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Friday 04.14.2017

JPMorgan's Jamie Dimon : 'U.S. consumers and businesses are healthy'

JPMorgan Chase (JPM) CEO Jamie Dimon gave an upbeat view of the U.S. economy in the bank’s earnings report on Thursday. “U.S. consumers and businesses are healthy overall and with pro-growth initiatives and improving collaboration between government and business, the U.S. economy can continue to improve,” Dimon said in the firm’s release. “We will be there to do our part, strong and steadfast in good times and bad, and working every day to support our clients and our communities.”

The largest U.S. bank by assets, JPMorgan kicked off earnings season for financials reporting better-than-expected first-quarter earnings per share of $1.65, beating analysts estimates of $1.52. Revenue came in at $25.6 billion.

Dimon noted that the consumer businesses continued to grow. During the quarter, the bank had $622.9 billion in deposits, up 11% year-over-year. Loans increased 5% to $466.8 billion.

“The consumer businesses continue to grow core loans at double digits, outperform the industry in deposit growth, and we once again had very strong card sales volume growth this quarter – reflecting our commitment to providing our customers the innovative products and services they want,” Dimon said.

Ballooning bills: More U.S. hospitals pushing patients to pay before care

Last year, the Henry County Health Center in Iowa started providing patients with a cost estimate along with pre-surgery medical advice. The 25-bed rural hospital in the southwest corner of the state implemented the protocol because of mounting unpaid bills from insured patients, a group that had previously not raised red flags.

Henry County is one of hundreds of U.S. hospitals trying to cope with an unexpected consequence of the Affordable Care Act of 2010, known as Obamacare: millions more Americans have health insurance, but it requires them to spend thousands of dollars before their insurer kicks in a dime.

Since U.S. hospitals do not want to end up footing the bill, they are now experimenting with pre-payment strategies for patients, with a growing number requiring payment before scheduled care and offering no interest loans, according to interviews with more than two dozen hospitals, doctors, patients, lenders and healthcare experts.

“Most patients are appreciative that we’re telling them up front,” said David Muhs, chief financial officer for the Henry County hospital, which provides a discount for early payment. The discussion leads some patients to skip care, others to delay it or use a no interest loans available through the hospital, he said. The ACA extended insurance to 20 million Americans, which initially helped hospitals begin to shrink debt from uninsured patients who could not pay their medical bills. But more and more, people in Obamacare plans or in employer-based health plans are choosing insurance that features low monthly payments. The trade-off is high out of pocket costs when they need care.

Women’s clothing chain Draper’s and Damon’s closing all stores

The company that owns the Draper’s & Damon’s chain of women’s clothing stores will soon close all of its locations.

“Unfortunately the company that bought us is going to close all of the stores,” the worker said Thursday. “All of the stores will close by April 30 and some could close earlier than that depending on how much merchandise is left over. They are going to keep the company going as an online and catalog business.” When asked about the plan, a representative with Blue Stem wouldn’t provide details. “No comment,” she wrote via email.

Draper’s was previously owned by Orchard Brands Corp., a national, multi-brand family of 13 catalog and e-commerce brands. Bluestem acquired Orchard Brands in July 2015 for $410 million. Bluestem currently operates about 26 Draper’s & Damon’s stores throughout California.

A San Marino location closed several years ago and another former location at 1855 E. Colorado Blvd. in Pasadena has been designated as a historical landmark. The company’s elegant stores, clothing lines and attention to detail and service harken back to another era, and they have resonated with shoppers over the years.

Yellen's Fed Bad For America but Good For My Investments

Eastern Outfitters asks court to close 48 of its Eastern Mountain Sports, Bob's Stores locations

Dozens of Bob's Stores and Eastern Mountain Sports locations across New England and the Northeast will likely close in the coming months if a judge agrees with a bankruptcy filing by parent company Eastern Outfitters.

The company is seeking to close 48 Bob's and EMS stores in eleven states from Massachusetts to Maine to Maryland. Eastern Outfitters LLC, the parent of discount chain Bob's Stores and outdoor retailer Eastern Mountain Sports, filed for bankruptcy protection in early February.

The company is asking a bankruptcy court to allow it to close 48 of its 86 stores as part of a plan for U.K. retailer Sports Direct International to acquire the company.

Bob’s Stores was founded by Bob Lapidus in 1954 and has 35 stores throughout the Northeast. Eastern Mountain Sports was founded in 1967 by a pair of Wellesley climbers who later opened a climbing school. The chain was sold in 2012 to a private equity firm.

Pier 1 imports to close up to 25 stores in the next year

Homegoods retailer Pier 1 Imports will close up to 25 stores in the next year, executives said in an earnings call Wednesday.

