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Top Reagan economist tells Trump: Cut taxes ASAP

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Trump signs 'Buy American, Hire American' order
Trump signs ‘Buy American, Hire American’ order

  @byHeatherLong

One of President Ronald Reagan’s top economic advisers has some blunt advice for President Trump: Put health care aside and focus on cutting taxes.

“Cut the corporate tax. Just do it,” economist Arthur Laffer told CNNMoney.

Trump really wanted a big win in his first 100 days in office, but the repeal of Obamacare failed spectacularly in March. Trump refuses to let it go. Last week, he stunned many by saying he still wants to “do health care first,” before tackling tax reform.

Laffer thinks that’s the wrong move. Laffer advised Trump during the campaign. He’s an informal counselor now, but he’s telling everyone in the White House who will listen to do what the Reagan team did: break up tax reform into small bits instead of trying to cram it all into one huge bill.

The easy win would be cutting business taxes, Laffer argues. It could even be done by August (the original deadline the White House set for action on taxes but has since backed away from).

“There’s no one who thinks a 35% federal corporate tax rate is appropriate,” Laffer says. He notes the U.S. has the highest tax rate on businesses out of any major economy in the world.

Trump proposed slashing business taxes to 15% on the campaign trail. Republican House Speaker Paul Ryan has pushed for a 20% top rate on business.

Republican economists tell Trump: Cut taxes ASAP

There’s a loud chorus of right-leaning economists telling Trump to drop health care and move on to tax cuts. In an Op-Ed in the New York Times on Wednesday, four of Trump’s top economic advisers from the campaign — Laffer, Steve Forbes, Larry Kudlow and Stephen Moore (a CNN contributor) — wrote, “Tax reform probably should have gone first, but now is the time to move it forward with urgency.”

The Op-Ed comes on the heels of Glenn Hubbard, President George W. Bush’s top economist, giving Trump that same advice back in March.

It’s notable though that Goldman Sachs(GS), the Wall Street firm that used to employseveral of Trump’s top advisers, now predicts tax cuts are “likely to slip to early 2018.”

The chorus of GOP economists says Trump should enact business tax cuts in 2017 and then tax reform for individuals in 2018.

Arthur Laffer says: Cut taxes but don’t cut spending yet

arthur laffer
Arthur Laffer was one of President Reagan’s key economic advisers. He also advised Trump during his campaign.

 

Laffer says the only reason Trump wants to tackle health care first is because overhauling Obamacare could generate more money for the U.S. Treasury. However, he argues Congress and the White House should stop obsessing about having tax cuts “paid for.” That would mean tax cuts do not add anything to America’s $19 trillion debt.

“The ‘pay for rule’ is the silliest rule I have ever heard in my life,” Laffer says. “You cannot balance the budget in the U.S. without growth.”

Laffer is telling Trump to cut taxes now and keep government spending about the same. The Trump Administration doesn’t appear to be heeding that advice. The White House is mulling deep cuts to the federal budget in order to fund an increase in military spending.

“Do not cut government spending right away. Wait until tax cuts have their effect on economic growth,” Laffer cautions.

How to revive Trump’s approval rating

Trump’s approval rating is just 41%, according to Gallup. That’s actually up from 35% a few weeks ago. But Laffer says Reagan faced something just as bad in his early years in the White House.

“Our first two years were a disaster,” Laffer says of the Reagan administration. He believes Trump will rebound if he gets back on track with tax cuts. “People criticized Reagan non-stop. Reagan made gaffes as well.”

President Reagan’s approval rating did hit a low of 35% as well, but that didn’t happen until 1983, two years into Reagan’s first term. During his first 100 days in office, Reagan had an approval rating of almost 70%.

Ronald Reagan approval ratings

 

The Kansas warning sign?

Laffer is a big champion of cutting taxes to spur growth. He’s often called the father of “supply-side economics” for his research on how cutting taxes can actually bring the government more revenue.

But Laffer’s theories have come under heavy criticism lately. Many point to Kansas, a state that cut taxes in 2012 and has since faced massive budget shortfalls and a floundering economy, as proof that Laffer is wrong.

Laffer says the real problem in Kansas is that Republican Governor Sam Brownback didn’t go far enough.

“The tax cut was too small. It was a rounding error,” Laffer told CNNMoney.
Published at Wed, 19 Apr 2017 16:59:15 +0000

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Bank of America’s wealth revenue rises on assets under management, fees

A Bank Of America sign is pictured in the Manhattan borough of New York August 21, 2014. REUTERS/Carlo Allegri

Bank of America’s wealth revenue rises on assets under management, fees

By Elizabeth Dilts| NEW YORK

Bank of America’s (BAC.N) wealth business reported revenue climbed 3 percent to $4.6 billion in the first quarter this year from last year on higher client assets under management and fees, Bank of America Chief Financial Officer Paul Donofrio said Tuesday.

The results come amid the backdrop of the bank’s decision to break from its wealth management peers and wind down its commissions-based retirement business and the departure of 145 financial advisers from Merrill Lynch’s “thundering herd.”

The firm committed to ending its IRA accounts last year in preparation for the U.S. Labor Department’s fiduciary rule that takes effect on June 9 and requires firms to eliminate potential conflicts of interest for advisers managing client’s retirement accounts.

“These solid results were produced in a period of change for the industry as firms and clients anticipate new fiduciary standards and other market dynamics such as the shift between active and passive investing,” Donofrio said on a call with analysts.

The bank’s Global Wealth and Investment Management division, which includes Merrill Lynch and U.S. Trust, reported long-term assets under managed rose to $29.2 billion in the three months ended March 31 from $18.9 billion in the fourth quarter last year.

The unit’s pretax profit margin, a key metric that can show growth across business segments, rose to 27 percent from 26 percent a year earlier.

Overall, the second-largest U.S. bank’s total revenue rose about 7 percent to $22.45 billion, beating the estimate of $21.61 billion.

