Headline News Archives

Friday 05.05.2017

Kraft Heinz to cut 5,150 jobs, close six factories

Kraft Heinz will cut 5,150 jobs and close six factories, laying off 13 percent of its workforce, in a bid to further cut costs at one of the world’s largest packaged food companies.

The decision is the latest in a series of aggressive cost-cutting maneuvers by the company, which merged in 2015 amid pledged to make both brands more efficient. The company announced the cuts a day after it failed to meet analysts’ revenue and earning projections for the first quarter of 2017. Company executives blamed slumping consumption for falling short of expectations for a fourth time in the last five quarters.

Analysts told Bloomberg Kraft Heinz needed to continue expanding its brand offerings to grow revenue in a difficult market for packaged foods. The company’s bid to buy European company Unilever failed after Unilever executives feared a “culture clash” between its socially conscious brands and the reputation Kraft Heinz has developed for deep cost cutting.

Heinz, which is backed by the private equity firm 3G and Warren Buffett’s Berkshire Hathaway, merged with the publicly traded Kraft in 2015. About 70 percent of the company’s sales are generated by the namesake condiment brands, Velveeta cheese and Oscar Meyer hot dogs.

U.S. House passes healthcare bill in big win for Trump

The U.S. House of Representatives approved a bill on Thursday to repeal major parts of Obamacare and replace it with a Republican healthcare plan, handing President Donald Trump his biggest legislative victory but setting up a tough fight in the Senate.

With the 217-213 vote, Republicans obtained just enough support to push the legislation through the House, sending it to the Senate for consideration. No Democrats voted for the bill. The bill's passage represented a vital step toward fulfilling a top Trump campaign pledge and a seven-year Republican quest to dismantle Democratic former President Barack Obama's signature healthcare law. But the effort now faces new hurdles in the Senate, where the House bill will have difficulty gaining Republican support.

Thursday's vote was also a political victory for House Speaker Paul Ryan, demonstrating his ability to pull together a fractured Republican caucus after two failed attempts this year to win consensus on the healthcare legislation.

Democrats are hoping that the Republicans' vote to repeal Obamacare will spark a voter backlash in next year's midterm congressional elections. Some 20 million Americans gained healthcare coverage under Obama's 2010 Affordable Care Act, which has recently gathered support in public opinion polls. But Republicans have long attacked it, seeing the program as government overreach and complaining that it drives up healthcare costs.

AT&T Workers Blast Outsourcing of Jobs to Dominican Republic

Some of AT&T's unionized workers engaged in tough negotiations with the company are borrowing a tactic that helped Verizon workers get a better contract last year.

To highlight the issue of call center jobs being outsourced to foreign countries, AT&T workers in the Communications Workers of America union traveled to the Dominican Republic this week to meet with some of their counterparts there who now handle AT&T customer service calls. AT&T is currently engaged in two tough negotiations with some 38,000 CWA workers in its wireless and wired businesses whose contracts have expired.

"AT&T's offshoring practices are the ultimate 'lose-lose' scenario for everyone involved," Tom Runnion, vice president of the CWA's District 9, said in a statement. U.S. workers lose jobs, foreign workers are poorly paid and customers get worse service, he charged.

AT&T said it has hired more than 20,000 U.S. workers for union positions in the past year alone. "We provide more good-paying full-time U.S. union jobs than any company in America, and the Communications Workers of America and their members have benefitted from that greatly," a spokesman said. The company recently announced it would open a new call center in Chicago, the spokesman added.

How many infrastructure jobs are there?

Why the Retail Crisis Could Be Coming to American Groceries

The American grocery store has so far been mostly immune to the ravages of online shopping and the all around apocalyptic outlook facing the nation's retailers. But a war is coming to the staid supermarket, and that could mean more consolidation, bankruptcies, and falling prices.

An invasion is getting under way. Lidl, a German retailer known for low prices and efficient operations, is expected to start an aggressive U.S. expansion in the coming weeks that could open as many as 100 new stores across the East Coast by the summer of 2018. The company, which runs about 10,000 stores in Europe, has also set its sights on Texas, one of the most competitive grocery markets in the U.S. Analysts expect Lidl to expand to nearly $9 billion in sales by 2023.

