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Thursday 06.30.2016

Seagate to cut 1,600 jobs in restructuring plan

Hard-disk drive maker Seagate Technology Plc said it would cut about 1,600 jobs, or 3 percent of its workforce, as the company looks to rein in costs amid waning demand

Seagate said on Wednesday the restructuring is expected to result in total pre-tax charges of $62 million and is likely to be completed by the end of the September quarter. The charges will be accounted for mainly in the current quarter.

The restructuring would result in about $100 million in savings on an annual run rate basis, the company said.

The company, which has about 52,000 employees worldwide, had said in September it would cut 1,050 jobs. Seagate's revenue declined in the past five quarters due to weak demand from original equipment manufacturers, including personal computers makers.

J.P. Morgan to Buy Back Up to $10.6 Billion in Shares After Passing Stress Test

J.P. Morgan Chase & Co said it would buy back up to $10.6 billion in stock over the next year after the Federal Reserve approved its capital plan in the regulator's annual stress test released Wednesday.

J.P. Morgan's plan was approved after the Fed found that the largest U.S. bank by market value could keep lending in a severe economic downturn. The approval clears the way for the bank to reward investors by returning capital either through dividend payouts by buying back stock, or both.

At the low point of a hypothetical recession, J.P. Morgan's common equity Tier 1 ratio -- which measures high- quality capital as a share of risk-weighted assets -- would be 6.8%, above the 4.5% level the Fed views as a minimum. The new ratio, unlike the one reported last week by the Fed in a related test, takes into account the bank's proposed capital plan.

J.P. Morgan's Tier 1 leverage ratio, which measures high-quality capital as a share of all assets, would have reached as low as 5.6% in a hypothetical recession, above the 4% Fed minimum.

CIA boss ‘worried’ ISIS is planning a major attack in US

CIA Director John Brennan warned Americans hours after Tuesday’s deadly Istanbul terror attack that ISIS is planning similar large scale offensives inside the United States.

In an interview with Yahoo News, the nation’s top spy said he’s “worried” a copycat attack will be carried out within our borders by the radical jihadist network, which is believed to be behind the suicide bombings at Ataturk Airport that claimed 41 lives and injured scores more.

“I am worried from the standpoint of an intelligence professional who looks at the capabilities of (ISIS) … and their determination to kill as many as people as possible and to carry out attacks abroad,” Brennan told Yahoo News, adding, “I’d be surprised if (ISIS) is not trying to carry out that kind of attack in the United States.”

Brennan then turned up the scare factor by talking about how easy it would be to “construct” a suicide vest. “You look at what happened in the Turkish airport, these were suicide vests,” he told Yahoo News.“It’s not that difficult to actually construct and fabricate a suicide vest … so if you have a determined enemy and individuals who are not concerned about escape, that they are going into it with a sense that they are going to die, that really does complicate your strategy in terms of preventing attacks.”

Firm Sticks with $1,400 Gold; Silver Takes Example, Hits 21-Mth High

Scathing New Report Sends Alarm On Social Security

Last week, a group of analysts published an astonishing report about the future of Social Security in the United States, and their remarks were nothing short of damning. According to their calculations, for example, these analysts claim that Social Security is already running a huge deficit to the tune of tens of billions of dollars each year.

In fact, this Social Security funding deficit has been taking place for several years now, and it’s actually accelerating. So the problem worsens each year. According to the analysis, the astounding rise in Social Security recipients vastly outpaces any growth in tax revenue received into the program. And this trend will continue for decades.

The report goes on to describe Social Security’s two main trust funds, OASI (for ‘Old Age Survivors Insurance’) and DI (‘Disability Insurance’).

They tell us that DI actually went bust several months ago. But rather than attack the root cause of the problem and restructure the program, Congress quietly slapped a band-aid on DI by simply diverting funds from OASI, just enough for DI to limp along for a few more years.

Tech Distributor Ingram Micro Ingram Micro Cuts Almost 1,000 Jobs in Texas

On Tuesday, giant tech distributor Ingram Micro’s shareholders overwhelmingly approved a $6 billion buyout offer by Tianjin Tianhai, a subsidiary of the Chinese conglomerate HNA Group. The same day, the company notified employees at its Fort Worth, Texas, facility of plans to cut 937 jobs.

A spokesman for Ingram Micro insisted the layoffs and the merger are unrelated. The cutbacks, he said, are the result of “changes in business activities conducted in this facility.”