The Fort Worth, Texas-based store reported net sales decreasing 3.4 percent for the full year, as well as the average number of stores declining 3 percent.

Pier 1 has 1,018 stores, including locations in Huntsville, Tuscaloosa and Hoover. It closed four stores in the previous quarter.

CFO Jeffrey Boyer told analysts Wednesday that the company saw same-store sales improvements last year that should continue this year, thanks to things like advertising, loyalty programs and in-store events.

Yellen’s Setting Up the Markets For Their Third Fed-Fueled Crash

Janet Yellen is playing with matches next to a $20 Trillion Debt Bomb. During her speech at the Gerald R. Ford School of Public Policy in Michigan, Yellen stated that the biggest risk to monetary policy is for the Fed to “get behind the curve” regarding inflation.

To that end, the Yellen Fed has already raised interest rates twice in the last six months. And it is pushing for yet another rate hike in June. However, Yellen as usual is missing the bigger issue: the risk of DEBT deflation triggered by the Fed’s rate hikes.

Since the 2008 Crisis, the US has been on a debt binge unlike anything we’ve ever seen before. Thanks to seven years of ZIRP and $3.5 TRILLION in QE, the US’s debt load has nearly doubled, bringing our Debt to GDP ratio well over 100%.

Now Yellen wants to raise rates even more, in her hopes of catching up with inflation… But what happens to the US’s massive debt pile as the Fed keep’s raisings rates, making the debt MORE expensive to pay off? In 2016, when rates were still 0.5%, the average US interest payment was already 1.9%. What happens to this when the Fed keeps raising rates, pushing the yield on the debt even higher? The markets are already “smelling” this.

Blame the bunny: Easter earnings effects

Bill Gross: Markets, Junk Bonds Pricing in 'Too Much' Hope, Growth

Influential bond investor Bill Gross on Thursday stepped up his warning to investors not to be tempted into buying equities, high-yield junk bonds and other asset classes, given the possibility that U.S. President Donald Trump might fail to enact policies that fuel economic growth.

"Equity markets are priced for too much hope, high-yield junk bond markets for too much growth, and all asset prices elevated to artificial levels that only a model-driven, historically-biased investor would believe could lead to returns resembling the past six years, or the decades predating Lehman," Gross said in his latest Investment Outlook.

"High rates of growth, and the productivity that drives it, are likely distant memories from a bygone era."

Gross, who runs the Janus Global Unconstrained Bond Fund, earlier this year said investors should not be allured by the "Trump mirage," of 3-4 percent economic growth and the "magical benefits" of tax cuts combined with deregulation.

JCPenney Postpones Store Closings Because People Are Shopping There Again

Two months after JCPenney announced it would shutter 138 stores across the country amid falling sales, the company says it is delaying those closings as customers have apparently started shopping with the retailer again.

CNBC reports that JCPenney is pushing back the end date for the 138 stores earmarked for closing this year by at least a month. A spokesperson for the company says that the stores on the closing list have recently experienced “better-than-expected sales and traffic” since the February announcement.

“This is not an uncommon response when you announce a store closure,” the rep said. “Local shoppers will come out for a variety of reasons — some out of nostalgia and some who are just looking for a great deal.”

As a result, the retailer says it is “prudent to continue” selling merchandise at the stores at the “current promotional level.”

Rickards: Predict the Unpredictable... We're Heading Straight Into a Recession

Tech Stocks Experience Their Longest Losing Streak In 5 Years As Panic Begins To Grip The Market

S&P 500 tech stocks have now fallen for 9 days in a row. The last time tech stocks declined for so many days in a row was in 2012, and that was the only other time in history when we have seen such a long losing streak. As I have stated before, the post-election “Trump rally” is officially done, and the market is starting to roll over as investors begin to realize that all of the buying momentum has completely evaporated. Tech stocks tend to be particularly volatile, and so the fact that they are starting to lead the way down should definitely be alarming to many in the investing community.

Of course it isn’t just tech stocks that are falling. The Dow was down another 59 points on Wednesday, and the S&P 500 has closed beneath its 50 day moving average for the very first time since the election. For those that have been waiting for a key technical signal before getting out of the market, there is one for you.

The price of gold was up again, and that is definitely not surprising in this geopolitical environment. The closer we get to war the higher gold and silver prices will go, and if we actually get into a major conflict we will see them blast into the stratosphere.

Another key indicator that I am watching very closely is the VIX. On Wednesday it shot up above 16 for the very first time since the day after Trump’s election victory, and many believe that it could soon go much higher.

Jim Hightower: How Can We Stop Banksters From Robbing Us?

