Headline News Archives

Wednesday 11.16.2016

Boeing Is Cutting 500 Jobs From Its Defense and Space Units

Boeing Co. plans to move about 2,500 positions to other sites, cut 500 jobs, and close two facilities by the end of 2020 as part of an effort to operate its Defense, Space & Security business more efficiently, the company said Tuesday.

About 1,600 positions currently in Huntington Beach, California, will move to plants in three other Southern California locations -- El Segundo, Long Beach and Seal Beach. About 500 positions will move to St. Louis County in Missouri, and 400 will shift to Huntsville, Alabama.

Chicago-based Boeing will close a plant that employs 290 people in in El Paso, Texas, and another that employs 70 people in Newington, Virginia. The company said the moves will reduce facility space by about 4.5 million square feet.

The Huntington Beach plant will remain open. Boeing spokesman Ken Smith declined to say how many workers will remain there. The company will move an unspecified number of jobs from Kent, Washington, to Tukwila, Washington. The two towns are just 16 miles apart.

Ford going ahead with moving small car production to Mexico: CEO

Ford Motor Co is moving ahead with plans to shift production of small cars to Mexico from Michigan, while "two very important products" will be built in its U.S. factories, Chief Executive Officer Mark Fields told Reuters on Tuesday.

President-elect Donald Trump has criticized Ford for the decision to shift production of Focus small cars to Mexico in 2018, and said he would consider levying tariffs on Mexican-made Fords. Trump has also said he wants to scrap the North American Free Trade agreement, which also includes Canada, and to build a wall on the U.S.-Mexico border to stop undocumented immigrants.

"We’re going forward with our plan to move production of the Ford Focus to Mexico, and importantly that’s to make room for two very important products we’ll be putting back into Michigan plants," Fields said in an interview on the sidelines of the Los Angeles Auto Show. "There will be no job impact whatsoever with this move."

Ford Chairman Bill Ford Jr. said last month he met with Trump. Ford has countered Trump's criticism, saying the company, founded by his great-grandfather, makes more cars and trucks in the United States than any other automaker. Fields said with U.S. gasoline prices so low, "it's very difficult for us to be able to make money on a vehicle produced in the U.S." in the small car segment. If Ford decided to build the Focus small car line in the United States, and had to raise the price, "we wouldn't sell the vehicle."

More Than Half of Americans Got No Pay Raise in the Past Year

The U.S. economy has been growing, but the pace of growth has slowed in the past year, and while many Americans are seeing the benefits of a rising economy, many more are not. In the past 12 months, average weekly earnings in the United States rose 2.5% to $891.65.

A recent survey by researchers at Bankrate revealed that Americans judge their incomes more on their feelings about what they earn than on the hard data. Respondents to the survey fielded early in November indicated that exactly half of employed respondents said they got a pay raise in the past 12 months.

In the monthly wage tracker maintained by the Federal Reserve Bank of Atlanta, 13.5% of workers reported no change in income in the past 12 months, and another quarter experienced a decrease. According to Bankrate, which cited the Atlanta Fed’s results, this is what the two surveys indicate:

Less than half of workers saw their incomes fall or go stagnant. This indicates that Bankrate’s survey question elicited people’s feelings about their incomes, rather than hard data about their incomes.

Steve Forbes: Big tax cut plan will spur an economic boom

Post Office Spends Itself $5.6 Billion Into the Red

The United States Postal Service continued to hemorrhage money by losing an additional $5.6 billion this past year, according to a federal report Tuesday.

The postal service releases the report on an annual basis to highlight its budget and expenses. It has lost billions of dollars in recent years with the latest showing more of the same. The postal service puts much of the blame on mandated retiree health benefit expenses but critics contest it’s a management problem.

“The net loss suffered by the Postal Service this year cannot be ignored,” the report states. “Even with continued proactive and aggressive management, such losses are likely to persist for the foreseeable future because of mandated costs such as an unaffordable retiree health benefits program.” The postal service argued in the report that legislative and regulatory reforms are needed to fix the funding issue. The report notes worker compensation has increased by $922 million while benefits went up an additional $1.2 billion. The postal service argues the increase in labor costs is likely due to there being more package deliveries.

“The growth in labor and transportation costs is largely due to the increase in Shipping and Packages volumes, which are more labor-intensive to process and require greater transportation capacity than mail,” the report states. “Transportation expense also increased to significantly improve service levels in 2016.

Walmart Warns Workers: Don’t Download Chat App From Labor Organization

Walmart has been repeatedly accused of retaliating against, and covertly monitoring, employees who have protested for improved conditions and higher wages. Now the nation’s largest retailer is reportedly warning employees to not download an app from a labor group that can be used for workers to connect and organize outside of Walmart’s gaze.