Last month, Merrill Lynch partly walked back its statement that it would completely end commissions-paying retirement accounts after the fiduciary rule was delayed by 60 days from the original implementation date of April 10.

Nonetheless, the portion of advisers with more than half of their clients enrolled in fee-based accounts, which pay an adviser a flat-fee rather than a commission, continued to rise this quarter, up 2 percent to 66 percent of advisers compared to the prior quarter.

Brokerage and other non interest income fell $83 million over last year as the firm moves away from commissions-paying accounts.

Donofrio acknowledged that transactional revenue continued to decline, but said it was offset by higher assets under management and fees.

Merrill Lynch revenue rose 5 percent to $3.78 billion from the prior quarter on higher asset management fees and net interest income. The firm’s total number of advisers fell to 14,484 from 14,629 in the fourth quarter last year.

 

(Reporting By Elizabeth Dilts; Editing by Bernard Orr)
Published at Tue, 18 Apr 2017 16:59:42 +0000

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U.S. business group urges Washington to ‘use every arrow’ against China

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 U.S. business group urges Washington to ‘use every arrow’ against China

By Michael Martina| BEIJING

The United States should “use every arrow” in its quiver to ensure a level commercial playing field in China, a U.S. business lobby said on Tuesday, warning that 2017 could be the toughest year in decades for American firms in the country.

China’s policies designed to support domestic companies and create national champions have narrowed the space for foreign companies, the American Chamber of Commerce in China said in its annual business climate report.

The White House has said U.S and Chinese officials are fleshing out a pledge by leaders Donald Trump and Xi Jinping for a 100-day plan to cut the U.S. trade deficit with China, which reached $347 billion last year.

But the chamber said it hoped more attention would be paid to market access for American firms in China.

“Right now basically we are recommending everything you have in your quiver – please use every arrow possible, with the understanding that some of these points of leverage could be counterproductive to us,” chamber chairman William Zarit said, referring to possible backlash from Beijing.

He was speaking at a briefing on the report.

U.S. business groups want U.S. officials to act against Beijing on market imbalances, but not push the world’s two largest economies toward a trade war.

Nonetheless, more vociferous complaints by American businesses mark a shift from years past, when many companies eschewed the idea of forceful action by Washington for fear of retribution by China.

Foreign technology companies fear what they see as Beijing’s plans for subsidies of billions of dollars to domestic competitors and regulations that could force the surrender of key technology or hit competitiveness.

“With uncertainty stemming from political and economic transitions in both the U.S. and China, perceptions of a deteriorating investment environment for foreign companies in China, and a slowing economy, 2017 will likely be one of the most challenging years in decades for U.S. companies in China,” the chamber said.

China is committed to further opening its economy, in a process whose speed is “quite visible,” the foreign ministry said.

“China is already one of the most open developing nations,” spokesman Lu Kang told a regular news briefing.

U.S. business leaders also worry that Trump’s focus on reining in North Korea could undercut U.S. commercial interests in China. Last week, Trump tweeted that Beijing would get a better trade deal if it helped resolve the issue.

“I’m sorry to see there is a possibility we may lose some momentum on helping to level the playing field with China in our economic relationship, due to the situation in North Korea, if there is some kind of trade-off,” Zarit said.

(Reporting by Michael Martina; Additional reporting by Christian Shepherd; Editing by Clarence Fernandez)
Published at Tue, 18 Apr 2017 08:31:52 +0000

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Premarket: 6 things to know before the bell

 

premarket Monday
Click chart for more in-depth data.

1. China GDP: The Chinese economy picked up steam in the first quarter, with GDP up 6.9% from a year earlier.

That’s the fastest pace of growth since the third quarter of 2015 and slightly above what some economists had been predicting.

China’s ruling Communist Party has been prioritizing economic stability ahead of a key leadership reshuffle later this year when President Xi Jinping’s second term in power will start. But the International Monetary Fund and other agencies have urged the Chinese government to focus on tackling the country’s high levels of corporate debt.

The Shanghai Composite lost 0.7% on Monday, while the tech-heavy Shenzhen Composite shed 1.4%.

2. North Korea tensions: U.S. Vice President Mike Pence has issued a warning to North Korea after a failed attempted missile launch by the country on Sunday.

Pence, who was in South Korea, said that Pyongyang should not test the resolve of the U.S. “or the strength of our military forces.”

Increased tensions in the region, along with the deterioration in relationship between the U.S. and Russia and attacks in Syria, have forced investors to look for safe havens assets.

Gold, the Japanese yen and the Swiss franc all gained in early trading on Monday.

3. Moneygram bid: Chinese firm Ant Financial on Monday upped its offer to $1.2 billion for MoneyGram(MGI), one of the most popular avenues for sending money from the U.S. to Mexico and other countries.

The original deal struck in January was for $880 million, but U.S. rival Euronet Worldwide(EEFT) jumped in last month with an unsolicited $1 billion offer.

4. Global market overview:U.S. stock futures are edging lower.

Most European markets are closed for a holiday. Asian markets ended mixed.

Turkey’s main stock market advanced 1% after a referendum to expand the powers of President Recep Tayyip Erdogan saw the “yes” side winning by the slimmest of margins.

The Turkish lira also strengthened in response.

U.S. crude oil futures were down 0.9% to trade at $52.70 per barrel.

5. Earnings and economics:United Continental Holdings(UAL), the owner of United Airlines, will release its quarterly report after the closing bell on Monday, a week after becoming embroiled in a turbulent PR nightmare.

The company will hold a conference call with investors on Tuesday.

Netflix(NFLX, Tech30) will also report after the markets close on Monday. Sales for last quarter are expected to clock in at $2.6 billion, up from $2 billion this time last year.

