Daimler Trucks will lay off 1,240 workers in the U.S. and Mexico
Daimler Trucks North America said Monday it will lay off 1,240 workers in the U.S. and Mexico – including 170 at its Western Star factory on Swan Island – amid a downturn in demand for long-haul trucks.
The Portland factory will continue to employ 570 and Daimler said it expects to recall laid-off workers once demand improves. It gave no indication, though, of when that will be. The layoffs fall hardest at two sites in North Carolina, where the company is eliminating 800 jobs. Daimler will lay off another 270 in Mexico.
Daimler said it forecasts a 15 percent decrease in certain classes of trucks this year after selling 425,000 units in 2015. But it said the company's market share remains strong, growing from 39.4 percent last year to 41.9 percent this year.
Employment at Daimler's Western Star plant has been volatile in recent years, rising and falling along with the truck market. Scheduled at one point to close in 2010, Daimler kept it open and in 2011 announced a major expansion. Last year, the company agreed to pay $2.4 million to settle accusations of racial discrimination and sexual harassment at the site.
Hercules Offshore files for Chapter 11 bankruptcy
Houston-based energy firm Hercules Offshore filed for Chapter 11 bankruptcy Monday, confirming an earlier plan to liquidate after a previous restructuring attempt flopped amid rocky terrain for oil companies.
The offshore oil drilling services firm and rig operator (HERO), which had signaled its plans to seek court protection 10 days ago, said Monday that 99.7% of its first-lien lenders had voted to endorse the pre-packaged bankruptcy plan.
Although many companies use Chapter 11 bankruptcy to restructure and emerge as a viable company, Hercules plans to use that segment of the bankruptcy code to dissolve its operations. The company confirmed Monday that it will sell assets and then shutter operations that do not find a suitor.
All unsecured creditors will be fully compensated, Hercules said in a statement. Shareholders will receive some cash upfront if they vote to accept the plan or will receive a portion of the proceeds from the asset sale if they vote no.
Lockhart: Jobs report doesnt signal economic slowdown
Yellen Sees Rates Rising Gradually But Avoids Precise Timing
Federal Reserve Chair Janet Yellen said that additional gradual interest-rate increases will be appropriate but was silent on their precise timing, an omission viewed as a signal that a June move was off the table.
“I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run,” Yellen said Monday during a speech in Philadelphia.
Her comments were less specific than in her previous remarks in describing when she thought the Fed should raise rates again. On May 27 at Harvard University, she said an increase would likely be appropriate in “coming months,” a phrase she didn’t repeat on Monday. Since then, the Labor Department reported U.S. employers in May added the fewest number of new jobs in almost six years, causing expectations for a rate increase to plunge.
“She did not address the timing of the Fed’s next gradual move which suggests to us that she is in no hurry,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd, arguing that her comments on the payroll report “largely rules out a move in rates next week. July is not a strong bet either.” The employment numbers were “disappointing,” Yellen said, while also pointing to one of the few encouraging elements of the report -- the increase in average hourly earnings
BofA Credit Analyst Loses It: "Central Banks Created A Fantasy Land"
For those who have been forced to trade the market, or provide trading recommendations, the past few months have not been kind: we have seen several instances in recent weeks where a trader lost it, where a strategist - one as prominent as SocGen's Albert Edwards - blew up and admitted "I'm Not Really Sure How Much More Of This I Can Take", and even a central banker went off the rails saying he and his peers are "magic people."
Today it is the turn of one of the more prominent (and bearish) sellside high yield analysts, BofA's Michael Contopoulos, to join the bandwagon of those driven to near insanity by the Fed, something he himself admits in a note titled "cycle not acting its age as central banks create fantasy-land."
The HY analyst says that while his bearish stance has gotten less pronounced in the last week as "Q1 earnings data was better than it had been in 6 quarters," he adds that his "bearish stance most definitely still remains both on valuations and our disposition about the trajectory of corporate and economic data. Long term we continue to find it very difficult to see a path for high yield corporates to grow into their balance sheets."
That's the fundamentals and they scream sell. On the other hand, Contopoulos adds that fundamentals do not matter when faced with activist central banks who are intent on inflating the biggest debt bubble ever, one which even Goldman warned over the weekend would lead to as much as $2.4 trillion in MTM losses if rates rise by just 100 bps: "at the same time, we fully recognize and appreciate that low global yields and the need to stay invested creates a positive technical that is difficult to fight against."
California Could Become the First State to Expand Coverage to Illegal Immigrants Under Obamacare
California state lawmakers are one step closer to expanding coverage under Obamacare to illegal immigrants, sending a bill to Gov. Jerry Brown’s desk that would allow those living in the state to illegally buy health insurance on the exchange with their own money.
