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Amazon’s Apparel Biz to Hit $85B by 2020: Instinet


Amazon’s Apparel Biz to Hit $85B by 2020: Instinet

By Shoshanna Delventhal | December 6, 2017 — 7:25 PM EST

After Inc.’s (AMZN) blowout “Turkey 5” shopping period—from Thanksgiving Day to Cyber Monday—one team of analysts on the Street expects the e-commerce and cloud computing giant to continue taking market share and adding partnerships in the apparel segment. (See also: Amazon—Not Apple—Will Be First $1T Co.: NYU Prof.)

Geared with hundreds of new brick-and-mortar locations following its $13.7 billion acquisition of natural food grocer Whole Foods Market, analysts see Amazon as better positioned to expand into markets such as apparel and pharmacy. Over the holiday, Amazon noted strong sales of its branded hardware at Whole Foods locations. In this way, consumers could start to see an apparel section, a pharmacy, and other non-food products being sold at the organic food retailer.

Largest Ever Total Available Market

Instinet’s Simeon Siegel and team, noting that Amazon may already be the biggest apparel retailer, expect sales to boom between $45 billion and $85 billion by fiscal 2020. The analysts estimate that overall apparel and accessories sales on the platform exceed $1 trillion, with “above average” online penetration and “leading gross margins” compared with other categories.

“We believe Amazon has the largest [total available market] TAM (ever), doesn’t carry socio-economic retailing stigmas, can stock a limitless number of goods on its virtual shelf and knows customers better than they do,” wrote Siegel. “Amazon’s path to book dominance provides a potential road map for apparel success, with its fiscal 2007 media progress sharing similarities to its fiscal 2017 apparel achievements.”

Instinet also sees upside in Amazon’s growing importance among brands such as the world’s largest sportswear company Nike Inc. (NKE), with whom Amazon just inked a deal. Siegel, who rates AMZN at buy, has a price target of $1,360 on the stock, reflecting an 18% upside from Wednesday close. (See also: Amazon Pushes Into New Territory—Australia.)

Published at Thu, 07 Dec 2017 00:25:00 +0000

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First Solar Stock Showing Unusual Strength


First Solar Stock Showing Unusual Strength

By Alan Farley | December 6, 2017 — 9:35 AM EST

First Solar, Inc. (FSLR) stock is sticking like glue to fourth quarter highs despite a series of bear raids intended to drop the Tempe, Arizona-based solar giant into an intermediate decline. This unusual strength suggests that the stock will head much higher in the first quarter of 2018, perhaps adding another 25% to dramatic gains posted since it bottomed out in April at a four-year low. As a result, market players should watch resistance at $62.50 for a breakout that sets off profitable buying signals.

The company raised 2018 earnings per share estimates above expectations in a Dec. 5 Analyst Day meeting, forcing many short sellers to cover positions. The bullish metrics eased newly bearish sentiment following passage of the Senate’s tax reform bill, which limits alternative energy credit provisions. On the flip side, a recent ruling on solar panel dumping by the the U.S. International Trade Commission (ITC) should underpin profits at the largest U.S. panel manufacturer starting in the first quarter of 2018. (See also: First Solar and SunPower: Effects of Solar Panel Tariffs.)

FSLR Long-Term Chart (2006 – 2017)

The company came public on the Nasdaq exchange in November 2006, opening at $24.50 and taking off in a powerful uptrend that reached $283 at the end of 2007. The stock’s value was nearly cut in half in the next 30 days, dumping to $143 ahead of an equally vigorous recovery wave that posted an all-time high at $317 in May 2008. A modest pullback accelerated during the economic collapse, dropping the stock through the prior low and into a 52-week low in the mid-$80s.

It bounced back above $200 in May 2009, stalling at the 50% sell-off retracement level while marking the highest high in the past eight years. A slow-motion decline followed, posting a series of lower highs and lower lows into a dramatic 2011 breakdown through the 2008 bear market low. The subsequent decline crushed remaining shareholders in a vertical impulse that reached an all-time low at $11.43 in June 2012.

A sturdy bounce into 2014 ended in the mid-$70s, marking major resistance that remains in force more than three years later. The stock then eased into a trading range, with support at $40 holding into a 2015 breakdown that ended at a higher low in the mid-$20s in April 2017. Committed buyers entered in force a few weeks later, generating a new uptrend that mounted broken range support in July. It stalled just above $60 in November and has spent the past five weeks consolidating impressive annual gains in a narrow range price pattern. (For more, see: The History of First Solar.)

FSLR Short-Term Chart (2016 – 2017)

A Fibonacci grid stretched across the 2016 into 2017 decline organizes two-sided price action, with the rally since April stair-stepping through harmonic resistance levels into the .786 retracement in the low $60s. Many bounces end at this critical level, while breakouts can be dramatic, generating momentum-fueled advances that complete V-shaped patterns. The 2016 high in the mid-$70s could be reached quickly if the bullish scenario plays out, offering sizable profits as long as exits are taken promptly.

On-balance volume (OBV) lifted to an all-time high at the start of 2016 and rolled into a distribution wave that ended at the same time the stock posted the deep April 2017 low. Healthy accumulation since that time has nearly reached the prior high, generating a bullish divergence, predicting that price will play catch up in the coming weeks. This bodes well for a breakout above harmonic resistance in the low $60s and a rapid ascent into the mid-$70s. (See also: First Solar Tops Q3 Earnings, Raises ’17 EPS Outlook.)

The Bottom Line

First Solar is holding close to fourth quarter highs while the Nasdaq-100​ sells off, signaling resiliency that should translate into higher prices. A breakout above horizontal resistance at $62.50 could set this rally wave into motion, targeting six-year resistance in the mid-$70s. (For additional reading, check out: Top 3 Solar Stocks as of December 2017.)

Published at Wed, 06 Dec 2017 14:35:00 +0000

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Shares of big U.S. banks jump as Senate approves tax overhaul


Shares of big U.S. banks jump as Senate approves tax overhaul

(Reuters) – Shares of the biggest U.S. banks rose on Monday, after the Senate approved a tax overhaul bill on Saturday, raising investor hopes that their earnings would get a boost from a significantly lower tax bill.

JPMorgan Chase rose 2.4 percent to hit a record on Monday, while Bank of America rose 3.5 percent to its highest since October 2008. Both were the top performers on the S&P 500 Index, which was up 0.7 percent.

Mid-cap and regional banks also gained, with KeyCorp, Citizens Financial and M&T Bank Corp rising almost 4 percent. Zions Bancorp and Comerica Inc rose more than 2.5 percent.

“Banks might be the biggest winners from the tax reforms,” Michael Mayo, a senior Wells Fargo analyst said.

Of the major S&P sectors, financials pay the highest effective tax rate at 27.5 percent, a Wells Fargo analysis of historical tax rates showed.

The tax cuts could add 16 percent to median bank earnings in 2018 and 18 percent in 2019, said Brian Klock, managing director in equity research at Keefe, Bruyette & Woods, who covers large regional banks.

Among large regional banks, Zions Bancorp, M&T Bank Corp and Comerica Inc stand to benefit the most, Klock said.

Talks will begin, likely next week, between the Senate and the House, which has already approved its own version of the legislation, to reconcile their respective bills.

While negotiations are ongoing, the legislation could cut the corporate tax rate to as low as 20 percent from 35 percent.

The tax overhaul is seen by President Donald Trump and Republicans as crucial as they head into mid-term elections in November 2018, when they will have to defend their majorities in Congress.

The S&P financial index rose nearly 2 percent to its highest since 2007, while the KBW Bank Index rose 2.7 percent.

Reporting By Aparajita Saxena; Additional reporting by Roopal Verma in Bengaluru; Editing by Shounak Dasgupta and Saumyadeb Chakrabarty

Published at Mon, 04 Dec 2017 16:15:42 +0000

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Apple may not need this supplier. Its stock crashes 23%


Dialog Semiconductor is finding out what happens when you put most of your eggs (or apples, perhaps) in one basket.

Shares in the British-German tech company plunged 23% on Monday, after it acknowledged that Apple(AAPL, Tech30) — by far its biggest customer — can now develop the power management chips Dialog produces.

Dialog shares had already slumped in April on fears that Apple could drop the company as a supplier, and Monday’s crash took the stock’s losses this year to more than 40%.

The company has previously tried to play down those concerns. Monday was the first time it has publicly acknowledged Apple could eventually replace its chips with in-house production.

“Dialog recognizes Apple has the resources and capability to internally design a [power management integrated circuit]and could potentially do so in the next few years,” the company said in a statement.

A lot is at stake. Apple accounted for74% of Dialog’s sales in 2016, according to the company’s annual report.

“This is a major disaster,” said Tim Wunderlich, analyst at Hauck & Aufhauser.

“I would expect Dialog to experience declining sales from 2019 onward, intensifying gross margin pressure, (and) brain drain as uncertainties make the company a far less appealing employer for top talent,” he added.

The Nikkei Asian Review reported last weekthat Apple could start using its own power management chips as early as next year.

Dialog said it had no information to suggest Apple was getting ready to start making its own chips that soon.

It is working with Apple on plans for 2019 products, and will have a better idea about its future contracts with Apple by March, the company added.

Apple did not respond to a request for comment.