6. Coming this week:

Monday – China GDP; United Airlines(UAL), Netflix(NFLX, Tech30) earnings
Tuesday – U.S. Tax Day; United Airlines(UAL) analyst call, Goldman Sachs(GS), Bank of America(BAC) and IBM(IBM, Tech30) report earnings
Wednesday – U.S. Crude oil inventories report, Morgan Stanley(MS), BlackRock(BLK), eBay(EBAY), American Express(AXP) publish results
Thursday – Mattel(MAT) earnings report
Friday – U.S. release of Samsung’s(SSNLF) Galaxy S8
Published at Mon, 17 Apr 2017 08:51:49 +0000

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Could Wix.com’s Rally Finally Be Coming to an End?

 

Could Wix.com’s Rally Finally Be Coming to an End?

Wix.com Inc. (WIX), a Tel Aviv-based web development platform targeting small businesses, has soared nearly 70% so far this year and 250% over the past 52 weeks. While the company is not profitable, its four-year compounded annual revenue growth rate stands at an enviable 38% with nearly 100 million users on its platform. The company’s history of beating earnings and achieving breakneck growth has led to its premium valuation.

After its recent move higher, the stock trades with a price-sales ratio of nearly 10x compared to an industry average of just 7x. The market for web development platforms is also becoming saturated with competitors like Shopify, Squarespace, and WordPress. WIX has benefited from its freemium business model (only ~3% of users are paying customers), but free customers bleed cash unless they’re converted into paying customers.

Raymond James recently downgraded Wix from Outperform to Market Perform due to these valuation concerns following its 250% rise over the past 52 weeks.

On a technical level, Wix faces a rising wedge chart pattern that could signal a bearish reversal. The stock attempted to breakout from its upper trend line and R2 resistance at $77.13, but has since moved lower toward its R1 resistance at $72.52. A breakdown from these levels could test lower trend line support at around $70 and a move below those levels could lead to a move to the 50-day moving average at $64.94 or S1 support at $61.87.

Wix is expected to report its first quarter earnings on May 3, which is an important day for traders and investors to watch. If it surpasses expectations, as it has done in the past, the stock could rally further. But, a failure to meet expectations could lead to a significant downturn as analysts become increasingly concerned over the company’s lofty valuation. The upshot is that it seems the company is well-capable of growing into its valuation over time.

Charts courtesy of StockCharts.com. Author holds no position in stocks mentioned.
Published at Fri, 14 Apr 2017 10:24:00 +0000

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Uber’s revenue hits $6.5 billion in 2016, still has large loss

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Uber’s revenue hits $6.5 billion in 2016, still has large loss

Ride-hailing service Uber Technologies Inc [UBER.UL] generated $6.5 billion in revenue last year and its gross bookings doubled to $20 billion, the company said on Friday.

Its adjusted net loss was $2.8 billion, excluding the operation in China it sold last year, Uber said.

As a private company, now worth $68 billion, Uber does not report its financial results publicly. It confirmed the figures in an emailed statement after Bloomberg reported the results.

Uber did not provide first quarter figures, but a spokeswoman said they “seem to be in line with expectations.”

For the final quarter of 2016, gross bookings increased 28 percent from the previous quarter, to $6.9 billion. But Uber’s losses grew to $991 million in the period, as revenues grew 74 percent to $2.9 billion from the third quarter.

In a separate emailed statement, Rachel Holt, Uber’s regional general manager for the United States and Canada, said: “We’re fortunate to have a healthy and growing business, giving us the room to make the changes we know are needed on management and accountability, our culture and organization, and our relationship with drivers.”

Uber has been rocked by a number of setbacks lately, including detailed accusations of sexual harassment from a former female employee and a video showing Chief Executive Travis Kalanick harshly berating an Uber driver.

The company is in the process of hiring a chief operating officer to help Kalanick manage it, repair its tarnished image and improve its culture.

Two of Uber’s high-level executives recently said they intended to leave, and last week the company’s communications head announced her departure.

 

(Reporting by Sangameswaran S in Bengaluru; Editing by Bill Rigby and Dan Grebler)
Published at Fri, 14 Apr 2017 22:59:19 +0000

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Apple granted autonomous car testing permit in California

Speculative rendering of an Apple Car (ClickMechanic.com)

Apple granted autonomous car testing permit in California

Apple is still in the car business. The autonomous car business.

Despite reports that the tech giant was scaling back its secretive automotive project, it was just granted a permit by the California Department of Motor Vehicles to test self-driving cars on public roads.

Apple joins a long list of companies on the registry that includes Google, Ford, Tesla, GM, and Bosch. That last one is doubly significant, because one of its facilities in Germany responsible for automotive parts showed up last month on an Apple supplier responsibility report, according to Apple Insider.

WHAT WILL THE APPLE CAR LOOK LIKE?

Apple hasn’t revealed exactly what its working on in the automotive space, but CEO Tim Cook has called it “interesting,” and that the company is always looking at new things. Recent rumors point to Apple being focused on the software and equipment that will enable autonomous cars, rather than the development of an entire vehicle.

We should find out more about it soon, as the permit requires public reporting of accidents involving the test vehicles and how often they require human intervention

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Trump is dialing back his economic promises. Bigly

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Watch Trump's stunning U-turns on key issues
Watch Trump’s stunning U-turns on key issues

  @byHeatherLong

President Trump and his top advisers appear to have a new message for America: Lower your expectations.

Trump played up his image as a businessman and dealmaker who could rescue the U.S. economy. The day he was sworn in, he vowed to create 25 million new jobs — the most of any president in history — and double the growth of the Obama era (among other promises).

Wall Street has roared in anticipation, with the stock market hitting new heights. Over on Main Street, small business and consumer confidence hit multi-decade highs.

Now, reality is setting in for how much Trump can really get done (and how fast) on the economy.

The big tax reform that was supposed to be done by August? Don’t bet on it. White House Press Secretary Sean Spicer put it this way: “It still would be a great opportunity before they leave for August recess, but we’re going to make sure we do this right.”

Trump’s campaign promise to greatly reduce — or even eliminate — America’s federal debt? “That was hyperbole,” White House budget director Mick Mulvaney told CNBC Wednesday. “I’m not going to be able to pay off $20 trillion worth of debt in four years.”

