Dow Whacks 2,500 Jobs, 2 Dow Corning Plants
The Dow Chemical Co. (NYSE: DOW) announced Tuesday morning that it is cutting 2,500 jobs (4% of its workforce) as it integrates its recently completed acquisition of Corning Inc.’s (NYSE: GLW) 50% stake in Dow Corning. Dow paid $4.8 billion in cash and a 40% stake in chip maker Hemlock to buyout its long-time partner in silicone maker Dow Corning.
Dow said it expects to cut annual expenses by $500 million and add $1 billion to its annual EBITDA as a result of the acquisition. The company said it expects the transaction to add to earnings per share, cash flow from operation, and free cash flow in the first full year after the close.
The company plans to close silicones manufacturing facilities in North Carolina and Japan as well as other ancillary facilities. The jobs losses are expected to be completed over the next two years and Dow said it would take a second-quarter charge of $410 to $460 million related to asset impairments and other costs related to the closures.
All this is being done in preparation for Dow’s proposed $130 billion merger with E.I. du Pont de Nemours & Co. (NYSE: DD). A U.S. Securities and Exchange Commission (SEC) review is expected to be completed by the end of June.
Swiss multinational firm closing Phoenix solar plant, moving jobs to Europe
ABB Ltd. is closing a solar manufacturing plant in Phoenix and is moving those operations and jobs to Latvia and Italy.
Zurich-based ABB makes solar inverters at the Phoenix production plant south of Sky Harbor International Airport near University Drive and Interstate 10. The company is also one of the backers of the Swiss-made Solar Impulse airplane.
ABB has officially reported 89 layoffs in Phoenix to the state of Arizona under federal rules requiring employers to report major job cuts. ABB will maintain some sales and service operations at the Phoenix office.
“We are not disclosing the number impacted, but the facility currently employs around 200,” said ABB spokeswoman Melissa London Zingle. The cuts are a blow to Arizona’s solar energy industry. The Phoenix operations will be shifted to Latvia and Italy by November.
Moody's changes outlook on 12 UK banks following Brexit
Moody's changed it's outlook on 12 United Kingdom-based banks Tuesday, after the country's referendum on European Union membership.
Eight of the 12 banks, including Barclays, HSBC, Santander UK and TSB Bank, were downgraded to negative from stable. Lloyds Bank and Principality Building Society were downgraded to stable from positive. The agency also changed the outlook on the U.K. government-guaranteed senior unsecured debt instruments, as well as Bradford & Bingley and NRAM, to negative from stable.
"We expect lower economic growth and heightened uncertainty over the U.K.'s future trade relationship with the EU to lead to reduced demand for credit, higher credit losses and more volatile wholesale funding conditions for U.K. financial institutions. This will be negative for banks' credit fundamentals, as reflected in today's rating actions. Simultaneously, we have changed the outlook on the U.K. banking system to negative from stable," Laurie Mayers, associate managing director at Moody's, said in a statement.
The U.K. shocked the world last week when it voted in favor of leaving the EU, sending financial markets across the globe into a frenzy. Since the Brexit referendum, European banks have fallen about 20 percent.
Brexit Is The Match That Lights The Tinderbox
America's biggest companies are sitting on a $1.45 trillion mountain of cash
America's biggest corporations are sitting on a historically large amount of cash. Cash and short-term investments on the S&P 500 constituent companies’ balance sheets have surged to 10-year highs in Q1 2016, totalling $1.45 trillion, according to a new report from Factset by Andrew Birstingl.
This does not include financial companies, as those companies are obligated to hold certain amounts of cash and debt on their balance sheets for regulatory purposes.
Tech companies have been leading the way, with Microsoft (MSFT) and Alphabet (GOOGL) possessing $105.6 billion and $75.3 billion, respectively. If longer term investments are included, another tech company, Apple (AAPL), takes the lead, with $232.9 billion. The Information Technology sector in general is holding nearly $604 billion.
Corporations are spending quite a bit of money on their operations. In Q1, S&P 500 companies (ex-financials) spent $141.3 billion on capital expenditures. This was down 4.9% from the same period a year ago. R&D spending (once again led by tech companies) is at an all-time high of $263.7 billion in the trailing twelve months (TTM). Amazon ($13 billion), Alphabet ($12.9 billion), and Intel ($12.3 billion) were the top spenders during this period.
America’s shrinking middle class is killing the economy
The middle-income class is hollowing out and it's hurting US economic growth. Only about a quarter of a percent of US households have climbed up the ladder from the middle class into the upper income bracket since 2000, according to the latest review by the IMF. Meanwhile, more than 3% of middle-income households have moved into the low-income bracket.