Of the 937 people losing their jobs, 762 are contract workers with Elwood Staffing, and 175 are Ingram Micro Mobility associates, according to a WARN letter filed with the Texas Workforce Commission.

“We are working with the Texas Rapid Response Unit to provide human resources assistance to affected workers,” the company said in its statement. “We anticipate employing about 350 people after this action is taken. Ingram Micro Mobility has no further comment on this issue.”

The Fed Is in an Epic Battle With Itself

Two Federal Reserve announcements less than a week apart, in contrast to the Federal Open Market Committee’s decision earlier this month, are likely to show that the agency's own goals are in conflict.

The committee setting monetary policy remains accommodative, with readily available credit to support a still-recovering economy; the regulatory arm of the Fed has a different agenda and is working to build a more stable system that incidentally makes credit more expensive and less available.

The first of these announcements was the results of the Dodd-Frank Act stress tests, released Thursday. The second is the Comprehensive Capital Analysis and Review for banks, which will come out Wednesday. The purpose of these examinations is to ensure that bank holdings aren't overly risky and that banks hold adequate amounts of capital in the event of a crisis.

The Fed notes that in the stress tests, "this year's severely adverse scenario features a more severe downturn in the U.S. economy as compared to last year's scenario." Try as they might, the banks continue to struggle to exit the Fed's penalty box.

GE Capital Wins Approval to Drop 'Too Big to Fail' Label

GE Capital is no longer "too big to fail." The financing unit of General Electric Co. won approval from federal regulators Tuesday to drop its designation as a "systematically important financial institution," a title that comes with added scrutiny and stricter rules.

GE and the Financial Stability Oversight Council — a group of top regulators charged with monitoring risks to the system — announced the decision Wednesday. The council was created by the financial overhaul law that came in the wake of the 2008 financial crisis that plunged the country into recession.

The label, which has been handed out by the council starting in 2013 to nonbank financial firms, is given to companies that the U.S. regulator deems so large that their failure could threaten the entire economy. Along with stricter supervision, being designated a "systematically important financial institution" can be costly for a company. Life insurer MetLife has sued the U.S. to remove the title.

GE Capital was given the label three years ago. The company pushed the U.S. to drop it in March, arguing that it sold many of its assets, making it a much smaller lender. Today, GE Capital is focusing on offering loans to companies that want to buy GE's industrial products, such as airplane engines or medical equipment. In a statement about its decision, the FSOC said GE Capital is now "significantly smaller and safer."

Venezuela: Mired in Crisis, With No Clear Path Ahead

Venezuela is a time bomb. The opposition, led by former presidential candidate Enrique Capriles, is calling for a referendum to recall President Nicolas Maduro. After gathering 1.85 million signatures that support the petition, Capriles has claimed victory and has said a recall vote will take place this year.

The opposition claims that Maduro has driven the country towards economic collapse. On the other hand, Maduro has just extended the state of emergency he issued earlier this year as a way to stave off the economic crisis. Protests keep surging across the country, showing everyone there is no easy way out of this worrying situation.

The state of emergency called by Maduro is a natural response to the critical economic situation Venezuela is struggling through. The inflation rate for 2015 was at 275%, while the IMF predicts it will surge to 720% by the end of 2016. The economy shrank by 5.7% in 2015 and analysts are foreseeing an 8% contraction for the present year. The government has started to sell its gold reserves as a way to mitigate the crisis, reducing them by 16% since January 2016.

As a response to this hostile environment, important companies have suspended their production faculties in the country. In May, Coca-Cola announced it will temporarily halt its soda production due to sugar shortages. In a similar case, Polar Industries, the country´s largest brewery, stated it was closing operations due to insufficient supplies as a result of the lack of US Dollars within Venezuela.

Marc Faber warns Federal Reserve will launch QE4, use Brexit as an excuse

The time to buy gold is now and the Federal Reserve will launch the fourth edition of quantitative easing soon, warns Marc Faber, editor and publisher of the Gloom, Boom & Doom Report.

After the historic Brexit referendum, Faber believes the United States central bank will print more money and use last week’s EU vote as an excuse. This echoes what Peter Schiff, president and CEO of Euro Pacific Capital, recently said. ( Peter Schiff: ‘Janet Yellen can blame her failure to raise rates on Brexit’)

Due to the money printing ways of Janet Yelle and Co., the yellow metal will soar. “If Brexit is used as an excuse, the central banks will print more money, QE4 in the U.S. is on the way and the depreciation in the purchasing power of currencies will continue,” Faber said told Bloomberg News from Hong Kong. “In that situation, you want to own some gold.”

