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Posts Tagged ‘Share price’

In 2012, news that wasn’t published hardly at all included the fact that Costco’s CEO Craig Jelinek decided that redistributing income from his employees to his shareholders by cutting wages was not good for the employees or for the shareholders. Wall Street was pressuring him to do exactly that (Click here for the story from http://www.zdnet.com). This was in spite of the fact that Costco’s closing share price hovered slightly below $39 a share in March 2009 and had risen to over $90 a share in March 2012.

That higher wage strategy seems to have worked beautifully. Costco’s share price has been steadily rising, and it closed at $177 on March 2 2017. Wall Street was proven wrong–again.

The truth is simple. When you have a massive income redistribution from the 99 to the 1 percent via federal legislation, as in the last thirty-seven years, you have a government and an economy that are sick with massive corruption. Costco has opted out of that business model. Thirty-six years ago, the 1 percent took home about 8 percent of the nation’s income, now it’s over 30 percent and growing, and it’s been stolen from the rest of us. Thirty-six years ago, the 1 percent owned 7 percent of the nation’s wealth, now they own over 40 percent, and it’s growing at the expense of us all. However, when the latest stock market bubble bursts, and it will, much of that wealth will evaporate.

 

This is why the current economic expansion is long, but historically weak by virtually all measurements, despite a bigger gross domestic product, greater worker productivity and larger population than in years past. Demand should be robust compared to decades ago, but it instead remains comparatively lackluster. That is because the income of the 99 percent has been redistributed to the 1 percent, leaving the rest of us insufficient money to boost this economy in the manner of the past.

It’s time to put a little more balance in the economy by following the Costco model. The government has redistributed income from the 99 to the 1 percent via free trade treaties, privatization scams, corporate welfare and other means. It’s time for the government to move in the opposite direction on behalf of all of us, not just the rich.

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This week, the Ford Motor Company announced that it was no longer going to export all small car production to Mexico, which meant exporting US jobs. The company will invest $700 million in Michigan, instead, and create another 700 jobs in the process.

Ford CEO Mark Fields said this move was a vote of confidence in Donald Trump. “We didn’t cut a deal with Trump. We did it for our business,” Fields told CNN’s Poppy Harlow in an exclusive interview Tuesday.

During the election season, Trump repeatedly slammed Ford for exporting tens of thousands of US jobs to Mexico.

Now here’s what you haven’t been told. Ford’s share price dropped from a recent high of $17.72 in 2014 to $11.34 on November 2016. Then came the election on November 8, and a subsequent rise in the overall price of corporate shares. So far, Ford’s share price has risen to $13.17 since November 4. Would Ford have kept the jobs in the USA if its share price was heading in the other direction. Not likely.

The billionaires, Wall Street investment corporations and hedge funds are taking cash out of the bond markets and stuffing that cash straight into the stock markets, thereby expanding the bubble, which will soon pop.

When the bubble pops, share prices will fall, and you can bet your bottom dollar that Ford will soon be exporting as many jobs as possible to enhance its bottom line and prop up its failing share price.

The economy should hit the recession by June of this year. Expect the stock and housing market bubbles to pop shortly afterwards.

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“It’s gutless leadership,” US Senator Warren told Wells Fargo CEO John Stumft at a senate hearing over how he led the bank to fool investors. Want to get angry? Listen to the video above. We need Warren to be the next US president!

On twelve occasions between 2012 and 2016 Stumpf told investors that Wells Fargo was doing great because the bank had record and increasing numbers of cross-selling, which is the number of accounts opened by the same customers. In this case, approximately two million accounts were opened by customers without their knowledge. Stumpf lied when he denied the bank committed these crimes to fool investors.

The Consumer Financial Protection Agency fined Wells Fargo $185 million for this latest Wall Street scandal, which is a drop in the bucket for the bank, and a small token of doing business-as-usual.

