A 2019 Earnings Recession?
by ilene - January 15th, 2019 3:54 pm
A 2019 Earnings Recession?
Courtesy of Joshua M Brown
Shout to Leigh!
On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.
What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?
Check out Estimize here.
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The shutdown will harm the health and safety of Americans, even after it’s long over
by ilene - January 15th, 2019 3:20 pm
The shutdown will harm the health and safety of Americans, even after it's long over
Courtesy of Morten Wendelbo, American University
With the U.S. federal government shutdown now the longest in history, it’s important to understand what a shutdown means for the health and safety of Americans.
The good news is that in the short run, the consequences are relatively few. But, as a researcher who studies natural disaster planning, I believe that Americans should be worried about the federal government’s long-term ability to ensure good public health and protect the public from disasters.
As the shutdown draws on, it increasingly weakens the government’s ability to protect Americans down the road, long after federal workers are allowed to go back to work. Many of these effects are largely invisible and may feel intangible because they don’t currently affect specific individuals.
However, the shutdown poses a very real threat to preparedness for future emergencies, such as natural disasters and disease outbreaks. It also damages the government’s ability to recruit and retain the experts needed to work at the cutting edge of public health.
Disaster preparedness and response
Much funding for disaster recovery that is already underway is funded in appropriations separate from those that fund the shuttered parts of government.
On Dec. 26, however, the Federal Emergency Management Agency, which contracts private contractors for a large share of their work, ordered its contractors to cease working on several projects. Even for programs with funding, progress is made difficult by a shortage of several thousand staff members.
When President Trump signaled to the Senate that he would not sign into law the appropriations bills that had passed the House, leading to the shutdown, funding with bipartisan support for disaster recovery died too. This impedes disaster relief efforts in the states that experienced disaster in the past two years. Among others, it leaves victims of the forest fires in California and victims of Hurricane Florence in the Carolinas waiting for crucial help needed to recover.
The shutdown also weakens the government’s ability to foresee, prevent and respond to upcoming natural disasters. For…
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Brexit: what are Theresa May’s options for a ‘plan B’?
by ilene - January 15th, 2019 3:17 pm
Brexit: what are Theresa May's options for a 'plan B'?
Courtesy of Christopher Kirkland, York St John University
All options raise more questions. Melinda Nagy/Shutterstock
If, as expected, Theresa May loses the Brexit “meaningful vote” on January 15, the UK government will have three days to prepare a “plan B” and present it to parliament. MPs would then have the chance to scrutinise this plan.
As the UK’s withdrawal date of March 29 is written into UK law, time is of the essence. There are six possible options for the prime minister at this stage.
Renegotiate with the EU27
Since postponing the first vote on the withdrawal agreement in December, May has sought reassurances from the heads of the other 27 member states about the UK’s future relationship with the bloc and the nature of the so-called “Irish backstop” to prevent a hard border on the island of Ireland.
While such discussions could continue should May lose the vote, the timescale makes this unlikely. If the assurances the prime minister has sought from Brussels in the four weeks since December are not sufficient to get the deal through parliament, it’s unlikely she would be able to make significant further progress within three days that could revive the deal. Many EU member states have insisted the text of the agreement cannot be changed at this stage.
There is equally unlikely to be sufficient time to agree an alternative deal based, for example, upon a Norway plus or a Canada model.
Extend article 50
Rather than focus on the nature of a new type of deal, the prime minister may ask the EU for more time to restart negotiations, extending the two-year article 50 deadline which governs the UK’s withdrawal process. This would need the approval of other member states and MPs, but it could potentially avoid the hard deadline of March 29.
Even if such an extension were to be agreed, it’s unclear what changes to the existing deal would be acceptable to the EU27, who have consistently refused to discuss options to alter the text. Any further negotiations would also have an added complication by overlapping…
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Why privatizing the VA or other essential health services is a bad idea
by ilene - January 15th, 2019 1:44 pm
Why privatizing the VA or other essential health services is a bad idea
Courtesy of Sebastian Jilke, Rutgers University Newark and Wouter Van Dooren, University of Antwerp
The seal affixed to the front of the Department of Veterans Affairs building in Washington. AP Photo/Charles Dharapak
The Trump administration wants to shift billions of dollars from government-run veterans’ hospitals to private health care providers. That’s true even though earlier this year the administration vehemently denied it would privatize any part of the Department of Veterans Affairs.
