GM cutting 1,300 jobs at only plant inside Detroit
In another sign of slowing auto sales, the Detroit-Hamtramck plant will eliminate its second shift and about 1,300 of its 3,000 jobs. The layoffs will take place in March. GM said it will try to find jobs for the employees at other plants.
The Detroit facility is the third GM plant to eliminate the second shift. Plants in Lansing, Michigan, and Lordstown, Ohio, announced layoffs in November, the first permanent cuts by GM at its U.S. plants since 2010. Those cuts take effect early next year.
In all, GM will cut about 3,300 jobs at the three plants. GM (GM) has enjoyed a sustained recovery since its 2009 bankruptcy and federal bailout, posting record earnings and steadily increasing sales. But sales are expected to fall this year for the first time since the crisis. Sales through November are down about 3% from the same period last year.
The Detroit plant makes the plug-in Chevrolet Volt, which has enjoyed strong sales this year. A new version that can travel farther on a single charge has driven a 59% jump in sales this year. But two of the other models built there, the Buick LaCrosse and Chevy Impala, have reported sharply reduced sales this year as buyers increasingly shift from cars to crossover SUVs. The Lordstown and Lansing plants make cars, not SUVs.
India is trying to solve its cash crisis with a massive lottery of electronic money
Nearly a month after Indian Prime Minister Narendra Modi announced that 86% of his country's cash would become worthless due to suspicions of rampant illegal activity, the country has devised a digital solution to the widespread shortage of paper money.
Beginning on Christmas Day, the Indian government will hold a daily lottery for anyone who buys into a new system of electronic payments.
The prize amounts vary from roughly $15 to $1,500, culminating in an April 14 draw for more than $1.5 million.
Modi's solution is an attempt to move India into the 21st century. While the US does about half of all transactions electronically, and Sweden about 98%, India only does about 5% of its payments digitally. "Our objective is to make digital payments a huge mass movement in this country," Amitabh Kant, CEO of the state-run think tank NITI Aayog, told CNN. NITI Aayog is the organization that came up with the idea for an electronic-payment lottery.
Euroclear Bankchain completes gold settlement pilot
The first pilot for a new London bullion settlement service, Euroclear Bankchain, has been completed by the international securities depository and financial technology firm Paxos. The service, which combines Euroclear's settlement activities with Paxos' blockchain platform, is one of a wide range of planned product launches that aim to minimise risk, drive efficiency and reduce balance sheet constraints for gold market participants.
The pilot saw more than 600 over-the-counter test bullion trades settled over a two-week period. Participants included Scotiabank, Societe Generale, Citigroup, MKS PAMP Group and INTL FCStone.
Settlement of unallocated gold is a capital-intensive process and the platform aims to reduce capital charges for market participants through instant settlement and simultaneous delivery versus payment. "This is a real first step in bringing a new settlement capability to the London bullion market that will help lower risk and simplify the post-trade process," said Angus Scott, director, product strategy and innovation at Euroclear."
Euroclear and Paxos will integrate feedback from the pilot in the coming months. The next market simulation is planned for early next year while the service is scheduled to go live during 2017.
CalPERS cuts retiree benefits for first time ever
How Do Banks Use Your Money? Morgan Stanley Fined $7.5M For Mishandling Depositors’ Funds
Morgan Stanley faces a $7.5 million fine from the Securities and Exchange Commission, the SEC announced Tuesday, for using illegal levels of customers’ cash and securities in swap trading.
From March 2013 to May 2015, the megabank used its affiliate, Morgan Stanley Equity Financing Ltd., to serve as a client to its U.S. securities brokerage, the SEC said. In doing so, the affiliate could use funds from the brokerage, or broker-dealer, to finance its trades. The only problem: The broker-dealer’s customer deposit reserves are required to be maintained at a certain level, in case customers want to pull out their money — in, say, the case of bank failure — and Morgan Stanley’s maneuver depleted the pool of readily available customer money “by tens to hundreds of millions of dollars per day,” the regulator found.
Morgan Stanley violated the SEC’s nearly half-century-old Customer Protection Rule, which “establishes crucial safeguards for investors” by ensuring their money is kept safe by broker-dealers, Michael Osnato, head of the Complex Financial Instruments Unit of the agency’s Enforcement Division, said in the SEC news release. The rule, according to the SEC’s site, states a brokerage “may not use customer property as a source of working capital for its operations” — in short, exactly what Morgan Stanley did.
“Complex trading schemes designed to artificially reduce the amount a broker-dealer must maintain in its customer reserve account run contrary to these basic obligations,” Osnato said.
