What Min. Wage Policy Just Did in CA Should Turn a Few Heads

What Min. Wage Policy Just Did in CA Should Turn a Few Heads

The plight of low wage workers in America is forcing activists and many policy makers to demand higher minimum wage standards. Unfortunately, the problem isn’t so easily solved just by raising wages. Proponents of the minimum wage increase fail to understand how such high wage standards would force businesses to terminate large portions of their workforce, therefore sacrificing thousands of low-paying jobs just so a few bottom-rung workers can have a “living wage.”

Or worse, many businesses might decide to move their operations away from states with excessively high minimum wages altogether. That’s exactly what Ashley Furniture did when they could no longer bear the weight of California’s new measure to progressively raise the state’s minimum wage to $15 between now and 2021.

As a result, 840 jobs were lost, and now they’re moving to states with more hospitable employment climates.

Zero Hedge has more:

A few weeks back we pointed out a couple of the reasons that businesses are fleeing California by the 1,000’s (“3 Simple Charts That Help Explain Why 9,000 Businesses Have Left California In Just 7 Years“).  Clearly the implementation of a State-wide $15 minimum wage hasn’t helped “lure” business owners.

On Friday, Ashley Furniture’s 840 employees working in the company’s production and warehouse facility in Colton, California became the latest victims of California’s minimum wage hike.  Ashley announced they would be leaving open their retail store in Colton, but would be relocating the production facility that accounts for most of the location’s jobs.  Per the San Bernadino Sun, Ashley Furniture released the following statements about the closure:

We thank our employees for all their hard work, but closing these plants on Oct. 25 and rebalancing our manufacturing mixstrengthens production capability and cost structure and will help ensure Ashley’s continued ability to compete effectively long-term in the global marketplace from a U.S. base.

The majority of production in Colton will move to U.S. plants in Wisconsin, Mississippi and North Carolina.

By shifting the majority of Colton production to other U.S. facilities we will create more efficiency and better use of existing capacity in our manufacturing network.

Ashley Furniture

Certainly, it’s not surpurprising that Ashley would choose to relocate their California prodcution capacity to Wisconsin, North Carolina and Mississippi given that they each sport minimum wages that are a mere 52% lower than California’s proposed $15 floor.

Minimum Wage by State

But, as per the norm, misinformed politicians rarely seem to take the heat for their reckless policies as Ashley employees prepared to protest the layoffs in Colton.

We cannot let companies like Ashley bleed the American dream,” Naja said. “It’s not only the employees, but the families, the kids, the wives. They’ve got wives with medical situations and things like that. There’s no way a huge company like Ashley’s can shut down the doors.

We’re going to be here making a protest and we’re calling everybody that can come to please support us and find out what they did to us,” Zuniga said. “Come and support all the hard-working employees and parents that take income to their house. I’m the only one supporting my family. I’m the only one paying a mortgage.”

Might we kindly suggest the better place to hold your protest would be in front of Jerry Brown’s office in Sacramento. 

Supporters of minimum wage rate hikes like California’s are cutting off their nose to spite their face. It might feel like they’re making progress when they get legislators to take their side and raise wages, but ultimately, they’re digging their entire social group deeper into poverty.

Give us your thoughts in the comments.

What To Do if You Find a Collection Account on Your Credit Report

What To Do if You Find a Collection Account on Your Credit Report

A collection account is bad news for your credit score, and the damage can last for years. During that time, you may miss opportunities to save on interest rates and insurance premiums, see an increase in offered interest rates if you want to finance a home or car, and generally stall your finances. But how do you know if this is what is bringing down your credit score and, if it is, what do you do?


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source: https://finance.yahoo.com/news/collection-account-credit-report-100000919.html

How investors should prepare for a Clinton victory

How investors should prepare for a Clinton victory

As the calendar flips to September, the U.S. presidential election is going to kick into overdrive. GOP contender Donald Trump and Democratic hopeful Hillary Clinton will face off later this month in their first debate, which will surely be an all-out cage match worthy of pay-per-view.

With two months until voters cast their ballots, Wall Street will be closely monitoring the polls and the debate performances for clues about the path of policy come 2017. Both candidates are seen by their political opponents as the reincarnation of pure evil. And both are running on a set of wildly different policies resulting in a “binary” post-election outcome.


