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NEWS to Disturb the Comfortable...

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Tuesday 03.03.2015

Weak U.S. consumer spending points to slower first-quarter growth
U.S. consumer spending fell for a second straight month in January as households continued to cut back on purchases, opting to save much of the massive windfall from cheaper gasoline. Other data on Monday showed factory activity slowed in February and construction spending declined sharply in January, adding to signs that economic growth moderated early in the first quarter. Growth is slowing in the first quarter after a strong second half of last year. All the gas savings are ending up at the bank rather than being spent," Thomas Costerg, an economist at Standard Chartered Bank in New York. onsumer spending, which accounts for more than two-thirds of U.S. economic activity, slipped 0.2 percent after falling 0.3 percent in December. The January dip reflected lower gasoline prices, which weighed on sales receipts at service stations, as well as drop in purchases of big-ticket items. With lower gasoline prices dampening inflation pressures, the so-called real consumer spending increased...

4,500 state workers to be offered early retirement - Massachusetts
A top administration official says Gov. Charlie Baker plans to file legislation that would allow thousands of state employees to retire early, and if that doesn’t work, the state may resort to layoffs. Baker’s budget chief Kristen Lepore tells The Boston Globe the administration projects that 4,500 will take advantage of the early retirement program if it is passed by the Legislature, which would save $178 million in the fiscal year that begins in July. Baker has projected the state’s budget gap at $768 million, and lawmakers have passed a plan to close it through a series of cuts and other moves. The Massachusetts Taxpayers Foundation, a watchdog group, pegs the shortfall as high as $1.5 billion. Northampton resident Paul Bosko told 22News if he was a state employee, he wouldn’t like the sound of the proposal. “It’s sort of like saying, you need to take this package or you’re probably going to be laid off, I would think. I don’t think there’s ever going to be an easy way to deal with this budget...

U.S. restaurant count declines
Independent restaurants decreased 2% during the fall of 2014, leading to an overall decline of 1% in the U.S. restaurant count, reported The NPD Group, a leading global information company. NPD said the overall decline in restaurant units was attributed entirely to independent restaurants, according to the company’s Fall 2014 ReCount, which includes restaurants open as of Sept. 30, 2014. NPD said the decline in independent restaurants was concentrated on the full-service segment, which includes casual dining, midscale/family dining and fine dining. But chain restaurants registered a 1% increase during the period, according to NPD. Additionally, the total quick-service restaurant segment posted a 1% year-over-year increase. Fast-casual restaurant chains led unit gains in the segment, NPD noted. Chain restaurants include independent and chain quick-service restaurants. “Without the increase in fast-casual chain units, we would be seeing greater declines in restaurant counts,”...

U.S. millennials post ‘abysmal’ scores in tech skills test, lag behind foreign peers
There was this test. And it was daunting. It was like the SAT or ACT -- which many American millennials are no doubt familiar with, as they are on track to be the best educated generation in history -- except this test was not about getting into college. This exam, given in 23 countries, assessed the thinking abilities and workplace skills of adults. It focused on literacy, math and technological problem-solving. The goal was to figure out how prepared people are to work in a complex, modern society. And U.S. millennials performed horribly. That might even be an understatement, given the extent of the American shortcomings. No matter how you sliced the data – by class, by race, by education – young Americans were laggards compared to their international peers. In every subject, U.S. millennials ranked at the bottom or very close to it, according to a new study by testing company ETS. “We were taken aback,” said ETS researcher Anita Sands. “We tend to think millennials are really savvy in this area.

Gross Says Fed May Raise Rates 25 Basis Points in June

Ron Paul: Shut Down Unconstitutional Department of Homeland Security
Late Friday night, Congress passed legislation funding the Department of Homeland Security for one week. This vote followed weeks of debate over efforts to attach a prohibition on funding President Obama’s executive order granting amnesty to certain illegal immigrants to the Homeland Security funding bill. Despite the heated rhetoric from both sides, no one seriously believes that Congress will allow Homeland Security funding to lapse. Most in Congress believe that, without the Department of Homeland Security, Americans would be left unprotected from terrorists and natural disasters. As with most areas of bipartisan agreement, the truth is the exact opposite of the DC consensus. The American people would be much better off if Congress transferred the few constitutional functions performed by Homeland Security to other parts of the government and then shut down the rest of the department. Many Americans associate Homeland Security with the color–coded terrorist warning system...

