The billionaire founders of KKR, America’s first nationally celebrated “private equity” giant, have just announced they’re stepping down as the company’s co-CEOs. Henry Kravis, now 77, and George Roberts, 78, helped found KKR in 1976. They opened up shop with $120,000 in capital to invest. Their KKR portfolio currently holds assets valued not all that far from half a trillion.

Kravis and Roberts also both personally now rank among America’s 100 richest, Roberts with a net worth of $9 billion and his cousin Kravis not far behind with $8.5 billion. In their retirement announcement Monday, they declared themselves supremely “proud of what we have built” and proclaimed that “KKR still has so much potential even 45 years later.”

Global business commentators, predictably enough, have been gushing over Kravis and Roberts this week, extending to the pair all the plaudits the phenomenally rich consider their natural due. The Financial Times, for instance, has marveled that Kravis and Roberts began their illustrious career with one “dazzling insight” and ended it with another. No one has ever, the business journal added, “understood the concept of ‘other people’s money’ better.”

In one niche of American economic life after another, private equity kingpins like Kravis and Roberts have been hollowing out the hopes of average working people and the communities they call home.

Kravis and Roberts, meanwhile, have of late been trying to show that the “other people” they care about include those not quite as fortunate as they happen to be. Last year, the cousins created a special $50-million KKR fund to support front-line workers struggling their way through the pandemic. And to help support the fund, the pair pledged a chunk of their own 2020 compensation, a gesture totally appropriate, they explained, in the face of a pandemic that’s “wreaking havoc on every country, every industry, every household, and virtually every single person.”

Kravis and Roberts, to be sure, certainly do know havoc. The private equity industry they pioneered has been wreaking massive amounts of it for over four decades now. In one niche of American economic life after another, private equity kingpins like Kravis and Roberts have been hollowing out the hopes of average working people and the communities they call home.

About 12 million Americans, some 7 percent of the nation’s workforce, are now laboring for firms that sit in private equity portfolios. That employment total would be considerably higher, analysts have calculated, had private equity not burst on America’s financial scene. In retail alone, one 2019 study reported, private equity takeovers have cost over 1.3 million U.S. workers their jobs.

Among private equity’s many retail victims: some 33,000 Toys ‘R’ Us workers who lost their jobs when their retail colossus went bankrupt and liquidated in 2018, just over a dozen years after KKR and two other private-equity firms had bought up all of the company’s outstanding shares. That leveraged buyout saddled Toys ‘R’ Us with the massive debt that KKR and its partners had incurred to make the purchase. The burden of that debt, some $400 million a year, fell squarely on workers. They lost jobs, pay, and benefits to private equity’s machinations — as have workers across America’s retail landscape. Of the 14 largest retail bankruptcies since 2012, ten have come at retailers that private equity firms swallowed up.

Last year, the Wall Street Journal identified the nation’s 38 surviving retailers with the weakest credit profiles. Private equity firms owned 27 of them. Between the massive debt private equity has foisted on retailers and the billions in fees and dividends that private equity has extracted from them, notes Jim Baker of the watchdog Private Equity Stakeholder Project, private equity “has made it more difficult” for retailers “to innovate in a changing industry.”

One typical storyline: KKR became retailer Academy Sports’ largest shareholder in 2011, then paid itself $900 million in dividends from Academy Sports Health over the next four years. A year ago, in April, Academy Sports furloughed a “substantial number” of its employees. Last month, KKR announced plans to sell its entire $853-million stake in the company.

Similar stories abound elsewhere in the U.S. economy. Private equity firms now own 11 percent of the nation’s nursing homes, and this ownership, says 2020 research from three prestigious U.S. business schools, “has coincided with cost cutting, declining quality of care, and increasing violations discovered in government inspections.”

This past February, another study — out of the National Bureau of Economic Research — found that private equity nursing home ownership “increases the short-term mortality” of Medicare patients by 10 percent, a dynamic that over the 12 years studied led to over 20,000 premature deaths.

The latest unsavory addition to private equity portfolios: the fossil fuel industry.

Private equity firms, observes the American Prospect’s David Dayen, seem to have a particular affection for collecting some of the nation’s “worst businesses,” outfits that range from for-profit colleges and payday lenders to bail companies and detention camps for children.

The latest unsavory addition to private equity portfolios: the fossil fuel industry. Private equity funds, the New York Times reports this week, are “buying up offshore platforms, building new pipelines, and extending lifelines to coal power plants.”

KKR has become a major player in this space, notes a just-released Private Equity Stakeholder Project study, and “recently redoubled on fracking.” Private equity firms like KKR have been picking up fossil-fuel assets on the cheap, exploiting the eagerness of publicly traded oil companies eager to ditch their dirtier holdings in the face of growing public pressure. Sales to private equity firms let Big Oil look more environmentally conscious, but the environment — and the 17.6 million Americans who live within a mile of an active oil or gas well — get no relief.

Through all this wheeling and dealing, of course, private equity dealmakers just continue getting richer. That aggrandizement comes with the territory, with the “business model” that Henry Kravis and George Roberts have done so much to perfect. Characters like Kravis and Roberts — they mostly call themselves “general partners” — have over $7 trillion in assets under management, mostly raised, notes policy analyst Matt Stoller, from wealthy people and institutional investors like pension funds. They pay themselves by the rule of “2 and 20,” charging the enterprises they’ve bought up a 2 percent annual management fee on their assets under management and a 20 percent performance fee on profits above some benchmark level.

This 20 percent fee, in turn, gets treated as a “capital gain” for tax purposes, and this “carried interest” may now be the U.S. tax code’s most notorious loophole, just one of the many ways government policies and inadequate oversight have fueled private equity’s rise.

“For far too long,” as Senator Elizabeth Warren declared two years ago as she introduced reform legislation, “Washington has looked the other way while private equity firms take over companies, load them with debt, strip them of their wealth, and walk away scot-free — leaving workers, consumers, and whole communities to pick up the pieces.”

Warren’s proposed Stop Wall Street Looting Act, if enacted, would stop “private equity firms from stripping cash, real estate and other assets from the companies they take over,” one appraisal notes, and, most importantly, “hold private equity firms responsible for the large debts that they use to buy companies.”

