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Monday 11.28.2016

Thanksgiving, Black Friday store sales fall, online rises

Sales and traffic at U.S. brick-and-mortar stores on Thanksgiving Day and Black Friday declined from last year, as stores offered discounts well beyond the weekend and more customers shopped online.

Internet sales rose in the double digits on both days, surpassing $3 billion for the first time on Black Friday, according to data released on Saturday.

Data from analytics firm RetailNext showed net sales at brick-and-mortar stores fell 5.0 percent over the two days, while the number of transactions fell 7.9 percent.

Preliminary data from retail research firm ShopperTrak showed that shopper visits to such stores fell a combined 1 percent during Thanksgiving and Black Friday when compared with the same days in 2015. The data highlights the waning importance of Black Friday, which until a few years ago kicked off the holiday shopping season, as more retailers start discounting earlier in the month and opened their doors on Thanksgiving Day.

Losers Who Won't Lose: What Are The Odds Of A Successful Hillary Recount?

President-elect Trump won 306 electoral votes versus Hillary Clinton's 232 (24% less electoral votes). Similar to 2000, the surrendering party then reversed course and put the nation through a recount, just for the sake of it. What are the odds that such an exercise here would yield successful for Ms. Clinton? Based on statistical randomness of re-assessing voter intent, the chance of Hillary emerging as the victor is far less than 10%.

Anything can happen, but these lean odds do not rise to the level of putting our peaceful democracy into the hands of a temptuous recount scheme every time a stung party loses (let alone misleadingly blame it on something else from Russia's Putin, to sexism, to "in hindsight the popular vote would be reasonable", to FBI Director Comey). All Americans should instead focus on how the 6 states that flipped this election, were all economically ignored and all flipped to Donald Trump.

The only viable path for a Hillary Clinton victory at this stage is to astoundingly uncover a wide-spread (across three states) fraud. And that's equally unlikely, since the basis for the voting aberrations occurred in less populated counties and anyway the three states employ three different voting mechanisms, so the fraud would have had to somehow occur through different transmission vehicles (paper voting, and electronic voting) and we would require a speedy judicial resolution for states such as Pennsylvania that sidestepped back-up recordings from their direct voting equipment.

We should note the following statistical facts about the electoral vote in the three recount states: 10 votes, Wisconsin (Trump leads by 0.9 percentage points. 20 votes, Pennsylvania (Trump leads by 1.1 percentage points). 16 votes, Michigan (Trump leads by 0.2 percentage points).

Venezuela’s currency is so devalued it no longer fits in ordinary wallets

It’s not so easy to find someone who still uses a wallet in Venezuela, where inflation is expected to reach 720 percent this year and the biggest bill — 100 bolivars — is worth about 5 U.S. cents on the black market.

The currency has dropped dramatically in value as Venezuela’s oil-based economy has cratered and the government has frantically printed more money. Prices, meanwhile, are soaring. So Venezuelans must handle huge volumes of cash — so much that the bills don’t always fit in a standard wallet — with many people packing wads of currency in handbags, money belts or backpacks.

The owner of a tiny kiosk selling newspapers, cigarettes and snacks in one of Caracas’s nicer neighborhoods said that each evening he quietly stuffs a plastic bag full of the day’s earnings, around 100,000 bolivars (about $52) in notes of 10, 20, 50 and 100 bolivars. This is a country with one of the highest crime rates in the world, and carrying that much cash is dangerous. He said he doesn’t feel safe, despite having his own scooter rather than using public transport.

“All of Caracas is unsafe,” said the 42-year-old kiosk owner, who declined to give his name. Three years ago, the volume of cash he carried home after a long day of work was smaller, he said, “and so were the risks.” He said that his clients usually count out their notes before stepping out onto the street, since they are too scared to be seen holding money in public.

2017 Destruction of the Old & Creation of the New

India grapples with the effects of withdrawing 86% of cash in circulation

A new strain of trickle-down economics has been spawned by the decision, on November 8th, to withdraw the bulk of India’s banknotes by the end of this year. As holders of now-useless 500-and 1,000-rupee ($15) notes rushed to deposit them or part-exchange them for new notes, an e-commerce site offered helpers, at 90 rupees an hour, to queue outside banks in order to save the well-off the bother.

Elsewhere, a chronic shortage of banknotes in a cash-dominated economy has left most trades depressed. Seven out of ten kiranas (family-owned grocers) have suffered a decline in business, according to a survey by Nielsen, a consultancy. Supply chains, in which wholesalers and truckers deal mostly in cash, have fractured. Some 20-40% less farm produce reached markets in the days after the reform. City folk admit to hoarding the 100-rupee note, the largest of the old notes to remain legal tender. Taxi drivers refuse to break the new 2,000-rupee note. Road-tolls have been suspended until at least November 24th, to prevent queues. Beggars have disappeared from parts of Delhi; no one has spare change.

India’s prime minister, Narendra Modi, is gambling that this temporary pain will be worth it. His goal is to flush out “black money”, stores of wealth that bypass the tax system, finance election campaigns and grease the wheels of high-level corruption. An enforced swap of high-value notes, say the reform’s boosters, acts as a tax on holders of illicit wealth.

