.

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Trump: Companies won’t leave U.S. ‘without consequences’

 Donald Trump doubles down on 35% tax for businesses that ship jobs out of U.S.

  @DavidGoldmanCNN

Fresh off saving 800 Carrier factory jobs from being off-shored to Mexico, President-elect Donald Trump is renewing his threat against companies that move their operations to foreign countries.

In a series of tweets Sunday morning, Trump pledged to lower corporate taxes across the board. But he also said he would charge a hefty 35% tax for “any business that leaves our country for another country, fires its employees, [or] builds a new factory or plant in the other country, and … sell[s] its product back into the U.S.”

Trump argued that those companies deserve “retribution.” He said businesses that want to offshore jobs have been “forewarned.”

It’s a carrot-and-stick promise that Trump has made before. But after scoring a big political victory with Carrier, the debate about how — and whether — politicians should stop U.S. companies from shifting operations across the border has kicked into high gear.

Many economists and investors optimistic about Trump’s plan focus on the “carrot” part: the potential for big tax cuts and a roll back in regulations on businesses.

Businesses have for years been urging Washington to lower its 35% corporate tax rate. Trump wants to make that rate 15%. He has also pledged to reduce regulations on several industries, most notably Wall Street and coal power.

On the other hand, some economists have expressed concern about the “stick”: Trump’s protectionist trade policies, which could hurt economic growth.

Many of the opponents of the 35% tax include conservatives, who argue that Trump is picking winners and losers.

For example, the Wall Street Journal editorial page last week railed against Trump’s tax proposal for offshorers, arguing that politicians shouldn’t interfere with companies’ business decisions to maximize their profits. When companies make good business decisions, sometimes the pain of laying off American workers is outweighed by the benefits of increasing profits, paying more in taxes and hiring more Americans in other parts of the (growing) business.

Additionally, the 35% tax would raise prices for Americans. Even if Trump imposes his promised tariff on foreign goods, the 35% tax could make foreign items more attractive.

Others have said Trump is incentivizing other companies to play a game of offshoring chicken.

To stay in the United States, Carrier received $7 million in tax breaks. Other businesses looking for similar deals might threaten to ship their jobs overseas too.

It’s also unclear how such a tax would be enforced. Carrier parent company United Technologies(UTX), for example, went forward with its plans to shift 1,300 jobs to Mexico even as it struck the deal to keep the 800 Indiana factory workers’ jobs at home.

 CNNMoney (New York)First published December 4, 2016: 9:05 AM ET
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Published at Sun, 04 Dec 2016 14:06:10 +0000

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OPEC Out! This Week’s Meeting was Really a Bust!

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OPEC Out! This Week’s Meeting was Really a Bust!

In May, I wrote an article titled “The OPEC Epoch is Over,” which pronounced OPEC officially dead and predicted oil prices would plunge again. So far, I’ve been wrong about a second perilous plunge in oil prices. However, even as market heavyweights herald this week’s OPEC meeting for pumping up oil prices, a few voices join this lightweight in saying this meeting proves OPEC is over.

The Financial Times says, “Oil Output-Cut Pact Spells ‘the Beginning of the End’ for OPEC.”

The recent OPEC oil output-cut deal “will come to symbolize the passing of one of the world’s most powerful cartels,” the Financial Times predicts…. “After 50 years in control of the oil price, OPEC has submitted to the economic power of a much-changed global market. The deal represents the recognition of their own impotence by a group of countries that once held unchallenged power,” writes Nick Butler, a visiting professor and chair of the Kings Policy Institute, London. ~ Newsmax

In other words, OPEC has given up on the Saudi brainstorm of flushing the US out of the oil export market. Contrary to the Saudis’ expectations, the US oil industry did not fold, though it buckled a bit. Saudi Arabia was forced to fold first.

The US industry trimmed a lot around the edges, with several companies failing while others became more economical and survived. Necessity once again became the mother of invention. Fracking operations slowed but kept going. Production has been capped in ways that can come quickly back on line if prices start to rise, but that will be an equilibrium force that pushes back down on prices as soon as they start to look profitable.

The same article points out that OPEC’s tightening of production (particularly Saudi and Russian production) is not going to drive the price of oil back up because the oil glut continues to grow and will stay on that path even at the newly agreed production levels:

“This is not a deal capable of lifting prices to the level of $60 or $70 a barrel that is supposed to be OPEC’s target,” Butler wrote for the FT…. “There is a surge of production coming in the next 12 months from new fields in countries outside Opec, such as Brazil, Canada and Kazakhstan. It is perfectly possible that total global production — from Opec and non-Opec states combined — will be higher next year than in 2016.”

Gasoline oversupply is at its worst all year. (See “Ahead Of OPEC’s Meeting, API Inventory Report Shows Major Crude Build At Cushing.”) Apparently that news is earthshaking because Cushing, Oklahoma, just had one of its largest oil-related earthquakes. (The USGS has determined that the huge increase in the number of earthquakes in Oklahoma is definitely caused by fracking.) Of course, if these earthquakes around Oklahoma’s oil hub get any worse, they have the potential of cutting off a lot of US oil supply by damaging oil infrastructure and creating a lot more public opposition to fracking.

Cost-saving technologies invented out of the need to survive the Saudi crush on oil prices will also now spread around the world to increase cheaper production everywhere. At the same time, the OPEC cuts won’t amount to much because one of the main producers — Russia — saw a huge increase in production in November and is using its November production as the baseline for its cuts. That means its cuts will really only hold it close to the level it was at earlier in the year when prices crashed. Another large producer Iran, which had been holding out on a deal, finally won against Saudi Arabia, as the new deal does not require Iran to make any production cuts.

The following chart reveals why the agreement that was finally reached after a year of talk no longer means anything at all:

OPEC Oil Production 2007-2016

As you can see, despite the talk all year of cutting production, OPEC actually increased production throughout the last half of 2016 to where the present agreed cuts to 32.5 million barrels a day will only put OPEC nations back to where they were earlier in the year when oil prices were crashing.

