Shell to stop Russian oil and gas purchases, apologizes for buying shipment after Ukraine invasion
PUBLISHED TUE, MAR 8 20225:46 AM ESTUPDATED 39 MIN AGO
Matt Clinch

KEY POINTS
On Friday, Shell purchased 100,000 metric tons of flagship Urals crude from Russia.

It was reportedly bought at a record discount, with many firms shunning Russian oil due to Moscow’s unprovoked invasion of its neighbor.

The purchase did not violate any Western sanctions.

The company faced heavy criticism for the purchase, including from Ukraine’s Foreign Minister Dmytro Kuleba, who has urged companies to cut all business ties with Russia.

Oil major Shell on Tuesday apologized for a buying a heavily discounted consignment of Russian oil and announced it was withdrawing from its involvement in all Russian hydrocarbons.

“As an immediate first step, the company will stop all spot purchases of Russian crude oil. It will also shut its service stations, aviation fuels and lubricants operations in Russia,” it said in a statement.
https://www.cnbc.com/2022/03/08/shell-apologizes-for-buying-russian-oil-announces-phased-withdrawal.html

Been there / Done that / LoL / Much of my "career" was "spent" in Golf /
That's how I "knew about" Toro Lawnmowers / But = Oh ! If I/we'd only INVESTED! in them !

Kinda SUSPECTED at the time that I should invest but of course never at all followed up on it.

Hey - I used to be the "go to" guy for re-sodding the greens when the Toros, etc, leaked.

But they ALSO assigned me to mostly changing the cups which was nice but I longed for variety

So I quit and went onto my own landscaping work

I've managed driving ranges and worked in Pro shops too....Cleaned clubs from age 13 to 18

And caddied

I worked on a golf course when I was young for a couple of years.


All our greens mowers were Toros with reels and grass catchers.

The greens mower was a 3 gang unit with hydraulics to raise and lower the reels. If a hydraulic line blew out on the green it would leave a skid mark that took a couple of weeks to repair.

We used to test the sharpness of the reels with newspaper.

We had a retired Baptist minister who used to sharpen the reels. He swore like a trooper at us if we hit a pebble on the green from a sand trap.

We had a retired guy who was our pinsetter. He would never play golf on Mondays with us when we were off. But he knew all the rules when it came to pinsetting.

He had his own Cushman 3 wheeler and that was his only job.


Members at the club on weekends would complain to where he set pins.

He'd say screw them if they can't hit a wedge.

Yes but pple have been mowing their grass for a long time

Why my Dad used to make ME mow the grass (with a Briggs * Stratton) reel mower with a wire frame cloth grass catcher

Nowadays though - it's a "corporate-led" thang / especially at golf courses and city parks

From 5 bucks to 120 bucks - Nice



https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=de&x=47&y=17&time=100&startdate=3%2F1%2F2000&enddate=8%2F23%2F2021&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=50+200&uf=0&lf=1&lf2=0&lf3=0&type=2&style=320&size=3&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11

Yes. And people are mowing lawns again.

https://finance.yahoo.com/quote/DE/

Caterpillar Propels The Dow



5 sessions earlier

Boeing posts sixth consecutive quarterly loss, expects turning point in 2021
PUBLISHED WED, APR 28 20217:00 AM EDTUPDATED 2 HOURS AGO
Leslie Josephs

KEY POINTS
Boeing said it expects 2021 to be a turning point as more people are vaccinated against Covid-19.
It has reported an improvement in plane orders this year as travel demand bounces back.

https://www.cnbc.com/2021/04/28/boeing-ba-q1-2021-earnings.html

Credit Suisse and Nomura stocks tumble following an investment firm’s defaults.

The fallout from a series of defaults at a New York hedge fund reverberated through markets for a second day on Monday, as global banks tried to size up their exposure to one firm’s string of bad bets.

Shares in Credit Suisse, the Swiss bank, dropped 14 percent on Monday and the Japanese bank Nomura closed 16 percent lower, after the banks said they could face significant losses because of defaults by an American investment firm.

U.S. stock futures fell on Monday, with the S&P 500 set to open 0.7 percent weaker. European stock indexes were mixed but an index of European banks was 1.6 percent lower.

Neither Credit Suisse nor Nomura named the investment firm whose default could lead to big losses, but Bloomberg identified it as Archegos Capital Management, a New York-based family office that manages the wealth of Bill Hwang, a former hedge fund manager at Tiger Asia Management who was found guilty of wire fraud in 2012.

Investment banks that provided services to Archegos, such as Goldman Sachs and Morgan Stanley, dumped huge quantities of stocks including ViacomCBS and Chinese tech companies on Friday.

Archegos was forced into the stock sales, worth about $20 billion, after bets the fund made moved the wrong way, Bloomberg reported. Shares in ViacomCBS, one of Archegos’s positions, dropped 23 percent on Wednesday last week. On Friday, the share price plummeted a further 27 percent as the investment banks liquidated positions.

Shares in Goldman Sachs and Morgan Stanley were about 3 percent lower in premarket trading. Shares in Deutsche Bank fell more than 4 percent on Monday, after it was said to also have some exposure to Archegos.

Credit Suisse has already been roiled this month by the collapse of Greensill Capital, a London-based financial firm it sold funds for, and to whom it extended loans of $140 million. The Swiss bank told investors it would probably report some losses on the loan.

“A significant U.S.-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks,” the Swiss bank said on Monday. It did not yet know the exact size of the loss from exiting its positions but “it could be highly significant and material to our first quarter results,” the statement said.

https://www.nytimes.com/live/2021/03/29/business/stock-market-today?

New name for BB&T-SunTrust bank lampooned: ‘You could put this on a brand of toothpaste’
PUBLISHED 2 HOURS AGOUPDATED AN HOUR AGO
Michael Sheetz
@THESHEETZTWEETZ
KEY POINTS
SunTrust and BB&T announced that Truist Financial will be the name of the company once the banks’ merger is complete later this year.
The name is intended to give the bank a single, fresh identity. But Wall Street analysts fear it may be less seamless than the banks hope, while some consumers reacted even more negatively.
“They have thrown aside two great brands that had real value in exchange for this horrific, means-nothing statement,” said investor psychologist Peter Atwater.
Other analysts were not as unnerved, with one saying “these changes may seem strange at first but with time are accepted and become normal.”

https://www.cnbc.com/2019/06/13/truist-name-for-bbt-suntrust-bank-lampooned-by-analysts-customers.html

Don’t Let Trump Mess With the Fed
Steady leadership at the Federal Reserve is keeping the economy on track.
By Steven Rattner
Mr. Rattner served as counselor to the Treasury secretary in the Obama administration.
April 29, 2019

Once again, the Federal Reserve has regrettably become a favorite whipping boy.

President Trump has been lobbying it to lower interest rates, even though the unemployment rate is 3.8 percent. Progressives are still complaining that the central bank didn’t do enough to stimulate the economy in the wake of the 2008 recession.

More worrisome, Mr. Trump has been attacking the Fed’s actions with more vitriol than any previous president in memory while proposing two highly partisan and unqualified nominees to join a distinguished board that has historically been free of any political agenda.

The policy critics on both sides are about as wrong as imaginable. And above all, we need to guard the independence of the central bank, the most important government institution that has not been divided by the deep partisanship so evident elsewhere.

In an era when even the Supreme Court divides routinely along ideological lines, the Fed still maintains an analytical and, as the former chairman Janet Yellen liked to say, data dependent approach to policymaking.

Sure, disagreements occur, and at times, one or two members of the committee that sets interest rates register a dissent. But contrast that general equanimity with the squabbling Supreme Court.

For that, credit goes to all recent presidents (including, in his first two years, Mr. Trump), who have appointed board members with strong economic and financial credentials and a shared commitment to analytical policymaking.

Now the president wants to change that.

Happily, the Senate has already made clear that Herman Cain — with little relevant experience and charges of sexual harassment swirling around him — would have been unlikely to survive confirmation. (Mr. Cain withdrew his name from consideration.) And Stephen Moore, with a raft of tax peccadilloes, would also have to explain past statements like “I’m not an expert on monetary policy.”

Mr. Trump and his aides base their call for the Fed to lower rates on quiescent inflation, a phenomenon that could well be either aberrational or a new normal. Put me down as generally skeptical of pronouncements of a new normal.

And having come of age as a young Times reporter covering economic policy during a period of rampant inflation, I’m particularly skeptical of declaring inflation dead and buried.

Regardless, few mainstream economists believe that the interest rate increases to date have impeded the recovery, nor would cutting them materially accelerate growth.

“The president is using the Fed as a scapegoat for his own economic policy mistakes,” Mark Zandi, the chief economist of Moody’s Analytics, told me. “The Fed’s actions last year have no bearing on long-term economic growth.”

Of course, the Fed doesn’t always get it right. (It famously missed the dangers of the credit bubble in 2007.) But neither do the rest of us, including the Trump officials who are now implicitly or explicitly criticizing the Fed.

In June 2005, as home prices began to soften in overbuilt markets, Lawrence Kudlow, now director of the National Economic Council, said that only “bubbleheads” believe that housing weakness would “bring down the consumer, the rest of the economy and the entire stock market.”

Then there was the open letter, penned by a distinguished group of economic thinkers in November 2010 when unemployment was still nearly 10 percent, decrying the Fed’s use of aggressive monetary tools to fight the effects of the huge downturn.

Among the signatories: Kevin Hassett, then at the American Enterprise Institute. Mr. Hassett is now chairman of the president’s Council of Economic Advisers but to his credit, has refrained from participating in the latest round of Fed bashing.

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Progressives have a different view of Fed policy over the past decade: Remarkably, they argue that the Fed was insufficiently aggressive in fighting the 2008 downturn.

Too timid? Really? In unprecedented actions, the Fed kept interest rates close to zero for seven years and engaged in an aggressive bond buying program known as quantitative easing.

That program, which prompted the enraged letter from conservatives when the Fed’s balance sheet totaled $2.3 trillion, ultimately reached $4.5 trillion. And after the economic data started to wobble late last year, the Fed announced that it would taper the reduction of its holdings.

What progressives don’t understand is that while it is immensely powerful, the Fed can’t solve all our economic problems. For example, weak productivity growth and raging income inequality need to be addressed through legislative action: better tax policy, increased spending on infrastructure and the like.

Meanwhile, as with so many other matters, Mr. Trump’s saber rattling has unnerved international allies. A week ago, the European Central Bank’s president, Mario Draghi, said that he was “certainly worried about central bank independence,” especially “in the most important jurisdiction in the world.”

We should all be worried. And most important, Mr. Trump should keep his hands off the Fed.

https://www.nytimes.com/2019/04/29/opinion/stephen-moore-fed.html

Trump Nominates Famous Idiot Stephen Moore to Federal Reserve Board
By Jonathan Chait@jonathanchait

Stephen Moore’s career as an economic analyst has been a decades-long continuous procession of error and hackery. It is not despite but precisely because of these errors that Moore now finds himself in the astonishing position of having been offered a position on the Federal Reserve board by President Trump.

Moore’s primary area of pseudo-expertise — he is not an economist — is fiscal policy. He is a dedicated advocate of supply-side economics, relentlessly promoting his fanatical hatred of redistribution and belief that lower taxes for the rich can and will unleash wondrous prosperity. Like nearly all supply-siders, he has clung to this dogma in the face of repeated, spectacular failures.

I first started writing about Moore in 1997. Four years before, President Clinton had raised the top tax rate to 39.6 percent, and supply-siders had insisted this would without question cause tax revenues to drop. This prediction was a necessary corollary of supply-side economic theory, which holds that tax revenue moves in the opposite direction of the top tax rate. The prediction was spectacularly wrong — revenue not only rose, it rose much, much faster than even the most optimistic advocates of Clinton’s plan had predicted.

Most supply-siders simply ignored this fact altogether. Moore, somewhat unusually, attempted to defend the original failed prognostication. His effort was hilariously buffoonish, using a series of errors that would embarrass a high-school economics student, such as failing to correct for inflation, and combining payroll tax data with income tax data.

In the years since, I have continued following his career, and he has shown no intellectual growth at all. He is capable of writing entire columns that contain no true facts at all. He made so many factual errors he achieved the rare feat of being banned from the pages of a Midwestern newspaper. He has sold his policy elixir to state governments which have promptly experienced massive fiscal crises as a direct result of listening to him. He believes what he calls “the heroes of the economy: the entrepreneur, the risk-taker, the one who innovates and creates the things we want to buy” should be lionized, and that the idea that a recession might be caused by anything other than excessively high rates on these heroes defies “common sense.” He was pulled into Trump’s orbit during the 2016 campaign and co-wrote a ludicrous hagiography of Trump and his agenda. By all appearances, Moore opposes mainstream fiscal theories because he simply doesn’t understand them.

And yet, for all their extravagant ignorance, Moore’s beliefs on fiscal policy are actually more sophisticated and well-developed than his views on monetary policy. It is the latter that he would be in a position to influence as a Federal Reserve governor.

Moore’s beliefs on monetary policy — it might be more accurate to describe them as “impulses” — tend to default to partisanship. During the Obama presidency, he warned that runaway government spending would produce hyperinflation. In 2009, he appeared on Glenn Beck’s program to wax hysteric. “We’ve seen this happened to Mexico, Bolivia, Argentina, Zimbabwe, Russia, all consumed by government, all do-gooders — some of that led to the decline of their civilizations,” he said, describing the scenario in lurid detail:

BECK: So, do we have hyperinflation with this scenario?

MOORE: Could be. I mean, that’s happened — in some countries, hyperinflation gets so bad, Glenn, that people have to go to the shopping stores literally with wheelbarrows full of their currency. In some countries, that people don’t even use the currency. In other countries, they print the currency but they don’t put the denomination on it because they write it down on the piece of paper.

BECK: Okay.

MOORE: And the currency becomes as valueless as the paper that it is printed on.

MOORE: And why do people buy gold?

(CROSSTALK)

MOORE: Because they don’t think money is worth anything anymore.

GERALD CELENTE: Not worth the paper it’s printed.

MOORE: Right. They don’t think it’s worth anything.

In 2010, Moore was still predicting hyperinflation and urging his audience to buy gold. Even by 2015, Moore was still urging the Federal Reserve to raise interest rates. “We’ve had seven years of zero interest rates and the lousiest recovery in 75 years,” he said, “So that’s one reason a lot of us feel like it’s time to get off the zero interest rate policy.”

