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Seemingly terrific April jobs report poses strange puzzle -
(www.marketwatch.com) Funky job reports are not unusual, and the
employment data for April certainly fits the bill. How else to explain the
biggest gain in hiring in more than two years – at the same time the labor
force shrank by the second largest amount in 32 years. Let’s review. The U.S.
added 288,000 jobs in April, the biggest spike since January 2012. The increase
in employment is measured by the so-called establishment survey that quizzes
private firms, government worksites and nonprofit institutions. Yet the size of
the labor force sank by 806,000. That’s the biggest drop since a 848,000 plunge
in October and you have to go all the way back to 1981 to find another
800,000-plus decline. Labor-force changes are measured by the “household”
survey that interviews Americans directly. Typically a shrinkage in the labor
force occurs when people become so discouraged about finding a job that they
give up looking for work. Yet the April surge in hiring would suggest that more
jobs – not fewer – are available.
Boehner
spokesman leaving for insurance group supportive of Obamacare - (www.marketwatch.com)
Brendan Buck, press secretary
for House Speaker John Boehner, is trading Capitol Hill for the health
insurance industry. Buck is joining America’s Health Insurance Plans, or AHIP,
as vice president of communications after more than three years with Ohio Republican
Boehner. Boehner, and House Republicans in general, have long warred against
President Barack Obama’s health-care law, which requires individuals to buy
insurance or pay fines. AHIP, meanwhile, has had a more cooperative
relationship with the law, and has said little critical about it. In
December, for example, health insurers voluntarily extended the deadline for
individuals to pay for insurance policies they choose through the health law.
At the time, AHIP Chief Executive Karen Ignagni said insurers were taking “an
important step to give consumers greater peace of mind about their health-care
coverage.”
It's
Policy to Kick Elderly Folks Out On The Street Rather Than – (www.ml-implode.com) In 2005, at 66 years young, and getting ready
to retire or at least re-tread, he wanted to take some cash out of his home’s
equity and the nice people at World Savings were standing by ready willing and
able to put him right into an Option ARM mortgage, which I think even the most
predatory of the predatory lenders would agree would have been about the most
inappropriate choice for him in his stage of life… but, no matter. We can
always come back to that later if it makes sense. Next, we all know what
happened… the world blew up, as the housing market melted down, and the
financial crisis ended the rich histories of every single investment bank on
Wall Street. Like millions of others, soon Arthur couldn’t keep up with
his mortgage payments and faster than you could say, “don’t worry, you can
always refinance,” he found himself headed for foreclosure.
Hardship
Makes a New Home in the Suburbs - (www.nytimes.com)
The freeway exits around here
are dotted with people asking for money, holding cardboard signs to tell their
stories. The details vary only slightly and almost invariably include: Laid
off. Need food. Young children. Mary Carmen Acosta often passes the silent
beggars as she enters parking lots to sell homemade ice pops, known as paletas,
in an effort to make enough money to get food for her family of four. On a good
day she can make $100, about double what she spends on ingredients. On a really
good day, she pockets $120, the extra money offering some assurance that she
will be able to pay the $800 monthly rent for her family’s three-bedroom
apartment. Sometimes, usually on mornings too cold to sell icy treats, she
imagines what it would be like to stand on an exit ramp herself. “Everyone here
knows they might have to be like that,” said Ms. Acosta, 40, neatly dressed in
slacks and a chiffon blouse, as she waited for help from a local charity in
this city an hour’s drive east of Los Angeles. Both she and her husband,
Sebastian Plancarte, lost their jobs nearly three years ago. “Each time I see
them I thank God for what we do have. We used to have a different kind of life,
where we had nice things and did nice things. Now we just worry.”
Yes,
we're in a tech bubble. Here's how I know it - (www.cnn.com) When
tech startups are willing to offer almost anyone -- even a journalist -- shares
ahead of an IPO, a burst isn't terribly far behind. I was surprised but not
completely flabbergasted by the phone call I received a few weeks ago. A
representative of Arista Networks, a networking company I've written about recently, phoned to
inform me that the company's chief executive wanted to offer me "friends
and family" shares in Arista's upcoming initial public offering. The offer
was explicit, down to the number of shares I'd have the opportunity to purchase
at the IPO price. The caller specifically wanted me to understand this offer
came directly from CEO Jayshree Ullal. I declined. I briefly explained that it was
impossible for me to accept the gift that was being offered. I also told the
(clearly uncomfortable) Arista rep, with whom I've dealt for stories forFortune,
that it is a horrible idea to be making these shares available to me. That's
because the company must be similarly propositioning other business partners
who, like me, are neither a friend of the company nor family members of its
employees.