That's a flip from the trend between 1970 and 2000, where middle-income households were more likely to move upward.
Combined with real income stagnation, polarization has had a negative impact on the economy, hampering the main engine of the U.S. growth: consumption. The analysis in our new paper suggests that over 1998–2013, the U.S. economy has lost the equivalent of more than one year of consumption due to increased polarization.
That's a pretty worrying trend, considering low- and middle-income households spend a far larger slice of their income than wealthier households. The IMF defined middle-income households– which is often a proxy for discussions on income polarization– as those whose real incomes are within 50 to 150% of the median income.
Italian bank crisis may be collateral damage from Brexit
Italy's banks were already reeling before the Brexit market rout. Now it seems some of them may need a bailout.
Shares in the country's biggest lenders lost 30% of their value on Friday and Monday as global markets went into meltdown after the U.K. voted to leave the European Union. The stocks stabilized on Tuesday but are still deep in the red for the year -- some of the big names have lost 60%.
Media reports suggest the government of Prime Minister Matteo Renzi is considering injecting as much as 40 billion euros ($44 billion) into the sector in the form of new capital or government guarantees.
In an exclusive interview with CNN's Christiane Amanpour, Renzi said he was ready to do "everything necessary to save customer and citizens' security." Italy was ready, if needed, to work with European institutions to ensure the security of the banks and their customers, he said. "This is the priority," Renzi added. A spokesperson for the European Commission told CNNMoney that it was closely monitoring market developments across the EU.
The Crackdown Begins: Chinese Bank Sues To Seize Vancouver Real Estate Assets
From the very beginning of Vancouver's housing boom episode courtesy of an invasion of shady Chinese hot-money laundering home buyers, which has now officially driven the average list price of Vancouver single homes above $4 million...we have wondered how long before the Chinese government and financial institutions, if not Canada's local authorities which apparently have no problem with a soaring housing bubble in their midst, finally crack down on these flagrant violators of China's capital controls, whose children have been so openly flaunting their parent's illicit wealth as reported in "My Daddy’s Rich And My Lamborghini’s Good-Looking": Meet The Rich Chinese Kids Of Vancouver." We now have the answer.
According to the Globe and Mail, China CITIC Bank has filed a lawsuit in Canada to try to seize the assets of a Chinese citizen the bank claims took out a $10 million loan in China then fled to Canada.
In a first of its kind attempt at intercontinental repossession, the bank is looking to seize numerous Vancouver-area homes, valued at at least $7.3-million, along with other assets, according to the lawsuit, which was filed in the Supreme Court of British Columbia in Vancouver on Friday.
The defendant, Shibiao Yan, owns three multimillion-dollar properties in a Vancouver suburb and lives in a $3-million Vancouver home owned by his wife, according to court documents, the Globe and Mail reports. China has been in the midst of a major corruption crackdown and has stepped up efforts to find fugitives it says are hiding stolen assets abroad. In which case it will have lots of fruitful leads in Vancouver where virtually all real-estate purchases over the past year by Chinese "figutivies." The lawsuit comes amid a debate about the role foreign money, particularly from China, has played in Vancouver’s property boom.
The True Nature Of Gold
“Look at that screen,” exclaimed Fox Business Network’s Stuart Varney, referring to the television graphic showing markets crashing across the globe. “The only thing going up is the price of gold!” “It’s always a dangerous thing when you leave democracy up to the people,” joked Varney’s guest – venture capitalist and author Peter Kiernan, as they watched Britain vote Thursday night to escape the European Union.
The dust is still settling after Britain’s seismic Brexit vote June 23rd. At issue: who should control British economic and immigration policies – Brits themselves, or unelected bankers and their bureaucracy stooges. A choice between the liberty of self-determination or the tyranny of faraway cronyism.
While the gritty election fallout spread through rattled markets and wafted into plush offices of banking’s money masters, the hard and fast implications were clear. The British Empire stood tall on what outspoken political leader Nigel Farage called Our Independence Day.
The Brit’s dramatic decision is the latest revolt of those fearing the loss of personal and national identities. Until Brexit, the populist revolution against powerful centralized world order was a series of smoldering brush fires. The Brexit victory has now kindled a wildfire. Spanish Catalonia was all set for independence from Spain in 2014, until stopped in its tracks by Spanish courts. Scotland the same year managed to muster 45% of three million votes in a losing bid to leave the UK. Quebec voted down independence from Canada in 1995, but has never stopped talking about it.
