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Tuesday 01.24.2017

Jobs Trump brings back will pay better and be high skilled, US manufacturing chief says

Though the glory days of U.S. manufacturing are over, President Trump's campaign promise to create manufacturing jobs in the United States will have ample benefits for the economy, Scott Paul, the president of the Alliance for American Manufacturing, said on Friday.

"The manufacturing jobs that should be coming back will be working with complex machines," Paul told CNBC's "Squawk on the Street." "They'll need a high skill set. They should be well paying. And, look, it is possible to do this."

Trump's main focuses on his first full day as president have been jobs and trade, with the North American Free Trade Agreement, or NAFTA, and the Trans-Pacific Partnership, or TPP, among the first items on his agenda.

The president has vowed to renegotiate both trade agreements and argue for fair trade on the part of the U.S. in an effort to try and boost the country's advantage against fierce trade competitors like China. "I think, if done properly, we can boost the prospects for manufacturing jobs, keeping in mind that we have industries that suffer devastating consequences from unfair trade practices and those that benefit from exports," Paul said.

Supermarket operator Kroger to fill 10,000 permanent posts

U.S. supermarket operator Kroger Co said on Monday it would fill 10,000 permanent positions in its supermarket divisions.

Kroger, which had about 431,000 full- and part-time employees as of Jan. 30, 2016, also said its total active workforce grew by more than 12,000 in 2016.

The world's No. 1 retailer Wal-Mart Stores Inc said last week it would create about 10,000 jobs in the United States this year, as President Donald Trump puts pressure on companies to hire more U.S. workers.

Companies such as General Motors Co and Amazon.com Inc have also announced plans to add jobs in the United States.

President Trump signs 3 executive orders, withdraws US from TPP

Former Wells Fargo Employees: Borrowers Forced To Pay For Bank’s Mortgage Delays

Even though you can now get an initial approval for a home loan in a few minutes, the actual underwriting process can take so long that the interest rate you were promised at the beginning has since increased. If the delay is the borrower’s fault, they can usually pay a hefty fee to extend that lower rate, but if the bank caused the delay, it usually eats that charge. However, some former Wells Fargo workers say the bank forced borrowers to pay for these rate extensions even when it was Wells’ fault.

This is according to Pro Publica, which reports that four former Los Angeles-area Wells staffers are now claiming that bank management told employees to shoulder borrowers with these extension fees regardless of who had caused the delay.

One former loan officer from Beverly Hills wrote to the Senate Banking and House Financial Services committees in November, alleging that “millions of dollars, in just the Los Angeles area alone… were wrongly paid by borrowers/customers instead of Wells Fargo.”

Three other former Wells staffers confirmed this practice to Pro Publica, saying that the bank’s underwriting staff was inexperienced and understaffed, resulting in delays that affected applicants’ interest rates. They claim that when loan officers argued that the bank should pick up the tab for the extension fees — often more than $1,000 — The answer from management “was always the same: No. Declined. ‘Borrower paid,’ never ‘Lender paid.’”

U.S. auto parts sellers skid after report on Amazon's entry

Shares of U.S. auto part retailers fell sharply on Monday following a report that Amazon.com Inc had set its sights on the $50 billion do-it-yourself after-market auto parts business.

Shares of Autozone Inc , which has a comparatively bigger exposure to the retail auto parts market, slumped as much as 5.1 percent to $730.99, posting their biggest intraday percentage loss in nearly one year.

Advance Auto Parts Inc's shares fell 4.2 percent to $164.27, O'Reilly Automotive Inc declined 4 percent to $263.13 and Genuine Parts Co lost 3.7 percent to $96.

Amazon has struck supply contracts with some of the largest parts makers including Federal-Mogul Holdings Corp , Dorman Products Inc, Robert Bosch GmbH and Cardone Industries Inc, NY Post reported on Sunday, citing sources. The NY Post report implies that Amazon is both paying vendors more and offering customers lower prices than brick-and-mortar competitors on like-for-like products, according to RBC Capital Markets analyst Scot Ciccarelli.