Another company, Imagination Technologies,(IGNMF) saw its stock drop more than 70% in April, after Apple said it was planning to stop licensing the firm’s technology in about two years.

Imagination has since been sold to China-backed Canyon Bridge Capital Partners for £550 million ($740 million), well below the £2 billion ($2.7 billion) it was worth at its peak in 2012.

Published at Mon, 04 Dec 2017 16:27:57 +0000

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Bank of America Rally Could Accelerate in 2018


Bank of America Rally Could Accelerate in 2018

By Alan Farley | December 1, 2017 — 11:02 AM EST

Tax cut optimism and an expected December interest rate hike have lifted commercial banks to multi-year highs, in expectations of record profits through greater business activity and wider yield spreads. Bank of America Corporation (BAC) stock has attracted strong buying interest in this bullish wave, breaking out to a nine-year high in the upper $20s. More importantly, it has now opened the technical door to more rapid upside that could reach the upper $30s in the second half of 2018.

Commercial banks have already hit short-term overbought technical readings following a three-day vertical buying impulse, so risk-conscious market players may wish to stand aside right here and wait for an orderly pullback that tests new support. A decline that fills Bank of America’s Nov. 28 gap between $27.50 and $28 might do the trick, offering a low-risk entry ahead of a first upside target at $31.50. (See also: Bank of America Stock Breaks Out After Powell Testimony.)

BAC Long-Term Chart (1989 – 2017)

The stock topped out at a split-adjusted $13.75 in 1989 and sold off to $4.22 in 1990. It took nearly four years for the subsequent uptick to clear resistance at the prior peak, yielding a 1995 breakout that gathered substantial momentum into the July 1998 high at $44.22, when the Asian Contagion triggered a slide into the mid-$20s. The subsequent bounce failed to stir buying interest, yielding a series of lower lows into the first quarter of 2000, when it bottomed out in the upper teens.

A slow-motion recovery wave reached the 1998 high in 2003, ahead of a 2004 cup and handle breakout that generated mixed but positive price action into the November 2006 all-time high at $55.08. The tables then turned in a modest reversal that gathered hurricane force during the 2008 economic collapse, dropping to a 25-year low at $2.53, ahead of a quick upturn that stalled near $20 in the second quarter of 2010.

The stock spent more than six years testing that resistance level, finally breaking out after the November 2016 election and entering a powerful trend advance that stalled at $25.77 in March 2017. It completed a basing pattern at the 50-day exponential moving average (EMA) in September and turned sharply higher, posting new highs in October and again this week. This price action has finally cleared the .618 Fibonacci retracement of the dramatic sell-off wave between September 2008 and March 2009.

You may recall the massive September squeeze when U.S. Treasury Secretary Hank Paulson banned short sales in an effort to stabilize the troubled banking sector, but the politically motived move backfired, printing lower highs ahead of the final collapse. The stock has been retracing that selling wave for many years, finally mounting the critical .618 level in October 2017. In turn, this price action opens the door to the .786 retracement level at $31.50 and 100% retracement at $39.50. (For more, see: Short Goldman Sachs, Buy Bank of America: Bove.)

BAC Short-Term Chart (2016 – 2017)

A furious decline broke three-year support near $15 at the start of 2016, reaching a three-year low at $10.99 in February. It remounted the broken trading range in August, setting off a preliminary buying signal that came to fruition during November’s big breakout. Meanwhile, the price pattern since the deep low has drawn the outline of an Elliott five-wave advance, with the 2017 trading range marking the fourth wave consolidation, ahead of a fifth wave breakout that targets the .786 selloff retracement level in the low $30s. It also suggests that the stock will undergo a deeper correction following this final impulse. (To learn more, see: Elliott Wave Theory.)

The Bottom Line

Bank of America stock has rallied to a nine-year high in the upper $20s and could lift into the lower $30s in the first quarter of 2018, ahead of larger-scale upside that could eventually reach the September 2008 high near $40. (For additional reading, check out: These Sectors Benefit From Rising Interest Rates.)

Published at Fri, 01 Dec 2017 16:02:00 +0000

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Rent-to-Own Homes: How the Process Works


Rent-to-Own Homes: How the Process Works

In a traditional home purchase, an offer is accepted, the buyer and seller meet to exchange funds and settle final costs, and, at the close of the transaction, the property and its title change hands. Typically, buyers use a mortgage to finance the bulk of the purchase.

But sometimes there is an alternative way to buy a home: a rent-to-own agreement, also called a lease option or a lease-to-own agreement. When buyers sign this kind of contract, they agree to rent the home for a set amount of time before exercising an option to purchase the property when or before the lease expires.

It’s not a common way to purchase a property, and the selection of rent-to-own properties is tiny compared to the selection of properties available purely for lease or sale. In addition, rent-to-own contracts tend to favor the owner/landlord and can put renters at a disadvantage.

Read on to find out how rent to own works, and when it may be a good choice for a potential homeowner.

How Rent to Own Works

In a rent-to-own agreement, potential buyers get to move into a house right away. While many states have their own regulations, and no two rent-to-own contracts are alike, someone in a rent-to-own agreement typically rents the property for a set amount of time (usually one to three years), after which he or she can purchase the house from the seller. It’s not as simple as paying rent for three years and then buying the house, though. Certain terms and conditions must be met, in accordance with the contract.

Option Money: In a rent-to-own agreement, the potential buyer pays the seller a one-time, usually non-refundable lease option fee called option money or option consideration. As with stock options, this gives him or her the opportunity to purchase the house in the future. It is important to note that some contracts (lease-option contracts) give the potential buyer the right but not the obligation to purchase when the lease expires. If he or she decides not to purchase the property at the end of the lease, the option simply expires. If the wording is “lease-purchase,” without the word “option,” the buyer could be legally obligated to purchase the property at the end of the lease. Clarifying the wording is one of many reasons buyers should have the contract vetted by a real estate attorney before agreeing to it.

The size of the option is negotiable. There’s no standard rate. It typically ranges between 2.5% and 7% (3% is common) of the purchase price. In some (but not all) contracts, all or some of the option money may be applied to the purchase price at closing. That’s a valuable clause. Consider that if a home has a purchase price of $200,000 and a 7% option consideration, the buyer would need to pay $14,000 up front. That’s a lot less than the $40,000 (the size of the standard 20% down payment) you’d make if purchasing outright.

Purchase price: The contact will specify when and how the purchase price of the home will be determined. In some cases, the buyer and seller agree on a purchase price when the contract is signed – often at or higher than the current market value. In other situations, the buyer and seller agree to determine the price when the lease expires, based on market value at that future point in time. Many buyers prefer to “lock in” the purchase price if possible, especially in markets where home prices may be increasing.

Rent: During the term of the lease, the potential buyer pays the seller a specified amount of rent, usually each month. In many contracts, a percentage of each monthly rent payment, called a rent credit, is applied to the purchase price. For example, assume the contract states that the buyer will pay $1,200 each month for rent, and that 25% of that will be credited to the purchase. If the lease term is three years, the buyer will earn a $10,800 rent credit to apply toward the purchase ($1,200 x 0.25 = $300; $300 x 36 months = $10,800). Factoring in these credits often makes the monthly payments slightly higher than the “going rate” for regular rentals. For the buyer, they act as down payments on the property. For the seller, they act as compensation for having taken the property off the market.

Maintenance: Depending on the terms of the contract, the potential buyer may be responsible for maintaining the property and paying for any repairs, homeowners association fees, property taxes and insurance. Because the seller is ultimately responsible for association fees, taxes and insurance (it’s still his or her house, after all), the seller may choose to cover these costs. Even in that case, the buyer still needs a renter’s insurance policy to cover losses to personal property and provide liability coverage if someone is injured while in the home or if the buyer accidentally injures someone.

Be sure that maintenance and repair requirements are specified in the contract. Maintaining the property – e-g., mowing the lawn, raking the leaves and cleaning out the gutters – is very different from replacing a damaged roof.

Purchasing the property: If the potential buyer decides not to purchase the property (or is unable to secure financing) at the end of the lease term, the option expires. The buyer forfeits any funds paid until that point, including the option money and any rent credit earned. If the buyer cannot purchase the property but has a legal obligation to (as stated in the contract), legal proceedings may be initiated.

If the buyer wants to purchase the property, he or she typically applies for financing (i.e., a mortgage) and pays the seller in full. According to the terms of the contract, a certain percentage of the option money and rent paid may be deducted from the purchase price. The transaction is completed at the closing, and the buyer becomes a homeowner.

When Are Rent to Own Homes a Good Idea?

A rent-to-own agreement can be an excellent option for people who want a home but who don’t yet qualify for a mortgage or who aren’t quite ready for the commitment of ownership.

For example, you might have a bad credit score – one that’s below 620, the bare minimum some lenders will accept – but the circumstances that depleted that score are behind you and you’ve been steadily improving it ever since. Maybe your debt-to-income ratio is too high, but not by much, and you have enough room in your budget to make extra payments and reduce your debt significantly over the next couple of years.  You might have a good job, or gotten one with a significantly better salary, but you haven’t been there long enough for a lender to consider it a stable source of income to repay your mortgage over the long run. Similarly, you might be successfully self-employed, but not have a long enough track record to make lenders comfortable. You might have started saving, but you haven’t accumulated enough to meet the usual 20% down payment on a home.

