Deutsche Bank Launches $8.5 Billion Share Sale to Boost Capital
Deutsche Bank AG Chief Executive Officer John Cryan is reversing course less than two years into his strategy, announcing an overhaul that includes offering 8 billion euros ($8.5 billion) in stock, selling part of the asset management business and reintegrating Postbank.
“It’s a positive step forward that we take the brave step of admitting we were going in the wrong direction,” Cryan said on Sunday. The CEO named two deputies to help him implement the shift, which he said he intends to see through to fruition. “I don’t intend to go anywhere.”
Germany’s largest lender will keep the Postbank consumer division and still aim to reduce total costs to 22 billion euros by 2018, the Frankfurt-based company said. Chief Financial Officer Marcus Schenck, 51, and Christian Sewing, who oversees wealth management and consumer banking, will become co-deputy CEOs. The company will find a new CFO “in due course.”
Cryan, 56, had unsuccessfully sought to sell Postbank to avoid tapping shareholders for extra cash. Deutsche Bank has posted more than 8 billion euros of net losses in the past two years as Cryan, who took over in 2015, settled misconduct investigations and scaled back capital-intensive debt-trading businesses.
China cuts growth goal, puts focus on reform and 'firewall' against risks
China has cut its growth target this year as the world's second-largest economy pushes through painful reforms to address a rapid build-up in debt, and erects a "firewall" against financial risks. China aims to expand its economy by around 6.5 percent, Premier Li Keqiang said in his work report at the opening of the annual meeting of parliament on Sunday.
The target, which Reuters had reported exclusively from sources in January, was realistic and would help steer and steady expectations, said Li.
China set a target of 6.5 to 7 percent last year and ultimately achieved 6.7 percent growth, supported by record bank loans, a speculative housing boom and billions in government investment.
But as the government moves to cool the housing market, slow new credit and tighten its purse strings, China will have to depend more on domestic consumption and private investment for growth. As in 2016, China did not set a target for exports, underlining the uncertain global outlook. "The developments both in and outside of China require that we are ready to face more complicated and graver situations," Li said, adding that world growth remained sluggish, while deglobalisation and protectionism were gathering pace.
Americans Can’t Agree On What It Means To Be American
Add one more to the list of things dividing left and right in this country: We can’t even agree what it means to be an American. A new survey from The Associated Press-NORC Center for Public Affairs Research finds Republicans are far more likely to cite a culture grounded in Christian beliefs and the traditions of early European immigrants as essential to U.S. identity.
Democrats are more apt to point to the country’s history of mixing of people from around the globe and a tradition of offering refuge to the persecuted. While there’s disagreement on what makes up the American identity, 7 in 10 people — regardless of party — say the country is losing that identity.
“It’s such stark divisions,” said Lynele Jones, a 65-year-old accountant in Boulder, Colorado. Like many Democrats, Jones pointed to diversity and openness to refugees and other immigrants as central components of being American.
“There’s so much turmoil in the American political situation right now. People’s ideas of what is America’s place in the world are so different from one end of the spectrum to the other,” Jones said. There are some points of resounding agreement among Democrats, Republicans and independents about what makes up the country’s identity. Among them: a fair judicial system and rule of law, the freedoms enshrined in the Constitution, and the ability to get good jobs and achieve the American dream.
AT&T to Bring Back 3,000 Offshore Jobs
AT&T Inc. (NYSE: T) has reached a tentative settlement with the Communications Workers of America over the 20,000 people the telecom employs in its Southwest region. Among the concessions AT&T made was that it would bring back 3,000 jobs, most are which are overseas.
The Communications Workers of America announced that its:… District 6 bargaining committee has reached a tentative agreement with AT&T Southwest, District 6 Vice President Claude Cummings reported.
The tentative four-year settlement provides for pay raises, paid parental leave, affordable healthcare and enhanced benefits for the 20,000 AT&T workers in Arkansas, Kansas, Missouri, Oklahoma and Texas.