Labeling China a currency manipulator on Day One? That’s not happening (not even on Day 100). “They’re not currency manipulators,” Trump told the Wall Street Journal Wednesday in a major U-turn. During the campaign, Trump had said China has the upper hand against American manufacturers because it keep its currency artificially low.

Repealing Obamacare and replacing it with something “something terrific”? That’s up in the air. His first attempt failed in March when he couldn’t gin up enough votes in Congress. Many business leaders hoped Trump would move on to tax cuts, but Trump surprised many by telling Fox Business on Tuesday, “I have to do healthcare first.” Now, confusion abounds on what the next priority is.

Fixing America’s “disastrous trade policies”? The White House has decided to study the issue. Commerce Secretary Wilbur Ross announced a 90-day comprehensive trade review at the end of March. Much of the “trade war” talk has been dialed back after Trump’s recent meeting with Chinese President Xi.

Spending $1 trillion on infrastructure? That’s unlikely. Mulvaney said he and top economic adviser Gary Cohn are “assuming a $200 billion number.”

“The Trump train appears to be coming off the tracks as the president backpedals on a number of issues,” says Mike O’Rourke, chief market strategist at Jones Trading.

Investors run to ‘safe haven’ assets again

There are also his flip flops on NATO (now he’s really for it), China’s trade surplus (he says he’ll give China more favorable trade terms if they help out on North Korea), Syria (now the White House wants regime change there) and Janet Yellen (he bashed her on the campaign trail for propping up the Obama economy. Now he says he “likes her” and that low interest rates are good).

All this dialing back of expectations is causing a reality check in the markets.

U.S. stocks have stalled — and even dipped — since the S&P 500 closed at an all-time high on March 1. Even more telling is how investors are stocking up on “safe haven” assets like gold and government bonds.

Gold has jumped 7% in the past month, and the 10-year U.S. Treasury bonds are now yielding a mere 2.26%, a significant decline from 2.58% a month ago. The yield goes down when more people are buying bonds.

The key might still be tax reform

Since the election, the consensus view has been that Trump would do a major tax cut/overhaul (the biggest since the 1986 reform under President Reagan), scale back regulations and spend more money on the military and infrastructure. All of this was supposed to juice the economy — and stocks.

But now that thesis is breaking down. Any action on taxes probably won’t happen until later this year — or even 2018. Infrastructure and the massive budget cuts Trump wants are in doubt, and Trump’s “get tough” foreign policy is causing some alarm that the U.S. could be headed for more war.

“The 30 Freedom Caucus members in the House have sent a chill through the Trump inner circle. It’s clear they can block much of the Trump agenda, and Democrats seem lukewarm, at best, about cooperating,” says Greg Valliere, chief strategist at Horizon Investments. “So Trump has to lower expectations.”

Valliere still believes the “pro-business” faction of the White House, led by Goldman Sachs alum Gary Cohn, will prevail.

Business owners from Wall Street to Main Street would probably forget (and forgive) a lot of Trump’s flip flopping and uncertainty if tax reform gets done. But all the indications are the White House and Congress are a long way from making that happen.

“We’re talking about revamping one of the most complicated tax systems in the developed world, which would understandably take time to draft and negotiate across party lines,” says Lindsey Piegza, chief economist at Stifel Fixed Income.
Published at Thu, 13 Apr 2017 19:02:46 +0000

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Uber’s PR Chief Whetstone Quits Amid Crisis

 

Uber’s PR Chief Whetstone Quits Amid Crisis

By Craig Adeyanju | April 12, 2017 — 6:45 AM EDT

Uber Technologies Inc.’s communication chief Rachel Whetstone is leaving the ride-hailing giant amid a public-relation crunch embattling the company. (See also: Can Uber Solve Its Leadership Crisis?)

Whetstone made the announcement in a statement released on Tuesday without giving any reason for her departure. Whetstone joined Uber from Alphabet Inc. (GOOG) subsidiary Google where she also served as the head of communications and public policy. Whetstone’s deputy, Jill Hazelbaker, who also worked under Whetstone at Google, will assume the duties of Whetstone, according to a Wall Street Journal report.

Uber has been dealing with a raft of controversies in recent months. CEO Travis Kalanick has had to issue public apologies in recent weeks after a video of Kalanick berating an Uber driver went viral. There has also been a sexual harassment scandal around the company after an ex-Uber engineer, Susan Fowler, revealed that she was sexually harassed during her time at Uber. Alphabet has also sued the ride-hailing firm for allegedly stealing a patented self-driving car technology. (See also: Google’s Self-Driving Car Division Sues Uber)

Whetstone’s departure is the latest in a string of high-profile departures. President of Ride-Hailing Jeff Jones, who joined from Target Corp. (TGT) last September to help improve Uber’s reputation, left in March, saying the ride-hailing company’s beliefs and approach to leadership were inconsistent with his own ideologies. Ed Baker, vice president of product and growth, Raffi Krikorian, who was in charge of Uber’s self-driving car activities and Brian McClendon, vice president of maps and business platform had also departed Uber.

Whetstone has been instrumental in developing responses to Uber’s recent crisis, which included an advanced external investigation into the sexual harassment claims brought forward by Fowler. (See also: Uber’s Race to Catch Asian Rivals May Hurt Profits)

Whetstone joined Uber, which is valued at around $70 billion, at a time when the company was putting together an experienced management team in response to the rapid expansion the ride-hailing company was undergoing, especially to deal with regulators in cases where the company’s operations violated local policies such as taxi laws.
Published at Wed, 12 Apr 2017 10:45:00 +0000

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U.S. job openings rise to seven-month high in February

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 U.S. job openings rise to seven-month high in February

U.S. job openings rose to a seven-month high in February while the pace of hiring slipped, pointing to a growing skills mismatch and a further tightening of labor market conditions.

Job openings, a measure of labor demand, increased 118,000 to a seasonally adjusted 5.7 million, the Labor Department said on Tuesday. That was the highest level since July and lifted the jobs openings rate to 3.8 percent after holding steady at 3.7 percent for four straight months.