If any of these describe your situation, renting to own might be a good idea. You can lock down a property you like now and possibly save yourself a move or two. Then you’ll have some time, typically in two to three years, to improve your credit score, lengthen your employment history, increase your savings or do anything else you need to make yourself a stronger mortgage applicant. And, if the option money or a percentage of the rent goes toward the purchase price, you also get to start building some equity.

To make rent to own work, potential buyers need to be confident that they’ll be ready to make the purchase when the lease term expires. Be wary of getting into this if there’s a more than 50% chance you’re going to move and not buy. Otherwise, you will have paid the option money – which could be substantial – and also have wasted money on the nonrefundable rent credits with nothing to show for it at the end. It isn’t likely that you’ll get a landlord/owner to agree to a refundable rent credit and refundable option fee to give you the flexibility to move.

If there’s a good chance would-be buyers still won’t be able to qualify for a mortgage or secure other financing by the time the lease expires, they should instead continue renting (with a “normal” lease), building credit and saving for a down payment. Then, when they’re ready, they can choose from any home on the market in their price range.

Finding Rent-to-Own Homes

Numerous real estate aggregator websites such as, Trulia and Zillow make it easy – and free – to search for properties to buy or rent. If you’re in the market for a rent-to-own home, however, it can be a bit more challenging to find available properties. Two places to try are and Both of these websites have rent-to-own listings from across the nation – just enter your desired city and state or zip code to display a list of available properties. In markets with no current availability, a list of for-sale and for-rent homes may appear.

Be forewarned: Rent-to-own websites typically charge a “membership” fee to view any information beyond an exterior photo and the number of bedrooms and baths., for example, charges “a nominal fee” for a seven-day trial, after which point you will be billed regularly per month unless you cancel (you must enter your credit card information to pay for the trial). iRentToOwn won’t even tell you the fee until you register, providing both an email and a phone number. It’s $1 for seven days, $99 for a three-month membership and $179 for an annual membership.

Another option is to ask sellers if they would consider a rent-to-own agreement. This is especially helpful if you’ve found your dream house, but you just can’t make the finances work out yet. Many sellers are open to such agreements, particularly in areas where homes spend a higher-than-average number of days on the market. In these markets, many sellers have already moved into their next homes – perhaps to relocate for a new job – and the longer the old home sits on the market, the harder it is to meet monthly debt obligations for two mortgages. In addition, many homeowners are leery – and rightfully so – about leaving a home vacant, especially for an extended period of time. As a result, these sellers may consider a rent-to-own agreement, even if the home is not listed as such.

You can also try working with a real estate agent in your desired market. Agents may have listings for rent-to-own homes, or may have inside information about sellers who may consider such agreements.

Renting vs. Owning a Home: Pros and Cons

If an owner is having trouble selling, rent to own provides an alternative to lowering the home’s price, taking the home off the market, or renting the home out long term. Because a selling price is established in the lease-option contract, the current homeowner knows exactly what to expect if a sale goes through. If the market declines slightly during the lease period, the sale price is already locked in, but the tenant will probably still be interested in buying the property because of the rent credit. Meanwhile, the owner gets help paying the mortgage, property taxes and insurance. Also, the tenants are more likely to take care of a lease-option property because they have the option to purchase it.

The main reason why a rent-to-own agreement appeals to buyers is the financial one, of course – no need to come up with a substantial down payment or qualify for a mortgage. The buyer also does not have to worry about immediately coming up with the money for property taxes, private mortgage insurance or homeowner’s insurance (though they should carry renter’s insurance, as noted above). Furthermore, by signing a contract now, the buyer locks in a purchase price, which means no worrying about rising home prices. (Bear in mind, however, that in a rapidly appreciating real estate market, a savvy owner would probably want to add a clause to the contract allowing for the price of the home to increase, especially if the lease is for several years.) Finally, by living in the home before deciding to purchase it, a buyer has the advantage of a lengthy test drive on the home before jumping into a major financial commitment.

And the downside? Since it’s less common, the rent-to-own process isn’t as tightly regulated as the home-buying industry or even the rental industry. While this lack of regulation can be a good thing, in that it gives would-be buyers and property owners more freedom in negotiating the purchase-option part of their contract (the lease agreement and purchase agreement are still subject to all the usual real estate laws), it can also make it easier for unscrupulous owners to take advantage of unsophisticated buyers. Sadly, the rent-to-own universe is rife with predatory landlords who have no intention of ever selling their property, and who are just trying to collect above-market rent and eventually make off with your nonrefundable option deposit. An owner could make the contract become void if the buyer is late on one payment or evict the buyer for not doing repairs. In one case in Florida, for example, a landlord with hundreds of properties negotiated contracts that permitted evictions for such items – with just three days’ notice.

In short, there’s little that’s “standard” in these legally binding contracts, making it especially important that you know exactly what you’re agreeing to. In fact, not all states allow lease options on residential property, so the buyer should ensure that even entering into this sort of agreement is legal. Even if a real estate agent assists with the process, or you hire a real estate attorney to explain (and maybe even negotiate) the contract, if you can’t understand both the legal and financial aspects of rent to own, you are not a good candidate.

Understanding Rent-to-Own Contracts

Like any contract, your rent-to-own contract needs to state the name of the tenant-buyer (that’s you) and the landlord-seller and be signed and dated by both parties. If anyone besides you will be occupying the property, that person should be named in the rental agreement, too. The contract should also have a legal description of the property: the full address and the parcel number. Including the parcel number helps eliminate any potential confusion about the address. You can get this number from the local property tax assessor’s office, often by simply looking up the address at the tax assessor’s website.

Lease Provisions

The lease portion of the contract should include everything you’d normally find in a property rental agreement. Key elements include:

  • The start and end dates of the lease period, whether that period can be extended and under what conditions
  • How much the rent is, when it is due, where payment should be made and what payment types the landlord will accept
  • Fees, if any, for late rent or returned checks
  • The amount of the security deposit, which should be fully refundable if you move out and haven’t damaged the property
  • Whether and which types of pets are allowed
  • Whether smoking is allowed
  • A description of any parking spaces or other amenities
  • Whether you can sublet the property, and if so, under what circumstances and terms
  • Which utilities the tenant is responsible for and which the landlord is responsible for
  • The conditions that can result in eviction, as well as the number of days you have to correct a problem before being evicted

A key difference between a regular lease and a rent-to-own lease is that under a regular lease agreement, the landlord will make and pay for all repairs and handle any routine maintenance. A rent-to-own agreement might make the tenant responsible for these items, the idea being that the tenant who intends to buy has a long-term stake in the property and should handle these tasks. Another possibility is that the landlord might not live nearby and it’s more convenient to make the tenant responsible.

However, until you actually own the property, you don’t want to be putting money into it that you might never get back. If the landlord won’t agree to handle repairs and maintenance, be wary. At most, you might agree to take on these responsibilities and expenses if they are added to your rent credit (which we’ll discuss in the next section). In other words, if you spend $1,000 to have some worn-out plumbing replaced, the seller will return that $1,000 to you at closing if you buy the place. But the risk to you is lowest if you don’t lay out the cash for these expenses in the first place.

Option Provisions

The option provisions might be the most complicated – and double-edged – part of a rent-to-own contract. These are the provisions that can make renting to own the property more favorable to you than just renting – or that can make it easy for the seller to collect extra monies with no intention of ever letting you buy.

These provisions should state:

  • The rent and what portion constitutes the rent credit
  • The option deposit – Under some agreements, you might pay only an option deposit or only a rent credit, not both. It’s up to you and the seller.
  • That you have the exclusive right to purchase the home at the end of the lease period – This means that the seller cannot let anyone else buy the property during the option period (basically, while you’re renting the property). Make sure this period is long enough to give you a chance to correct whatever problems, like poor credit or lack of a down payment, that have made you unable to qualify for a mortgage right now. Eighteen months to two years is often a reasonable time frame; three years might be even better. The contract should state how many days’ notice you are required to give the seller that you intend to buy, and at what point your option to buy expires. You may want to structure the contract so that you can buy before the end of the lease period if your financial situation improves sooner.
  • That the seller maintains homeowner’s insurance, that he/she stays current with property taxes and that he/she doesn’t take out any new loans against the house – You don’t want the seller to be able to do anything that gives another entity a right to the property because, if that happens, it will be difficult if not impossible for you to buy it.
  • Any other conditions, besides electing not to buy, under which you forfeit your deposit and rent credit –These might include vacating the premises, trashing the property or failing to pay rent as agreed – basically, the same things that could get you evicted.

Purchase Provisions

The purchase portion of a rent-to-own agreement is similar to a regular real estate purchase agreement. Your state’s laws may require a standard contract for real estate purchase agreements. But even in a standard agreement, there’s room to negotiate the fill-in-the-blank sections.

It will state the purchase price, which should be reasonable given current market values for similar properties. The seller might want to price the home 5% to 10% higher to account for price appreciation during the rental period. But keep in mind that home values could also decrease during that time. If that happens, not only might you not want to pay the price you originally agreed to, but a bank might not lend you enough for you to close the deal. In this situation, you will end up not exercising your option to buy, and you will lose your option deposit and rent credit unless your contract provides an alternative.