A key provision of the proposed settlement commits AT&T to bring 3,000 jobs, the majority of which are sourced offshore, into bargaining units in District 6. This is not the first confrontation, or settlement, AT&T has had with the big union.
What Do Banks Do With Your Deposits?
Is the Fed about to make a policy mistake?
After a week of aggressively hawkish commentary, Federal Reserve policymakers have all but assured investors they’ll raise interest rates again at their March policy meeting -- a mere week-and-a-half away. After hiking rates just twice in the last 10 years, Janet Yellen’s Fed is about to precipitously accelerate that pace to two hikes in just three months.
Is that a mistake? Has the Fed been gotten caught up in the same post-election whirlwind that has boosted the Dow Jones industrials index past the 21,000 level, while “soft” survey-based measures of economic vitality and “hard” economic data disappoint, and first-quarter GDP growth estimates get cut?
On Friday, in a speech in Chicago, Yellen endorsed the hawkishness from her colleagues that has pushed March rate hikes odds in the futures market to 80 percent -- over the 70 percent threshold that presaged the rate hikes in December 2015 and December 2016.
She said the labor market had essentially hit the Fed’s full-employment mandate, while inflation was moving closer to the central bank’s 2 percent goal. She added that the Fed would likely move rates higher at a faster pace than it did over the past two years. Fed Vice-Chair Stanley Fischer backed Yellen up, saying almost no economic indicator has come out badly in the last three months.
Is A Second OPEC Cut On The Cards?
OPEC’s coordinated effort to curtail global supply has so far managed to put a floor under oil prices, which have been sitting modestly above US$50 since the deal was announced at the end of November last year. But resurging U.S. shale has been capping the upside, and Brent has not breached US$58 per barrel. Analysts and experts are now mostly predicting that oil prices will remain below US$60 this year.
The supply-cut deal has so far resulted in a surprisingly high OPEC compliance of more than 90 percent, thanks to the cartel’s leader and biggest producer, Saudi Arabia, which has been cutting deeper than pledged. But the market has already priced in this high compliance, and although oil prices jump for a few hours on every report of ‘extraordinary efforts’ and reassurance that members will strive for ‘full conformity’, they are stuck in a narrow band, kept in check by U.S. shale and record high inventories in America.
A key upside driver for prices would be an extension of the OPEC deal beyond its original expiry date at the end of June. Just over a month had passed since the beginning of the production cut deal when talk of extending the agreement started to intensify. OPEC is said to be prepared to extend the deal, and may also increase the cuts, if inventories fail to drop to a specified level, sources from the group told Reuters.
The cartel has always claimed that the primary goal of the cut was to draw down excessive supply and bring the market back into balance. According to its latest Monthly Oil Market Report published in February, total OECD commercial oil stocks fell in December 2016 (before the cuts took effect) to stand at 2.999 billion barrels. At this level, OECD commercial oil stocks were 299 million barrels above the five-year average, OPEC said.
Dying shopping malls are wreaking havoc on suburban America
Rolling Acres Mall in Akron, Ohio opened in 1975 to great fanfare as the premier shopping destination for the surrounding community.
But customer traffic started to slow more than a decade ago, several department stores abandoned their leases, and the mall started failing. It lost its last store tenant in 2013.
Over that period, the mall was the scene of several crimes. A homeless man was sentenced to prison for living inside a vacant store there, another man was burned alive trying to steal copper wire from the mall, and the body of a murder victim was found behind the shopping center.
The mall was still standing vacant last year, and it remained a safety concern. The mayor of Akron instructed residents in July to "stay clear" of the area. The city finally began the process of demolishing the rotting shopping center in late October. Like Rolling Acres, shopping malls across the country are dying, and in some cases leaving jobless communities and rotting buildings that are hotbeds for crime in their wake. Dozens of malls have closed in the last 10 years, and many more are at risk of shutting down as retailers like Macy's, JCPenney, and Sears — also known as anchor stores — shutter hundreds of stores to staunch the bleeding from falling sales.