In an insightful song about outlaws, Woody Guthrie wrote this verse: "As through this world I travel/ I see lots of funny men/ Some'll rob you with a 6-gun/ Some with a fountain pen."

The fountain pens are doing the serious stealing these days. For example, while you would get hard time in prison for robbing a bank at gunpoint, bankers who rob customers with a flick of their fountain pens (or a click of their computer mouse) get multimillion-dollar payouts, and they usually escape their crimes unpunished. After all, it's their constant, egregious, gluttonous thievery that has made "banker" a four-letter word in America, synonymous with immoral, self-serving behavior.

Take John Stumpf, for example. The preening, silver-haired, exquisitely-tailored CEO of Wells Fargo was positioned on the top roost of the financial establishment and hailed as a paragon of big-banker virtue... until he suddenly fell off his lofty perch.

It turns out that being "a paragon of big-banker virtue" is not at all the same as being a virtuous human being. Banker elites don't get paid the big bucks by "doing what's right," but by doing what's most profitable — and that means cutting corners on ethics, common decency and the golden rule. Stumpf didn't just cut corners, he crashed through them, driving his big banking machine into the dark realm of immoral profitability by devising a business plan that effectively encouraged Wells Fargo branches to steal from millions of their poorest and most easily deceived customers.

Gas at $3 per gallon could hurt U.S. economy

The U.S. national average price for a gallon of gasoline would need to move close to $3 before it starts having a negative economic impact, an analyst said.

U.S. retail gasoline prices have been on a steady increase for the better part of the year. Motor club AAA reports a national average price for a gallon of regular unleaded at $2.40 early Thursday, an increase of 15 percent, or 32 cents per gallon higher than this date last year. Over the course of a year, that difference could eat into savings or discretionary spending.

Gasoline prices are tied to crude oil prices and the health of the nation's refinery infrastructure. Crude oil prices are up almost $5 per gallon from one month ago and gasoline prices have moved up 4.5 percent, or 10 cents per gallon, since the middle of March.

Crude oil prices are increasing in response to a decision from the Organization of Petroleum Exporting Countries to cap production levels in order to erase a glut of oil on the market and because of geopolitical tensions sparked by U.S. military action in Syria.

British collector finds $1.4M gold stash in ex-Iraqi tank

A British man who buys and restores old tanks made a surprising discovery in a former Iraqi Army tank -- five gold bars worth about $1.4 million. Nick Mead, a collector and owner of Tanks A Lot, a tank restoration business, said he recently saw the Chinese Type 69 tank listed on eBay and he was able to barter it for a retired British Army truck and Abbot self-propelled howitzer.

The Chinese Type 69, modeled after the Russian T-54 sold from 1959-1968, were produced in bulk and sold to the Iraqi Army during the Gulf War. Todd Chamberlain, one of Mead's mechanics, was working on the restoration when he found evidence that one of the fuel tanks might be filled with guns, a common discovery with retired military tanks.

Mead joined Chamberlain and started filming, a practice he said is common when restorers think they might find illegal guns and want to make sure they have evidence of the discovery to show police.

The video shows the restorers reaching into the fuel tank and pulling out the foreign objects, which turn out to be five gold bars weighing a total of about 70 pounds -- $1.4 million in gold.

GM to add 1,100 jobs in California over five years at self-driving unit

General Motors Co (GM.N) said on Thursday it will add more than 1,100 jobs in California over five years at its Cruise Automation unit to boost its self-driving efforts after receiving $8 million in state tax credits.

The largest U.S. automaker said it is investing $14 million in a new research and development facility in San Francisco that will more than double its current space. GM acquired Cruise Automation for $1 billion in March 2016 as part of its effort to build autonomous vehicles.

GM is testing more than 50 Chevrolet Bolt electric vehicles with self-driving technology on public roads in San Francisco, the Detroit metropolitan area and Scottsdale, Arizona. "Running our autonomous vehicle program as a startup is giving us the speed we need to continue to stay at the forefront of development of these technologies and the market applications," said GM Chief Executive Mary Barra in a statement.

When GM acquired Cruise in 2016, the company had been working to develop hardware and software that could be installed in a vehicle to enable the car to pilot itself on a highway, without the driver steering or braking.

Fannie Mae sells $1.62 billion in re-performing loans to Credit Suisse subsidiary

Fannie Mae announced Thursday that it completed its second sale of re-performing loans, selling more than $1.6 billion in re-performing loans to a subsidiary of Credit Suisse. According to Fannie Mae, it is selling approximately 7,500 re-performing loans with a total unpaid principal balance of $1.62 billion to DLJ Mortgage Capital, a subsidiary of Credit Suisse.