Ford Seen as 'Canary' With Record Leases Spurring Used-Car Glut

All those years of rising U.S. auto sales are starting to work against carmakers. A glut of used vehicles has started to depress prices. That trend will intensify as Americans will return 3.36 million leased cars and trucks this year, another jump after a 33 percent surge in 2016, according to J.D. Power. The fallout has already begun, with Ford Motor Co. shaving $300 million from its financial-services arm’s profit forecast for this year.

“Ford is the canary in the coal mine,” said Maryann Keller, a former Wall Street analyst who’s now an auto industry consultant in Stamford, Connecticut.

This drag may be hitting the rest of the industry, too. A National Automobile Dealers Association index of used-vehicle prices declined each of the last six months of last year. If used values weaken more than anticipated, it can lead to losses across the industry, hitting carmakers, auto lenders and rental companies.

The NADA Used Car Guide’s price index dropped about 4 percent last year from 2015’s average, the first significant decrease since the recession. The boom in cars and trucks coming back off leases will continue into 2017, rising about 9 percent, J.D. Power estimates. The impact of falling used prices has also hit Hertz Global Holdings Inc. The rental-car company replaced its chief executive officer last month, weeks after cutting its annual earnings forecast due to the falling value of its cars.

Citi units to pay US$28.8 million for giving US homeowners 'runaround': watchdog

The U.S. consumer financial watchdog said on Monday it had fined subsidiaries of Citigroup Inc US$28.8 million for giving "the runaround to borrowers" on mortgage servicing by keeping them in the dark about options to avoid foreclosure or making it difficult for them to apply for relief.

CitiMortgage will pay an estimated US$17 million to compensate wronged consumers, as well as a civil penalty of US$3 million, the Consumer Financial Protection Bureau said. CitiFinancial Services will refund approximately US$4.4 million to consumers, and pay a civil penalty of US$4.4 million.

The CFPB said the subsidiaries neither admitted nor denied the findings in the consent orders. "“We are pleased to resolve these matters," said Mark Rodgers, director of Citi public affairs.

In the first hour after the penalties were announced, Citi shares dropped to US$55.52 from US$55.77. In mid-afternoon trading they recovered slightly, rising to US$55.88, off 0.4 percent. "Citi’s subsidiaries gave the runaround to borrowers who were already struggling with their mortgage payments and trying to save their homes," CFPB Director Richard Cordray said in a statement. "Consumers were kept in the dark about their options or burdened with excessive paperwork."

Foreigners Are Dumping U.S. Debt At A Record Pace And Our $20 Trillion National Debt Is Poised To Become A Major Crisis

While most of the country has been focused on the inauguration of Donald Trump, a very real crisis has been brewing behind the scenes. Foreigners are dumping U.S. debt at a faster rate than we have ever seen before, and U.S. Treasury yields have been rising. This is potentially a massive problem, because our entire debt-fueled standard of living is dependent on foreigners lending us gigantic mountains of money at ultra-low interest rates. If the average rate of interest on U.S. government debt just got back to 5 percent, which would still be below the long-term average, we would be paying out about a trillion dollars a year just in interest on the national debt. If foreigners keep dumping our debt and if Treasury yields keep climbing, a major financial implosion of historic proportions is absolutely guaranteed within the next four years.

One of the most significant aspects of the “Obama legacy” is the appalling mountain of debt that he has left behind. As I write this article, the U.S. national debt is sitting at 19.944 trillion dollars. During Obama’s eight years, a staggering 9.3 trillion dollars was added to the national debt. When you break that number down, it comes to more than a hundred million dollars every single hour of every single day while Obama was living in the White House. In just two terms, Obama added almost as much to the national debt as all of the other presidents before him combined.

What Obama and the members of Congress that cooperated with him have done to future generations of Americans is beyond criminal. Unfortunately, hardly anyone is talking about this right now, but the consequences are about to start catching up with us in a major way.

