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Thursday 04.14.2016

Jamie Dimon says Americans only have one problem area when it comes to debt

JP Morgan CEO Jamie Dimon says the American consumer is looking great these days, except for in one key area — student debt.

Dimon spoke at the Grant's Interest Rate Observer Conference in New York City on Wednesday, and (student debt aside) he sounded really upbeat. From mortgages to credit cards, household to even auto loans, Americans are paying off their debts at a steady clip.

That stark difference is what makes growing student debt delinquency stand out so dramatically as an outlier. "Student debt is going to be a problem," he said. "It's grown too much too fast."

Part of that, he reasoned to the crowd, is actually because banks got out of the student debt game back in 2010. That's when Congress passed an overhaul of the federal student loan program that President Obama called “one of the most significant investments in higher education since the G.I. Bill.”

Fed survey finds US economy still expanding

The Federal Reserve said Wednesday that the economy kept expanding in late February and March, despite weakness in the energy sector and a slowdown in exports of some factory and farm products because of global weakness and the strong dollar.

The Fed's latest survey of business conditions in its 12 districts found that consumer spending was rising modestly and wages were increasing in all districts except Atlanta. Fed officials are hoping to see a pickup in wages after a prolonged period of weak wage growth following the Great Recession.

The survey, known as the Beige Book, will be considered at the Fed's next meeting on April 26-27. Economists expect the Fed to keep its benchmark policy rate unchanged in a range of 0.25 percent to 0.5 percent. The Fed boosted the rate by a quarter-point in December after keeping it at a record low near zero for seven years.

It kept rates unchanged in January and March, preferring to see what the fallout of a spreading global slowdown and turbulent financial markets would be on the U.S. economy. Fed Chair Janet Yellen has emphasized in recent comments that the Fed still expects raise rates gradually, especially since inflation remains well below its target of price increases of 2 percent per year.

Banks Look to Enter the Lucrative Business of Check-Cashing

Banks are rolling out services that allow their customers to cash a check before it clears — for a fee, of course.

Traditional banks have avoided offering the service, which is usually aimed at people with low incomes or without bank accounts, but now they want to get in on a business that has come to be dominated by local check-cashing stores. U.S. banks and the consultants that serve them believe check cashing services can be marketed more broadly than they currently are, and that they have the potential to earn banks millions in additional fee income. At least two large banks have offered or are in the process of offering such "instant funds availability" services.

Bank consultants are hopeful the "want it now" attitude among customers will result in wide adoption of the service beyond the poor, who more often need access to money from a check more urgently.

Consumer advocates have expressed reservations. While having instant access to funds from a check deposit could be helpful, it would be yet another fee for everyday banking services and would still most likely be paid by low-income customers.

1 in 5 big U.S. companies pay no federal income tax

Nearly a fifth of profitable U.S. corporations pay no federal income taxes.

That's according to a new analysis by the U.S. Government Accountability Office, which was asked to explore the issue of corporate taxes by Sen. Bernie Sanders. In 2012 (the most recent data available), 19.5 percent of larger companies -- defined as those with at least $10 million in assets -- that reported earnings paid no income tax that year, the GAO found.

Overall, including businesses that didn't report a profit, roughly two-thirds of all larger companies in the U.S. had no federal income tax between 2006 and 2012. "There is something profoundly wrong in America when one out of five profitable corporations pay nothing in federal income taxes," Sanders, a candidate for the Democratic presidential nomination, said in a statement. "Large corporations cannot continue to get more tax breaks when children in America go hungry. We need real tax reform to ensure that the most profitable corporations in America pay their fair share in taxes. That means closing corporate tax loopholes to raise the revenue necessary to rebuild America and create millions of jobs."

The GAO said there were several reasons why profitable businesses may not have owed taxes. Companies that lose money one year are allowed to "carry forward" the losses for accounting in future years, reducing their tax liability. A range of tax breaks, such as for R&D and depreciation of equipment, can also help lower the bill.

‘This is global insider trading ring, CIA is playing the game’ – Max Keiser on Panama Papers

Yes, you are paying more for your health insurance

It’s only getting more expensive to pay for health care. That’s a common complaint, but a new study from the Kaiser Family Foundation finds there’s support behind the idea, with people on employer-sponsored plans paying more out-of-pocket for services their plan covers over the last decade.

Patients have been shouldering these costs at a “substantially faster” rate than health plans payments for care between 2005 and 2014, the Tuesday report found, though large employer plans continue to pay a significant share of covered benefits.

Deductible and co-insurance payments were responsible for the overall rise, the report found, with average deductible payments increasing by 256% over 10 years and average co-insurance payments rising 107% over the same time.