There was no evidence for this position at all. Had Moore’s advice been followed, it would have led to a quick end to the recovery and a deep recession. It did, however, dovetail with the Republican Party’s political imperative of encouraging contractionary fiscal and monetary policy, in order to slow down or strangle the recovery.

Since Donald Trump moved into the White House, the Republican Party has reversed its views on both fiscal and monetary policy. Whereas it had previously deemed deficits and inflation a mortal threat, and called stimulus and lower interest rates counterproductive, the party line now demands both.

Moore has naturally ridden along with this reversal, but what has set him apart is the fervency with which he has embraced the volte-face. He has insisted on television that the economy is experiencing deflation, and when corrected by panelist Catherine Rampell on this unambiguous error of fact, refused to give ground. He has called for firing the Federal Reserve chairman as well as firing the entire Federal Reserve board.

Mooore’s current ultra-dovish stance is hardly anywhere near as ridiculous as his previous ultra-hawkish stance. The problem is that he has no grasp of the policy, and simply follows whatever line helps the Republican Party. While the internal workings of his mind remain a matter of speculation, I doubt he is consciously venal enough to tailor his thinking explicitly to partisan goals. Rather, Moore has extremely strong partisan instincts and extremely limited analytical skills. The combination results inevitably in the latter giving way to the former. He should not be permitted any position of serious responsibility, in government or anything else.

http://nymag.com/intelligencer/2019/03/stephen-moore-federal-reserve-trump.html

The Financial Crisis Put a Chill on Big Bank Deals. That Ended Thursday.
If approved, the merger of BB&T and SunTrust would create the sixth-biggest bank in the U.S., large enough to compete against the country’s largest lenders.
1d ago
By MICHAEL J. DE LA MERCED and EMILY FLITTER

https://www.nytimes.com/2019/02/07/business/dealbook/bbt-suntrust-bank-mergers.html

The Year in Charts
Economic and other indicators are making it increasingly clear that Trump’s economic dreams are unlikely to come true.

Steven Rattner
By Steven Rattner
Mr. Rattner was counselor to the Treasury secretary in the Obama administration.

https://www.nytimes.com/2018/12/31/opinion/trump-2018-charts.html

The Ghost of Trump Chaos Future
Sorry, investors, but there is no sanity clause.
By Paul Krugman
Opinion Columnist
Dec. 24, 2018

Two years ago, after the shock of Donald Trump’s election, financial markets briefly freaked out, then quickly recovered. In effect, they decided that while Trump was manifestly unqualified for the job, temperamentally and intellectually, it wouldn’t matter. He might talk the populist talk, but he’d walk the plutocratic walk. He might be erratic and uninformed, but wiser heads would keep him from doing anything too stupid.

In other words, investors convinced themselves that they had a deal: Trump might sound off, but he wouldn’t really get to make policy. And, hey, taxes on corporations and the wealthy would go down.

But now, just in time for Christmas, people are realizing that there was no such deal — or at any rate, that there wasn’t a sanity clause. (Sorry, couldn’t help myself.) Put an unstable, ignorant, belligerent man in the Oval Office, and he will eventually do crazy things.

To be clear, voters have been aware for some time that government by a bad man is bad government. That’s why Democrats won a historically spectacular majority of the popular vote in the midterms. Even the wealthy, who have been the prime beneficiaries of Trump policies, are unhappy: A CNBC survey finds that millionaires, even Republican millionaires, have turned sharply against the tweeter in chief.

But market behavior has, until recently, been a different story.

The reality that presidential unfitness matters for investors seems to have started setting in only about three weeks (and around 4,000 points on the Dow) ago. First came the realization that Trump’s much-hyped deal with China existed only in his imagination. Then came his televised meltdown in a meeting with Nancy Pelosi and Chuck Schumer, his abrupt pullout from Syria, his firing of Jim Mattis and his shutdown of the government because Congress won’t cater to his edifice complex and build a pointless wall. And now there’s buzz that he wants to fire Jerome Powell, the chairman of the Federal Reserve.

Oh, and along the way we learned that Trump has been engaging in raw obstruction of justice, pressuring his acting attorney general (who is himself a piece of work) over the Mueller investigation as the tally of convictions, confessions and forced resignations mounts.

But let’s play devil’s advocate here: Does all this Trump chaos matter for the economy, or for the stock market (which isn’t at all the same thing)? At first sight, it’s not all that obvious.

After all, aside from the prospect of trade war, none of Individual-1’s tantrums, unpresidential as they are, have much direct economic impact. Even the government shutdown will impose only a modest drag on overall spending.

And even trade war might not do that much harm, as long as it’s focused mainly on China, which is only one piece of U.S. trade. The really big economic risk was that Trump might break up Nafta, the North American trade agreement: U.S. manufacturing is so deeply integrated with production in Canada and Mexico that this would have been highly disruptive. But he settled for changing the agreement’s name while leaving its structure basically intact, and the remaining risks don’t seem that large.

So why do investors seem to be losing their what-me-worry attitude? It’s not so much what Trump is doing, as what he might do in the future — or, perhaps even more important, what he might not do.

The truth is that most of the time, presidential actions don’t matter much for the economy; short-term economic management is mainly up to the Fed. But when bad things happen, we do need the White House to step up. In 2008 and 2009, it mattered a lot that officials of both the outgoing Bush administration and the incoming Obama administration responded competently and intelligently to the financial crisis.

Unfortunately, there’s no reason to expect a comparable degree of competence if something goes wrong again.

Consider how the Trumpistas have responded to falling stocks. So far these are just a minor economic bobble. Yet Trump himself, having claimed credit when stocks were rising, has flown into a rage and lashed out; hence the attacks on Powell. Meanwhile, top officials are still claiming that last year’s tax cut was a triumph in the teeth of the evidence, and issuing bizarre statements — via Twitter — about the health of the banks, which nobody was questioning.

Now imagine how this administration team might cope with a real economic setback, whatever its source. Would Trump look for solutions or refuse to accept responsibility and focus mainly on blaming other people? Would his Treasury secretary and chief economic advisers coolly analyze the problem and formulate a course of action, or would they respond with a combination of sycophancy to the boss and denials that anything was wrong? What do you think?

Let’s be clear: There isn’t an obvious crisis-level threat looming at the moment. But growth is slowing, and as the bumper stickers don’t quite say, stuff happens. And if and when it does, the people who would be supposed to deal with it are the gang that can’t think straight. Merry Christmas.

https://www.nytimes.com/2018/12/24/opinion/trump-economy-stock-market.html?

How Sears Helped Oppose Jim Crow
For black Southerners in 1900, shopping locally meant enduring indignities and implicit threats. Enter the catalog.
By Louis Hyman
Mr. Hyman is an economic historian.

Oct. 20, 2018

Every year I give a lecture on the history of retail in which Sears, central to American shopping for a century, plays a starring role. On Monday, when Sears filed for bankruptcy protection, I got a little wistful — not because I was particularly attached to the company, but because of the largely unsung role of its iconic catalog in helping African-Americans evade the injustices and humiliations of the Jim Crow era.

Historians typically date the Jim Crow era to the Mississippi Plan of 1890, which amended Mississippi’s Constitution to allow the disenfranchisement of African-Americans. But the true onset of this era came earlier, and it started with shopping. In 1883, the Supreme Court voided the Civil Rights Act of 1875, which had banned discrimination in public businesses like theaters, restaurants, trains and shops. The loss of political rights, then, followed the loss of consumer rights. Jim Crow was active white resistance to black people’s freedom both at the ballot box and at the local shop.

Every time black Southerners went to a local store, they were forced to wait as white customers were served first. Serving white customers before black ones might seem a relatively small insult, but behind that racial ordering was an omnipresent threat of violence. Products in these stores reminded black shoppers that whites did not consider them deserving of human dignity: Grotesque caricatures of black faces were used as a “humorous” way to sell toothpaste, soap and nearly anything else; far more harrowing, with the rise of public “spectacle” lynching in the 1890s, black people could find the charred remains of lynching victims for sale alongside postcards commemorating the event.

Waiting for service was not mere discrimination. It was part of a larger world of white violence.

Then there was the matter of buying items on credit. Farmers, white and black, depended on credit to survive until the harvest. Credit came through small general stores, where the (white) shopkeeper would decide what you were allowed to buy. Black sharecroppers would often be in perpetual debt to a store, which was often owned by their landlord and employer. The credit price for goods, higher than the cash price, always managed to leave sharecroppers a little in the red even after they were paid for their crops. This debt system bound black farmers to the land in an almost feudal fashion. Adding insult to injury, black people were often even not allowed to purchase the same quality clothes as white people.

If you were a black Southerner in 1900, finding another way to shop would have been a godsend. Enter the Sears catalog.

The catalog, which was introduced around 1891, undid the power of the storekeeper, the landlord and, by extension, the racially marked consumerism of Jim Crow. All of a sudden, black families could buy whatever they wanted without asking permission. The Sears catalog, unlike the earlier Montgomery Ward catalog, also offered credit. With that credit, black farmers could buy the same overalls and hats as white people, and even the same guns (and farm equipment).

Prices were lower, too. Indeed, the catalog was so successful in part because it brought low prices to the countryside. And flipping through the catalog was like strolling through a department store in Chicago. For sharecroppers who had often never have left the county in which they were born, the catalog was a window into another, freer life.

Shopkeepers resisted this newfound freedom. They convinced their customers to burn the catalogs in public squares, and offered prizes for the most catalogs destroyed. Part of the resistance was economic, pushing back against the catalog’s threat to local businesses, but the racism of Jim Crow was also at work. In an attempt to discourage whites from using the catalog, shopkeepers told them that Sears was a black company, and that was why it sold by mail — to hide its black face.

Richard Sears and Alvah Roebuck, the company’s founders, published photos to “prove” they were white. They were not anti-racist crusaders. But in an important sense, it didn’t matter to black customers whether Sears itself was for or against Jim Crow. Simply by giving African-Americans equal access to consumer goods, the company doing something radical, even if it was profitable.

This aspect of the Sears legacy is a reminder that retail is never just about buying things; it is also part of a larger system of power that seeks to define and control us. Politics and commerce are never far apart. Capitalism promised both the right to property and the right to shop. Jim Crow denied both.

Today, it is easy to take for granted the ability to buy what you want, if you have the money. But that still is not always the case. In some ways, the freedom of the Sears catalog is echoed in how online shopping allows transgender people to buy clothes without being harassed and African-Americans to browse without being followed down the aisles. Even the conservative right to spend your own money still contains radical possibilities.

Louis Hyman, the director of the Institute for Workplace Studies at the ILR School at Cornell, is the author of “Temp: How American Work, American Business and the American Dream Became Temporary.”

https://www.nytimes.com/2018/10/20/opinion/sears-catalog-jim-crow.html?action=click&module=Opinion&pgtype=Homepage

Trump Takes a Rare Presidential Swipe at the Fed
By Jim Tankersley
July 19, 2018

WASHINGTON — President Trump criticized the Federal Reserve on Thursday for raising interest rates, a rare rebuke by a sitting president that upends longstanding White House protocol to avoid commenting on monetary policy.

Mr. Trump, in an interview with CNBC set to air on Friday morning, said that he was “not thrilled” about the Fed’s decision to raise interest rates twice so far this year, to a current range of 1.75 to 2 percent. He implied that the moves, which are aimed at getting interest rates back to historically normal levels, could derail his administration’s efforts to bolster the economy and put the United States at a disadvantage.

“I don’t like all of this work that we’re putting into the economy and then I see rates going up,” Mr. Trump said, according to excerpts released by CNBC. “I am not happy about it.”

The highly unusual comments come as Mr. Trump and Republicans try to make a booming economy a big issue in the midterm elections this year. At a White House event on Thursday, Mr. Trump — flanked by executives from some of the biggest companies in the country — announced a worker retraining program that he said would further goose employment. On Capitol Hill, Republican lawmakers are trying to pass a second round of tax cuts that would make permanent many of the individual cuts in last year’s $1.5 trillion package.

But as the economy finally gains steam after years of sluggish growth in the wake of the Great Recession, the Fed is facing a delicate political and economic balance. Unemployment is at an 18-year low. Inflation is running above the Fed’s 2 percent target. Gross domestic product growth could hit 3 percent this year, which would be the best rate in more than a decade, and growth for the second quarter is estimated to be as high as 5 percent when the numbers are released on Friday morning.

If the Fed raises rates too quickly, it risks slowing growth at a time when wages have stagnated for most American workers, after accounting for inflation. But if it raises rates too slowly, some Fed officials fear the economy could “overheat” and ignite a rapid spiral of price increases that could eventually prompt a recession. Historically, presidents have preferred lower rates, because faster economic growth typically helps incumbents win re-election.

Indeed, during his presidential campaign, Mr. Trump accused the Fed of getting political, saying that the bank’s chairwoman at the time, Janet L. Yellen, should be “ashamed” for keeping interest rates low — a move he said was meant to help President Barack Obama.

The Fed is on track to raise rates twice more this year, for a total of four increases in 2018, after cutting them to near zero in the wake of the financial crisis. The chairman of the Fed, Jerome H. Powell, has continued to express confidence that the United States economy is strong enough to handle higher borrowing rates. Typically, a period of economic expansion is the exact moment when a central bank seeks to raise rates, to keep price growth in check — and in part to maintain firepower to lower borrowing costs during the next economic downturn.

Larry Kudlow, who leads the National Economic Council, said on Thursday that Mr. Trump’s comments were not unusual in historical context.

“Lots of people talk about the Fed. That doesn’t mean they’re jawboning them,” Mr. Kudlow said, adding that the president was not “in any way, shape or form trying to influence the Fed or undermine its independence.”

Former White House officials said Mr. Trump’s words could backfire by building pressure on Fed officials to demonstrate political independence.

“Likely result of Presidential intervention is higher rates as Fed needs to assert its independence,” Lawrence H. Summers, a top economic official in the Obama and Clinton administrations, said Thursday on Twitter. “That is part of the reason why wise Presidents respect Fed independence.”


Lawrence H. Summers
?
@LHSummers
Attacking central bank is one more step in what seems like a Presidential strategy of turning the United States into a banana republic.

2:52 PM - Jul 19, 2018
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It is not the first time that Mr. Trump and members of his administration have broken economic policy protocols. The president tweeted about the monthly jobs report shortly before its release on June 1, hinting that it would be strong. Steven Mnuchin, the Treasury secretary, moved currency markets in January when he said a weak dollar could help the United States in trade.