The only possible way that our game of “borrow, spend and stick future generations with the bill” can continue is if the rest of the world participates. In other words, we need them to continue to buy our debt.

America's millennials stuck in their parents' basement may finally be able to move out

Economists are hinging a lot of their forecasts for the US economy on how many election promises President Donald Trump keeps.

Millennial household formation is one such trend, according to Matthew Pointon, a property economist at Capital Economics.

Last year, the share of young adults living with their parents increased again, as the chart shows. Two important reasons for this are that millennials are getting married later, and wage growth has been sluggish for much of this economic recovery.

"With wage growth finally set to accelerate, thanks to the fiscal stimulus, we think a larger number of youngsters will have the resources to move out of the parental home this year," Pointon said. The fiscal stimulus involves cutting taxes and increasing infrastructure spending to create domestic demand and, potentially, economic growth.

Federal judge blocks Aetna Inc's plan to buy rival Humana

A U.S. federal judge blocked on Monday health insurer Aetna Inc's proposed $34 billion merger with rival Humana, and Aetna said it was considering an appeal.

Judge John Bates of the U.S. District Court for the District of Columbia said the proposed deal would "substantially lessen competition" in the sale of some Medicare Advantage plans in 364 counties that the Justice Department identified in their complaint and in individual insurance on the Obamacare exchange in three Florida counties.

"We're reviewing the opinion now and giving serious consideration to an appeal after putting forward a compelling case," Aetna spokesman T.J. Crawford said.

The order came as President Donald Trump began the process of attempting to dismantle the Affordable Care Act, popularly known as Obamacare. On Friday, shortly after being sworn in, he directed government agencies to freeze regulations and take steps to weaken the program.

SEC probes Yahoo over data breaches

Report: George Soros Tied to More Than 50 'Partners' of Anti-Trump Women's March

Billionaire George Soros has provided financing to or has close relationships with at least 56 “partners” of Saturday’s “Women’s March on Washington,” according to a report at a website affiliated with the New York Times.

Writing the website for Women in the World, a summit in a joint venture with The New York Times, former Wall Street Journal reporter Asra Q. Nomani relates her findings on the Soros ties to the march. The Women in the World site is hosted by the Times.

By my draft research, which I’m opening up for crowd-sourcing on GoogleDocs, Soros has funded, or has close relationships with, at least 56 of the march’s “partners,” including “key partners” Planned Parenthood, which opposes Trump’s anti-abortion policy, and the National Resource Defense Council, which opposes Trump’s environmental policies. The other Soros ties with “Women’s March” organizations include the partisan MoveOn.org (which was fiercely pro-Clinton), the National Action Network (which has a former executive director lauded by Obama senior advisor Valerie Jarrett as “a leader of tomorrow” as a march co-chair and another official as “the head of logistics”). Other Soros grantees who are “partners” in the march are the American Civil Liberties Union, Center for Constitutional Rights, Amnesty International and Human Rights Watch. March organizers and the organizations identified here haven’t yet returned queries for comment.

In response to the report, a spokeswoman for Soros’s Open Society Foundations released a statement – included in an update to Nomani’s article – denying the group was “funding protests” in the wake of the presidential election. Nomani, however, did not charge that Soros was funding protests; she documented the numerous Soros-funded groups that were “partners” to the protest march.

The US dollar is now overvalued against almost every currency in the world

In September 1986, The Economist weekly newspaper published its first-ever “Big Mac Index”. It was a light-hearted way for the paper to gauge whether foreign currencies are over- or under-valued by comparing the prices of Big Macs around the world.

In theory, the price of a Big Mac in Rio de Janeiro should be the same as a Big Mac in Cairo or Toronto. After all, no matter where in the world you buy one, a Big Mac generally consists of the same ingredients– two all beef patties, special sauce, etc.

A Big Mac currently sells for 49 pesos in Mexico, for example; at the current exchange rate, that’s about $2.23 US dollars. Meanwhile in Switzerland, a Big Mac sells for 6.50 francs, or roughly USD $6.35.