Faber noted that he typically purchases gold every month. He likes gold stocks, but he thinks they need to correct first after making significant gains this year. Gold prices reached a two-year high on Wednesday as they settled at $1,321. Silver finished the trading session above $18 for the first time since September 2014.

Peter Schiff-Huge Crisis-Gold Will Routinely Be Moving Up at $100 Clips

Puerto Rico will default on $1 billion of debt on Friday

Puerto Rico is going to default, again. The governor of the commonwealth, Alejandro García-Padilla, wrote in an article for CNBC on Wednesday that Puerto Rico would not make some $1 billion in bond payments on Friday as it struggles with the long-term implications of its massive deficits.

"On July 1, 2016, Puerto Rico will default on more than $1 billion in general obligation bonds, the island's senior credits protected by a constitutional lien on revenues," he said in the article.

García-Padilla also emphasized the need for a long-term restructuring of the island's more than $70 billion in debt, saying Puerto Rico's obligations "must be restructured fairly and equitably" for both the creditors and citizens.

Just hours after García-Padilla's article was published, the US Senate on Wednesday appeared close to passing a bill that will allow Puerto Rico some of the same bankruptcy protections afforded to states. Those protections are not currently allowed under US law. The vote Wednesday was the last procedural hurdle before final passage, which is expected to come as soon as Thursday, according to Bloomberg.

30% of Businesses Say They Would Eliminate Jobs As A Result of $15 Minimum Wage

Thirty percent of businesses said they would eliminate jobs if the minimum wage were increased to $15 an hour, according to a survey from Express Employment Professionals.

The survey asked 390 businesses in the United States and Canada what effect the increase in the minimum wage would have on their operations.

Thirty-seven percent of businesses said they would increase the price of goods, 30 percent of businesses said they would eliminate positions, and 20 percent of businesses said they would increase other wages in the company.

A majority of the businesses surveyed, 82 percent, said they do not pay the current minimum wage for some positions while 18 percent of respondents said they do. “A $15 minimum wage has certainly become a political hot topic,” said Bob Funk, CEO of Express Employment Professionals. “There’s no doubt it makes for a good talking point, but the real question is whether it makes good economic sense.”

Fed flags Morgan Stanley, Deutsche, Santander in stress tests

The Federal Reserve objects to capital distribution plans proposed at Deutsche Bank Trust and the Santander U.S. operation, meaning that the banks cannot issue dividends or make share buybacks until they establish a new plan, the central bank said Wednesday.

Further, regulators are requiring Morgan Stanley to submit a new capital plan by the end of the fourth quarter of 2016, but said they did not object to the bank's capital plan.

The Fed's Wednesday announcement of the results of its Comprehensive Capital Analysis and Review marks the second and final portion of the annual, two-part stress tests aimed at gauging Wall Street's ability to adequately respond to an economic crisis.

There were only three objections out of 33 institutions tested. The Fed's objections to Santander Holdings USA and Deutsche Bank Trust, the bank's U.S. transaction bank and wealth management business, mark the second consecutive year regulators flagged both banks.

Raoul Pal on Brexit impact, Default in Puerto Rico

Japan Industrial Output Falls 2.3% In May

Industrial production in Japan fell a seasonally adjusted 2.3 percent on month in May, the Ministry of Economy, Trade and Industry said in Wednesday's preliminary reading.

That was well shy of forecasts for a decline of 0.2 percent following the 0.5 percent increase in April.

On a yearly basis, industrial production fell 0.1 percent - missing forecasts for a gain of 1.9 percent following the 3.3 percent contraction in the previous month. Upon the release of the data, the METI maintained its assessment of industrial production, saying that it has been fluctuating indecisively.

Industries that mainly contributed to the decline included chemicals, general-purpose, production and business oriented machinery, and electronic parts and devices.

LA votes to put $1.2 billion homeless measure on ballot

The Los Angeles City Council voted Wednesday to place a $1.2 billion bond measure before voters to raise money to fight homelessness.

The council voted 14-0 to put a measure on the November ballot to provide a decade's worth of money for shelters, permanent housing, drug and alcohol treatment and mental health services to the homeless. It also would provide affordable housing to poor people in danger of becoming homeless, ranging from the elderly to battered women and their children.

Los Angeles is struggling to deal with a surging homeless population, now estimated at 27,000.

