Posts by Rick Newman

  • Trump just got friendlier toward China

    Rick Newman at Yahoo Finance 2 days ago

    Talk versus action: It’s always important to distinguish between the two–especially with incoming president Donald Trump, a master of using hyperbole to get what he wants.

    Trump bashed China during the presidential campaign, and since winning the election on Nov. 8, he has continued to say he’ll impose sanctions on China if it doesn’t agree to more favorable trade terms. But those are mere words, and Trump just made an actual decision involving China that undercuts many of his threats.

    Trump has nominated Iowa Gov. Terry Branstad to be his ambassador to China, and by extension, point man for any new negotiations involving trade. CEOs who have been worried abut possible trade wars with China ought to cheer, because Branstad is steeped in the importance of trade and the ways it benefits Americans.

    Rick Newman is the author of four books, including  Rebounders: How Winners Pivot from Setback to Success . Follow him on Twitter:  @rickjnewman .

     

     

  • Trump should order Amazon to stop innovating

    Rick Newman at Yahoo Finance 3 days ago

    If incoming president Donald Trump wants to protect American jobs, he’ll have to do more than cancel a few offshoring deals. The real job-killer these days isn’t China or Mexico, but innovation.

    Amazon (AMZN) shows why. Its latest project, Amazon Go, is a supermarket concept with no need for cashiers or checkout counters. A smartphone app scans you into the store. Every item you drop in the cart goes on your digital tab. Then, you just leave, with your account digitally billed for whatever you took. Technology does what human checkout clerks do in other stores.

    Amazon plans a couple thousand such stores, and while it won’t make clerks extinct overnight, the history of technology suggests they’ll become as rare as bank tellers and travel agents. That’s not all. Amazon has plans to replace warehouse workers with robots, delivery drivers with drones, and, for all we know, all of its managers with Jeff Bezos clones.

  • How Trump can help Main Street businesses

    Rick Newman at Yahoo Finance 4 days ago

    Every politician lavishes praise on the mom-and-pop economy. But few do much to help it.

    Donald Trump fancies himself a man of the people, with business-friendly policies meant to create millions of jobs. But cutting corporate taxes and slashing federal regulations, such as the 2010 Dodd-Frank law, may not be enough to push small-business activity back to the more robust levels of a decade ago.

    “Small-business owners love a tax cut,” Karen Mills, head of the Small Business Administration under President Obama, tells Yahoo Finance in the video above. “And they really do need less regulation. But just getting rid of regulation alone does not make things better for small-business owners in areas like access to capital.”

    Innovation could help. Online lenders such as OnDeck, Prosper and Lending Club have emerged during the last few years to offer loans to underserved customers such as small businesses. Unlike big banks, with laborious underwriting procedures, online lenders use algorithms to assess risks and approve loans in as little as a day or two.

  • Subprime auto lending is actually getting better

    Rick Newman at Yahoo Finance 4 days ago

    Worrywarts like John Oliver have been arguing for some time now that the next big problem in finance is subprime auto lending.

    They’re wrong.

    The very word “subprime” suggests financial Armageddon, as if every loan to a borrower with below-average credit is a ticking time bomb. But new data shows that the market for car loans is actually getting stronger, with the portion of subprime loans declining and the portion of prime loans, to borrowers with strong credit, increasing.

    The number of auto loan issues to subprime borrowers—people with credit scores between 501 and 600—declined by 4.5% from the third quarter of 2015 to the same period in 2016, according to Experian. The number of deep subprime loans—issued to people with credit scores between 300 and 500—fell by 2.9%. The number of loans to prime and superprime borrowers—with credit scores between 661 and 850—rose slightly. Here are the numbers, including loans and leases both:

     

  • 4 ways Trump’s economic plan is already morphing

    Rick Newman at Yahoo Finance 7 days ago

    Campaign promises are a special kind of lie. Voters know they can’t be kept, yet still love grandiose ideas that sound too good to be true.

    Donald Trump made a lot of unkeepable promises during the presidential campaign, and voters rewarded him with a startling victory on Election Day. Now that he’s filling out his cabinet and fleshing out his ideas, the hype from the campaign is morphing into more pragmatic plans that can actually be implemented. Here are four important ways Trump’s economic plan has been changing:

    Fewer tax breaks for the wealthy. Trump’s tax plan during the campaign included a huge tax cut for the wealthy, on the supply-side principle that they’d spend more and help create more jobs. In October, the nonpartisan Tax Policy Center estimated that Trump’s plan would save the top 1% of earners an average of $215,000 per year, while middle earners would only save $1,000 or so.

