November 2015

If you don’t remember how devastating the financial crash of 2008 truly was, you probably weren’t old enough or you have enough assets that you personally are too big to fail.

But world financial leaders remember the bailout that had to be issued to Lehman Brothers and the financial collapse that sparked the worse economic times since the Great Recession. When “too big to fail” banks hit rough times, markets all over the world feel the affects. It is for this reason that the Financial Stability Board was created by the Group of 20 Nations following the 2008 crisis – to work towards setting in place rules and regulations to help prevent another crisis without having it affect the taxpayers as it did in 2008.

New Regulations Set in Place by Global Regulators

Basically, what the Financial Stability Board has put forth, is a regulation on how much total loss absorption capital (TLAC) banks must have on hand in the event of problems. The FSB is increasing the totals, and the plan will affect 30 major banks all over the world. Having more capital on hand in case of another financial crisis is a key component to having banks become self-sustaining, rather than dependant on governments and individuals to shoulder the financial burden.

The new rules on TLAC state that banks must acquire a cushion of 16% of their current assets by 2019. The percentage will go up with the years, reaching 18% by 2022. The new regulations will make it more difficult for banks to simply post profits, as they will be required to store money for rough times – requiring them to follow basic financial principles that will not only benefit them, but everyone else as well.

What U.S. Banks are Affected?

The top two U.S. banks that will be the most affected by the ruling are Wells Fargo and JP Morgan Chase. It’s not simple pennies they will need to acquire – it’s billions. Wells Fargo will need to save about $30 billion and JP Morgan Chase will need to save about $25 billion. Other banks that will be affected are America’s Citigroup and Bank of America, and Europe’s HSBC and Barclay’s.

The FSB are allowing four Chinese banks extra time to reach the minimum threshold of 16% – they have until 2025. They are the world’s largest banks and the top three, Agricultural Bank of China Ltd., Bank of China Ltd., and Industrial & Commercial Bank of China Ltd., have to raise an estimated 269 billion euros by 2025.

How Will This Affect You?

The banks who are affected by this ruling are going to have to issue much more debt in coming years in order to increase their capital. At the same time, there may be an increase in interest rates due to the squeeze put on them as well. So while you may be allowed to borrow more, stay aware of how interest will affect any debt you take on from the big banks listed.


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Back in March of this year, H.J. Heinz Company and Kraft Foods Group signed an Agreement to form the Kraft Heinz Company.  The agreement creates a monstrously huge company that will be the 3rd largest Food and Beverage company in North America and the 5th largest Food and Beverage Company in the world.  

H.J. Heinz Company, is worldwide marketer of nourishing and affordable food products.  Wherever, you go HJ is sure to follow, whether you’re at work, home, on the road again.  If you’re not yet aware, Heinz products include:  Ketchup, sauces, soups, beans and infant foods.  

Kraft Foods Group, Inc. is one of the world’s largest consumer product companies.  The annual revenue is in excess of $18 billion.  Their recognizable brands include:  Kraft, Capri Sun, Jell-O, Kool-Aid, Lunchables, Maxwell House, Oscar Mayer, Planters and my all-time favorite, Velveeta. They employ 22,000 employees here in North America.    

Kraft Heinz revenues are projected to be:  $28 billion with eight $1+ billion brands and five brands between $500 million-$1 billion.

Both parties have unanimously agreed that:

  1. Kraft share owners will own a 49% share of the total business.  Heinz Shareholders will  own 51% on a fully diluted basis.  
  2. The proposed merger creates significant value for those owning Kraft shares.
  3. Two mega-investors, Berkshire Hathaway and 3G Capital have invested $10 billion in the corporate venture

Alex Behring, currently the Chairman of Heinz and the Managing Partner of 3G Capital, will be installed as the Chairman of the Kraft Heinz Company. (KHC).  Kraft Chairman and Chief Executive Officer.  John Cahill will be installed as Vice Chairman and chairperson of the operations and strategy committee of the Board of Directors.  Bernardo Hees, formerly CEO of Heinz, will be assume the position of Chief Executive Officer of the new company.

The new company will continue to maintain their corporate offices in both Pittsburgh and Chicago and its environs.  The company will continue to support and build upon their relationships in these communities. The new company brings together brands that have always well received and enjoyed by consumers.  The merger connects eight 1+ billion dollar brands 5 other brands that gross between $500 Million and $1 billion dollars.

After lots of good stuff, a merger of two of two of leading brand names in the world of business, just two days ago on 11/6 announced that they are intending to lay off 2,600 workers (approximately, 10% the company’s workforce), closing facilities, including plants in: CA, MD, NY, PA, WI, and Ontario, Canada.  The company will be upgrading their facilities in Davenport, IA and Champaign,IL.  

