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Junk-Debt Apocalypse Later
Barron’s assuaged our fears about junk bonds. “High yield is likely to be relatively safe and offer decent yields for the next year or two.” A year or two? And then what? Ah… “But risks loom as the credit cycle stretches out and the long-expected rise in rates materializes.” Everyone gets out in time. That’s the idea. Everyone, all at once. With no buyers at the other end because everyone is getting out, rather than in. But Barron’s was right, even if the timing doesn’t work out: whatever mayhem awaits us in the future, at the moment we’re having fun. Possibly the most fun ever: Charter Communications’ offer to buy the much larger Time Warner Cable for a red-hot $78.7 billion comes on top of its previously announced but now amended deal to buy Bright House Networks for $10.4 billion. But that deal suddenly requires an additional $2 billion in debt, as Charter disclosed in an SEC filing. In order to pull both deals off, Charter would likely have to issue over $25 billion in new debt.

IRS believes identity thieves from Russia
IRS investigators believe the identity thieves who stole the personal tax information of more than 100,000 taxpayers from an IRS website are part of a sophisticated criminal operation based in Russia, two officials told the Associated Press. The information was stolen as part of an elaborate scheme to claim fraudulent tax refunds, IRS Commissioner John Koskinen told reporters. Koskinen declined to say where the crime originated. But two officials briefed on the matter said Wednesday the IRS believes the criminals were in Russia, based on computer data about who accessed the information. The officials spoke on condition of anonymity because they were not authorized to publicly discuss the ongoing criminal investigation. An IRS spokeswoman said Wednesday the agency couldn't comment on the investigation. The revelation highlights the global reach of many cyber criminals. And it's not the first time the IRS has been targeted by identity thieves based overseas.

‘Dollar’ Tightening Is Not Back—-It Just Resumed
Nobody really knows what is going to happen as Greece disproves all the narratives about the ECB’s ability to actually fix anything. As with all things monetarism, the attempts of liquidity were really about time rather than dissuading imbalances. But the funny thing about trying to buy time is that it so often removes the very pressure necessary to instill discipline in the first place. In the case of Greece, they defaulted (twice) on their debt, but only a short time later they were back at it issuing billions in a bond market far too eager to oversubscribe as if nothing had ever happened. Into that forming maelstrom, the euro is taking the heat for the “dollar.” There is certainly that piece of European participation in whatever is taking place of the past week or so, but I think that overstates the “dollar’s” recent issues. From all proxy indications, the “dollar” seems to be tightening again across a broad global front, which suggests far more than Greece and the euro.

Average cost of computer breach is $3.79 million
The average cost of a computer breach at large companies globally was $3.79 million, a survey released Wednesday found. For U.S.-based companies, the average cost was much higher, $6.5 million. The survey was conducted by the Ponemon Institute, a security research center, in conjunction with IBM. It surveyed 350 companies in 11 countries that had experienced a data breach, mostly in 2014. In the United States, 62 companies participated in the survey. "The cost of a data breach, both the total organization cost as well as the cost per compromised record, increased substantially," said Larry Ponemon, chair of the institute. Globally it has risen 23% since 2013. In the United States it's up 11%. The average cost per lost or stolen record in the United States was $217. Globally the cost was $154. Those costs included abnormal turnover of customers, reputation loss, diminished goodwill and paying for credit reports and aid to customers whose information was breached, said Ponemon.

Copper Theft Causes NYC Train Chaos

The Fed Considers a More Seasoned Approach - Peter Schiff
Just as the steady torrent of awful economic data, which began in the First Quarter and continued well into April and May, had forced many market analysts to grudgingly concede that 2015 would not see the robust economic growth that most had expected, the statisticians arrived on the scene like a cavalry charge and routed the forces of pessimism with a wave of their spreadsheets. The campaign began in late April with some seemingly groundbreaking analysis by CNBC's Steve Liesman showing that over a 30 year time frame GDP data had consistently measured first quarter growth at 1.87%, which was far lower than the 2.7% rate averaged in the following three quarters of the year. He pointed out that the trend had gotten even more pronounced since 2010, when first quarter growth averaged just .62% and the remaining three quarters averaged 2.3%. The disparity caused Liesman, and others, to question whether first quarter data should be regarded as reliable.