Federal Judge: U.S. Constitution Is Outdated, Judges Should Stop Studying It
According to 7th Circuit Judge Richard Posner in a post published to Slate, U.S. judges should stop studying the Constitution.
“I see absolutely no value to a judge of spending decades, years, months, weeks, day, hours, minutes, or seconds studying the Constitution, the history of its enactment, its amendments, and its implementation,” Posner argued.
“Eighteenth-century guys, however smart, could not foresee the culture, technology, etc., of the 21st century,” he continued. “Which means that the original Constitution, the Bill of Rights, and the post–Civil War amendments (including the 14th), do not speak to today.”
Posner, an influential jurist who has served as a federal judge for thirty-five years, has previously voiced his disregard for the Constitution.
Why The Collapse Of The U.S. Economic & Financial System Has Accelerated
The collapse of the U.S. economic and financial system accelerated this year, thus pushing the country closer to a third-world status. Most Americans are unaware of the dire consequences facing the nation, so they continue to believe business as usual will continue indefinitely.
Unfortunately, lousy reporting by the Mainstream media along with the public’s denial and delusional thinking is a recipe for disaster for most Americans over the next several years.
The U.S. economy is being propped up by a great deal of monetary printing, Fed stock and bond purchases and extreme leverage in all areas of the market. While these policies have given the “ILLUSION” of continued prosperity, or at best a sustainable slow growing economy, the debt now in the system is unsustainable.
Still to this day, most investors (including precious metals investors) do not understand the real reason for the massive increase in U.S. Federal debt. They believe the debt was either increased to enslave Americans or to fund continued economic growth. While the second reason is more accurate, they still fail to understand the “ROOT CAUSE” of the debt increase.
U.S. officials: Istanbul attack has hallmarks of ISIS
Deloitte: Oil industry could fall $2 trillion short of cash
It’s been two years now since oil prices began one of their worst declines ever, and the cost of recovering from the slump is mounting.
A new report from the consulting firm Deloitte warns that the oil and gas industry may come up $2 trillion short of the cash it will need to replace proved reserves and meet other obligations over the next five years, following huge cuts that companies are making in capital spending to offset lower prices for their commodities.
“It takes significant capital for the industry to just remain flat. Actual and announced capital expenditure cuts suggest that even remaining flat could be a challenge for the industry, let alone meeting any expected growth,” John England, a vice chairman with Deloitte, said in a statement accompanying the release of his firm’s report.
On June 20, 2014, the futures price for WTI, the U.S. benchmark for crude oil, hit a high for the year of $107.26 per barrel. Since then, the price has tumbled to below $30 at one point this year, and to $46.33 on Monday, 57% off its level two years ago.
Walmart's Made In The USA Claim: Fact Or Fiction?
Walmart has embraced the “Made in the USA” ethos and this week hosted its third annual Open Call for products made, assembled or grown in the U.S. It’s part of Walmart’s fourth annual Manufacturing Summit, which is Walmart’s initiative to invest in U.S. industry.
But there are doubts about whether all of the products labeled “Made in the USA” are actually made in the U.S.
Made in the USA is a big program for Walmart which made a pledge to source $250 billion in products by 2023. The initiative is expected to create 1 million new U.S. jobs with 250,000 in direct manufacturing and 750,000 in support and services, according to the company.
Last year, Walmart scrubbed the “Made in the USA” labeling from its website following allegations from the nonprofit group Truth in Advertising that found more than 100 examples of items that did not adhere to that label’s requirements. To claim “Made in the USA,” all of the components must be manufactured and assembled in the United States.
Michelle Obama Pledges $100 Million For Girls' Education In Morocco
U.S. first lady Michelle Obama, her mother and daughters Sasha and Malia were joined by Meryl Streep in Morocco's Marrakesh on Tuesday on a six-day tour to try to promote girls' education.
More than a third of Morocco's population of 34 million is illiterate - one of the highest rates in North Africa, and the rate is higher for women at 41 percent, official data shows. "I am sitting here now as the U.S. first lady, talking to you, because of my education," MichelleObama told a dozen girls from different towns.
The Millennium Challenge Corporation (MCC), a U.S. government foreign aid agency, announced during her visit the allocation of $100 million to be spent on 100,000 Moroccan students, half of whom will be teenage girls.
The funds come from $450 million given by the MCC last year to boost education and employablity in Morocco.