Hiring, however, slipped to 5.3 million from 5.4 million in January. The hiring rate dipped to 3.6 percent from 3.7 percent the prior month.

“It shows you that there is one of the most gigantic skills mismatches out there across the country that we have ever seen in history,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.

The U.S. labor market is viewed as being near or at full employment. The unemployment rate is at a near 10-year low of 4.5 percent, below the most recent Federal Reserve median forecast for full employment.

(Reporting By Lucia Mutikani; Editing by Meredith Mazzilli)
Published at Tue, 11 Apr 2017 15:00:32 +0000

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Guinness Exports Subject to Brexit Uncertainty

Guinness Exports Subject to Brexit Uncertainty

By Shoshanna Delventhal | April 8, 2017 — 11:09 PM EDT

Diageo Plc’s (DEO) iconic Guinness beer could face problems as the Dublin-based brewer foresees potential border compilations between the United Kingdom and Ireland, a European Union member state.

The 310-mile border between The Republic of Ireland and Northern Ireland will serve as the only land border between the U.K. and another EU country. Barrels of Guinness cross this border twice before being shipped out to beer connoisseurs around the world.

Companies Fear Return of Hard Border

Ingredients for Guinness are shipped from across Ireland to Dublin where they are mixed and fermented at the brand’s famous brewery at St. James Gate. The stout is then transferred into tanker trucks and moved 90 miles north to a Diageo packaging facility across the border in East Belfast. The Guinness, ready to hit the markets, then passes the unmarked border a second time before returning back home to Dublin.

Over the past two decades, an open border has allowed for the overall peaceful exchange of trade and culture between the U.K. and Ireland. While E.U. and British politicians say border controls between the states won’t return, many wonder how realistic that is. “For me, there’s no question, there has to be some sort of customs visibility on either side of the border,” Bloomberg quoted Robert Murphy, a former European Commission worker in Brussels.

Restraint of Trade?

The Irish government estimates cross-border trade between the U.K. and Ireland surpasses an annual 3 billion euros, or about $3.2 billion. A hard border could cost corporations big time, as the two states have a highly integrated agri-food sector. Diageo, for example, is estimated to lose 100 euros on each beer journey from Ireland just due to a time delay, amounting to 1.3 million euros in additional cost per year given border controls revamp.

The Economic & Social Research Institute estimated Brexit​ could cut trade flows between Ireland and the U.K. by 20%. Diageo for one, has said it will work with the the two governments on finding a solution to the border issue. E.U. leaders are scheduled to meet later this month for a summit to begin what is estimated to become two years of Brexit negotiations. (See also: Diageo: Finally Benefiting From ‘Transition Year’?)
Published at Sun, 09 Apr 2017 03:09:00 +0000

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Union pushes Morgan Stanley to bar payouts for U.S. government-job takers

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Union pushes Morgan Stanley to bar payouts for U.S. government-job takers

Morgan Stanley shareholders will again vote on an investor proposal from the AFL-CIO union that would prohibit stock awards from vesting for bank executives who resign for government service.

The board said in a proxy it was against the measure. Morgan Stanley and the board defeated the proposal at the annual meeting last year. It received 16 percent of votes cast.

Morgan Stanley, like many other Wall Street firms, allows employees to receive stock that otherwise would have been locked up for years if they depart the bank for Washington.

The practice has received scrutiny in recent months from investors and lawmakers after it was disclosed that former Goldman Sachs Group Inc president Gary Cohn would receive at least $100 million upon taking a job with the Trump administration.

Other banks, including Citigroup and JPMorgan Chase & Co, have also voted on similar proposals over the last several years.

Morgan Stanley will hold its annual meeting on May 22 at its wealth management headquarters in Purchase, New York.

(Reporting by Olivia Oran; Editing by David Gregorio.
Published at Fri, 07 Apr 2017 22:58:10 +0000

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High-roller Billy Walters convicted on insider trading charges

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billy walters conviction
A federal prosecutor said Billy Walters made more than $43 million by making trades based on inside information about Dean Foods.

  @jackiewattles

Las Vegas gambler William “Billy” Walters just lost the bet of a lifetime.

Walters, whose risky bets earned him the title of the “most dangerous sports bettor in Nevada,” was convicted of insider trading charges Friday, a federal prosecutor in Manhattan said.

“Billy Walters lost his bet that he could cheat the securities markets on a massive scale and get away with it scot-free,” said Joon Kim, the acting U.S. Attorney for the Southern District of New York.

He hasn’t been sentenced yet, but Walters could face prison time for his crimes.

Kim said Walters made more than $43 million by making trades based on inside information about Dean Foods, which he received from one of the company’s board members.

Walters made headlines last year when famed golfer Phil Mickelson — who’s currently competing in The Masters in Georgia — was ordered to pay the Securities and Exchange Commission $1 million in fines for profiting off a tip from Walters about Dean Foods(DF).

Federal investigators also questioned activist investor Carl Icahn regarding the matter, probing whether Mickelson and Walters made money selling shares of Clorox(CLX) around the time that Icahn announced his interest in buying the company.

Neither Mickelson nor Icahn faced criminal charges.

Published at Fri, 07 Apr 2017 19:39:05 +0000

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The right stuff: first jobs of America’s astronauts

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The right stuff: first jobs of America’s astronauts

By Chris Taylor| NEW YORK

While many dream about what is beyond our horizon on Earth, some actually get to see outer space up close.

For the latest in the Reuters “First Jobs” series, we talked to a few of America’s foremost astronauts, who have undertaken missions to the International Space Station and on the now-discontinued Space Shuttle.

Before they ended up global, they started local.

Anna Fisher

First job: Candy scooper

I used to work in the candy section of Newberry’s, which was a department store back in the day in San Pedro, California. I used to scoop up treats like popcorn and gummy bears and put them in little bags for customers. I remember how scared I was, not wanting to make any mistakes.