The privatization of essential government services is nothing new, of course. Over the years, countries have privatized dozens of services and activities that were once the sole domain of governments, such as the provision of electricity and water, road operations and prisons and even health care, with the ostensible aim of making them more efficient.
But before going down that road, the question needs to be asked whether privatizing essential human services such as those for military veterans serves the public interest. New research we recently published suggests that privatization may come at a social cost.
Economic incentives of privatization
Privatization theory assumes that organizations, including those that deliver social services, thrive on competition and monetary gain.
Supporters of privatization argue that companies can perform government functions more efficiently. More competition and more choice for clients are expected to put pressure on providers to be more innovative and aware of financial costs.
In the public sector, however, competition is almost by definition absent, either because users of services cannot be excluded from the service – breathing clean air, for example – or because there is little monetary gain to be made – such as with services to the homeless.
So in situations where there is no real market, governments have attempted to mimic their conditions, such as by giving citizens the freedom to choose a public service provider or negotiating contracts that include certain performance incentives.
But this reliance on performance contracts can lead business providers to focus on short-term financial targets – such as the number of people processed per dollar spent – often at the expense of…
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Mucking through the Wall Street Banks’ Earnings This Week
by ilene - January 15th, 2019 11:30 am
Courtesy of Pam Martens
If you’ve ever mucked horse stalls full of smelly manure, you’re better prepared for this week.
Yesterday, the inscrutable Citigroup ushered in the week of mind-numbing fourth-quarter earnings reports from the financial supermarkets/commercial banks/insurance companies/brokerage firms/investment banks/derivative warehouses that have combined under one highly combustible roof, using the simple moniker Wall Street bank. There is so much going on under one roof that you’d need your own team of 100 accountants to have any clue as to whether the bank is doing well or not.
JPMorgan Chase, a component of the Dow Jones Industrial Average, was out with its disappointing earnings this morning. Goldman Sachs and Bank of America report on Wednesday, followed by Morgan Stanley on Thursday.
Citigroup’s big reveal was that it had missed analysts’ revenue expectations by half a billion dollars – not exactly small change. The bank reported $17.1 billion in revenue in the fourth quarter versus average analyst expectations for $17.6 billion. That was mostly owing to a 21 percent decline in fixed income trading.
Its net profits were clearly helped by its report that it had used a big chunk of its capital not to make loans to worthy businesses but to repurchase 74 million shares of its own stock in the fourth quarter and a whopping 212 million shares for all of 2018. Fourth quarter net earnings came in at $4.3 billion or $1.64 per share. Excluding the impact of President Trump’s generous tax cut gift to corporations, net income was $4.2 billion or $1.61 per share.
For the full year of 2018, Citigroup reported net income of $18.0 billion on revenues of $72.9 billion, compared to a net loss of $6.8 billion on revenues of $72.4 billion for the full year of 2017.
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Why Big Pharma must disclose payments to patient groups
by ilene - January 14th, 2019 6:08 pm
Why Big Pharma must disclose payments to patient groups
The Chronic Pain Association of Canada has received money from Eli Lilly Canada Inc., Purdue Canada Inc. and Merck Frosst Canada. A blog post on the association’s website contains messages favourable to increased opioid use. (Flickr/Ajay Suresh), CC BY-SA
Courtesy of Itai Bavli, University of British Columbia and Joel Lexchin, University of Toronto
A United States congressional report revealed last year that five opioid manufacturers made more than $10 million in payments to patient advocacy groups and professional societies between 2012 and 2017.
Initiatives from these advocacy groups and professional societies often echoed and amplified recommendations to increase opioid use. For example, they promoted opioid for chronic pain, minimized the risk of addiction and criticized the Center of Disease Control and Prevention (CDC) guidelines to limit opioid prescriptions.
In addition, opioid manufacturers used these groups to lobby Congress to change laws directed at curbing opioid use. This, according to the report, “may have played a significant role in creating the necessary conditions for the U.S. opioid epidemic.”