DLJ Mortgage Capital also recently purchased $4.9 billion in mortgages from HSBC Finance Corp. and HSBC Bank, as part of HSBC’s reduction of its U.S. mortgage business, which began back in 2008.

In this sale from Fannie Mae, DLJ Mortgage Capital was the winning bidder on all four pools of re-performing loans, which Fannie Mae classifies as mortgages that were previously delinquent, but are now performing again because payments on the mortgages have become current with or without the use of a loan modification.

According to Fannie Mae, this sale includes 7,508 loans with an aggregate unpaid principal balance of $1,620,289,531. The sale was initially announced last month. The average loan size in the pool is $215,808.41. The pool’s weighted average note rate is 4.10%, while the pool’s weighted average broker's price opinion loan-to-value ratio is 103.60%.

Bernie Madoff is helping teach MBA students how to combat fraud from jail

As he serves out his 150-year prison sentence for running one of the largest Ponzi schemes of all time, former financier Bernie Madoff has taken on an unusual role.

No, he hasn't cornered the prison market on chocolate — that's a charge he vehemently denies in Poets & Quants' recent exclusive.

Instead, he's teamed up with David Weber, the former chief investigator of the SEC, in order to teach MBA students about fraud. According to Poets & Quants' report, Weber, a professor at the University of Maryland's Smith School of Business, enlisted Madoff to help out with his online executive and fraud detection classes.

So far, Madoff has reviewed course materials, evaluated Weber's syllabus, and even picked out the textbook for the class. Online MBA students occasionally email him questions, and he emails them back responses through Weber. In one email correspondence with Weber, shared via Poets & Quants, Madoff weighed in on how MBA graduates might feel pressure to commit fraud because "earnings pressure is so high."

Sean Spicer: Taxpayers deserve good customer service from U.S. government

Consumer debt growth can't outpace wages forever

U.S. consumers are taking out debt at a far faster rate than their incomes or the economy are growing, and just as we may be hitting a peak in employment. Add in rising interest rates courtesy of the Federal Reserve and you have the consumer sector - 70 percent of the U.S. economy - treading on thin and thinning ice.

U.S. consumers have run up over $1 trillion on credit cards, hitting a level not seen since January 2009 and up 6.2 percent from a year ago. For comparison, wages are up less than 3 percent and the economy is growing just under 2 percent a year. Borrowers can only take on debt at twice the rate they increase the ability to service it for so long. Student and auto loans are also at $1-trillion-plus levels and also growing about twice as fast as wages or the economy.

To be sure, the percentage of disposable income the average household needs to service debt is hovering at about 10 percent, near all-time lows. So too are interest rates, and the thing about interest rate changes at very low levels is that small increases in absolute terms imply large increases in proportional ones.

Firstly, the Fed, happy to 'normalize' rates while it can, is likely to hike rates by a quarter percentage point twice more this year and, as indicated in the most recent interest-rate-setting meeting minutes, is also planning to begin the long and fraught process of unwinding its $4.5 trillion balance sheet. Secondly, while labor market conditions are on par with their 2006-2007 peak, according to Barclays Capital, momentum in the labor market is flagging. Friday’s jobs report showed payrolls expanding by just 98,000 in March, far less than expected, even as the jobless rate fell to just 4.5 percent.

Wells Fargo posts flat profit as new customers stay away

Wells Fargo's first-quarter profit was essentially flat from a year earlier as new customers continue to stay away from the bank following its sales practice scandal. The company said Thursday that new checking account openings were down 35 percent in March from the same month a year ago. New credit card applications were down 42 percent.

Overall, Wells Fargo reported net income of $5.46 billion, or $1 per share, in the quarter ending March 31, compared with $5.46 billion, or 99 cents per share, in the same quarter a year ago. The results surpassed Wall Street expectations of 96 cents per share, according to FactSet.

The company posted revenue of $23.93 billion in the period. Its adjusted revenue was $22 billion, falling short of analyst forecasts of $22.4 billion, according to FactSet. Like Citigroup and JPMorgan Chase, who also reported their results on Thursday, Wells did benefit somewhat from the rise in interest rates since a year ago. The Federal Reserve has raised interest rates twice recently, last December and in March. Higher rates mean banks like Wells can charge more for loans. In the quarter, Wells' net interest income was $12.3 billion, up 5 percent from a year earlier.

"Wells Fargo continued to make meaningful progress in the first quarter in rebuilding trust with customers and other important stakeholders, while producing solid financial results," said Wells Fargo's CEO Tim Sloan in a prepared statement.

NEWS to Disturb the Comfortable...

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