Gold Is Poised For A Second Leg Up
In my last Market Update, I made the case that there is evidence for the first time in years that inflation could be turning from a downward path to an upward path in the future. I'm not suggesting that the turn will be dramatic, but any turn is sufficient to buoy commodities. A turn upward in gold and silver will do wonders for gold and silver stock prices as time goes by. It is with this reasoning that I again increased my position in precious metal stocks since I wrote, "Why I'm Buying Gold Stocks", on November 7, 2014. The reasoning still holds: "Precious metal stocks are as oversold today as they have ever been. Most are down on valuations. I think most are discounting (or already have discounted) $1000 dollar gold long ago. One of the tell-tale signs of the end of crashing commodities is the stabilizing and/or reversal of commodity stocks. Generally speaking gold stocks lead gold, and the same is true with silver stocks and most other miners..."What occurs to me is this is not only a good time...

Gas Prices Rising at Quickest Pace Since 2013
Higher crude oil prices, the beginning of refinery maintenance season, and some unplanned production problems at U.S. refineries have all contributed to 35 straight days of rising pump prices for gasoline, the longest streak since February 2013. The average cost of a gallon of regular gasoline rose 39 cents during that streak. Last week alone the national average price of a gallon of gas rose 13 cents according to AAA. In California, where Tesoro Corp. (NYSE: TSO) shut down one of its plants when the United Steelworkers strike began and Exxon Mobil Corp.’s (NYSE: XOM) Torrance refinery suffered an explosion in February, gasoline prices have jumped about $0.95 in just 31 days. AAA thinks that gas prices could rise another 20 cents per gallon in March, from today’s average of $2.43 as refinery maintenance continues. A spokesman for AA said: Paying $2 for gas will seem like a distant memory for most drivers in the coming weeks. Gasoline remains much cheaper than in recent years, but...

Nasdaq hits 5,000 for the first time in 15 years

Spain: 3rd Bailout for Greece Being Mulled for up to $56B
Eurozone nations are negotiating a third bailout worth as much as 50 billion euros ($56 billion) for Greece, Spain's economy minister said Monday. But in a sign of the state of uncertainty surrounding the efforts to stabilize Greece's finances, the eurozone's top financial official denied the claim. Spanish Economy Minister Luis de Guindos said at a conference in the northeastern city of Pamplona that a new bailout would provide between 30 billion euros and 50 billion euros. Its "central scenario for Greece is a deal on the basis of the current bailout, and new conditions to be set with flexibility." "Greece will not leave the eurozone," the minister said, according to comments distributed to media outlets by his ministry. "That would not be good for Greece and for the eurozone." Soon after those comments, the spokeswoman for the leader of the Eurogroup, the gathering of eurozone finance ministers of which de Guindos is a member, said she was unaware of talks for a third bailout.

Lumber Liquidators stock plummets after 60 Minutes investigation over toxic flooring
Stocks of Lumber Liquidators have plummeted after a 60 Minutes report accused the company of selling Chinese-made laminate flooring containing toxic amounts of formaldehyde, a known carcinogen. Although the company's domestic-made laminate flooring met health and safety standards, almost of its products made in China did not, according to a report by 60 Minutes on CBS. When news of the CBS report surfaced, the company's stock price fell about 43 percent over the last week. Lumber Liquidators Holdings Inc. had a year-long high of $110.50 per share on March 4, 2014, but dipped to a low of $38.10 per share on Monday. Trading for Lumber Liquidators was halted for a period on Monday. Its stock was down 24 percent before the stock market opened and down another 21 percent by noon, according to CNBC. Lumber Liquidators released a statement standing by its record and stating that the company complies with all regulations regarding its products, including California standards for formaldehyde emissions...

