Headline News Archives

Friday 03.24.2017

GameStop tanks after missing on sales and signaling it will close at least 150 stores this year

GameStop on Thursday reported fourth-quarter profits that topped analysts' expectations, but sales that missed forecasts amid weaker demand for its gaming consoles.

In its earnings release, the video-game retailer said its core category was weak, especially in the second half of last year, as the console cycle aged with a dearth of new hardware releases. A previous update on holiday sales showed that top gaming titles did not sell well in the fourth quarter.

The company said it was hurt by the aggressive Black Friday promotions its competitors had. It expects to close between 2%-3% of its stores worldwide this year, according to the earnings statement.

GameStop reported adjusted earnings per share of $2.38, topping the forecast for $2.29 according to Bloomberg. Full-year earnings per share were forecast between $3.10 and $3.40, below the consensus for $3.73. Comparable sales — at stores open for at least one year — slumped 16.3% in the fourth quarter, not as much as the 17.5% decline that analysts had forecast.

Federal banks can’t agree on how the economy is doing

It’s the New York Federal Reserve Bank versus the Atlanta Fed. The issue: the health of the US economy during the first quarter of Donald Trump’s presidency.

The quarter, of course, ends next Friday. But the two regional Fed banks have such different outlooks on how the economy is doing so far in 2017 that it is not only embarrassing but also dangerous.

The powerful New York Fed, which houses the trading desks for the central bank, thinks the US economy has been growing at a reasonable 2.8 percent annual rate during the first quarter. The New York Fed calls its up-to-the-minute gauge of the economy the “Nowcast.”

The Atlanta Fed calls its constantly updated measure of the economy “GDPNow,” which is recording just 0.9 percent annual growth during the first quarter. So is it 2.8 percent or 0.9 percent? One is very wrong — and such divergent opinions this late in the quarter are unheard of.

Growing up poor makes it harder to succeed: Janet Yellen

Your adult life really does depend on where and how you grew up. That's the conclusion from the Federal Reserve's latest study on the well being of ordinary Americans.

"Considerable evidence shows that growing up poor makes it harder to succeed as an adult," Fed Chair Janet Yellen said Thursday at a conference on community development in Washington.

The Fed's latest findings haven't been published, but Yellen offered a sneak peak Thursday of the survey, which in years past sampled about 8,000 to 9,000 randomly selected Americans. The Fed asked adults if they grew up worrying about having enough food, a stable caregiver, or for their personal safety. Of those who said yes, more than 50% said they're facing financial troubles as an adult.

For adults who never had those concerns growing up, only about 25% said they have financial problems. Adults who grew up worrying about food, an unstable family, or safety were less likely to be employed, have stable income or be able to pay monthly bills compared to adults who had better circumstances growing up.

“Deaths of despair” are surging in white America

Some Groups Are Trying to Reverse Minimum Wage Hikes

Last November, voters from four states, Arizona, Maine, Colorado, and Washington, approved ballot initiatives that raised their state’s minimum wage. In each state, the measures passed by a significant margin, after making it to the ballot by citizen petition. However, these wage hikes are now under threat from business groups that have been fighting to undermine the increases.

In the state of Arizona, Proposition 206 won nearly 60 percent of the vote. It will increase the minimum wage to $12 per hour by 2020. The state’s minimum wage was $8.05 on election day. It went up to $10 per hour on January 1st of this year, and will rise each year until hitting the $12 mark in 2020. The minimum wage will be adjusted further, based on the cost of living, beginning in 2021.

“Working people need a livable wage. You can’t get by on minimum wage,” James Neal, who was a supporter of Prop 206, tells the Arizona Republic. “You could work two or three jobs at minimum wage and still not make enough to support your family.”

The voters made it clear that they felt the minimum wage should be increased. However, there has been some significant push-back. Several of the state’s Chambers of Commerce have filed a lawsuit to stop the increase. So far, the courts have upheld the voters’ decision. “As attorney general, my job is to uphold the rule of law,” Arizona state Attorney General Mark Brnovich said in a statement after the court’s decision, according to Courthouse News. “The constitution is designed to protect our rights. It’s not a tool to be used to undermine the will of the people.”

Big mall-based stores face new threat as customers dwindle

Erica Dao used to shop at malls once a month, looking in stores and seeing what the mannequins displayed. Now, she mainly looks for inspiration on social media. “I discover brands through Instagram,” said Dao, 33, of St. Paul, Minnesota.

