Gathering for the first time after their epoch-ending decision to raise interest rates in December, the backdrop couldn’t be more different for Federal Reserve policy officials.
The long-awaited rate increase went smoothly, but simmering concerns over China, the global economy as a whole, deflating commodities and financial market valuations have since risen to the fore. Even fund managers that were relaxed about slightly tighter monetary policy last month are now wondering whether that was complacent.
“It is reasonable for investors to wonder whether Fed’s December rate hike was a policy error,” admits Bob Michele, chief investment officer of JPMorgan Asset Management. “Historically the Fed has raised rates because either growth or inflation was uncomfortably high. This time is different — growth is slow; wage growth is limited; deflation is being imported.”
Perhaps most of all, many investors now fret that they are operating without a safety net they had grown attached to during the post-financial crisis era.
Some of Apple Inc’s main Asian suppliers expect revenues and orders to drop this quarter, indicating iPhone sales are almost certain to post their first annual decline since the flagship product was launched almost a decade ago.
The forecasts of lackluster sales by companies including Taiwan Semiconductor Manufacturing Co (TSMC), the world’s biggest contract chipmaker, and smartphone camera lens producer Largan Precision Co Ltd add to concerns about Apple’s outlook amid slowing global demand for smartphones.
Industry executives say the latest iPhone did not have enough new features from the previous model to tempt users, raising fears that Apple’s innovative streak – and the profits it has generated – may be running its course.
Apple, which reports December-quarter results on Tuesday, declined to comment on its sales outlook.
“Visibility is only a month at a time and demand is quite weak,” Largan Precision Chief Executive Adam Lin told an earnings briefing, referring to his company’s overall business.
Other suppliers said Apple now only gave them orders one month in advance, instead of the usual three months.
Marcus Leroux
Last updated at 12:01AM, January 16 2016
The start of this year has been the worst for financial markets since the onset of the Great Depression, with stock prices slumping around the world amid mounting concern over the situation in China.
A wave of selling has swept the world’s leading financial centres over the past two weeks, with the value of Britain’s leading companies falling by more than £110 billion since the start of the year.he year.
The FTSE 100 index of Britain’s biggest quoted companies fell 114 points, or 2 per cent, to 5,804 yesterday — the lowest close since November 2012. Indices in Europe and America have fared even worse: the Shanghai market was the worst performer, closing down 3.6 per cent, taking its total losses to 18 per cent for 2016. This was prompted by the price of a barrel of Brent crude dipping below the $30 mark, for the third time this week. In America the Dow Jones industrial average closed down 391 points, or 2.4 per cent, at 15,988.
The FTSE 100 index of Britain’s biggest quoted companies fell 114 points, or 2 per cent, to 5,804 yesterday — the lowest close since November 2012. In America the Dow Jones industrial average closed down 391 points, or 2.4 per cent, at 15,988.
The Shanghai market was the worst performer, closing down 3.6 per cent, taking its losses for the year so far to 18 per cent. This was prompted by the price of a barrel of Brent crude dipping below $30 for the third time this week.
David Buik, of Panmure Gordon, the investment bank, suggested that the “financial carnage” in stock markets in the first two weeks of the year was the worst since 1928.
Ridgewood NJ, In November Rep. Scott Garrett (NJ-05), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, questioned Federal Reserve Chair Janet Yellen about the Fed’s use of cost/benefit analyses on new regulations. Chair Yellen testified before the House Financial Services Committee today and admitted to Rep. Garrett that the Fed has no plans to conduct an economic analysis that would determine the cumulative impact that hundreds of new rules prescribed by Dodd-Frank and the Basel Committee will have on the economy.
Garrett spoke earlier last year saying “ the Dodd-Frank Act was signed into law amidst promises that the legislation would protect American consumers, make our economy more competitive, and end ‘too big to fail.’ Instead, Dodd-Frank has stifled economic growth, made it more difficult for Main Street businesses to obtain credit, and increased the likelihood that taxpayers will be on the hook for additional Wall Street bailouts. Most importantly, this law has and has made it harder for Americans to find a job, buy a home, and save money for their family’s future.
“Despite creating new bureaucracies that have imposed thousands of pages of rigid, invasive, and unworkable regulations, Dodd-Frank did nothing to reform the mortgage giants Fannie Mae and Freddie Mac, whose actions caused the 2008 financial crisis. Now more than ever we need solutions that expand economic freedom and opportunities for hard-working American taxpayers. I look forward to working with my colleagues in order to protect our economy from the harsh reality of Dodd-Frank.”