Let’s say the property is worth $200,000 at the time you’re drawing up the contract. You might be able to get the seller to agree to sell you the property for $210,000 or its appraised value at the time of purchase, whichever is lower. Whether the market increases or decreases, the price will be fair and the appraisal won’t prevent you from buying. Of course, these terms are highly favorable to you, the buyer, so don’t be surprised if the seller balks, concerned about taking a loss on the property or being unable to pay off his or her mortgage. So agreeing to a firm purchase price might be the only way to go.

The contract should explicitly state which appliances and fixtures come with the house if you decide to buy it.  Do you get the dishwasher, the fridge, the washer and dryer? What about the patio furniture and all the potted plants? Don’t assume anything; spell it out.

Ideally, the purchase portion of the contract should also provide you with a remedy if the seller backs out. You’ve put down the equivalent of an earnest money deposit in the form of your option deposit; have the contract require the seller to not only return your option deposit and rent credit, but pay you an additional sum if he or she doesn’t uphold the agreement when you’re ready to buy. You may never collect the money, but it doesn’t hurt to try. And just having such provisions in the contract could act as a deterrent to the seller’s reneging on the deal.

You also want to contract to give you an out, and give you your money back, if the title isn’t clear or if a property inspection reveals that the home is in poor condition. These are typical contingency clauses in a real estate purchase contract.

For protection, you should use an escrow service. This neutral third party acts as a financial intermediary between you and the landlord. It will hold your option deposit and monthly rent credits until you buy the property, at which point it’ll return the money to you to put toward your down payment and closing costs. If the purchase option expires and you decide not to buy, the escrow service will remit those sums to the landlord. It will also turn over the money to the correct party in the event that either of you violates your end of the agreement in a way that can’t be remedied.

Potential Pitfalls for Buyers

Before signing that contract and entering a rent-to-own agreement, a potential buyer should:

Check the seller’s credit report. Look for potential warning signs that the seller is in financial trouble, such as delinquent accounts or a large amount of outstanding debt. Even after a satisfactory credit check, a potential buyer who currently lives in the home should still pay attention to any warning signs that would indicate that the seller is in financial distress. Some examples include phone calls from debt collectors and suspicious-looking notices that are sent to the house.

Recognize that the seller could lose the property during the rental period. This could occur for any number of reasons such as if he or she is unable to make the mortgage payments, a tax judgment is placed on the property, he or she goes through a divorce, is being sued, and so on. If the seller loses the property, the potential buyer loses the possibility of buying the property, forfeits the extra rent paid and will have to find a new place to live.

Ensure that the lease option clearly states who is responsible for various types of maintenance or repairs. This agreement should also specify the types of changes or improvements (if any) the potential buyer is allowed to make to the property during the lease term.

Be sure to enter a “lease-option agreement” rather than a “lease-purchase agreement.” The former grants the option to buy at any time during the rental period, while the latter requires purchase by the end of the lease period and has legal ramifications for backing out.

Do market research and obtain a home inspection and an appraisal. This is how you can ensure that the home purchase price is fair before signing a contract.

Be aware that if the seller is unscrupulous, he or she can refuse to sell at the end of the lease-option period. This means that all the above-market rent money you’ve paid will be lost. A seller may also try to back out of the contract if the real estate market has appreciated rapidly and the property significantly increases in value – or hold you up for more money. Of course, none of these actions are legal, but if the buyer doesn’t have the financial resources to hire a lawyer, there won’t be much recourse against a shady seller.

Understand that if the market declines, you will still have to pay the higher price stipulated in the contract to own the home. However, if the price is too high, the lessee can just walk away and shop for a different property. However, you’ll will lose that portion of the rent that would have gone toward a down payment, so it’s important to do the math necessary to determine whether walking away is the best option.

Talk to a mortgage broker to find out what it will take to qualify for a home mortgage in future. While inability to obtain financing or sufficient financing is precisely why many buyers opt for rent-to-own arrangements, you want to make sure there’s nothing major in your credit history that could stop you from getting approved down the line. If you determine that you’ll still be unable to qualify for a mortgage by the time the lease expires, a rent-to-own agreement could become a costly mistake.

Obtain a condition of the title report. This can help a buyer learn how long the seller has owned the property. The longer the seller has owned it, the more equity and stability he or she should have built up in it.

The Bottom Line

Even though you’ll start off renting the property, it’s a good idea to perform the same due diligence you would if you were buying the property. Those who can afford to buy a home the traditional way, using financing, are probably better off doing so. But for those who just need to buy some time – or need to keep their options open or their funds liquid – renting to own can be a way to reside in your dream home now, and pay in full for it later.

Published at Fri, 01 Dec 2017 04:03:00 +0000

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Vanguard to offer its first active ETF lineup in U.S.

Vanguard Group’s CEO Bill McNabb is pictured in the board room at the Vanguard Headquarters in Valley Forge, Pennsylvania, December 2, 2010. To match Special Report INVESTING/ETF/ REUTERS/Tim Shaffer (UNITED STATES – Tags: BUSINESS)

Vanguard to offer its first active ETF lineup in U.S.

BOSTON (Reuters) – Vanguard Group Inc on Tuesday said it will offer six actively managed exchange-traded funds aimed at giving investors exposure to specific factors like low volatility or liquidity, increasing competition in the nascent investment product area.

The new funds mark the first active ETFs that Pennsylvania-based Vanguard will sell in the United States, and come as it looks to build out its active fund lineup as it expands internationally.

Vanguard also said in a statement that one of the funds, as well as a new mutual fund, will use more than one factor in selecting stocks, and that all will begin trading in the first quarter of 2018.

Vanguard is best known for its passive products, whose low costs have helped drive its total assets to $4.8 trillion, the most of any mutual fund firm.

Unlike traditional ETFs, which often track a particular index, holdings in actively managed ETFs can deviate from their benchmarks based on managers’ judgments.

Most active ETF assets are currently in fixed-income products such as Pimco Active Bond ETF and the SPDR DoubleLine Total Return Tactical ETF. Of the $43 billion in active ETFs as of Oct. 31, just a little more than $3 billion was in funds focused on equities, according to AdvisorShares.

Greg Davis, chief investment officer of Vanguard Group Inc. is pictured in this undated handout photo obtained by Reuters November 17, 2017. Vanguard Group Inc./Handout via REUTERS

But Vanguard’s new active ETFs could boost demand on the equity side, said Todd Rosenbluth, a director at fund researcher CFRA, along with similar products from rivals. Just last week, for instance, BlackRock Inc filed plans for a set of ETFs that would let a computer program choose and classify stocks.

The new funds will charge about 13 basis points, or 0.13 percent of assets. That will be a fraction of the 35 basis points active ETFs typically charge, said Matt Hougan, principal of conference organizer Inside ETFs.

“Vanguard’s entry is going to accelerate the fee wars,” he said.

Vanguard said the new funds will be advised by its Quantitative Equity Group, which currently oversees nearly $35 billion, including active ETFs in Canada and the United Kingdom.

Vanguard executives were not immediately available to comment. In a Nov. 15 interview Vanguard executives pointed to their non-U.S. active ETFs as the sort of new products they may offer to draw in more foreign investors.

“There’s a huge opportunity for us to offer low-cost active products outside of the U.S.” said Greg Davis, Vanguard’s chief investment officer.

Reporting by Ross Kerber in Boston; Editing by Dan Grebler and Lisa Shumaker

Published at Tue, 28 Nov 2017 21:19:37 +0000

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SEC looking at fixed-income markets with ‘greater focus’: Clayton

The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst

SEC looking at fixed-income markets with ‘greater focus’: Clayton

NEW YORK (Reuters) – U.S. Securities and Exchange Commission Chairman Jay Clayton said on Tuesday that the SEC had formed a group to examine fixed-income markets with the goal of protecting retail investors.

Clayton, speaking at the Managed Funds Association Conference, said the SEC was looking at fixed-income markets with “greater focus” than in the past as such markets would look more like equity markets in coming years.

“Developments you’ve seen in equity markets in recent years, they are going to come to the fixed income markets,” he said, following a big push by retail investors into fixed-income products that have become less complex and easier to use.

Retail investors, scarred by the 2008 financial crash, have become risk-averse and poured billions into bond funds against the backdrop of ultra low yields.

U.S-based bond mutual funds and exchange-traded funds have taken in $2 this year for every $1 pulled in by stock funds, according to Thomson Reuters’ Lipper unit.

Clayton said the SEC was waiting to see how MiFID played out in Europe before implementing tougher rules in the United States. The long-running practice of paying for research through trading commissions is being upended by new regulations in Europe, known as the revised Markets in Financial Instruments Directive, or MiFID II.

Part of the sprawling MiFID overhaul will force investors in the European Union to pay for research directly. Global asset managers are expected to “unbundle” payments in other regions as well.

Clayton said the SEC would listen to feedback from big long-term investors on MiFID to see what rule set they like better.

“Hopefully we have a little bit of a Petri dish,” he said.

Reporting By Lauren Tara LaCapra; Editing by Chizu Nomiyama and Andrew Hay

Published at Tue, 28 Nov 2017 15:56:13 +0000

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Republicans say CFPB is crippling the economy. Really?