McDonald’s to end monthly sales reporting - Company turns focus to reversing sales weakness
McDonald’s Corp. will stop reporting same-store sales on a monthly basis beginning in July, the company said Wednesday, as it takes a quieter path in an effort to reverse its historic sales weakness. At the Bernstein Research Strategic Decisions Conference, McDonald’s CEO Steve Easterbrook said the company would cease announcing monthly same-store sales results on July 1. Easterbrook said the company is making its move “to focus our activities around strategic long-term actions we’re taking as part of our plan.” Disclosing same-store sales on a quarterly basis “is consistent with nearly all retailers, and will provide a greater understanding of sales results in the context of the company’s overall performance,” he said. McDonald’s is the last restaurant company to publicly report monthly same-store sales. No other restaurant company releases monthly sales reports. The last operator to report monthly sales, Starbucks Corp., ended its reports in 2008.

Congrats, class of 2015, and welcome to a grim job market
The class of 2015 can't be blamed for tossing their graduation caps into the air with a great deal of trepidation. The tepid demand for workers and weak wage growth that continues to hamper the U.S. job market is forcing many newly minted college graduates into low-paying, low-skilled jobs, according to a new report from the left-leaning think tank Economic Policy Institute. And that's for those who are lucky enough to find a full-time job, given that the ranks of recent college grads who are underemployed have continued to swell in recent years. While younger people have always suffered from higher unemployment than older workers, the Great Recession has has an uncommonly long and severe impact on young workers. Even though the unemployment rate is falling, it still remains almost 2 percentage points higher for recent college grads than in 2007, before the recession started. Young workers with only high school degrees are predictably in even worse shape...

Third Madoff employee avoids prison
A former Bernard Madoff trader who helped create fake securities data to trick customers avoided a prison sentence, the third ex-worker to do so after assisting in the prosecution of former colleagues. David Kugel, who worked in the brokerage operation of Madoff's New York-based firm for almost four decades, was given 10 months' home detention and ordered to perform 200 hours of community service. He had faced as long as 85 years behind bars for his role in the con man's $17.5 billion Ponzi scheme. He was sentenced Wednesday in Manhattan by U.S. District Judge Laura Taylor Swain, who oversaw the only trial tied to the unprecedented fraud. A jury convicted five of Madoff's former top aides after a government case that relied in part on Kugel's testimony. Kugel, hired in 1970, was the first witness to testify in the five-month trial to admit involvement in the fraud, which unraveled with Madoff's arrest on Dec. 11, 2008.

FIFA 'did this over and over, year after year,' says US attorney general

Don't downplay Greece's struggles
A Greek exit from the euro zone could "discombobulate" currencies and open the door for contagion to other heavily indebted nations, bond investor Bill Gross said Wednesday. The cash-strapped European nation's struggles matter despite markets' perceived resistance to its ongoing debt negotiations, Gross contended. He noted that if Greece left the euro zone, it would only lead to speculation swirling around Portugal, Spain or Italy. "I think it matters because markets interpret events on a forward basis," said Gross, manager of the Janus Global Unconstrained Fund. In an interview on CNBC "Power Lunch," Gross noted that projecting economic growth in the euro zone is difficult, especially because it depends on the effectiveness of the European Central Bank's bond-buying program. The ECB's easy policy does not necessarily make 2 to 3 percent growth in euro zone nations a "slam dunk," Gross said.

Etihad Airways says it will add $6.2 billion to U.S. economy by 2020
Abu Dhabi's Etihad Airway's contribution to the U.S. economy will almost double to $6.2 billion by 2020, it said on Wednesday, in an apparent counter to allegations that government subsidies gave it an unfair edge over competition. The airline will support the American economy with 23,400 jobs and $2.9 billion in 2015, according to research by Oxford Economics, Etihad said in a statement. Both of the figures will nearly double by 2020 as Etihad increases operating expenditure and capital investment. Etihad said the study assessed its capital expenditure with U.S. suppliers and its operating expenditure, as well the impact of passengers it brought into the country. Three U.S. airlines - Delta (DAL.N), United and American, earlier this year launched a campaign, asking for their Open Skies pact with Gulf carriers to be altered. In a lengthy report, the airlines accused Etihad, Emirates [EMIRA.UL] and Qatar Airways of taking $40 billion in government subsidies...

