Headline News Archives

Wednesday 08.17.2016

Cisco Systems to lay off about 14,000 employees

Cisco Systems Inc is laying off about 14,000 employees, representing nearly 20 percent of the network equipment maker’s global workforce, technology news site CRN reported, citing sources close to the company.

San Jose, California-based Cisco is expected to announce the cuts within the next few weeks, the report said, as the company transition from its hardware roots into a software-centric organization.

Cisco, which had more than 70,000 employees as of April 30, declined to comment. Cisco increasingly requires “different skill sets” for the “software-defined future” than it did in the past, as it pushes to capture a higher share of the addressable market and aims to boost its margins, the CRN report said citing a source familiar with the situation.

Cisco has been investing in new products such as data analytics software and cloud-based tools for data centers, to offset the impact of sluggish spending by telecom carriers and enterprises on its main business of making network switches and routers.

Tudor Investment Corp. Said to Cut 15% of Workforce After Withdrawals, Losses

Billionaire Paul Tudor Jones dismissed about 15 percent of the workforce at his Tudor Investment Corp. after losses and investor withdrawals at the $11 billion hedge fund, according to three people with knowledge of the matter.

Tudor earlier Tuesday informed the affected employees, which include positions ranging from money managers to support staff, said the people, who asked not to be identified because the firm is private. Tudor employed 409 people, about half in investing roles, according to a March regulatory filing.

“Amid a changing operating environment, we have made strategic adjustments to our firm’s staffing,” Tudor said in a statement that didn’t specify how many jobs are being cut. “These difficult changes were made after conducting a deep and broad review of our business and are meant to optimally size the firm for future success. We are committed to treating our departing employees with care and support and appreciate their many contributions to Tudor.”

The cuts at Tudor, one of the oldest and most expensive hedge funds, shows the upheaval in the industry is engulfing even the most renowned firms, as large investors sour on the high-fee managers. Tudor, founded in 1980, is reducing expenses after it suffered about $1.7 billion in client withdrawals in the first half. The firm has already trimmed fees and some long-time money managers have left.

U.S. ‘Debt Held by Public’ Tops $14,000,000,000,000; Up 122% Under Obama

The federal government’s “debt held by the public”—as opposed to its “intragovernmental debt”—has topped $14,000,000,000,000 for the first time in history, according to the latest numbers released by the U.S. Treasury.

As of the close business on Aug. 10, the “debt held by the public” was $13,987,862,462,404.79, according to the Treasury. By the close of business on Aug. 11, it had risen to $14,012,831,105,933.15. By close of business on Aug. 12, it had increased again, hitting $14,012,909,909,536.53.

When President Barack Obama was inaugurated on Jan. 20, 2009, the federal government’s debt held by the public was $6,307,310,739,681.66. Since then, it has increased by $7,705,599,169,854.87—or 122 percent.

According to the latest publicly released numbers, foreign entities and the Federal Reserve own a combined $8,743,956,000,000 in U.S. government debt held by the public---giving them ownership of 62.4 percent of the total. The other part of the federal debt—the “intragovernmental debt”-- closed the day on Aug. 12 at $5,390,094,670,446.31. That made the total federal government debt $19,403,004,579,982.84. The U.S. government debt held by the public largely consists of marketable Treasury securities, such as bills, notes and bonds. The “intragovernmental debt” is primarily money the Treasury has borrowed and spent out of government trust funds, such as the Social Security trust funds.

Fed rate hike 'possible' as soon as September, Dudley says: FBN

The Federal Reserve could possibly raise U.S. interest rates as soon as September, an influential Fed policymaker said on Tuesday in comments that boosted the dollar ahead of next week's signature meeting of world central bankers.

New York Fed President William Dudley said that as the U.S. labor market tightens and as evidence builds of wage gains, "we're edging closer towards the point in time where it will be appropriate I think to raise interest rates further."

"It's possible" to hike rates at the next scheduled policy meeting on Sept. 20-21, he said on the Fox Business Network. "We'll have to see where the data falls." The U.S. central bank also needs to watch "the broad supports for the economy" and how inflation plays out "in coming months," he said.