Patient advocacy groups play an important role in democratic societies, giving voice to vulnerable populations, shaping health policy debates and acting to influence public policies to promote their members’ interests and needs.
When funded by the industry, however, they often serve merely as a marketing tool — promoting corporate interest.
To date, there has been no attempt to systematically investigate the relationships between opioid manufacturers and pain advocacy groups and societies in Canada. However, evidence shows that, similar to the U.S., opioid manufacturers fund such organizations in Canada.
Advocacy groups echo corporate interest
In Health Advocacy Group Inc: How Pharmaceutical Funding Changed the Breast Cancer Movement, bioethicist Sharon Batt explores the alliance between patient-group advocacy and pharmaceutical companies in Canada. She suggests that this relationship can distort policies that have been put in place to protect public health.
Batt questions the ability of such groups to speak on behalf of people who need help, and shows how advocacy groups today echo the demands of pharmaceutical companies that are often counter to its members interests.
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Who are the federal workers affected by the shutdown? 5 questions answered
by ilene - January 14th, 2019 5:10 pm
Who are the federal workers affected by the shutdown? 5 questions answered
Courtesy of Nevbahar Ertas, University of Alabama at Birmingham
The current government shutdown is now the longest in American history, affecting about 800,000 federal employees out of 1.8 million full-time civil servants, not counting military personnel and postal workers.
Of those, about 380,000 have been furloughed, meaning that they cannot work or get paid. The rest, whose positions are categorized as essential, are working without pay.
Here’s a closer look at some quick facts about the U.S. federal workers.
1. Who are they?
According to the U.S. Office of Personnel Management’s federal employee database, about 57 percent of federal workers were male and 43 percent were female in 2017. About 63 percent were white and 19 percent were black. Over half of the workforce had a college degree and about a quarter also had an advanced degree.
The federal civilian workforce has grown older than the American workforce overall. The average federal worker was 47.5 years old in 2017. Just about 16 percent of federal workers are under 35 years old, compared to 40 percent in the private sector. More than a quarter of federal employees are over 55.
2. Where do they work?
They might be your neighbors. More than 80 percent of the federal workers work or live outside of the Washington, D.C. metropolitan area.
According to Governing magazine’s calculations, nearly every state has a least a few thousand affected employees. OPM shows that California tops the list with 152,466 federal workers, followed by Virginia, Texas, Maryland and Florida.
More than 18 percent work for the Department of Veterans Affairs. In fact, almost 60 percent of the federal workforce is employed by just five agencies: the VA, Army, Navy, Homeland Security and Air Force.
3. How much do they make?
Under open government transparency guidelines, records of most public employees of the U.S. federal government is public record.
As of 2017, the average salary among 375 agencies was US$69,344.22. In fiscal year…
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The 2019 government shutdown is just the latest reason why poor people can’t bank on the safety net
by ilene - January 14th, 2019 5:02 pm
The 2019 government shutdown is just the latest reason why poor people can't bank on the safety net
Unreliable policies can make poverty more stressful. Rawpixel/Shutterstock.com
Courtesy of Jamila Michener, Cornell University
I conduct a lot of in-depth interviews with people like a woman I’ll call Angie as part of my work as a political scientist who studies poverty and public policy. When I asked the low-income mother of two, who works multiple jobs but still struggles to care for her family, about her experience with government assistance programs, she expressed dismay over benefit cuts.
“The people who make these rules … they don’t have any poor people in their family,” she told me. “That is why they are willing to chop so many services for the poor.”
People living in poverty are now bracing for that kind of chopping as a result of the partial government shutdown that began in December. By the three-week mark, most safety-net benefits were still being funded. But should the impasse drag on, that could change.
In my view, the added economic hardship brought on would highlight an enduring aspect of American public policy: Government benefits can be unreliable. They can be cut or eliminated arbitrarily.
Fragmented help
As I’ve explained in a book published in 2018, the nation’s systems for aiding Americans who have trouble making ends meet are fragmented. Different programs housed in multiple agencies serve distinct populations, with all of this happening in different ways across states and localities.
That means government shutdowns do not sever all assistance at once. In this instance, Congress has already passed the appropriations bills funding agencies like Health and Human Services, so Medicaid, Medicare and many other programs that agency runs are relatively safe.