The last thing U.S. grocers need is more cutthroat competition. As the ranks of U.S. grocery stores have swelled, food has become a way for struggling brick-and-mortar retailers such as dollar stores and pharmacies to compete for customers. Even though groceries have been somewhat insulated from online pressure, remains dedicated to cracking the code, finally, on fresh food.

"It's an intimidating time for a lot of these retailers," said Jennifer Bartashus, an analyst at Bloomberg Intelligence. "We're poised to see a lot more change in the next couple of years." These are the five forces that are going shake up the landscape of American groceries.

Why you can't ignore Puerto Rico's bankruptcy

Puerto Rico's bankruptcy is poised to bludgeon investors, threaten the livelihood of American citizens who planned their retirement on the island's promises, and undermine state governments.

The bankruptcy may also provide hope of fiscal sustainability and improved services for Puerto Rico, as the U.S. territory attempts to dig out of $74 billion in debt and $49 billion in pension promises. But the ripple effects remain shrouded in uncertainty as the U.S. judicial system runs, for the first time, a debt-cutting legal process known as Title III of a 2016 law dubbed the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA).

"Nobody really knows exactly what’s going to happen," S&P Global Ratings credit analyst David Hitchcock said. "It’s highly uncertain." To be sure, the legal process is similar to the Chapter 9 municipal bankruptcies of Detroit in 2013 or Orange County, Calif., in 1994.

An oversight board governing Puerto Rico will aim to negotiate debt-cutting deals with creditors with the goal of achieving a viable "plan of adjustment" that a federal judge deems reasonable and fair. But previous municipal bankruptcies have demonstrated that the clash between Wall Street creditors, mom-and-pop vendors, retirees, politicians, union officials and special interests is a recipe for inertia.

Rite Aid: Walgreens Merger Is On Track, Fred’s Buying At Least 1,200 Stores

How are things going with Walgreens and Rite Aid, who are still working on their planned merger to become the largest drugstore chain in the United States? In its annual report, Rite Aid reports that the merger is on track, and consumers can expect to have fewer drugstore choices soon, as around 3,300 Rite Aid stores change to Walgreens or close.

In its annual report this week, Rite Aid explains that based on its discussions so far with the Federal Trade Commission, the company expects that at least 1,200 Rite Aid stores will be sold to Fred’s, a pharmacy chain now based mostly in the South, to satisfy the FTC. That will mean the lowest possible price for Rite Aid’s shareholders, $6.50 per share.

The companies had already agreed to the sale of 865 Rite Aid stores for $950 million, and will have to negotiate a new sale agreement if the FTC requires that 1,200 or more be sold to approve the merger.

This divestment is a great opportunity for Fred’s to go national, but is ultimately not all that great for consumers. To at least try to preserve some competition, the FTC requires merging businesses to sell some of their locations to a competitor in areas where they overlap.

Rwanda plans to move towards a cashless society

The Government of Rwanda and Mastercard have reaffirmed their shared commitment to the development of strong digital platforms to meet the needs of the country’s citizens and work towards Rwanda’s goal of promoting a cashless society.

According to FinScope 2016, about 68% of adults in Rwanda have r use formal financial services. The partnership agreement signed between MasterCard and the Rwanda Development Board at the World Economic Forum on Africa in Kigali in 2016 will have a significant impact on this number.

“Named SIKASHI, the project is focused on digitising numerous state services to improve the efficiency and transparency of public services and ultimately promote the move to a cashless society – a critical pillar of Rwanda’s broader Vision 2020 to create a knowledge-based economy in a world beyond cash,” says Clare Akamanzi, Rwanda Development Board Chief Executive Officer and Cabinet Member.

Key focus areas of SIKASHI include school fees payment digitisation, providing an online payment gateway services for RwandaOnline, contributing to the creation of an interoperable mobile banking platform, addressing the national healthcare claims disbursement and payment processes, and contributing to the effective management of foreign exchange process flow

Retail Bankruptcies Are Rising Fast: 10 Companies That May Be Next

There is no doubting the impact that the internet has had on everyday life, and the incredible change that it has brought to our society and the world as a whole. In most cases, the change has been a positive one, and since the availability and accessibility has become ubiquitous, it is a force to be dealt with every day.

One area that has been weakened by the internet is retail, as many people have come to trust transactions on the internet and shopping is fast and easy, and delivery in many cases is very cheap or free. Bankruptcies in the industry are piling up, and in 2017 alone such well-known companies as Payless, Wet Seal, The Limited and hhgregg have filed for protection.