Catching
Social Security Disability Fraudsters in the Act – (abcnews.go.com) Rogers
and his agents recently busted Ramona Hayes, 42, and Cory Eglash, 52. The two
of them ran a coffee shop in Friday Harbor, a beautiful tourist town in
Washington’s San Juan Islands. With the eye-catching name “Criminal Coffee” the
two of them boasted their cafe was “The place to come when you’re on the run.” But
when Eglash filed for disability in 2012, a review of his application turned up
the fact that he was working the coffee shop and that Hayes – who also worked
in the coffee shop -- was already receiving disability payments. "The
uniqueness of this case shows that the system works,” Rogers said. “We get an
allegation on him. He’s trying to get on social security and when we are
looking at him we discover her already on.” In her application, Hayes had
written she couldn’t work due to “anxiety, severe depression and PTSD."
Eglash is on-record in her application to support her claim, writing that her
symptoms were so severe that he doubted she could work a part time job or even
put gas in her car. The government was paying her more than $1,000 a month in
disability based on her application and she ultimately received over $40,000
from Social Security before she was caught. In his application, Eglash claimed
to have difficulty “lifting, squatting, bending, standing, reaching, kneeling,
stair climbing, seeing, memory, completing tasks, concentration, understanding,
using hands, getting along with others.”
Think the euro crisis is
over? These firms say it's not - (www.cnbc.com) More
than half of European businesses are suffering as a result of late or
non-payment of bills and invoices – cutting off vital funds that could be used
to invest or employ new staff, a new survey finds.While investors have hailed
the end of the euro zone sovereign debt crisis, as bond yields fall and even
countries like Greece have returned to the markets, European businesses have
been forced to write off 360 billion euros ($495.7 billion) of "bad"
or unpaid debt, up 10 billion euros from the previous year, data shows. Polling
more than 10,000 businesses across Europe, credit management group Intrum
Justitia found 55 percent of companies, the highest level in the history of its
annual European Payment Index, said unpaid debt is hurting their business. Nearly
three out of four companies surveyed also said they had not yet felt any impact
from a recovery in the euro zone with small and medium sized enterprises (SMEs)
at most risk, Intrum Justitia said.
Japan
Posts Record Low Current-Account Surplus in Fiscal ’13 - (www.bloomberg.com) The surplus of 789.9 billion yen ($7.74 billion) in
the year ended March was the smallest in data back to 1985, the Ministry of
Finance said in Tokyo today. A 14 percent surge in primary income from overseas
investments helped make up for a shortfall in the balance of trade and services
that suffered from weak exports and a higher import bill. A slide into
sustained deficits in Japan’s widest gauge of trade could make the government
more reliant on foreign funding to service the world’s biggest debt burden. Keeping
the balance in the black depends on how successful Japanese companies are in
boosting exports following the yen’s slide and their ability to generate higher
returns on overseas investments, according to economist Izumi Devalier.
China’s
New Credit Declines - (www.bloomberg.com) China’s broadest measure of new credit fell last
month as authorities extended their campaign to tame financial dangers even as
construction and manufacturing data point to risks that the economy’s slowdown
will worsen. Aggregate financing was 1.55 trillion yuan ($249 billion) in April, the People’s
Bank of China said yesterday in Beijing, compared with 2.07 trillion yuan in
March. New local-currency bank loans were 774.7 billion yuan, down from 1.05
trillion yuan the previous month. The figures add to signs that officials are
reluctant to heed calls for monetary stimulus, with President Xi Jinping saying
in remarks published May 10 that the nation needs to stay “cool-minded” amid
what analysts forecast will be the weakest annual growth since 1990. PBOC
Deputy Governor Liu Shiyu said the same day that shadow banking threatens to
undermine the financial system, as policy makers try to rein in credit.