The report — which analyzed a sample of health-care claims made by large employers and health plans in the Truven MarketScan Commercial Claims and Encounters Database — found that copayments actually declined over that same period of time. These trends are likely occurring because more plans now allow for tax-exempt health savings accounts, the report said. In addition, people tend to pay more attention to the costs of care with deductibles and co-insurance than the flat dollar amount of a copay.

Promise Kept: Barack Obama Breaks the Coal Industry

President Obama’s war on coal has bagged its biggest trophy to date: the bankruptcy filing by the largest U.S. coal company, Peabody Energy.

Make no mistake about it, though, Peabody’s management and that of the rest of coal industry bears much of the blame for its own demise. It ought to serve as a lesson for everyone else targeted by take-no-prisoners progressives. Peabody’s bankruptcy filing follows that of other major coal companies including, Alpha Natural Resources, Arch Coal, and Patriot Coal. The irony is that coal is actually the world’s fastest growing source of energy, according to the International Energy Agency. So what happened?

Even before Obama vowed to “bankrupt” the coal industry in a 2008 interview with the editorial board of the San Francisco Chronicle, the coal industry had already allowed the seeds of its destruction to take root. It had failed to believe global warming hysteria was an existential threat. The industry thought the demand for cheap and reliable electricity combined with the power of politicians representing coal states would suffice as a defense against attack. But contrary to the myths propagated by global warming activists, the coal industry was never a serious funder of climate skeptics.

This strategy was completely upended when decidedly anti-coal Obama became president and Republicans lost control of Congress. Not only did an unprecedented coal industry-hating “progressive” government come to power, but also an up-and-coming new technology for producing natural gas was coming into its own. Hydraulic fracturing and horizontal drilling, commonly referred to as “fracking,” began to change the U.S. energy market.

17 million have received minimum wage increases since 2012, report claims

Efforts to raise the minimum wage have put more money in the pockets of roughly 17 million low income workers since 2012, a new report claims.

The report released Wednesday by the National Employment Law Project claims the "Fight for $15" -- a movement to raise the minimum wage to $15 an hour -- has played a crucial role in these increases. Paul Sonn, the report's co-author, said that causation between the Fight for $15 and the minimum wage increases can't directly be proven. But he said there's a big argument for its impact in raising public awareness and changing the national conversation.

"Lawmakers were stuck at increasing the minimum wage to $10.10 an hour from $7.25," said Yannet Lathrop, co-author of the report. "Now people are talking about $15 an hour." The Fight for $15 movement began in November 2012 and the study by NELP, a workers rights group, looks at employees who have received pay increases since then.

The report evaluated minimum pay increases that resulted from city and state ordinances, executive actions and corporate policies. Most of the workers included in the report have already begun to receive increases, which will build up gradually.

Death Of Paper Money vs Gold

As Central Banks continue to prop up the financial system with massive monetary printing, the death of paper money grows closer each passing day. While it is true that the Fed and Central Banks have been able to postpone the day of reckoning much longer than most precious metals investors imagined, the inevitable collapse of the fiat monetary system will turn out to be much worse.

There have been over 3,400 fiat currencies, and all of them have failed. According to the article on Washington’s blog, The Average Life Expectancy For A Fiat Currency Is 27 Years …

The average life expectancy for a fiat currency is 27 years, with the shortest life span being one month. Founded in 1694, the British pound Sterling is the oldest fiat currency in existence. At a ripe old age of 317 years it must be considered a highly successful fiat currency. However, success is relative. The British pound was defined as 12 ounces of silver, so it’s worth less than 1/200 or 0.5% of its original value. In other words, the most successful long standing currency in existence has lost 99.5% of its value.

Given the undeniable track record of currencies, it is clear that on a long enough timeline the survival rate of all fiat currencies drops to zero.

IRS Admits It Encourages Illegals To Steal Social Security Numbers For Taxes

This isn’t exactly the kind of story the IRS wants buzzing around at tax time. The IRS and Justice Department normally want ‘scared straight’ stories just before Tax Day. Ideally, when an indictment or conviction for tax evasion hits the news, it makes you think twice. Somehow, you think just a bit more about all those deductions, or if you really reported all your income, before you sign your return under penalties of perjury.

Instead, we have the top dog at the IRS, the IRS Commissioner himself, admitting that, well, there’s a problem with illegal immigrants and taxes. In fact, the top IRS official this time wasn’t talking about how the IRS wipes some hard drives or can’t find emails. He wasn’t even asking for a bigger budget to give bonuses to IRS employees.