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source: http://www.cbsnews.com/news/how-investors-should-prepare-for-a-clinton-victory/

Buy of the Year: Japanese Stocks, Says Analyst

Buy of the Year: Japanese Stocks, Says Analyst

Japanese stocks are poised to rocket higher and test levels not seen since the 1980s, according to Yves Lamoureux, president and chief behavioral strategist of macroeconomic research firm Lamoureux & Co.

From a technical perspective, Lamoureux notes that the Nikkei 225 Index (^N225) has showed strength by going sideways most of 2016 despite a significantly stronger yen, which ought to have weighed heavily on Japanese stocks.

Lamoureux correctly calls many long-term price swings in various markets and rarely shares his proprietary work. However, he has provided the below chart exclusively to Yahoo Finance, which shows the current “buy” signal in the Nikkei.

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Source: https://finance.yahoo.com/news/japanese-stocks-could-biggest-buying-000000762.html
Pitfalls Of Copycat Investing

Pitfalls Of Copycat Investing

 While some investors are trailblazers and do their own research, many investors attempt to mimic the portfolios of well-known investors, such as Warren Buffett of Berkshire Hathaway, in the hope of being able to cash in on those investors’ world-class returns. But copying another investor’s portfolio, particularly an institutional investor’s portfolio, can actually be quite dangerous. So, before you jump on the copycat bandwagon, get to know the pitfalls of this approach to investing.


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source: http://www.investopedia.com/articles/stocks/08/coattail-investor.asp?rp=y&partner=YahooSA&yptr=yahoo

‘Historical data will show that in 2016 the US was in recession’: Texas manufacturer

‘Historical data will show that in 2016 the US was in recession’: Texas manufacturer

Most economic data show that the US economy is still growing, albeit at a lackluster pace. According to the Bureau of Economic Analysis, US GDP grew at a 0.8% pace in Q2.

However, the big aggregate numbers fail to capture the tone of what’s going on at more localized levels. For some manufacturing and energy driven economies in the US, things look like a recession if not an outright depression.

Sometime after the election, historical data will show that in 2016 the U.S. was in recession,” said a machinery manufacturer who responded to the Dallas Fed’s latest manufacturing outlook survey. (Every month, the Dallas Fed conducts a survey of Texas-based manufacturers for an up-to-date read on the state’s economic activity.)

“The global economies and the US economy are very weak and uncertain,” a fabricated metal product manufacturer said.

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source: https://www.yahoo.com/news/dallas-fed-report-us-recession-000000460.html

5 Top Restaurant Stocks for Dividend Income

5 Top Restaurant Stocks for Dividend Income

Restaurant stocks are a little risky, since they’re subject to food scares, seasons and recessions, but they’re fun, especially if they have dividends.

Yet some analysts are predicting a bear market will impact restaurant stocks in the near future, since consumers cut their discretionary dining budgets when times are tight. The sector is on the front lines when the bear market appears.

But others say the public might head toward affordable food, so restaurants with lower priced menus might do well. And, with consumer confidence in July at one of the highest points since the recovery, at 97, and unemployment claims so low, these may be signals of a healthy economy.

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source: https://www.yahoo.com/news/5-top-restaurant-stocks-dividend-income-134408591.html

This Analyst Correctly Called 5 Market Crashes – Now He’s Looking at 3 Crucial Dates

This Analyst Correctly Called 5 Market Crashes – Now He’s Looking at 3 Crucial Dates

Only a handful of analysts in the financial world are renowned for their uncanny ability to predict major market movement, and among that handful, Sandy Jadeja has one of the best track records. Jadeja’s predictions have proven true time and time again, and now he’s going public with his latest set of market predictions.

Jadeja has correctly called major trends in some of the most unpredictable markets in the world, including the oil market, which followed his predictions almost to the letter between July and August of this year.

Now he’s setting his sights on the broader market, predicting what investors can expect in the stock market for the remainder of 2016.

Business Insider spoke directly with Jadeja. Here’s their exclusive report:

The man who accurately predicted four market crashes to the exact date has been proved correct on his fifth prediction.

Sandy Jadeja is a technical analyst and chief market strategist at Core Spreads.

Technical analysts look at charts to pinpoint patterns in various markets and asset classes. From that they forecast which direction prices are likely to move.

They can’t tell you why there will be a big market movement — only that there will be one. His previous four predictions are explained in detail here.