Obamacare to add billions in insurance overhead costs, study says
Obamacare will cost insurers more than a quarter of a trillion dollars in additional administrative costs by 2022, a new study released Wednesday says. The findings published in Health Affairs magazine call for a universal single-payer system because it would reduce, rather than add, to administrative costs. The report says that over the eight years through 2022, the Affordable Care Act will tack on $273.6 billion in overhead. Some of that will be added to Medicare and Medicaid programs, but the bulk of it — $172.2 billion — will be borne by private insurance. That total increase, in both government and private insurance programs, amounts to $1,375 for each newly insured person a year, or roughly 22.5% of total government expenditures. “Insuring 25 million additional Americans, as the [Congressional Budget Office] projects the ACA will do, is surely worthwhile. But the administrative cost of doing so seems awfully steep, particularly when much cheaper alternatives are available,” the report says.

Jamie Dimon blasts "lazy" shareholders
JP Morgan CEO Jamie Dimon blasted investors who follow the voting advice of shareholder advisory firms ISS and Glass Lewis, calling them “lazy.” “God knows how any of you can place your vote based on ISS or Glass Lewis,” Dimon said at an investor conference in New York. “If you do that, you are just irresponsible, I’m sorry. And you probably aren’t a very good investor, either,” the tough-talking CEO said to awkward laughter. “And you do. Believe me, I know some of you here do it. Because you’re lazy,” he said at the Bernstein Annual Strategic Decisions Conference. ISS and Glass Lewis created problems for Dimon this year when they recommended shareholders vote against the bank’s executive pay packages. As a result, the bank came close to losing a non-binding shareholder vote in May. Just 61.4% of JP Morgan shareholders gave the thumbs-up to compensation paid to the company’s top five executives in 2014, including $20 million to Dimon.

China plans to create US$16 billion gold stockpile to help drive new Silk Road
China plans to establish a US$16 billion gold fund to stockpile the precious metal, in a move expected to provide a jolt to flagging prices. State-endorsed media in China has reported that Shandong Gold Group and Shaanxi Gold Group will take stakes of 35 per cent and 25 per cent respectively in the new fund alongside other investors, as part of a scheme known as the “Silk Road” initiative aimed at boosting trade. The new entity, which may include an exchange-traded fund for gold and investments in miners of the precious metal, aims to raise the US$16 billion in three tranches, according to the report. News of the fund could restore some impetus to the gold market, which has been struggling to offset the growing strength of the US dollar. Gold fell below the psychologically important $1,200 per ounce level at the start of the week as traders bet on the timing of an expected rate rise by the US Federal Reserve this summer.

One third of U.S. workers want longer hours even with no raise
The Federal Reserve's report on the economic well-being of U.S. households is out, and it contains one very interesting finding: A decent share of Americans want to work longer hours even without a raise. The Fed asked non-self-employed workers whether they'd prefer to work more, less, or the same amount that they now work if their hourly wage was unchanged. The goal of the question was to help gauge the amount of underemployment in the economy, according to the report. Thirty-six percent of respondents said they'd prefer to work more hours at their current wage. Among those who work part time, the share is even higher at 49 percent. The results might help Fed Chair Janet Yellen and her colleagues connect the dots in a labor market that's still flashing mixed signals. "When Yellen says that the unemployment rate probably does not fully capture the extent of slack in the labor market, this is exactly what she's talking about,"...

Overdraft fees top $1 billion at the big 3 banks
America's three biggest banks -- JPMorgan Chase, Bank of America, and Wells Fargo made more than $1.1 billion on overdraft fees in the first three months of the year. Despite efforts to curb these charges after the financial crisis, they are still a big money maker for banks. If the fee collection pace keeps up, the big three banks are on track bring in $4.5 billion in overdraft charges by the end of this year. That works out to about $20 for every American adult. Banks aren't supposed to charge customers overdraft fees when they use an ATM to get cash unless the customer chooses or "opts in" to get the cash despite the fee. That said, banks can still levy a fee if someone's balance goes negative because a check is cashed or an automatic payment such as rent goes through and there aren't sufficient funds to cover it. A 2014 Pew study found more than half of the people who overdrew their checking accounts in the past year didn't remember consenting to the overdraft service.