     

  • How a smartphone saved 1,000 jobs

    Rick Newman at Yahoo Finance 7 days ago

    A picture is worth a thousand workers.

    It’s a moving picture, but still—a picture.

    On Feb. 10 of this year, supervisors called workers together at a Carrier factory in Indianapolis. The news was bad: Carrier would be shutting down the plant, starting in 2017, and moving 1,400 jobs to Mexico.

    The announcement was big news in Indiana, which had fought hard to keep Carrier by offering tax breaks and other incentives. Beyond the state’s borders, however, hardly anybody noticed. US employers announced more than 60,000 layoffs that month, and 1,400 job losses at one plant was hardly national news.

    But two days later, a Carrier employee named LaKeisha Austin posted a three-and-a-half minute video to her Facebook account showing Carrier workers revolting as a man in a suit recites a corporate statement about the move. Workers shout and swear at him, and sneer when he says, “this is strictly a business decision.”

     

  • What just happened with Carrier is crazy

    Rick Newman at Yahoo Finance 8 days ago

    From 2011 to 2013, the city of Indianapolis and the state of Indiana gave Carrier and an affiliated company $1.7 million in grants and tax incentives, as an inducement to keep two manufacturing plants in the state and bring additional work in. It turned out not to be enough.

    Earlier this year, Carrier said it would move those factories to Mexico, eliminating 2,000 jobs and saving $65 million. Indiana and its governor, Mike Pence, demanded most of the tax break money back, and got it.

    Perverse incentives

    Tax incentives that offset the cost of labor also give companies a stronger incentive to substitute automation and other types of technology for labor, as long as they’re not committed to a minimum number of jobs. That way, employers can benefit from tax breaks while still lowering labor costs by replacing people with machines.

     

  • Surprise! Trump is listening to critics

    Rick Newman at Yahoo Finance 9 days ago

    Okay, it’s only a few tweets, and the details may not measure up to the promise. But incoming president Donald Trump is responding fairly quickly to concerns that his far-flung real estate operations could be a funnel for favors from countries and other entities he deals with as a businessman.

    The New York Times recently published a long analysis of the myriad ways Trump’s business interests around the world could collide with his duties as the nation’s commander-in-chief and foreign policy architect. Other groups have begun to track potential conflicts of interest involving Trump, his business and his family. The Sunlight Foundation has identified nearly 30 so far.

    After the election, Trump said he’d turn over the running of his business to his kids, Ivanka, Eric and Donald, Jr., who already have senior positions in the Trump Organization. But that didn’t appease good-government experts, who felt that wouldn’t go far enough.

     

     

  • Steve Mnuchin, Trump’s Treasury nominee, has a nagging foreclosure problem

    Rick Newman at Yahoo Finance 9 days ago

    He’ll probably get confirmed. But first, Steve Mnuchin, Donald Trump’s nominee for Treasury Secretary, will have some explaining to do.

    Mnuchin is a Goldman Sachs alumnus and lifelong financier who mostly has a strong track record of earning millions of dollars for clients and himself. But he became a lightning rod after assembling a group of investors to buy the insolvent bank IndyMac in 2009. Mnuchin et al. renamed the bank OneWest and successfully turned it around, but in the process foreclosed on thousands of irate homeowners while also drawing criticism for exploiting corporate welfare. Those foreclosures represent ready ammunition for Trump critics eager to paint his Cabinet choices as heartless Wall Streeters.

    Rick Newman is the author of four books, including  Rebounders: How Winners Pivot from Setback to Success . Follow him on Twitter:  @rickjnewman .

     

  • Trump’s Commerce nominee, Wilbur Ross: “There aren’t going to be trade wars”

    Rick Newman at Yahoo Finance 9 days ago

    Corporate America’s biggest worry about incoming President Donald Trump is that he’ll ignite trade wars with China, Mexico and other big exporters. His pick for Commerce Secretary, private-equity billionaire Wilbur Ross, says that’s not going to happen.

    “There aren’t going to be trade wars,” Ross told Yahoo Finance the day after the election. “There are plenty of things that could be done that would not be the end of the Earth but would help our trade balance.”

    On the campaign trail, Trump talked tough about slapping quotas on cheap imports and punishing China if its currency appeared to be undervalued. If those things were to happen, it would make imports more expensive for American consumers, invite similar quotas on American exports and possibly cause a recession. Hence the worry in US boardrooms.

    The goal, he says, wouldn’t be to punish US companies that produce goods in Mexico, but to reduce America’s $60 billion trade deficit with Mexico. That can be done two ways: by Mexico exporting less to the United States or buying more from it. Either could be accomplished, he says, without dismantling the North American Free Trade Agreement.