The California legislature passed a bill last week setting in motion a process to eventually allow illegal immigrants living in the state to purchase private health insurance through its state-run exchange, Covered California.
Illegal immigrants cannot and would not qualify for federal subsidies available to lower-income Americans under Obamacare. The bill requires the state to request permission from the federal government to waive a provision of the Affordable Care Act prohibiting illegal immigrants from participating in Obamacare’s exchanges.
If Brown, a Democrat, decides to sign the legislation and receives the government’s blessing, California would become the first state to offer health insurance to illegal immigrants through Obamacare. Though the health care law prohibits illegal immigrants from participating in Obamacare’s exchanges, California officials can seek approval from the Department of Health and Human Services through a Section 1332 “State Innovation Waiver” to bypass that prohibition.
The war on cash is raging - should we welcome of fear the death of hard money?
Cash is no longer king. Although the Bank of England unveiled a new, polymer-coated £5 note last week, the seemingly unstoppable march towards paper-free transactions continues.
Electronic payments overtook notes and coins last year in the UK, according to the Payments Council, an industry body representing the banks and card machine industry. They now account for 52 per cent of transactions, compared to 48 per cent from cash. Consumers have taken to contactless payments with gusto, and the limit for each transaction was raised to £30 in 2015.
If anything, the UK is lagging behind. Scandinavia is leading the way into the cashless world, with Sweden the most cash-free society on earth. Barely 2 per cent of transactions are made with physical money, according to the central bank, Riksbank, while half the country’s banks don’t hold cash or accept deposits. Denmark is close behind. Its central bank has stopped printing fresh notes, while the government has proposed dropping the legal requirement for shops to accept cash – although essential services such as hospitals and post offices would still have to take notes and coins. It’s not an unusual proposal in the region.
The power of cash is slowly being eroded all over the world. The €500 note will soon no longer be issued, while the UK government mooted phasing out cheques. In the US, people can order food automatically through their fridge, courtesy of technology from MasterCard and Samsung. There’s a “Bitcoin Boulevard” in Amsterdam, a street where vendors accept crypto-currency as payment. The list goes on.
Gold Finds Footing Post-Yellen
Hillary Clinton wore a $12,495 Armani jacket during a speech about inequality
Hillary Clinton’s New York primary victory speech in April focused on topics including income inequality, job creation and helping people secure their retirement. It was a clear attempt to position herself as an everywoman.
But an everywoman she is not — she gave the speech in a $12,495 Giorgio Armani tweed jacket.
The polished outfit was a stark contrast to the fashion choices Clinton has made in the past. As first lady, Clinton wore frumpy pastel skirtsuits. As New York senator and secretary of state, she attempted a more serious look, wearing pantsuits in a rainbow of colors — so mocked that they sparked memes. In comparison to Michelle Obama, who’s become known as a style icon during her time in the White House and appeared on the cover of Vogue twice, Clinton has never been able to nail down a personal aesthetic that works for her.
But now, the presumptive Democratic presidential nominee, whose dowdy and matronly style has haunted her throughout her entire political career, is making her first real effort to play the fashion card. She’s upgraded the designers she wears, opting for high-end European labels, and hired a team of image experts that includes former Michelle Obama aide Kristina Schake, who’s been tasked with shaping her style and making her more relatable. She’s even rumored to have “Veep” makeup artist Barbara Lacy on the payroll.
The Real Reason We Have a Welfare State
Yesterday, the Swiss cast their votes and registered their opinions: “No,” they said. We left off on Friday wondering why something for nothing never works. Not as monetary policy. Not as welfare or foreign aid. Not in commerce. Not never, no how.
But something for nothing is what people most want. The Swiss voted against awarding all citizens a “universal basic income” of about $30,000 a year, regardless of whether they have work or not. But the idea is unlikely to go away. Two-thirds of British voters say they are in favor of the idea. And Canada’s Ontario province is set to try something similar.
If you’ve been following these Diary entries, you know how and why we have a welfare state. It’s not because our leaders are more thoughtful and caring than those in the past. Instead, the French and American Revolutions showed the relative greater value of “citizens” over “subjects.”
When people thought they were in charge of a government, rather than merely subject to it, they no longer found it absurd to ask not what the government could do for them, but what they could do for it! The elite, who control the government, had a quick response: You can pay higher taxes! And you can get yourself blown up in one of our self-serving foreign wars.
Don't Follow Your Passion
Election angst hurting US economy
What's behind the recent slowdown in the U.S. economy? It's the election, stupid. Some 60 percent of business economists say that uncertainty about the November vote is damaging prospects for growth this year, according to a survey released Monday.