He told Business Insider last month that there was an “80% probability of lower [oil] prices from July 2, right through to August 18.”

“Interestingly if we take a look at the chart [below], we can clearly see the technical indicator on the lower portion of the chart showing a potential move to lower prices,” Jadeja told Business Insider at the time. ” This is a well-known seasonal effect that many commodities tend to follow and can be utilised for profitable trading.”

This was the chart he provided at the time. As you can tell, there is “V” pattern for the period, with a significant slide in prices before a slight recovery toward the end:

oilpredictiontechchart3Sandy Jadeja

During this period, oil prices did indeed follow this pattern. First of all, look at how oil prices behaved during the beginning half of the time period:


Overall, from July 2 to August 18, here is the oil price movement that mirrors Jadeja’s chart:


Oil has been a tricky market to predict. Oil, which cost over $110 a barrel in June 2014, is now trading at about $47 a barrel. At one point this year it was touching $20 a barrel.

The oil market was hailed as returning to the bull market after hovering above $50 a barrel. Prices fell again, however, and couldn’t keep above $50 a barrel because of chronic oversupply in the market.

There are several key dates that we need to watch out for, Jadeja said in June this year. Sharp movements in the US stock market could spread to other areas on the dates listed below, Jadeja said.

1. Between August 26 and August 30, 2016.

2. September 26, 2016.

3. October 20, 2016.

“We have interesting times ahead of us,” he told Business Insider in June. “We are dealing with issues on so many levels from economic uncertainty in the financial markets, including currencies and commodities as well as the rising house prices we have seen.

“I believe that using the information we have and embracing the tools and technology we have access to right now that we could use these to our advantage to prepare and protect as well as prepare and prosper.”

In trying to time the market, however, Jadeja noted the standard disclaimer that “past performance does not guarantee future certainty.”

Few sources measure up to Jadeja in terms of reliability, so investors are lucky to get his outlook first-hand.

What would you add to these predictions? Tell us your thoughts in the comments.

Citi Analysts Say Approaching Bond Market Turning Point Could Change Everything

Citi Analysts Say Approaching Bond Market Turning Point Could Change Everything

Bond yields are at their lowest in years, but analysts and commentators believe there could be a landmark turning point not too far ahead. Looking at the bond yield curve – the difference between short-term and long-term bond rates – there’s something fascinating hiding in the data.

According to Business Insider, Citi’s technical analysts are watching for the yield curve to repeat a historic trend that traditionally signals a major downturn.

But when the curve fulfills that trend this time, they think it could mean something totally different. Whether or not that’s good or bad remains to be seen. Here’s more from the original article:

Bond yields remain abnormally low across much of the developed world as policies of zero or even negative interest rates by the Bank of England, the Bank of Japan, theEuropean Central Bank, and the US Federal Reserve keep rates anchored.

That has kept the yield curve, which measures the difference between short-term rates and long-term rates, relatively flat even though some expect the Fed to raise rates again later this year.

According to Citi’s Technicals team, led by Tom Fitzpatrick, the spread between the US two-year yield and the US five-year yield is going to flatten further, and the current level of about 35 basis points is the “line in the sand.”

In other words, the yield curve is about to breach a crucial support level. That would normally trigger a “WHAT?”

Research from Citi shows that the three most recent breakdowns of that level produced a move lower to at least 11 basis points. And the yield curve eventually inverted, though in the case of the 1994 breakdown an inversion didn’t occur until the end of 1997.

Typically, when the yield curve inverts, it signals that a “negative economic/market event” has happened and that a recession is ahead.

2Y 5Y spreadCiti

Citi, however, says this time around is different and the narrative that a flattening yield curve is a negative for the US economy is “completely wrong.”

That thought process seems to go along with what others in the industry are saying.

At a round-table discussion in July, Mohamed El-Erian, Allianz’s chief economic adviser, told reporters: “If we were living in a normal world, that would be a massive signal of recession, it’s so flat, and at rates so low, that the only conclusion you could normally devise from the yield curve is that we are on the cusp of a major recession,” but what’s pulling down the yield curve, he said, “has less to do with the US and has more to do with Europe.”

Citi does warn, however, that there is a point at which it will begin to get worried. That is if the curve inverts by about 20 basis points. Then we might have problem, as the instances in 1989, 2000, and 2006 instances were all a harbinger of “bad things to come.”