OUR Walmart, a group that was formerly backed by the United Food and Commercial Workers union, recently launched an Android app called WorkIt that lets Walmart workers ask questions — anonymously, if they choose — about company policy and employees’ rights. Some of those questions will be answered by humans, but the app has used IBM’s Watson technology to put together replies to hundreds of the most common questions a Walmart worker might have.

Registered users can also share stories and chat with each other. In that way, WorkIt is not that different from having a Facebook group, and there are a number of public and private groups like that already in existence.

Yet this app, only a few days into its existence, is apparently rubbing Walmart HQ the wrong way. So much so that the Wall Street Journal reports that the retailer is telling employees to not even download it.

PacketSled CEO Matt Harrigan resigns over Trump assassination threat

The chief executive of a San Diego-area cybersecurity firm has resigned after threatening on Facebook to assassinate President-elect Donald Trump.

“I’m going to kill the president. Elect,” PacketSled President and CEO Matt Harrigan wrote on election night on his now-deleted Facebook page, according to screenshots posted on Reddit.

When someone commented, “You just need to get high,” Mr. Harrigan responded, “Nope, getting a sniper rifle and perching myself where it counts. Find a bedroom in the White House that suits you, [expletive]. I’ll find you.” Mr. Harrigan later apologized on Twitter for using “poor judgment.”

“My humble apologies that a flawed joke has become public/out of context,” he wrote in a series of tweets. “My poor judgement [sic] does not represent the views of @packetsled… customers, investors or the officers of PacketSled, I have no malicious intention toward the #POTUS and apologize to all for my lack of judgement [sic] and offensive commentary. I wish you all well,” he added.

In California, 220,000 Public Employees Earn Six-Figure Salaries

California’s liberals are infamous for railing against the top 1 percent and the income inequality that has supposedly plagued our economic system. Democratic governor Jerry Brown assured his colleagues in this year’s State of the State address that “California has not been passive” on the issue of income inequality. Just last week, voters passed Proposition 55, which extended — for twelve years — Brown’s tax increase on high-income earners, redistributing the wealth to help fund public schools and health insurance. But as California endlessly passes progressive laws that are intended to combat wealth inequality, public employees rake in lucrative salaries. In 2015, 220,000 public employees earned six-figure salaries, costing taxpayers $35 billion. Some of these employees earned salaries north of $400,000.

It’s not only public-sector executives who make these sizable salaries. Open the Books, a non-profit dedicated to disclosing government spending, found that 171 assistant city managers earned an average salary of $201,550 (in other words, some of California’s assistant city managers were in the top 6 percent of income earners nationwide). In the City of Riverside, not one, but two, assistant city managers made over $200,000. What’s more absurd is the income of their bosses: City managers in nine cities, including Escondido, Fremont, Napa, Ontario, and Palm Springs, made over $300,000, two of which (Escondido and Fremont city managers) cleared $400,000.

Other noteworthy high-income earners in the public sector were the “motor coach operators” and the “animal collection curators” who earned over $100,000, the lifeguard supervisors who made $250,000, the Los Angeles harbor-boat-pilots who made $483,000, and the city librarians who made $220,000. And the list goes on.

If four in ten California residents are living in or near poverty, and the progressive ideology is to redistribute the wealth as widely as possible, why are 220,000 public-sector employees earning these substantial government-funded salaries that place them in the top 25 percent of salary-earners nationally.

Obama begins final European tour in Greece

$3.7 billion New York hedge fund: 'Perhaps we need to put our phones down and get back to work'

Cell phone addiction, particularly among millennials, may be hurting the labor force and the economy at large. That's according to a $3.7 billion New York hedge fund, Tourbillon Capital Partners.

"Perhaps we aren't in secular stagnation. Perhaps we need to put our phones down and get back to work," founder Jason Karp wrote in the firm's third quarter investor letter, a copy of which was obtained by Business Insider.

"At the risk of sounding like an old-man curmudgeon and a Luddite, I believe this to be a massive problem for society at large," Karp added. "All businesses globally, where employees have smartphones, are not getting as many true labor hours as we think."

Karp lists several concerns, including how addicted millennials and teens are to their smartphones and computers. Millennials check their phones over 150 times per day compared to about 30 times for the average adult, Karp wrote, citing Facebook data. Meanwhile, the average human's attention span has dropped. "Undoubtedly, access to such time-saving technologies has dramatically increased our potential productivity," Karp wrote. "But what if we are spending those saved hours on Facebook, Instagram, Snapchat and the like. As much of the above data shows, we unfortunately are spending those hours on our phones."

Remember "stagflation"? It could make a comeback

Anyone who lived through the 1970s is likely to shudder when they hear the term “stagflation.” That’s the dreadful combination of rising inflation, higher unemployment and a slowing economy that hampered U.S. growth in that decade.