Dudley, a permanent voter on rates and a close ally of Fed Chair Janet Yellen, gave the market-moving interview nine days before the annual meeting of top central bankers in Jackson Hole, Wyoming, a venue the Fed often uses to telegraph policy plans. His comments, including an unusual warning on low bond yields, were seen as more hawkish than a cautious message last month when in a speech he outlined risks to the economy.

'Perfect Storm' Forces Pushing Gold Prices Higher

The $6 trillion public pension hole that we’re all going to have to pay for

U.S. state and local employee pension plans are in trouble — and much of it is because of flaws in the actuarial science used to manage their finances. Making it worse, standard actuarial practice masks the true extent of the problem by ignoring the best financial science — which shows the plans are even more underfunded than taxpayers and plan beneficiaries have been told.

The bad news is we are facing a gap of $6 trillion in benefits already earned and not yet paid for, several times more than the official tally.

Pension actuaries estimate the cost, accumulating liabilities and required funding for pension plans based on longevity and numerous other factors that will affect benefit payments owed decades into the future. But today’s actuarial model for calculating what a pension plan owes its current and future pensioners is ignoring the long-term market risk of investments (such as stocks, junk bonds, hedge funds and private equity). Rather, it counts “expected” (hoped for) returns on risky assets before they are earned and before their risk has been borne. Since market risk has a price — one that investors must pay to avoid and are paid to accept — failure to include it means official public pension liabilities and costs are understated.

The current approach calculates liabilities by discounting pension funds cash flows using expected returns on risky plan assets. But Finance 101 says that liability discounting should be based on the riskiness of the liabilities, not on the riskiness of the assets.

U.S. steel industry has lost 48,000 jobs since 2000

The layoffs at U.S. Steel's Gary Works on Friday were just part of an ongoing trend that's afflicted the steel industry, which was once Northwest Indiana's largest employer and a ticket to a comfortable middle class life.

Steel jobs nationally have fallen more than 35 percent to 87,000 jobs last year, down from 135,000 jobs in 2000, according to the U.S. Bureau of Labor Statistics. The United States lost another 4,000 steel industry jobs in 2015, as compared to the previous year.

The U.S. steel industry has been declining since the 1970s, but federal data shows job losses have accelerated rapidly in the 21st century. Health care has since eclipsed the steel mills as the Region's biggest employer. Since 2000, the U.S. steel industry has weathered two import crises that have resulted in bankruptcies, closed mills and pink slips nationwide. The United States is however now enforcing 161 tariffs against dumped foreign steel, to try to protect the domestic industry.

"At the U.S. Department of Commerce, we are fully committed to enforcing U.S. trade laws and ensuring that our trading partners comply with their obligations under the World Trade Organization and our free trade agreements," U.S. Secretary of Commerce Penny Pritzker wrote in a letter to the Cleveland Plain Dealer after touring an ArcelorMittal mill there. "We are cracking down on companies and countries that don't play by the rules in record numbers."

Retiree Health Care Cost Estimates Reach Record Level - $260,000

A 65-year-old couple retiring in 2016 will need an estimated $260,000 to cover health care costs throughout retirement, according to Fidelity’s Retiree Health Care Cost Estimate. The level represents a 6% increase from last year’s estimate of $245,000 and marks the highest projection since Fidelity began making calculations in 2002.

The estimate applies to retirees with traditional Medicare insurance coverage and general, monthly expenses associated with Medicare premiums, co-payments and deductibles, as well as prescription drug and out-of-pocket expenses. Fidelity attributes much of the increase to a boost in the utilization of medical services and a rise in the costs of prescription drugs.

“In recent years, the health care industry has experienced a period of historically low spending levels, due to a range of factors including a period of slow economic growth,” says Adam Stavisky, senior vice president of Fidelity Benefits Consulting. “Looking forward, we expect health care spending to pick up from where it’s been in recent years, though less than what we’ve seen over the last few decades.”

According to Fidelity, health care cost estimates for retirees has increased by at least 29% since 2005. This year, Fidelity also examined estimates of long-term care costs, which usually are covered by Medicaid in only limited circumstances and could affect seven in 10 Americans who reach age 65 within the next five years.

Politically Correct School Officials Reject ‘Gifted and Talented’ Label for Students

A report from The Baltimore Sun claims that Baltimore County school officials acting in the name of political correctness are planning to drop the words “gifted and talented” in favor of a new term, “advanced academics.”

