by clarisezoleta - April 27th, 2017 9:53 am
Financial Markets and Economy
Euro-area economic confidence jumped to the highest in almost a decade this month, a testament to a continued improvement that may soon prompt a policy shift at the European Central Bank.
Investors are waiting to see whether Mario Draghi joins in the optimism that has engulfed the region’s stock market since the French vote. If he does, one clear winner will be banks.
The pound rose to its highest level since October versus the dollar, which faltered after investors cited a lack of clarity in tax plans unveiled by President Donald Trump’s administration.
Sweden’s central bank in a split decision unexpectedly extended its bond buying program into the second half of the year and delayed any potential tightening as policy makers take no chances on inflation backsliding.
European stocks are giving a collective thumbs down to Trump's tax plan (Business Insider)
European stocks are lower on Thursday as investors take their lead from a negative session in the USA on Wednesday following President Trump's long-awaited tax plan announcement.
President Trump's economy isn't bursting out of the gates.
All signs are that it is starting 2017 with more of the same sluggish growth the U.S. experienced during President Obama's term.
Trump railed against the trade deal as a candidate and as recently as last week declared it harmful to U.S. workers.
Here comes the ECB … (Business Insider)
The governing council of the European Central Bank (ECB) holds its April meeting on Thursday, and while fireworks are unlikely, the bank's rate decision and the monthly press conference will be keenly watched given recent improvements in the single currency
by phil - April 27th, 2017 8:36 am
Wow, what a tax plan!
The plan is, essentially, not to collect any taxes but don't worry, all that wealth will trickle down and the bottom 99% will be so tired of winning they will say "Donald, please, we are tired of winning, make it stop." As I noted yesterday morning, it is a $4Tn giveaway to the rich, not $2Tn and, now that we have more fact, the Federal Tax Policy Center says this plan will reduce Federal Revenues by $6.2 TRILLION over the next 10 years. That's $500Bn per year!
At our current rate of Government spending, that will put the US close to $30 TRILLION in debt if Trump lasts until 2025. The big changes revealed under the new program has several winners:
- Corporations – Taxes are cut from 35% to 15%.
- High-Income Earners – Top rate cut from 39.6% to 35% and 3.8% Obamacare surcharge removed.
- LLC Members – If you are in an LLC, your income will be taxed at just 15%
- Multimillionaires – Couples with estates over $11M and singles with $5.5M will no longer have to pay estate taxes (you know, family farmers). This will save Trump's children about $1.5Bn when he dies.
- Tax Avoiders – The AMT is being eliminated, now your accountant can get creative again.
- Red Staters – Your state and local taxes will no longer be deductible, a big "screw you" to the blue states, whose citizens believe in social safety nets (and didn't vote for Trump)
And we get all that for just $6Tn – what could possibly go wrong? As I noted on Tuesday, $1.7Tn has already gone into the markets (on paper) and today we're closer to $2Tn in gains since the election at Dow 21,000 and, despite the fact that we're doing that on 10:1 leverage (to actual inflows), that will be counted as "economic growth" – even though it's nothing more than a gigantic bubble that is unlikely to have long-term support.
by ilene - April 26th, 2017 8:41 pm
For restaurants looking to boost profits, it's often about everything but the food
Staying one step ahead of the competition in the hypercompetitive restaurant industry requires more than simply tinkering with the menu. Serving tasty food doesn’t do much good if customers don’t stay long enough – or never even walk through the door in the first place.
People in the restaurant business have long understood that design and ambiance matter a great deal, and studies by environmental psychologists and other social scientists confirm that the shrewd manipulation of a restaurant’s physical environment can boost profits.
Consequently, a perpetual arms race of restaurant redesign has become a defining feature of many American restaurant chains.
The scramble has been especially frantic in recent years, with fast food giants KFC, Arby’s, Panera and Subway all revamping their interiors, along with casual dining chains such as Olive Garden and T.G.I.Friday’s.
This attention to detail matters, with studies showing that everything from the color of the lighting to the appearance of the waitstaff can influence the dining behavior of patrons.
Sometimes it is all about the presentation
In 2010, Cassandra Smith, a 20-year-old Hooters waitress who was 5'8" and weighed 132 pounds, was told by her boss that she needed to lose weight if she wanted to keep her job. Smith ended up suing Hooters for weight discrimination and settled out of court.
But a 2013 study suggests that when restaurants discriminate against overweight employees, it may not be just a public relations problem – it could actually undermine the bottom line.
A team of researchers observed approximately 500 people as they ate in 60 different restaurants. They assessed the body mass index (BMI) and body type of every diner and his or her server, keeping track of the number of appetizers, soups, salads, main courses, desserts and beverages each ordered.
by ilene - April 26th, 2017 8:15 pm
Frexit: how a Le Pen victory could unleash a tsunami of economic volatility
With Marine Le Pen through to the second round of the French presidential elections, the prospect of Frexit, which is at the centre of her economic policies, is beginning to spook financial markets. While the possibility of Le Pen winning in the second round remains remote, two weeks can be a long time in politics.
When it comes to the implications of a French exit from the European Union, commentators have so far focused on the €1.7 trillion of French public debt issued under French law – which can be re-denominated into francs, if France leaves the eurozone. According to the rating agencies, this would constitute the largest ever sovereign default.
By comparison, Greece’s sovereign debt restructuring, which affected €200 billion of debt held by the private sector in 2011-12, appears miniscule. While the timing of a French default remains uncertain, French sovereign bondholders are likely to flee en masse the moment they realise their baseline scenarios – which do not account for a Frexit – are wrong.