But even the provisions of Warren’s legislation, the Center for Economic and Policy Research’s Eileen Appelbaum has told Congress, won’t be enough to fully prevent private equity’s pillaging of Main Street. She’s called for other legislation to halt “particular financial abuses” like the organizing of so-called “wolf packs” to secretly accumulate shares in publicly traded companies.

But even these additional moves might not be enough to tame the animal spirits the Kravis-and-Roberts crew has been visiting upon us. Private equity, argues analyst Matt Stoller, amounts to “a highly ideological social movement that comes out of the modest conglomerate craze of the 1960s” and the junk bond mania that followed soon after. The essential lesson private equity’s pioneers gained from these episodes: Go for it. Get everything you can grab.

Americans have received, in effect, a half-century-long lesson in what happens when you let the rich get ever richer.

This new attitude began emerging, not so coincidentally, when the federal income tax rate on America’s highest incomes began sliding in 1964. The year before, the nation’s richest faced a 91 percent tax on income over $400,000. By the middle of the Reagan years that top rate had dropped down to 28 percent, only rising marginally in all the years since.

In this new, low-tax environment, America’s rich could keep the lion’s share of whatever income streams they could get their hands on. They now had a powerful personal incentive, in other words, to seek out new sources of income and exploit them to the fullest. And exploit they did, employing their new wealth politically to stack the deck in their favor. They soon won the massive deregulation of the rules put in place to stop the nation’s original Robber Barons. They neutered the labor movement and white collar criminal enforcement. They birthed private equity.

Americans have received, in effect, a half-century-long lesson in what happens when you let the rich get ever richer. Our New Deal forbears had a better idea: discourage the accumulation of grand personal fortunes. In 1942, Franklin Roosevelt even proposed what amounted to a “maximum wage,” a 100 percent tax on income over $25,000, about $400,000 in today’s dollars. That 100-percent top rate didn’t become law, but the nation’s top tax rate would hit 94 percent in 1944 before leveling off at 91 percent for most of the next two decades.

Those decades would see the emergence of the first mass middle class society in world history. We’ve been going backwards from that middle-class society ever since, leaving Henry Kravis and George Roberts, in the process, with plenty to smile about.

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U.S. stock indexes closed out their best day in two months Wednesday, after the Federal Reserve Chairman Jerome Powell signaled the central bank may announce a pullback of its bond purchases in November and could start to raise interest rates in 2022, with both moves largely expected by market participants.

Investor concerns about financial contagion from a potential default by China’s giant property company Evergrande have somewhat abated, but investors are also watching developments in the U.S. Congress on raising the federal debt ceiling.

How did stock indexes do?

• The Dow Jones Industrial Average
  DJIA,
  +1.09%
  climbed 338.48 points, or 1%, closing at 34,258.32.

• The S&P 500 index
  SPX,
  +0.75%
  added 41.45 points, or 1%, ending at 4,395.64.

• The Nasdaq Composite Index
  COMP,
  +0.50%
  advanced 150.45 points, or 1%, finishing at 14,896.85.

On Tuesday, the Dow fell 51 points, or 0.15%, to 33,920, the S&P 500 declined 0.08% to 4,354, and the Nasdaq Composite gained 32 points, or 0.22%, to 14,746. The Dow and S&P 500 marked a fourth straight day of losses, which was the worst stretch for the S&P 500 since mid-May.

What drove the market?

Wall Street cheered Wednesday’s Federal Reserve decision to keep its massive bond-buying program and ultralow interest-rate regime in full swing to support financial markets and the economy through the pandemic — for now.

Stocks trimmed some of their gains after Fed Chairman Powell said plans to taper the central bank’s bond buying program could be announced in November after the Fed’s next policy-setting meeting. Fed officials also penciled in an interest-rate increase in 2022.

The Dow and S&P 500 still booked their largest daily percent gains since late July, while the Nasdaq scored its best session advance in about a month, according to Dow Jones Market Data.

Powell said there remains “a range of views” among Fed officials about the state of the U.S. economic rebound, while warning that higher interest rates next year aren’t set in stone, in an afternoon news conference.

“It looks like we are on track for a November tapering announcement,” said Kathy Jones, chief fixed-income strategist at Charles Schwab, in a phone interview. But she also explained that the “dot plots” now implying four rate increases, or a 1% increase, through the end of 2023 would be a “pretty significant rate of increases.”

“Dots are just dots. They are going to move,” she said. “It’s not a done deal, or a forecast, just an estimate,” Jones said.

A number of analysts had pegged November or December as a likely time frame for an official Fed announcement for tapering its monthly purchases of $120 billion in Treasurys and mortgage-backed securities, with an eye toward concluding those purchases at in the middle of next year.

The longer-term outlook for policy interest rates, which currently stand in a range between 0% and 0.25%, now shows benchmark interest rates potentially climbing as high as 1.8% by the end of 2024.

Read: Fed could fracture in 2022 over when to raise interest rates, economist says

“We’ve been through a move in the dot plots already,” said Giorgio Caputo, head of JO Hambro Capital Management’s multi-asset team, adding that any fits of weakness in stocks this year have been extremely short lived.

“The little dips, the blips, they get bought,” Caputo said, in a phone interview. “The thing is, market liquidity does evaporate when volatility spikes.”

“Even through we seem to have processed this latest wobble, or are in the process of processing, the risk continues to remain that one of these days we’ll have a more significant air pocket,” he said.

For markets, worries about China’s indebted property company Evergrande subsided on Wednesday.

Frankfurt-listed shares of China Evergrande surged 50% after a unit of the company, Hengda Real Estate Group, pledged to make an on-time interest payment on Thursday. Separately, China’s central bank reportedly injected liquidity as markets reopened after a two-day holiday and talk of a restructure of Evergrande has eased some of the initial panic on Wall Street about potential financial contagion akin to what occurred in 2008 when U.S. investment bank Lehman Brothers failed.

However, investors remain wary as Evergrande still faces interest payments on bonds in coming days.