That was actually one of the only times in my life that I got a paycheck and paid Social Security taxes, because as an astronaut, I am in the retirement system for civil servants. So the few Social Security credits I do have come from that old candy job.

That store doesn’t exist anymore, but I still drive by that shopping center when I go back to San Pedro. Since then I have gone on to more complicated jobs, like launching and retrieving satellites on the 14th Shuttle flight. But I still look back fondly on my first job – and I still love candy today.

Butch Wilmore

First job: Stonemason

I grew up in middle Tennessee, and worked for a rock mason who built stone chimneys and walls. We had a real hard-driving kind of boss, who always made sure we were on the clock and never taking any breaks.

I started at $3.65 an hour, and pretty soon graduated to driving the dump truck. I used to go into the Tennessee backwoods and buy old stone chimneys from homeowners, or find old rock walls built back in the 1800s.

It was such dirty work. I came home from work every day, and my mom would have to hose me off in the backyard, because I was literally covered head to toe in soot. My claim to fame was that the musician Charlie Daniels, who sang “The Devil Went Down to Georgia,” had a log cabin in the area – and I built his chimney.

Working a backhoe isn’t that different from working robotics, actually. You are operating in three dimensions, just like in spaceflight.

Chris Cassidy

First job: Corn picker

This was in southern Maine, and there was a corn farmer who lived only a couple of miles from my house. One day when I was 12, I went up to his farmstand and asked if they needed help, and they told me to show up the next morning.

I didn’t particularly enjoy it, because there were a lot of big, mean 16-year-olds there, who used to mess with me and put grease on the seat of my bike. What I really remember is the early wakeup at 5:30 a.m. That was a real shock to my system, riding my little bike there in the pitch dark.

That was some real work. Picking corn, grinding it out with hands and sweat – that was a good foundation for me.

Rex Walheim

First job: KFC cook

I worked for a couple of years at the Kentucky Fried Chicken in Redwood City, California. I believe it was for $2.75 an hour, prepping the chicken and then putting it in the deep fryer. I remember I had to dump the chicken into a marinating tub with the secret herbs and spices, and I used to get totally coated in flour.

I liked the chicken, but after working there and having it so much, it took a long while before I could start eating it again. My family loved it, though, because after work I got to bring home extra chicken and they would put it all in the freezer.

That job gave me motivation to get out of there and go to college, because what I really wanted to be was an Air Force pilot. Eventually I became an astronaut and went on three shuttle missions. I may be the only KFC worker to have been in space – I haven’t heard of any others yet.

(Editing by Beth Pinsker and Matthew Lewis)

 
Published at Thu, 06 Apr 2017 16:33:37 +0000

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Health Carriers Hanging Tough Despite D.C. Debacle

by DarkoStojanovic from Pixabay

 

Health Carriers Hanging Tough Despite D.C. Debacle

By Alan Farley | April 6, 2017 — 12:01 PM EDT

Health insurance carriers are holding intermediate support levels despite chaotic political swings that have generated massive opposition to Republican health care reform efforts. This resilient price action tells us investors and market players aren’t worried, at least yet, that industry profits will suffer when the smoke clears, and new legislation becomes the law of the land.

A number of major carriers have already pulled out of ACA coverage, lowering their exposure to legislative surprises, but that might not protect them because new laws are likely to impact the entire system from premium gathering to final payments. Also, taking insurance away from tens of millions of current policyholders could also have an adverse and chaotic effect because that entire premium base will be lost.

UNH

Dow component UnitedHealth Group, Inc. (UNH) broke out above the 2005 high at $64.61 in 2013 and entered a powerful trend advance that continued to post new highs into the first quarter of 2017. Rally momentum escalated after the November election, signaling optimism that new administration policies would underpin profitability. The company pulled out of ACA coverage in 2016.

It hit an all-time high at $172.14 on March 16th and turned lower, posting greater than average selling volume during Congressional negotiations that broke down near month’s end. The decline settled on the 50-day EMA about two weeks ago, with the stock holding like glue to that intermediate support level into April. The selloff had an adverse impact on institutional sponsorship, with On Balance Volume (OBV) falling to the lowest-low since January.

AET

Aetna, Inc.(AET) topped out at $60 in December 2007, following a 7-year uptrend, and sold off to the mid-teens during the 2008 economic collapse. It returned to the prior high in 2013 and broke out, entering an uptrend that peaked at $134.40 in June 2015, ahead of an intermediate correction that found support in the low-90s in the first quarter of 2016. The subsequent recovery wave reached resistance after the election, but the stock failed to break out, instead of turning lower into February.

A bounce at the 200-day EMA gathered momentum into mid-March but reversed about 2-points under the 2016 high, dropping back to the 50-day EMA during the health care debate. On Balance Volume (OBV) has been dropping like a rock since 2016, signaling a bearish divergence that opposes a bullish cup and handle breakout pattern. This marks a major bull-bear standoff that could last into the second half of 2017.

HUM

Humana, Inc.’s (HUM) pattern looks similar to rival AET because the companies were locked into a merger agreement until the Federal government nixed the deal in January 2017. HUM topped out in the upper-80s in January 2008 and sold off into the upper-teens in March 2009. It took more than two years for the subsequent bounce to reach resistance at the prior high, ahead of a 2014 breakout that stalled near $220 in May 2015.

The stock carved a long rounded base into the second half of 2016 and took off in a strong rally that reached the prior highs in December. It pulled back into January 2017, testing the 200-day EMA and returned to resistance once again, completing a cup and handle breakout pattern. The stock is also sitting on the 50-day EMA after the reform debacle but has attracted much strong buying interest than its former suitor.