Barney Frank: CFPB out of control? Give me an example.
Barney Frank: CFPB out of control? Give me an example.

 Republicans say CFPB is crippling the economy. Really?


President Trump argues that the Consumer Financial Protection Bureau is a “disaster” that has “devastated” banks and hurt Americans by stifling loans.

Mick Mulvaney, the official Trump installed as the agency’s acting director, claimed on his first day that the CFPB is “trampling on capitalism” by “strangling access” to loans.

Yet Republicans’ description of the CFPB as a renegade regulator handcuffing banks doesn’t match up with reality.

The CFPB has enacted rules to safeguard consumers from financial predators, but there’s little evidence those rules are crippling the economy. In fact, America’s banks are hauling in record profits, and households have more debt than ever before. Bank loans to businesses are also at all-time highs.

Not to mention that the U.S. economy has grown at a healthy 3% pace the past six months, and the stock market has never been higher.

“They talk about an agency that is out of control, it’s a bureaucratic monster. You would think there would be some horror stories,” Barney Frank, a Democratic former congressman and one of the authors of the Dodd-Frank law, which created the CFPB, told CNN on Monday.

Booming bank profits

It’s true that the CFPB has moved to crack down on risky mortgages, prevent shady payday lending and penalize big banks like Wells Fargo(WFC) for breaking the law.

Yet U.S. banks made $171.3 billion in profit last year, their third record in the past four years, according to the FDIC. Bank profits are on track for another record in 2017, and just 3.9% of banks suffered losses during the third quarter.

“The banks are doing just fine,” Richard Cordray, the Obama-appointed former director of the CFPB, told CNN on Tuesday. “The question is: Will someone be looking over their shoulders to make sure they do things the right way?”

chart bank profit loss

Record business loans

There’s no question that Dodd-Frank, the post-crisis law that created the CFPB, forced banks to spend heavily on consultants and technology as well as curtail risky activity that may have been lucrative in the past. And even Barney Frank has admitted Dodd-Frank may have unfairly hurt some smaller banks.

Still, Trump has painted a dire picture that doesn’t jibe with the numbers. For instance, he said in February that “many friends of mine who have nice businesses” can’t get loans because of Dodd-Frank.

Yet banks are lending plenty of money to businesses.

Commercial and industrial loans from commercial banks hit an all-time high of $2.1 trillion in October, according to the Federal Reserve. That’s nearly twice as many as much in business loans as banks had on their balance sheets in July 2011, when the CFPB opened its doors.

It is true that bank loans to businesses have slowed to a near-halt in recent quarters. But financial analysts don’t blame the CFPB for that.

Harvey Lei, a Bloomberg Intelligence analyst covering U.S. regional banks, said possible reasons for the slowdown include “uncertainty” among businesses about the Trump administration’s tax proposals and an ability to borrow even more cheaply from the bond market.

“It seems like the supply of loans is there,” Lei said. “The demand is less clear from clients.” He said the CFPB is “definitely not” to blame.

business loans banks record high

Americans have more debt than in 2008

Mulvaney, who as a member of Congress voted to kill the CFPB, said he wants the agency to “protect people” without “choking off access to financial services that are so critical to many folks.”

But Americans don’t seem to be having trouble taking on more debt. Total household debt reached an all-time high of $12.96 trillion during the third quarter, according to the New York Federal Reserve.

Americans now have $280 billion more debt than they did during the prior peak in 2008. Household debt has climbed 16.2% fromthe low point in 2013, the Fed says. Consumer confidence hit a 17-year high in November, according to the Conference Board.

Asked for instances when the CFPB erred, White House press secretary Sarah Sanders criticized the agency for auto lending guidance that has hurt consumer access to car loans.

Yet the New York Fed recently said that a record 107 million Americans have auto debt. They took out $150.6 billion worth of car loans in the third quarter, “among the highest” the New York Fed has ever seen.

household debt record high

Housing is recovering despite mortgage crackdown

The CFPB’s restrictions on mortgages have been unpopular among some in the real estate industry. For instance, the CFPB’s qualified mortgage rules banned risky loans such as “interest-only” and “negative amortization” mortgages.

And it’s true that mortgages have not recovered to pre-crisis levels. Just over 2 million mortgage loans were issued during the second quarter of 2017, compared with a peak of 4.2 million in 2006, according to Attom Data Solutions, formerly known as RealtyTrac.

Bloomberg’s Lei said CFPB rules aren’t to blame. “Post-crisis, banks essentially stopped doing these kinds of mortgages anyway,” he said.

While the CFPB may be having a “chilling effect” on some mortgage loans, Attom senior vice president Daren Blomquist agrees that much of this is “self-imposed.”

“A lot of big banks got burned by the housing bubble and are voluntarily taking on more restrictive lending practices,” he said.

It’s also hard to argue the housing market is in shambles. New numbers released this week show that new home sales hit a seven-year high in October and home prices rose at their fastest pace since mid-2014.

“To the extent that the market has a short memory, the CFPB is there to hold it in check,” Blomquist said.

Published at Tue, 28 Nov 2017 20:20:35 +0000

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France cuts cost of sacking traders to lure banks post-Brexit


France cuts cost of sacking traders to lure banks post-Brexit

PARIS (Reuters) – The French parliament has approved measures to cut the cost of sacking traders by excluding their bonuses from compulsory redundancy payouts, in a move aimed at luring banks’ trading activities to Paris as Britain leaves the European Union.

A general view shows the Arc de Triomphe and the financial and business district in La Defense, west of Paris, France November 22, 2017. REUTERS/Gonzalo Fuentes

Paris and Frankfurt are at the forefront of a race among European cities to attract London financial services businesses that need a base in the European Union to continue serving customers in the bloc after Britain leaves in March 2019.

France has stepped up efforts to attract London banks to Paris after the election of President Emmanuel Macron, who has cut taxes and taken steps to make labor laws more flexible.

France’s lower house of parliament approved the measures late on Thursday, just days after Paris was picked to host the European Banking Authority (EBA), giving new momentum to its bid to attract banking jobs after Brexit.

“In order to improve the attractiveness of Paris as a financial center in the context of Brexit and for social justice, it seems preferable to exclude these bonuses from compulsory redundancy payouts and possible court awards,” Labour Minister Muriel Penicaud told lawmakers.

Goldman Sachs has already said it will make Paris and Frankfurt its European hubs after Brexit.

Bank of America is also looking to lease more office space in Paris, according to two sources familiar with the matter, while Citigroup is applying for a licence to conduct investment banking activities in France.

JPMorgan Chief Executive Jamie Dimon said in October the U.S. bank might move 60 jobs to Paris.

Reporting by Simon Carraud and Emile Picy; Writing by Michel Rose. Editing by Jane Merriman

Published at Fri, 24 Nov 2017 13:34:51 +0000

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Palo Alto Networks Upside Limited Despite Solid Quarter


Palo Alto Networks Upside Limited Despite Solid Quarter

By Alan Farley | November 22, 2017 — 11:08 AM EST

Security software provider Palo Alto Networks, Inc. (PANW) reported solid fiscal first quarter results on Monday evening, beating EPS and revenue estimates while raising second quarter and full-year guidance. The stock shot higher at the start of Tuesday’s session, gaining nearly 10% before a mid-day swoon cut deeply into early gains. Even so, it closed at a four-week high, good enough to raise hopes for additional upside into year end.

However, a convoluted two-year price structure littered with multiple unfilled gaps predicts high volatility well into 2018, with bulls and bears so evenly divided that neither has generated a sustained trend since the July 2015 top at $200. An 89 million-share float with more than 86% locked up by institutions and insiders practically ensures wide bid/ask spreads and brutal price swings generated by predatory algorithms feeding on at-home gamers flipping the remaining 14%.

The $165 level marks the place to watch in this whirlwind, following four failed attempts to mount resistance since it broke in January 2016. The 200-day exponential moving average (EMA), currently rising through $137, presents a second inflection point because it has triggered multiple 2017 reversals. The most reliable positioning while we wait for those levels to be hit will be to sell strength and buy weakness, taking advantage of the two-sided tape while hitting the sidelines with quick exits. (See also: Palo Alto Networks Stock Could Rally Above $160.)

PANW Long-Term Chart (2012 – 2017)

The company came public at $55.15 in July 2012 and topped out quickly at $72.61. A persistent decline into the second half of 2013 found support in the upper $30s, carving a double bottom and a new uptrend that gathered strength into 2015, culminating in July’s all-time high at $200.55. That euphoric burst evaporated in a vertical decline that reached $140 during the August mini flash crash.

A December test posted a slightly lower high at $194.73, while the subsequent pullback broke the August low in February 2016. That selling wave ended at $111 a few weeks later, generating a strong bounce that failed in March at the .618 Fibonacci sell-off retracement level in the mid-$160s. It returned to that harmonic level in October after posting a higher June low and reversed once again, reinforcing resistance that is still in play as 2017 draws to a close. (For more, see: Palo Alto Networks Beats on Q4 Earnings and Revenues.)

PANW Short-Term Chart (2015 – 2017)

Price action has held within the November 2016 into April 2017 trading range, while the initial reaction to this week’s earnings nearly filled the gap between $158 and $144. It will take little effort for short-term price action to test resistance at $165 once again, but June and September 2017 gaps remain unfilled and could easily act as price magnets in the coming months, delaying the long-awaited breakout.