"Every night in Los Angeles, tens of thousands of Angelenos — men, women, children, veterans, and seniors — sleep on our streets," Mayor Eric Garcetti said in a statement praising the council decision. "This crisis is pervasive, it endangers public health and stifles economic prosperity." "As we continue working on regional solutions with state and county officials, we must seize this moment — and we'll need everyone's help," the mayor said. The cost of repaying the bonds would fall on property owners, who on average would pay an extra $40 to $80 a year in taxes, according to city estimates.

Almost 25% of Americans report falling victim to financial data breaches

In just the past two years, nearly one fourth of consumers reported that their financial data had been hacked online in the past two years, according to a new report from a survey on the banking industry by Accenture.

The report is based on an online survey of 4,013 bank customers in North America, and was conducted by Accenture, a global professional services company that provides solutions in strategy, consulting, digital, technology and operations. About 70% of respondents were based in the U.S. The remaining 30% were based in Canada.

Despite 23% of respondents reporting financial data hacks, consumers are still willing to share their data in order to receive better service from their bank. About 63% of respondents are willing to give their bank direct access to personal information.

Respondents give access to information such as mortgage, credit card and student loan data in order to let their bank use it to present them with suitable products and services. Respondents want banks to use the information to provide them with lower prices, faster service, such as rapid loan approval, more relevant advice and personalized offers based on location.

Bank of America: We Expect a U.K. Recession

Why Oil Is Still Heading For $10 A Barrel

Back in February 2015, the price of West Texas Intermediate stood at about $52 per barrel, half of its 2014 peak. I argued then that a renewed decline was coming that could drive it below $20, a scenario regarded by oil bulls as unthinkable. But prices did fall further, dropping all the way to a low of $26 in February. Since then, crude rallied to spend several weeks flirting with $50 per barrel, a level not seen since last year. But it won’t last; I’m sticking to my call for prices to decline anew to $10 to $20 per barrel.

Recent gains have little to do with the fundamentals that led to the collapse in the first place. Wildfires in the oil-sands region in Canada, output cuts in Nigeria and Venezuela due to political unrest, and hopes that American hydraulic fracturing would run out of steam are the primary causes of the recent spurt.

But the world continues to be awash in crude, and American frackers have replaced the Organization of Petroleum Exporting Countries as the world’s swing producers. The once-feared oil cartel is, to my mind, pretty much finished as an effective price enforcer. Even OPEC’s leader, Saudi Arabia, is acknowledging the new reality by quashing recent attempts to freeze output, borrowing from banks and preparing to sell a stake in its Aramco oil company as it tries to find new sources of non-oil revenue.

The Saudis and their Persian Gulf allies continue to play a desperate game of chicken with other major oil producers. Cartels exist to keep prices above equilibrium, which encourages cheating as cartel members exceed their allotted output and other producers take advantage of inflated prices. So the role of the cartel leader, in this case Saudi Arabia, is to cut its own output, neutralizing the cheaters to keep prices up. But the Saudis suffered market-share losses from their previous production cuts.

What Is The Government Preparing For?

You may not be getting prepared for a major national disaster, but the government sure is. I have been informed that in recent months numerous emergency food companies have been contacted by the government, and they have been told that their inventories could potentially be seized in the event of a significant emergency. And as you will see below, the government recently participated in an exercise that simulated “an unprecedented global food crisis lasting as long as a decade”. In addition, NPR has just revealed details about the very secretive Strategic National Stockpile program that is storing billions of dollars worth of medical supplies in warehouses around the nation. This is a program that most Americans do not even know exists. On top of everything else, strange reports of military vehicles with UN markings have been coming in from all over the nation. So what in the world is the government up to? Why are they working so feverishly hard to get prepared?

Let’s begin our discussion with the Strategic National Stockpile. According to NPR, there are at least six of these warehouses at various locations around the country, and they are holding at least seven billion dollars worth of supplies…

Thousands of lives might someday depend on this stockpile, which holds all kinds of medical supplies that the officials would need in the wake of a terrorist attack with a chemical, biological or nuclear weapon. The location of these warehouses is secret. How many there are is secret. (Although a former government official recently said at a public meeting that there are six.) And exactly what’s in them is secret.

“If everybody knows exactly what we have, then you know exactly what you can do to us that we can’t fix,” says Burel. “And we just don’t want that to happen.” What he will reveal is how much the stockpile is worth: “We currently value the inventory at a little over $7 billion.“

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