This time, he was talking about illegal immigrants, and about the IRS turning a blind eye. Or maybe worse. The IRS actually wants illegal immigrants to illegally use Social Security numbers, he suggested. IRS Commissioner John Koskinen made the surprising statement in response to a question from Sen. Dan Coats, R-Ind., at a Senate Finance Committee meeting. The question was a touchy one. Gee, is the IRS collaborating with taxpayers who file tax returns using fraudulent information? It wasn’t put exactly that way. According to Senator Coats:

"What we learned is that … the IRS continues to process tax returns with false W-2 information and issue refunds as if they were routine tax returns, and say that’s not really our job. We also learned the IRS ignores notifications from the Social Security Administration that a name does not match a Social Security number, and you use your own system to determine whether a number is valid.”

Buy Gold – HSBC

Buy gold is the call of HSBC technical analysts who are becoming increasingly bullish on gold and increasingly bearish on stocks as reported by Business Insider. Sentiment towards gold is slowly moving from being extremely negative and bearish to more bullish. HSBC joins a long list of large banks, insurers and investment houses who are now bullish on gold.

HSBC, JP Morgan Chase, Bank of America Merrill Lynch, ABN Amro, UBS, Deutsche Bank, PIMCO and BlackRock head a growing number of investment houses that are recommending an allocation to gold today. Indeed, the world’s largest reinsurer Munich Re is buying gold.

HSBC’s bullish gold call was reported by Business Insider: “The US dollar price of Gold is in an uptrend with a bullish Elliott Wave structure,” said Murray Gunn, HSBC’s head of technical analysis. “With momentum turning up we open a long position at a spot reference of $1,260. A stop-loss is set at $1,200 with an initial target of $1,500.”

Gold was trading at around $1,261 an ounce on Tuesday morning. Gunn’s analysis is formulated based on something called the Elliott Principle, a form of technical analysis that believes investors move between periods of bullish and bearish thinking in a reasonably consistent pattern.

Why the U.S. deficit continues to expand

Macquarie lays off 15 percent of U.S. investment banking group

Australia's Macquarie Group Ltd (MQG.AX) shed close to 15 percent of its U.S. investment banking workforce this month to replenish its ranks with star performers in North America, according to people familiar with the matter.

The action comes as other international banks reconsider their U.S. investment banking strategy. Earlier this week, Japan's Nomura Holdings Inc (8604.T), for example, laid off more than two-thirds of the bankers working at its leveraged buyouts group.

Like Nomura, Macquarie has focused in the last few years on advising on and financing private equity deals, as a way to gain investment banking market share with corporate America. But most of the layoffs at Macquarie, which were announced internally earlier this month, targeted industry coverage rather than leveraged buyout bankers.

The job cuts came as Macquarie merged several industry groups in its investment banking division, the people said on Wednesday. The industrials group was disbanded and some chemicals bankers joined the infrastructure team, the people said. The consumer group was merged with the gaming and leisure group, while the healthcare services information technology group was absorbed by the technology, media and telecommunications group, the people said.

'Pig Book' finds earmark spending on the rise

The fire of anti-Washington sentiment that’s burning through the country this election season has found some new fuel in the latest Congressional Pig Book, an annual tome detailing federal government waste.

Citizens Against Government Waste, in their latest report, found that the cost of earmarks increased 21 percent from fiscal 2015, despite a 2011 moratorium on earmarks imposed by then-House Speaker John Boehner.

"Every two years when a new Congress comes around, the Republican conference has to vote again to establish a new moratorium, and there are 70 to 80 votes to keep earmarking," said CAGW President Tom Schatz. "Until there is a permanent ban on earmarks they can always creep back up as they have been over the last several years."

Among the expenditures flagged as waste: $40 million to upgrade the M1 Abrams tank, even though the Pentagon says the upgrade isn't needed or wanted. "There are 2,000 of them parked in the desert and it's simply not something that they want to spend money on," Schatz said.

FCC Kept ‘Obamaphone’ Fraud Under Wraps Until After It Expanded Program

Federal regulators were instructed to keep a massive fraud investigation under wraps until a day after a controversial vote to expand a program that was allegedly used to bilk taxpayers of tens of millions of dollars, one those regulators claims.

The Federal Communications Commission on Friday announced that it would seek $51 million in damages from a cell phone company that allegedly defrauded the federal Lifeline program of nearly $10 million.

The commission’s five members unanimously backed the Notice of Apparent Liability (NAL), but Republican commissioner Ajit Pai parted from his colleagues in a partial dissent. According to Pai, he and other commissioners were told not to reveal the details of its investigation until April 1, a day after the FCC voted to expand the Lifeline program.