The move away from the label “gifted and talented” has upset some parents in the Baltimore County school district who are concerned that the change will lead to neglect of accomplished students who demand a more academically rigorous education. However, in response, the county believes the incorporation of the label “advanced academics,” which will include gifted and talented and advanced placement students, will help retain the school district’s focus on providing an environment for advanced students that is specifically suited to their unique educational needs.

According to the report, students qualify as “gifted and talented” when they display superior abilities in both academic and creative pursuits: “Baltimore County selects its students in third and fifth grades based on achievement and other, more subjective criteria, including personality, creativity, curiosity and ability to concentrate. Roughly one-fifth of students qualify.”

Some educators reject the traditional approach to educating “gifted and talented” students because they claim that students who don’t qualify for the accelerated curriculum by second grade will be unable to progress into the the gifted group despite any progress that would have qualified the for it otherwise.

Fmr. SEC Chair: Fed board less independent since Dodd-Frank, economic meltdown

Bank of England bond buying plan back on track

The Bank of England has successfully bought £1.17bn worth of government bonds as part of its £60bn buy-back programme to stimulate the economy.

Last week, the Bank failed to find enough sellers when it offered to buy the bonds, known as gilts. But it found no shortage of sellers on Tuesday. The "reverse auction" was oversubscribed by almost 2.7 times.

By creating money to buy gilts the Bank hopes to push cash out into the economy for investment and lending. Pension funds in particular have been reluctant to sell gilts, especially those with long maturities, because they bought them when they were cheap and offered a high rate of return.

The Bank's quantitative easing programme began in 2009, and last month it announced a new £60bn round of government bond buying to try to stimulate growth after signs of a slowdown followed the referendum vote in June.

Forgiving All Student Loan Debt Would Be an Awful, Regressive Idea

An especially half-baked idea for dealing with America's student debt burden has been bubbling up from the far reaches of the political left lately: Washington, a few well-meaning souls say, should just forgive all of the loans—wipe the slate clean. The Green Party's Jill Stein is running for president on the promise that she'll wave away every cent of outstanding federal education debt. And late last week, Bard College President Leon Botstein argued in Money that Hillary Clinton should vow to do the same, giving the concept at least a thin veneer of academic respectability.

It's easy to see why this notion would be politically appealing for a certain kind of lefty. Many young progressives are college graduates with student loans they would love to see disappear. If you're a third-party candidate like Jill Stein, appealing to their self-interest is an obvious way to attract a few votes.

Meanwhile, if you're the president of an expensive private institution of higher education, like Botstein is, a temporary solution to college costs that doesn't require any sacrifice from universities themselves is probably very appealing. And, hey, student debt is a crushing, generational crisis, right? Why not just eliminate it all?

Well, for one thing, it would be expensive—there are about $1.25 trillion of outstanding federal loans right now, which is more than a year's worth of Social Security spending, or enough to fund the federal block grant for Temporary Assistance for Needy Families, aka welfare, for about 78 years. But more importantly, across-the-board student-loan forgiveness would be an incredibly regressive way of dealing with debt. And typically, trillion-dollar spending programs that disproportionately benefit relatively affluent college graduates aren't high on progressives' to-do lists. Or they shouldn't be, anyway.

One in 5 New York companies say they're hiring fewer people because of Obamacare

Some companies in the Empire State say they are slowing down hiring because of Obamacare.

According to a new survey by the Federal Reserve Bank of New York, 20.9% of manufacturing firms in the state said they were employing fewer workers because of the Affordable Care Act, the healthcare law known as Obamacare, while 16.8% of respondents in the service sector said the same.

As the New York Fed noted, this still leaves a vast majority of businesses unaffected, but even a one-in-five change is significant.

"The vast majority of respondents in both surveys said they were not changing the proportion of part-time workers or the amount of work outsourced to other firms," the New York Fed report said. "Most respondents also said wage and salary compensation and other benefits were not being affected by the ACA, though more respondents said they were being cut than raised."

Gold Prices: Rising, Bucking the Commodities Trend

The commodities sector is suffering from lackluster prices, weak demand and, in many cases, overproduction but one sector is on the up, and that’s precious metals. Particularly gold and silver prices.