“While the markets are rebounding, we think its to soon to think the Evergrande situation will blow over without causing more near- term market pain,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

The U.S. debt ceiling issue also was in focus Wednesday, after a group of former U.S. Treasury secretaries, including Henry Paulson, Timothy Geithner and Robert Rubin, sent a letter to Congressional leadership calling for Washington to avoid an “unprecedented default” that could “serious economic and national security harm.”

The House voted late Tuesday to keep funding the government and avoid a shutdown, but faced opposition in the Senate given the Republican party’s opposition to raising the debt ceiling.

See: Washington is now the stock-market ‘wild card’ as debt-limit showdown looms

The New York Federal Reserve Bank on Wednesday also announced it would double the amount each counterparty can park overnight a popular Fed repo facility to $160 billion a day, effective Thursday.

In U.S. economic news, investors parsed an August update on existing home sales, which retreated as inventory and prices remained major concerns for prospective buyers. Existing-home sales dropped 2% to a seasonally-adjusted, annual rate of 5.88 million in August, the National Association of Realtors said. Compared with August 2020, home sales were down 1.5%.

Which companies were in focus?

• Robinhood Markets Inc. 
  HOOD,
  +0.24%
   shares closed 10.9% higher Wednesday after the company said it was rolling out a new feature that will allow users to use a crypto wallet and make cryptocurrency transfers on its app.

• Dave & Buster’s Inc.
  PLAY,
  -3.14%
  shares jumped 6.9% Wednesday after the company announced that Chief Executive Brian Jenkins would retire next week—a move that Truist analysts say transitions the company into a new phase of its COVID recovery.

• FedEx
  FDX,
  +0.73%
  shares dropped 9.1% after the shipping and logistics company lowered its outlook for the year, citing a tight labor market and higher expenses.

• DraftKings
  DKNG,
  -2.59%
  shares lost 0.3% after U.K.-listed betting group Entain
  ENT,
  +1.85%
  said it was considering a new, improved takeover from the digital sports betting and entertainment group.

• Stitch Fix Inc.
  SFIX,
  -2.55%
  shares advanced 15.7% after the clothing-subscription company said it gained more clients and revenue rose 29% in the fourth quarter, driving more than $2 billion in annual sales for the first time.

How did other assets trade?

• The yield on the 10-year Treasury note
  TMUBMUSD10Y,
  1.574%
  was almost 1 basis point lower around 1.332%, after the Fed decision. Yields and debt prices move in opposite directions.

• The ICE U.S. Dollar Index
  DXY,
  -0.00%,
  a measure of the currency against a basket of rivals was 0.2% higher at 93.42.

• Oil futures closed higher, with the U.S. benchmark
  CL00,
  +1.66%
  up 2.5% to settle at $72.23 a barrel. Gold futures
  GC00,
  -1.66%
  rose about 0.03% to settle at $1,778.80 an ounce, but slipped later in electronic trading.

• In Asia, Hong Kong was closed for a holiday, but reopening after a two-day break, China’s CSI 300
  000300,
  +0.38%
  fell 0.7%. The Nikkei 225 index
  NIK,
  +1.81%
  dropped 0.6%.

• Markets in Europe rose. The Stoxx Europe 600 index
  SXXP,
  +0.74%
  booked a 1% gain and London’s FTSE 100 index
  UKX,
  +0.37%
  gained 1.5%.

—Barbara Kollmeyer contributed reporting

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By: Jenny Flores, Head of Small Business Growth Philanthropy

Published: Oct. 15, 2021 at 8:00 AM CDT|Updated: 7 minutes ago

SAN FRANCISCO, Oct. 15, 2021 /PRNewswire/ — As we celebrate Hispanic Heritage month this year, it’s a good time to recognize the many contributions of Hispanic small business owners. And there truly are many. Wells Fargo served as lead sponsor of the Latino Donor Collaborative’s U.S. Latino GDP Report, which tracks the growing influence of the Latino community within the U.S. economy, and the results are incredibly promising. Latinos contributed $2.7 trillion to the U.S. GDP in 2021, equivalent to the seventh largest economy in the world, and they’re growing 57% faster than the U.S. economy overall. From 2010 to 2019, the U.S. Latino GDP was the third-fastest growing among the 10 largest GDPs in the world, with the U.S. economy ranking fourth. Latinos are also accounting for 68% of the growth in U.S. labor participation. These figures are due, in large part, to Latina business owners. In fact, as of 2019, Latina women owned 18% of all women-owned businesses1, and between 2014 and 2019, Latina-owned firms grew 40%.2 These are significant numbers and show the impact Latina business owners are making on the country’s overall economy.

Experience the interactive Multichannel News Release here: https://www.multivu.com/players/English/8961251-wells-fargo-hispanic-heritage-month-success-tips/

But we all know, small business owners have continued to struggle to stay open given the pandemic’s repercussions and continuous fluctuations. While the statistics surrounding Latina-led companies are sobering – twice as many Latina-owned companies experienced closure during the COVID-19 pandemic compared to their male counterparts (30% vs. 16%)3 – the below tips can help aspiring Latina entrepreneurs stay on a path to success.

Develop a business plan
Having a good idea is NOT enough! Developing a business plan* is the first key step for any business owner. An effective plan can help you prioritize how to spend your time and money, and set measurable goals. It also can help identify current or future obstacles so you can better anticipate and avoid potential risks. For example, with COVID-19 impacts, you may have had to create more online offerings or enhance your digital presence for your business. Some of you may have had to change relationships with supply chains and vendors or reduce hiring. Whatever it was, now’s the time for you to review how you’ve adapted to the current situation, which of these adaptions you want to build upon in the future, and then document it in your plan.

Get mentorship support
Latinos are increasingly in advantageous positions to start their own businesses—they’re younger, with higher educational attainment: Nearly 90% of Latino Post-Millennials are high school graduates. They’re contributing to the labor force in greater numbers, buying more homes, and closing the wealth gap at a rapid rate. But the past year and a half has reinforced what we’ve always known: It takes a village. As women business owners continue to climb out of the pandemic impacts, and build from survivability toward recovery and opportunity, connecting with mentors and other experts is one of the most powerful and greatest ways to exchange knowledge, share best practices, and learn from each other. Wells Fargo recently partnered with the Nasdaq Entrepreneurial Center where women entrepreneurs can gain complementary support through its signature Milestone Mapping Coaching Circles*, a 12-week long mentorship program to help them overcome key business challenges while developing a peer support network and connection to mentors. Women business owners who are interested may apply to participate, and upon acceptance, will be placed in a circle.