The element of surprise is disruptive but without it, there would be time for black-money holders to launder their funds by purchasing gold, foreign currency or property. A tight deadline makes it hard for holders of large stashes of notes to swap or deposit them without alerting the tax authorities.

Record number of car buyers 'upside down' on trade-ins

The wave of easy credit and longer auto loans has left a record percentage of consumers trading in vehicles that are worth less than what they owe on their loans.

In auto finance parlance, these folks are underwater, or upside down. They already are affecting the market as automakers boost incentives and subprime lenders monitor their delinquency rates more closely.

So far this year, a record 32%, or nearly one-third, of all vehicles offered for trade-ins at U.S. dealerships are in this category, according to research by Edmunds.com. When these people go to buy a new vehicle they must add the difference between their loan balance and the vehicle's value to the price of the one they want to buy.

For perspective, the lowest the underwater percentage has been was 13.9% in 2009, the depths of the Great Recession when credit was tight. The previous high was 29.2% in 2006, about when the housing market was near its frothiest point.

Wall Street bonuses are down nearly 10% from last year

Bankers are raising hell for bigger bonuses in another rough year for Wall Street revenues and employment. Average bonuses are forecast by Johnson Associates to be 5 percent to 10 percent smaller in 2015, down for a second consecutive year — and tempers are flaring.

Dealmakers are lobbying hard with their bosses for a bigger slice of a shrinking pie, according to insiders and compensation experts. The average bank bonus pool has plunged 30 percent since 2009.

“They can lobby their departments, and that is all happening right now,” said Scott Rostan, chief executive of Training The Street, a financial training firm. And that can result in rising tensions within tight-knit departments, admitted Rostan, a former M&A exec at Merrill Lynch.

You can absolutely count on angry bankers clamoring for more of the deal credit this year, Alan Johnson, managing director of Johnson Associates, told The Post. “And there is more pain to come,” he added. “It could be like this for a couple more years.”

Fed braces for Trump shake-up

The Federal Reserve could be in for a bumpy ride as resurgent Republicans led by President-elect Donald Trump look to make a big mark on the central bank.

The right has grown increasingly irritated by the central bank’s policies since the financial crisis and may now be poised to finally push through long-stalled changes to overhaul its operations.

“We knew there was going to be limited progress under Barack Obama’s administration,” said Rep. Bill Huizenga (R-Mich.), who authored a broad Fed reform bill in the last Congress. “Now, with a partner at 1600 Pennsylvania Avenue that’s interested in moving the needle, frankly we’d be dumb not to try to pursue this.”

For years, GOP-led efforts to impose new rules and restrictions on the Fed ran aground amid substantial Democratic opposition, both in the Senate and the White House. But the election puts the Fed on shaky ground, with any number of GOP-authored bills waiting in the wings for renewed consideration.

Low Oil Prices Create a $1 Billion Business Killing Aging Fields

Low crude prices that have been hammering oilfield service companies for the past two years might be ready to give a little back.

Sinopec Oilfield Service Corp., Keppel Corp. Ltd. and others will have a chance to fight for $1 billion a year in new business in Asia as the crude crash forces energy producers to decommission aging and unprofitable fields, industry analyst Wood Mackenzie Ltd. said in a new report. More than 600 fields, mostly in China, Australia, Indonesia and Malaysia, could be shut down over the next decade.

The decommissioning represents an opportunity for oilfield service firms to rebuild their business after two years of layoffs and cost-cutting as the crude plunge caused a drop in drilling and exploration, the main activity for these firms. The Bloomberg World Oil & Gas Services Index has dropped 40 percent since the summer of 2014, compared with a 12 percent gain in the S&P 500.

“There’s been a lack of the traditional activity for service companies, like drilling and exploration,” Andrew Harwood, Wood Mackenzie’s director for Asia upstream research, said in Singapore. “Maybe this is an opportunity to fill the gaps.”

Apple Will Buy Back Stock Rather Than Build U.S. Factories

It's no secret. President-Elect Donald Trump is not a fan of Apple's (NASDAQ:AAPL) manufacturing strategies. During the campaign trail, Trump repeatedly attacked Apple for outsourcing manufacturing of iPhones and other electronics to China. Trump took a tough stance against manufacturing outsourcing prior to winning the election proposing tariffs on Chinese-manufactured goods being imported to the U.S. and labeling China as a currency manipulator.

As a populist Republican candidate, Trump took aim at Apple in particular at one point stating the U.S. federal government will "get Apple to start making their computers and their iPhones in our country, not China." Trump's rhetoric caused a period of decline in tech stocks directly after his surprising victory as corporations and investors alike tried to determine what policy implications Trump's plans would have on big tech companies who have been outsourcing American jobs by the tens of thousands over the last few decades.

Trump recently revealed to the New York Times that he received a phone call from Apple CEO Tim Cook in which policy proposals were elaborated upon. "I said 'Tim, you know one of the things that will be a real achievement for me is when I get Apple to build a big plant in the United States instead of China. We'll create the incentives for you, and I think you're going to do it. We're going for a very large tax cut for corporations, which you'll be happy about."