“I believe we have a virus in our banking system that is stifling competition and innovation. It protects incompetent management and insulates antiquated business models from market discipline. It incentivizes the largest banks to grow even larger and makes these mega-banks captive to government influence. This “Too-Big-To-Fail” virus is now poised to spread beyond banks to other types of financial firms. Not surprising, it is the government that is preparing to label other financial firms “Too-Big-To-Fail” by designating them as systemically important and spreading these market distortions.
The Spectacular Too Big Failure of Dodd-Frank
Quick-to-fix regulation often creates unintended consequences Dodd-Frank ultimately destroyed the community bank Consumers lost choice and completion, although farmers were hurt most
By Edward Morrissey
February 12, 2015
Not much unites the activist Left and activist Right, and not much ever has. After the near-collapse of the fiscal sector in 2008, though, populist movements on both sides found momentum in opposition to government bailouts of private-sector firms, especially in the financial industry.
“Too big to fail” became a mantra used to leverage massive taxpayer bailouts of financial institutions. Those bailouts enraged conservatives who believed that government had largely created the “too big to fail” players that needed rescuing from bad government policy. At the same time, progressives angrily denounced the parachutes provided to Wall Street fat cats while ordinary Americans suffered through a period of tight lending and a poor economy — especially in the labor markets.
By the time 2010 rolled around, the two sides could agree on one thing: changes were necessary to unwind “too big to fail.” Conservatives wanted to push government out of lending and finance through tax and regulatory reforms that would end rent-seeking behaviors that perpetuated it. Progressives wanted more regulation and government intervention to force the industry to behave better.
Since Democrats controlled Congress and the White House in the spring and summer of 2010, they chose the progressive policy. Congress passed and President Barack Obama signed the Dodd–Frank Wall Street Reform and Consumer Protection Act in July of that year – not long after passing the progressive Affordable Care Act that created massive government intervention in the health-insurance industry.
For the past eighteen months, the news media has focused on the failures and incompetence of the Obama administration in the ACA’s rollout and infrastructure. The impact of Dodd-Frank has largely been ignored, until now. According to a new study by the Harvard Kennedy School of Business, the attempt to end Too Big to Fail backfired – in a big way.
One problem that led to TBTF was industry consolidation, which had been steadily reducing the number of smaller community banks that made lending much more accessible to small business owners, farmers, and middle and working-class families. Over the past twenty years, the share of US lending handled by community banks has fallen by half, from 41 percent to 22 percent, while the share handled by large banks more than doubled from 17 percent to 41 percent.
The S&P 500 has begun 2016 with its worst performance ever. This has prompted Wall Street apologists to come out in full force and try to explain why the chaos in global currencies and equities will not be a repeat of 2008. Nor do they want investors to believe this environment is commensurate with the dot-com bubble bursting. They claim the current turmoil in China is not even comparable to the 1997 Asian debt crisis.
Indeed, the unscrupulous individuals that dominate financial institutions and governments seldom predict a down-tick on Wall Street, so don’t expect them to warn of the impending global recession and market mayhem.
But a recession has occurred in the U.S. about every five years, on average, since the end of WWII; and it has been seven years since the last one — we are overdue.
Most importantly, the average market drop during the peak to trough of the last 6 recessions has been 37 percent. That would take the S&P 500 down to 1,300; if this next recession were to be just of the average variety.
JAN 14, 2016 5:04 AM EST UPDATED JAN 14, 2016 9:08 AM EST
By Mark Gilbert
Forget hoverboards, fridges that talk to the Internet, and self-driving cars. Three of the most popular items at this month’s annual Consumer Electronics Show in Las Vegas — a cine camera, a record turntable and a new Polaroid snapper — suggest there’s a back-from-the-future movement gaining ground that reflects a growing fatigue with the virtual world of digital products, and a renewed enthusiasm for the old-fashioned analog experience.
It’s a debate that rages in my house. My partner sniffs books as she opens them; she says it conjures up memories of childhood library visits that promised to make all of the world’s knowledge and literary entertainment available. For her, the latest adventures of Bridget Jones in paperback, have all of the evocative power of Proust’s madeleine cakes. Me, I’ve owned a Kindle since they first became available almost a decade ago; I can’t remember the last time I bought an actual physical book.