In their latest forecasts, members of the National Association for Business Economics have once again marked down their expectations for this year, pegging the overall growth in gross domestic product at just 1.8 percent. That's down from 2.2 percent in the group's March survey and 2.6 percent in December of last year.
The U.S. economy hit a soft patch in the first three months of 2016, slowing to an annual growth rate of just 0.8 percent, according to the government's latest reporting. Since then, the economic data have been flashing mixed signals.
Consumer spending surged in April, posting the biggest gain in nearly seven years. But Friday's report on the U.S. job market showed the pace of hiring slowed sharply in May, and was weaker than originally reported in the prior two months. The slowdown comes as businesses are growing increasingly uneasy about the outcome of the presidential election, and the wider uncertainty about the policies advanced by the next occupant of the White House.
Janet Yellen warns of Brexit hit to US economy
Federal Reserve chair Janet Yellen said a UK vote to leave the European Union could have "significant economic repercussions". In a speech on Monday, she said a Brexit was one factor that the central bank would consider when deciding whether to raise interest rates.
The Fed next meets on 14-15 June. Ms Yellen said "positive economic forces have outweighed the negative" - her strongest indication yet that the Fed will raise rates this summer.
"If incoming data are consistent with labour market conditions strengthening and inflation making progress toward our 2% objective, as I expect, further gradual increases in the federal funds rate are likely to be appropriate," she said.
The Fed raised interest rates by 0.25 percentage points for the first time in nine years last December and has left them unchanged since. It had been widely expected to raise interest rates over the summer, but poor job creation figures for May diminished those expectations. The US labour market added just 38,000 jobs last month - the fewest since September 2010.
Low gas prices have saved the average household about $1,300, Fed chair says
About $1,300 — that's how much the average household has saved since mid-2014 thanks to the fall in gasoline prices, Federal Reserve Chair Janet Yellen said Monday. Speaking at the World Affairs Council of Philadelphia, Yellen cited dropping oil and gas prices as positives for the economy because they boost households' purchasing power.
For every dollar saved at the gas pump, individuals spent about 80 cents on other things, according to a report last October from JPMorgan Chase Institute.
In her speech, Yellen outlined several other positives — and some negatives — for the U.S. economy. "The increase in employment over the past several years has contributed to higher household incomes and strengthening consumer confidence," she said. And "rising equity and house prices have helped restore households' wealth."
Yellen expects consumer spending to grow at a "solid" rate and the housing sector to "make further progress," partly due to low mortgage rates. "Both home sales and construction have been gradually improving," she said. But Yellen, while overall remaining "cautiously optimistic," also sees numerous potential drags on the economy.
After Puerto Rico’s collapse, is your city or state next?
Which state or city is most likely to follow Puerto Rico’s example, and beg Congress for a legal mechanism to get out of its crushing bond and pension debts?
A detailed new study from the Mercatus Center at George Mason University gets us part of the way to an answer.
Puerto Rico’s finances are uniquely terrible, according to this study of state finances, ranking dead last in five major measurements of long- and short-term solvency. But the worst-run states are much closer to Puerto Rico’s condition than they are to states with balanced budgets and reasonable debt.
With short-term budget troubles and colossal long-term debt, Kentucky, Illinois, New Jersey, Massachusetts, and Connecticut, in particular, are much closer to the basket case economic condition of the Caribbean territory on the Mercatus fiscal health index than they are to states such as Texas, the Dakotas, Florida, or Nebraska, where budgets are balanced and public pension systems may yet be salvaged.
U.S. Labor Secretary: Verizon Strike Had Big Impact on May Jobs Report
Ron Paul: Who Stole The Jobs?
Late last week the markets were shocked by a surprisingly bad May jobs report – the worst monthly report in nearly six years. The experts expected the US economy to add 160,000 jobs in May, but it turns out only 38,000 jobs were added. And to make matters worse, 13,000 of those 38,000 were government jobs! Adding more government employees is a drain on the economy, not a measure of economic growth. Incredibly, there are more than 102 million people who are either unemployed or are no longer looking for work.
Gold reacted to the report quickly and decisively, gaining 2.5 percent to $1,243 per ounce on Friday. Gold mining stocks also saw significant gains on the day.
As recently as late May, there was confident talk about a rate increase when the Federal Reserve meets in June. Transcripts of the Federal Reserve’s April meeting showed that the central bank was seriously considering a June rate hike. With last week’s jobs report and other bad news, that is increasingly unlikely. In fact, citing the weak May employment numbers, Goldman-Sachs is now predicting that there is a zero percent chance of a rate hike in June. Of course they also see this as a temporary blip in an otherwise robust economy, predicting a 40 percent chance of a rate hike in July.