American Apparel To Liquidate Nine Stores Ahead Of January Auction
Two weeks after American Apparel confirmed it could lay off 3,500 workers as part of its second bankruptcy go-around in two years, the company received approval to liquidate nine stores by the end of the month. The Wall Street Journal reports that U.S. Bankruptcy court judge Brendan Shannon approved the liquidation of the nine stores giving the company permission to begin “going out of business” sales for the next two weeks.
American Apparel estimates that the liquidation sales will generate about $600,000 in income for the company, and the location closures will save about $200,000 a month in rent.
Affected stores are located in New York, Washington, D.C., Seattle, Atlanta, Dallas, Memphis, Santa Cruz, CA, Evanston, IL, and Burlington, VT. The remainder of the company’s stores – about 100 – will be sold at auction on Jan. 9.
Canadian company Glidan Activewear is thought to be the top contender for American Apparel’s intellectual property rights and some other assets. However, with the auction looming it’s possible other companies will swoop in to buy what’s left of the retailer.
Walgreens, Rite Aid to sell 865 stores to Fred's
In a bid to bolster its chances to buy Rite Aid, Walgreens Boots Alliance (WBA) and Rite Aid (RAD) said Tuesday that they plan to sell hundreds of Rite Aid locations to Fred's Inc. (FRED) for $950 million.
If the sale of the 865 stores gets the green light from regulators, Fred's would instantly become one of the biggest pharmacy chains in the U.S., and Walgreens' year-long quest to merge with its drug store rival would move closer to its goal of the deal closing at the start of next year.
Investors seemed pleased by the move. Shares in Fred's soared almost 80% in afternoon trading. Rite Aid shares rose 5.4% and Walgreens saw a more modest uptick of .0.4%.
Walgreens, which merged with Alliance Boots two years ago, said that it planned to buy Rite Aid in October, 2015 for $9.5 billion. But federal trade officials have expressed concerns about the melding of the world's largest retail pharmacy chain with Rite Aid's 4,600 stores in the U.S.
Seniors' Social Security Benefits Docked Over Student Debt
Hundreds of Pennsylvania Jobless Center Workers Lose Jobs
Hundreds of state employees caught in an unemployment compensation program funding dispute between Democratic Gov. Tom Wolf's administration and Senate Republicans spent their last day on the job Monday before they qualify for jobless benefits themselves.
Officials said there were no signs of a last-minute reprieve that could help about 520 people avoid being laid off less than a week before Christmas from the state Department of Labor and Industry's unemployment compensation call centers.
Wolf's administration is cutting jobs and closing unemployment compensation call centers in Allentown, Altoona and Lancaster without the $58 million from unemployment compensation tax revenue it said is necessary to maintain the centers at current staff levels.
Senate Republicans wrapped up the chamber's legislative business without voting on the funding bill sought by Wolf, saying they were unsatisfied with Wolf's answers on how the money would be used. Senate Republicans have not committed to approving funding when they return to the Capitol next month. Diane Bowman, of the Service Employees International Union Local No. 668, which represents more than 300 of the affected workers, said, "I would hope that would be the case, but I don't have any reason to believe it's going to happen magically."
This Christmas Americans Will Spend An Average Of 422 Dollars Per Child
For many Americans, the quality of Christmas is determined by the quality of the presents. This is especially true for our children, and some of them literally spend months anticipating their haul on Christmas morning. I know that when I was growing up Christmas was all about the presents. Yes, adults would give lip service to the other elements of Christmas, but all of the other holiday activities could have faded away and it still would have been Christmas as long as presents were under that tree on the morning of December 25th. Perhaps things are different in your family, but it is undeniable that for our society as a whole gifts are the central feature of the holiday season.
And that is why so many parents feel such immense pressure to spend a tremendous amount of money on gifts for their children each year. Of course this pressure that they feel is constantly being reinforced by television ads and big Hollywood movies that continuously hammer home what a “good Christmas” should look like.
Once again in 2016, parents will spend far more money than they should because they want to make their children happy. According to a brand new survey from T. Rowe Price, parents in the United States will spend an average of 422 dollars per child this holiday season…
More than half of parents report they aim to get everything on their kids’ wish lists this year, spending an average of $422 per child, according to a new survey from T. Rowe Price.
Nearly all Americans under 50 are buying online
A close look at the buying behavior of younger consumers is crucial for merchants planning for the future. Consumers between the ages of 18 and 35—so-called millennials—are expected to spend more than $200 billion annually starting next year and $10 trillion in their lifetimes, according to an estimate from Advertising Age.
That’s why web merchants especially should take note of a new study released this week from the Pew Research Center, which shows younger adults are far more likely to purchase products on their phone or through social channels than older consumers. They’re also much more likely to check online reviews before buying a new product online or in stores.