Elizabeth Troy says she was the “queen of sales,” going through discounted items at J. Crew and Banana Republic stores at malls near where she lives in Richmond, Virginia. But her go-to source has become the online subscription service Stitch Fix, which lets her try on clothes at home and decide what to keep. “I almost never go out to buy now,” says Troy, 50.

Those kind of shifts illustrate the way people are changing how they buy clothing. Shoppers aren’t just showrooming at stores and then buying the same items online if they can find better prices -- it’s a more significant separation from the mall.

That is spelling big problems for mall chains like The Limited, which has shut all 250 of its stores, and Wet Seal, which filed for bankruptcy. Department stores like Macy’s (M) and J.C. Penney (JCP) -- anchors for the malls -- are also closing stores. Sears Holdings (SHLD) has said there’s “substantial doubt” about its future, but believes its plan to turn around its business should reduce that risk. The number of “distressed” retailers -- those with cash problems and poor credit profiles that are facing strong competition -- is at the highest rate since 2009, says Moody’s Investor Service.

Burger King Owner: Small Biz Rooting for Trump, Ryan on Obamacare Replacement

Randy Bradley, owner of Burger Kings in Iowa and Missouri for the past 27 years, said he is rooting for the House Republicans proposal to replace Obamacare, especially the Trump-endorsed American Health Care Act’s (AHCA) plan to eliminate Obamacare’s employee mandate provision.

According to Bradley, who employs more than 80 people, Obamacare’s employee mandate – which requires that all businesses with 50 or more full-time equivalent employees provide health insurance to at least 95% of staff and dependents up to age 26, or pay a fee – caused some of his workers to receive worse insurance than they previously had and other employees to experience up to a 20 percent reduction in wages.

“Basically, the government interfered and told me I couldn’t provide my managers with that premium level of coverage anymore and my only option was to provide them with Obamacare,” Bradley told FOX Business. “Furthermore, even if I wanted to reimburse my managers for the premiums they paid for purchasing their own insurance on the open marketplace, I couldn’t without facing major fines.”

Prior to Obamacare, Bradley said he provided his managers with a competitive group health care insurance policy, in which he contributed 75% of the premium and half of the deductible. However, a non-discrimination clause in Obamacare prevented Bradley from providing this plan to his managers if he didn’t also provide the same plan to his hourly-wage employees, which he said would have bankrupt his business within three to four months.

93 of America’s 100 Fastest-Growing Counties Went Trump

From deep red Texas to bright blue Oregon to purple Florida, America’s fastest-growing counties overwhelmingly are trending Republican.

The latest population estimates released Thursday by the U.S. Census Bureau make that starkly clear. Of the 100 counties of at least 10,000 residents that had the fastest growth rates from July 2015 to July 2016, 93 voted for President Donald Trump in November. Just six backed Democrat Hillary Clinton. The political leanings of the 100th, Matanuska-Susitna Borough in Alaska, are unclear because that state does not report presidential returns at the county level.

Clinton won 26 of the 100 counties that lost population at the fastest rate. That is a higher share than her performance nationwide, when she carried about 16 percent of counties.

Many of the biggest Democratic strongholds shed population. Cook County in Illinois, home to Chicago, experienced the steepest numerical decline of any county in the country. It lost 21,324 people in one year. The second-biggest loser was Wayne County in Michigan, home to Detroit, followed by Baltimore and Ohio’s Cuyahoga County (Cleveland). All are overwhelmingly Democratic. Seven of the 10 counties with the biggest numerical declines backed Clinton.

Average credit card interest rate at record high

The national average credit card interest rate has climbed to 15.59%, according to That's the highest level since the card comparison site began keeping score.

The move was highly anticipated, especially since the Federal Reserve this month raised the Federal Funds Rate for the second time since December. That key interest rate has the most direct correlation to what credit card customers pay. arrived at its record by averaging the rates on 100 of the most widely-used cards in the U.S., representing every card category. For example, the average rate on "low interest" cards is 12.44%, up from 11.98% six months ago. Cards for customers with bad credit carry a much higher rate. The average is now 23.04%, up from 22.86% six months ago.

If you pay off your credit card balance in full each month, you really don't have to worry about what the rate is. But if you are carrying a large balance, rising rates will increase the cost, and usually the time it takes to pay off the debt. For example, a 1% increase in interest rates on a $10,000 credit card balance will increase interest payments by $8.33 a month. That might not sound like a lot, but if you are already paying as much as you can each month on your credit card balance, you would need to add that amount to your payment just to stay even.