Uber Partners with Hertz To Expand Short-Term Car Rental Program
Uber Technologies partnered this week with Hertz, one of the world's largest car rental companies, to offer short-term auto rentals to ride-hailing drivers -- a move intended to court new drivers and keep current ones on the road.
The partnership, which launches in Los Angeles and will be rolled out to other U.S. cities in the coming months, will allow approved Uber drivers to rent a car from Hertz to drive for the ride-hailing company. The weekly rentals cost $180, which includes auto insurance, unlimited miles, vehicle maintenance and 24/7 roadside assistance.
Uber has a similar agreement with Enterprise, which charges drivers $210 a week. Uber competitor Lyft also offers a short-term rental program through General Motors, starting at $99 with conditions. Outside of these programs, car rental companies typically do not allow customers to drive for Uber and Lyft.
Uber's short-term rental programs are different from the company's Xchange Leasing program, which offers longer contracts with the option to buy vehicles outright at the end of a lease. Although the partnerships with Hertz and Enterprise are more expensive than traditional dealership leases, Uber is marketing them as an option for drivers who either need a short-term solution, or are trying out Uber for the first time.
There Have Been Double-Digit Increases in Medical Costs in Just a Year
Anyone who’s reviewed their health insurance statements is well-acquainted with just how high medical bills can climb. Now, a new analysis from TransUnion found that consumers are increasingly being asked to shoulder the costs.
Per the credit bureau, patients saw a 13% rise in both deductible and out-of-pocket maximum costs between 2014 and 2015. The average deductible for consumers in 2015 was $1,278, compared to $1,131 in 2014. Out-of-pocket costs rose to $3,470 in 2015, compared to $3,065 the year prior, TransUnion found.
The analysis is based on anonymous data estimates from thousands of health care providers, including hospitals and clinics across the U.S. Those statistics were compared to proprietary TransUnion financial data.
The credit bureau also found, as of the first quarter of 2016, approximately 51% of patients owe more than $1,000 to their healthcare providers while nearly eight in 10 patients (77%) owe more than $500. Worse still, many of these debtors have less credit at their disposal than they have in the past when it comes time to pay medical bills. Per TransUnion’s analysis, for every $100 in healthcare costs, consumers had $1,720 in revolving credit to potentially make those payments at the end of March 2016. Just a year before, consumers had $2,250 in revolving credit to put toward medical costs.
Celente: Globalists Are Going To Collapse World Economy
First Made-In-China Jetliner Makes Debut Commercial Flight
The first regional jet produced in China's initiative to compete in the commercial aircraft market made its debut flight Tuesday carrying 70 passengers. The ARJ21-700 jet is one of a series of initiatives launched by the ruling Communist Party to transform China from the world's low-cost factory into a creator of profitable technology in aviation, clean energy and other fields.
The plane operated by Chengdu Airlines took its passengers from the western city of Chengdu to Shanghai in two hours.
China is one of the biggest aviation markets but relies on foreign-made aircraft. Beijing wants to capture more of those sales. Its major airlines are state-owned, which gives the ruling party a captive pool of potential customers that can be ordered to buy Chinese-made aircraft.
The ARJ21 — or Asian Regional Jet for the 21st Century — is intended to make its state-owned manufacturer, Commercial Aircraft Corp. of China, a competitor to Bombardier Inc. of Canada and Brazil's Embraer SA. "The first flight of the ARJ21 marks the beginning of commercial, or passenger, operations for the ARJ21 and signifies the first time a domestically made regional jet has been used by a Chinese airline," said the COMAC chairman, Jin Zhuanglong.
Shipping Company Ditches Forever 21 Because Business Is Too Slow To Be Profitable
In a sign of the sad state of retail these days, a company that delivered clothing to Forever 21’s stores is canceling its contract with the chain, saying business has slowed down to the point where it just isn’t profitable anymore.
EZ Worldwide Express is trimming down operations after filing for bankruptcy in January, and that includes exiting its partnership with Forever 21, The Wall Street Journal reports.
The agreement had EZ Worldwide Express as the retailer’s exclusive carrier for at least 171 stores until 2019. But although payments from Forever 21 made up almost half of the shipping firm’s annual revenue, the retailer’s “business has declined precipitously,” EZ Worldwide Express lawyers said in court documents cited by WSJ.
“[Weekly] sales to Forever 21 have ranged from a low of $352,483 to a high of $428,764,” EZ Worldwide Express lawyers said in a document filed May 20. “These numbers are drastically lower than the same five-week period last year, where weekly sales ranged from $629,817 to $780,730.”