Pentagon: Military mistakenly shipped live anthrax samples
The Centers for Disease Control and Prevention said Wednesday it is investigating what the Pentagon called an inadvertent shipment of live anthrax spores to government and commercial laboratories in as many as nine states, as well as one overseas, that expected to receive dead spores. "At this time we do not suspect any risk to the general public," CDC spokeswoman Kathy Harben said. A Pentagon spokesman, Col. Steve Warren, said the suspected live anthrax samples were shipped from Dugway Proving Ground, an Army facility in Utah, using a commercial delivery service. Warren said the government has confirmed one recipient, a laboratory in Maryland, received live spores. It is suspected, but not yet confirmed, that anthrax sent to labs in as many as eight other states also contained live spores, he said. Later he said an anthrax sample from the same batch at Dugway also was sent to a U.S. military laboratory at Osan air base in South Korea; no personnel there have shown signs of exposure, he said...

Texas floods: Cleanup, searches continue
A man prepares to toss a rope into the Blanco River, unsure of what will happen next. Someone is in the murky waters, rescuers believe -- but they don't know yet whether the person is alive or dead. The team is hoping for a rescue, but bracing for a recovery. In the end, this one turns out to be a false alarm. And the search for the missing continues in the flood-ravaged town of Wimberley. It's a scene playing out over and over as Texas copes with widespread flooding from a storm system that swept through region. At least 34 people -- 14 in northern Mexico, 14 in Texas plus six in Oklahoma -- have died in the severe weather, both tornadoes and flooding from raging rivers. Another 10 people are missing. "It's just very heartbreaking, that we have this loss of life," said Kristi Wyatt, city spokeswoman in San Marcos, Texas -- one of the hardest hit areas. "Some of those people were in a home together, celebrating the holidays, and they were swept away in the stormwater. ... It's just a terrible situation."

U.S. Government Preparing To Seize Private Pension Funds

Stocks Began Falling Right At This Time Of The Year Just Prior To The Last Financial Crisis
Have you heard of the saying “sell in May and go away”? Traditionally, the period from May through October has been a time of weakness for stocks. In fact, on average stocks hit their lowest point of the year on October 27th. And most people don’t remember this, but the Dow Jones Industrial Average actually began plunging right at this time of the year just prior to the financial crisis of 2008. Most people do remember the huge stock crash that happened in the fall of that year, but the market actually started to slide in May. Throughout the first four and a half months of 2008, stocks moved up and down in a fairly narrow range, and the Dow closed at a short-term peak of 13,028.16 on May 19th. From there it was all downhill for the rest of the year. So will a similar thing happen in 2015 as we approach the next great financial crisis? Since March 20th, the Dow Jones Transportation Average has already fallen by almost 800 points. So will the Dow Jones Industrial Average soon follow?

Unions say it's OK for businesses to sidestep the L.A. minimum wage
Labor leaders say that businesses with unionized workers should be exempt from the $15 minimum wage requirement. Earlier this month, the Los Angeles City Council voted in favor a new law that would increase the city’s minimum wage from $9 to $15 an hour by the year 2020. Yet the Los Angeles Times reports that labor officials, who until now have been strong supporters of the wage hike, are asking for a last-minute change that would allow unions the freedom to collectively bargain for wages that are lower than the minimum. “With a collective bargaining agreement, a business owner and the employees negotiate an agreement that works for them both,” Rusty Hicks, head of the Los Angeles County Federation of Labor, said in a statement. “This provision gives the parties the option, the freedom, to negotiate that agreement. And that is a good thing.” Some business leaders suspect the sudden about face by the organization, which represents over 300 unions in the L.A. area...

The One Big Economic Problem That No One Is Talking About
Just when you thought America had gotten back on track, with a low unemployment rate, record stock market highs, and businesses posting huge profits, something had to come along and wreck the party. Many Americans are already acutely aware that there are still a few big issues hamstringing the economy, namely wage growth and the swelling ranks of the long-term unemployed, but it turns out there has been another problem brewing for some time now, and it may lead to further complications down the road. According to a report from the U.S. Government Accountability Office, a huge number of America’s jobs — we’re talking as many as 40% — are “contingent” jobs. That means that those jobs are not particularly secure, and are made up of positions that require employees to work on contracts, on-call, or as independent contractors. These jobs are not only less secure than full-time positions, but they also come with limited benefits including subpar healthcare, sick days, and retirement plans.

Thursday 05.28.2015

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.