The Bottom Line

Health insurance carriers have pulled back to their 50-day EMAs and entered holding patterns after the administration, and House of Representative failed to deliver health reform legislation to the U.S. Senate. While UnitedHealth Group has carved the strongest rally in recent years, Humana now shows the greatest upside potential, after completing a cup and handle pattern backed by strong buying volume.
Published at Thu, 06 Apr 2017 16:01:00 +0000

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Bezos is selling $1 billion of Amazon stock a year to fund rocket venture

Amazon and Blue Origin founder Jeff Bezos addresses the media about the New Shepard rocket booster and Crew Capsule mockup at the 33rd Space Symposium in Colorado Springs, Colorado, United States April 5, 2017. REUTERS/Isaiah J. Downing

 

Bezos is selling $1 billion of Amazon stock a year to fund rocket venture

By Irene Klotz| COLORADO SPRINGS, Colo.

Amazon.com founder Jeff Bezos said on Wednesday he is selling about $1 billion worth of the internet retailer’s stock annually to fund his Blue Origin rocket company, which aims to launch paying passengers on 11-minute space rides starting next year.

Blue Origin had hoped to begin test flights with company pilots and engineers in 2017, but that probably will not happen until next year, Bezos told reporters at the annual U.S. Space Symposium in Colorado Springs.

“My business model right now … for Blue Origin is I sell about $1 billion of Amazon stock a year and I use it to invest in Blue Origin,” said Bezos, the chief executive of Amazon.com Inc (AMZN.O) and also the owner of The Washington Post newspaper.

Ultimately, the plan is for Blue Origin to become a profitable, self-sustaining enterprise, with a long-term goal to cut the cost of space flight so that millions of people can live and work off Earth, Bezos said.

Bezos is Amazon’s largest shareholder, with 80.9 million shares, according to Thomson Reuters data. At Wednesday’s closing share price of $909.28, Bezos would have to sell 1,099,771 shares to meet his pledge of selling $1 billion worth of Amazon stock. Bezos’ total Amazon holdings, representing a 16.95 percent stake in the company, are worth $73.54 billion at Wednesday’s closing price.

For now, Kent, Washington-based Blue Origin is working toward far shorter hops – 11 minute space rides that are not fast enough to put a spaceship into orbit around Earth.

Blue Origin has not started selling tickets or set prices to ride aboard its six-passenger, gumdrop-shaped capsule, known as New Shepard.

The reusable rocket and capsule is designed to carry passengers to an altitude of more than 100 miles (62 km) above the planet so they can experience a few minutes of weightlessness and see the curvature of Earth set against the blackness of space. Unmanned test flights have been underway since 2015.

At the symposium, Bezos showed off a mockup of the passenger capsule, which sports six reclined seats, each with its own large window. Also on display was a scorched New Shepard booster rocket that was retired in October after five flights.

Like fellow tech entrepreneur Elon Musk, founder and chief executive of SpaceX, Bezos says that reusability is the key to cutting the cost of space flight. Last week, SpaceX re-launched a rocket for an unprecedented second mission to put a spacecraft into orbit.

“The engineering approach is a little different, but we’re very like-minded,” Bezos said of Musk.

Blue Origin is developing a second launch system to carry satellites, and eventually people, into orbit, similar to SpaceX’s Falcon 9 and Dragon capsule.

Development costs for that system, known as New Glenn, will be about $2.5 billion.

There is no estimate yet for how much Bezos will invest overall on Blue Origin. But Bezos has indicated he will spend what it takes.

“It’s a long road to get there and I’m happy to invest in it,” Bezos said.

According to Forbes magazine, Bezos has a net worth of $78 billion.

 

(Reporting by Irene Klotz; Editing by Leslie Adler)
Published at Thu, 06 Apr 2017 01:35:12 +0000

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Government orders Wells Fargo to reinstate whistleblower

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 Government orders Wells Fargo to reinstate whistleblower

By Pete Schroeder

The federal government has ordered Wells Fargo (WFC.N) to reinstate a former bank manager who lost his job after reporting suspected fraudulent behavior at the bank.

The Labor Department’s Occupational Safety and Health Administration (OSHA) announced on Monday that the bank must rehire the employee, as well as pay back wages, compensatory damages and attorneys’ fees totaling $5.4 million.

OSHA concluded that the manager was “abruptly” forced to leave a Los Angeles branch of the bank in 2010, after he told superiors he suspected two of his subordinates of bank, mail and wire fraud. The manager also called the bank’s ethics hot line. OSHA determined his whistleblowing was “at least a contributing factor in his termination.” The manager was not named.

The bank is planning to request a full hearing on the OSHA decision before the Labor Department’s Office of Administrative Law Judges. Such a step will not halt the initial reinstatement order.

“We take seriously the concerns of current and former team members. This decision is a preliminary order and to date there has been no hearing on the merits of this case. We disagree with the findings and will be requesting a full hearing of the matter,” said Vince Scanlon, a bank spokesman.

According to OSHA, the manager had previously received positive job performance appraisals, but in 2010 he was told he had 90 days to find a new job at the bank after being dismissed as a manager. He was unable to do so and was terminated, and has not found work in banking since.

The manager worked in Wells Fargo’s wealth management group, according to the bank.

The OSHA decision is unrelated to the bank’s woes surrounding the creation of potentially millions of fake accounts by employees looking to hit sales goals. In that case, the bank has also come under scrutiny over whether it punished whistleblowers that notified superiors of wrongdoing involving Wells Fargo employees.

(Reporting by Pete Schroeder; Editing by Tom Brown and Steve Orlofsky)
Published at Mon, 03 Apr 2017 23:11:39 +0000

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Tesla Hits All-Time High, Passes Ford in Market Cap

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Tesla Hits All-Time High, Passes Ford in Market Cap

By Rakesh Sharma | April 3, 2017 — 7:14 PM EDT

Call it a symbolic change of the guard, if you will. Tesla, Inc. (TSLA), which kick started the electric car revolution, passed Ford Motor Company (F), a company that pioneered the car revolution in the United States, in market value today.

At the end of trading, Tesla’s share price was $298.52, an increase of 7.27 percent since the day’s start. That bump brought its total market capitalization to $48.63 billion, making it the second biggest automotive stock in the markets. Only General Motors Company (GM) is ranked higher. In comparison, Ford’s stock price declined by 1.7 percent to $11.44, and its total market capitalization declined to to $45.4 billion. (See also: Elon Musk Mocks Short Sellers After Tesla Stock Surge.)