Shopping online is now generally mainstream across all age groups, as 79% of consumers have purchased something online in their lifetime (90% of 18- to 29-year-olds; 87% of 30- to 49-year-olds; 72% of 50- to 64-year-olds; and 59% of those 65 and over), the study finds.
Shopping via smartphone is much more popular in the under-50 age bracket, however. Roughly 77% of consumers ages 18 to 29 have purchased something on their phones, while 64% of consumers 30 to 49 have done the same. That compares to a drastically smaller portion of older Americans that are doing so. Only 36% of consumers 50 to 64 years old have bought something on their phone and only 17% of those 65 and above.
Uber Drivers Say They Deserve Tips for Driving You Everywhere
One of the most contentious things about taking an Uber, leaving a tip after your ride, can pose a moral dilemma for customers. When it was founded, the ride-share monolith maintained that gratuities were included in your base fare, but many of the company’s drivers disagree, arguing that yes, a little extra compensation goes a long way when you’re paid an middling hourly wage for shuttling drunk people home late at night.
According to a survey conducted by Business Insider, which queried more than 40 Uber and Lyft drivers, rank and file employees of the world’s largest ride-share companies basically don’t make enough money, and think a dearth of tips is partly to blame.
One Uber driver who spoke to BI lamented the paltry hourly rates he sometimes earns, which he said could plummet to $4 an hour when business is slow. "Sometimes it's as low as $4 an hour, and that's before wear and tear, gas, routine maintenance, and now regularly replacing my brakes. On a really good day, I might make $10 per hour, and there's the very rare occasion I might make up to $25 in an hour, but that's not per hour. We provide a service, yet you think we don't deserve tips."
The consensus around tipping is basically universal, according to the survey. Why Uber drivers might be especially fuming can make sense, particularly in light of some the company’s newest programs, like Uber Eats, which sees drivers delivering food in addition to their traditional on-demand taxiing. In essence, drivers claim they’re being asked to do more for less, and aren’t seeing the fruit of their labor materialize in any enduring way.
Will a robot take your job? White House Economic Counsel says maybe
Amazon drones deliver packages, self-driving Ubers taxi riders, and artificial intelligence even files AP reports. As automation increases, many have wondered if a robot will make their job obsolete. Luckily, the very-human White House Council of Economic Advisors has the answer.
The binary for replacement falls along the lines of ability and pay grade. More specialized workers aren't as likely to be replaced as their less skilled coworkers. And that could complicate Trump's plan to make American manufacturing great again.
Workers making less than $20 an hour were more than twice as likely to lose their job to a robot as those making between $20 and $40 an hour. For employees bringing in more than that, chances of automation attrition are negligible. And unsurprisingly, employees with higher levels of education face less of a threat from robots in their field. But almost half of the jobs occupied by those with less than a high school education could be on the chopping block.
The Carrier deal in Indiana provides a ready case study of the clash between robotics and protectionist politics. Shortly after the president-elect helped negotiate $7 million in tax cuts, the HVAC company announced that, in order to save cost, it planned to automate much of the plant instead of moving to Mexico. It's part of the latest trend occurring across the country.
Ford halting Venezuela production until April
Ford Motor Co halted auto production in Venezuela last week and will not resume it until April, a company executive said on Tuesday, in another blow to the crisis-wracked country's manufacturing sector.
"It is a measure to adjust production to demand in the country," Lyle Watters, Ford's president for South America, told reporters at an event in São Paulo, adding that the plant affected by the shutdown employs 2,000 workers.
Watters said the production freeze would not affect Ford's consolidated results as operations in Venezuela are reported separately. Beginning in the first quarter of this year, Venezuela became the only wholly-owned Ford unit with operating results that are excluded from its income statement.
In January 2015, Ford took a charge related to its Venezuelan operations that cut fourth-quarter net profit by US$700 million. Ford is the only automaker still mass producing cars in Venezuela, even on a limited scale.
'The housing bust appears bigger than the boom' even after 7 years of recovery
Looking at the US economic landscape as it stands now, it appears that in many parts of the country the fall out from the financial crisis has been cleaned up.
The stock market is at all-time highs, the unemployment rate is at levels not seen since before the recession, and wages are on the rise. One notable exception, according to Scott Brown at Raymond James, is the housing market.
The growth of the housing market has been a relative laggard. Given that the epicenter of the financial crisis was the housing market, its no surprise that it has taken longer than the rest of the economy to recover.
"In a number of ways, the housing bust appears bigger than the boom," wrote Brown in a note to clients. "The housing recovery was always expected to take several years, but improvement has been even slower than anticipated."