While OPEC’s production increased throughout all the talk about talks with all of the corresponding failed meetings, US production decreased. However, the US oil rig count has now climbed to a ten-month high, which means pressure is building for future production. With Trump planning to do everything he can to aid US production, I think it is a near certainty that US production wills start to rise, pushing down on prices again.

On the positive side, the fact that technology has brought down production costs, means the US companies that have weathered through won’t be as hurt by lower prices, and that means their banks will not be as hurt by lower prices. U.S. banks have also stockpiled $6 billion in cash during the time in which prices were back up to the high forties and low fifties, set aside to cover future energy losses. By the time the next drop in prices occurs, it may not be as damaging as the previous plunge.

So, there you have it. The oil market got the big news it was hoping for all year; but, for so much pent-up hope, it didn’t bring the gusher of price increases that producers hoped for. As initial relief wears off, investors will see there’s not much good news in the pipeline for those needing higher prices: The OPEC cut was minute to the point of being silly; the flow of oil from elsewhere is likely to increase, and gasoline is oversupplied as we go into winter when less is needed. So, gas prices are likely to fall (maybe even plunge), meaning profits for both oil producers and refiners (often one and the same) are likely to be lean to nonexistent awhile longer.

OPEC oil deal reveals weakness in stock market post-election rally

For some it was surprising that this long-hoped-for deal did nothing for the US stock market. One analyst sees that as an ominous sign of weakness in the market’s post-election rally:

The OPEC deal news on Wednesday should have been more than enough to unleash a flood of buying, according to Ziedins. “If the market was a coiled spring ready to explode higher, this would have triggered that move,” he wrote. “Instead we hit our head on the ceiling and fell into a tailspin…. There are few things more ominous than a market that cannot rally on good news because it tells us we are running out of new buyers.” ~ MarketWatch

The stock market probably didn’t rally much because 1) it’s a euphoric boost and is mostly realigning to fit Trump’s proposed changes and 2) the oil news that was long-awaited was anticlimactic at best.


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David Haggith

David Haggith
The Great Recession Blog

David Haggith

My path to writing this blog began as a personal journey. Prior to the start of this so-called “Great Recession,” my ex-wife had a family home that was an inheritance from her mother. I worked as a property manger at the time, and near the end of 2007, I could tell from rumblings in the industry that the U.S. housing market was on the verge of catastrophic collapse. I urged her to press her brothers to sell the family home before prices dropped. The house went on the market and sold right away — and just three months before Bear-Stearns and others crashed, taking the U.S. housing market down for the tumble. Her family sold at the peak of the market.

Copyright © 2015-2016 David Haggith

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Published at Sat, 03 Dec 2016 16:09:03 +0000

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How Seniors Are Seeing the End of File and Suspend

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How Seniors Are Seeing the End of File and Suspend

By Mark P. Cussen, CFP®, CMFC, AFC | December 3, 2016 — 8:00 AM EST

The Bipartisan Budget Act of 2015 closed two Social Security claiming strategy loopholes that many seniors are coming to see as a material reduction of their benefits. But these changes went largely unnoticed by the public when the bill was passed in the fall of last year, and many retirees who were intent on claiming certain strategies when they filed for their benefits this year have discovered that the method that they planned to use is no longer available. The new legislation, which was designed to help keep the Social Security trust fund funded for a longer period of time, has had a substantial impact on the filing options of new retirees.

The End of File and Suspend

The two key strategies that the Bipartisan Act eliminated applied to married couples who elected to choose one of the file and suspend strategies. The first of these two options was where the higher-earning spouse elected to suspend their benefits until a later period of time, such as age 70, and then have the other spouse collect a spousal benefit in the meantime. The other strategy that is no longer available is the ability for a spouse or qualifying ex-spouse to claim a spousal benefit equal to half of their spouse’s full retirement benefit while their own benefit continues to accrue until age 70. Now, only filers who were born on or before January 1 of 1954 can choose from these options when they reach 66 years of age. (For more, see: Alternative Strategies to File and Suspend.)

This change means a lot less money in the pockets of retirees who were born on or after Jan. 2, 1954. Starting on April 30 of this year, filers can still suspend their benefit until age 70 if they so choose, but their spouses cannot collect any form of spousal benefit during the suspension period. Filers are now deemed to file for all available benefits when they file, and they will be paid the higher of their own benefit or the spousal benefit.

Art Cooper, the chairman of the Senior Citizens’ League, made the following statement following the results of a poll it released that found 7 out of 10 respondents felt the revisions were “unnecessary benefit cuts,” InvestmentNews reports. “There was little time for the public to learn what was happening to their benefits or to plan alternative action. With people living longer and spending 30 years or more in retirement, there’s growing consensus that Congress should be boosting benefits instead of cutting them.”

A whitepaper titled “Social Security Planning After the Bipartisan Budget Act” and written by financial planner and Social Security software developer Joe Elsasser, explained that the remaining choices available to filers can create a tension between the respective income planning goals of a married couple. For example, a couple who waits for the higher earning spouse to collect the maximum benefit at age 70 will force the other spouse to wait through the entire suspension period in order to collect a spousal benefit. (For more, see: How to Boost Social Security Spousal Benefits.)

Elsasser gave the following example example that illustrates this dilemma. The full retirement benefit for a husband is $2,000 a month, and his wife is not eligible for Social Security benefits. If he waits until age 70 to begin collecting benefits, it would increase the present value of his lifetime benefits assuming that he dies at age 85. But his wife will have to wait the additional four years to collect her spousal benefit, which reduces its lifetime value by $17,000.