This scam impacted negatively the credit ratings of Wells Fargo customers even if they didn’t use the accounts they didn’t know they had. Meanwhile, Stumpf received over $200 million in stock options in part because of this scam, which drove the bank’s share price upward.

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According to Business Insider, “Carrie Tolstedt, the head of the community banking division, was the executive directly responsible for overseeing the retail banking sector of the company, where the fake accounts were created.

In July, Tolstedt retired from Wells Fargo, holding roughly $96.6 million in various stock awards. Numerous times during the testimony on Tuesday, Stumpf was asked why Tolstedt wasn’t fired and whether the bank would use its clawback provision to take back some of that compensation.”

Warren called for Strumpf to be criminally investigated for the fraud he likely ordered. This wasn’t something engineered by some branch manager, not with two million phony accounts. The order had to come from way up.

Who in the bank is accountable? The CEO hasn’t resigned. He hasn’t fired one senior executive. Instead, Wells Fargo’s definition of “accountable” is to push blame on low-level employees who don’t have the money or PR firms to defend themselves. A bank cashier who steals $20 would be facing theft charges, but the department of justice has failed to hold any Wall Street executives accountable for any of the crimes they’ve committed for decades.

On the other hand, CNN reported that a number of Wells Fargo employees were fired for refusing to open the phony accounts, or if they complained about it to higher bank officials. See Wells Fargo Fired Workers in Retaliation For Reporting Fake Accounts–CNN

I should point out that Wells Fargo unofficial and perhaps under the table employee happens to be Wall Street Senator Mitch McConnell. He is unhappy with the Consumer Financial Protection Bureau because it is doing its job, so he’s been trying to defund it since the scandal broke. McConnell and his wife hold more Wells Fargo stock than any other senator. What a sore loser!

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Ford announced Wednesday that it will move its entire small car operation from America to Mexico.

“Over the next two to three years, we will have migrated all of our small car production to Mexico and out of the United States,” said Ford CEO Mark Fields, during an investor conference it was hosting in Detroit, Michigan. Notice he told investors what they should expect.

Ford’s share price continued its slow decline anyway. The share price peaked back in 1999 at $37.14. It’s been up and down since then, but never back up to the peak. The share price plummeted to a $1.43 in 2009, reached $18.65 in 2011, hit another peak in 2014 at $17.72 and has been going down ever since. The shares traded at $12.11 on September 16, two days after Fields made his foolish announcement to investors.

Ford management has exported over half of its US jobs to Mexico since NAFTA. Thank you Bill and Hillary Clinton. This has been done to reduce its labor costs and increase its profits, share price and dividends. Ford’s decision will also increase income inequality and reduce its long-term per capita sales.

So what happens when virtually all of Ford’s jobs are overseas? What happens when the next recession hits sometime within the next twelve months, most likely by or before June 2017?

Ford management can’t export many more jobs to Mexico, so that avenue to increase earnings and share prices will soon close down. The next recession will be worse than the last one, which I will explain why in a day or so. Ford’s retained earnings peaked at $27.5 billion a year ago. That’s dropped by $11 billion in a year. In other words, Ford is running out of financial room to maneuver, especially during this coming economic downturn.

The company still gives a nice dividend of nearly 5 percent. But all that means is that Ford will run out of money sooner than later during the downturn.

Expect its share price to drop back down to a dollar something, or less. The company likely will be facing a financial crisis and possible insolvency within the next five years.

Ford is an unwise investment, even for billionaires and hedge funds. Even if the company doesn’t face insolvency over the next five years, its share price is going to continue to tank in the long-run, but CEO Fields hasn’t figured that out. He should be investing in US production rather than investors, and to hell with the share price.

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The Epipen delivers a dose of epinephrine, otherwise known as adrenaline, to treat extreme allergic reactions. It’s been around for more than a century. And the pen that delivers the medication has been around since the 1970s, when it was first developed by the US military with taxpayer dollars.