This means that a Big Mac in Switzerland costs 2.8x as much as the exact same burger in Mexico. Obviously there are a LOT of differences between Switzerland and Mexico that would ordinarily lead to some difference in price. But 2.8x is clearly excessive, suggesting that the Mexican peso is undervalued relative to the Swiss franc.

Gold's Momentum Could Push Prices To $1,250 Despite Hawkish Fed

There is a tug of war in the gold market resulting from the prospect of higher interest rates and rising inflation expectations; however, one research firm expects prices to move higher in the first half of the year resulting from geopolitical uncertainty.

In its quarterly metals report, published Monday, analysts at Sucden Financial Research said that they see gold prices pushing to as high as $1,250 an ounce in the first half of the year. At the same time, the firm sees gold being well supported on dips to $1,150 an ounce.

Since the start of the year, gold prices have benefited from a weaker U.S. dollar. February gold futures last traded at $1,215.60 an ounce, up 0.88% on the day and up 5.5% since the start of the year.

However, looking ahead, the firm said that potential interest rate hikes could eventually boost the U.S. dollar and weigh on gold. “With positive numbers coming out of the U.S. economy the expectation of two additional rate hikes this year will limit the need for gold as a safe haven investment. Continued dollar strength expected throughout 2017 will also keep a lid on gold prices as higher rates in the U.S. attract investment,” they said.

Texas Governor Threatens To Cut Funding To County Over 'Sanctuary Cities'

Republican Texas Gov. Greg Abbott on Monday told Austin's liberal sheriff that her jail would become the first in the state to lose taxpayer money over so-called "sanctuary cities" policies unless she reverses plans to curtail working with federal immigration authorities by February.

President Donald Trump made similar vows as a candidate, declaring that his "Day One" priorities would include stopping all federal dollars to places where local officials rebuff federal agents and don't arrest or detain immigrants living in the country illegally. Several big cities, including New York and Chicago, already have formal sanctuary policies on the books.

Newly elected Travis County Sheriff Sally Hernandez on Friday — in a defiantly timed announcement after Trump was inaugurated — said starting Feb. 1 she would end her predecessor's policy of honoring all jail detainers sought by U.S. Immigrations and Customs Enforcement.

Abbott, who attended Trump's inauguration, is now effectively threatening to carry out the president's promise on a state level. Abbott has previously warned local officials against adopting sanctuary policies but has not delivered such a direct ultimatum before now. "Your unilateral decision will cost the people of Travis County money that was meant to protect them," Abbott wrote. He said funding would be lost by Feb. 1 unless the county changes course.

When Their Shifts End, Uber Drivers Set Up Camp in Parking Lots Across the U.S.

In the 1970s, the Safeway grocery store in San Francisco’s gleaming Marina neighborhood, known as the Social Safeway, was a cornerstone of the pre-Tinder dating scene. Armistead Maupin made it famous in his 1978 book, Tales of the City, calling it “the hottest spot in town” to meet people. For years afterward, locals called it the “Singles Safeway” or the “Dateway.”

Forty years later, German Tugas, a 42-year-old Uber driver, got to know it for another reason: Its parking lot was a safe spot to sleep in his car. Tugas drives over 70 hours a week in San Francisco, where the work is steadier and fares are higher than in his hometown, Sacramento. So every Monday morning, Tugas leaves at 4 a.m., says goodbye to his wife and four daughters, drives 90 miles to the city, and lugs around passengers until he earns $300 or gets too tired to keep going. (Most days he nets $230 after expenses like gas.) Then, he and at least a half dozen other Uber drivers gathered in the Social Safeway parking lot to sleep in their cars before another long day of driving.

“That’s the sacrifice,” he said in May, smoking a cigarette beside his Toyota Prius parked at the Safeway at 1 a.m., the boats in the bay bobbing gently in the background. “My goal is to get a house somewhere closer, so that I don’t have to do this every day.”