Find the right guidance and information
Many women may not know where to turn for trustworthy information to support them with critical business decisions. The good news is there are many free resources and tools* to help educate women business owners. The SBA.gov* website is another great place to start. It even offers a version of its site in Spanish. Additionally, the Minority Business Development Agency connects women to resources, events and opportunities to help them succeed through its Enterprising Women of Color Initiative*. Last, the U.S. Hispanic Chamber of Commerce (USHCC)* has more than 200 local chapters designed to support ambitious Hispanic business owners and also has specific Latina entrepreneur programing.

Get credit-ready
Once you’ve got a business plan, are connected with mentors and other experts, and have done your research, getting credit ready will be a critical next step before obtaining business financing. It’s important to work with a bank that offers tools and resources that make financing easier to understand, and a banker who shows you what your business needs in order to get approved for a loan. Before applying for a small business loan or line of credit, your bank will want to see that your business generates steady cash flow, has low levels of debt, and is in a strong financial position in order to manage debt payments. The more you know about what bankers want to see in a credit application, the more prepared you will be to pursue credit for your business. A business plan also may help you obtain business financing. For example, for an SBA loan and some larger business loans and lines of credit, lenders may require a formal written business plan before extending credit.

By creating or updating a business plan, looking into mentorship opportunities, increasing knowledge, and getting credit ready, more Latina entrepreneurs can achieve success.

12019-state-of-women-owned-businesses-report.pdf (q4cdn.com) (English only)
2, 3 Key Insights from the 2020 State of Latino Entrepreneurship Report  | LatinasinBusiness.us (English only)

*Links only available in English

Media contact:
Carolina Guana
Corporate Communications
Hispanic Diverse Marketing Segments
Phone: 480-493-6272

View original content:

SOURCE Wells Fargo

The above press release was provided courtesy of PRNewswire. The views, opinions and statements in the press release are not endorsed by Gray Media Group nor do they necessarily state or reflect those of Gray Media Group, Inc.

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FILE – In this April 9, 2019, wheels are attach as workers assemble a tractor at John Deere’s Waterloo, Iowa assembly plant. The vast majority of United Auto Workers union members rejected a contract offer from Deere & Co. Sunday, Oct. 10, 2021 that would have delivered at least 5% raises to the workers who make John Deere tractors and other equipment. (Zach Boyden-Holmes/Telegraph Herald via AP, File)

Zach Boyden-Holmes

MOLINE, Ill. (AP) — More than 10,000 Deere & Co. workers went on strike Thursday, the first major walkout at the agricultural giant in more than three decades.

The union had said its members would walk off the job if no deal has been reached by 11:59 p.m. Wednesday. The vast majority of the union rejected a contract offer earlier this week that would have delivered 5% raises to some workers and 6% raises to others at the Illinois company known for its green tractors.

“The almost one million UAW retirees and active members stand in solidarity with the striking UAW members at John Deere,” UAW President Ray Curry said.

Brad Morris, vice president of labor relations for Deere, said in a statement that the company is “committed to a favorable outcome for our employees, our communities and everyone involved.” He said Deere wants an agreement that would improve the economic position of all employees.

“We will keep working day and night to understand our employees’ priorities and resolve this strike, while also keeping our operations running for the benefit of all those we serve,” Morris said.

Thirty-five years have passed since the last major Deere strike, but workers were emboldened to demand more this year after working long hours throughout the pandemic and because companies are facing worker shortages.

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Featured Image for Broadstone Technologies

Featured Image for Broadstone Technologies

Featured Image for Broadstone Technologies

CAMBRIDGE, Mass., Oct. 12, 2021 (GLOBE NEWSWIRE) — Broadstone Technologies and Cloud Warriors teamed up to provide free cloud security posture assessments to businesses during Cybersecurity Awareness Month.

In recognition of Cybersecurity Awareness Month, Broadstone Technologies is partnering with Cloud Warriors to offer free Cloud Security Posture Management (CSPM) assessments to the U.S. business community utilizing Broadstone’s patent-pending SaaS-based solution, Cytex.

Cytex is a SaaS-based solution that combines cybersecurity, network operations, data/asset management, third-party risk assessment, and compliance management. Cytex’s patent-pending technology reduces application sprawl by combining product features and tools that typically require the deployment of multiple applications. Cytex is utilized by the MIT Cyber Defense Clinic’s audit and assessment program. www.cytex.io

“We are thrilled to partner with Broadstone Technologies on this initiative. Cloud Warriors and Broadstone Technologies believe that cybersecurity is vital to the health of the business community and an important private sector component of our national defense,” said Chris Nebel, President & CEO of Cloud Warriors.

“A popular and dangerous misconception that many businesses have is that moving to the cloud means that data and networks are automatically secure, which is not the case. An example of this is the well-publicized CapitalOne data breach which exposed the information of 100 million consumers to hackers through a Server-Side Request Forgery (SSRF) enabled by misconfigured IAM permissions. Cytex provides persistent cloud security posture monitoring to alert organizations of any violations based on the best practices published by AWS, Azure, and Google Cloud Platform. Identifying violations and remediating them quickly is essential to every company’s data supply chain security processes,” said Andrew Surwilo, Broadstone Technologies’ CEO.

Story continues

To register your business for a CSPM assessment, please contact Broadstone Technologies at https://cytex.io/cytex_demo.html.

About Broadstone Technologies, LLC:

Broadstone Technologies creates innovative solutions in cybersecurity, fintech, and augmented reality. Broadstone Technologies is driven to use technology to solve difficult problems in easily executable ways resulting in a net-positive impact on our customers, society, and our environment.
Complexity is often incorrectly equated with perceived quality. Broadstone Technologies’ goal is to change this and develop high-quality technology products that are easy to use, economical, and empowering. www.broadstonetech.com

About Cloud Warriors:

Cloud Warriors is a technology brokerage and consulting firm with a mission to create jobs for U.S. Military Veterans. Our focus is on delivering best-in-class services that empower customers to increase productivity, enhance security, and reduce costs.