According to the Financial Times, gold and silver have been among the best performing metals during 2016, powering a sharp rally in stock prices and helping miners ease concerns over their finances.

Since the start of the year, gold has risen 27% while silver is up 46% giving more scope to the sector to return to dividend payments. Many miners cut dividends after the price of gold, which peaked at about $1,900 in 2011, started to fall sharply in 2013. Although gold miners were not alone, they did take action early.

Bulk miners like BHP Billiton and Rio Tinto Group kept large dividend payments flowing until just a year ago but gold miners saddled with debt taken on to fund capital investments were, in many cases, facing a shaky future as the gold price plummeted. However, mining firms have since reduced costs dramatically, shoring up their balance sheets and reducing debt.

Lower Gasoline Prices Cause Inflation To Slow

Prices for a wide variety of consumer goods held steady in July, pushing down the annual inflation rate in a report that could add to economic concerns of Federal Reserve officials.

The rise in the consumer price index during the previous four months was halted by a 4.7% drop in gasoline prices in July, which offset modest increases in other goods and services, the Labor Department said Tuesday. Consumer prices had risen 0.2% in June.

Analysts expected the overall index to be unchanged. But they had forecast that so-called core prices, which exclude often-volatile food and energy costs, would rise 0.2% in July. With lower gas prices, the core price index increased just 0.1%.

Economists say a moderate increase in prices is important for overall growth, helping push up wages and make it more cost-effective to borrow money. Federal Reserve policymakers want to see inflation rising 2% a year. But the recovery from the Great Recession has been marked by extremely low inflation. For the 12 months that ended July 31, prices increased 0.8%. That was down from the 1% increase for the 12 months that ended June 30.

MIT and Microsoft Research made a 'smart' tattoo that remotely controls your phone

A group of PhD students from the MIT Media Lab and researchers from Microsoft Research have come up with the ultimate wearable: a temporary tattoo that can turn into a touchpad, remotely control your smartphone, or share data using NFC.

The technology, which is described on MIT's website and will be presented in full at a wearables symposium next month, is called DuoSkin. The researchers say you can design a circuit using any graphic software, stamp out the tattoo in gold leaf (which is conductive to electricity), and then apply other commodity materials and components that would make the tattoo interactive.

The paper presents three key use cases for the tattoo: you could use it to turn your skin into a trackpad, design it to change color based on temperature, or pull data from the tattoo. In one photo shared by MIT the tattoo even includes LED lights, creating a kind of glowing display on the skin.

This isn't the first time researchers have tried to turn our "dumb" epidermis into the equivalent of a touchscreen. Back in 2010 a Carnegie Mellon student, also in collaboration with Microsoft Research, came up with something called Skinput, which was designed to turn your wrist or the back of your hand into a "gestural finger input canvas."

Global central banks dump U.S. debt at record pace

In the first six months of this year, foreign central banks sold a net $192 billion of U.S. Treasury bonds, more than double the pace in the same period last year, when they sold $83 billion. China, Japan, France, Brazil and Colombia led the pack of countries dumping U.S. debt.

It's the largest selloff of U.S. debt since at least 1978, according to Treasury Department data. "Net selling of U.S. notes and bonds year to date thru June is historic," says Peter Boockvar, chief market analyst at the Lindsey Group, an investing firm in Virginia.

U.S. Treasurys are considered one of the safest assets in the world. A lot of countries keep their cash holdings in U.S. government bonds. Many countries have been selling their holdings of U.S. Treasuries so they can get cash to help prop up their currencies if they're losing value.

The selloff is a sign of pockets of weakness in the global economy. Low oil prices, China's economic slowdown and currencies losing value are all weighing down global growth, which the IMF described as "fragile" earlier in the year.

Popular Ransomware Earns $195,000 In a Month, Report Says

There’s a very obvious reason why ransomware, a form of malware that locks a victim’s files until they pay a ransom in bitcoin, is extremely popular: its operators make ridiculous amounts of money even if very few of their victims shell out the digital cash.

But how much money exactly? According to a new report, one of the world’s most popular ransomware campaigns at the moment made $195,000 in the span of one single month, thanks to 161 affiliate campaigns infecting 150,000 victims.