Senators
eye bill to halt corporate tax 'inversion' - (www.reuters.com) Democratic
senators on Thursday said they are considering legislation to prevent corporate
inversions, an increasingly-popular transaction that involves U.S. companies
reincorporating overseas to avoid U.S. taxes. Senator Finance Committee chairman Ron Wyden, a Democrat,
said he wants to make it harder for U.S. companies to move their headquarters
abroad to lower their taxes for inversion deals that take place on or after May
8, 2014. "I don't approach retroactivity in legislation lightly, but
corporations must understand that they won't profit from abandoning the
U.S.," Wyden said in a Wall Street Journal editorial posted online late
Thursday. Wyden said he wants to increase to 50 percent from 20 percent the
amount of stock a foreign company must own in a U.S. company for an inversion
deal to legally take place. Additionally, Wyden called for comprehensive tax
reform as a way to make the U.S. more business friendly.
US Postal Service loses $1.9B, pleads for help - (www.cnbc.com) The
Postal Service says it lost $1.9 billion over the first three months of
this year and is pleading again for Congress to pass reforms to its financial system. The
agency said Friday that the loss for the quarter ended March 31 matched
the $1.9 billion in red ink in the same period last year. And it came
despite a 2.3 percent rise in its operating revenue and continued
cost-cutting efforts. Postal officials have been asking for comprehensive
legislation that includes a different delivery schedule, greater control
over its personnel and benefit costs and more flexibility in pricing and products.
Though various legislative proposals have been advanced, Congress has been
unable to pass a bill with the requested changes.
Chinese
developers pull back as property downturn hits economy - (www.reuters.com) China's
efforts to cool its property sector look to have been more effective than
intended, as a sharp drop in construction activity
and falling prices threaten what had been one of few firing engines of the
world's second-largest economy.
Developers know the market is struggling -- their inventory is rising and
prices are falling -- but expect that authorities will relax their tight grip
on the sector in coming months. The government has long made it clear that
economic growth would moderate as it tries to reform the economy.
But by keeping the pressure on property too long, analysts fear the fallout
will be more severe than anyone had expected. "To us, it is no longer a
question of 'if' but rather 'how severe' the property market correction will
be," Nomura analysts said in a report. New housing starts in the first
quarter fell 25.2 percent compared to a year ago, Nomura calculated, as tighter
credit conditions, oversupply and falling prices undermined the market.
Putin
marks Victory in Crimea, more bloodshed in Ukraine - (www.reuters.com) President
Vladimir Putin flew in to Crimea on Friday, marking the Soviet victory in World
War Two and proclaiming the success of the peninsula's seizure from a Ukraine that Russia
says has been taken over by fascists. In east Ukraine,
where pro-Moscow rebels plan a referendum on Sunday to follow Crimea in
breaking from Kiev, between three and 20 people were reported killed in the
port of Mariupol, one of the biggest clashes yet between Ukrainian forces and
separatists. The head of NATO, locked in its gravest confrontation with Russia since
the Cold War, condemned Putin's visit to Crimea, whose annexation in March has
not been recognized by Western powers. He also renewed doubts over an assurance
by the Kremlin leader that he had pulled back troops from the Ukrainian border.
Geithner
in Book Says Obama Aides Weighed Nationalizing Banks - (www.bloomberg.com) Former Treasury Secretary Timothy F.
Geithner said
in his new book that members of the Obama administration “talked openly” about
nationalizing banks such as Citigroup Inc. (C) in the aftermath of the financial crisis,
according to an article in the New York Times Magazine. Geithner disagreed when Lawrence
Summers,
then head of the White House’s National Economic Council, suggested to
President Barack Obama that
the administration “pre-emptively nationalize” banks including Citigroup and
Bank of America Corp., or try to embarrass them into changing their pay
structures, according to the Times. The article includes quotes from the book,
“Stress Test: Reflections on Financial Crises,” and interviews with Geithner.