That unappetizing stew of negative trends could return under President-elect Donald Trump’s economic proposals, according to a new report from Goldman Sachs’ (GS) economics team. Stagflation is a possibility under what the firm describes as its “adverse” forecast, based on Trump’s restrictive economic proposals, which include limiting free trade.

With Trump’s surprise win last week, economists have been scrambling to assess what his plans will mean for the near- and long-term prospects of the U.S. economy. Many economists, Goldman’s among them, are developing several scenarios because of what’s viewed as a high level of uncertainty about how Trump might translate his proposals -- such as a 45 percent trade tariff on Chinese imports -- into political reality.

“The positive fiscal impulse from his tax reform and infrastructure proposals could provide a near-term boost to growth and, depending on the specifics, could have positive longer-run supply side effects,” Goldman economists wrote in their report. “However, other proposals could lead to new restrictions on foreign trade and immigration, which could have negative implications for growth, particularly over the longer term.”

Spike in Mortgage Rates Throws a Wrench Into US Housing Market

The spike in borrowing costs in response to President-elect Donald Trump’s pro-growth agenda is causing some heartburn in America’s housing industry.

San Diego mortgage broker Shanne Sleder said a third of his clients, many of whom were already stretching budgets to buy homes in pricey southern California, are having to reconsider what they can afford as rates soar.

“With a number of the people we were in the middle of pre-approving, as rates are going up, it’s getting tighter and tighter qualifying them,” Sleder said. He’s urging them to lock in rates. “In some cases, the higher rates are making it so they are not as comfortable with the payment.”

With investors anticipating faster expansion and inflation from Trump’s policies, the yield on the U.S. 10-year note -- a bellwether of changes in mortgage rates -- has jumped more than 35 basis points since the Nov. 8 presidential election, the biggest three-day increase since 2009. Home loans may be beginning to follow suit: The average 30-year mortgage rate rose to 3.73 percent last Wednesday from 3.69 percent the prior week, according to, whose chief financial analyst Greg McBride sees the rate climbing to near 4 percent this week.

Gallup: Economic Confidence Surges After Trump Beats Hillary for White House

Gallup’s Economic Confidence Index soared 13 points last week to turn positive for the first time since March 2015 in the wake of Donald Trump’s White House victory. Republicans' economic outlook also improved drastically.

Gallup's Economic Confidence Index moved from a slightly negative evaluation (-10) to a slightly positive one (+3). The index had been consistently negative throughout the year leading up to the election.

The increase in economic confidence mostly stems from Republicans' more positive views after Republican Donald Trump won the election. Gallup has previously noted that Americans view the economy through a political lens. Republicans have had a dismal view of the economy -- especially of its future direction -- during Democratic President Barack Obama's two terms.

“After Trump won last week's election, Republicans and Republican-leaning independents now have a much more optimistic view of the U.S. economy's outlook than they did before the election. Just 16% of Republicans said the economy was getting better in the week before the election, while 81% said it was getting worse. Since the election, 49% say it is getting better and 44% worse,” Gallup reported.

The Coming Dollar Shortage

Is the Fed about to drag the world into another financial crisis? Trump’s election has filled the dollar’s sails with fresh winds. As Neil MacKinnon, economist with VTB Capital, says, “From the perspective of the financial markets, the immediate reaction to the outcome of last week’s election has been a stronger dollar due to expectations of a loose fiscal and tighter policy mix.”

Today, fed funds futures are flashing a 91% probability of a rate hike next month. The likely result: a stronger dollar. But that stronger dollar could reap a whirlwind… Many fear the world is facing a destabilizing dollar shortage. And they fear a stronger dollar could unleash a global liquidity crisis. Dollar shortage?

In the words of the Telegraph: “Fear that the U.S. Federal Reserve may have to raise rates uncomfortably fast is leading to an acute dollar shortage, draining global liquidity.”

“The idea of a dollar shortage sounds strange to many observers,” Jim Rickards concedes. “Didn’t the Fed print $3.4 trillion of new money from 2008–2015? How could there possibly be a dollar shortage with that much new money around?” The answer, says Jim, is that the world created new dollar-denominated debt faster than the Fed created money. Every dollar printed by the Federal Reserve has been lugging around a 20-fold pyramid of debt on its back.

Italy threatens to block EU budget talks

Why this Oil-Price Bust will Drag Out a Lot Longer than the US Oil Industry Claims

Despite prolific jabbering about output cuts by various OPEC oil potentates, and despite promises by Saudi Arabia that Russia would cut in conjunction with OPEC, OPEC’s production in October rose to 33.64 million barrels per day, the highest in many years, up 1.05 million barrels per day from May, on surging production in Iran and Iraq and near record production in Saudi Arabia. Russia set a post-Soviet record in October, with 11.2 mmbpd.