A new Jefferies research report sources an article from S&P Global Market Intelligence that looks at 10 companies that are the most at risk now to be one of the next to choose bankruptcy. While filing bankruptcy in of itself does not mean the company is gone forever, it does mean that shareholders and holders of the debt can be in for a long wait.

Some companies cited in the article as being potential candidates to file for bankruptcy: 1. Sears Holdings Corp. should come as no surprise, as the iconic retailer, which also owns Kmart, has been selling assets and closing store for years. The shares closed most recently at $10.43. 2. DGSE Companies Inc. buys and sells jewelry and bullion products with individual consumers, dealers and institutions in the United States. The company markets its products and services through eight retail locations under various banners, including Charleston Gold & Diamond Exchange, Chicago Gold & Diamond Exchange and Dallas Gold & Silver Exchange. The stock closed trading most recently at $1.65 a share.

Millions of homes still 'seriously underwater'

Since the housing recovery began a few years ago, millions of homeowners have gotten their heads back above water. Having taken out 100% mortgages during the housing bubble, they found themselves owning more than their homes were worth after the bubble burst. However, rising home prices have restored millions to positive home equity. That said, there are still millions who are still underwater. Seriously underwater.

In its latest report, ATTOM Data Solutions found nearly 5.5 million homes in the "seriously underwater" category at the end of the first quarter. Homes in that grouping have mortgages that are at least 25% more than the homes' current value. The report says the number of homes seriously underwater actually rose from the number at the end of the fourth quarter, suggesting a worsening of the situation. However, the authors point out that most of these seriously underwater homes are in markets that were hit hard by the collapse of the housing market and have yet to recover.

“While negative equity continued to trend steadily downward in the first quarter, it remains stubbornly high in often-overlooked pockets of the housing market,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “For example, we continue to see one in five properties seriously underwater in several Rust Belt cities, along with Las Vegas and central Florida. Additionally, close to one-third of homes valued below $100,000 are still seriously underwater."

Part of the problem, says Blomquist, is that these markets tended to have a higher than average number of distressed sales during the first quarter. That, he says, created a drag on the overall market and pulled down home values. And in some cases, literally being under water contributed to the problem.

The American Flag: A Symbol of Hate Speech on Campuses?

The NSA Collected 151 Million Phone Records In 2016

The National Security Agency (NSA) became a target for ire after the public learned in 2013 that it had been scooping up millions of Americans’ phone records without warrants or disclosure, and holding on to all of them. A change in the law in 2015 significantly changed the way and volume in which the NSA is legally authorized to scoop up data… but the net it casts is still pretty broad, pulling in 151 million phone records last year.

The data comes from an annual transparency report that, for some reason, the Office of the Director of National Intelligence hosts on Tumblr.

According to that report, in calendar year 2016 the NSA collected 151 million phone metadata records — the who, where, and when, but not the “what” of calls — and contacts from “U.S. persons.” That doesn’t mean 151 million different persons, though, by any stretch. Each query related to a single phone number counts separately. So if someone under surveillance made calls to 40 different other numbers that the NSA knows about, that would count as 40 different records.

Still, 151 million is not exactly a small number of records. And further, as Reuters notes, the secretive Foreign Intelligence Surveillance Court (FISC) only authorized warrants to spy on 42 terrorism suspects in 2016, in addition to “a handful” identified in 2015.

Oil Prices Crash To Pre-OPEC Deal Levels

Oil prices dropped on Thursday to their lowest level since last November, with Brent breaking below $50, amid concerns of rising global supply and still high inventories. At 11:22am EDT, WTI Crude was trading down 2.82 percent at $46.47, while Brent was down 2.62 percent at $49.46 -- with both WTI and Brent having effectively wiped out all the price gains since OPEC announced on 30 November 2016 the output cut deal aimed at reducing oversupply and propping up prices.

On Wednesday, a day after the American Petroleum Institute (API) injected a bit of optimism among traders by reporting a crude oil inventory draw of 4.2 million barrels, the EIA once again poured cold water on the oil bulls by reporting a much smaller decline, of 900,000 barrels, against expectations for a decrease of 2.3 million barrels.