At Cloud Warriors, our tagline, Turn Your I.T. Spend into Jobs for Veterans, simplifies how we accomplish our mission. A portion of every successful engagement is allocated toward the hiring and development of Veterans as they transition to the civilian workforce.

Cloud Warriors is passionate about delivering long-term value for its partners and building a platform to elevate servicemen and women into well-paying careers.

https://www.cloud-warriors.com

PRESS CONTACT: Leslie Braga, hello@cytex.io

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Gold futures fell on Thursday, with prices marking their lowest finish in more than six weeks, as investors gravitated toward equities and away from assets perceived as havens.

The loss is “related to a combination of factors centered around investor confidence improving and fear easing,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

So far, China property giant Evergrande’s
3333,
-3.91%
problems have been contained, the Federal Reserve is moving toward tapering and at the Bank of England’s monetary policy committee vote, there were two “hawkish dissenters” calling for reducing stimulus as well, he told MarketWatch. “A more hawkish trend for central banks improves the value of paper money relative to hard currency like gold.”

December gold
GCZ21,
-0.24%
 
GC00,
-0.24%
fell $29, or 1.6%, to settle at $1,749.80 an ounce. The most-active contract suffered its worst one-day dollar and percentage loss since Sept. 16 and saw the lowest finish since Aug. 10, FactSet data show. Prices gained less than 0.1% on Wednesday. December silver
SIZ21,
-0.53%

SI00,
-0.53%
also fell 23 cents, or 1%, to $22.68 an ounce, following a 1.3% gain on Wednesday.

The Federal Reserve on Wednesday signaled its intent to “soon” taper its bond purchases and raise interest rates by late next year, which could dim appetite for bullion if investors shift to assets that offer yields.

Specifically, the Fed said “if progress continues broadly as expected, the committee judges that a moderation in the pace of asset purchases may soon be warranted.”

The announcement “put the Fed on a more hawkish path, with its intentions turning in favor of tapering beginning November,” to be completed by June next year, and with sentiment strongly leaning toward at least one 25 basis point rate hike in 2022 and at least two or more rate increases in 2023, said Jeff Klearman, portfolio manager at GraniteShares, which offers the GraniteShares Gold Trust
BAR,
+0.06%.

“The tilt away from easy money comes as the Fed’s ‘transitory’ inflation view shifts with growing concerns of higher, lasting baseline inflation,” he told MarketWatch.

Meanwhile, “Fed Chairman Powell at his press conference sounded upbeat on U.S. economic and jobs-growth prospects,” wrote Jim Wyckoff, senior analyst at Kitco.com, referring to Powell’s press conference on Wednesday.

“Judging by the positive reactions of stock and financial markets, the Fed meeting’s results, while not leaning dovish, were not too hawkish on U.S. monetary policy,” he wrote.

The Dow Jones Industrial Average DJIA and the S&P 500 index SPX traded higher Thursday.

Still, real interest rates remain at historical lows, and it “does not seem likely they will be above zero any time soon,” Klearman said. “The market, at this point, believes the current, extremely low real-and nominal-rate environment will persist at least for the near future.”

That, combined with “fear of falling asset/equity levels, further fallout from Evergrande contagion, potentially spiraling inflation, historically high and growing U.S. deficits/debt levels and continued European Central Bank and Bank of England easy-money policies” are likely to provide solid support for gold prices,” said Klearman.

In U.S. economic news, U.S. weekly initial jobless benefit claims rose to 351,000 from 335,000 in week ended Sept. 18, but continuing state jobless claims increased 131,000 to 2.71 million. Separately, the IHS Markit flash U.S. manufacturing index fell to 60.5 in September from a previous reading of 61.1.

In other metals trading, December copper
HGZ21,
+1.56%
lost 0.5% to $4.23 a pound. October platinum
PLV21,
+0.39%
lost 0.4% to $997 an ounce and December palladium
PAZ21,
+2.80%
settled at $1,971.80 an ounce, down 3.2%.

Also see: Lumber demand looks to strengthen as price volatility gives way to a ‘new normal’

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The U.S. labor market recovery may be slowing, but Wall Street still thinks it’s time for the Federal Reserve to take a step back from its far-reaching monetary support during the pandemic.

The Federal Reserve probably will — and should — taper “excessive liquidity-accommodation in the very near future,” BlackRock’s Rick Rieder, CIO of global-fixed income at the investment giant, wrote in Friday note, after September’s disappointing payroll report.

September’s nonfarm payroll data on Friday showed the U.S. economy had the smallest gain in jobs of the year, adding a fewer-than-anticipated 194,000 jobs, while the unemployment rate dropped to 4.8% from 5.1%.

Rieder pointed to the “unusual situation” in the U.S., namely that jobs gains have subsided from earlier monthly highs, but that pandemic shortages, including for workers, have fueled surges in prices for everything from household goods to cars, “consequently dulling the growth of an economy.”

Read: California port crisis, tangled supply chains are fueling a shipping container boom. Will it bust?

BlackRock, for some time, has been arguing that the Fed’s “emergency” monetary policies no longer are necessary, given what has been an “impressive” economic recovery.

Here’s a Barclays chart showing why its economists think monthly payroll gains since August 2020 have been sufficient to taper.

Pandemic payrolls

Barclays

“In our view, the FOMC will regard cumulative progress through September as sufficient to warrant a November taper announcement,” Barclays’ economics research team led by Jonathan Millar, wrote Friday, speaking of the the central bank’s policy and rate-setting committee.

Fed Chairman Jerome Powell said “he didn’t need to see a ‘super strong’ report in order for the Fed to proceed with a taper, only a ‘reasonably good’ employment report,” Eric Winograd, AllianceBernstein’s senior economist for fixed income, wrote in a note.

While the slower pace of job growth may “give the Fed some pause,” Winograd thinks there is an 70% chance the central bank will move forward with plans to reduce its $120 billion monthly pace of Treasury and mortgage-backed securities purchases, with the odds of waiting another month at 30%.