JANUARY 9, 2016 LAST UPDATED: SATURDAY, JANUARY 9, 2016, 1:21 AM
BY PETER J. SAMPSON
STAFF WRITER |
THE RECORD
With his conviction for conspiracy and embezzlement reinstated by an appeals court, a former North Jersey labor leader is facing a possible prison term when he is sentenced later this month for plotting to siphon funds from an electricians union in a scheme to pad the salary of his future wife.
Following a trial in federal court in Newark, a jury in November 2013 found Richard “Buzzy” Dressel guilty on two of eight counts: conspiracy to embezzle union funds and embezzlement from Local 164 of the International Brotherhood of Electrical Workers in Paramus.
Five months later, U.S. District Judge William J. Martini granted a defense motion for acquittal, ruling the government had not presented sufficient evidence for conviction.
The office of U.S. Attorney Paul J. Fishman challenged the judge’s decision, and a three-judge panel of the 3rd U.S. Circuit Court of Appeals in Philadelphia reversed Martini and reinstated the conviction in August.
As a result, Dressel, 66, of Montvale, who as business manager held the local’s top position for 14 years, is facing up to five years in federal prison and a $250,000 fine on each of the two counts when he is sentenced by Martini on Jan. 21.
Before his indictment in 2012, Dressel had served on the boards of the Hackensack University Medical Center Foundation, Bergen Community College and the state Casino Reinvestment Development Authority. He had been a member of the New Jersey Sports and Exposition Authority, and he was a major force in Democratic Party politics, raising funds and using the rank and file to get out the vote.
Dressel has steadfastly maintained he committed no crime.
POSTED 8:09 PM, JANUARY 6, 2016, BY ANDREA CAVALLIER AND ASSOCIATED PRESS, UPDATED AT 08:11PM, JANUARY 6, 2016
NEW YORK — Macy’s is closing dozens of stores and cutting thousands of jobs across the United States after disappointing holiday sales.
The Cincinnati-based department store chain says sales fell 5.2 percent in November and December at existing stores. Warm weather and lower spending by international tourists hurt sales.
The company also listed Wednesday which 40 stores it would close.
New Jersey is among U.S. states least equipped to respond to an economic downturn, according to a new study comparing states’ savings. Samantha Marcus, NJ.com Read more
January 4, 2016 — 8:00 AM EST
Americans are increasingly foregoing paychecks due to disability, school or retirement
Kasia Klimasinska kklimasinska
How come more people are retiring in their early 20s? Why are middle-age men becoming stay-at-home dads? What’s keeping women out of the workforce other than illness, kids or school?
Those are some of the questions raised in a new Bureau of Labor Statistics report that shows changes over the past decade in why people stay out of the labor
Here’s what the bureau found, broadly: Thirty-five percent of the U.S. population wasn’t in the labor force in 2014, up from 31.3 percent a decade earlier. (You’re considered out of the workforce if you don’t have a job and aren’t looking for one. That’s distinct from the official unemployment rate, which tracks those out of work who are actively job hunting.)
Drilling down into the numbers reveals more about the shifts in the reasons some people forego a paycheck. In all age groups, for instance, more people cited retirement as the reason for being out of the labor force, and it wasn’t just older people.
For Americans between the ages of 20 and 24, the share of those sidelined over the past decade because they were in school increased, unsurprisingly, during the decade that included the Great Recession. What’s more unusual is that the share of 20- to 24-year-olds who say they’re retired doubled from 2004 to 2014.
HONG KONG (MarketWatch) — Those fearing that China is the big risk in the year ahead for global markets hope that the first trading day of 2016 does not set the tone for the rest of the year.
Between a 7% fall in shares that triggered new circuit breakers on the ShanghaiSHCOMP, -6.86% and Shenzhen stock exchanges 399100, -8.21% and accelerated weakness in the yuan, there is ample fodder for China bears.
The question being posed anew is whether 2016 will be the year Beijing finally throws in the towel on its attempts to coerce multiple asset markets upwards, while its economy continues to sink in a sea of debt.
While yet more weak industrial activity numbers from the Caixin China December PMI got the new year off to a flat start, the bigger concern is whether the leadership still has the will or the ability to continue holding up stock prices as its confrontsever more painful policy choices.