“Commissioners were told that the Notice of Apparent Liability could not be released or publicly discussed until April 1, 2016, conveniently one day after the Commission was scheduled to expand the Lifeline program to broadband,” Pai wrote. “That’s not right.” Pai did not say who issued that directive. However, it had the effect of preventing public knowledge of widespread fraud in the Lifeline program ahead of a contentious vote on expanding it despite persisting concerns about a lack of internal safeguards.

Kyle Bass: 40-50% Chance of Brief U.S. Recession

Kyle Bass, the famed hedge fund manager, who successfully called the subprime crisis in 2008 before it nearly destroyed the U.S. financial system, is climbing a new wall of worry; Asia’s impact on the U.S.

During an upcoming appearance on the FOX Business Network’s Wall Street Week, Bass, the founder of Hayman Capital Management, was asked whether the U.S. could be facing a recession.

“Asia has a giant credit bubble, that they've been building for the last 10 years, or longer, that has kind of reached its atrophy level and it's going to -- it's going to happen over the next two or three years,” said Bass while adding his odds for a recession, “So whether that causes the U.S. to have a brief, minor recession, I think it's kind of 40, 50% chance in the next year, personally.”

Bass has a solid track record predicting financial blowups. He reportedly earned over $4 billion betting against subprime mortgages. He has also warned over other trouble spots such as Japan, which is currently dealing with negative interest rates implemented by the Bank of Japan, in efforts to shore up its economy.

The crystal ball for US equities

Outsourced Jobs Claim Cause Verizon Workers to Go on Strike

Strikes are taking place across the region at sites, including in East Syracuse, along with others like Oneonta, Utica, Vestal and Watertown. Workers claim that the company is unfairly outsourcing jobs, despite Verizon making tens of billions of dollars in profits.

Represented by the Communications Workers of America and the International Brotherhood of Electrical Workers unions, the workers have failed to reach an agreement with Verizon over ten months of contract negotiations.

Union leaders claim more than 5,000 jobs have been outsourced to the Philippines, Mexico and the Dominican Republic, resulting in 40 percent fewer workers compared to a decade ago. "What Verizon put forth in their contractual demands is not anything that we can live with. Despite making $39 billion in profits for the last three years, and despite the fact that we've met their concessionary demands on health care. That's not what it's about, it's about jobs," said Chris Ryan, the CWA 1123 president.

Meanwhile, Verizon says it's ready for a strike and has a plan in place so business is not disrupted. The company will be training non-union employees and reassigning corporate employees to handle customer inquiries, maintenance and repair while workers are on strike.

America is great now, readers tell Yahoo Finance

Donald Trump undoubtedly disagrees, but a surprising portion of Americans think their nation is great right now. In 2016. No fooling.

To plumb Trump’s popular campaign slogan, “Make America great again,” Yahoo Finance recently ran a series of online polls asking our audience when they felt America was last great. First we asked that open-ended question on our Facebook and Twitter pages. Then we narrowed hundreds of responses into six specific years: 1952, 1962, 1969, 1988, 1999 and 2016. Each of those years more or less corresponds with a cyclical peak in employment and the sweet spot in the business cycle.

Nearly 6,000 of you responded to our survey, and the winning year was 2016, the choice of 31.6% of respondents. The second choice got 22.2% of the vote—though we’re not saying yet which year that was, since that will be the focus of a forthcoming story.

Here are a few reasons people gave for choosing 2016: “It’s no longer a white man’s world.” “America has never stopped being great.” “Look around and appreciate the goodness of America.” “Things are always progressively better if you continue to make better opportunity.” In general, those happy with the state of things in 2016 were refreshingly optimistic.

Wells Fargo is a growing risk to the world's financial system

Wells Fargo & Co poses an increasingly serious threat to the global financial system, while risks posed by other large U.S. banks have changed relatively little, according to an annual report released Wednesday by a U.S. government research group charged with monitoring such threats.

The Office of Financial Research (OFR), a financial stability watchdog, studied the systemic importance of the world's largest banks using 2014 data from the Basel Committee on Banking Supervision.

It then assigned a score to each bank based on factors including size, complexity, interconnectedness and cross-jurisdictional activity, as well as how easily the products they offer can be provided by competitors.

JPMorgan Chase & Co , Citigroup Inc and Bank of America Corp , Goldman Sachs Group Inc and Morgan Stanley are still riskier than Wells Fargo, as they were a year earlier, but their scores were little changed.

Thursday 04.14.2016

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