Global demand for crude oil has crept up to 97.3 mmbpd in the third quarter, but production has risen to 98.3 mmbpd. In other words, in the quarter, the world produced 1 million barrels per day on average that went into storage, from where it will exert pressure on prices in the future.

On Sunday, Iran’s Oil Ministry cited President Hassan Rouhani at a ceremony to formally open the project west of the Karoun River, near the border with Iraq. Production there had jumped from 65,000 barrels per day in 2013 to 250,000 barrels per day now, Rouhani said. And it “must reach one million barrels per day.”

There will be more OPEC meetings, more jabbering, and more promises, but none of this is likely to make significant headway in cutting production. And in the US, new money has begun to surge back into the sector. In select locations, production is soaring. The US matters because it has become the global “swing producer” – the oil producer with the most excess capacity that can be unleashed on short notice.

The Next Great Debate at the Fed Will Be All About the 'Monetary Offset'

The checks and balances imposed on President-Elect Donald Trump's new economic agenda won't just come from Capitol Hill, but also from the Marriner S. Eccles Federal Reserve Board Buildings farther west on Constitution Avenue.

The real-estate mogul is believed to be prepping a massive fiscal expansion featuring tax cuts and an infrastructure spending binge, potentially funded by debt, at a time when the U.S. unemployment rate has fallen to levels historically consistent with full employment. This points to pricing pressures picking up steam as these expenditures arrive — and as such, bond yields have risen, with markets betting that Trump will be the inflation president.

How the Federal Reserve will react to this expansion of government spending and the inflation it may augur is anyone's guess, so one thing's for sure: the topic promises to become the next hot debate in central bank circles.

Economists at Goldman Sachs Group Inc. and Standard Chartered Plc., to name two banks, have already suggested that the Federal Reserve will pursue a more aggressive hiking cycle in light of the fiscal impulse being sought after by the new administration. Markets appear to agree with this diagnosis: overnight index swaps imply that the amount of Fed tightening priced in two, three, and four years down the road has increased markedly since the U.S. election.

Protesters being paid up to $1,500 a week to ‘Stop Trump’

The anti-Trump protesters are entering the sixth consecutive day, but many of the participants are being paid.

All over the United States, there are scores of individuals protesting, both peacefully and violently, last week’s election results. Despite suggestions that Trump supporters would pull out their guns and take to the streets if he lost, it seems that’s what is happening with Hillary Clinton supporters.

But are these anti-Trump protesters on the streets because they feel the 2016 election was unjust or is it because they’re being paid to be there? Well, it seems that it is actually the latter, according to a lot of job advertisements posted across the Internet.

Ostensibly, there are a plethora of job ads on Craigslist in cities like New York, Chicago and Los Angeles. These job postings offer protesters up to $1,500 per week in order to “Stop Trump.”

Anti-Trump protesters didn't vote

The Impact of the Growing National Debt

It is undeniable that if it’s left unchecked, the rising Federal debt will have a negative impact on corporate America. Just like the situation when you’re dealing with your household finances, you cannot outspend your income indefinitely without it having negative consequences on you personally, as well as others that you interact with.

In an extreme example, if your household spending were left unchecked, you might have to file personal bankruptcy. Obviously, that negatively affects you and your family, but it also affects a variety of people and businesses that you deal with. That could include a bank where you have to negotiate a debt restructuring or forgiveness. You may forgo vacations for several years, purchase fewer discretionary goods, donate less to charities, and so on.

In looking at the current national debt situation, with the exception of a brief period during the most recent recession, government spending as a percentage of GDP is at historic highs, according to the U.S Bureau of Economic Analysis. At the same time, debt as a percentage of GDP is at its highest level since the 1940s, according to the U.S Bureau of Public Debt.

Of further concern is that interest costs in the current federal budget remain relatively low as a result of the historically low interest-rate environment. Even a modest increase in interest rates, which many are predicting, could cause interest costs in the Federal budget to soar.

McDonald's 'Hiring Day' seeks to fill 3K jobs in Arizona

McDonald's restaurants in the Phoenix area and in northern Arizona will be interviewing and hiring 3,000 new employees on Wednesday as part of "Hiring Day."

Arizonans looking for a job for the holidays, or even for something long-term, can go into one of the restaurant chain's 260 participating McDonald's restaurants for a guaranteed interview between 10 a.m. and 5 p.m Wednesday.

Full-time, part-time and managerial positions will be available. "They will have the opportunity to fill out an application and sit down with a manager for an interview right there," said Chris Carney, a local McDonald's franchise owner and operator. "Results will vary from store to store, but we're not just going to let a good person walk out the door. My guess is that, if you're hired, you'll be setting up a day to return for paperwork and orientation before you leave."

McDonald's is utilizing this event to advertise a new program called Archways to Opportunity, which is offering tuition help to students while they work. Carney explained that the Archways to Opportunity program opens countless doors to all employees, helping them to succeed with little to no "red tape."

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