In his interview with CNBC, Mr. Trump said that rising rates were putting the United States at a disadvantage with its trading partners, including Japan and the European Union, which have kept their own interest rates near zero as the Fed has increased rates. The rate hikes have contributed to a strengthening of the dollar in recent months, which allows Americans to more easily buy imported goods and services. That can widen the trade deficit, a metric that Mr. Trump believes indicates weakness in the American economy.

Mr. Trump also seemed to suggest he would not try to meddle in the Fed’s affairs, saying “I’m letting them do what they feel is best.” He also called Mr. Powell, whom he nominated as Fed chairman last year, “a very good man.”

Mr. Trump said that he understood he was breaking with that protocol, but that he did not care.

“Now I’m just saying the same thing that I would have said as a private citizen,” he said. “So somebody would say, ‘Oh, maybe you shouldn’t say that as president.’ I couldn’t care less what they say, because my views haven’t changed.”

Presidents have no direct authority over interest rate decisions, only the power to appoint some of the Fed members that set those rates.

While there have been some instances in the past of presidents weighing in on monetary policy, those have been rare. Independence from presidential criticism has long been a hallmark of the Fed’s existence, and a contributor to its ability to maintain monetary policy that aims to keep inflation stable and the economy running at maximum employment.

A Fed spokesman declined to comment on Thursday. The two most recent past leaders of the Fed, Ms. Yellen and Ben S. Bernanke, also declined to comment.

Mr. Powell has said repeatedly that the president has not attempted to interfere with the Fed’s policy decisions and would have no success if he tried.

“Let me just say I’m not concerned about it,” Mr. Powell told the Marketplace radio program in an interview last week. “We have a long tradition here of conducting policy in a particular way, and that way is independent of all political concerns.”

Asked about possible White House displeasure over rate increases at his inaugural news conference in March, Mr. Powell responded: “No. That doesn’t keep me awake at night. We don’t consider the election cycle.”

Mr. Trump has nominated five members to the Fed board, including Richard Clarida, a Columbia University economist who is awaiting confirmation by the Senate on his appointment as vice chairman, and Michelle W. Bowman, the Kansas banking commissioner, who has been nominated for a seat reserved for community bankers. Both pledged to carry out their jobs free of political interference during their confirmation hearings, and Mr. Clarida said that the president had “absolutely not” indicated a preference for how he should vote on interest rate decisions.

But one of the candidates Mr. Trump considered for chairman, the former Fed governor Kevin Warsh, said on a Politico podcast this year that during an interview for the position, the president had made his opinions on interest rate policy clear.

“If you think it was a subject upon which he delicately danced around, then you’d be mistaken. It was certainly top of mind to the president,” Mr. Warsh said. Later, he added: “In some sense the broader notion of an independent agency, that’s probably not an obvious feature to the president.”

Mr. Warsh said on Thursday that he was too busy to discuss Mr. Trump’s CNBC comments.

The most recent presidents to openly pressure a Fed chairman to keep interest rates low, to lift growth, were George Bush and Richard M. Nixon.

“I respect his independence,” Mr. Nixon said of the chairman at the time, Arthur F. Burns, at his swearing-in at the White House in 1970. “However I hope that independently he will conclude that my views are the ones that should be followed.” Mr. Nixon continued, “That’s a vote of confidence for lower interest rates and more money.”

His aides would later seek to undermine Mr. Burns, including by spreading a story that he had sought a big pay increase at a time he was urging lower pay hikes. Mr. Burns later wrote in his diary of Mr. Nixon, “I knew that I would be accepted in the future only if I suppressed my will and yielded completely — even though it was wrong at law and morally — to his authority.”

In the administrations of Ronald Reagan and Mr. Bush, there were efforts to influence the Fed chairmen Paul Volcker and Alan Greenspan, though those tended to be more subtle.

Nicholas F. Brady, Treasury secretary to Mr. Bush, privately urged Mr. Greenspan to lower interest rates in spring and summer 1991, as Mr. Greenspan’s reappointment as Fed chairman was being weighed.

However, upon being reappointed, Mr. Greenspan did not lower rates as much as the Bush administration preferred. Mr. Bush would later blame Mr. Greenspan for his election loss in 1992, which occurred in the aftermath of a recession.

“I reappointed him, and he disappointed me,” Mr. Bush said in a television interview in 1998.

Neil Irwin contributed reporting.

https://www.nytimes.com/2018/07/19/business/trump-fed-interest-rates.html

Stock Markets Are Scary. Suddenly, It’s a Good Time to be a Trader.
By LANDON THOMAS Jr.MARCH 8, 2018

Inflation scares. Trade wars. Rising interest rates.

Suddenly, it is a scary time to be an investor — but a great time to be a trader.

After nearly a decade of calmly climbing stock markets, a period during which algorithms and index-tracking funds reigned supreme, newly volatile markets and the return of a little bit of fear have given new life to an old Wall Street creature: the swaggering risk-taker.

Hedge funds, after years of poor performance and rich fees that led to questions about the viability of the industry’s business model, are finally beginning to perform better. Having steered clear of increasingly pricey stocks, so-called value investors, who make long-term wagers on undervalued companies, are getting back into the game. And as the volumes of buying and selling spike, traders at Wall Street banks who were relegated to the sidelines in recent years are hoping for a return to the days of easy profits.

So far, it’s unclear which firms have been able to capitalize on the market turmoil and to what degree. But Wall Street firms are licking their chops.

Volatility and uncertainty: “We’re in that business,” said Marty Chavez, the chief financial officer of Goldman Sachs, speaking on a recent conference call with analysts.

After a year in which a 1-percent move, up or down, in the Standard & Poor’s 500 stock index was a rarity, 2018 has featured stomach-churning market swings on a regular basis. Monday was a good example. Stocks plunged initially on news that Gary Cohn, President Trump’s top economic adviser, had resigned, only to recover those losses by the end of the day.

“We are seeing extreme volatility here — it is the Goldman Sachs business model,” said Adam Sender, the founder of Sender Company & Partners, a hedge fund the specializes in making quick bets in up-and-down markets. “Things are moving around like crazy — the opportunities are tremendous.”

Mr. Sender was so frustrated by the long period of markets grinding higher, absent any sharp moves, that he simply stopped trading last November and took a three-week tour of Sweden, Iceland and Japan.

“It made me sick looking at my screen all day,” he said. “I felt I was wasting time.”

No longer. On a day last week when stocks plunged, Mr. Sender was in and out of the market all day — buying a stock here, betting it would fall there.

Of course, a choppy, fun-to-trade market could easily turn ugly if the economy suddenly slows or a trade war erupts with China, to name just two risks. And these days of roiled markets might not last, or the volatility could grow so severe that traders seeking to profit from the turbulence are instead capsized by it.

After the stock market plunged in early February, Charlie McElligott, a derivatives strategist at Nomura, said that his clients were eager to put on trades that would capitalize on increased volatility.

But by last week, when markets plunged again, many of those same investors had had enough. They sold their shares in a panic, trying to cut their losses. “It is the second sell-off that scares you — there has been a change in psyche,” Mr. McElligott said. “People were burned when they bought the dip.”

Investors who make bets on stocks, currencies and bonds based on where they think the overall economy is headed argue that the recent market spasms are healthy, if nerve-rattling, for the financial system.

That is because a stock market that goes up for 15 consecutive months, as the S. & P. 500 did before its streak was broken in February, lulls investors into a false sense of security. When that happens, investors largely remove the prospect of losing money on an investment from their calculations.

Traders say that much of the selling in recent weeks has come from funds that gambled that markets would remain calm. When they instead became volatile, the funds — many of them programmed to automatically buy or sell based on computer-driven strategies — started selling en masse. The clearest manifestation of the heightened volatility is an index known as the VIX, whose levels have doubled in recent months.

“The machines had taken control — now they are selling everything,” said Philippe Jabre, founder and chief investment officer of Jabre Capital in Geneva, which manages $1.5 billion in assets.

Mr. Jabre made his name as a hedge fund investor in the 1990s, a time when markets were turbulent and unpredictable. He pointed out that higher volatility does not necessarily mean lower markets; they are just more challenging to navigate. That was why he got into the business in the first place. “We have made our name in these up-and-down cycles,” he said. “Things are more interesting today because we are more nimble and we can find great picks.”

Over the past several years, there has been a vast migration of investor money — more than $1 trillion, analysts estimate — from funds run by stock pickers to those, such as exchange-traded funds, or E.T.F.s, that are designed to track major market indexes.

Suddenly, funds that have human beings in charge of investment decisions are looking more attractive to anxious investors.

“Last year, people were saying, ‘Why am I paying all this money to a hedge fund? I can just buy an E.T.F.,’” said Said Haidar of Haidar Capital, a hedge fund in New York with $440 million under management. “But with all this volatility, you might want someone who can trade around these markets.”

In other words, investors are now looking for hedge funds — investment vehicles that engage in a wide range of trading, including making bets that markets will fall — to actually live up to their names and offer protection, or hedges, against falling stock markets. That could mean, for example, buying stocks that didn’t benefit from the bull market and thus are less likely to fall as sharply as the broader index.

That is the strategy being followed by Thomas H. Forester, chief investment officer for Forester Capital Management in Chicago.

His fund used to manage $250 million. It’s now down to $40 million. When markets seem to go up forever, the very idea of protecting your downside, thus missing out on returns, seems foolish to many — and that was what Mr. Forester was doing.

In the past month, though, Mr. Forester’s phone has started ringing. Wary investors want to give him their money, and he is finally seeing stocks that might be cheap enough to buy.

“We are no longer watching reruns,” Mr. Forester said, referring to the stock market’s regular rise each year. “Your stomach starts churning, it’s more dicey — but it is a lot more fun.”

https://www.nytimes.com/2018/03/08/business/stock-market-traders.html?

Fed Officials Say Economy Is Ready for Higher Rates
By BINYAMIN APPELBAUMFEB. 21, 2018

WASHINGTON — Robust economic growth has increased the confidence of Federal Reserve officials that the economy is ready for higher interest rates, according to an official account of the central bank’s most recent policymaking meeting in late January.

The Fed did not raise its benchmark interest rate at the meeting on Jan. 30 and 31, but the account reinforced investor expectations the Fed would raise rates at its next meeting in March.

The account said Fed officials have upgraded their economic outlooks since the beginning of the year and listed three main reasons: The strength of recent economic data, accommodative financial conditions and the expected impact of the $1.5 trillion tax cut that took effect in January.

“The effects of recently enacted tax changes — while still uncertain — might be somewhat larger in the near term than previously thought,” said the meeting account, which the Fed published Wednesday after a standard three-week delay.

The Fed is seeking to raise rates gradually to maintain control of inflation without impeding an economic expansion that is nearing the end of its ninth year, one of the longest stretches of continuous economic growth in American history.

A wave of turbulence passed through global equity markets in the days after the Fed’s January meeting. The government reported an unexpected increase in wages, and investors worried the Fed would respond by raising rates a little more quickly. Then Congress passed a plan increasing government spending, tossing more logs onto the fire.

So far, however, Fed officials have treated the stronger economic news as a reason to carry out their plans for gradual rate hikes, rather than as a reason to start raising rates more quickly. Most Fed officials predicted in December the Fed would raise rates three times in 2018, as it did last year.

“If the economy evolves as I anticipate, I believe further increases in interest rates will be appropriate this year and next year, at a pace similar to last year’s,” Loretta Mester, president of the Federal Reserve Bank of Cleveland, said this month.

In the policy statement the Fed issued after the January meeting, the central bank outlined its approach to raising rates, saying it “expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate.”

The meeting account said the addition of the word “further” in that statement reflected the increased confidence among officials that the Fed would continue raising rates.

Jesse Edgerton, an economist at JPMorgan Chase, said the Fed’s increased confidence was likely to translate eventually into more interest rate increases than the three Fed officials predicted.

“We think increased confidence in the need for further hikes will accompany a perceived need for more than three hikes among a growing portion of the committee,” he wrote Wednesday.

And the minutes did suggest the Fed might eventually raise rates to a level higher than financial markets presently anticipate. Fed officials predicted in December that the Fed’s benchmark rate would come to rest around 2.8 percent, well below its precrisis level. The rate is currently in a range between 1.25 percent and 1.5 percent.

At the January meeting, some Fed officials raised the possibility that the strength of economic growth might raise that ceiling. The Fed would welcome such a development, because it would preserve more room to reduce rates in future downturns.

The persistent question mark is inflation. The Fed aims to keep prices rising at an annual rate of 2 percent, but it has consistently fallen short of that goal since the end of the last recession in 2009.

The minutes said the Fed has gained some confidence in its prediction that inflation will rise toward 2 percent. The economy continues to gain strength, and the minutes said a decline in the foreign exchange value of the dollar was also likely to put upward pressure on inflation. Lower exchange rates translate into higher prices for imported goods.

But the Fed has made the same predictions repeatedly, without success, and the minutes said the Fed intends to raise rates slowly as it continues to watch inflation closely. Some officials argue that the Fed should stop raising rates until inflation shows clear signs of revival.

The Fed has good reason for its uncertainty about inflation: It lacks a convincing explanation of what causes inflation, or a model that accurately predicts future inflation.

In a presentation at the January meeting, economists on the Fed’s staff told policymakers that the most popular explanations had significant flaws. One class of theories says inflation is produced by excess demand for available resources. This suggests inflation should rise as growth approaches its natural speed limit, a pattern that can be seen in some historical data but is difficult to find in recent decades. Another class of theories argues, with some circularity, that inflation is determined by expectations about inflation. It is not clear, however, how those expectations are formed.

The account said that “almost all” Fed officials responded by expressing a continued commitment to both theories. They said they intended to raise interest rates as the economy gains strength, and to seek to maintain public confidence in the 2 percent inflation target.

The January meeting was the final meeting for Janet L. Yellen, who concluded her four-year term as the Fed’s chairwoman in early February. Her successor, Jerome H. Powell, is scheduled to make his public debut when he testifies before House and Senate committees next week.

https://www.nytimes.com/2018/02/21/business/economy/fed-economy.html?

Republicans, Deficits and the Two-Santa Theory
If you think budget shortfalls violate conservative economic principles, you've forgotten Reaganomics.
By Karl W. Smith
20
February 9, 2018, 12:20 PM EST

With his signing of a budget deal Friday morning, a Republican president has now joined forces with a Republican-controlled Congress to increase the projected 2019 deficit from $710 billion to $1.15 trillion. And that's in just two months, the time it took to add spending increases to the effect of the $1.5 trillion tax overhaul enacted in January.