The Bottom Line

Social Security filers who were born after January 1, 1954 have fewer options to choose from than they did before April 30 of 2016. The old file and suspend alternatives have disappeared, and this will leave future filers with less money in their pockets. They will need to start planning now to maximize their remaining benefits and provide themselves with a secure retirement future. (For more, see: 4 Unusual Ways to Boost Social Security Benefits.)

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Published at Sat, 03 Dec 2016 13:00:00 +0000

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Trump’s win gives some hedge funds big boost: investors

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William Ackman, founder and CEO of hedge fund Pershing Square Capital Management, speaks during the Sohn Investment Conference in New York May 4, 2015.REUTERS/Brendan McDermid

Trump’s win gives some hedge funds big boost: investors

By Svea Herbst-Bayliss | BOSTON

Donald Trump’s U.S. presidential election win gave a huge boost to some prominent hedge fund portfolios, helping them post double-digit gains in November, several investors said.

William Ackman’s Pershing Square Capital Management posted gains of roughly 10 percent in two portfolios while Mick McGuire’s Marcato Capital Management’s flagship fund surged 12 percent, investors in the funds said. Both firms are known as activist investors that often try to shake up management.

Pershing Square’s gains were largely fueled by gains at mortgage finance companies Fannie Mae (FNMA.PK) and Freddie Mac (FMCC.PK) as investors bet that Trump’s administration would end the government control that began with the 2008-09 financial crisis. It helped cut Ackman’s losses for the year to roughly 10 percent.

Whitney Tilson’s Kase Capital jumped 7.5 percent last month, he said in an email as the government-backed mortgage firms jumped 172 percent since the Nov. 8 election.

At Marcato, the gains were underpinned by crane maker Terex (TEX.N), a relatively new position in the portfolio, as investors expected the Trump administration to focus on infrastructure projects. Marcato’s main fund is up 10.7 percent for the year while its smaller Encore fund is up 13.7 percent for the year.

Barry Rosenstein and David Einhorn, both closely watched for their investment ideas, told clients they made money in November, but not as much as the Standard & Poor’s 500 stock index, which gained 3.6 percent.

Rosenstein’s Jana Partners fund climbed 2.2 percent in November, and is up 1.4 percent for the year. Einhorn’s Greenlight Capital rose 1.9 percent in November and is up 7.7 percent for the year, investors said.

Almost immediately after the election, investors bet on a business-friendly president helping financial and healthcare stocks perform even better than the broader index. Hopes for lighter regulation, corporate tax cuts, fiscal stimulus and higher interest rates boosted these stocks.

Most hedge funds are still compiling monthly numbers which are generally not made public.

The Standard & Poor’s 500 has gained 7.2 percent since Jan. 1.

Renaissance Technologies LLC’s Renaissance Institutional Equities Fund, one of two portfolios available to outsiders, has gained 14.8 percent this year, but fell 1.7 percent in November, an investor said.

(Reporting by Svea Herbst-Bayliss; editing by Grant McCool)

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Published at Sat, 03 Dec 2016 01:04:14 +0000

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Wells Fargo to keep brokerage retirement plans under fiduciary rule

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A Wells Fargo branch is seen in the Chicago suburb of Evanston, Illinois, U.S. on February 10, 2015.REUTERS/Jim Young/File Photo

Wells Fargo to keep brokerage retirement plans under fiduciary rule

Wells Fargo & Co (WFC.N) said it will continue to offer individual retirement accounts that pay brokers commissions and will adjust procedures to comply with a new U.S. financial regulation that requires companies to put clients’ interests first, according to a memo sent to staff on Thursday.

Wells became the latest bank brokerage to announce plans to adopt the U.S. Department of Labor’s fiduciary rule, set to take effect in April. The regulation aims to eliminate conflicts of interest in the financial advice Americans receive on retirement accounts by requiring firms to change how brokers get paid.

While there is some question as to whether industry groups or Republicans will succeed in delaying the start date of the rule, Wells Fargo’s rivals Bank of America Corp’s (BAC.N) Merrill Lynch and Morgan Stanley (MS.N) have already started making changes to comply with the rule.

In the memo, Wells Fargo said it plans to continue offering commissions-paying accounts in a way that complies with the rule’s “best interest contract exemption,” which allows firms to keep commissions-paying retirement products if they provide greater disclosure about fees to clients.

The bank said it will provide more information on specific adjustments in the coming weeks, according to the memo.

Merrill Lynch plans to discontinue retirement accounts that pay brokers commissions, while Morgan Stanley will keep offering commissions-paying accounts under the best interest contract exemption.

Morgan Stanley has said it will meet the standards set by the new regulation by retraining brokers, having clients sign additional disclosure contracts, and adding new supervisory software.

(Reporting By Elizabeth Dilts; Editing by David Gregorio)

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Published at Thu, 01 Dec 2016 19:33:36 +0000

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UPDATE -Starbucks CEO steps down to focus on high-end coffee, shares fall

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A man walks out of a Starbucks coffee shop in Seoul, South Korea, March 7, 2016.  REUTERS/Kim Hong-Ji

A man walks out of a Starbucks coffee shop in Seoul, South Korea, March 7, 2016. REUTERS/Kim Hong-Ji

UPDATE -Starbucks CEO steps down to focus on high-end coffee, shares fall

By Lisa Baertlein and Gayathree Ganesan

Starbucks Corp (SBUX.O) co-founder Howard Schultz will step down as chief executive to focus on new high-end coffee shops, handing the top job to Chief Operating Officer Kevin Johnson, a long-time technology executive.

Schultz, who will become executive chairman in April 2017, said he would focus on building ultra-premium Reserve stores and showcase Roastery and Tasting Rooms around the world as well as setting the brand’s “social impact agenda” that includes sending employees to college and recruiting veterans.

Starbucks had signaled the change in July, but its shares fell 3.6 percent to $56.41 in extended trading on Thursday, as investors recalled the company’s decline after Schultz handed over the reins in 2000. He returned in 2008.

