Posts by Rick Newman

  • The economy is stronger than weak job numbers suggest

    Rick Newman at Yahoo Finance 1 day ago

    The prevailing narrative on the U.S. economy has downshifted, as three consecutive months of disappointing job growth raise concerns about a serious slowdown.

    There’s some good news to offset the bad, however: household incomes have finally shown a sharp gain, which means the typical family’s purchasing power is bouncing back. And the pace of car sales is accelerating toward record levels, with consumers more than willing to commit to costly long-term purchases. Meanwhile, several other indicators that don’t get as much attention as the monthly jobs report show sustained improvement in key parts of the economy.

    There are silver linings in other data, however. A new report by Sentier Research, for instance, shows that median household income, adjusted for inflation, grew by $615 in August, to a post-recession high of $55,794. Real incomes are still about 2.7% lower than they were in 2000, indicating ongoing stress on American consumers. But the trend is improving after a period of stagnation, as this chart shows:

    Median Household Income Index (in red)

    Monthly Auto Sales, annualized rate

    Construction Spending, millions of dollars

    Weekly Jobless Claims

  • 5 car companies that (apparently) don’t cheat

    Rick Newman at Yahoo Finance 2 days ago

    Does every automaker cheat or cover up safety problems?

    There are times when it certainly seems so. Volkswagen (VOW3.DE) is only the latest big carmaker to get busted for breaking the rules, with "defeat devices" on 450,000 U.S. diesel models that shut down emission controls during normal driving, allowing the cars to spew pollution. That revelation comes after a record year for recalls in 2014 and some high-visibility tussles between regulators and many of the biggest brands on showroom floors.

    Critics of the auto industry contend that rule-breaking is widespread, with regulators legally and financially outgunned by huge companies that have been calling the shots for decades. So we decided to research whether every big automaker has been tarred by scandal recently, or if there are still some brands customers can purchase with a perfectly clear conscience.

    These automakers have had significant run-ins with regulators since 2010:

  • Tesla Model X: Right car, wrong time

    Rick Newman at Yahoo Finance 3 days ago

    It’s hard to think of a niche vehicle that’s ever gotten as much attention as the Tesla (TSLA) Model X is likely to get. Then again, most niche vehicles don’t have the hauling capability of the Model X.

    Tesla needs the Model X — now officially launched, two years behind schedule — to be as much of a hit as the Model S sedan it shares many components with. That's asking a lot. The Model S has won raves from owners and critics alike, earning the highest-ever score for a car from the fussy folks at Consumer Reports. It has transformed Tesla from a one-trick pony (its original car, the Roadster) into a muscular upstart able to challenge automakers that have been in business for a century or more.

  • Here's the catch with Donald Trump’s tax plan

    Rick Newman at Yahoo Finance 5 days ago

    It’s fun to imagine: A nation in which half of all families pay no taxes, yet the government has all the revenue it needs and strong growth creates plenty of good jobs.

    That’s the gist of Donald Trump’s tax plan, the third set of serious policy proposals from the Republican presidential candidate, after ones on immigration and gun rights.

    The Trump plan is cleverly crafted to rev up voters while also answering policy wonks who criticize Trump for peddling slogans without details. It’s a serious plan, comparable in gravitas to those offered by Jeb Bush and Marco Rubio. And it follows through on Trump’s pledge to hike taxes on hedge fund managers who “shift paper around” and “get lucky,” which is sure to earn thunderous applause at Trump’s stadium rallies.

  • VW emission recall could be the most expensive ever

    Rick Newman at Yahoo Finance 9 days ago

    Most car recalls are pretty straightforward: The automaker notifies the car owner, who takes the vehicle to a dealer and gets it fixed at the automaker’s expense. Case closed.

    Volkswagen (VOW3.DE) has a much more complicated problem. It hasn’t issued a recall yet for nearly 500,000 turbodiesel models in the U.S. with “defeat devices” that shut down emission controls during normal driving. But it almost certainly will. The government won’t even let VW sell new models with the device until it fixes the problem, which has exploded into a scandal likely to involve hefty fines, lawsuitsand possibly criminal prosecution.

    VW is still determining how to fix the problem, but here are some ways it may try to make owners whole, in addition to modifying the cars so they comply with the law:

    Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman .

  • Time to buy a VW!

    Rick Newman at Yahoo Finance 10 days ago

    Something is rotten in the city of Wolfsburg. But there may never be a better time to buy a car from the auto giant that’s based there.

    Volkswagen, the world’s biggest automaker, suddenly needs a tow truck as it lurches through a surreal case of corporate cheating. The German car manufacturer apparently installed software on 11 million diesel-powered vehicles worldwide that disables pollution controls during ordinary driving, allowing toxic emissions far above allowable standards. The only time the pollution controls work is when the engine is hooked up to an emission-testing machine, which is surely one of the more diabolical innovations in automotive history.