The stock broke out above a trendline of lower highs in September and has held new support that is aligned with the 200-day EMA at $137. A breakdown through that level would set off bearish signals that predict another trip to corrective lows between $100 and $110. Fortunately, on-balance volume (OBV) has lifted to a 2017 high following the news, signaling the return of institutional capital.

This tailwind should limit selling pressure in the coming months, eventually supporting a base breakout that brings the 2015 high into play. However, there is no advantage in early trade entry given volatile forces at play, predicting that the sidelines will offer the best place to watch testing at resistance. In the meantime, traders should look for short sellers to reload aggressive positions when the current uptick reaches the low to mid-$160s. (See also: 13 Ways to Invest in Cybersecurity.)

The Bottom Line

Bulls and bears show equal strength following Palo Alto Networks’ upbeat earnings report, telling trend followers to stand aside until resistance at $165 gives way. Classic swing trading strategies could generate opportune profits until that happens, buying weakness and selling strength. (To learn more, check out: Are You a Trend Trader or a Swing Trader?)

Published at Wed, 22 Nov 2017 16:08:00 +0000

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Uber told SoftBank about data breach before telling public


Uber told SoftBank about data breach before telling public

(Reuters) – Uber Technologies Inc said on Thursday that it discussed a massive data breach with potential investor SoftBank Group Corp ahead of going public with details of the incident on Tuesday.

A photo illustration shows the Uber app on a mobile telephone, as it is held up for a posed photograph, in London, Britain November 10, 2017. REUTERS/Simon Dawson

The ride-hailing service is trying to complete a deal in which the Japanese company would invest as much as $10 billion (£7.52 billion) for at least 14 percent of Uber, mostly by buying out existing shareholders.

“We informed SoftBank that we were investigating a data breach, consistent with our duty to disclose to a potential investor, even though our information at the time was preliminary and incomplete,” Uber said in a statement.

”We also made clear that our forensic investigation was ongoing,“ Uber said. ”Once our internal inquiry concluded and we had a more complete understanding of the facts, we disclosed to regulators and our customers in a very public way.”

Uber described its early discussion with SoftBank when asked to comment on a Thursday Wall Street Journal report on the disclosure, which the newspaper said occurred about three weeks ago.

The Wall Street Journal also said that more than two months elapsed between the time Uber Chief Executive Dara Khosrowshahi learned of the breach and this week’s disclosure, citing unnamed sources familiar with the matter.

Uber did not say when Khosrowshahi first learned of the breach, or reveal the specific date of its disclosure to SoftBank.

Reporting by Jim Finkle in Toronto and Kanishka Singh in BengalaruEditing by Marguerita Choy

Published at Thu, 23 Nov 2017 22:36:41 +0000

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The worst day for mall diamonds in 25 years

Most diamonds in the world are cut here

Kay, Jared and Zales’ diamonds are losing their sparkle.

Sales fell at the three mall-based affordable jewelers. Parent company Signet warned that profit heading into next year will be light.

Hurricanes and weak sales on engagement and wedding rings led to a “challenging” quarter, CEO Virginia Drosos said on Tuesday.

Revenue fell $30 million during the quarter ending in late October, pushed lower by a 7% decline at Kay.

A customer service mishap contributed to Kay’s slowdown. Kay was in the middle of overhauling its store credit program, and disruptions with the switch caused some customers to cancel rewards plans.

Kay has more than 1,200 stores across the country and makes up about a third of Signet’s total revenue, estimated Citi senior analyst Paul Lejuez.

The sluggish report alarmed investors: Signet’s(SIG) stock plunged 30% on Tuesday. It was the worst day for the stock in 25 years. Shares have now dropped 44% this year.

Signet holds a 13% market share on a $43 billion affordable jewelry industry, more than double its nearest rival, according to Cowen retail analyst Oliver Chen.

But lagging mall traffic is squeezing stores, said Lejuez.

The lower-cost jewelry business is a race to the bottom, driven by struggling retailers dropping their prices to stay competitive.

Department chains such as Target, JCPenney, Nordstrom and Macy’s offer jewelry selections. JCPenney noted last week that jewelry sales were up on the quarter and expects the uptick to continue during the holidays.

Mom-and-pop stores are also challenging Signet, said Lejuez. Local stores are often promotion-driven or can offer reductions because they’re liquidating.

Amazon(AMZN, Tech30) and Walmart’s(WMT) online jewelry collection are also taking a bite out of Signet sales.

Signet clearly recognizes the dwindling power of its mall brands. The company announced it would shed 125 stores in 2018, primarily at malls.

In addition to shutting down underperforming stores, Signet also bought R2Net, the owner of online wedding ring site James Allen, for $328 million in August.

James Allen immediately gave Signet a boost: The company’s overall digital sales spiked 56% during the quarter.

Published at Tue, 21 Nov 2017 20:01:25 +0000

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Have digital currencies really stolen Vladimir Putin’s heart?

Have digital currencies really stolen Vladimir Putin’s heart?

| Tue, Nov 21, 2017

If you’re talking economics in Russia these days, you won’t be able to avoid the matter of digital currency.

Leading online Russian news agency’s economy lead on November 20 made no bones about the issue. “What will help Russia escape its oil dependence?” asked the headline. The vaunted solution: digital currencies.

Yet, despite Vice’s recent assertion that Russia has gone “all-in” on digital currencies, the Kremlin continues to deliver mixed messages. On the one hand, government officials will not stop berating digital currencies, claiming that they are the tools of money launderers and terrorists. But there are also signs that Russia might just be on the verge of embracing digital currencies – on an unprecedented scale.

Cause for concern?

Where does the negativity stem from? Well, for a start, the country’s Central Bank recently warned of “serious concerns over the risks of digital currencies,” claiming that terrorists can exploit them to their own ends, and berating “the highly volatile nature of the crypto-currency market.”

Officials have vowed that they will issue a comprehensive set of regulations before the year is out, and the Duma’s head of IT Leonid Levin said in September, “In a country where millions have suffered from pyramid schemes, we should not allow citizens to sell their apartments to make cryptocurrency investments.”

Last month, the central bank even said it would move to block access to online digital currency exchanges, and called bitcoin and other currencies “dubious.”

Glass half full

You could argue that shutting the door to digital currencies makes no real sense to Russia, a country that is quite publicly trying to find ways to reduce its well-publicized dependence on selling oil and gas.

Many claim that digital currency mining presents countries like Russia with a massive opportunity. As energy prices remain so low in Russia, Vladimir Putin and his aides are no doubt casting an eye at former Soviet states like Georgia, whose state-run bitcoin mining center is now the envy of all Central Asia. This success story appears to have them, “why aren’t we doing something like this?”

Russian Miner Coin, a venture that Bloomberg claims is run by one of Putin’s internet aides, is proposing to do just that. Dmitry Marinichev, Russia’s Internet Ombudsman of Russia and perhaps the most influential digital currency advocate in the country, has claimed that Russia “has the potential to reach up to a 30 percent share in global cryptocurrency mining in the future.”

Ethereum excitement

Much has also been made of Putin’s recent meeting with the 23-year-old founder of Ethereum, Vitalik Buterin, with the Kremlin’s official website recounting that “Buterin spoke about the possibilities of using the technology he had developed in Russia,” and adding that “the president supported the idea of ??establishing business contacts with potential Russian partners.”

The country’s banks also seem very keen on Ethereum. Vnesh Econombank (VEB) announced it had begun work on an Ethereum-based project back in August, with Buterin himself turning up to sign an agreement with VEB chiefs.

Meanwhile, another leading Russian bank, Sberbank, has recently joined the Enterprise Ethereum Alliance (EEA), whose members also include the likes of Accenture, Deloitte, Intel and Microsoft. The alliance was created in February this year, and aims to apply blockchain technology to real-world business situations using Ethereum.

Some believe that digital currencies provide Russia with a way to sidestep Western sanctions in business dealings – by disposing with the need for offshore companies and utilizing a minimum of intermediaries.

And then there is the much-vaunted “Bitcoin City” project. This ambitious venture could see the government set up a state-run “megacity” bitcoin mine, Georgia-style. The site is an as-yet-unnamed Siberian city, possibly near the Chinese border – where it could increase the influx of “business tourism.”

Hybrid approach possible

Instead of loosening the reigns or issuing a China-style government crackdown, the Kremlin perhaps wants to take a hybrid approach to digital currencies. Putin, it might be argued, seems happy to let digital currency-based enterprises thrive in Russia on two conditions: that the government knows about them, and that Moscow takes a cut.

Take, for example, the Kremlin’s proposed cryptocurrency mining legislation. If passed, Russian miners would be able to continue their activities unabated – so long as they paid taxes on their earnings.

No doubt, Russia has massive competitive advantages when it comes to potential bitcoin mining. As mentioned above, power is cheap, especially in rural areas. And much has been made of the possibility of placing mining data centers in some of the coldest parts of the country to solve overheating problems. Energy prices in Irkutsk, for example, are five time cheaper than in Moscow – a reason why many of the country’s bitcoin miners have already set up shop in this Siberian city, and why Irkusk residents are now using mining software to “pay their utility bills.”