“Having him step down as CEO raised the anxiety level,” said Stephens analyst Will Slabaugh, who said that Schultz is the heart and soul of the brand, its entrepreneurial leader and its savior.

“We’re in a much better position on every level,” said Schultz, who returned for his second stint as CEO in the depths of the “Great Recession,” when Starbucks’ stock was trading below $10. Late last year, it hit an all-time high above $60. Schultz has put Starbucks in the national spotlight, asking customers not to bring guns into stores and urging conversations on race relations.

Many of the campaigns have generated controversy, but analysts have not seen a hit to financial results and the efforts have raised the profile of the coffee company and cemented Schultz’s status as a national figure.

“The idea that he’s replaceable, I think that’s erroneous,” said Bill Smead, CEO of Smead Capital Management in Seattle, which owns Starbucks shares. He compared the change to the retirement of long-time McDonald’s Corp (MCD.N) CEO Ray Kroc, who turned a handful of hamburger stands into the world’s biggest restaurant company.

The announcement on Thursday also came as investors worry about the restaurant industry’s stubborn traffic declines. Starbucks has held up better than most, but it has not been immune.

Johnson is a former technology executive who became president and chief operating officer at Starbucks in March 2015.

Johnson has been on the Starbucks board since 2009 but most of his career was in the technology industry. He was the chief executive of Juniper Networks Inc (JNPR.N) from September 2008 to January 2014 and prior to that held several senior positions at Microsoft Corp (MSFT.O).

On a conference call after the announcement, analysts pressed the company on timing and whether, with Schultz stepping aside, senior management still had the “merchant gene.”

“Not having retail experience could be a problem over time,” said Howard Penney, an analyst at Hedgeye Risk Management.

“I’m not leaving the company and I’m here every day,” said Schultz, whose office is connected to Johnson’s.

Traffic at established Starbucks cafes fell in the last quarter, which Johnson has attributed to a change in the company’s loyalty program, and Starbucks forecast a mid-single-digit rise in 2017 same-store sales.

The company dismissed speculation that Schultz could be preparing for a new career in politics.

“He has no plans to run for political office, as he has said many times, and will remain with the company as Starbucks executive chairman, focusing on premium coffee,” a spokeswoman said.

(Reporting by Gayathree Ganesan and Siddharth Cavale in Bengaluru; additional writing by Peter Henderson; Editing by Bill Rigby and Jonathan Oatis)

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Published at Thu, 01 Dec 2016 23:49:21 +0000

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Starbucks CEO Howard Schultz to step down

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Howard Schultz stepping down as Starbucks CEO

Starbucks CEO Howard Schultz to step down

  @mattmegan5

Howard Schultz, the visionary leader of Starbucks, will be stepping down next year as CEO of the iconic coffee giant.

Schultz’s surprise decision to step aside as the leader of Starbucks (SBUX) sent the stock sinking 3% in after-hours trading on Thursday.

Starbucks said Schultz isn’t going away completely. Effective April 3, he will become executive chairman, where he will focus on innovation, the company’s premium offerings and on social impact. Current chief operating officer Kevin Johnson, a tech industry veteran, will replace Schultz as CEO.

“This is a good thing. I’m not leaving the company,” Schultz told CNN’s Poppy Harlow by phone on Thursday.

The 63-year-old said he had been planning the move for at least a year. Asked if he’s going to Washington, Schultz laughed and said, “No, I’m not going to Washington.”

Instead, Schultz emphasized a desire to focus on the company’s social impact initiatives.

“Given the state of things in the country, there is a need to help those left behind,” Schultz told CNN.

Schultz said he also wants to focus on Starbucks’ premium offerings, such as the Roasteries that allow customers to watch freshly-roasted beans arrive.

Separately, in a conference call, Schultz said Johnson brings “unparalleled understanding of market dynamics” and he deserves a “tremendous amount of credit” for the company’s recent record results.

During the call, Johnson called Schultz “among the world’s most iconic leaders and entrepreneurs.”

Johnson seemed to choke up and his voice broke when he said it had been a “privilege to work side-by-side with Howard.”

Schultz joined Starbucks in 1982 as director of retail operations and he helped turn the company into a retail powerhouse and an iconic American brand. He stepped down as CEO in April 2000 to concentrate on executing the company’s global strategy.

But Starbucks struggled without him at the helm and seemed to have lost its way. Schultz returned as CEO in 2008 and helped guide the coffee giant through the Great Recession and get it back on track. Today, Starbucks is valued at $84 billion and it has more than 24,000 retail stores in 70 countries.

Schultz has also been outspoken on a variety of social issues. He has supported raising the minimum wage, he offered his employees free college and pushed Starbucks to open a store in Ferguson following the city’s violent protests.

Asked if he’s concerned Starbucks could suffer again in his absence as CEO, Schultz said the “differences between then and now couldn’t be greater.”

Schultz said the Starbucks management team didn’t have the “capability and experience” to navigate the Great Recession. By contrast, he praised Johnson’s skills and even said his deputy is “better prepared than I am” to be CEO at this point.

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Published at Thu, 01 Dec 2016 22:07:20 +0000

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Why Dollar General’s Comp Sales Dropped in Q3

dollar-941246_1280

by TBIT from pixabay

Why Dollar General’s Comp Sales Dropped in Q3

Cuts to the federal Supplemental Nutrition Assistance Program (SNAP) — what used to be called “food stamps” — contributed to a slight drop in same-store sales for Dollar General (NYSE: DG) in the third quarter, the discount retailer said in its earnings release Thursday.

On the positive side, net sales increased 5% to $5.32 billion in Q3. Sames-store sales, however, dropped by 0.1%, which the company blamed on a decline in traffic that was partially offset by an increase in the chain’s average transaction value.