Barclays
Cuts Mark Europeans’ Retreat as Rules Pinch - (www.bloomberg.com) Barclays Plc (BARC)’s decision to shrink its investment bank shows
how tighter rules and dwindling revenue are forcing Europe’s lenders to scale back operations and efforts
to compete globally. In a break from his predecessor’s strategy to create a
global securities operation, Barclays Chief Executive Officer Antony
Jenkins said
yesterday the lender will eliminate 7,000 jobs, a quarter ofemployees at
the investment bank, shrink its fixed-income business and focus on fewer
clients in the U.K. and U.S. The fixed-income market faces a structural rather
than a cyclical decline and investment-banking revenue will be “weak for some
time,” Jenkins told reporters. “European banks haven’t had sufficient time to
build capital, and investors and managers have become impatient,” said Paul
Vrouwes, who helps oversee about 6 billion euros ($8.3 billion) at ING
Investment Management in The Hague, including Barclays shares. “Banks are having
to think about returns at the group level, and they are seeing a more promising
environment in other areas.”
Former
San Fran Fed Employee Threatened To Murder Ex-FHFA Head Ed DeMarco - (www.zerohedge.com) Richard Hornsby last week threatened to shoot
former FHFA Acting Director Edward J. DeMarco and then kill himself, according
to an April 29 police report. DeMarco, who retired from the agency that
regulates Fannie Mae and Freddie Mac on April 30, was taken to a secure
location while Hornsby was arrested. The details of the charge against Hornsby can be found here. So how did the FHFA COO nearly end up
commiting a murder-suicide? Perhaps this had something to do with it: "Before
joining FHFA, Hornsby worked for 26 years at the Federal Reserve Bank of San
Francisco." WSJ, which broke the story, has more:
Mr. Hornsby didn't respond to requests for comment, including messages left on
a cellphone and a visit to his apartment. A woman who answered the phone at a
California number associated with his name hung up when informed the caller was
from The Wall Street Journal.
All-cash deals hit 43% of total home sales in
1Q - (www.cnbc.com) Even
as deep-pocketed institutional investors pull back on buying homes, all-cash
deals accounted for an all-time high of 43 percent of total homes sales in the
first quarter, according to RealtyTrac. The demand is high, supply is low and that is
precisely why more homebuyers today are relying on cash to be competitive. It
is not just investors. Indeed, institutional investors, which bought large
swaths of distressed properties in the past few years, are actually slowing
their purchases, down to just 5.6 percent of all U.S. residential sales in the
first quarter of 2014 from 7 percent one year ago, said RealtyTrac. "Strict
lending standards combined with low inventory continue to give the advantage to
investors and other cash buyers in this housing market," said Daren
Blomquist, vice president at RealtyTrac.
Yellen: Minimum wage hike to have negative
impact - (www.cnbc.com) In
testimony before a Senate committee on Thursday, Fed Chair Yellen said a
minimum wage increase would likely have some negative effects on jobs, though
it's not clear how large. Still, boosting the federal minimum wage, which has
remained at $7.25 per hour since mid-2009, would benefit some people, she
added. In recent months, the federal minimum wage has been a hot-button issue.
In February, President Barack Obama boosted the minimum pay for federal
contractors hired in the future to $10.10 per hour. He's also voiced his
support for the federal level for all workers to rise to $10.10 from the
current $7.25. Separately, organized protests of fast food workers have lobbied
for a jump to $15. Yellen also addressed concerns regard U.S. fiscal policy. "Fiscal
policy, while it has accomplished a very meaningful reduction in the budget
deficit, as you pointed out has served as a drag on spending and aggregate
demand in the economy and in a sense this has been part of the headwinds that
the Federal Reserve has had to confront in designing our own monetary
policy," she said.
Hedge
Funds Extend Their Slide - (online.wsj.com) A
bumpy trading environment is tripping up hedge funds. Big stumbles by some star
managers drove hedge funds to back-to-back monthly declines for the first time
in two years, according to researcher HFR Inc. The lackluster showing—the
average hedge fund trailed benchmarks for both stocks and bonds in April—was a
blow for an industry that charges more than other fund managers but pitches
steady returns in both good times and bad. Hedge funds on average dropped 0.17%
in April, HFR said Wednesday, following a 0.33% decline in March. Funds hadn't
turned in two consecutive losing months since April and May of 2012, HFR said.