It's hard to miss the contrast to the Republican fiscal hawkishness that was on display in 2010, when House Speaker John Boehner negotiated a series of budget compromises with President Barack Obama. For today's Republicans, the appeal of tax cuts and military spending trumps everything. In Boehner's day, Republicans argued that the deficit was an existential threat, and that shutting down the government was a painful necessity if it meant preventing the deficit from spiraling out of control.

Naturally, the change of tune has produced accusations of hypocrisy. Senator Rand Paul, the libertarian-minded Kentucky Republican, took to the Senate floor to complain that his party keeps faith with its conservative identity only when it's out of power. He wasn't completely wrong. But the whole truth is more complicated. The Republican rift over austerity runs deep.

In March of 1976, The National Observer published an article by the conservative thinker Jude Wanniski entitled, "Taxes and the Two-Santa Theory" that argued that Republican fiscal policy had gone dangerously astray.

The GOP had committed itself to a program of permanent austerity, Wanniski observed, meaning that in good times Republicans wanted to raise taxes to ward off inflation while in bad times Republicans wanted to cut spending to balance the budget. In contrast, he argued, Democrats had the political sense to play Santa, offering the economy increased spending whenever they could and paying for it with higher taxes when the bill came due.

Wanniski thought that a triumph of the Democratic Santa would harm the economy, as rising taxes dampened incentives for entrepreneurship and choked off the capital that businesses need to expand.

What the economy required, he wrote, was two Santas: a Democratic one to deliver the gift of government spending, and a Republican one to hand out tax cuts. The addition of the tax-cutting Santa would unleash private enterprise, expand the business sector and dampen the demand for social services, Wanniski thought.

Notice that Wanniski wasn't especially fearful of deficits. He hinted that it was the absence of the tax-cutting Santa that tended to push deficits higher anyway. First, the permanent austerity demanded by the GOP meant that Americans could only receive a bit of succor from the spending delivered by the Democrats. So naturally, they demanded ever more of it. Second, the resulting high tax rates constrained business formation so much that revenues were actually lower than they would be if rates were cut.

The two-Santa theory became the political complement to supply-side economics, a phrase also popularized by Wanniski, and formed the basis of the fiscal policies of the Ronald Reagan presidency, when taxes were cut and spending was increased. Contrary to Wanniski’s predictions, the budget deficit surged. The economy, however, turned a corner. It went from low growth and high inflation in 1980 to high growth and low inflation by 1987.

Reagan’s popularity elevated the status of the supply-siders and their two-Santa theory. For two decades, the Republican austerity impulse was contained. The financial crisis in 2008 and popular rage over the accompanying bailouts revived it. The Tea Party seemed to be the hope for the Republican future, and the party leadership was swept away by calls for fiscal restraint.

Their hearts, though, were never really in it. After all, this was the party that, under President George W. Bush, cut taxes during a time of war and expanded benefits under Medicare, the largest U.S. entitlement program.

Deep down, they still believed in Reaganomics. Now that a Republican is in the White House and the Tea Party has faded from prominence, the two-Santa theory prevails again.

https://www.bloomberg.com/view/articles/2018-02-09/republicans-deficits-and-the-two-santa-theory

http://wallstreetpit.com/26546-jude-wanniski-taxes-and-a-two-santa-theory/

The G.O.P. Is Flirting With Fiscal Disaster
Steven Rattner FEB. 9, 2018

In August 2015, the leading Washington budget watchdog predicted that the federal deficit would total about $600 billion the next year.

Now, just about two and a half years later, the projected gap for 2019 has grown to $1.2 trillion, in large part because of a boisterous round of tax cuts and spending increases. And if history is any guide, when the books close, the final number will be higher.

That amounts to a shortfall that will rival the deficits of a decade ago, when the economy was struggling to recover from the financial crisis and ensuing recession.

But while fiscal stimulus to restore economic growth has merit, staggering deficits in the ninth year of a recovery, with unemployment down to 4.1 percent, make no sense.

In addition to piling more debt onto the current $20 trillion of outstanding obligations, today’s mounting gap between revenues and expenses is already contributing to higher interest rates and the shakiness in the stock market.

Leading the charge into rising amounts of red ink have been the Trump administration and Republicans in Congress.

Yes, blame for what is likely to be $15 trillion of added debt over the next 10 years should be placed squarely on the self-proclaimed party of fiscal responsibility.

“The level of national debt is dangerous and unacceptable,” the Senate majority leader, Mitch McConnell, said in 2016. Referring to President Obama’s stimulus program, he added, “We borrowed $1 trillion and nobody could find that it did much of anything.”

That was then and this is now.

On top of insisting that the nation needed tax cuts that could total $2.1 trillion over the next decade, the Republicans clamored for large increases in military spending. As the price for their cooperation, the Democrats won an equal increase in domestic spending.

Perhaps I shouldn’t be surprised, but that’s just not responsible governing. While I’m all for meeting pressing needs, as part of doing so, both the White House and the Congress have an obligation to find other savings or sources of revenues. Just like every household and business must.

I recognize that those of us who have warned of the ominous consequences of deficit and debt have yet to be proven right by a market crisis or the like. And the current gyrations in both stocks and bonds may not turn out to constitute that proof.

However, never in the 35 years since Ronald Reagan managed to eradicate fear of deficits from the national psyche have we flirted so aggressively with potential fiscal disaster.

For one thing, on present course and speed, deficits of more than $1 trillion will persist indefinitely. Indeed, if current policies are maintained, the gap would exceed $2 trillion by 2027, according to calculations by the Committee for a Responsible Federal Budget.

That would mean that the amount of debt relative to the size of our economy (the ratio of debt to gross domestic product) could reach a record 109 percent by 2027, exceeding even post-World War II levels.

For another, for the first time since at least the 1960s, we have thrown a deficit log onto a fire that was already burning briskly. That Vietnam War era decision — that we could have both guns and butter — contributed meaningfully to the raging inflation that erupted a few years later.

Although inflation has been quiescent so far in this recovery, potential pressure from rising wages has begun to appear, particularly in last week’s unemployment report.

While we all want to see pay go up, particularly for working-class Americans, excessive wage increases can become excessive price increases, which would in turn force the Federal Reserve to increase interest rates faster than it would otherwise.

The bond market, which can serve as a kind of early warning signal of overheating, has been signaling concerns for several weeks. The yield on 10 year Treasury notes, which had been loitering around 2.35 percent, has jumped to 2.8 percent.

That may not sound like much, but in the world of bonds, rates generally don’t move that far that fast. Importantly, higher interest rates are the enemy of stock prices. As yields rise, investors begin to shift money from equities to debt, depressing valuations of the former. That may well be a part of what is now occurring.

Having lived for nearly 15 years with high deficits and low inflation, Americans may have become inured to the risks of bad budget policy.

As unattractive as the policy options are (essentially, raising taxes or finding spending that we are willing to cut), we would all be well advised to take on the challenge before it is too late.

Steven Rattner, who was a counselor in the Obama Treasury Department, is a Wall Street executive and a contributing opinion writer.

https://www.nytimes.com/2018/02/09/opinion/republicans-deficit-budget.html?

Stocks Post Worst Week in Two Years: DealBook Briefing
FEB. 9, 2018

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The New York Stock Exchange in Lower Manhattan. Credit Spencer Platt/Getty Images
Good Friday. Here’s what we’re watching:

• Stocks posted their worst week in two years.

• Waymo and Uber settled their legal fight.

• Congress passes a budget deal, but shows it doesn’t care about deficits.

• How will the market rout impact the Federal Reserve’s March decision?

• Amazon is reportedly preparing its own delivery service.

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Stocks posted their worst week in two years.
Stocks on Wall Street ping-ponged between gains and losses as volatility ruled the day.

The Standard & Poor’s 500-stock index and Dow Jones industrial average started Friday higher, then plummeted, then swung back to finish higher.

The Dow climbed 332 points, or 1.4 percent, to 24192. The S.&P. 500 jumped 1.5 percent, and the Nasdaq Composite gained 1.4 percent.

Continue reading the main story
For the week, the S.&P. 500 and the Dow tumbled 5.2 percent, their steepest weekly declines since January 2016.

At its lows on Friday, the Dow had given back nearly 40 percent of its gains since election day in 2016 and more than 45 percent of the gains since President Trump was inaugurated.

How volatile were stocks this week?

The Dow moved more than 1,000 points between its intraday high and low on Friday. For the week, the Dow swung at least 500 points from its session high to its low on five consecutive trading days—something that last happened in October 2008, points out the WSJ’s Akane Otani.

Bloomberg reports that a gauge on S.&P. 500 price moves had its biggest swing over the past two weeks on record. Of the move, Cameron Crise, a macro strategist at Bloomberg, said:

“The journey from ecstasy to agony is entirely unprecedented, in the United States at least. That’s the largest momentum swing in history — and it’s not particularly close.”

The C.B.O.E Volatility Index, known as the market’s so-called fear gauge, moved from contango to backwardation. What does that mean? Here’s an explanation.

The bigger picture

The cause of one of the most turbulent weeks in recent memory appeared to be widespread expectations that the global economy is improving and that growth would accelerate in the near future.

That has led to fears that interest rate increases could cheapen the value of certain kinds of investments.

More on the markets and economy

• Steep sell-offs in the stock market can be the result of superficial worries that soon pass. But sometimes, falling stock prices reflect concerns about deeper problems. After a years-long borrowing binge, cracks may start to appear in the credit markets. Peter Eavis takes a look at where the big debt loads are and asks if they are sustainable.

Amid market turmoil, earnings remain a bright spot.
Nearly 70 percent of S.&P. 500 companies have reported results so far, and profits are on pace to grow 14 percent, according to FactSet. Analysts expected earnings to rise 11 percent at the end of the fourth quarter.

• If that growth rate holds up, it would mark the third quarter of double-digit earnings growth in the past four.

• All 11 of the S.&P. 500’s sectors are reporting higher profits, and five sectors have reported double-digit gains.

• 74 percent of companies are announcing earnings above Wall Street estimates.

• 79 percent are reporting sales above forecasts.

• S.&P. 500 companies that generate more than 50 percent of their sales abroad are on pace to report a 17.4 percent increase in their bottom lines. For those that get the majority of their revenue from within the United States, earnings are set to rise 12 percent.

Photo

Dara Khosrowshahi of Uber at the World Economic Forum. Credit CNBC
Waymo and Uber settle their legal fight.
Nearly a year after Waymo first accused the ride-hailing company of plotting to steal important self-driving car technology, the two companies have settled their courtroom fight.

After four days of arguments in Federal District Court here, Uber agreed to provide Waymo with 0.34 percent of its stock. Uber is now valued at about $72 billion, which works out to about $240 million, according to Waymo.

Waymo, the self-driving car unit spun out of Google’s parent company, Alphabet, argued that Uber had colluded with a former Google engineer to steal technology related to laser-based sensors, a key component in self-driving cars. Uber said it had developed its technology on its own.

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Senator Rand Paul on Thursday ahead of a budget vote in Washington. Credit Eric Thayer for The New York Times
Who cares about deficits? Not Congress, it seems
One of the shortest shutdowns in U.S. government history is over, and Congress has reached a budget deal. The price is hundreds of billions in new spending.

Rand Paul, who temporarily halted the Senate’s vote on the deal, said this:

“I want people to feel uncomfortable. I want them to have to answer people at home who said, ‘How come you were against President Obama’s deficits and then how come you’re for Republican deficits?’ ”

Conservative House Republicans like the Freedom Caucus opposed the bill on similar grounds.

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The critical take on deficit spending, from the lead editorial of this week’s Economist:

Democrats are to get more funds for child care and other goodies; hawks in both parties have won more money for the defense budget. Mr. Trump, meanwhile, still wants his border wall and an infrastructure plan. The mood of fiscal insouciance in Washington, D.C., is troubling.

What’s in the bill

The NYT has a rundown of some hard-to-spot items in the bill, including:

• The killing of the Independent Payment Advisory Board, which was meant to cap Medicare spending

• The extension of tax breaks for renewable and nuclear energy and a tax credit for carbon dioxide capture

• Special tax rates for timber sales

The immigration issue

Nancy Pelosi both praised the budget deal and said that she wouldn’t vote for it because it didn’t protect Dreamers. Some Democrats called on her to force her colleagues to block the deal, but others pointed to its funding for domestic programs.

How will the market rout impact the Federal Reserve’s March decision?
The S.&P. 500 and the Dow Jones industrial average both fell into correction territory on Thursday. Fed officials, though, have remained upbeat on their outlook for the United States economy and sanguine about the market’s tumble.

This week Robert Kaplan, the head of the Federal Reserve Bank of Dallas, said:

“I think it’s healthy that there is some correction, a little more volatility in markets…can be a healthy thing.”

William Dudley, the New York Fed President, said:

“If the stock market were to go down precipitously and stay down, then that would actually feed into the economic outlook, and that would affect my view in terms of the implications for monetary policy.”

But expectations for a March rate increase have begun to come down, reported Chelsey Dulaney of MoneyBeat. Traders are betting there is a 72 percent chance that the Fed will raise rates at its March meeting, down from 79 percent a week ago, according to CME Group data. For the year, investors now see only a 17.5 percent chance of four rate increases this year, compared to 24 percent a week ago, Ms. Dulaney wrote.

The big question remains: Is the underlying economy holding up? So far, probably yes.

More in markets

• The LJM Preservation and Growth Fund, an options mutual fund, essentially collapsed amid the turmoil. (FT)

• Most Americans have limited exposure to the stock market. (NYT)

Photo

Credit Ted S. Warren/Associated Press
The Amazon effect is coming for UPS and FedEx
Shares in the two big names in package delivery were down in premarket trading today. Why?

From Laura Stevens of the WSJ:

Amazon.com preparing to launch a delivery service for businesses, positioning it to directly compete with United Parcel Service Inc. and FedEx Corp.

Dubbed “Shipping with Amazon,” or SWA, the new service will entail the tech giant picking up packages from businesses and shipping them to consumers, according to people familiar with the matter.

Amazon expects to roll out the new delivery service in Los Angeles in coming weeks with third-party merchants that sell goods via its website, according to the people. Amazon then aims to expand the service to more cities as soon as this year, some of the people say.

Where else have investors felt fear about what Amazon might do to an industry?

• Healthcare

• Groceries

• Media

• And retail, of course

— Michael de la Merced

Photo

Credit Jonathan Ernst/Reuters
The Washington flyaround
• White House officials knew as early as last fall that Rob Porter, the former White House staff secretary, faced domestic abuse allegations. The scandal has cast unflattering light on Mr. Porter’s boss, John Kelly. And some White House officials say it was all orchestrated by the former Trump aide Corey Lewandowski.