Although a sovereign default of such magnitude could unleash a tsunami of volatility in international financial markets, that is only the tip of the iceberg. The roll-out of a new currency across the economy would create new and unprecedented solvency and liquidity risks, which could cause financial turmoil, if not chaos, early on in the life of the new government.
Frexit would certainly have implications for the debt issued by French banks and corporations, irrespective of whether it has been issued under French law or otherwise. In the case where the debt has been issued under French law, its redenomination in French francs would be automatic. Again, international investors would be likely to flee early on, attempting to cut their losses short. This would cause abrupt drops in French bond prices and collateral values.
by ilene - April 26th, 2017 7:57 pm
Mine wars: The struggle for coal miners' health care and pension benefits comes to a head
During the 2016 presidential campaign, then-candidate Trump repeatedly expressed his support for coal miners and their communities. Voters in the country’s old mining regions of Appalachia rewarded these promises with overwhelming electoral support.
Yet this Friday, more than 22,000 retired union coal miners in seven states whose former companies went bankrupt over the past few years are bound to lose their health care benefits if Congress is unable to agree on a permanent or temporary fix.
The situation is a repeat of the one coal miners were confronted with just four months ago. Unable to find a permanent solution in December to a shortage of funds to pay health benefits to these retired miners, Congress settled on a temporary compromise.
The situation serves as a harbinger for further troubles for coal miners and their health care and pension benefits. Moreover, the situation could point to troubles ahead for other union-run pension and health care plans.
I study health care policy at West Virginia University. With close to 30,000 retired union coal miners, West Virginia, a state already suffering from the dramatic changes in the coal industry, would be particularly negatively affected by the failure to find a solution to this issue.
The changing fortunes of the coal industry
At the heart of the current situation is an agreement between the federal government and the United Coal Miners of America dating from 1946. Faced with a series of strikes across different industries in 1945 and 1946, President Truman, in line with a long line of…
by Market Shadows - April 26th, 2017 4:04 pm
Financial Markets and Economy
Oil prices rebounded from early losses on Wednesday after U.S. government data showed a larger-than-expected falloff in crude inventories, which encouraged buying after prices slid for several days on worries that a global crude glut was persisting despite cuts in output by producing countries.
Lucky, Good or Tipped Off? The Curious Case of Government Data and the Pound (The Wall Street Journal)
Some investors could be trading with knowledge of U.K. official statistics before they are published, according to a comparison of currency trading data for the Swedish krona and British pound.
With a tweet on Tuesday morning, President Donald Trump told Wisconsin dairy farmers—and the world—that America “will not stand for” the Canadian policies he says are hurting U.S. exports.
U.S. stocks pared gains in midday trading on Wednesday after the Trump administration outlined its tax reform plan.
President Donald Trump on Wednesday proposed slashing the U.S. tax rate on corporate and pass-through business profits to 15 percent from 35 percent or more.
The rich-poor gap -- the difference in annual income between households in the top 20 percent and those in the bottom 20 percent — ballooned by $29,200 to $189,600 between 2010 and 2015, based on Bloomberg calculations using U.S. Census Bureau data.
Mexico’s peso, the Canadian dollar and shares of companies that rely on cross-border trade plunged on speculation the Trump administration was close to scrapping Nafta.
Home prices in China's biggest cities would likely rebound if government curbs are relaxed, a senior official from the country's top economic planner was quoted as saying, suggesting authorities are in no mood to lift restrictions any time soon.
by ilene - April 26th, 2017 2:22 pm
Bespokecast Episode 10 — Josh Brown — Now Available on iTunes, GooglePlay, Stitcher and More:
"In our newest conversation on Bespokecast, we spoke to Josh Brown, the CEO of Ritholtz Wealth Management. Josh is a contributor on CNBC’s daily show Fast Money Halftime Report, has written two books about the financial markets, regularly writes on his blog The Reformed Broker, and has a huge following on Twitter."
by Market Shadows - April 26th, 2017 9:52 am
Financial Markets and Economy
Oil’s jerky path to recovery has been a frustrating, money-losing affair for hedge fund trader Pierre Andurand this year, but he’s sticking to his view that the commodity is set to rebound.
President Donald Trump appears to be OK with people judging his success by the stock market.
In an interview with the Associated Press on Friday, Trump was asked whether it was still fair to use the stock market as a scorecard to evaluate the success of his presidency.
First Cannabis ETF Hits Market and Rises Sharply in Initial Trading (Dispensaries.com)
Canada continues to trail blaze when it comes to legal marijuana, with national legalization on the table in 2017 and even Snoop Dogg traveling north of the border to partner with an Ontario-based marijuana company.
Mexican annual inflation rose more than expected in early April to hit its fastest pace in nearly 8 years, which could bode for further interest rate hikes from the central bank.
The Trump administration announced Monday plans to impose duties of up to 24% on most Canadian lumber, charging that lumber companies there are subsidized by the government. Canadian lumber makes up about 30% of the U.S. market.
New rules are going to fundamentally change the business models of brokers (Greenwich Associates)
Most people in the industry have been aware of the impending regulations for many years, but were able to brush it aside for a variety of reasons: the implementation date is far in the future / it’s been delayed / we are waiting for further guidance / it might get delayed again … but now it has become a reality and brokers, asset managers and vendors are hurrying to comply with the directives scheduled to go into effect in January 2018.