Epinephrine was invented in Japan. This jump-started other areas of emergency medication for heart and lung problems. The hormone is now used in hospitals around the world, and is included on the WHO’s list of essential medicine. It only costs a few dollars for a vial.

Mylan, which is the corporation with the legal right to the taxpayer funded Epipen, recently relocated outside the United States to avoid paying taxes.

Proxy filings show that from 2007 to 2015, Mylan CEO Heather Bresch’s total compensation went from $2,453,456 to $18,931,068, a 671 percent increase. During the same period, the company raised EpiPen prices, with the average wholesale price going from $56.64 to $317.82, a 461 percent increase, according to data provided by Connecture.

Mylan was able to rip off the public because it bought legislation through corrupt politicians, and let’s face it, the US government from the White House to almost every US senator and almost every US member of the House of Representatives have been bought and packaged by big business so as to increase their profits at the expense of the 99 percent.

According to NBC News, “After Mylan acquired EpiPen the company also amped up its lobbying efforts. In 2008, its reported spending on lobbying went from $270,000 to $1.2 million, according to opensecrets.org.

Legislation that enhanced its bottom line followed, with the FDA changing its recommendations in 2010 that two EpiPens be sold in a package instead of one and that they be prescribed for at-risk patients, not just those with confirmed allergies. And in 2013 the government passed a law to give block grants to states that required they be stocked in public schools.

In 2007 the company bought the rights to EpiPen, a device used to provide emergency epinephrine to stop a potentially fatal allergic reaction and began raising its price. In 2008 and 2009, Mylan raised the price by 5 percent. At the end of 2009 it tried out a 19 percent hike. The years 2010-2013 saw a succession of 10 percent price hikes.

The stock price more than tripled, going from $13.29 in 2007 to a high of $47.59 in 2016.”

In other words, the US government aided and abetted a monopoly so that it could redistribute income from the 99 to the 1 percent. Furthermore, as a complete monopoly, the US government allowed Mylan to rip off the needy in violation of the numerous US laws, which include the Sherman Anti-Trust Act.

That’s how corrupt your government is.

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The rich are getting richer under President Obama, and this is partly true because of his policies, such as the South Korea Free Trade Agreement.

According to a report out of the Pew Research Center, “During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%.”

There’s are several reasons for this trend. One of the worst is that one to two plus million jobs are exported every year from the US, according to the Federal Reserve. The difference between the old wages and the new lower wages over there are redistributed from the job losers to rich shareholders via higher corporate earnings, increased dividends and rising share prices.

And that is precisely what has occurred, a massive redistribution of income, which has fueled a rise in share and bond prices (wealth). BTW, income is money coming in, such as weekly pay checks and corporate dividends, while wealth is composed of assets.

The people in the top 7 percent saw their total wealth increase $5.6 trillion, mostly in the form of stocks and bonds. The 93 percent and lower saw their wealth decrease by $0.6 trillion. Their wealth is mostly in their houses.

What happens when job get shipped overseas? Many people lose their houses. If enough jobs are shipped overseas, then local tax bases begin to shrink. Teachers, fire fighters, government lawyers and accountants; they lose their jobs, they lose their houses. But corporate share prices rise because labor costs are reduced. In other words, a massive redistribution of income results in a massive redistribution of wealth.

The 1 percent have stolen virtually all income growth during the last five years. They now steal over 30 percent of all yearly US income, up from about 8 percent thirty-three years ago. Free trade treaties have played a massive role in this.

According to Pew, “During the period under study, the S&P 500 rose by 34% (and has since risen by an additional 26%), while the S&P/Case-Shiller home price index fell by 5%, continuing a steep slide that began with the crash of the housing market in 2006. (Housing prices have slowly started to rebound in the past year but remain 29% below their 2006 peak.)”

The reason for the results of this study is massive corruption in the US government. Money is the reason why many congress persons and senators vote to redistribute income from the 99 to the 1 percent. All of this was easily predictable, and I did so in The Rigged Game.

Click the link for more on this story.

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