2017 Data Breaches Soar Above 350

The latest count from the Identity Theft Resource Center (ITRC) reports that there have been 353 data breaches recorded this year through March 21, 2017, and that over 1.3 million records have been exposed since the beginning of the year. The total represents a 56% increase to date compared with 2015.

On Wednesday, New York Attorney General Eric Schneiderman reported that nearly 1,300 data breaches occurred in the state last year and that those incidents exposed personal records of some 1.6 million of the state’s residents. The number of incidents was up 60% year over year and the number of exposed records tripled.

The exposed records consisted “overwhelmingly” of Social Security numbers and financial account information. The AG’s office attributed the release of the personal data primarily to hacking (40%) and inadvertent disclosure (24%). Employee negligence — a combination of inadvertent disclosure, insider wrongdoing and lost devices or media — accounted for 37% of all breaches, nearly as much as hacking.

The medical/health care sector leads all sectors in the number of records compromised so far in 2017. The sector has posted 22.9% (81) of all data breaches. The number of records exposed in these breaches tops 745,000, or about 57.1% of the 2017 total. The business sector accounts for more than 475,000 exposed records in 187 incidents. That represents 53% of the incidents and 36.4% of the exposed records so far in 2017.

Millennials Don't Consider Themselves Adults Until 30

Turns out, you might be a millennial and not even know it. Even if you’re approaching 40. As's Tony Maglio reports, according to new research by CBS’ TV ratings guru David Poltrack and Nielsen Catalina Solutions, the youngest millennials should be graduating college this year — but that doesn’t mean they all consider themselves adults.

The median age of millennials is 30, Poltrack says — meaning that half are older and half are younger. And 30 happens to be the age at which millennials tend to self-identify as adults, Poltrack said. For these purposes, an “adult” is defined as “someone who has moved out of their parents’ home, has a job, and pays their own bills.”

How did millennials start seeming so middle-aged? Poltrack says it because of “lazy” classifications that defined millennials as those 18-to-34. Poltrack, one of the most respected people in studying the demographics of TV viewers, uses designations like “millennial” to simplify who’s watching what.

He and the Center for Generational Kinetics both use the term to describe those born between 1979 and 1995, based on years prescribed by William Strauss and Neil Howe’s book “Generations.” It defines a generation as lasting for 18 years, and works forward from the giant Baby Boomer generation. Their kids, the next largest generation, are millennials. People born after 1995 are actually members of Gen Z.

Lack of skilled immigrant labor could cause higher food prices

American agriculture has long depended on immigrant labor — particularly labor by undocumented workers. A 2014 study commissioned by the American Farm Bureau Federation put the percentage of undocumented farm laborers at between 50 percent and 70 percent of the total workforce.

“What we are going to do is get the people that are criminal and have criminal records, gang members, drug dealers, where a lot of these people, probably 2 million, it could be even 3 million, we are getting them out of our country or we are going to incarcerate,” Trump said. He then said that once that initial group was eliminated and “the border is secure,” immigration officers would make a “determination” about the remaining undocumented workers.

The current admiration’s rhetoric on illegal immigration and reports on crackdowns on undocumented workers have brought jitters not only to immigrant workers, but also to their employers.

It’s unclear exactly what a crackdown on labor would do to produce pricing, particularly considering other trade-related and taxation issues that are up in the air. Those potential initiatives include mentions by the Trump administration of a tax of up to 20 percent on imports from Mexico to pay for the proposed border wall, and a new corporate tax structure proposed by Congress that would give tax breaks to exporters and remove tax exemptions from importers. The border adjustment tax would basically change how goods are taxed, taxing them where they’re consumed rather than where they’re produced.

Renters Now Rule Half of US Cities as Leases Replace Mortgages

Detroit was once known as a city where a working-class family could afford to own a home. Now it’s a city of renters.

Just 49 percent of Motor City households were homeowners in 2015, down from 55 percent in 2009 and the lowest percentage in more than 50 years. Detroit isn’t alone, of course: The rate of U.S. home ownership fell steadily for a decade as the foreclosure crisis turned millions of owners into renters and tight housing markets made it hard for renters to buy homes. Demographic shifts—millennials (finally) moving out of their parents basements, for instance, or a rising Hispanic population—further fed the renter pool.

Fifty-two of the 100 largest U.S. cities were majority-renter in 2015, according to U.S. Census Bureau data compiled for Bloomberg by real estate brokerage Redfin. Twenty-one of those cities have shifted to renter-domination since 2009. These include such hot housing markets as Denver and San Diego and lukewarm locales, such as Detroit and Baltimore, better known for vacant homes than residential development.