Gun Sales Surge in CA Ahead of Sweeping New Gun Control Laws
The Average U.S. Household Owes More than $16,000 in Credit Card Debt
Americans may soon have as much credit card debt as they did during the Great Recession.
The average U.S. household owes $16,061 in credit card debt, up from 10% from $14,546 from 2006, according to an analysis released by personal finance company NerdWallet. That figure is still down from the recent high of $16,912 at the height of the recession in 2008. Credit card debt levels aren’t expected to hit pre-recession levels until the end of 2019.
Interest rates play a large role in the debt: The average household that owes money on credit cards pays about $1,292 in interest each year. That could jump to $1,309 after the Federal Reserve voted on a rate hike of a quarter of a percentage point. If you find yourself in credit card debt, check out MONEY’s recommendations for the best cards to get you out of debt.
Total debt—including mortgages, student loans and auto loans—is expected to surpass the amounts owed at the start of the Great Recession by the end of 2016. That’s largely due to the growth of mortgage debt, which surged from $159,020 per household in 2010 to $172,086 this year, and debt from auto loans, which jumped from $20,032 in 2010 to $28,535 in 2016.
Happy Holidays, You’re Fired: List of Companies Laying People Off
The holidays are a particularly cruel time to lay off people, or to tell them they will be laid off soon. That has not stopped a number of companies from doing so. The most recent large public corporations to disclose job cuts are Boeing Co. (NYSE: BA) and General Motors Co. (NYSE: GM), but they are not alone.
Caterpillar Inc. (NYSE: CAT) announced layoffs and even said it was a bad time of the year to let workers go. According to the Herald Democrat on December 15: Officials with Caterpillar announced a new series of company-wide layoffs Wednesday amid lower projected sales and revenues in 2017 than the previous year. Caterpillar would not confirm the scope of the layoffs, but local sources confirmed this includes positions at the company’s Denison location. “There is never a good time for announcements like this, but we recognize this is particularly difficult for employees and their families during the holidays,” Caterpillar Spokesperson Lisa Miller said Thursday.
Note that Caterpillar’s stock has been the second most successful in the Dow Jones Industrial Average this year, up 36%.
Recently, a large Florida call center company laid off hundreds. According to the Sun Sentinel: Sitel Corp., a call center operation in Pompano Beach, has issued a notice to the state of Florida that it plans to lay off 804 workers in February. Located at 2528 NW 19th St., Sitel said the layoff would be between Feb. 14 and 28, according to the Worker Adjustment and Retraining Notification posted Friday. Sitel couldn’t be reached for comment.
The Fed has no idea how to tackle the economy
The Federal Reserve raised interest rates last week. As I explained many times before, it really had no choice since the financial markets were already raising them.
But here’s the funny thing. The Fed doesn’t have a clue as to what the economy is really doing. Yes, I know that’s been my theme for a long time. But the proof came out again last week.
Days after the Fed rate hike, the New York Federal Reserve Bank lowered its estimate of fourth-quarter gross domestic product growth to just 1.8 percent. And it said the first quarter of 2017 will hit only 1.7 percent.
Both are pathetic growth rates and about 0.7 percent lower than the NY Fed had been predicting.
Uber Lost Over $800 Million In Q3 On $1.7 Billion In Revenue
Uber lost more than $800 million in the third quarter excluding taxes, interest and stock-related compensation, sources told a variety of media sources. The ride-hailing giant generated $1.7 billion in net revenue, which excludes payments to drivers.
Uber's losses and revenue growth were slashed due to Uber's decision to sell its Uber China unit in mid-quarter to Didi Chuxing for a 17.5% stake in the Chinese ride hailing giant backed by internet giants Alibaba (BABA) and Tencent (TCEHY).
But Uber is still losing money in the U.S., after briefly turning a profit in Q1. Uber spends heavily on promotions as it faces competitors such as Lyft. Alphabet (GOOGL) unit Google is beginning a carpool ride-hailing service in the San Francisco-area. Uber also is taking on GrubHub (GRUB) and Amazon (AMZN) via its Amazon Eats food deliver service. Uber also has a self-driving venture, where Uber faces tech and automotive giants such as Alphabet's self-driving unit Waymo, General Motors (GM), Tesla Motors (TSLA) and perhaps even Apple (AAPL).
Uber has a market capitalization of some $68 billion. Uber's continued heavy losses could delay an eventual IPO. However, Snapchat parent Snap is still reporting losses as the short-lived photo messaging service plans an early 2017 IPO that would be the biggest U.S. listing since Alibaba.