And while the shape of the yield curve is important, Citi’s Technicals team says what is even more important is the type of flattening that occurs. Those scenarios include:

  1. Bear flattening, or the yield curve flattening as Treasurys sell off, causing yields to move higher. This occurrence would mean the shorter-term yield rises faster than the longer-term yield. Citi says this would happen if the market felt the Fed was going to start raising rates again. It believes something like this could happen in December.
  2. Bull flattening, or the yield curve flattening as Treasurys catch a bid, causing yields to fall. In this instance, the longer-term yield would fall faster than shorter-term yield. Citi believes this is unlikely to happen, however, as it would most likely occur if the Fed were to launch another round of quantitative easing or if foreign investors continued to play the long end as a play on rate differentials.
  3. “Hybrid flattening,” or short-term yields rise as long-term yields lag or even fall. According to Citi, “This is predominately a demand/supply driven dynamic where increased demand for value in the long end of the US curve is not matched by supply.”

As for how this eventually plays out, the team thinks this week’s Jackson Hole Symposiumcould lead the market to believe that a Fed rate hike won’t happen before the end of the year and that bull flattening will win out in the near-term. But that could turn into a hybrid flattening before eventually seeing bear flattening

After seeing the Citi technical team’s analysis, what do you think this means for bonds, as well as the market at large, moving forward?

Tell us what you think in the comments.

Dollar Store Earnings Reveal U.S. Consumers’ Terrifying Secret

Dollar Store Earnings Reveal U.S. Consumers’ Terrifying Secret

The majority of U.S. consumers are avid price shoppers. With a shrinking middle class and growing pressure on the lower class, shoppers are constantly seeking to cut costs in their personal budgets. Subsequently, major retailers like Walmart, Kroger, Dollar General, and Dollar Tree are competing with one another to slash prices on essential consumer staples as low as they possibly can.

That said, it would stand to reason that retailers like Dollar General and Dollar Tree would excel as consumers look for the cheapest options for common items. However, both chain’s earnings took a surprising hit last quarter.

The reason behind their slump isn’t what you’d think though. It’s not because Walmart beat them on pricing or because they failed to give consumers the products they want.

Instead, according to Dollar General CEO Todd Vasos, the problem lies in quickly decreasing spending power for the majority of U.S. consumers.

According to Zero Hedge’s evaluation of the story, over 50% of U.S. consumers are finding themselves unable to afford the everyday items they need, even though prices are lower than ever:

If there was any confusion about how the lower half of the US consumer class is doing these days, it was quickly lifted following today’s distressing earnings calls of dollar store titans, Dollar General and Dollar Tree.

Discount retailer Dollar General said it was cutting prices on its most popular items such as bread, eggs and milk, intensifying a price war among already commoditized products with retail giant Wal-Mart Stores to win back falling market share. It shares fell the most on record, plunging by 18% after the company missed on revenue, blaming aggressive competition, lower food prices and reduction in SNAP, or food stamp, coverage in 20 key states.

It’s larger ultra-discount rival Dollar Tree Inc also reported lower-than-expected sales, sending its shares down 10%, the biggest dollar drop decline since going public in 1995.


Dollar General, whose product selection prices are already among the lowest in the country, cut prices by 10% on average on about 450 of its best-selling items across 2,200 stores during the quarter, CEO Todd Vasos said on a conference call. It’s just the beginning: quoted byReuters, he said the company expects to extend the price reductions to more product categories and markets.

One factor for the declining operations is the aggressive cost-cutting by retail giant, Wal-Mart, which recently reported better than expected results. It now appears WMT solid performance was mostly on the back of margin reductions and major cost-cuts in an attempt to win market share from its lowest-priced competitors.  As Reuters notes, Wal-Mart’s strategy of cutting prices has helped the world’s largest retailer to boost sales in the latest two quarters.

“Wal-Mart’s been doing better lately, lowering prices, and that’s been a concern that (it) could impact dollar stores,” Edward Jones analyst Brian Yarbrough said. “Historically, it hasn’t as much but maybe we are seeing something different here.” Retailers are also grappling with a drop in grocery prices, further cutting into margins. Dollar General said prices for milk were down about 8% and for eggs over 50 %.

But the biggest factor by far impacting the performance of both dollar stores was the sharp, adverse turn in the purchasing power of the lower half of US consumers.