How Much More Economic Pain Can Vladimir Putin Take?
It looks like the one-two punch of sanctions and cheap oil are about to wreck Russia. It’s been a little more than six months since the full brunt of Western sanctions took force against Russia. The punishment, while slow in coming, has proven devastatingly effective—especially when paired with the crash in oil prices. Last summer, of course, U.S. and European Union officials had no way of knowing an epic oil selloff was right around the corner. But in hindsight the coordination seems uncanny. Oil prices peaked less than a month before the sanctions were announced. By November, the combination of cheap oil and tighter sanctions was bleeding Russia of billions in budget revenue and had cut it off from the world’s largest capital markets. In December, state-owned oil giant Rosneft had to get a loan backed by the Central Bank of Russia, which is sort of like the U.S. Fed giving a loan to ExxonMobil. Recent news reports suggest Russian President Vladimir Putin is doing a better job of hurting the Ukrainian...

$4.8 million in gold stolen from truck in North Carolina
Armed robbers stole about $4.8 million in gold bars on Sunday from an armored truck traveling north along Interstate 95 from Florida to Massachusetts, authorities said Monday. he two security guards working for Transvalue Inc. of Miami reported pulling off to the side of the interstate about 6:30 p.m. Sunday after their armored truck began having mechanical problems in Wilson County, the sheriff's office said. They were then approached by three armed men driving a white van who ordered the guards to lie on the ground, tied their hands behind their backs and then marched them into nearby woods. The robbers then unloaded barrels filled with gold and made their getaway, according to a statement. Transvalue said the stolen gold bars weigh a total of about 275 pounds. The office of Wilson County Sheriff Calvin Woodard, Jr., did not respond to messages seeking additional information. No detailed description of the suspects or their vehicle was released.

Barnett: Oil’s marginal cost is as low as $5-10 a barrel

How Much Will Banks Charge to Park Cash?
As central bank interest rates go negative, businesses are likely to accept negative rates on deposit accounts to maintain access to the conveniences of modern banking. Central banks are stooping to new lows to conquer weak inflation. The monetary guardians of the euro area, Switzerland, Sweden, and Denmark are now imposing negative interest rates on bank deposits or on funding operations that feed through to the real economy. Analysts at Commonwealth Bank of Australia reckon almost a quarter of worldwide central-bank reserves now carry a negative yield. By confounding the one-time idea that they had to stop cutting borrowing costs at zero, monetary-policy makers are seeking to spur spending over saving. They also expect their currencies to weaken as capital inflows are discouraged. The risk is that negative rates backfire and result in even less demand. That could happen if people begin stuffing their cash under mattresses, or if rates below zero eat into the profit margins of banks...

U.S. Department Of Education Cuts Ties With Five Debt Collection Agencies To Protect Borrowers
Consumer advocates applauded the Department of Education’s announcement last week to end contracts with five private collection agencies that provided inaccurate information to borrowers. On Friday, the Dept. of Education revealed that it would wind down contracts with Coast Professional, Enterprise Recovery Systems, National Recoveries, Pioneer Credit Recovery, and West Asset Management after conducting a review of agency practices. The Department’s Federal Student Aid (FSA) office reviewed all private agencies under contract to ensure they were complying with terms of the agreements, including provisions that the agencies would not engage in unfair or deceptive practices and would comply with all applicable federal and state laws. According to the review, the five private collection agencies in question were found to have given inaccurate information at unacceptably high rates about the benefits of federal loan rehabilitation programs. In particular, these agencies gave borrowers misleading...

The Internet Of Things: A Dystopian Nightmare Where Everyone And Everything Will Be Monitored On The Internet
Can you imagine a world where your home, your vehicles, your appliances and every single electronic device that you own is constantly connected to the Internet? This is not some grand vision that is being planned for some day in the future. This is something that is being systematically implemented right now. In 2015, we already have “smart homes”, vehicles that talk to one another, refrigerators that are connected to the Internet, and televisions that spy on us. Our world is becoming increasingly interconnected, and that opens up some wonderful possibilities. But there is also a downside. What if we rapidly reach a point where one must be connected to the Internet in order to function in society? Will there come a day when we can’t even do basic things such as buy, sell, get a job or open a bank account without it? And what about the potential for government abuse? Could an “Internet of Things” create a dystopian nightmare where everyone and everything will be constantly monitored...