I don’t mean to rain on Goldman’s parade, but there are no miracles between now and July that will propel the economy to where according to their terms a rate hike would be appropriate. Many will point to the May employment numbers and the weak economy in general and pin all the blame on President Obama. However, Obama is only part of the problem. The real culprit is an economic philosophy shared by both Republicans and Democrats for many decades. It is a belief in the fantasy of effective central economic planning by the Federal Reserve. It is a belief that a central bank can determine better than the free market what interest rates should be. This belief results in mal-investment, spiraling debt, distorted markets, inflation, bubbles, and finally economic depression.
70 is the new 60 — and that’s not good news
Have you heard the expression 60 is the new 40? The premise is that we are living longer and are much healthier. And as a result, middle age comes later. Well, here’s a new one. When it comes to retirement, 70 is the new 60. And that’s not such good news.
Nearly a quarter of American workers expect that they will have to work beyond age 70, according to a new survey by Willis Towers Watson. Also a third of those surveyed expect that they will retire later than they had planned.
It goes back to the fact that we are not saving for retirement, and apparently, most of us know it. For many, it just may be too late. As a result they are faced with working longer or accepting a reduced lifestyle in retirement.
A few things are crystal clear from the latest survey. First, Americans are still adjusting to the fact that pensions are, for the most part, gone. Many of today’s Baby Boomers and most of the next generations have to look out for themselves when it comes to retirement. That means using a do-it-yourself company 401(k) or an Individual Retirement Account.
Are Members of Congress Too Rich?
A person can't open the newspaper these days without encountering a reminder of the plummeting value of the dollar. Sunday's New York Times was a perfect example. The lead editorial, about money in politics, reports, "As the money torrent rises, it's no coincidence that for the first time in history, most members of Congress are millionaires (268 of 534 House members), according to the Center for Responsive Politics."
This is indeed "no coincidence," but not in the way the Times intends. The rising number of millionaires in Congress is not some indication that the legislature has been overrun by the rich, but further evidence, as if it were needed, that a million dollars isn't what it used to be. The Center for Responsive Politics count the Times references makes no adjustment for inflation, so there's no way to tell, as measured by any real yardstick, whether today's Congress is richer or poorer than it used to be.
In fact, the rising number of millionaires in Congress may be a sign that the chamber is more representative than it is plutocratic; CNBC reported recently that there are a "record number of millionaires living in the U.S.," an estimated 10.4 million of them, if one counts by assets and does not include the value of one's primary residence.
Elsewhere in the Sunday Times, a column about the uncertain fate of the Big Apple Circus, a non-profit entertainment organization that is a cultural treasure if there ever was one, reports, "In 1981, the year that the Big Apple Circus, which Binder founded with Michael Christensen, began to pitch its tent behind Lincoln Center, the price of a bagel at Zabar's was 35 cents. Now that same bagel was $1.66, the ad explained, and so by the logic of bagel math the average price of a ticket to the circus might have risen accordingly, from $25 in the early 1980s to $118 today. Instead it was $65." (The circus, or the Times article, might have used a different example: the price of a single copy of the New York Times at a newsstand in New York City, which soared to $2 in 2009 from 60 cents in 1999.)
Harley Davidson Foot Traffic Is Down Due To "Weather"
Best buy shares decline after CEO cuts stake in retailer by 44%
Best Buy Co. shares declined after Chief Executive Officer Hubert Joly sold $12.8 million in stock, cutting his stake in the electronics retailer by 44 percent.
Joly, who joined Best Buy in 2012, sold 398,000 shares for an average price of $32.24, according to a regulatory filing. That left him with about 511,000 shares as of June 2.
The news rattled investors, who are looking to the 56-year-old Joly to complete a turnaround of the retail chain. While the CEO has been lauded for cutting costs and selling off foreign divisions, the company has yet to return to steady sales growth. Revenue is expected to be flat this year.
Best Buy said on Monday that Joly has no plans to leave his role.
Robots are infiltrating retail
More shoppers are moving online to purchase their goods, but brick-and-mortar stores still rule.
New data from the U.S. Department of Commerce reveals that 93% of all U.S. retail sales come from these physical stores. As wages rise, retailers are trying to increase their margins by replacing workers with robots. The novelty factor of these robots could drive more foot traffic to these stores, especially if the robots improve customer service.
And these robots have already started to infiltrate some retailers. Lowe's has been developing OSHbot, a customer service robot that speaks multiple languages and helps shoppers find items, and testing this bot in its Orchard Supply Hardware subsidiary.
Best Buy has begun using Chloe, a robot that retrieves products that customers request from a kiosk. And Target recently began a trial of Tally, a robot that travels through aisles and takes inventory.