The vast majority of Uber’s full-time drivers return home to their beds at the end of a day’s work. But all over the country, there are many who don’t. These drivers live near, but not in, expensive cities where they can tap higher fares, ferrying wealthier, white-collar workers to their jobs and out to dinner—but where they can’t make enough money to get by, even with longer hours. To maximize their time, drivers find supermarket parking lots, airports and hostels where they catch several hours of sleep after taking riders home from bars and before starting the morning commute.

Why Good Teachers Want School Choice

The Cost Of Regulatory Compliance: $20,000 For Every American Worker

As JPM writes in its intraday update, the "Trump/Ryan enthusiasm is starting to quietly fade as investors appreciate the enormous logistical and mathematical hurdles associated w/realization of their agenda. The nature of the Trump White House is such that investors should get used to avalanches of headlines, tweets, etc. on a daily basis but very little of this stream of consciousness barrage is likely to be incremental – platitudinous promises about slashing taxes “massively” or cutting regulations “by 75% or more” are increasingly being ignored as markets wait for specifics on the “Big 3” (tax reform, deregulation, and infrastructure spending). Tax reform continues to account for the bulk of the Trump/Ryan enthusiasm but enormous uncertainty exists around this issue (timing, revenue offsets, forced vs. optional repatriation, 35% vs. 20 or 15% when the average cash/effective rate is already ~23-25%, etc.)."

Yet while investors are becoming somewhat disenchanted with the tax reform and infrastructure spending aspects of the Trump agenda, little has so far been said about the deregulation aspect of Trump's proposals, and it is here that another potential source of upside, especially to small US businesses - the primary source of job creation - resides.

As JPM's Michael Cembalest reminds us in his latest note "The Rules of the Game: on regulation and deregulation", the updated WhiteHouse.gov website states the following: “the President has proposed a moratorium on new federal regulations and is ordering the heads of federal agencies and departments to identify job-killing regulations that should be repealed.”

According to Cemablest, this initiative would be welcomed by small businesses which have expressed rising concerns about regulation since 2009. Similarly, in a 2014 survey by the National Association of Manufacturers, 88% of respondents felt that regulations were affecting their business, by far the #1 concern in the survey. Why might this be the case? While most administrations add to new regulations, the regulatory pace of the last 8 years substantially exceeds its two predecessors.

McDonald's can't keep up with its all-day-breakfast launch

McDonald's reported fourth-quarter earnings on Monday, beating expectations across the board.

Adjusted earnings per share for the quarter came in at $1.44, slightly higher than analysts' expectations of $1.41 a share. Additionally, revenue was just ahead of expectations at $6.03 billion against projections of $6.00 billion.

Sales crushed expectations with a 2.7% gain year-over-year for same-store sales, much higher than the expectations of 1.4% growth.

Sales in the US, however, slid by 1.3%. The company said this was due to "challenging comparison against the prior-year launch of the very successful All-Day Breakfast." The company also warned that the first quarter of 2017 may face similar challenges because it is being compared with a strong quarter in 2016 that the company said "benefited from leap year, favorable weather, and continued momentum from All-Day Breakfast in the US."

Foxconn may build a $7 billion plant in the U.S.

Foxconn, a major assembler of iPhones and other electronics, may invest $7 billion in a plant for manufacturing display panels that would create as many as 50,000 jobs in the U.S.

Foxconn CEO Terry Gou discussed the potential expansion Sunday during a company meeting in Taiwan, the company’s home country. Several publications in Taiwan reported Gou’s remarks.

It’s the first time he has provided details about a possible U.S. expansion since one of Foxconn’s partners, SoftBank CEO Masayoshi Son, revealed Foxconn was mulling a $7 billion investment after a December meeting with then President-elect Donald Trump.

If the plant is built, Gou said it would work with Foxconn’s Sharp subsidiary. He touted Pennsylvania as leading candidate for the plant, but said Foxconn is in discussions with other states, too.

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