Other federal agencies are more likely to see their funds dry up during this particular shutdown, especially the departments of agriculture and housing.
USDA and HUD are responsible for many programs that directly and indirectly keep low-income Americans fed and housed. The USDA’s Supplemental Nutrition Assistance Program, more commonly called SNAP, helps more than 19 million low-income households. HUD’s Housing Choice…
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If Trump declares a national emergency, could Congress or the courts reverse it?
by ilene - January 14th, 2019 4:51 pm
If Trump declares a national emergency, could Congress or the courts reverse it?
Courtesy of Chris Edelson, American University School of Public Affairs
If President Donald Trump declares a national emergency to fund some portion of a wall along the U.S.-Mexico border without congressional authorization, what would happen next?
Would the courts step in? What is Congress’ role?
As I explain in my book “Emergency Presidential Power,” presidents generally claim emergency power two ways: through inherent or implied authority under the U.S. Constitution or under statutory authority granted by Congress.
Relying on the Constitution as a basis for emergency power is controversial, and less likely to stand up to meaningful congressional or judicial review. The U.S. Constitution says nothing specific about presidential emergency power: Presidents can only claim such authority is implied or inherent.
The emergency powers the Constitution does describe are actually assigned to Congress. Congress has delegated some emergency powers to the president through statutes, including the National Emergencies Act. But Congress retains the power to reject a president’s declaration of a national emergency.
If President Trump does declare an emergency, the question is: Will Congress use the power available to it, or will it play the role of passive spectator?
Gaining congressional approval
Since presidents lack any specific constitutional emergency power, they often find it necessary to gain congressional authorization. For instance, at the start of the Civil War, with Congress out of session, President Abraham Lincoln suspended habeas corpus and took other unilateral actions. He later sought and gained retroactive approval from Congress for these actions.
President Harry Truman in his White House office in Washington Dec. 16, 1950 signs a proclamation of a state of national emergency, summoning the nation to marshal its strength against the threat of AP Photo/William J. Smith
This precedent of gaining congressional approval was put to the test nearly 100 years later. In 1952, President Harry Truman claimed emergency power to take control of steel factories during the Korean War in response to a labor strike. He invoked a “very great inherent power to meet great national emergencies.” Congress took no specific action to…
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There Goes The Chinese Consumer: Alibaba Is Latest Company To Warn About Slowing Growth
by Zero Hedge - January 14th, 2019 4:45 pm
Courtesy of Zero Hedge
Hours after the Wall Street Journal published a story speculating about who would be next to upend an equity rally with a warning about faltering sales in China (after Apple's quarterly revenue guidance cut rattled markets during the opening days of the year) – citing Starbucks, Nike, Texas Instruments and a host of chipmakers and luxury retailers as potential culprits – the answer has arrived perhaps more swiftly than the paper's editors had expected. And the answer is: None of these.
As it turns out, the latest warning about "near-term headwinds" in the Chinese market comes from a company that's so deeply interwoven into the fabric of the Chinese economy, even the hint of a sales slowdown should be enough to trigger anxieties about slowing global growth – even as its CEO tries to put a positive spin on things. And that company is: Alibaba.
According to a separate story published by WSJ Monday afternoon, as the ramp in equities spurred by Trump's positive trade talk faded into the close, the president of the Chinese e-commerce giant reportedly said during a presentation at the National Retail Federation's trade show in New York that he's still confident in the long-term potential of the Chinese economy despite data showing a deepening slowdown.
"This is a market that requires patience," Alibaba President J. Michael Evans said in a presentation at the National Retail Federation’s annual trade show in New York on Monday. "But if you think about where the country is going in the long-term…The future I think looks very good, notwithstanding some troubling headwinds."
As WSJ reminds us, Alibaba, whose Taobao and Tmall marketplaces are some of the most widely used e-commerce platforms by Chinese consumers and merchants, cut its full-year revenue forecast by 4% to 6% back in November over concerns about the slowing Chinese economy's impact on sales growth, as well as the possibility that the burgeoning trade war could also hurt sales.
Alibaba President J. Michael Evans
Yes, China's economy may be slowing – something that recently prompted the Communist Party to rethink its GDP growth projections – but it's still growing much more quickly than its developed rivals in…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site