While U.S. crude oil inventories have declined in the past couple of weeks, stocks are still at 527.8 million barrels, near the upper limit of the average range for this time of year. In addition, production from countries not signatories to the OPEC/NOPEC deal – most notably the U.S. – is on a continuous rise since that very same deal managed to lift oil prices and keep them steadier at above $50 for a few months.

“At some point, the market should recognize OPEC isn't the most important player in the market any more. That is non-OPEC, and, above all, U.S. shale,” Commerzbank analyst Eugen Weinberg told Reuters.

House panel advances bill to overhaul Dodd-Frank financial reforms

After nearly 23 hours of debate, House lawmakers on Thursday advanced one of President Trump's top promises to dismantle the "horrendous" Dodd-Frank financial regulations that were put in place during the Obama administration. The House Financial Services Committee voted 34 to 26 along party lines, passing the Financial Choice Act, a Republican bill to undo the 2010 financial reform law. GOP lawmakers blame the Dodd-Frank regulations for choking U.S. economic growth and crimping lending by banks.

The bill crafted by Jeb Hensarling, chairman of the panel, cleared the committee despite vehement objections by Democrats to preserve the sweeping law aimed at preventing another financial crisis and protecting American consumers.

Minority lawmakers accused the GOP of having amnesia about the factors that led to the 2008 financial meltdown. They argued Hensarling's bill would gut consumer protections and allow banks to make risky investments that required taxpayers to come to the rescue of the nation's largest financial institutions almost a decade earlier.

"It's an invitation for another Great Recession or worse," Maxine Waters, the top Democrat on the panel, said during this week's markup of the bill.

Keiser Report: All Talk, No Action

Manufacturing Might Come Back to the US, but Robots will Get the Jobs: Apple CEO

Apple will invest in and promote “advanced manufacturing” in the US, CEO Tim Cook told CNBC’s Jim Cramer on Wednesday after the somewhat uninspiring earnings report. It was one of the ways Apple would create jobs in America, he said. To do that, Apple would put $1 billion in a fund that would invest in “advanced manufacturing” companies.

Apple has already “created two million jobs in America,” he said in the interview. This includes 80,000 jobs at Apple in the US; plus jobs at US suppliers, such as Corning, which makes the glass for the iPhone and iPad, and 3M, which makes adhesives that Apple uses in its devices; plus the “developer community” of almost 1.5 million people who write apps that, as he said, “change the world.”

So to “get more people to do advanced manufacturing in the US,” he said, Apple is setting up a fund, “initially” putting in $1 billion. “We’re announcing it today,” he said. “We’ve talked to a company that we’re going to invest in already.”

This $1 billion would have to be “our US money which we have to borrow to get, which is another whole topic….” Most of Apple’s cash is registered overseas, the result of profits that have not been taxed in the US. Apple’s overseas cash can be and is already invested in the US, such as in Treasury securities, but it cannot be used for capital expenditures or share buybacks in the US without being “repatriated” under the US tax code and thus triggering an income-tax event.

iHeartMedia Debt Grows, Layoffs Continue

iHeartMedia has released its financial results for the first quarter of 2017 (ending March 31) and its report was not encouraging. “There is substantial doubt about our ability to continue as a going concern for a period of 12 months following the release of the figures,” the report says, with “a substantial amount of [their] cash requirements [slated] for debt-service obligations.”

The news comes in the wake of renewed contracts with superstar on-air personalities like Elvis Duran and Steve Harvey, and the move of Ryan Seacrest to New York to co-host “Live with Kelly and Ryan,” for which the company built brand-new studios at WABC in New York so he can continue his live morning duties at KIIS-FM in Los Angeles.

There have also been widespread layoffs at various iHeartMedia properties in Chicago, Detroit, Tampa, Cleveland, Cincinnati, Jacksonville, Sacramento, New Orleans, Grand Rapids, Florence, and Mobile, Alabama; Biloxi, Mississippi; and Canton, Ohio — which are widely seen as coming in anticipation of what many believe will be a potential bankruptcy filing, even if that possibility has been denied by the company.

An iHeartMedia spokesperson, referring to the layoffs, issued the following statement: “Each market constantly looks at all aspects of its business to ensure that it reflects how the best organizations work today so they can continue to operate as effectively and efficiently as possible. This creates some new jobs, and unfortunately sometimes eliminates others,” while insisting the moves are unrelated to “any threat to file for bankruptcy.”

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