The Dow Jones Industrial Average plunged about 400 points in early trade Monday as a 7% drop in Chinese shares stoked a global selloff in stocks.
The Dow DJIA, -2.42% plunged nearly 411 points to 17,015, led by a drop in DuPont Co. DD, -4.08% and American Express Co. AXP, -3.24%
The S&P 500 SPX, -2.32% fell about 45 points to 1,998, led by a decline in technology stocks, financials and industrials. Only the S&P 500’s energy sector showed a modest gain as Middle Eastern tensions helped lift crude-oil prices.
“It is not surprising to see such a selloff considering negative headlines from China and tensions between Iran and Saudi Arabia. What is surprising is that it is happening on the first day of the year,” said Ryan Larson, head of equity trading at RBC Global Asset Management.
“While trading desk are busier than they normally would be on Mondays, this is not a panic selling, it’s orderly. We are likely to see this kind of volatility a lot in 2016,” Larson said.
The S&P 500-tracking “SPY” ETF opened down nearly 2%. According to Bespoke Investment Group analysts, since the SPY SPY, -2.24% began trading in 1994, the ETF has opened lower on the first trading day of the year only twice in 22 years, and never by more than 1%.
Meanwhile, the Nasdaq Composite COMP, -2.86% tumbled by 138 points to 4,869 as tech stocks took the brunt of Monday’s drop.
NEW YORK (Reuters) – A federal judge has certified two shareholder class actions accusing Facebook Inc of hiding concerns about its growth forecasts prior to the social media company’s May 2012 initial public offering.
U.S. District Judge Robert Sweet in Manhattan said retail and institutional investors who claimed to lose money from buying Facebook shares at inflated prices in connection with the $16 billion IPO may pursue their respective claims as groups.
The decision is dated Dec. 11 but had been kept under seal, which Sweet lifted in an order made public on Tuesday.
Other Facebook defendants include Chief Executive Mark Zuckerberg, Chief Operating Officer Sheryl Sandberg and other officials.
Facebook is appealing the class certifications, which the Menlo Park, California-based company said are “without merit” and conflict with “well-settled” precedent.
Shareholders accused Facebook of concealing internal projections prior to its IPO of how growth in mobile devices, an area in which it generated little ad revenue, might hurt its prospects, even as it quietly warned underwriters to cut their forecasts.
Facebook made its market debut on May 18, 2012 at $38 per share. Its share price fell to $17.55 on Sept. 4, 2012 and stayed below the IPO price for more than a year.
The stock ultimately rebounded, and closed on Tuesday up $1.33 at $107.26 on Nasdaq. That gave Facebook a roughly $303 billion market value, Reuters data show.
A lot of people want to believe that easy ways to get money are true because seriously, what’s better than easy money? It’s now believed by a lot of people that Facebook head Mark Zuckerberg is giving away millions of dollars. Well, part of that is true. Yes, Zuckerberg does have plans to give away a vast majority of his fortune, but it won’t be done because you copy and past a status update. That is simply nothing more than another Facebook hoax.
There are currently variations of a Facebook status going around right now, and people are falling for it. The post claims that Zuckerberg is giving out $4.5 million to 1,000 Facebook users as long as they copy and past a status on their profile.
Sometimes, the status will say it’s going to the “first 1,000 users,” that post is as reported by NBC Bay Area. Other times, it says that as long as you post the status by midnight, then you’re in the running for the money.
Here is one variation.
“According to Good Morning America, Not a hoax! Mark Zuckerberg has announced that he is giving away $45 billon of Facebook stock. What you may not have heard is that he plans to give 10% of it away to people like YOU and ME! All you have to do is copy and paste this message into a post IMMEDIATELY. At midnight PST,Facebook will search through the day’s post and award 1000 people with $4.5 million Each as a way of saying thank you for making Facebook such a powerful vehicle for connection.”
For some reason, it’s supposed to be made more believable because the status update says that it was on Good Morning America. Also, chances are that if something says this is “not a hoax,” then it most likely is a hoax.
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If hoverboards are this year’s most buzzed-about holiday gift, drones are probably a close second. They were a big hit last year, and that appears to be the case again this year — even if this time around, the new drone owners will have to register their new toys with the FAA.
The next best thing to opening one on Christmas morning is basking in the glory of watching people crash them, and if you’re hungry for some drone crash schadenfreude, nothing beats seeing one happen from the drone’s perspective.