CEO Todd Vasos said in the earnings release that he expects the company to fix its same-store sales issue, but that the efforts it’s undertaking won’t have an immediate impact. And then, there’s the matter of the cuts to SNAP benefits.

“We saw an acceleration in headwinds from average unit retail price deflation and reductions in SNAP benefits in the 2016 third quarter as compared to the 2016 second quarter,” he said. We are focused on efforts to drive traffic in our stores and to control the factors we can control as we look to overcome the issues impacting our results, many of which we believe are macroeconomic and transitory in nature.”

The full year is still on track

Dollar General noted in the earnings release that it has not revised its full-year outlook. The company still expects earnings per share to come in at the low end of its forecast range of 10% to 15% growth.

So far, through three quarters of 2016, Dollar General has grown sales by 5.9% over the comparable 2015 period to $15.98 billion. And, despite the Q3 drop, same-store sales are up by 0.9% for that period, driven by an increase in average transaction amount.

What happens next for Dollar General?

Perhaps more than most retailers, the company’s future profits depend upon what kind of changes to entitlement programs for the poor come from the incoming Republican government in Washington, D.C. That’s a major unknown that makes any predictions much beyond Q4 far less reliable.

Still, despite these bumps in the road and future uncertainty, Dollar General remains committed to its long-term growth model. The company noted that it still expects to grow by 10% to 15% each year even if “in any given year, one or more key drivers of the model may be outside of the annual targets outlined” in the model.

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Published at Thu, 01 Dec 2016 18:04:05 +0000

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UPDATE 3-Lower food prices weigh on Kroger’s profit forecast

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A selection of Kroger brand products is displayed in Golden, Colorado September 15, 2009.REUTERS/Rick Wilking/File Photo

Lower food prices weigh on Kroger’s profit forecast

By Gayathree Ganesan

Kroger Co (KR.N), the biggest U.S. supermarket chain, tempered its forecasts for the remainder of the year amid pressure from falling food prices and intense competition from grocery sellers ranging from Wal-Mart (WMT.N) to Amazon (AMZN.O).

Cincinnati, Ohio-based Kroger said it now expects this fiscal year’s adjusted per share profit to be $2.10 to $2.15, down from its prior forecast of $2.10 to $2.20.

Shares in the company, whose supermarket brands also include Ralphs and Fred Meyer, were up 0.9 percent to $32.58 in midday trading after that revised forecast essentially matched analysts’ estimate of $2.13 per share for the fiscal year that ends Jan. 30, according to Thomson Reuters I/B/E/S.

Kroger, known as one of the supermarket industry’s best operators, reported slightly better-than-expected third-quarter revenue, profit in line with Wall Street expectations, and marketshare gains.

Nevertheless, its challenges continue.

“Persistent and increasing deflation” is expected to weigh on store sales in the fourth quarter, Chief Financial Officer Michael Schlotman said on a conference call with analyst.

Food prices in the United States have been deflating due to low oil and grain prices.

The food-at-home consumer price index for the third quarter was 1.9 percent lower than a year ago with milk, eggs, beef, veal, pork and poultry posting the largest declines. (bit.ly/2gYNp15)

Most grocers are passing those lower prices on to shoppers and restaurants, which have been raising menu prices to offset higher labor costs.

Kroger’s net income attributable to the company fell to $391 million, or 41 cents per share, in the third quarter ended Nov. 5, from $428 million, or 43 cents per share, a year earlier.

Excluding certain items, the company earned 41 cents per share, matching analysts’ estimate.

Net sales rose 5.9 percent to $26.56 billion. Analysts on average had expected $26.34 billion.

Kroger, whose stock has lost more than a fifth of its value this year, said it expects the current operating environment to continue in the first half of 2017.

“The extent to which the grocery market has shifted from an environment of modest inflation to one of deflation and tough price competition is evident in Kroger’s numbers,” said Neil Saunders, chief executive of research firm Conlumino.

As a result, Saunders expected the company to keep a lid on costs in the coming quarters.

(Reporting by Gayathree Ganesan in Bengaluru; Editing by Sayantani Ghosh and Bill Trott)

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Published at Thu, 01 Dec 2016 17:15:33 +0000

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How to Owe Nothing on Your Federal Tax Return

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How to Owe Nothing on Your Federal Tax Return

By Amy Fontinelle

The way you fill out the W-4 form that you turn in to your employer when you start a new job determines how much tax you will have withheld from each paycheck, which affects how much you will ultimately owe or receive as a refund in April. What you may not know is that it’s possible to submit a new W-4 form to your employer whenever you want — it’s not a one-time thing. (For more on income taxes, see our Income Tax special feature.)

If you don’t want to owe anything in April, but you also don’t want to overpay taxes and give an interest-free loan to Uncle Sam all year, read on to find out how to get your tax bill or refund closer to zero before tax time approaches.

Determine Your Total Tax Liability

Your personal situation will determine how accurately you can calculate your total tax liability for the year. If you are a salaried employee with a steady job, it’s relatively easy, because you can predict what your total income for the year will be. If you’re an hourly, seasonal or self-employed worker, make an educated guess based on your earnings history in your current line of work and how your year has gone so far. (For more information, read 3 Common Tax Questions Answered.)