Bankruptcy trustee opposes bonuses for RadioShack executives
RadioShack will have to overcome opposition from the U.S. Trustee before implementing a $2 million retention bonus program for eight top executives. The program was designed to reward the executives with bonuses that aren’t tied to any measurable incentives related to the sale process, the Justice Department’s bankruptcy watchdog said in a court filing. At the outset of bankruptcy, the threshold for executives to earn $500,000 of the bonus pool was already met because the so-called stalking horse deal with Standard General for about half of the chain’s stores was already signed, the U.S. Trustee said. The degree of difficulty to achieve the remaining two bonuses of $750,000 each is “not capable of calibration,” according to the U.S. Trustee, which said the benchmarks may be “lay-ups.” RadioShack’s request did not name the eight executives, but seeks permission to set aside $2 million for them, ranging from $88,000 to $650,000 for each. The executives would receive the bonus money in three payments.

Gregory Mannarino-Staring Down Barrel of Worst Financial Cataclysm Ever

Obama hopes for U.S. embassy in Cuba before April summit in Panama
U.S. President Barack Obama said on Monday he hopes the United States will open an embassy in Cuba by the time of a Western Hemisphere summit in Panama in mid-April. In an interview with Reuters, Obama also cautioned that it will take more time to fully establish normal relations with Cuba after more than a half-century rupture. "My hope is that we will be able to open an embassy, and that some of the initial groundwork will have been laid" before the April 10-11 Summit of the Americas in Panama City, Obama said. "Keep in mind that our expectation has never been that we would achieve full normal relations immediately. There's a lot of work that still has to be done," he said. In a historic agreement, Washington and Havana announced on Dec. 17 that they planned to restore diplomatic relations following 18 months of secret talks. Two rounds of "normalization" talks in Havana and Washington have since made quick progress toward renewing official ties. Cuba is keen to have Washington's official recognition...

ECB plays down virtual currency risks
Despite flagging some concerns, the European Central Bank says that it does not think that the rise of virtual currencies currently provides a material risk to the smooth operation of payment systems. In a follow up to a 2012 analysis, the ECB reiterates its stance that virtual currency, such as bitcoin, is a "digital representation of value," not money as defined in economic literature or in a legal sense. The central bank lays out a list of drawbacks: lack of transparency, clarity and continuity; high dependency on IT and on networks; anonymity of the actors involved; and high volatility. However, it concludes that, despite the hype, virtual currencies pose no material risk for any of its tasks, including promoting the smooth operation of payment systems. This is largely because bitcoin and its 500-odd imitators are still barely used. Bitcoin is tapped for around 69,000 transactions per day worldwide, compared with a total of 274 million non-cash retail payment transactions per day for the EU alone.

The Goldman Sachs primary
Forget the Democratic and Republican primaries: The two biggest names in the 2016 presidential race are competing directly against each other in an elite forum, the halls of Goldman Sachs. Jeb Bush will be back in New York raising money next week with his sights set on Goldman, the wealthiest and most successful bank in Wall Street history. He has a pair of events scheduled for next Wednesday with current and former Goldman executives, sources familiar with Bush’s plans said. The events signal that Bush hopes to go head to head for Goldman money and support with Hillary Clinton, who also has strong ties to the bank and is expected to raise large sums from its executives to help fund her likely presidential campaign. And it means the nation’s richest investment bank is increasingly putting its money on the two best-known candidates, both of whom are viewed across Wall Street as centrists who could cool some of the scorching anti-banker rhetoric and policies emanating from the Elizabeth Warren wing...

A New Front In The Ukrainian Conflict: Russian Gas Imports
Ukraine faces a trio of crises — war, bankruptcy, and now, the threat that its people may have the heat turned off for the rest of winter. Russia is once again threatening to cut off shipments of natural gas to Ukraine — and hinting that fuel supplies to Europe could be disrupted as well.Energy ministers from Russia and Ukraine are holding emergency talks in Brussels mediated by the European Union. It's an issue for the entire continent. About 40 percent of EU gas imports come from Russia, and half of that is delivered by pipelines that cross Ukraine. Russia says Ukraine still owes more than $2 billion in gas bills and has been requiring Ukraine to pay in advance for the fuel it has been burning this winter. Last week, Alexei Miller, the head of Gazprom, Russia's giant state-run gas company, said Ukraine's prepayment was about to run out, and that Russia would have to stop shipping gas to Ukraine in a matter of days. Why should Europe be affected if Ukraine doesn't pay its bills?

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.