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Bad news from China sends the markets down as the world nervously braces for an explanation from the historically secretive country. The markets are spooked. First from China’s currency devaluation followed by its decision to ease interest rates. So why does one nation’s economic problems have the world markets on edge?


Their decisions have a big impact on commodity prices, precious metals and global industry. Here’s why:


1. China is the world’s second-largest economy.

China has been moving from an export economy to one based on consumer spending. An economic slowdown by Chinese consumers affects many nations that export products and services to China. And nations that don’t export to China could still be affected if the Chinese cut back on tourism and foreign real estate investments.

2. China has an insatiable demand for oil.

Lower Chinese economic growth could depress oil prices as China levels off their need for oil. The good news is that lower oil prices means cheaper gas for motorists. But lower gas prices affect shareholder’s returns on worldwide oil industry stocks.


And as China’s demand for oil slows down, other natural resource prices in steel and iron also drop, affecting a wide variety of companies and industries. Australia, in the midst of an economic boom from sale of coal and iron ore to China may be one of the hardest hit. More than a quarter of their natural resource exports go to China. Other nations that could be hard hit include Russia, Korea and Brazil.


3. A downward spiral for gold

The Chinese have been big investors in gold and gold jewelry. As consumer demand continues to taper off, major jewelry companies like Tiffany and Cartier will take an earnings hit. But worse, investors holding on to gold as a safe investment are unlikely to see a decent return any time soon.


3. Delayed interest rate rises

Central bankers in the US and Europe have been issuing warnings for months that as growth strengthens they are preparing to push interest rates up by the end of the year in order to reverse the emergency cuts made during the global credit crunch. But if the cheaper Chinese yuan cuts the price of imports, this will undermine inflation (which is already at zero in parts of Europe) by delaying an interest rate rise.


4. Deflation

While lower borrowing costs help consumers in debt, the markets are afraid of a stagnant Chinese economy leading to deflation. Brief periods of falling prices in one or two commodities is good for the American consumer, but persistently falling prices affect employee wages, spending, and overall company growth. And if the markets are in store for a downturn due to China’s problems, there’s not much governments can do about it since interest rates are already at near zero.


5. Even more austerity for Greece

If the Chinese devaluation does bring a wave of deflation to the world economy, countries holding the most debt (like Greece) are in trouble. Wages and profits fall during deflation, but debt remains fixed, making it more expensive to pay off.


Greece is already in a deflationary period after repeated government cuts in wages and benefits in an attempt to balance the troubled nation’s books. If it worsens, their massive debts worth more than 170 percent of the size of the economy will be nearly impossible to pay off.


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The day a person becomes so ruthless for cash, they find themselves dressing up as a Titlemax employee to steal money from unsuspecting, desperate customers in need of immediate cash, is a very sad and disturbing day. Single mother of three, Teri Cody, was one of those customers in serious need of cash to pay some bills. Smelling the scent of his prey through a phone call, the predator set his eyes on his meal for the day. The con-artist took the respected brand of Titlemax and became the nightmare to countless victims in the state of Georgia.

Authorities have not released the name of the crook who was a former employee of the title loan franchise. He was terminated from his position with Titlemax well over a year ago, but apparently held onto his name tag, company shirt, and Titlemax documents.

The bandit calls his prey and instructs them to meet him at a third party location. Customers who are not familiar with the title loan process would not question a process they are not familiar with. Once the crook quotes the amount of cash the customer will receive by bringing in the title to their vehicle, a customer in an emergency state needing to pay their child’s tuition or save their home from foreclosure is ready to take the next step to get the cash in their hands. He meets the customer dressed in Titlemax attire with a Titlemax name tag and hands over Titlemax paperwork to fill out at a gas station.

In Cody’s case, she needed $1500 and was instructed to bring him $600 along with the title to her car. She followed his instructions. When she followed up to complete the process, his contact number no longer worked.

A legitimate car title lender, such as car title loans Sacramento, would never ask a customer to meet outside a store location to do business, and would never ask for any amount of cash up front.

Going into a state of panic, Cody went to the Titlemax location to discover the crook had been fired over a year ago. Cody is now out of $600 and very concerned about the title to her car. She told investigators the man came across very professional and convincing. She did not question why he requested to meet at a gas station instead of a Titlemax location. Cody hopes her story will save anyone else from becoming his next victim. The police not only need to release his name, but also a photo for innocent Georgia residents to recognize and report him as soon as possible.

For those in an emergency situation and a title loan could possibly be the quick solution, steer clear of anyone asking for money upfront. Beware of anyone instructing you to meet them at a third party location outside a Titlemax store. If anyone encounters a situation that appears suspect, please call 706-821-1080 immediately.

Beware of predators sniffing out their prey for the day…


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