The Fed now holds $5.4 trillion of Treasury debt, but also about $2.5 trillion of mortgage-backed securities with government backing.

The dual punch of the Fed’s low interest rate policy and extreme liquidity has spilled over into markets in ways like never before, including as Wall Street firms flush with cash have parked $1 trillion to $1.6 trillion overnight since mid-August at the popular repo facility set up at the New York Federal Reserve Bank.

While many U.S. households have found a better financial footing during the pandemic, the downturn also has been exacerbating inequality in America, particularly for families who don’t own homes or stocks as prices have leapt to fresh all-time highs.

U.S. stocks closed lower Friday to cap a volatile week for equities, but with the Dow Jones Industrial Average
DJIA,
-0.03%
still booking an 1.2% weekly gain, the S&P 500 index
SPX,
-0.19%
adding 0.8% since Monday and Nasdaq Composite Index
COMP,
-0.51%
ending the week 0.1% higher.

U.S. credit spreads, or the compensation investors are paid on bonds over a risk-free benchmark rate like Treasurys
TMUBMUSD10Y,
1.612%,
also have compressed to near historic lows as the Fed’s bond purchase program enters its 19th month.

See: ‘A job is not just a job’ —Why some unemployed people aren’t jumping at job openings

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(ProNewsReport Editorial):- Tampa, Florida Oct 8, 2021 (Issuewire.com) – We arrange for the establishment of your company in the United States and take you through the motions. The establishment of the company, for example, a corporation, ensues within 48 hours. We would also gladly assist you with the formation of a partnership – a General Partnership (a general or ordinary partnership comparable with the OHG), a Limited Partnership, LP for short (a limited partnership comparable with the German KG), a Limited Liability Partnership, LPP for short (a partnership with limited liability, which constitutes a compromise between the German KG and GmbH) – or the establishment of a Limited Liability Company, LLC for short (companies with limited liability, comparable to the German GmbH to some extent).

In the case of business operations occurring exclusively outside the United States, a lump sum in taxation is incurred annually. This lump-sum taxation is included in the annual management fee (see Prices).

Hints on the various legal structures:
American company law, which originally came about via jurisdiction, is now regulated statutorily to a large extent. Even so, a uniform company law does not exist in the United States. This area falls under the jurisdiction of every individual state. However, most states base their statutory provisions on a prototype that has been developed nationwide.

Joint partnerships are the widely used term under which the various business types – General Partnership, Limited Partnership, Limited Liability Partnership, and Limited Liability Company – are consolidated. What they all have in common is that their existence is dependent on their members and that basically any business carried out, is conducted by the associates themselves.

Partnerships

Partnerships differ from corporations, particularly with regard to liability and taxation. In principle, partners are liable for the liabilities incurred by the Partnership, while the liability of an associate of a corporation is limited to his investment in the corporation. The Partnership per se is not subject to tax. The Partnership’s profits are declared directly by the partners as their personal incomes. As a rule, a corporation’s profits are taxed as the company’s income. Any dividends and other payouts are taxed separately as private income received by the associates. Since no provision is made for dealing with allowances, Partnerships in the United States have a tax advantage over corporations.

General Partnerships – GP

Partners belonging to a General Partnership assume the liabilities of the partnership with their entire fortunes. Through their actions, every partner entitles and binds the other partners at the same time. Not only are the members liable for their own contractual obligations, but they are also liable for the mistakes any of the other partners may make and the ensuing demands resulting from breach of contract or tort liability. By the same token, they vouch for damages that may arise from mistakes made by employees of the partnership. A partner is liable to the partnership’s creditors for the entirety of the partnership’s commitments, but as a rule, where the internal relationship is concerned, can demand to be recompensed proportionately by the other partners.

Limited Partnerships – LP

The legal framework of a Limited Partnership makes it possible for individual partners to participate in a partnership, however limiting their liability to their capital contribution. However, at least one partner must accept unlimited liability. As in the case of the German GmbH&Co.KG, the unlimited partner can also be an LLC or a corporation under the United States law, so that the personal liability of the individual can be circumvented. The restricted liability partner cannot however make an appeal for limited liability if he is actively involved in the leadership and management of the partnership.

Limited Liability Partnerships – LLP

The Limited Liability Partnership is another form of partnership and a relatively new type of business. In contrast to a General Partnership, in most states, the partner of an LLP is liable for the wrongs of his associates and those of the partnership’s employees who are not under his supervision. In some states, a partner even becomes liable if he knowingly fails to prevent or if he knowingly tolerates a tort liability by another partner. The extent of the limitation of liability varies considerably from state to state in the United States. Some exclude responsibility for tort liability only, while others include a “no bail-out from contractual liability” clause. Entrepreneurs should seek advice on the laws of the states they intend to establish their businesses in before deciding on a legal framework. What must be taken into account in an LP and in an LLP is that the partners must be treated like those of a General Partnership if the businesses are not established in line with legal provisions. In this case, they lose their safeguard from liability.

Business Corporations – Inc., Corp., Ltd., Co.

As a rule, Business Corporation associates can only be held liable for their investment into the business, or if this investment is still forthcoming, up to the amount that is still outstanding. Jurisdiction has however come up with some exceptions to this basic rule, which coincides with the legal position in Germany. The most significant examples of this are cases in which the corporation did not have any of its own assets right from the get-go, or where it had become obvious that the corporation’s capital outlay was insufficient, and the associates thus passed the entire business risk on to their creditors. In cases like these, jurisdiction can call for transparency regarding the fortunes of the associates, which may mean that they become personally responsible for the corporation’s liabilities. This is called: Piercing the corporate veil.
 
The company associated with the corporation must be identifiable by business type. In addition to the identification Corporation” (Corp.), this could include Incorporated (Inc.), Limited (Ltd), or Company (Co). The Articles of Incorporation deed must be handed in at the relevant offices of the Secretary of State (a kind of register of companies) at a fee. He then issues a Certificate of Incorporation (establishment certificate), the granting of which does however not represent the constitutional establishment of the corporation. This already occurs when the Articles of Incorporation are filed. In an initial meeting that follows, a founding assembly of the board of directors and shareholders (stockholders and shareholders), many decisions have to be made. Here the first directors and officers of the corporation are named and the by-laws (rules of operation) are passed.
 