Early
Tap of 401(k) Replaces Homes as American Piggy Bank - (www.bloomberg.com) The
Internal Revenue Service collected $5.7 billion in 2011 from penalties, meaning
that Americans took out about $57 billion from retirement funds before they
were supposed to... Adjusted for inflation, the government collects 37 percent
more money from early-withdrawal penalties than it did in 2003. Meanwhile, the
amount of home-equity loans outstanding was $704 billion in 2013, down 38
percent from the 2007 peak, according to Federal Reserve data.
Ukraine crisis starts to hit European firms - (money.cnn.com) The
economic turmoil triggered by the Ukraine crisis is beginning to hurt major
European companies. From banks to brewers, the slump in Russia's economy is
taking its toll on sales and profits at businesses in the rest of Europe. Weak
factory orders in Germany could point to worse to come. The International
Monetary Fund says Russia has already been dragged into a recession as
investors flee the emerging market for fear of being caught up in the
escalating conflict in eastern Ukraine. The United States and Europe accuse
Moscow of stoking separatist tension in Ukraine, following its annexation of
Crimea. They've frozen the assets of dozens of Russian officials, and the U.S.
has gone further by targeting 18 Russian companies. Harsher measures aimed at sectors of the Russian economy will follow, they
warn, if Ukraine's presidential election on May 25 is put at risk.
First-Quarter
Economic Slump Looking Uglier by the Day - (www.moneynews.com) It
now looks like the world's largest economy contracted in January through March
instead of eking out a 0.1 percent gain at an annualized rate as reported by
the Commerce Department last week. The latest knock came from data issued
today. Although the trade deficit shrank in March to $40.4 billion from $41.9
billion as exports grew, the narrowing was less than the government had
projected when putting together the advance estimate on gross domestic
product.''
Foreign
Firms Pressured as Chinese Workers Near Henry Ford Moment - (www.businessweek.com) The
Chinese government is gaining an unlikely ally in its effort to overhaul the
economy: striking Chinese workers. So far this year, the China operations of International
Business Machines Corp.(IBM:US),
PepsiCo Inc., Wal-Mart Stores Inc., and Yue Yuen Industrial Holdings Ltd., a
major supplier to Nike Inc. and Adidas AG, all have been idled by labor
protests. “This is not a blip,” says Dan Harris, a Seattle-based attorney
representing companies operating in China. “It’s going to continue and get
worse.” While China’s communist party was founded to benefit the country’s
“workers and peasants,” Chinese leaders aren’t known for their patience with
protest. This latest wave of labor unrest -- at least when confined to
pocketbook concerns -- might be different. The government wants to rebalance
the slowing economy to rely more on consumption. Higher incomes for workers
would be a good start.
Report:
Porn-Watching EPA Employee Received Bonuses Despite Wasting Work Days - (www.newsmax.com) An
employee at the Environmental Protection Agency downloaded more than 7,000
pornographic files onto a government computer and viewed them for two to six
hours a day, according to the agency’s independent watchdog. The worker, who
wasn’t identified, was watching pornography when a special agent showed up at
his work space, Allan Williams, the EPA’s deputy assistant inspector general
for investigations, told lawmakers today. “True deterrence of employee
misconduct at the EPA ultimately rests with agency executives and managers to
set a tone that ensures such behavior will not be condoned,” Williams told the
House Committee on Oversight and Government Reform. The allegations emerged in
a broader examination of EPA employees. The EPA’s 16,000 employees are facing
greater scrutiny by the Office of Inspector General after the 2013 conviction
of senior agency official John Beale for collecting paychecks for more than a
decade during which he had not worked. Beale explained absences to his EPA
supervisors by telling them he was working on classified projects, including
for the Central Intelligence Agency, which wasn’t true.
Frankfurt
issues first bond backed by Chinese currency - (www.dw.de) Frankfurt is joining London, Singapore and Hong
Kong in the fast-moving market for bonds denominated in the Chinese currency,
the renminbi. Germany's KfW development bank announced it was issuing a
two-year bond with the volume of 1 billion renminbi at the Frankfurt Stock
Exchange... [the bonds] have become a huge boost to the popularity of the
currency. The Society for Worldwide Interbank Financial Telecommunication says
the renminbi is now among the top ten most-used currencies for global trade
payments, overtaking the Swiss Franc to occupy position seven in February.