• Rand Paul is opposing the nomination of Marvin Goodfriend to the Fed, endangering the economist’s chances. (WSJ)

• Mr. Trump formally nominated Charles Rettig, a tax lawyer who fought the I.R.S., as its next leader. (NYT)

• CVS is raising its base hourly pay rate and improving employees’ health benefits because of the tax overhaul. (It also happens to be trying to buy Aetna for $69 billion.) (Axios)

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SEE SAMPLE MANAGE EMAIL PREFERENCES PRIVACY POLICY OPT OUT OR CONTACT US ANYTIME
• Penn Station and Newark Liberty International Airport are good examples of why the U.S. needs to upgrade its infrastructure, Jim Stewart writes. (NYT)

Will Broadcom and Qualcomm reach a deal?
Qualcomm rejected Broadcom’s revised $121 billion bid, saying it was an undervaluation and didn’t offer enough commitment if regulators pushed back. But it opened the door to negotiations.

Broadcom’s C.E.O., Hock Tan, responded by asking to meet this weekend.

But there’s still a lot they disagree on:

• Qualcomm wants more than $82 a share. Broadcom says its bid is “best and final.”

• Qualcomm says it needs a firmer commitment to completing a deal, even if antitrust regulators object. Broadcom has offered an $8 billion breakup fee in that case, as well as a 6 percent “ticking fee” if the deal takes more than 12 months to close.

What one shareholder wants: Steven Ré of Fairbanks Capital Management told the WSJ, “In a peaceful deal, they can probably talk Hock Tan up another $5, maybe $7.”

Also remember: Qualcomm’s shareholder meeting is scheduled for March 6. Broadcom is looking to unseat the entire board.

Photo

Credit Andri Tambunan for The International Herald Tribune
The deals flyaround
• L’Oréal says that it’s ready to buy out Nestlé’s 23 percent stake in it and hinted that it would sell its own stake in Sanofi, if necessary. (FT)

• Walmart is willing to invest up to $4 billion in Flipkart, valuing the Indian ecommerce giant at as much as $20 billion, an unnamed source says. (Bloomberg)

• Is Boeing in talks to buy Woodward, an airplane parts maker? Woodward says no, but unnamed sources told the WSJ yes. (WSJ)

• Starboard Value will seek to unseat the entire board of Newell Brands, unnamed sources said. (WSJ)

• Bayer has offered to sell its vegetable seeds business to win German regulatory approval for its $63.5 billion takeover of Monsanto. (Reuters)

• Alibaba’s Ant Financial is preparing to raise up to $5 billion at a $100 billion valuation, unnamed sources say. (Reuters)

• HNA, the troubled Chinese conglomerate, is selling $4 billion worth of U.S. office buildings to raise money. (Bloomberg)

• Shandong Ruyi Group of China bought control of the Swiss accessories company Bally from JAB Holding. (WSJ)

• Tilray, a medical marijuana producer and distributor, has raised 60 million Canadian dollars. (Tilray)

Photo

Credit Doug Mills/The New York Times
The Winter Olympics, brought to you by Samsung
Follow the NYT’s coverage of the games at Pyeonchang.

Behind the scenes, the games reflect cozy ties between South Korea’s government and Samsung — ones that continue to attract criticism.

More from Raymond Zhong and Park Jeong-eun of the NYT:

The company’s chairman, Lee Kun-hee, is a longtime member of the International Olympic Committee and lobbied for years behind the scenes to bring the Winter Games to South Korea. The government saw Mr. Lee as so pivotal to its Olympic dreams that after he was convicted of tax evasion in 2008, the country’s president then pardoned him expressly so he could resume lobbying for Pyeongchang.

And from Timothy Martin of the WSJ:

So extraordinary is the overlap between Samsung, South Korea and the Pyeongchang Games it is unlikely to be repeated, say IOC members and Olympics experts. Mr. Lee’s lobbying and Samsung’s close involvement are now considered inappropriate by some Olympics experts and voters.

Photo

Credit Kacper Pempel / Reuters
Are Twitter and Snap contenders again?
After Snap and Twitter reported earnings this week, the view now seems to be that there is space for the two firms to make good money, even in the shadow of Facebook and Google, Peter Eavis writes:

Bright spots: Snap’s strong user growth, up 18 percent in the fourth quarter, is a sign that it remains a draw to younger users. And while Twitter’s U.S. user growth and advertising revenue were unimpressive in the fourth quarter, both looked solid in the rest of the world.

Breathing room: The fourth-quarter results bought both companies more time to prove themselves. And the financial pressure has lessened at Twitter. It is now churning out roughly half a billion dollars a year in cash flow.

But it will be a slog: The fourth quarter is generally a bumper period for companies that rely on digital advertising, so the next couple of quarters could feel like a let down for Snap and Twitter. And if they disappoint, their stocks — far more highly valued than Facebook — could plunge.

The tech flyaround

• Eleven British lawmakers testily questioned executives from Google, Facebook and Twitter about fake news during recent elections. (WaPo)

• India’s competition regulator fined Google $21 million for abusing its market position. (BBC)

• Facebook is testing a downvote button. (TechCrunch)

• Didi and SoftBank are teaming up for ride-hailing services in Japan, giving Uber another headache. (WSJ)

Photo

Credit Sam Hodgson for The New York Times
Your Bitcoin update
It’s down to about $8,251 this morning, according to CoinMarketCap. Meanwhile, investors are more willing to bet against the virtual currency.

• Elite U.S. universities are rushing to offer classes about Bitcoin and blockchain. (NYT)

• Traders keep their skills sharp by trading digital money. (FT)

• The European Central Bank will create its own settlement system. One board member boasted that it’s better than blockchain. (Bloomberg)

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Neal Wolin, the Brunswick Group’s new C.E.O. Credit Brunswick Group
Revolving door
• Neal Wolin, a deputy Treasury secretary under the Obama administration, is the new C.E.O. of Brunswick Group. (DealBook)

• Dennis Berman, the WSJ’s financial editor, is joining Lazard’s activist defense practice. (Lazard)

• SandRidge Energy replaced its C.E.O. and C.F.O. under pressure from Carl Icahn. Bill Griffin will be interim C.E.O. and Mike Johnson interim C.F.O. (Bloomberg)

The Speed Read
• The Trump administration has published data showing a large increase in penalties against polluters, as well as $20 billion in commitments from companies to correct problems that have cause environmental damage. (NYT)

• The Addiction Policy Forum’s acceptance of money from the Pharmaceutical Research and Manufacturers of America has raised questions about whether it can really hold the drug industry to account over the opioid crisis. (NYT)

• Justice Ruth Bader Ginsburg has been on tour and enjoying it. (NYT)

• The cola wars may be turning into fizzy water wars. (NYT)

• David Wallerstein, Tencent’s chief exploration officer, has been helping the company make moonshot investments that could lead to big payoffs. (WSJ)

• Carson Block said that Muddy Waters was behind a 2015 report about a Chinese billionaire and an aluminum cache in Mexico, which helped spawn federal investigations (WSJ)

We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.

JPMorgan’s Profits Are Strong, and They’ll Likely Get Stronger
By EMILY FLITTERJAN. 12, 2018

JPMorgan Chase’s financial results came in slightly stronger than expected on Friday, despite a big one-time hit from the new tax law, and they indicate that the bank and its peers could grow even more profitable in the years ahead.

JPMorgan’s results are an important bellwether for the entire financial industry. It’s the biggest bank in the United States by assets. And it’s the first large bank to report its quarterly and annual results, most likely foreshadowing the performances that its rivals will report over the next week.

In the fourth quarter, JPMorgan’s underlying finances were obscured by accounting for the new tax package, which slashed the corporate income tax rate and applied a new, lower rate to earnings that companies had been stockpiling overseas — and that they now need to bring back to the United States.

The changes prompted many banks and other corporations to adjust their balance sheets to create the optimal mix of assets that ultimately will result in the lowest possible tax rate.

In the short term, that resulted in some modest pain: JPMorgan took a $2.4 billion charge, and Wells Fargo, which also reported its results on Friday, logged $173 million in costs related to moving money back to the United States to comply with the tax law’s so-called repatriation provision.

In the long run, though, the 21 percent corporate tax rate, down from 35 percent under the previous law, will be a huge boon to companies and their shareholders. JPMorgan, for example, said on Friday that its effective tax rate would be about 19 percent — far lower than what it has paid in most past years.

Wells Fargo is already enjoying the fruits of the new law. Despite the repatriation-related loss, it reaped an overall $3.35 billion gain from the new law. That propelled the bank, based in San Francisco, to a $6.2 billion total profit for the fourth quarter.

Without the one-time impacts from the new tax law, JPMorgan’s profits were impressive. The bank raked in more than $24 billion in profits for the full year, consistent with its 2016 results. Analysts said the results were modestly better than they had expected.

JPMorgan’s investment bank was again a laggard, with profits falling by about one-third from a year earlier. That was partly because of the industry’s continued struggle to make money trading bonds, currencies and commodities — a once-powerful business that has shriveled because of new regulations, changing market conditions and greater competition from companies other than banks.

But its consumer-banking business performed better, with profits climbing 11 percent. If the economy remains strong and interest rates rise, that business is likely to accelerate because JPMorgan and other banks will be able to increase the interest rates they charge on loans.

https://www.nytimes.com/2018/01/12/business/dealbook/bank-quarterly-earnings.html?

CVS Is Said to Be in Talks to Acquire Aetna Insurance
By ANDREW ROSS SORKIN, MICHAEL J. de la MERCED and KATIE THOMAS
The proposed deal, which could be worth more than $60 billion, would reflect the health industry’s blurred boundaries.

https://www.nytimes.com/2017/10/26/business/dealbook/cvs-aetna.html

Boston Fed’s President Makes Case for Interest Rate Hikes
By BINYAMIN APPELBAUMOCT. 16, 2017

BOSTON — Eric Rosengren, president of the Federal Reserve Bank of Boston, was a leading advocate for the Fed’s economic stimulus campaign after the financial crisis. Lately, he has been equally outspoken in arguing that the Fed must continue to raise its benchmark interest rate even though inflation remains sluggish.

Mr. Rosengren, perhaps the Fed official whose views most reliably approximate those of Janet L. Yellen, the Fed chairwoman, argues that inflation will rebound as unemployment continues to fall. He also argues that raising rates slowly could prolong the economic expansion by averting any need to raise rates quickly.

In an interview on Saturday at the Boston Fed’s annual conference, Mr. Rosengren said he favored raising the Fed’s benchmark rate later this year, and that the rate should rise to about 2 percent by the end of 2018.

The conversation began on a broader subject: Policy rules. Republicans want the Fed to adopt a formula for moving interest rates up and down. Randal Quarles, sworn in Friday as the Fed’s vice chairman of supervision, favors that approach. So do some of the candidates to become the Fed’s next chairman.

The transcript has been edited for length and clarity.

Q. You opened this conference by offering your own judgment on policy rules, saying they should essentially be used as benchmarks and guidelines, but that it would be a mistake for the Fed to choose a rule and follow it.

A. A number of papers at the conference highlighted that some of the economic relationships that are frequently assumed to be stable over time have proven to be not so stable as we have come out of the financial crisis. These structural changes mean that if you tried to have a model that was fairly invariant to these changes, or a process that was invariant to these changes, there would start being big misses in monetary policy.

So I think a more flexible approach, that thinks about not one particular rule but a lot of rules, and does ask ‘Are we behaving quite differently than we have historically? And, if so, why?’” — I think that’s a good discussion to have. We should have it with the public; we should have it with each other.

Q. On the other hand, you argued in a recent speech the Fed has put too much emphasis on short-term fluctuations when adjusting long-term estimates, like the natural rate of unemployment.

A. So assuming it’s a constant is not good and assuming that it moves too much is not good. That’s where judgment comes in. I would say particularly the natural rate of unemployment has tended to go up when we’ve had high unemployment rates and go down when we’ve had low unemployment rates. And that’s the situation we’re in right now, where the unemployment rate is at 4.2 percent and people’s estimate of the natural rate has been coming down. I think if you look back over time those frequently are mistakes — that we move too much. That doesn’t mean you shouldn’t move, but it shouldn’t change abruptly and substantially over a short period of time.

Q. The Fed’s sensitivity to those short-term fluctuations are an effort to explain why inflation remains sluggish. You’re rejecting the explanation but not offering an alternative.

A. A mystery is unsatisfying. You always like to have an end to the book. My own view as of now would be that, more than likely, we’re going to find that it’s temporary. We’re seeing wages and salaries go up. That’s consistent with a labor market that’s gotten tight enough that it’s starting to be reflected in wages and salaries. If a year from now you’re at the conference and we’re still undershooting on inflation and wages and salaries went down, then I have to come up with another explanation. I’m not expecting that.

Q. So the Fed should keep raising its benchmark rate?

A. If at the end of the next year we were at the point where inflation was around 2 percent and the unemployment rate was below 4 percent, I’d be concerned if we hadn’t moved to remove accommodation.

Q. It’s hard to know what to make of the Fed’s forecasts given that the central bank’s leadership could change completely in the next few months.

A. Chairs do matter. But it is a committee that’s making this decision. I wouldn’t expect a dramatic divergence from what we’ve been doing over the recent period. The staff stays the same, the presidents stay the same. We’ll have some new governors but I would be surprised if there are dramatic shifts in what we’re doing. I think it’s more likely we would see changes over time if there was somebody that had a different view about what we should be doing, and other governors with that same view came onto the committee. But I agree it’s harder to forecast what monetary policy will be when you don’t necessarily know who the chair or some of the governors will be in key slots, including the vice chair.

Q. Where should the interest rate be at the end of 2018?

A. If the data comes in as I’m expecting, that would be consistent with having something much closer to 2 percent on the federal funds rate.

Q. And that march toward 2 percent with a rate hike by the end of 2017?

A. Unless the data turns out otherwise, based on what I’m expecting I would think that a rate increase by the end of the year would be appropriate.

Q. Would you oppose a more rapid change in the course of monetary policy?

A. As long as inflation is below our 2 percent target there’s no reason to move quickly.

Q. Mr. Quarles says he wants to relax some financial regulations imposed after the 2008 crisis. Does that concern you?

A. There are areas that I could pull back in and areas that I would certainly not want to pull back in. Areas in which I think assessment is probably warranted: The Volcker Rule is a pretty cumbersome rule. Some fresh eyes looking at that actually makes sense.