Keiser Report: Cognitive Dissonance in US Stock Markets
Will Chicken Prices Go Up In 2017? Bird Flu Confirmed At Tennessee Breeding Facility
The Tennessee Department of Agriculture Sunday confirmed a highly contagious form of avian influenza — bird flu — at a commercial breeding facility in south-central Tennessee. The U.S. Department of Agriculture said it was the first confirmed case of the viral infection this year. The USDA said there are 73,500 birds in the flock, which will be destroyed to keep them out of the food chain.
The source of the H7 virus has yet to be identified. It can travel in wild birds without them appearing to be sick. Tennessee Gov. Bill Haslam said the state is working with local, county and federal officials to control the situation to “protect the flocks that are critical to our state’s economy.” The agriculture departments’ statements did not identify the facility involved, saying only that it was in Lincoln County, whose largest city is Fayetteville.
The highly pathogenic form of the virus can be deadly to domesticated chickens and turkeys. The state began investigating the situation Friday when the breeding facility reported an increase in chicken deaths.
“With this [bird flu] detection, we are moving quickly and aggressively to prevent the virus from spreading,” state veterinarian Dr. Charles Hatcher said. In addition to the facility that reported the virus, 30 other poultry farms in a 6-mile radius have been quarantined. Previous outbreaks of bird flu in Tennessee have involved a less virulent form.
Are We Breaking The Internet?
Recent outages from critical services across the net have created massive disruption in recent weeks: Whether it was Amazon’s S3 service failure, which took down thousands of sites, Cloudflare’s “Cloudbleed” security issue, which forced many sites to ask users to reset their passwords, or Google Wifi’s accidental reset, which wiped out customer’s internet profiles, the infrastructure behind the internet has looked substantially more unstable recently.
The packetized technology that underlies most of the internet was created by Paul Baran as part of an effort to protect communications by moving from a centralized model of communication to a distributed one. While the Internet Society questions whether the creation of the internet was in direct response to concerns about nuclear threat, it clearly agrees that “later work on Internetting did emphasize robustness and survivability, including the capability to withstand losses of large portions of the underlying networks.”
From there, the foundation was laid for an internet that treated the distributed model as a key component to ensuring reliability. Almost 50 years later, consolidation around hosting and mobile and the development of the cloud have created a model that increases concentration on top of few key players: Amazon, Microsoft, and Google now host a large number of sites across the web. Many of those companies’ customers have opted to host their infrastructure in a single set of data centers, potentially increasing the frailty of the web by re-centralizing large portions of the net.
That’s what happened when Amazon’s S3 service, essentially a large hard drive used by companies like Spotify, Pinterest, Dropbox, Trello, Quora, and many others, lost one of its data centers on Tuesday morning. The problem began around 9:37 a.m. Pacific, the company later explained, after an employee tried to fix a problem with S3’s billing system: “an authorized S3 team member using an established playbook executed a command which was intended to remove a small number of servers… Unfortunately, one of the inputs to the command was entered incorrectly and a larger set of servers was removed than intended.”
Amazon CEO Has Dreams Of Express Shipping To The Moon
Will Amazon one day provide free two-day Prime shipping to the moon? Probably not, but the company’s CEO Jeff Bezos does have a plan in which the company would build a system to ship supplies to future moon settlements.
The Washington Post — which is also owned by Bezos — reports that Bezos’ rocket company Blue Origin wants to develop a lunar spacecraft project, dubbed Blue Moon, with NASA that would deliver gear, cargo, and other goods to assist in the habitation of the moon by 2020.
The project, described in a white paper sent to lawmakers and NASA, doesn’t focus on sending people to the moon, but instead providing them with needed products after they’ve arrived.
Still, Bezos addressed the project at an awards event hosted by Aviation Week on Thursday night, Ars Technica reports, noting that the CEO believes the project has the “intent over time to building a permanently inhabited human settlement on the moon.”