You have three options for calculating your tax liability:

  1. Online Paycheck Calculator
    Online paycheck calculators can be found easily with a simple internet search. By entering your gross annual pay, the state where you work, your pay frequency, federal filing status and the number of allowances you entered on your W-4, the calculator will tell you your federal tax liability per paycheck, which you can multiply by the number of pay periods to find out your total tax liability for the year. This method is easy and the result will be reasonably accurate, but it may not be perfect since your actual tax liability will depend on whether you itemize your deductions and which tax credits you claim.
  2. IRS Tax Withholding Calculator
    The tax withholding calculator at the Internal Revenue Service website is particularly useful for people with more complex tax situations. It will ask about factors like your eligibility for child and dependent care tax credits, how much you have contributed to a tax-deferred retirement plan or health savings account (HSA) and how much federal tax you had withheld from your last paycheck. Based on the answers to your questions, it will tell you how much federal tax it expects you to owe at the end of the year, what you have paid so far and how much you will owe or be refunded. (To read more about these credits, see Give Your Taxes Some Credit.)
  3. Sample Tax Return
    If you have tax software or know how to fill out a 1040 form yourself, you can complete a sample tax return. This method will give you the most accurate picture of your end-of-year tax liability. The only thing that can make it inaccurate is if you have to use the previous year’s tax software because the current year’s software hasn’t been released yet. However, a little online research can usually uncover what tax provisions have changed from the previous year, such as the new standard deduction amount. Filling out a sample return is also ideal for people who itemize deductions, such as homeowners or those who are self-employed. (Mastering these fundamentals now will take the stress out of tax season. Read more in Next Season, File Taxes on Your Own.)

Determine Your Tax Withholding

Once you know the total amount you will owe in federal taxes, you’ll need to figure out how much you need to have withheld per pay period to get to that total, but not exceed it, by December 31.

  • If not enough tax is being withheld, the easiest way to fix the problem is to fill out a new W-4. On line 6, which says “additional amount, if any, you want withheld from each paycheck,” fill out the difference between what you should be paying each pay period and what you’re actually paying. You could also decrease the number of allowances you claim, but the results won’t be quite as accurate. And you don’t have to wait for your employer’s HR department to hand you a new W-4 form — just print it out yourself from the IRS’s website. (For more ways to fill out your W-4 for deductions, read Payroll Deductions Pay Off.)
  • If you’ve overpaying and you want to get some of that extra money back each pay period, try increasing the number of allowances you claim. It won’t match the worksheet, but that doesn’t matter. You can claim seven allowances even if the W-4 worksheet suggests you should only claim two.
  • The most important thing is to pay enough tax throughout the year to avoid penalties and interest. You’re required to pay at least 90% of your current year’s tax liability or 100% of your previous year’s tax liability, whichever is smaller. You’ll also avoid penalties if you owe less than $1,000 on your annual tax return.

If it’s so early in the year that you haven’t received any paychecks or pay stubs yet, just divide your total tax liability for the year by the number of paychecks you receive. Then, compare that amount to the amount that is withheld from your first paycheck of the year and make any necessary adjustments.

If it’s not the beginning of the year, you’ll need to compensate for all the previous pay periods when you were over- or underpaying your federal tax by filling out a new W-4 to adjust your withholding up or down for the rest of the year. Then, the following January, you’ll need to fill out a new W-4 again, or else your withholding will be off for the new year. (Finding out that you owe money when you were expecting a refund is a nasty shock. If this has happened to you, learn how to bounce back in Top 9 Solutions to an Unexpected Tax Bill.)

The basic way to resolve the under- or overpayment problem is the same, but instead of dividing the amount you’ll owe for the whole year by the number of paychecks you receive, you’ll need to figure out how much you’ve paid in federal taxes so far (your pay stub may have a running total; if not, ask your HR department). Subtract that amount from what you owe, then divide the result by the number of pay periods remaining for the year. The final number is how much federal tax you need to have withheld from each paycheck. If you’ve been underpaying, a simple subtraction calculation will show you how much extra you need to pay each month. (For more on prepaying taxes, read Money-Saving Year-End Tax Tips.)

Figuring out the reverse is trickier. There is no simple way to do it; the best method is to plug different numbers of federal allowances into a paycheck calculator until it spits out the amount closest to the calculated federal tax you want to be paying each pay period.

Remember, if you’re self-employed, have fluctuating income because you’re an hourly or seasonal worker, have multiple jobs or itemize your deductions, things get considerably more complicated. You probably won’t be able to make sure you owe nothing on your taxes with 100% accuracy, because your income and tax liability will change throughout the year. But following these steps may help you get closer to a reasonable number. You can always redo the calculations described above two or three times a year as your income picture evolves. (For more on how itemized deductions can impact your taxes, read An Overview of Itemized Deductions.)

The Bottom Line

It sometimes takes considerable effort to figure out what amount you should really have withheld from each paycheck, especially if it’s not the beginning of the year. However, a couple of hours now can either increase your monthly cash flow for the rest of the year or save you from an unexpected bill at tax time.

(Read about why having money now is more valuable than having the same money in the future in Understanding the Time Value of Money.)
Published at Thu, 01 Dec 2016 11:00:00 +0000

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State treasurers renew call for independent chair at Wells Fargo

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A Wells Fargo branch is seen in the Chicago suburb of Evanston, Illinois, U.S. on February 10, 2015.REUTERS/Jim Young/File Photo

State treasurers renew call for independent chair at Wells Fargo

By Ross Kerber

Investors, including the state treasurers of Connecticut and Illinois, called on Wells Fargo & Co to require an independent board chair, saying the bank needs stronger oversight in the wake of a scandal over fake customer accounts.

Although Wells Fargo already has shuffled its leadership structure, Connecticut Treasurer Denise Nappier on Tuesday said the investor group has filed a shareholder resolution for the San Francisco bank’s annual meeting next spring seeking a change in its bylaws.

Improvements need to be formalized, she said, because a board whose chair is also chief executive – the dual role once held by John Stumpf at Wells Fargo – creates a potential conflict of interest.

“At the end of the day, the company’s shameful conduct was fueled by poor governance that fostered a culture of irresponsibility and deficiencies in risk management,” Nappier said in a statement.

Via email, Wells Fargo spokesman Ancel Martinez said, “We appreciate the feedback that we receive from our investors and we will review the proposal.”

Stumpf resigned on Oct. 12, bowing to pressure following a $190 million settlement the bank reached with regulators in September. Reviews found the bank’s staff opened as many as 2 million accounts without customers’ knowledge to meet internal sales targets.