Crucially, the Central Bank’s Deputy Chair and head of blockchain technology Olga Skorobogatova spoke during a recent televised interview of imposing mining taxes. Skorobogatova stated that these taxes would apply to both individual miners and to private mining ventures.

There is also talk of regulating (rather than banning) initial coin offerings (ICOs), another sign that Russia sees digital currencies as a potential money-spinner.

Guarded stance

Only time will tell what Putin’s digital currency policy is – the chances are he is happy for the rest of the world to remain in a state of confusion regarding his true motives. And with so much at stake, perhaps he believes playing his cards close to his chest is the smartest move he can make right now.

But for a country that seemingly has so much to gain from digital currencies, it is hard to imagine Putin ordering a Beijing-style clampdown.

As’s Yegor Polyankov speculates intriguingly, “Who knows? Perhaps Russia’s rich are already converting their money into digital currencies.”

By Crypto Insider

All Images, XHTML Renderings, and Source Code Copyright ©

Published at Tue, 21 Nov 2017 15:12:54 +0000

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Rising Medicare costs leave many U.S. seniors with a flat COLA


A pair of elderly couples view the ocean and waves along the beach in La Jolla, California March 8, 2012. REUTERS/Mike Blake


Rising Medicare costs leave many U.S. seniors with a flat COLA

CHICAGO (Reuters) – Millicent Graves will get a raise from Social Security next year, but her household budget will get worse, not better.

The 2 percent cost-of-living adjustment (COLA) announced by Social Security for 2018 last month will boost Graves’ monthly benefit by $20.70. But in reality, that increase will be wiped out by a higher Medicare Part B premium, which will be deducted from her Social Security benefit.

The federal government announced last Friday that the standard Part B premium will be $134 per month next year, unchanged from 2017. That sounds like good news at first blush. But for roughly 70 percent of seniors, Social Security benefit amounts will stay flat due to the relationship between the premium and the Social Security cost-of-living adjustment.

Graves is 73 and lives near Williamsburg, Virginia. Her Social Security benefit – a little less than $1,000 after Medicare Part B is deducted – provides roughly half of her total income. The rest comes from retirement savings, which she will use to close the budget gaps next year. “It is frustrating, but I’m lucky in that I can handle it. I know plenty of other people who are living just on Social Security, and it will be hard for them to get by.”

COLAs are determined by an automatic formula tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). From 2013 to 2015, the annual increases ranged around 1.5 percent. No COLA at all was awarded in 2016; this year, the adjustment was a paltry 0.3 percent.

For most beneficiaries, Medicare Part B premiums are deducted from Social Security. The impact of the Part B premium on net benefits next year will vary due to what is known as the “hold harmless” provision governing Social Security.

By law, the dollar amount of Part B premium increases cannot exceed the dollar amount of the COLA – a feature that ensures net Social Security benefits do not fall. The hold-harmless provision applies to the 70 percent of the Medicare population enrolled in both programs. Those not held harmless include anyone delaying their filing for Social Security benefits, but others affected include some federal and state government retirees. Affluent seniors who pay high-income Medicare premium surcharges also are not protected.

The stingy COLAs of the past two years were rare – but they also set the stage for the odd 2018 situation now facing Graves and millions of others.


The recent flat COLAs meant that nonprotected Medicare enrollees shouldered most of the burden of rising Part B premiums; the premiums for this group jumped sharply in 2016 and 2017. This year, they are paying $134 per month, while protected beneficiaries are paying an average of $109.

But the more-generous 2018 COLA will spread higher Part B program costs across the entire Medicare population. That means premiums will stay flat for this year’s nonprotected enrollees, while the protected group will pay more.

“The lower the benefit the lower the Medicare Part B premium people were paying in 2017 and the more they need to reach $134,” said Mary Johnson, a policy consultant at the Senior Citizens League. “The upshot is Part B will take their entire COLA.”

The hold-harmless situation affects people differently according to the level of their Social Security benefit. A held-harmless beneficiary with a $2,000 monthly benefit would still receive a net COLA of $15 next year, for example. But the COLA flattens to zero with a monthly benefit of around $1,250 and below.

The math matters to many seniors living on fixed incomes. Half of all Medicare beneficiaries had income below $26,200 in 2016, according to the Kaiser Family Foundation – a figure that includes Social Security, pensions, retirement account withdrawals, wages, and other miscellaneous income sources.

At the same time, 62 percent of beneficiaries relied on Social Security for more than half of their income in 2015, according to the Social Security Administration; 34 percent relied on the program for 90 percent or more of income. Seniors heavily reliant on Social Security find themselves forced to make tough choices as healthcare consumes a larger share of income.

Graves is a former veterinary technician who also sold real estate for a few years before retiring. She claimed Social Security at the earliest possible age – 62 – to help pay the premiums on her health insurance. Now, she finds a variety of expenses rising sharply, including her Medigap and Part D prescription drug plans, homeowners insurance and utilities.

“I never realized before how people can just work all their lives and then retire and find themselves living on the edge,” she said. “I am not going to starve because of this, but I know people who could.”

(The writer is a Reuters columnist. The opinions expressed are his own.)

Editing by Matthew Lewis

Published at Mon, 20 Nov 2017 18:44:44 +0000

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Wells Fargo illegally repossessed another 450 service members’ cars


Wells Fargo illegally repossessed another 450 service members’ cars


Wells Fargo has uncovered another 450 service members who had their vehicles illegally repossessed by the bank. That brings the total to more than 860.

The Department of Justice on Tuesday said Wells Fargo agreed to pay an additional $5.4 million for the illegal vehicle seizures.

Federal law requires banks to get a court order before repossessing a car from members of the military. The DOJ previously charged Wells Fargo in September 2016 with illegally seizing 413 cars owned by service members.

As part of a settlement reached last year, Wells Fargo has “identified additional violations” that affected about 450 service members between January 2008 and July 2015, according to the DOJ.

Wells Fargo(WFC) has agreed to repair the credit of the service members and to pay each $10,000, plus any lost equity in the vehicle, with interest.

“Losing an automobile through an unlawful repossession while serving our country is a problem service members should not have to confront,” Sandra Brown, acting United States Attorney, said in a statement.

Wells Fargo said in a statement that it’s committed to “ensuring all service member customers have the protections and benefits available to them.” The bank said it’s in the process of notifying and refunding impacted customers.

Dennis Singleton found out that Wells Fargo had repossessed his car in 2013 just as he was preparing to go to Afghanistan.

“I said, ‘Hey, they can’t do that!'” Singleton told CNNMoney last year. “Honestly, I just think it sucks.”

Under the Servicemembers Civil Relief Act, courts must sign off on vehicle repossessions if the service member took out the loan and made a payment prior to entering military service.

Wells Fargo and its troubled auto lending division are no stranger to legal problems. Wells Fargo has admitted to charging as many as 570,000 customers since 2012 for car insurance they didn’t need. The bank estimates that about 20,000 of those customers may have had their cars repossessed as a result of their inability to pay for the additional car insurance.

Wells Fargo recently said one former employee has alleged “retaliation for raising concerns” about the bank’s auto lending tactics.

All of this is on top of Wells Fargo’s infamous fake account scandal. Wells Fargo recently raised its estimate of the number of unauthorized accounts its employees opened to 3.5 million.

–CNNMoney’s Jackie Wattles and Aaron Smith contributed to this report.

Published at Tue, 14 Nov 2017 22:30:25 +0000

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Buffalo Wild Wings soars 25% on takeover talk


5 stunning stats about the fast food industry
5 stunning stats about the fast food industry

 Buffalo Wild Wings soars 25% on takeover talk


Fast food chain Arby’s likes to tout in TV ads that it “has the meats.” It’s even introduced venison to the menu. But if Wall Street rumors are to be believed, the company behind Arby’s may soon own a chain famous for something more common — chicken.

Roark Capital, the majority owner of Arby’s, Carl’s Jr and Moe’s Southwest Grill, is reportedly looking to buy Buffalo Wild Wings(BWLD) for $2.3 billion. Shares of the chicken wing and sports bar franchise surged nearly 25% Tuesday on the news.

Spokespeople for Buffalo Wild Wings and Roark Capital, which also has big stakes in Auntie Anne’s, Carvel and Jimmy John’s, were not immediately available for comment.

But Buffalo Wild Wings, known as B-Dubs to its fans, has been struggling due to rising food costs and slumping sales. That could make it vulnerable to a takeover. The stock is still down more than 5% in 2017 — despite Tuesday’s big pop.

Longtime CEO Sally Smith announced in June that she would retire at the end of the year after investors elected three candidates to the company’s board who were backed by activist shareholder firm Marcato Capital. Marcato owns about a 6% stake in Buffalo Wild Wings.

Still, there have been some recent signs of a turnaround at Buffalo Wild Wings.

Shares soared after its most recent earnings report in October. Sales of so-called boneless chicken wings helped boost profits. One of the problems that Buffalo Wild Wings was facing was a spike in the price it paid suppliers for its namesake wings.

By offering cheaper boneless wings, which are really just breast meat cut to look more like wings, Buffalo Wild Wings was able to boost profit margins.