I would say over all I wouldn’t want to see the capital ratios of our largest institutions go down. So I’m quite supportive of having a very well capitalized banking system that is resilient. I think the stress tests are a key component of that. It’s a fairly significant process that’s expensive for both the Federal Reserve and banks, so I think looking at ways that we could make that process go more smoothly I think is worth thinking about. But the overall idea of making sure that our banks are resilient to very significant stresses that may change over time is, I think, a key component of changes in supervision that we should keep.

If Congress cuts taxes, should the Fed raise rates more quickly?

It depends on the nature of what actually gets changed. If you can credibly believe that the productive capacity of the country is going to change as result of the way they do the tax cuts, you might view that as a positive. If you have a lot more workers coming back into the labor force and you have firms that are doing a lot more capital investment, that’s a situation where there’s some very big positive spillovers from the change in the policy. But you can easily imagine something that doesn’t do either of those, in which case I would be more concerned that it would be adding to aggregate demand, which seems strong enough now.

https://www.nytimes.com/2017/10/16/us/politics/federal-reserve-interest-rates.html?

Nobel in Economics Is Awarded to Richard Thaler
By BINYAMIN APPELBAUMOCT. 9, 2017

https://www.nytimes.com/2017/10/09/business/nobel-economics-richard-thaler.html

If Janet Yellen Goes, the Fed’s Current Policy May Go With Her
By BINYAMIN APPELBAUMAUG. 24, 2017

GRAND TETON NATIONAL PARK, Wyo. — Liberal activists who stage an annual protest in favor of lower interest rates at the Federal Reserve’s annual conference here are planning a different kind of demonstration this year. They plan to don “Yellen wigs” on Friday to demonstrate in support of Janet L. Yellen, the Fed chairwoman, whose first term ends in February.

President Trump must soon decide whether to renominate Ms. Yellen or pick someone similarly inclined to emphasize economic growth. Or, instead, he could accede to the wishes of many conservatives for a Fed chairman more worried about inflation.

The looming decision is injecting an element of uncertainty into monetary policy after years of relative stability. Ms. Yellen continued the aggressive economic stimulus campaign that was launched by her predecessor, Ben S. Bernanke, during the financial crisis that began 10 years ago, and she has moved slowly to end it.

Gene B. Sperling, the former director of President Barack Obama’s National Economic Council, said the choice was a “fascinating test” for Mr. Trump, pitting conservative ideology against “the stark reality of politicians worried about how the economy performs.”

The approaching fork in the road is likely to be a major topic of conversation as Fed leaders, central bankers from other countries and academic economists gather in Grand Teton National Park on Friday and Saturday for an annual policy conference.

The basic question nearly everyone is asking is how quickly the Fed will raise interest rates.

The Fed already has raised its benchmark rate twice this year, to a range of 1 percent to 1.25 percent. Officials are debating whether to raise rates for a third time, but no decision is expected before the final meeting of the year in December.

That would leave the benchmark rate at a level Fed officials regard as neutral. Low rates increase economic growth by encouraging borrowing and risk-taking, while high rates weigh on economic growth by reducing those activities.

Mr. Trump has said that he is considering another term for Ms. Yellen. But Gary D. Cohn, the director of his national economic council, is also a candidate. Ms. Yellen has not commented on her own plans, beyond committing to serve out her term.

Mr. Trump has not named other candidates, but likely possibilities for any Republican president include Kevin Warsh, a former Fed governor; John B. Taylor, an economist at Stanford University; and Glenn Hubbard, an economist at Columbia University.

Mr. Trump has sent mixed signals about his priorities. In public comments, he has repeatedly described himself as a lover of low interest rates. But last month, he nominated Randal K. Quarles, a financial industry executive who has advocated the Fed to raise interest rates more quickly, as the Fed’s vice chairman for supervision.

The Trump administration also plans to nominate Marvin Goodfriend, a Carnegie Mellon University economist who is an even more outspoken critic of the Fed’s stimulus campaign, to an open seat on the Fed’s board.

Regulatory issues may prove an even more important consideration. Mr. Trump wants to relax some of the restrictions placed on the financial industry in the wake of the 2008 crisis. Ms. Yellen has agreed that there is room for improvement, but she has cautioned against any significant reduction in regulation.

Ms. Yellen is scheduled to speak here about financial regulation on Friday morning.

Mr. Cohn has rarely spoken publicly about his views on monetary policy, but he is a key adviser to Mr. Trump on the administration’s plans to cut financial regulation.

In addition to criticism from conservatives, Ms. Yellen also has faced criticism from liberals who argue that the Fed is moving too quickly to raise rates.

Fed Up, a coalition of liberal groups, has made a tradition of bringing protesters to the Jackson Hole conference to press for more stimulus, and it staged a teach-in on Thursday to emphasize that the economic recovery remains incomplete.

“Let’s not prematurely choke off this recovery,” Susan Helper, an economist at Case Western Reserve University, told the activists gathered outside the conference hotel.

But this year, the group is less concerned about what Ms. Yellen might do, and more concerned about someone else taking her place.

Mr. Sperling, who also addressed the protesters, compared Ms. Yellen to Jim Harbaugh, the University of Michigan football coach who has improved the performance of that program but not yet beaten its archrival Ohio State.

“The Bernanke and Yellen Fed do deserve praise for very expansive and creative monetary policy and that there has been real policy since 2010,” Mr. Sperling said. “We should also equally recognize it doesn’t mean things are good enough.”

The choice confronting Mr. Trump parallels the Fed’s internal policy debate.

Inflation remains persistently sluggish. The Fed aims for 2 percent annual inflation, and it expects to miss that target for the fifth-straight year. Some Fed officials want to wait for evidence that inflation is rebounding before raising rates again.

Most officials, however, see the low level of unemployment as a sufficient reason for confidence that inflation will rebound. “I think we should continue with the gradual rate path,” Esther L. George, president of the Federal Reserve Bank of Kansas City, which hosts the annual monetary policy conference here, told CNBC. “While we haven’t hit 2 percent, I’m reminded that 2 percent is a target over the long term, and in the context of a growing economy, of jobs being added, I don’t think it’s an issue that we should be particularly concerned about unless we see something change.”

Both Mr. Bernanke and Ms. Yellen were nominated in October, but there is little sign that the Trump administration is moving toward a quick decision. Mr. Trump had told The Wall Street Journal that he plans to make a decision by the end of the year.

That would leave relatively little time for the person selected by Mr. Trump to be questioned and confirmed by the Senate before Ms. Yellen’s term ends in February.

https://www.nytimes.com/2017/08/24/us/politics/if-janet-yellen-goes-the-feds-current-policy-may-go-with-her.html?

C.E.O.s Long Avoided Politics. Trump Is Changing the Calculus.
Corporate leaders often avoid taking political stands, especially on the president. Equivocation from the White House on right-wing extremism has forced a response.
14h ago
By JAMES B. STEWART

https://www.nytimes.com/section/business?WT.nav=page&action=click&contentCollection=Business&module=HPMiniNav&pgtype=Homepage®ion=TopBar

Wells Fargo to Claw Back $75 Million From Former Executives
By STACY COWLEY and JENNIFER A. KINGSONAPRIL 10, 2017

Wells Fargo’s board said Monday that it would claw back an additional $75 million in compensation from the two executives on whom it pinned most of the blame for the company’s sales scandal: the bank’s former chief executive, John G. Stumpf, and its former head of community banking, Carrie L. Tolstedt.

In a scathing, 113-page report that made it clear that all the warning signs of the problem had been glaring, the board released the results of its six-month investigation into the conditions and culture that prompted thousands of Wells Fargo employees to create fraudulent accounts in an effort to meet aggressive sales goals.

The report, compiled by the law firm Shearling & Sterling after interviewing 100 current and former employees and reviewing 35 million documents, said that it was obvious where the problems lay. Structurally, the bank was too decentralized, with department heads like Ms. Tolstedt given the mantra of “run it like you own it,” and given broad authority to shake off questions from superiors, inferiors or lateral colleagues.

So many suspicious things should have added up, the report said: People were not funding — or putting money into — their new accounts at alarming rates. Regional managers were imploring their bosses drop sales goals, saying they were unrealistic and bad for customers.

Particularly in Arizona and Los Angeles, where this toxic culture was the most pronounced, managers explicitly told subordinates to sell people accounts even if they did not need them.

Because of the bank’s decentralized structure, the problem went unnoticed for a long time. When it finally came to light — thanks in part to a news report in The Los Angeles Times — the bank was slow to take action. Ms. Tolstedt, who ran the community bank — Wells Fargo’s term for the branch network — was told to fix the problem that she had created.

Her department saw itself as a “sales organization, like department or retail stores, rather than a service-oriented financial institution,” the report said. Further, Ms. Tolstedt was said to have kept hidden the true number of people who were fired for setting up false accounts. Her report to the board in October 2015 “was widely viewed by directors as having minimized and understated problems at the community bank,” the report said.

The board came away believing that only 230 employees had been terminated for acting unethically. The company had actually fired 5,300 over a five-year period — something the board only learned in September, after Wells Fargo announced that it would pay $185 million in penalties and fines to settle lawsuits brought by federal regulators and the Los Angeles city attorney over its creation of as many as two million sham accounts in the names of real customers.

Mr. Stumpf — who had a long and warm professional relationship with Ms. Tolstedt and was inclined to trust her and let her manage on her own — was warned as early as 2012 about “numerous” customer and employee complaints about the company’s sales tactics, but ignored growing evidence that the problem was pervasive, the board said in its report.

Much of the pressure-cooker climate stemmed from Ms. Tolstedt, according to the report, who led Wells Fargo’s community bank for eight years before retiring last year. The report casts her as a powerful and insular leader who focused obsessively on sales targets and turned a blind eye to signs that some managers and employees were cheating to meet them.

“She resisted and rejected the near-unanimous view of senior regional bank leaders that the sales goals were unreasonable and led to negative outcomes and improper behavior,” according to the report, which was commissioned by a committee of Wells Fargo independent directors.

Timothy J. Sloan, who succeeded Mr. Stumpf as chief executive, was largely exonerated by the report, despite the fact that he was also a career Wells Fargo executive. As president and chief operating officer, he became Ms. Tolstedt’s immediate supervisor in November 2015. At that point, the report said, he “assessed her performance over several months before deciding that she should not continue to lead the community bank.”

Mr. Stumpf, who retired in October, exercised all of his remaining options and converted them to stock, which he retained, in the months before Wells Fargo announced its regulatory settlement. He held 2.5 million shares as of late February, currently valued at $137 million.

Asked about the timing of Mr. Stumpf’s options exercise, Stephen Sanger, the board’s chairman and leader of its investigation, cast it as a routine move that did not raise concern. The $28 million the board is retracting from Mr. Stumpf — the proceeds of a 2013 equity grant — will be deducted from his retirement plan payouts, Mr. Sanger said.

The board’s report, which praised the changes the bank has made since the sales scandal erupted into public view, is unlikely to quell the bank’s critics. Better Markets, a nonprofit that lobbies for stricter regulation of Wall Street, called the report a compendium of “too-little, too-late cosmetic actions,” and called on shareholders to oust all of Wells Fargo’s board members at the company’s annual meeting later this month.

Two influential shareholder advisory firms have also called for significant changes to the company’s board.

https://www.nytimes.com/2017/04/10/business/wells-fargo-pay-executives-accounts-scandal.html?

Tesla Passes Ford in Market Value as Investors Bet on the Future
By BILL VLASIC and NEAL E. BOUDETTE
With signs that the long boom in American auto sales is tapering off, the Detroit giants are eclipsed on Wall Street by the electric-vehicle upstart.

https://www.nytimes.com/2017/04/03/business/tesla-ford-general-motors-stock-market.html?ref=dealbook

Verizon Announces New Name Brand for AOL and Yahoo: Oath
By NIRAJ CHOKSHI and VINDU GOEL
The announcement that legacy brands AOL and Yahoo would soon operate under the name Oath was met with bewilderment online.

https://www.nytimes.com/2017/04/03/technology/verizon-oath-yahoo-aol.html?ref=business

Citing Misdeeds, U.S. Gives Wells Fargo Failing Grade on Lending
By STACY COWLEY
A regulator said it had found “an extensive and pervasive pattern” of “discriminatory and illegal credit practices across multiple lines of business.”

https://www.nytimes.com/2017/03/28/business/dealbook/wells-fargo-failing-score-discrimination-lending.html?ref=dealbook

Westinghouse Files for Bankruptcy, in Blow to Nuclear Power
By DIANE CARDWELL and JONATHAN SOBLE
3:30 AM ET
The company, whose corporate parent is Toshiba of Japan, led projects once seen as heralding a nuclear renaissance, but its filing casts a pall over the troubled industry.

https://www.nytimes.com/2017/03/29/business/westinghouse-toshiba-nuclear-bankruptcy.html?ref=business

Parent of Sears and Kmart Issues Warning as Its Losses Mount
By CARLOS TEJADA
3:53 AM ET
Sears Holdings Corporation said in its annual report that there were “substantial doubts” it could remain a going concern.

https://www.nytimes.com/2017/03/22/business/dealbook/sears-kmart-closing-doubt.html?ref=business

Trump Wants Faster Growth. The Fed Isn’t So Sure.
By BINYAMIN APPELBAUMMARCH 12, 2017

WASHINGTON — For President Trump and his economic advisers, the strong February jobs report was a cause for celebration — and a first step toward delivering on the president’s promise of faster economic growth.

For the Federal Reserve, it was the final confirmation that the time had come to raise interest rates to prevent the United States economy from overheating.

Mr. Trump and Janet L. Yellen, the Fed’s chairwoman, appear to be headed toward a collision, albeit in slow motion. Mr. Trump has said repeatedly that he is determined to stimulate faster growth while the central bank, for its part, is indicating that it will seek to restrain any acceleration in economic activity.

On Wednesday, the Fed plans to make a first move in the direction of restraint. The central bank has all but announced that it will raise its benchmark interest rate at the conclusion of a two-day meeting of its policy-making committee.


The move itself is minor. The rate is expected to remain below 1 percent, and interest rates on consumer and business loans will still be remarkably low by historical standards. But the Fed is moving months earlier than markets had expected at the beginning of the year, precisely because the economy appears to be gaining steam.

Both Fed officials and independent economists are quick to emphasize that the central bank is not trying to pre-empt the new administration’s policies. The Fed is raising rates because economic conditions are improving. Winter did not chill the United States economy this year. The stock market keeps fizzing upward; employment and wages are growing; companies and consumers are optimistic.