Stumpf was replaced as CEO by the bank’s president, Tim Sloan. The role of board chair was given to Stephen Sanger, who had been Wells Fargo’s lead director and was listed as independent in the bank’s latest proxy filing.

Nappier called the splitting of the roles “a welcome first step” but said Wells Fargo must still put a better leadership structure in place.

Co-filers of the resolution included Illinois State Treasurer Michael Frerichs, shareholder adviser Hermes EOS and Needmor Fund, which had filed before Stumpf’s departure.

In a separate news release on Tuesday, Frerichs said the bank’s “predatory and illegal banking practices have proved that the company needs a set of independent eyes to ensure stronger, unbiased oversight.”

Frerichs had earlier cut some state business with Wells Fargo, such as suspending its use as a broker dealer.

(Reporting by Ross Kerber in Boston; additional reporting by Jonathan Stempel in New York; Editing by Dan Grebler and Jonathan Oatis)

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Published at Tue, 29 Nov 2016 22:50:01 +0000

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Citigroup ‘boys’ club’ disfavors women, lawsuit claims

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A view of the exterior of the Citibank corporate headquarters in New York, New York, U.S. May 20, 2015.REUTERS/Mike Segar/Files

Citigroup ‘boys’ club’ disfavors women, lawsuit claims

By Jonathan Stempel | NEW YORK

A former Citigroup Inc financial adviser on Monday filed a lawsuit accusing the bank of running a “boys’ club” that favored men over women, treating her as a “glorified secretary,” and firing her in retaliation for whistleblowing activity.

Erin Daly is seeking double back pay, unpaid bonuses and punitive damages over the bank’s alleged harassment, hostile work environment and unlawful retaliation, according to her lawsuit filed in Manhattan federal court.

The resident of Manhattan’s Upper West side said Citigroup let her go less than two weeks after she complained that her manager demanded inside information from her work on restricted stock offerings, so that he could pass it to favored clients.

Daly said she also filed a complaint with the U.S. Equal Employment Opportunity Commission, and plans to add federal discrimination claims against the fourth-largest U.S. bank.

“We believe the claims alleged are without merit and intend to vigorously defend against them,” Citigroup spokeswoman Danielle Romero-Apsilos said.

 The lawsuit is one of many over the years accusing U.S. banks of favoring male bankers, traders and financial advisers over their female counterparts, and permitting improper conduct.

Bank of America Corp in September settled one such case, in which former co-head of global structured products Megan Messina accused it of running a “bro’s club.”

Daly said she graduated from the University of Rhode Island in 2005, and according to brokerage industry records worked for Citigroup from 2007 to 2014.

She claimed that even though she performed well, Citigroup took away many of her responsibilities, and even once forced her to apologize in writing for requesting equal treatment.

Daly also said Citigroup sometimes routed stock allocations from “hot deals,” such as Alibaba Group Holding Ltd’s $25 billion initial public offering in 2014, to a male colleague, advancing his career at her expense.

“Citi’s ‘boys’ club’ policies and practices” reflect a “culture of gender discrimination,” the complaint said. “The boys were in charge. The men were doing business. Erin was just a glorified secretary.”

A lawyer for Daly declined additional comment.

The case is Daly v. Citigroup Inc et al, U.S. District Court, Southern District of New York, No. 16-09183.

(Reporting by Jonathan Stempel in New York; editing by Diane Craft)

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Published at Tue, 29 Nov 2016 00:06:46 +0000

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Consumers, exports power U.S. third-quarter economic growth

 

A shopper walks down an aisle in a newly opened Walmart Neighborhood Market in Chicago in this September 21, 2011 file photo.REUTERS/Jim Young/Files

Consumers, exports power U.S. third-quarter economic growth

By Lucia Mutikani | WASHINGTON

The U.S. economy grew faster than initially estimated in the third quarter, notching its best performance in two years, buoyed by strong consumer spending and a surge in soybean exports.

In a separate report, U.S. home prices rose 5.5 percent in the year to September, meaning house prices overall have now fully recovered from their plunge during the 2008 financial crisis.

A third report showed U.S. consumer confidence rebounded in November to its highest level in nine years despite uncertainty surrounding the policies of President-elect Trump.

U.S. stock prices edged higher on Tuesday after the data, with the benchmark S&P 500 index .SPX now up about 6.0 percent since the Nov. 8 elections. U.S. Treasury yields ended slightly lower on Tuesday but the benchmark ten year note US10YT=RR yield has risen about 0.5 percent in the past two weeks, helping to push the U.S. dollar up to its highest levels in more than a decade against major currencies .DXY.

U.S. ECONOMIC GROWTH FASTEST SINCE 2014

U.S. gross domestic product increased at a 3.2 percent annual rate instead of the previously reported 2.9 percent pace, the Commerce Department said in its second GDP estimate on Tuesday. Economists had forecast third-quarter GDP growth being revised up to a 3.0 percent rate.

Growth was the strongest since the third quarter of 2014 and followed the second quarter’s anemic 1.4 percent pace. Output was lifted by upward revisions to business investment and home building.

Exports grew at their quickest pace since the fourth quarter of 2013, driven by a surge in soybean exports after a poor soy harvest in Argentina and Brazil. International trade contributed 0.87 percentage point to GDP growth and not 0.83 percentage point as reported last month.

Data ranging from housing to retail sales and manufacturing output also suggest the economy retained its momentum early in the fourth quarter even as exports appear to be faltering amid a reversal of the boost to growth provided by soybean exports in the third quarter.

The Atlanta Fed is currently forecasting GDP rising at a 3.6 percent rate in the fourth quarter, supporting market expectations that the Federal Reserve will raise interest rates next month.

Economic growth could also be supported next year if President-elect Donald Trump succeeds in pushing through Congress a fiscal stimulus plan that includes massive infrastructure spending and tax cuts, analysts said.