The seal, the Corporate Book (stock register), and a master copy of the deed must be accepted. Market analysts, tax consultants, a commercial bank, and an attorney must be stipulated. Registration for taxation purposes and the transfer of the business establishment costs must be arranged. The founders (in this case, US AG 24 Inc.), who will not be taking on any further roles within the business, retire from their positions. A record of the proceedings of the meeting must be compiled, i.e. the Minutes of the Initial Meeting. The entire launch process for your company in the United States will obviously be prepared for you by us within the framework for establishing a company, so that all you will need to do is provide the necessary signatures. This is what a company launch service should be all about. Unfortunately, it has come to our attention time and time again, that other service providers do not offer this, let alone consider it part and parcel of what they should be offering.

Closely Held Corporations – C-Corporation or S-Corporation

Even if what we are essentially being offered, is the establishing of a Business Corporation or an LLC in the American state of Florida, for the sake of doing a proper job, we would still like to go into the specific regulations that govern so-called Closely Held Corporations – in other words, corporations that are run by a negligible number of associates. The pre-requisites for a corporation qualifying as a Closely Held Corporation differ from state to state. Generally, they may have a maximum number of associates that may not be exceeded. This limit varies. The main advantage of a Closely Held Corporation is its simplified administrative regulations that allow its associates to run the company themselves without having to appoint a board of directors.

With regard to taxation, the United States differentiates between so-called C-Corporations, the basis of which is represented in the description, and S-Corporations, whose profit is not taxed on a company level as opposed to the profit of C-Corporations’ profit, but as a direct income of its associates. The S-Corporation, therefore, has a tax advantage over the C-Corporation. To be categorized as an S-Corporation, the associates must make an application to this effect. Moreover, the firm has to be established in accordance with the regulations that govern firms in American states, with less than 75 associates. The firm may only give out one type of stock, i.e. no preferential stocks. Only an individual with American citizenship or with a long-term resident permit qualifies as an associate of an S-Corporation. For this reason, an affiliate of a European principal cannot file a request to become an S-Corporation.

Limited Liability Companies – LLC

Likewise, the Limited Liability Company is a relatively new type of business. One of the ways in which it distinguishes itself is by the limited liability of its partners, the so-called members. Their liability differs from that of the partners of a General Partnership only when it comes to their investment in the company. Another distinguishing factor is that an LLC enjoys the privilege of being treated like a partnership for taxation purposes i.e. the profits are not taxed on an LLC level. Instead, as in the case of a partnership, they must be taxed as the personal income of the partners or members. The participation of the associates in the management of the company, unlike in the case of an LP and an LLP, has no influence on the liability of the associates for the liabilities incurred by the company. In this case, their liability remains limited to their investment.

The LLC has one disadvantage: Its short legal history. It has not been subjected to extensive jurisdiction and therefore offers a certain amount of uncertainty regarding matters legal. For example, what remains a mystery is whether, as in cases involving corporations, it is conceivable for jurisdiction to call for transparency, which may mean that the associates could become personally liable. Even so, Limited Liability Companies are becoming increasingly popular. For tax classification of Limited Liability Companies founded in Germany based on United States state legislation.

 

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The Euro is down against the U.S. Dollar on Wednesday amid jitters that surging energy prices could spur inflation and interest rate hikes, and as traders awaited U.S. jobs data for clues on the timing of Federal Reserve policy tightening.

The greenback is moving higher as investors increased bets on the Fed to begin tapering asset purchases this year and lay the ground for an exit from pandemic-era interest rate settings well before the European Central Bank.

At 17:47 GMT, the EUR/USD is trading 1.1552, down 0.0046 or -0.39%.

In U.S. economic news, private payrolls increased more than expected in September as COVID-19 infections started subsiding, boosting hiring at restaurants and other high-contact businesses.

The ADP National Employment Report released on Wednesday supported expectations that job growth picked up last month, though it has a poor record predicting the private payrolls count in the Labor Department’s more comprehensive and closely watched employment report.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The down trend was reaffirmed earlier in the session when sellers took out the previous low at 1.1563. Taking out the intraday low at 1.1529 will reaffirm the downtrend. The main trend will change to up on a trade through 1.1755.

The minor trend is also down. A trade through 1.1640 will change the minor trend to up. This will shift momentum to the upside.

The first minor range is 1.1640 to 1.1529. Its 50% level at 1.1585 is the nearest resistance.

The second minor range is 1.1755 to 1.1529. Its 50% level at 1.1642 is the next resistance level.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Wednesday is likely to be determined by trader reaction to 1.1565.

Bullish Scenario

A sustained move over 1.1565 will indicate the presence of buyers. If this move creates enough upside momentum then look for the move to possibly extend into 1.1585, followed by 1.1598.

Story continues

Bearish Scenario

A sustained move under 1.1565 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into 1.1529.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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As business leaders enter the fall, a confluence of negatives is clouding their outlook on the economy. The big bounce back from last year’s trough has lost steam, stimulus is fading, and a plethora of softer economic data is weighing on sentiment. All of this unfolds against the backdrop of the pernicious Delta variant, reinforcing a downbeat narrative.

Yet, the economic outlook in the next year remains attractive once we examine what’s driving the current slowdown. To understand why, we need to look at the nature of the rebound, the risks and opportunities as the expansion is handed off to consumers, and the potential ways the current cycle could end.

What’s Really Driving the Current Slowdown

Policy makers and vaccine developers delivered an enormous growth bounce globally — particularly in the U.S. where a massive V-shaped recovery has been achieved.

But deceleration is built into any V-shaped recovery: Outsized growth rates pull activity out of the trough but such growth cannot persist as year-on-year comparisons are progressively made against stronger base periods.

With a few exceptions, we expect global growth to peak this year, followed by a deceleration next year.