While U.S. home ownership ticked up in the second half of 2016, there are reasons to think the trend toward renting will continue. A 2015 report from the Urban Institute predicted that rentership would keep rising through 2030, thanks to demographic trends that include aging baby boomers who downsize into rentals.

Here’s what U.S. layoffs look like since 2012 after jobless claims redo

A fresh government look at the pace of U.S. layoffs since 2012 shows that somewhat more Americans lost their jobs than previously reported. Yet fewer people are losing their jobs than anytime since the late 1970s.

As it does annually, the Labor Department on Thursday updated its figures on initial jobless claims for the past five years. The redo includes more accurate information on seasonal adjustments tied to holidays, weather and employment patterns in certain industries such as autos.

The result: Layoffs are slightly higher, mainly in 2016 and early 2017 compared to the original set of numbers.

The newly revised figures don’t change the underlying trend, though. The rate of layoffs fell sharply in the past five years, reducing them to levels last seen in the early 1970s. The postrecession low in new claims, what’s more, is the lowest since December 1969.

One of the biggest hedge fund launches of all time is shutting down

Eton Park Capital Management is shutting down. In a letter sent to investors on Thursday, founder Eric Mindich wrote:

"A combination of industry headwinds, a difficult market environment and, importantly, our own disappointing 2016 results have challenged our ability to continue to maintain the scale and scope we believe necessary to pursue our investment program consistent with our founding principles. ... We have made the very difficult decision to return your capital, from a position of relative strength."

Mindich, 49, said he plans to return 40% of all investors' capital by the end of April and that the fund's other investments would take longer to unwind over the "coming months," with some taking even longer. Partners and employees of the fund are the firm's largest investors, Mindich said.

Mindich's New York-based fund was considered one of the largest hedge fund launches when it started in 2004 with $3.5 billion. Mindich had worked at Goldman Sachs and is thought to be the youngest person to have made partner at the bank, doing so at 27.

Former company town Reduction, Pa., listed for $1.5M

The former company town of Reduction might carry in its name the seeds of its own demise. Once home to employees of the American Reduction Co. plant on the Youghiogheny River, the South Huntingdon “town” is up for sale by the family that has owned it for nearly 70 years.

David Stawovy's father, John, bought the 75-acre property in 1948 for $10,000. Today's asking price of $1.5 million includes farmland, 19 single-family dwellings and a 1914 one-room schoolhouse that is being used as a duplex.

A small collection of rental homes at the end of Reduction Road sits on a hill overlooking the Yough River, where American Reduction once operated a plant that processed, or reduced, tons of garbage a day from Pittsburgh.

Before it opened its own facility in 1936, the city paid American Reduction to accept its garbage by rail. Everything from tin cans to animal carcasses was processed under high heat and turned into products such as soap and fertilizer. On an idyllic plot of adjacent land, David Stawovy's father and grandfather operated Valentine's Dairy Farms. When John Stawovy (pronounced sta-VO-vee) expressed interest in one of the American Reduction homes, a company official asked him, “Why don't you just buy them all?”

Keiser Report: Heading for Global War

Sears' plan to sell brands no salve for financial woes

Sears' plan to avoid bankruptcy in part by selling off or licensing brands including Kenmore and DieHard may prove difficult because of changing consumer tastes and possible legal roadblocks.

Sears Holdings Corp, once the largest U.S. retailer, warned on Tuesday about its ability to continue as a going concern after years of losses and declining sales. The Kenmore brand for appliances and the DieHard brand for car batteries are among the best-known remaining assets of the U.S. retailer, whose roots date back to 1886. In January, Sears sold its Craftsman tool brand to Stanley Black & Decker Inc for US$900 million. Sears, which also owns Kmart Corp, has dozens of other in-house apparel and houseware brands.

Analysts in the past four years have collectively valued the Craftsman, Kenmore and DieHard brands at up to US$3 billion. However, several industry consultants and restructuring experts said the worth of those assets has declined as Sears has fallen out of favor with consumers. Like their parent, Sears brands are hampered by a perception that they are yesterday's names.

"Sears is serving a customer base that is over the age of 50 or 55," said Doug Stephens, an independent retail industry consultant. As younger consumers increasingly embrace "smart appliances," they do not perceive the 90-year-old Kenmore brand as being at the cutting edge of technology, he said. Sears declined to comment.

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