“Couple that with an increasingly enthusiastic consumer supported by stronger wage gains and the economy appears well-positioned to remain on a growth path heading into 2017,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

When measured from the income side (GDI), the economy grew at a 5.2 percent clip amid a rebound in corporate profits. That was the fastest pace of increase in gross domestic income in nearly two years and followed a 0.7 percent rate of expansion in the second quarter.

The average of GDP and GDI, which economists consider to be a more accurate measure of current economic growth and a better predictor of future output, increased at a 4.2 percent rate in the third quarter, the fastest pace in two years.

That followed a 1.1 percent rate of increase in the second quarter and likely exaggerates the economy’s strength.

CONSUMER SPENDING AND CONFIDENCE UP

The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 2.8 percent rate in the third quarter and not the 2.1 percent pace reported last month. That was still a slowdown from the second quarter’s robust 4.3 percent pace.

With a tight labor market lifting wage growth and boosting household sentiment, consumer spending is likely to gain further momentum for the rest of the year and in 2017.

A separate report from the Conference Board showed its consumer confidence index surged in November, climbing back to levels seen before the 2008 recession. Consumers were upbeat about the labor market and current business conditions.

Rising house prices are also likely to keep consumption supported. The Standard & Poor’s CoreLogic Case-Shiller national home price index rose 5.5 percent in the year to September and is now just above the peak seen in July 2006.

BUSINESS SPENDING MIXED

Spending on non-residential structures, which include oil and gas wells, was revised sharply higher to show it increasing at its fastest pace since the first quarter of 2014.

Business spending on equipment, however, fell at a steeper rate than previously reported, declining for a fourth straight quarter. With after-tax corporate profits rising at a 7.6 percent pace last quarter there is scope for business investment to rebound. Corporate profits declined at a 1.9 percent rate in the second quarter.

“The return to positive growth in corporate profits at least satisfies what is probably a necessary, but not sufficient, condition for a rebound in business fixed investment,” said Andrew Hollenhorst an economist at Citigroup in New York. Businesses increased spending to restock after running downinventories in the second quarter, but just not as much as previously reported. Businesses accumulated inventories at a $7.6 billion rate in the last quarter, almost half of the $12.6 billion pace reported last month.

That means inventory accumulation contributed 0.49 percentage point to GDP growth and not the 0.61 percentage point reported last month.

The third-quarter revision showed a much more favorable growth profile for the economy, analysts said. The boost from inventories was not as big as previously estimated, which suggests that businesses are not sitting on piles of unwanted goods.

This means businesses will have more scope to place new orders, which augurs well for economic growth in the coming quarters. The sharp acceleration in GDP in the last quarter should quash any lingering fears that the economy was at risk of stalling after growth averaged just 1.1 percent in the first half. That together with a labor market that is near full employment and slowly rising inflation could leave the Fed comfortable with raising hike interest rates at its Dec. 13-14 policy meeting. The U.S. central bank raised its overnight benchmark interest rate last December for the first time in nearly a decade.

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U.S. GDP tmsnrt.rs/1jLPbzV

U.S. home prices (Case-Shiller interactive) tmsnrt.rs/23LEcIe

Consumer confidence interactive tmsnrt.rs/1qUmtAm

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(Reporting by Lucia Mutikani; Editing by Andrea Ricci and Clive McKeef)

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Published at Tue, 29 Nov 2016 14:00:29 +0000

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DISH’s Sling TV Beta Tests a Cloud DVR

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by PIRO4D from Pixabay

DISH’s Sling TV Beta Tests a Cloud DVR

DISH Networks‘ (NASDAQ: DISH) Sling TV beat all other live-television streaming services to market, but now, it’s facing competition from Sony (NYSE: SNE), and more rivals are soon to come.

Sling TV has a fairly simple proposition at its core. It offers roughly 20 live-streaming cable channels for $20 a month. There are add-on packs with more channels, and users can also spring for premium services like HBO, but at its core, Sling TV is a “skinny bundle,” while Sony offers a pricier, more cable-like package of channels.

One of the challenges for Sling customers has been that the service is primarily a live one. While it includes some on-demand programming, mostly it’s a product where if you miss a show, you have missed it. That’s not always a deal breaker, but it is a mark against Sling when consumers weigh it against more traditional cable offerings.

DISH has certainly not entirely solved that problem (and it’s unlikely to any time soon, given its contracts with its various partner channels) but for a select group of users, it offers the beginnings of an answer. The company has begun a beta test with Roku to offer a cloud DVR.

What is Sling doing?

The live-streaming service is letting customers using Roku streaming devices or its Roku TVs request an invitation to the beta program. Beginning in December, the test may ultimately spread to other devices, the company said in a press release.

“Unlike other OTT services, we’re delivering a true cloud DVR with no 28-day restriction on your recordings, marking another win for Sling TV and our customers,” said Sling TV CEO Roger Lynch “Two years ago we became the first live OTT provider, and we continue to innovate and bring the best experience to our customers.”

Why is this important?

Lynch’s boasting aside, the reason some consumers hesitate to switch to Sling is the fact that the services don’t offer some features that have become common in most television packages. Sony’s service has a DVR, and even at its higher price, that could give it an edge over DISH’s service.

A DVR is no longer an exotic luxury; it’s something most people have and it’s how a lot of us consume much of our television. If DISH can offer a cloud DVR — even for an add-on price — it should be able to win over more customers. That’s especially true given that it has a lower starting price than Sony’s service, making it seem more like a cord-cutting choice, while PlayStation Vue feels more like traditional cable delivered over the internet.

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Daniel Kline has no position in any stocks mentioned.

Stock market, trading journal, daily journal, investing journal

My Trading Journal: 30 Day Trading Journal



Published at Mon, 28 Nov 2016 19:49:03 +0000

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