“The thought that by tweaking the funds rate you could send some kind of political message is crazy, and they know that, and they’re not going to do it,” said Jon Faust, an economist at Johns Hopkins University and a former adviser to Ms. Yellen. “On the other hand, this is the first first quarter in about six years that isn’t looking scary, so it’s not surprising they would be considering a rate increase.”

The essential point, however, is that the Fed does not want faster growth. Fed officials estimate that the economy is already growing at something like the maximum sustainable pace. Fed officials predicted in December that the economy would expand 2.1 percent this year, slightly faster than the 1.8 percent pace they regard as sustainable. The Fed will publish new projections on Wednesday.

Growth above the sustainable pace can lead to higher inflation. That, in turn, can force the Fed to raise rates more quickly, a course that often ends in a recession.

Representative Steve Pearce, a New Mexico Republican, asked Ms. Yellen rather incredulously at a congressional hearing in February whether the Fed would really try to offset faster growth by raising rates more quickly. Ms. Yellen’s response was carefully couched, but it amounted to “yes.”

She said the Fed was fine with faster growth so long as it reflected an improvement in economic fundamentals. On the other hand, she said, the Fed would try to offset faster growth “if we think that it is demand-based and threatens our inflation objective” — a technical description of what would happen if Congress cut taxes or increased spending.

The White House and the Fed have very different economic outlooks.

Mr. Trump has repeatedly painted economic conditions in some of the bleakest language ever used by an American president, and he has described his fiscal policy agenda as necessary to revive growth and restore the nation’s prosperity.

Gary Cohn, the head of the president’s National Economic Council, told CNBC on Friday that he expected job growth to strengthen in the coming months.

“We’re very excited about what’s ahead of us,” he said.

Fed officials, by contrast, see the pace of job growth as unsustainable. The unemployment rate fell below 5 percent last May. Since then, employment has continued to expand at an average of 215,000 jobs a month — more than twice the job growth necessary to keep pace with population growth. The faster growth is good news for the economy, indicating that adults who gave up on finding jobs are returning to work. The question is how long that can continue.

There are already growing signs of a tighter labor market. The Federal Reserve Bank of Dallas recently reported that Texas employment in residential construction had nearly reached the level seen before the 2008 financial crisis and that skilled workers like framers, masons and bricklayers were in short supply. Average hourly earnings, adjusting for inflation, climbed 20.3 percent in the Texas construction sector from 2011 to 2016, compared with 5.9 percent for all Texans in private-sector jobs, the Dallas Fed reported. The National Association of Homebuilders reported that 82 percent of builders regarded the cost and availability of labor as their primary concern.


The Fed’s slow march toward higher interest rates is gradually raising borrowing costs for businesses and consumers. The average rate on a 30-year mortgage loan was 4.21 percent last week, up about half a percentage point from the same time last year, according to Freddie Mac. Rates on credit cards and car loans have also ticked higher, although borrowing costs remain well below historical norms.

As for interest on saving accounts, banks tend to raise those rates more slowly than they raise rates on loans. But as the Fed pushes up rates, savings rates will eventually increase, too.

Ms. Yellen and other Fed officials have been careful to acknowledge the persistence of a range of economic problems. Labor force participation is low. Productivity growth remains weak. Middle-income families have seen little income growth.

But these problems, in the view of Fed officials, cannot be addressed by holding down the Fed’s benchmark rate. “Monetary policy cannot, for instance, generate technological breakthroughs or affect demographic factors that would boost real G.D.P. growth over the longer run,” Ms. Yellen said in a speech this month in Chicago. “And monetary policy cannot improve the productivity of American workers.”

She noted that the White House and Congress could adopt fiscal policies that would improve those fundamental factors, although doing so would take time.

The Fed, an institution whose mission was famously described by a former chairman as taking away the punch bowl just as the party gets going, has a long history of angering politicians who would prefer to let the good times roll.

But in this case there is no reason for the Fed to rush. The Fed has indicated what it will do. Now, it can afford to wait and see what fiscal policy makers do.

President Trump has promised “massive tax relief for the middle class,” and his Treasury secretary, Steven Mnuchin, said last month that he wanted to see a bill passed before Congress goes on summer vacation in August. That is an ambitious timetable, not least because health care legislation is first in line. But even if the deadline is met, more months will pass before the money accumulates in the pockets of businesses and consumers, and before the money is spent.

“The thing that makes it relatively easy for the Fed is that fiscal policy usually takes a long time,” said James A. Wilcox, an economist at the University of California, Berkeley. “Financial markets don’t wait for all of that to happen, of course, but the actual spending and employment effects — they usually take a while to show up.”

President Trump and his advisers, meanwhile, have shown little sign of the belligerence toward the Fed that characterized Mr. Trump’s campaign pronouncements.

Mr. Trump has also not seized quickly on the opportunity to appoint his own people to the central bank. Two seats on the Fed’s seven-person board have been vacant for almost three years because Senate Republicans refused to consider President Barack Obama’s nominees. But Mr. Trump has not put forward his own.

Mark Calabria, the chief economist for Vice President Mike Pence, said last week that the White House planned to fill vacancies at the Fed and other regulatory agencies “in short order.” But he added that the administration was still considering its options.

David Nason, a General Electric executive who was regarded as a leading candidate, recently withdrew his name from consideration.

Mr. Trump also has the opportunity to replace Ms. Yellen as chairwoman when her four-year term ends in February, although she could remain on the board.

https://www.nytimes.com/2017/03/12/business/trump-fed-interest-rate.html?ref=politics

Profitable Companies, No Taxes: Here’s How They Did It
By PATRICIA COHENMARCH 9, 2017

Complaining that the United States has one of the world’s highest corporate tax levels, President Trump and congressional Republicans have repeatedly vowed to shrink it.

Yet if the level is so high, why have so many companies’ income tax bills added up to zero?

That’s what a new analysis of 258 profitable Fortune 500 companies that earned more than $3.8 trillion in profits showed.

Although the top corporate rate is 35 percent, hardly any company actually pays that. The report, by the Institute on Taxation and Economic Policy, a left-leaning research group in Washington, found that 100 of them — nearly 40 percent — paid no taxes in at least one year between 2008 and 2015. Eighteen, including General Electric, International Paper, Priceline.com and PG&E, incurred a total federal income tax bill of less than zero over the entire eight-year period — meaning they received rebates. The institute used the companies’ own regulatory filings to compute their tax rates.

The 100 companies that paid no taxes in at least one year in the last decade.

How does a billion-dollar company pay no taxes?

Companies take advantage of an array of tax loopholes and aggressive strategies that enable them to legally avoid paying what they owe. The institute’s report cites these examples:

Multinational corporations like Apple, Microsoft, Abbott Laboratories and Coca-Cola have ways of booking profits overseas, out of the reach of the Internal Revenue Service. (Those companies were not among the 258 whose rates were calculated by the institute, which said it could not verify the breakdown of their profits between the United States and other countries.)

Citing evidence in the report, Senator Bernie Sanders, the Vermont independent, and Senator Brian Schatz, Democrat of Hawaii, introduced a bill on Thursday to eliminate tax loopholes that encourage companies to shift activities offshore. “The truth is that we have a rigged tax code that has essentially legalized tax dodging for large corporations,” Senator Sanders said. “Offshore tax haven abuse has become so absurd that one five-story office building in the Cayman Islands is now the ‘home’ to more than 18,000 corporations.”

Others, like American Electric Power, Con Ed and Comcast, qualified for accelerated depreciation, enabling them to write off most of the cost of equipment and machinery before it wore out.

Facebook, Aetna and Exxon Mobil, among others, saved billions in taxes by giving options to top executives to buy stock in the future at a discount. The companies then get to deduct their huge payouts as a loss. Facebook used excess tax benefits from stock options to reduce its federal and state taxes by $5.78 billion from 2010 to 2015, the institute found.

Individual industries have successfully lobbied for specific tax breaks that function as subsidies: for instance, drilling for gas and oil, building Nascar racetracks or railroad tracks, roasting coffee, undertaking certain kinds of research, producing ethanol or making movies (which saved the Walt Disney Company $1.48 billion over eight years, the report says).

Why do some industries make out better than others?


Most of the 18 companies that managed to pay no total income tax between 2008 and 2015 were in the energy sector.

Pepco Holdings
Energy
PG&E
Energy
Wisconsin Energy
Energy
NiSource
Energy
International Paper
Manufacturing
FirstEnergy
Energy
Priceline
E-commerce
Atmos
Energy
General Electric
Conglomerate
American Electric Power
Energy
Ryder System
Logistics
Duke
Energy
NextEra
Energy
Xcel
Energy
Ameren
Energy
CMS
Energy
Sempra
Energy
Northeast Utilities
Energy

Companies listed are among 258 whose rates were calculated by the institute. It omitted companies for which it could not verify the allocation of profits between the United States and other countries.
These industry-specific subsidies mean that the goodies were not evenly distributed. Utilities logged an effective tax rate of just 3.1 percent over the eight-year period. Industrial machinery, telecommunications and oil, gas and pipeline companies paid roughly 11.5 percent. Internet services paid 15.6 percent. In just two sectors — health care and retail — companies paid more than 30 percent of their profits in federal income tax.

“One of the things that jumps out pretty starkly is there’s a real gap between the tax rates paid by different industries,” said Matthew Gardner, a senior fellow at the institute and a co-author of the study. “When the biggest companies aren’t paying their fair share, that means the rest of us are left to pick up the slack. It means small business and middle-income families are paying more.”

But Tara DiJulio, a spokeswoman for General Electric, called the report “deeply flawed and misleading.”


“G.E. is one of the largest payers of corporate income taxes,” she said. “Over the last decade, G.E. paid $32.9 billion in cash income taxes worldwide, including in the U.S., and pays more than $1 billion annually in other U.S. state, local and federal taxes.”

She added: “The tax code is complex and outdated, which is exactly why tax reform must happen this year. G.E. has long been advocating to simplify and modernize the tax system — even if it means we pay more in taxes.”

Tax reformers have long argued that the nominal 35 percent federal rate on corporate profits more often than not functions like a strike-through price — an artificially inflated number that sounds high but rarely applies. Thanks to a variety of loopholes and tax-dodging methods, those 258 corporations paid an average rate of 21.2 percent. (Other studies, including a new one by the Congressional Budget Office that compares corporate income tax rates in various countries, have found that average and effective rates in the United States are lower than the nominal rate.)

Who are the biggest beneficiaries?

Companies with the biggest tax subsidies over the eight years, the institute’s report said, included:

¦ AT&T ($38.1 billion)
¦ Wells Fargo ($31.4 billion)
¦ JPMorgan Chase ($22.2 billion)
¦ Verizon ($21.1 billion)
¦ IBM ($17.8 billion)
¦ General Electric ($15.4 billion)
¦ Exxon Mobil ($12.9 billion)
¦ Boeing ($11.9 billion)
¦ Procter & Gamble ($8.5 billion)
¦ Twenty-First Century Fox ($7.6 billion)
¦ Time Warner ($6.7 billion)
¦ Goldman Sachs ($5.5 billion)

Some of the tax incentives, including those enacted during the recession, were meant to increase economic growth and hiring, but the institute’s report said they often didn’t work that way.

Republicans say their tax overhaul will eliminate some of the biggest loopholes, although critics counter that the substitute will end up further reducing companies’ tax bills.

https://www.nytimes.com/2017/03/09/business/economy/corporate-tax-report.html?ref=economy

Caterpillar Is Accused in Report to Federal Investigators of Tax Fraud
By JESSE DRUCKERMARCH 7, 2017

For years, federal investigators have been scrutinizing Caterpillar’s overseas tax affairs with no resolution to the examinations of the complex maneuvers involving billions of dollars and one of the company’s Swiss subsidiaries.

Now, a report commissioned by the government and reviewed by The New York Times accuses the heavy-equipment maker of carrying out tax and accounting fraud. It is extremely rare to accuse a big multinational company of tax fraud, which could result in high penalties.

“Caterpillar did not comply with either U.S. tax law or U.S. financial reporting rules,” wrote Leslie A. Robinson, an accounting professor at the Tuck School of Business at Dartmouth College and the author of the report. “I believe that the company’s noncompliance with these rules was deliberate and primarily with the intention of maintaining a higher share price. These actions were fraudulent rather than negligent.”

No charges have been filed, and it is not clear whether investigators agree with the findings or intend to act on them. The report, which has not been made public or made available to Caterpillar, outlines a company strategy for bringing home billions of dollars from offshore affiliates while avoiding federal income taxes on those earnings.

Corrie Heck Scott, a Caterpillar spokeswoman, pointed out that the company had not been provided with a copy of the report and declined to comment further. The company, which makes heavy construction and mining equipment, has defended its tax strategies in previous years by calling the arrangements prudent and lawful among large United States companies.

Caterpillar’s strategies for reducing the taxes it must pay in the United States have saved the company billions of dollars. Last week, federal agents raided three Caterpillar buildings near its headquarters in Peoria, Ill., as part of the investigation. Caterpillar said it was cooperating with law enforcement.

The company’s tax practices have been a focus of government investigators since a 2014 Senate hearing found that the company cut its tax bill by $2.4 billion over 13 years, moving earnings out of the United States and into a Swiss subsidiary, despite internal company warnings that the strategy lacked a business purpose, other than tax avoidance.

Less than a year later, Caterpillar disclosed it received a subpoena from federal investigators seeking documents and information relating to the movement of cash among domestic and overseas subsidiaries, as well as other matters involving its foreign units, including the Swiss entity.

The company has since disclosed in securities filings that the Internal Revenue Service is seeking more than $2 billion in income taxes and penalties on profits earned by the Swiss unit. Caterpillar has said it is “vigorously contesting” the I.R.S.’s proposed increases.

Reached by telephone, Ms. Robinson declined to comment. Her report focused on one specific part of Caterpillar’s offshore tax arrangement. It concluded that the company failed to pay taxes on billions of dollars brought home primarily from its Swiss unit and its affiliates, and thus failed to comply with United States tax law and financial reporting rules.

It is not clear which federal agency hired Ms. Robinson. In her report she wrote that she was asked to provide a written opinion of Caterpillar’s financial reporting related to various tax accounting standards, “as pertaining to” the investigation of Caterpillar by the Federal Deposit Insurance Corporation Office of Inspector General.