US government to compensate victims of terror attacks
Retail sales are up– but closure and bankruptcies plague giants
Scratch the surface of recent retail sales gains, and you’ll find thousands of shuttered stores and billions in distressed debt underneath.
It seems like a contradiction: Retail sales rose a healthy 5.6 percent in January over the year-ago period, but the industry is convulsing with store closures, bankruptcies and liquidations by major chains — topped off by levels of distressed debt not seen since the Great Recession.
What’s going on? Overall, top-line results mask brick-and-mortar stores’ desperate battle against Amazon, which has radically reshaped American shopping habits with its Prime membership club, which offers rapid shipping of millions of products for a flat annual fee.
To compete, traditional chains are slashing prices while struggling to become omnichannel sellers with products in-store, online or whatever mixture consumers prefer. This battle has been heating up for years, but traditional retail is on the ropes now after online sellers scored a huge holiday-season victory.
Tight Market Governs Housing Recovery, Analysts Say
The US housing market, a key economic driver, is exceedingly tight, with supply struggling to meet demand as the sector recovers a decade after the housing crisis, analysts say.
But persistent and pent-up demand among would-be homeowners could spur builders to boost construction, helping to ease pressure on the market for new homes.
Inventory of homes for sale has remained stagnant even while the pace of sales returns to pre-crisis levels. "What I hear from realtors pretty much across the country is that if they had more inventory they could make more sales," Lawrence Yun, chief economist at the National Association of Realtors, told AFP.
Home sales jumped in January, with sales of existing homes rising 3.3 percent, the fastest monthly rate since early 2007, while sales of new homes increased nearly four percent, with buyers in the Northeast snapping up the largest volume of single-family houses in nine years.
Clif High-Chaos Starts Middle of March
Cash to remain king for Swiss; central bank rules out note ban
When it comes to cash and its future, Swiss authorities seem to have a totally opposite view to that of their Indian counterparts -- for them cash is "more reliable" and enjoys a low opportunity cost.
Among other benefits over cashless payments, cash provides "more effective budget control" and can be used without any technical know-how, while it also offers a comprehensive protection with regard to financial privacy, a top official of Swiss National bank (SNB) has said.
Amid a debate on future of cash globally and the ambitious demonetisation move carried out by India, SNB's deputy head Fritz Zurbruegg said there remains a continuing robust demand for cash among general public and banknotes are like the country's 'calling cards' in case of Switzerland.
It has been speculated for some time that Switzerland may have to do away with cash, especially high value banknotes, to get rid of its tag of being an alleged 'safe haven' for black money stashed by foreigners including from India. A number of policy measures have been put in place by Swiss authorities in the recent years to address concerns of its banks providing high secrecy walls around their global clients. New rules make it much easier for several foreign jurisdictions, including India, to get details from Switzerland about people suspected to be involved in tax evasion and other financial crimes.
Warren Buffett's advice 'doesn't work anymore,' robo-advisor CEO says
Warren Buffett's advice for ordinary investors is simple: Invest your retirement portfolio in an S&P 500 index fund. However, at least one financial advisor thinks the Oracle of Omaha is off base.
That strategy "doesn't work anymore. It's not actually making the most of your money. You can do a lot better than that," Jon Stein, CEO and founder of Betterment, a robo-advisor with more than $8 billion of assets under management, said in a recent CNBC "On The Money" interview.
Stein said that portfolios built by Betterment can beat an S&P 500 Index fund over time because Betterment optimizes taxes to enhance performance.
Betterment estimated its tax-loss harvesting service can add 0.77 percent to an average customer's after-tax returns annually. Also, by automatically coordinating where assets are located among taxable and tax-deferred accounts, the firm said it can produce another 0.10 percent to 0.82 percent each year. Many robo-advisors, including Betterment, Charles Schwab and Wealthfront, offer automatic tax-loss harvesting, which means they sell an investment to generate a loss to offset capital gains.