    VW’s cheating scandal may be different, for two reasons. First, it appears to be a deliberate attempt to deceive regulators and consumers, rather than an engineering or manufacturing mistake, which is much more common. “This is an unprecedented scandal in that there was manipulation and intent,” says Lyman. “That would seem to lend itself to negative consumer sentiment.”

  • How Xi Jinping lords it over American CEOs

    Rick Newman at Yahoo Finance 11 days ago

    Chinese President Xi Jinping will get a tour of a Boeing (BA) facility near Seattle this week, as if he’s never seen what goes on in an American aircraft factory. Yet China has stolen more data from Boeing than Xi will ever see on a hospitality tour.

    Xi’s high-profile visit to the United States this week will include many meetings with top CEOs, including Tim Cook of Apple (AAPL), Howard Schultz of Starbucks (SBUX) and Mary Barra of General Motors (GM). On one level, it’s normal for CEOs to seek face-time with the leader of a country that’s vitally important to their bottom line.

    China and the United States have long been frenemies joined through trade, even as they compete for military and economic dominance. China’s huge size and rapid growth make it an essential market for most Fortune 500 firms. Yet no other large country seems to flout international law and steal corporate secrets as aggressively as China does.

  • Pope Francis has an unsettling message for corporate America

    Rick Newman at Yahoo Finance 15 days ago

    You have to wonder if John Boehner knew what he was getting into.

    Boehner, the Republican House Speaker, is a lifelong Catholic who says he’s been trying for 20 years to get a pope to address Congress. He finally succeeded. On Sept. 24, Francis will be the first pontiff ever to speak before a joint session of Congress. He’ll speak in English rather than his native Spanish. And he’ll most likely say a lot of things objectionable to the Republicans who hold majorities in both branches of Congress, and to many champions of American-style capitalism.

    Meanwhile, if you do a web search for “Pope Francis socialist,” you’ll find lots of nervous chatter about the pontiff endorsing a “noxious ideology” and fomenting “a revolt that will overthrow American capitalism.” Even the usually understated Economist magazine called the pope an “ultra-radical” who seems to be a devotee of Vladimir Lenin. If Francis were a U.S. presidential candidate, he’d be to the left of Bernie Sanders.

    - Produce goods or services that have a useful purpose.

    - Look for opportunities to serve the underprivileged.

    - Respect the dignity of your workers.

    - Help employees find ways to capitalize on their own talents.

  • Donald Trump's big vulnerability has surfaced

    Rick Newman at Yahoo Finance 16 days ago

    He might not flame out the way establishment pundits predict, but Donald Trump isn’t invulnerable either—and his weaknesses are beginning to appear.

    Trump has obviously surprised everybody (but himself) by surging to the head of the polls despite jarring statements about Mexican rapists, our stupid political leaders and Carly Fiorina’s face. Trump’s undoing, however, might be hiding in plain sight—the four corporate bankruptcies his companies have declared.

    Trump says these Chapter 11 filings are nothing more than a shrewd businessman using “the laws of this country” to his advantage. It’s true that bankruptcy is considered a legitimate way to restructure a troubled company and give it a second chance, instead of just liquidating it. But it’s also a last-resort option when all else has failed, and it is hardly a mark of success.

    Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman .

  • One huge issue the GOP candidates aren’t talking about

    Rick Newman at Yahoo Finance 16 days ago

    It’s not about the economy, stupid.

    Anybody who watched the latest debate among Republican presidential contenders could easily draw that conclusion. During a very long three-hour session, the 11 candidates on stage discussed just about everything that’s been in the news lately, with one exception: An economy that’s underperforming and a job market that’s leaving many Americans behind.

    Here’s a loose outline of the topics in the order they came up in the debate:

    Donald Trump’s character – role of outsiders in the race - Russia - Syria - Iran - Middle East - China - foreign policy - gay marriage - Kim Davis – Planned Parenthood - government shutdown - Carly Fiorina’s face – immigration - Trump vs. Fiorina as business leaders – TAX REFORM (sort of economicky) – MINIMUM WAGE - world dangers - Supreme Court – legal marijuana - crime – gun rights – NATIONAL DEBT – FEDERAL BUDGET - climate change – vaccines - women - Ronald Reagan.

    That was about the extent of it. No follow-up by anybody, no plans for creating better jobs, no talk of Jeb Bush’s dream of somehow boosting economic growth from the lackluster 2.5% range we’re in now to a robust 4%.

    2008 presidential election: 63%