What Trump was referring to here are plans to cut the corporate tax rate 20 points from 35% down to 15%, which the Trump administration believes is absolutely necessary to provide incentives for investments in manufacturing in the U.S. On top of that, Trump would reduce costly manufacturing regulations which do not exist in many other parts of the world.

Keiser Report: Trump, Diamond & Silk

Resurrecting the American Dream

October showed some signs of life in the American dream, if you consider owning a home the core of the American dream.

Last month, U.S. housing starts soared an astounding 25.5% to 1.32 million units, crushing Wall Street’s estimate for 1.16 million units. It was the highest level since August 2007, as starts jumped across all four regions.

What’s more, permits for single-family homes increased 2.7% in October — a leading indicator that we should continue to see growth in home starts in November. While new home sales dropped 1.9% in October, existing home sales soared 5.9% from a year ago to 5.42 million — setting the fastest pace since February 2007.

Of those existing home sales, 33% were first-time buyers — significantly higher than we’ve seen in previous years. And this could be just the tip of the iceberg for a much larger trend that will still play out.

Consumers Are Losing Trust in Hacked Companies

Hacked companies are losing the trust of consumers, and it’s adding steeply to the cost of cyberattacks. According to the non-profit tech think tank Internet Society’s 2016 Global Internet Report, 59 percent of internet users said they were unlikely to engage in a business transaction with a company that had suffered a data breach.

The Wednesday report comes a few short months after Yahoo disclosed a year-old hack that compromised personal data, including email login information, for more than 500 million users. That’s the largest successful breach of personal information ever, and one that is reportedly already making Verizon reconsider how much it’s willing to pay to buy out the web giant.

Findings in the report come during the season of some of the most damaging high-profile hacks in recent years at retailer Target and Sony Pictures Entertainment, both of which cost the companies tens of millions.

Despite the rising frequency and cost of such attacks, too many organizations still aren’t doing enough to mitigate their risk, according to economist and society fellow Michael Kende. “One of the key questions raised by this report is why are organizations doing so little to protect their customers’ data?” Kende, one of the report’s authors, said in a statement. “Everyone knows that data security is a major issue for both consumers and businesses, yet companies are not doing everything they could to prevent breaches.”

Starbucks Is Selling a $150 Smart Mug That Lets You Control the Temperature of Your Coffee

Watch out, folks, your coffee may soon be getting hacked—in a good way. A hundred Starbucks stores are selling smart coffee mugs made by Ember. The internet-connected mug lets users adjust the temperature of the liquid inside via the brand's smartphone app. The device has been in the making for several months, but it's going to be fascinating to see whether it takes off.

The Ember mug costs $150, which is more than the $140 Snap Inc. is charging for its video-recording sunglasses, Spectacles. Starbucks is the exclusive distributor of the mug.

So, if there is a precise temperature you prefer your beverages to be, this technology may be your solution. It can rapidly cool your coffee to a Farenheit degree and then hold the temperature right there for as long as the mug is powered.

Ember has an interesting list of investors, including Demi Lovato, Nick Jonas and Ndamukong Suh. Lovato posted the above picture on Instagram before the weekend, and the image has garnered more than 900,000 likes.

Little Havana celebrates the death of Fidel Castro

How Trump Will Reshape America’s Auto Industry

Trade, immigration, tax cuts, and deregulation were the big issues of Donald Trump’s campaign. The automotive industry didn’t feature prominently, but his presidency will have major implications for it. The potential increase in trade barriers puts automakers at risk. Lower corporate taxes and reduced regulations, however, could bring them benefits.

Trump’s trade protectionism is perhaps the most controversial pledge he made during his election campaign. He blames U.S. corporates for moving manufacturing to Mexico and elsewhere, thus causing job losses. He often singled out Ford in his campaign speeches.

Trump says he will not approve the Trans-Pacific Partnership and intends to either renegotiate or withdraw from NAFTA. The policy changes would affect all auto companies that produce abroad and then sell into the American market.

“We would expect a headwind from any changes in NAFTA, as companies would either need to shift production or incur pressure from higher tariffs,” Goldman Sachs states in a research report. During his election campaign, he said he would impose a 35 percent tariff on goods from Mexico. Imposing such tariffs could increase import prices by 15 percent and overall U.S. consumer prices by 3 percent, according to research by Moody’s Analytics.

9% Of Consumers Done With Holiday Shopping

E-commerce continues to pound bricks and mortar retail, and overall holiday retail sales are tepid. Whatever happens for the remainder of the year, some potential shoppers are lost Nine percent of consumers say they have completed their holiday shopping

According to The National Retail Federation’s new research about Thanksgiving Weekend shopping:

The survey also found that only nine percent of consumers have finished their holiday shopping, down from 11 percent last year. While 23 percent have yet to make any dents to their lists, up from 19 percent last year.

Amount spent per shopper is flag, the same research showed: Average spending per person over Thanksgiving weekend totaled $289.19, down slightly from $299.60 last year. With an average of $214.13 specifically going toward gifts or 74 percent of total purchases.

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