The economy is running into additional negative surprises, which are driving uncertainty and fear: Consumer confidence has dipped markedly in recent weeks, while firms’ outlook has dimmed too, as seen in falling PMIs. Inflation, though moderating recently, has not yet fallen back to comfortable levels, while firms are facing bottlenecks in labor and product markets. This is all occurring against the backdrop of the Delta variant, which brings the prospect of waning of vaccine effectiveness, more breakthrough infections, booster shots, and potentially new rounds of restrictions.

Adding complexity, all of this is unfolding in that critical stage of the recovery when the crutches of policy support fade and the private sector — consumers most of all — have to drive the expansion forward. That hand-off is part and parcel of any recovery, but given the unusual size of stimulus and its withdrawal, the slowdown now happens in a high-risk window.

If the hand-off to consumers is successful, we project year-over-year growth will slow from as high as 7% in 2021 to perhaps 2.9% in 2022. What looks like a brutal deceleration, however, is in fact necessary. (The economy should not overheat too much.) Plus the projected 2.9% would leave the U.S. economy still operating comfortably above its trend growth of around 2%, below which an expansion becomes sharply more vulnerable.

Five Reasons Consumers Can Pick Up the Economic Expansion

It’s understandable that the slowdown, unexpected headwinds, and tricky hand-off to consumers should encourage negative expectations. But the headwinds that consumers face now should be netted against the tailwinds and the sources of strength that households have built. Here are five prominent concerns and why they are overblown.

First, while economic prospects are still widely equated with the Delta variant’s path, the reality is that the economy largely decoupled from the virus early on. That was not only a function of strong stimulus but also of adaptability. Households and firms have learned to live with the virus and that learning is unlikely to be undone by the Delta variant. For example, even when cases and hospitalizations were at their highest in Florida, we did not see a sharp retreat in economic activity.

Second, while fiscal stimulus to households is rapidly fading, the labor market is booming. Remarkably, despite historic unemployment numbers, the stimulus helped personal incomes soar in 2020 and early 2021. Now, with a record number of job openings and many firms struggling to fill them, households are in a good position to replace fading stimulus with employment and higher wages, ensuring that consumer spending power will remain strong.

Third, while current inflation is eroding wage gains it is unlikely to last. U.S. price growth continues to look transitory – driven by the idiosyncrasies of a torrid reopening and supply bottlenecks – whereas a tight labor market will not easily return to slack conditions. The prospects for a tight cycle delivering both wage and productivity gains remain strong.

Fourth, much has been made of soaring house prices undercutting confidence and household budgets. However, home prices are not the same as housing cost. After factoring in record low financing conditions, the index of housing affordability is broadly in line with pre-pandemic levels and significantly more favorable than in the decades before the global financial crisis.

Finally, there is fear of a fickle household sector pulling back at any moment, and the continued high savings rate provides some cover for this idea. But that view ignores the large, accumulated savings, particularly relative to levels of household wealth, which is already high. This suggests that households have room to spend and carry an already strong expansion further.

How Cycles End

Taken together, consumers are in a strong position to pick up the expansion. The Delta variant may shift the timeline somewhat, as growth expectations have declined for the third quarter but risen for the fourth. But it is less persuasive that Delta changes the overall shape of the recovery or the level at which growth will stabilize.

Yet all things must end eventually, and indeed the post-Covid cycle will reach a 2019-like maturity much faster than any cycle before it, as labor markets tighten and growth decelerates. With this will re-emerge the question of 2019: How long can the cycle last?

Traditionally, risk assessments of the cycle examine exogenous shocks last or not at all, but Covid has reminded everyone of their pertinence. Events like destructive solar flares, great power wars, or systemic cyber-attacks are all possible, but like pandemics, these are low-probability, high-impact events. A baseline awareness of the risk does not inoculate or even assure an advantage, aside from recognizing that even the strongest expansion can be ended by shock.

Next on the list of risks are endogenous imbalances that tend to build slowly but then unravel rapidly. These can play out both in the real economy — think an unsustainable investment boom — or in the financial system, which, upon unwinding, usually poses systemic challenges. Today’s real economy imbalances are not extreme, nor do private-sector balances suggest strained finances, although each have pockets of activity that could grow into problematic imbalances over time and surprises in the financial system can never be completely ruled out.

This leaves policy errors. In our reading, mistakes by those in charge of the economy is the biggest risk to the post-Covid cycle. Monetary policy makers, who adroitly backstopped households, firms, and the financial system during the pandemic, run the risk of acting too soon (tightening policy and killing the cycle), too late (risking the inflation regime and being cornered into cycle-ending tightening), and/or with the wrong intensity (generating unwanted volatility).

The reason policy makers are more likely than usual to commit errors is that their world is upside down today. Normally, policy tightening can occur modestly as an expansion slowly ages, leaving room for gradual adjustments or course corrections.

Today, policy makers are not only having to adjust away from super-sized stimulus, they are also having to do it as the economy slows into very tight conditions, while inflation is above target but may be falling fast. While policy makers have a credible strategy to adjust slowly, they are facing a lot of moving economic pieces. The complexity creates a real risk that they find themselves in the wrong position and need to risk the expansion to right the ship.

How Firms Can Manage the Slowdown

For business leaders digesting the macro landscape there is both a practical and reflective lesson.

As growth slows, economic activity will likely settle on levels exceeding pre-pandemic expectations — and this is where operational focus should be. This can be challenging while strong gyrations play out in labor and product markets, but hiring difficulties as well as price growth are likely to abate in the course of 2022. Knee-jerk tactical reactions to the current situation, such as premature price hikes that risk the loss of market share, are unlikely to pay off.

In fact, a broader lesson that Covid and its aftermath offers is to resist the temptation of chasing see-sawing data flow. Covid has been an endless experience of records: the biggest fall, the largest stimulus, the fastest recovery, strong price growth — and now the potential for the strongest overshoot in a generation.

Trying to follow and adapt to all these gyrations has rarely been a winning strategy since Covid broke. Business leaders must take a broader interpretation of the trajectory, followed by calm execution. Today, that broader reading is of a steep but necessary slowdown, an economy running above potential, with tight labor markets, wage, and productivity growth — all helping to underpin an expansion that has the potential to persist for a long time.

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