Tesla’s stock price shot up after the company reported record deliveries of 25,000 vehicles during its first quarter. Investors were enthused by the announcement, as it means that the company is on track to deliver 50,000 vehicles during the first half of this year. In contrast, Ford was hit by an overall decline in passenger car sales in the country and reported a 7.2 percent decline in sales of its cars. (See also: Tesla Reports Record Deliveries in the First Quarter.)

A Wall Street Journal report about Tesla’s soaring stock price draws another parallel between the two companies. Henry Ford was 45 – the current age of Tesla CEO Elon Musk – when he released the Model T, the common man’s car. Musk is scheduled to release the Model 3, an affordable electric car priced at $35,000, later this year. Musk is also said to have cheekily named Tesla’s sedan Model S because the letter S comes before T in the alphabet. (See also: Elon Musk Biography.)

But the stock market’s valuation for both companies is not reflective of the scale of their operations or profits. For example, Ford reported profits of $10.4 billion last year and had a positive cash flow of $6.4 billion. Meanwhile, Tesla reported losses of $773 million and had negative cash flow. Ford delivered 6.6 million vehicles last year, while Tesla delivered 76,000. (See also: Tesla’s Stock Drops on Missed Delivery Forecast.)

However, the market’s assessment of Tesla is based on the electric car maker’s future prospects. Volatility in global oil prices combined with the threat of global warming has resulted in a surge of interest in renewable energy products. Cities and countries have passed legislation that mandates increased penetration for electric cars and solar products. Tesla is well positioned to take advantage of this rapidly expanding market. The company acquired solar panel maker SolarCity Corporation to provide a full stack of renewable energy solutions from solar panels to storage facilities and electric cars to customers.

That, at least, is Tesla CEO Elon Musk’s vision. A critical litmus test for that vision will occur this summer, when the company starts production on its first mass-market electric car, the Model 3. The company is already facing the prospect of a workers’ strike and has weathered criticism from naysayers regarding its capital raise to expand production facilities. But a successful Model 3 debut will ensure Musk’s place in the history books – right next to Henry Ford. (See also: Tesla Model 3 Could Become Safest Car on Road.)
Published at Mon, 03 Apr 2017 23:14:00 +0000

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Ford recalls F-250 pickups that could roll while in park

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Ford recalls F-250 pickups that could roll while in park

The recall, the third announced by Ford this week, affects 2017 model year F-250 vehicles powered by 6.2-liter gasoline engines and built in its Louisville, Kentucky, truck plant, it said in a statement.

Ford, the second-largest U.S. automaker, also said it was unaware of any injuries or accidents associated with the latest issue.

The company said on Wednesday it was recalling 211,000 vehicles in North America to replace potentially faulty side door latches.

Another recall involves 230,000 vehicles that present a fire risk in the engine compartment. Ford said it had reports of 29 fires related to that issue but no injuries.

The Dearborn, Michigan-based automaker had previously recalled nearly 4 million vehicles for door latch issues in six separate announcements since 2014, including 2.4 million vehicles recalled in late 2016.

(Reporting by Frank McGurty; Editing by G Crosse and Bill Trott)

 
Published at Sat, 01 Apr 2017 17:30:18 +0000

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BlackBerry lives! Stock soars on strong outlook

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Blackberry CEO: The smartphone market is saturated
Blackberry CEO: The smartphone market is saturated

BlackBerry lives! Stock soars on strong outlook

Shares of BlackBerry(BBRY, Tech30) surged nearly 15% on Friday after the company reported sales that topped Wall Street’s forecasts. The company also reported beat estimates with its adjusted profit, a figure that excludes restructuring charges and other expenses.

Make no mistake, though: BlackBerry, which used to be known as Research in Motion, is a shell of its former self. The stock is down about 95% from its peak in 2008.

And when you include charges, BlackBerry still lost $47 million in its most recent quarter and $1.2 billion for the full fiscal year. Revenues plunged as well.

It’s well known that BlackBerry’s phone business is essentially dead. BlackBerry is transitioning from a company known mainly for old-school smartphones with physical keyboards to a company that develops software for other phone makers.

And that shift appears to be going extremely well.

CEO John Chen said Friday that the company expects to report a real profit this fiscal year. Not a profit after accounting for one-time charges. An actual profit.

Investors are also happy that the company is no longer burning cash. Not long ago, investors were worried BlackBerry was going to run out of money.

But it finished the quarter with $1.7 billion on its books, up nearly $90 million from the end of November.

The company’s shift from hardware to software seems to be paying off. BlackBerry said last September that it would stop making phones itself and would outsource production of BlackBerry-branded phones to other companies.

It was a stunning admission of defeat for the firm, which was once so popular that people referred to its phones as CrackBerries. Former President Barack Obama and Kim Kardashian West were big fans.

But BlackBerry was late to the smartphone game, relying too long on keyboards and its proprietary operating system. Apple(AAPL, Tech30), Samsung and others in Google’s(GOOGL, Tech30) Android camp vaulted over BlackBerry in market share.

Even Microsoft(MSFT, Tech30) — which hasn’t done all that well with its own Windows Phone business after spending billions to buy assets from Nokia(NOK), another former king of the handset world — has eked out a bigger share of the market than BlackBerry.

Software and services now account for almost 60% of BlackBerry’s overall sales. It’s also a growing player in connected devices, the so-called internet of things.

Ford(F) is a key partner for BlackBerry. The auto giant uses BlackBerry’s QNX software in some of its cars. And Ford just hired 400 BlackBerry workers to develop connected cars.

So even though BlackBerry had to concede defeat in the smartphone wars, and even though it may never again be CrackBerry, its new focus is giving it a good chance of survival.
Published at Fri, 31 Mar 2017 16:40:04 +0000

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