“I was provided with all documents available to the case agents assigned to the investigation,” Ms. Robinson wrote. She also wrote that she spent approximately 200 hours reviewing the evidence and performing calculations.

The investigation is being conducted by the United States attorney’s office for the Central District of Illinois as well as the Inspector General of the F.D.I.C., which investigates criminal activities affecting financial institutions. Agents from that office, as well as from the I.R.S. and the Department of Commerce’s office of export enforcement joined the raid on Caterpillar’s offices last week.

A spokeswoman and a spokesman for the agencies confirmed last week’s law enforcement activity and the agencies involved, but declined to comment further.

United States companies owe corporate income taxes at a rate of 35 percent on profits earned around the world. However, they are permitted to defer the taxes owed on the profits generated offshore until they bring those earnings back to the States, a process known as repatriation. Once they bring cash back, they generally owe federal income taxes, with a credit for any income taxes they have already paid overseas.

In the report, Ms. Robinson estimated that Caterpillar has brought back $7.9 billion into the States, structured as loans, over and beyond the income that had already been taxed overseas. She concluded that the company failed to report those loans for tax or accounting purposes, and she wrote that those profits should be subject to federal taxes.

In one example, she cited correspondence between the company and the Securities and Exchange Commission in which Caterpillar said it had $2.5 billion of income eligible to be brought to the United States tax-free. Ms. Robinson wrote that her research showed that the company did not have “anywhere near” that sum still available to be brought in tax-free.

Caterpillar failed to report those loans as taxable distributions of cash, thus avoiding the tax on earnings brought home from Switzerland, while “enjoying the use of those earnings to meet U.S. cash needs,” she wrote.

Ms. Robinson’s 85-page analysis is based on publicly available and internal financial data of the company, she wrote in the report, as well as bank data tracking wire transfers from Switzerland into the United States.

The report does not explain whether Caterpillar used the type of creative, and often legal, transactions that United States multinationals use to avoid tax on earnings brought home from offshore.

For instance, while companies typically owe tax on earnings brought home, there some exceptions. For instance, they do not owe tax on short-term loans made by their offshore subsidiaries to their domestic parent company. In her report, Ms. Robinson does not mention this legal exception, and it is unclear if Caterpillar used such transactions.

In 2012, the same Senate committee that examined Caterpillar’s taxes found that Hewlett-Packard stitched together a series of such loans to bring home billions of dollars tax-free.

The 2014 Senate report on Caterpillar said the company worked with the accounting firm PricewaterhouseCoopers, to set up its Swiss tax-cutting strategy. PwC was also the company’s auditor, which raised “significant conflict of interest concerns,” according to Senate investigators.

The report by Ms. Robinson makes a passing reference to PwC but does not address what role, if any, it had in these transactions.

Caroline Nolan, a spokeswoman for PwC, said, “We don’t comment on client matters or pending investigations.”

Companies like Caterpillar, Google, Apple and Pfizer have accumulated at least $2.3 trillion offshore, much of it in subsidiaries located in tax havens like Bermuda, Luxembourg and the Cayman Islands. President Trump has said he supports a holiday of sorts that would permit companies to bring those profits back to the United States at a low rate.


https://www.nytimes.com/2017/03/07/business/caterpillar-tax-fraud.html?ref=business

Mall REITs rocked by news of J.C. Penney store closures
Published: Feb 24, 2017 1:09 p.m. ET

http://www.marketwatch.com/story/mall-reits-rocked-by-news-of-jc-penney-store-closures-2017-02-24?siteid=YAHOOB

Blackstone to Acquire Aon Unit for Up to $4.8 Billion
By CHAD BRAYFEB. 10, 2017

LONDON — The Blackstone Group said on Friday that funds affiliated with the private equity giant had agreed to pay up to $4.8 billion to acquire Aon’s human resources outsourcing business.

The business is the largest benefits administration platform in the United States and a provider for cloud-based human resources management systems, Blackstone said. It serves about 15 percent of the United States’ working population at more than 1,400 companies.

Aon, an insurance broker and risk manager that moved its headquarters to London from Chicago in 2012, would receive $4.3 billion in cash, plus up to another $500 million based on future performance, under the deal’s terms.

“We are excited to acquire a world-class leader of scale in health, retirement and HR services,” Peter Wallace, a Blackstone senior managing director, said in a news release. “Blackstone sees tremendous opportunity for investing in leading businesses within the technology-enabled services sector, where we believe there is a significant opportunity to accelerate future growth.”

Aon acquired the business in 2010 as part of its $4.9 billion takeover of Hewitt Associates.

“This transaction sharpens our focus on growing our core professional services capabilities and accelerates our ability to invest in emerging client needs, while ensuring that clients continue to receive the level of service and performance they have come to expect,” said Gregory C. Case, the Aon president and chief executive.

Citigroup, Credit Suisse, SMB Capital and the law firm Kirkland & Ellis advised Blackstone, while Morgan Stanley and the law firm Sidley Austin advised Aon.

The transaction is subject to regulatory review and is expected to close in the second quarter.

Federal Debt Projected to Grow by $8.6 Trillion Over Next Decade
By ALAN RAPPEPORTJAN. 24, 2017

WASHINGTON — After seven years of fitful declines, the federal budget deficit is projected to begin swelling again this decade, adding $8.6 trillion to the federal debt over the next ten years, according to projections from the nonpartisan Congressional Budget Office that reveal the strain that the government’s debt will have on the economy as President Trump embarks on plans to slash taxes and ramp up spending.

The deficit, which is expected to shrink in the next two years before swelling later in the decade, will amount to 3.8 percent of the country’s total economic output, above the 3 percent that economists view as the danger point for the economy.

The new deficit figures will be a major challenge to congressional Republicans, who were swept to power in 2010 on fears of a swollen deficit and who have made controlling red ink a major part of their legislating. Statutory caps imposed in 2011 on domestic and defense spending have helped control the deficit. But those controls are likely to be swamped by the aging Baby Boomer generation, which is ramping up spending on health care and Social Security.

Now, congressional leaders will have to choose between their fealty to the cause of fiscal prudence and the demands of the new president, who wants $1 trillion in infrastructure work over 10 years, a surge in defense spending, and large tax cuts for individuals and corporations.

The Congressional Budget Office’s budget and economic outlook said that the share of debt held by the public is expected to reach 89 percent in 2027. Such a high level of debt could increase the likelihood of a financial crisis and raise the possibility that investors will become skittish about financing the government’s borrowing.

Over the next 10 years, real economic output is projected to grow at an annual rate of 1.9 percent.

Mr. Trump has promised that his combination of tax cuts and investment on infrastructure will cause growth to surge above 4 percent.

Despite the swelling deficit, the report describes an economy that is currently on “solid ground,” with increasing output and job growth on the immediate horizon. The snapshot represents a stark contrast to the economic “carnage” that Mr. Trump detailed in his inauguration address and the crisis that faced President Barack Obama when he took office eight years ago.

https://www.nytimes.com/2017/01/24/us/politics/budget-deficit-trump.html?ref=politics

Exxon Concedes It May Need to Declare Lower Value for Oil in Ground
By CLIFFORD KRAUSS
The company may have to concede that 3.6 billion barrels of oil-sand reserves and a billion barrels of other reserves are currently not profitable to produce.

http://www.nytimes.com/2016/10/29/business/energy-environment/exxon-concedes-it-may-need-to-declare-lower-value-for-oil-in-ground.html?ref=business

AT&T Agrees to $85 Billion Acquisition of Time Warner
By MICHAEL J. de la MERCED
In buying the home of HBO and CNN, the telecommunications giant would create a new colossus capable of both producing content and distributing it to millions.
The proposed deal is likely to spur yet more consolidation among media companies.

http://www.nytimes.com/2016/10/23/business/dealbook/att-agrees-to-buy-time-warner-for-more-than-80-billion.html

Microsoft Shares Hit a High With Promise of the Cloud’s Profit Margins
By NICK WINGFIELD
Microsoft said its gross profit margin from its commercial cloud business was 49 percent — lower than its traditional software business, but still attractive.
http://www.nytimes.com/2016/10/21/technology/microsoft-earnings-cloud-computing.html?ref=dealbook

Deutsche Bank Troubles Raise Fear of Global Shock

By PETER S. GOODMAN

As investors’ concerns of another crisis are stoked, the arithmetic is less important than fears about the impotence of European authorities.

http://www.nytimes.com/2016/10/01/business/dealbook/deutsche-bank-stock-bailout.html?ref=business

Fed, With 3 Officials in Dissent, Stands Firm on Interest Rates While Noting Improving Economy

By BINYAMIN APPELBAUM

Three members of the central bank’s 10-member policy-making group voted to raise rates. Most officials said that they still expected to raise rates before the end of the year.

http://www.nytimes.com/2016/09/22/business/economy/fed-interest-rates-yellen.html?ref=business

Yellen Sees Stronger Case for Interest Rate Increase

By BINYAMIN APPELBAUM

The Federal Reserve chief, in a speech, pointed to gains in the job market and economic outlook. But the Fed is not expected to act before December.

http://www.nytimes.com/2016/08/27/business/economy/janet-yellen-federal-reserve-interest-rates.html?ref=dealbook

What Trump Doesn’t Know About Detroit
Steven Rattner AUG. 18, 2016


No shortage of critics unleashed their weaponry eight years ago as the federal government intervened to save General Motors and Chrysler when they teetered near bankruptcy. Among the more notable: Mitt Romney, who’s well remembered for his 2008 New York Times Op-Ed article, “Let Detroit Go Bankrupt.”

This year’s Republican nominees have echoed Mr. Romney.

“You could have let it go bankrupt, frankly, and rebuilt itself, and a lot of people felt it should happen,” Donald Trump said last summer, adding that, without government assistance, the industry would be in the same situation. His running mate, Gov. Mike Pence of Indiana, opposed government intervention and continued to hold that position afterward. “It still would have been better if G.M. had gone through an orderly reorganization bankruptcy without taxpayer support,” he said in 2010.

Just as Mr. Romney was wrong eight years ago, so, too, have Mr. Trump and Mr. Pence been wrong more recently. I know, because as lead auto adviser in the Obama administration, I was there.

In late 2008 and early 2009, when General Motors and Chrysler exhausted their cash reserves, traditional sources of private capital that typically provide liquidity to companies during a bankruptcy reorganization fled to the sidelines.





Without government assistance (provided first by President George W. Bush and then by President Obama), the giant automakers would have been forced to stop production, lay off their workers and close their doors. The ripples would have cascaded through the auto industry, causing already strapped suppliers to shut down as well. With the flow of parts interrupted, other manufacturers, including Ford, would have been compelled to halt assembly, at least for a time.

Instead, temporary infusions of government capital helped shepherd G.M. and Chrysler through managed bankruptcies that installed new management and fundamentally restructured unsustainable liabilities and cost structures.

Fast forward to 2015, when a record number of new vehicles were sold in the United States by companies that were hiring new workers, paying existing workers more and earning the highest profits in their history. Meanwhile, of the $80 billion invested by Washington in the auto sector, all but about $9 billion was returned to taxpayers — money well spent to save a cornerstone industry and perhaps more than a million jobs.

Since 2009, double-digit unemployment rates in key auto states have dropped precipitously; the jobless rate in Michigan is currently 4.6 percent, below the national average, down from 14.9 percent in June 2009. In Mike Pence’s own Indiana — the No. 3 state for auto manufacturing — the unemployment rate is 4.8 percent, down from a peak of 10.9 percent in early 2010.


Mr. Trump’s confusion about the automobile industry extends well beyond bankruptcy questions.

In 2013, he tweeted, “After Obama bailed out G.M. for $80 billion, 7 of 10 G.M. cars made in China!” Wrong on multiple counts. It wasn’t $80 billion; it was $49.5 billion for G.M., of which $13.4 billion was provided by the Bush administration. (Another $30 billion was allocated to Chrysler and the automobile finance companies.) Nor are most G.M. cars made in China; in fact, hardly any General Motors cars made in China are brought to the United States.

In 2012, Mr. Trump tweeted that Chrysler was going to move its Jeep production to China. Wrong again. Jeep is making vehicles in China only for Asian markets.

What’s particularly notable about the auto rescue is the difference between how the auto industry was restructured and how bankruptcy has worked, Donald Trump style.

In many of Mr. Trump’s multiple insolvencies, he scratched, clawed and bullied creditors into leaving him with a substantial share in the reorganized company, allowing him to profit from any future success. He also sometimes kept a management role — or at least a title — along with hefty fees for licensing his name or providing other “services.”





By contrast, when General Motors and Chrysler entered bankruptcy, we insisted that the existing shareholders be wiped out as a condition of receiving government money. And we replaced failed management.

In fairness, Mr. Trump’s musings about the auto bailout have not always been uniformly negative. Back in 2008, he said of the auto companies, “I think the government should stand behind them 100 percent.” And a nugget of truth lies nestled in his rantings about the state of trade between Mexico and the United States. As Mexican workers have become more productive (while remaining relatively low paid), major automakers have shifted assembly to plants south of the border.

That’s an unfortunate — although not unusual — byproduct of economic development. The solution is not to slap on huge tariffs and start a disastrous trade war, as Mr. Trump suggests, but to develop new jobs requiring the higher skill levels of American workers.

Had Mr. Trump’s vision of a free-fall bankruptcy been implemented, a result would have been a dramatically shrunken American auto industry and even more of those job-killing imports that he claims to detest.


Steven Rattner, who served as lead auto adviser in the Obama administration, is a contributing opinion writer.

http://www.nytimes.com/2016/08/18/opinion/what-trump-doesnt-know-about-detroit.html?

Walmart Rewrites Its E-Commerce Strategy With $3.3 Billion Deal for Jet.com

By LESLIE PICKER and RACHEL ABRAMS

http://www.nytimes.com/2016/08/09/business/dealbook/walmart-jet-com.html?ref=dealbook

I buy almost nothing but NYSE stocks, and I suspect I've outperformed 98+% of IHUBbers

Dollar Shave Club Sells to Unilever for $1 Billion
By MIKE ISAAC and MICHAEL J. de la MERCEDJULY 20, 2016

http://www.nytimes.com/2016/07/20/business/dealbook/unilever-dollar-shave-club.html?ref=business

Pimco Hires Emmanuel Roman, Man Group’s Chief Executive, for Top Post

By CHAD BRAY

Mr. Roman will take over at the bond giant on Nov. 1 as the California-based fund looks to turn around its fortunes.

http://www.nytimes.com/2016/07/21/business/dealbook/pimco-man-group-bonds-roman.html?ref=business