The ransomware in question is called Cerber. Its author or authors set it up so that they would to earn 40 percent of the total profits, with the rest given to the affiliates. Considering that, Cerber's creatorsmade $78,000 last July, according to the security firm Check Point, which published the report on Tuesday.

“Ransomware is no longer a highly profitable business reserved only for skilled attackers who can write sophisticated encryption schemes and establish a steady infrastructure,” Check Point researchers wrote in the report. “An unskilled actor who lacks the required technical knowledge can now easily reach out to one of many users in various closed forums. For a small payment, the would-be attackers can obtain an undetected ransomware variant and a designated set of C&C infrastructure servers, and easily manage their active campaigns using a basic web interface.”

How 100% of Clintons' 2015 charity went to themselves

The World’s Biggest Miner Just Posted Its Worst-Ever Loss

BHP Billiton (NYSE:BHP) reported on Tuesday a massive loss of US$6.385 billion for the fiscal year ended June 30, after multi-billion impairments on U.S. shale assets and a burst dam in Brazil made it swing to its worst loss on record from the US$ 1.91-billion profit for the previous financial year.

BHP—the world’s biggest miner by market capitalization—recognized an impairment charge of US$4.9 billion against the value of its onshore U.S. assets, reflecting altered price assumptions amid high volatility and much lower prices in the gas and oil industry.

The miner was also hit by a US$2.2-billion net charge by the Samarco dam failure in which a joint venture of BHP suffered Brazil’s worst mining disaster when the dam burst and killed 19 people and released billions of gallons of mining waste into the valley.

The commodity price crash added to BHP’s headwinds in the period mid-2015 through end-June 2016, and the miner slashed dividends by 76 percent to US$0.30 per share. Upon announcing its half-year results in February, BHP said that it was bracing itself for a prolonged period of lower commodity prices, and therefore adopted a dividend policy to link dividend payments to underlying profits in order to ensure financial flexibility and protect the balance sheet.

Blockchain-based Omni Foundation adds 'Euro-coin' pair to its USDT digital dollar

Omni Foundation, originally founded as Mastercoin back in the day, has launched a "Euro-coin" (EURT), in conjunction with Omni asset Tether Inc and other partner exchanges. The Euro-coin is tradeable and transferable over the Bitcoin blockchain.

US dollars can be converted to euros on the blockchain using USDT (dollars digitally stored using Tether) and USDE (the euro equivalent of USDT), said a statement. In association with Edinburgh-based exchange CoinsBank, these transfers can now be transmitted directly into traditional bank accounts in Europe through SEPA transfers.

Omni Foundation currently supports USDT on Tether, which trades between half a million and a million USD a day across more than five exchanges. Tether's goal is to combine the stability of fiat currency to the utility offed by digital currency. The new EURT coin is fully backed by a banking trust in Taiwan on a one-to-one basis of deposits to coins issued. The currencies are issued using the Omni Layer protocol, which like the Bitcoin blockchain itself, is fully decentralised and allows low-cost trading with no custodian or middleman.

Omni Foundation also said it is integrating with CoinsBank to enable debit card payments for holders of Tether USD and EUR. CoinsBank averages over $2m in daily trading volume for Bitcoin against the euro, dollar and pound.

Aetna ditching 70% of its ObamaCare business

Insurance giant Aetna won’t be offering coverage under ObamaCare next year in 11 of the 15 states it now serves — an announcement that instantly became an issue in the presidential race.

Aetna’s decision led Donald Trump to charge that President Obama’s health care reform was “imploding.” “Aetna’s decision to leave the Affordable Care Act’s public marketplaces is the latest blow to this broken law that is slowly imploding under its regulatory red tape,” said Trump campaign deputy national policy director Dan Kowalski.

“Millions of Americans have lost their health coverage under this disastrous policy, eliminating their ability to choose their doctors. Thousands of businesses have been forced to cut employment or shutter their doors in response to Obama’s signature achievement,” he added.

The company had previously warned that it expected to lose more than $300 million this year on the 900,000 patients it covers under the Affordable Care Act. Aetna said it is pulling out of ObamaCare markets in Arizona, Florida, Georgia, Illinois, Kentucky, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina and Texas.

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