There are still concerns that ratings declines for National Football League games this season are hurting sales though. Papa John’s, the pizza partner of the NFL, has already blamed the National Anthem protests by some players for weak sales.

Same-store sales, which measure the performance at the company’s locations open at least a year, fell 2.3% from a year ago at the company-owned restaurants and were down 3.2% at franchise-run locations.

Buffalo Wild Wings CFO Alexander Ware said during the company’s conference call last month that he expected similar sales declines in the fourth quarter on Thursday nights, Sundays and Monday nights when the NFL plays its games.

So Buffalo Wild Wings may still be a company that, like a defensive back struggling to cover a star wide receiver, gets a lot of penalty flags from Wall Street.

For that reason, several analysts think that Buffalo Wild Wings would be wise to say yes to any deal from Roark.

“We believe Roark’s extensive restaurant experience could aid Buffalo Wild Wing’s turnaround and cash in-hand is difficult to turn down unless investors believe a recovery is already well underway,” said BTIG’s Peter Saleh in a report Tuesday.

Morgan Stanley analyst John Glass added in a report that a deal makes sense since it would give the investors at Marcato a chance to quickly cash in on their investment.

Of course, it remains to be seen whether a takeover actually happens or not.

But a Buffalo Wild Wings acquisition would just be the latest deal in what’s been an incredibly busy year for restaurant mergers. Private equity firms and other investment companies have been hungry for deals.

Oak Hill Capital bought Checkers. Golden Gate Capital ate up Bob Evans Restaurants. And Krispy Kreme owner JAB acquired Panera.

Publicly traded restaurant chains appear eager to grow as well. Burger King parent Restaurant Brands(QSR) scooped up Popeyes Louisiana Kitchen this year while Olive Garden owner Darden(DRI) gobbled up Cheddar’s Scratch Kitchen.


Published at Tue, 14 Nov 2017 18:20:54 +0000

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BlackRock’s Fink learns to live with activist investors


BlackRock’s Fink learns to live with activist investors

NEW YORK (Reuters) – Larry Fink, whose $6 trillion BlackRock Inc seldom picks a public fight with large companies, said on Monday that activist investors often help lay the groundwork for positive change in the corporate world.

The company logo and trading information for BlackRock is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 30, 2017. REUTERS/Brendan McDermid

“The role of activists is getting larger, not smaller,” Fink said at the Reuters Global Investment 2018 Outlook Summit in New York, “in many cases their role is a good one.”

BlackRock is one of the world’s largest so-called passive investors, which runs portfolios that largely mirror stock market indexes and sticks with the companies that are included in those indexes.

Joking that BlackRock owns some of the world’s best and worst companies, Fink said the interaction between management and so-called activists who push top executives to perform better is often very productive for investors like his funds.

Years ago, Fink made headlines by warning corporate chiefs that they should not be so quick to give in to corporate nudges’ demands.

Activist investors, which often include big-name hedge fund managers such as Nelson Peltz, Carl Icahn and William Ackman, have repeatedly asked corporate management to buy back more stock and raise their dividends, something Fink said could push up share prices in the short term but be less helpful in the long term.

He said he is still worried about the short-term investment strategies and noted that activists often play those well. But he also gave them credit for setting the path for longer-term improvements.

Even as Ackman’s Pershing Square Capital Management last week lost a bruising proxy battle with Automatic Data Processing, Fink said that the campaigns will bear fruit.

At ADP, for example, Ackman pushed for management to become more efficient, deliver more robust earnings and consolidate its real estate footprint. “They may have lost but they are forcing change,” Fink said of activists, without discussing any specific proxy contest.

BlackRock, whose votes are often instrumental to a proxy contest’s outcome, is now talking more openly about how it reaches its decisions on which way to vote.

In May, BlackRock helped pass a shareholder resolution calling on Exxon Mobil Corp to provide more information about how new technologies and climate change regulations could impact the business of the world’s largest publicly traded oil company.

Fink said the firm is only voting in the long-term interests of its investors, and that its responsibilities are growing as more money moves into its index funds and ETFs. The new detail around its proxy votes is what investors now expect, he said. “The market is demanding it, I mean I would prefer never talking about it,” Fink said of the new explanations.

For other news from Reuters Global Investment 2018 Outlook Summit, click here

Reporting by Svea Herbst-Bayliss and Ross Kerber; Editing by Susan Thomas


Published at Mon, 13 Nov 2017 23:01:06 +0000

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Most millennials seen worse off than parents despite aptitude: study


Most millennials seen worse off than parents despite aptitude: study

ZURICH (Reuters) – Most millennials will struggle to earn more money and find better jobs than their parents despite being more highly trained, according to a study by Credit Suisse.

Defined by the U.S. Census Bureau as being those born between 1982 and 2000 — so between 35 and 17, now — millennials face tougher borrowing rules, rising home prices, and lower income mobility, the study said.

“With the baby boomers occupying most of the top jobs and much of the housing, millennials are doing less well than their parents at the same age, especially in relation to income, home ownership and other dimensions of wellbeing,” the Swiss bank wrote in its annual Global Wealth report, published on Tuesday.

As a result only high achievers and those in lucrative areas like technology and finance have better prospects than their parents.

Overall, Credit Suisse found global wealth at mid-2017 totaled $280 trillion, up 6.4 percent year-on-year, the fastest pace of growth since 2012 thanks to surging equity markets and more valuable non-financial assets such as property.

However, the wealth is heavily concentrated.

Some 36 million millionaires making up less than 1 percent of the adult population own 46 percent of global household wealth; 70 percent of adults — 3.5 billion people — own less than $10,000 in assets and account for 2.7 percent of wealth.

Reporting by Joshua Franklin Editing by Jeremy Gaunt


Published at Tue, 14 Nov 2017 10:37:37 +0000

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GE is broken. Fixing it will be long and difficult


GE losing bulb division, lives on in retro ads
GE losing bulb division, lives on in retro ads

 GE is broken. Fixing it will be long and difficult


Restoring General Electric to greatness, or even just mediocrity, won’t be quick or easy.

GE’s(GE) fall from grace has forced the iconic company to take drastic steps just to stop the bleeding. This week, GE cut its beloved dividend in half, and launched plans to sell off the century-old railroad business as well as at least 12 other units.

But just as it took years to run GE into the ground, there’s a growing realization inside and outside the company’s Boston headquarters that fixing it will be long and difficult. GE stock nosedived another 7% on Monday, its worst day since April 2009, after new CEO John Flannery detailed his turnaround vision.

Flannery warned that 2018 will be difficult, dubbing it a “reset year for us.”

That’s not exactly music to the ears of GE’s long-suffering shareholders, especially when the rest of the stock market is booming. GE shares closed at a five-and-a-half year low on Monday.

GE faces a “tough slog ahead,” Cowen & Co. analyst Gautam Khanna wrote in a research report on Monday.

Scott Davis, head analyst at Melius Research, said it’s still “early days” for Flannery to “fix the GE mess he was handed.”

While Davis has “high hopes,” he wrote in a report that GE is facing a “debacle” and it’s “hard to have much confidence yet.”

GE is not just one of America’s most storied companies. It’s one of the country’s biggest employers, with nearly 300,000 workers, and one of its most widely held stocks.

Facing a serious cash crunch, GE has cut its dividend to save about $4 billion a year. It also plans to jettison more businesses, including the transportation division that makes trains and railroad parts. GE is even getting rid of the light bulb business that long symbolized the innovative company. And it’s thinking about relinquishing a majority stake in Baker Hughes(BHGE), which was formed when it combined with GE’s oil-and-gas assets.

Flannery has said these sales are necessary to simplify GE and refocus the company on core areas: aviation, healthcare and power.

“Complexity has hurt us,” the new GE CEO said.

Yet even a slimmed-down GE will still be quite complex, making everything from jet engines and MRI machines to power plants.

And it’ll take time to sell off these various businesses, especially the ones like transportation that GE admits are slumping right now. Flannery warned that the transportation division faces a “protracted slowdown in North America” due in part to shrinking coal shipments.

The other problem is that some of the businesses GE is keeping are in even worse shape. GE now expects to earn just $1.00 to $1.07 per share next year. That’s roughly half the goal GE had less than a year ago.

GE warned it will take one to two years to fix its power division, which supplies over 30% of the world’s energy in 140 countries. The business has been hit hard as utilities move away from fossil fuels in favor of renewable energy like solar and wind. GE expects a “challenging market into 2019,” which will force further cost-cutting.

“It’s a heavy lift to turn around,” Flannery admitted.

Davis put it this way: “Power is still a mess.”

That mess threatens to delay efforts to fix GE’s cash crunch. Free cash flow, which measures how much cash is generated after investing in the business, has dropped for six-straight years.

GE said it expects industrial free cash flow, which includes dividends from Baker Hughes but excludes deal taxes and pension obligations, of $6 billion to $7 billion in 2018.

That’s barely enough to cover even the lowered dividend payments.

But Cowen’s Khanna thinks GE’s “cherry-picked” definition of free cash flow has inflated its figures, making things appear better than they are. He noted that GE is borrowing $6 billion to fund its pension obligations through 2020.

Underlying free cash flow “appears close to zero as most industrial firms would define it,” Khanna wrote.


Published at Tue, 14 Nov 2017 13:19:10 +0000

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