Both Dollar General and Dollar Tree said pressures on their core lower-income shoppers contributed to the same-store sales misses that both retailers reported. On today’s conference call, Dollar General CEO Todd Vasos said that he was surprised to admit that while on the surface things are supposed to be getting better, the reality is vastly different for low-income US consumers:

I know that when we look at globally the overall U.S. population, it seems like things are getting better. But when you really start breaking it down and you look at that core consumer that we serve on the lower economic scale that’s out there, that demographic, things have not gotten any better for her, and arguably, they’re worse. And they’re worse, because rents are accelerating, healthcare is accelerating on her at a very, very rapid clip.

Making matters worse, he added that the company’s core consumers base, 65% of which is comprised of lower-income shoppers, has been impacted by the recent reduction or elimination in foodstamps: “now couple that in upwards of 20 states where they have reduced or eliminated the SNAP benefit, and it has really put a toll on [the core consumer].”

He elaborated that the reduction in foodstamps benefits promptly filtered through the entire business model, and culminated with Dollar General being forced to cut prices to remain competitive.  This is what he said:

That SNAP benefit reduction and/or elimination happened in April. That was the kickoff, and you could see it immediately in the numbers. So I believe that those are the things that are affecting her today. Again, our core customer, and by the way, we’ve seen this play out before. If you dial the clock back to October of 2013 and coming into November of 2013, when the last large SNAP benefit reduction happened, it happened almost exactly the same way on our comps and in how we saw traffic. Obviously, we’re up at a little higher level at that time, but rest assured, that our traffic slowed tremendously then, very similar to as it did now.


The difference here is we’re going to take aggressive price action to get that consumer back in the store. She needs a little motivation to get back in. We need to help her stretch her budget for a time period until she figures it out. Our core customer is very resilient. They’ll figure it out over time, but they need a little help as they tend to now try to figure out how to make ends meet with less money during the month.

Dollar Tree, which said that fewer than 5% of its customers were SNAP recipients, echoed its competitor when explaining the stress being felt by its own shopper base. As CEO Robert Sasser said on the call, “the consumer is still seeing a lot of pressure on cost increase with rent and just food and healthcare and taxes and all the things. So we see them as still being under pressure. I think that’s the number one issue that we see out there.”

But back to the Dollar General call, where analysts were incredulous and were wondering if the deterioration in spending may have been the result of, wait for it, the recovery and broader consumer improvement, leading to “trading-up” to higher price point competitors. The exchange was amusing:

Q. I understood the issues with SNAP and deflation, but is there a piece of this that’s just related to the consumer job – labor market getting better, so that consumers spending a little bit better and they’re trading up? Is that not possible?


Vasos: I am not going to say, it’s not possible, but we have not seen that in our data. Once again, remember that over 60% to 65% of our sales and consumer base is on that lower demographic area that – of the economic scale. And when you keep that in mind, her life hasn’t gotten any better. And that’s really that customer that we’re serving the most, and that we’re intent on making sure has enough money and enough products inside her house to be able to feed her families.

And then there are soaring healthcare and rental costs:

[The] core consumer, I tell you, has gotten no better as far as her economic well-being. Matter of fact, she tells us, while we’re out in the stores or even through all of our panel data that we do, that while things haven’t gotten a lot worse as far as income coming in, other than the recent SNAP decrease, my expenditures are going up at a very rapid rate.


Healthcare is one of the big ones, because most of our consumers, while she may be working, doesn’t have healthcare, and we all know that she’s having to now pay for this healthcare or be taxed on it, right? So that is starting to really play against that low-end consumer right now, and it will continue to play against her. You couple that with those rents that we talked about, those increased rents are real, and in many parts of where we serve our customer, the affordability and availability of rental units are getting more and more scarce, which is driving up prices. And we’re seeing that because most of our core customers cannot and do not own their own homes. 

The punchline:

And when we’re out in stores and we drop prices like we do, I can tell you, I’ve been out in stores in the middle of the aisle and heard customers come up to our store manager in tears and thanking them for being there and thanking them for the prices that we offer in a real convenient nature for her, where she can walk to the store, because she can’t afford anything else. When you hear that, that really brings home where this core customer is.

We wonder if this particular tearful customer would also be accused by the president of peddling fiction.

What’s in store for the U.S. consumer base if they’re struggling this much? Do things have to get worse before they can get better?

Give us your take in the comments.