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Senin, 07 Oktober 2019

GE freezes pension plan for 20,000 employees - Fox Business

General Electric is still trying to defend itself against accusations of accounting issues. SEC said they are monitoring the situation.

General Electric is making sweeping changes to its pension plan for approximately 20,000 employees, sending shares higher ahead of Monday’s opening bell.

Ticker	Security	Last	Change	Change %
GE	GENERAL ELECTRIC COMPANY	8.57	-0.14	-1.61%

Seven hundred employees who became executives before 2011 will have their supplementary benefits frozen, and no changes will be made for retired employees. The changes will reduce GE’s pension deficit by about $5 billion - $8 billion and net debt by approximately $4 billion - $6 billion.

“Returning GE to a position of strength has required us to make several difficult decisions, and today’s decision to freeze the pension is no exception,” Kevin Cox, chief human resources officer at GE, said in a press release.

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“We carefully weighed market trends and our strategic priority to improve our financial position with the impact to our employees. We are committed to helping our employees through this transition.”

The company said it will use some of the money it has received from the sale of its BioPharma, BHGE and Wabtec transactions to pre-fund up to $5 billion of its Employee Retirement Income Security Act payments for 2021 and 20212. Retired employees who have not started receiving monthly payments will have the option to receive a one-time lump-sum payout.

General Electric, once an industrial icon, is in the midst of trying to engineer a turnaround after shares lost more than half their value amid a slew of problems last year. The battered company has undertaken a massive restructuring plan aimed at reducing debt by selling off non-core assets. In August, the company was accused by whistleblower Harry Markopolos, who alerted authorities about Bernie Madoff's Ponzi scheme, of hiding its problems through fraudulent accounting.

GE's Troubled Timeline:

2019:

January: GE altered its agreement with the rail-transport company Wabtec in order to receive $2.9 billion of cash in exchange for giving up more equity.
March: Warns it could have a negative free cash flow of up to $2 billion this year.
June: Reports strong first-quarter results, bolstered by its aviation unit.

2018:

June: GE was booted from the Dow Jones Industrial Average and announced a massive restructuring, shifting its focus to aviation, power, and renewables.
October: CEO John Flannery gets the boot and was replaced by Larry Culp. The company then took a $23 billion goodwill charge for its power business. Culp said he would sell assets to raise cash and pay down debt. The SEC and the Justice Department said they would investigate the writedown. The investigation is ongoing.
End of the year: GE sold a $4 billion stake in the oil-services provider Baker Hughes and announced it would sell a majority stake in the software provider ServiceMax to the private-equity firm Silver Lake. It was able to bring down debt by $21 billion in the fourth quarter.

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2019-10-07 10:45:53Z
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Amsterdam-bound flight makes emergency landing in Maine - Fox News

BANGOR, Maine -- A United Airlines flight with more than 200 people aboard has made an emergency landing in Maine.

A United spokesman says a cabin pressure issue diverted the Amsterdam-bound Flight 986 that had left San Francisco on Sunday afternoon to land in Bangor early Monday, local time.

WOMAN BOARDS FLIGHT WITH NO ID, BOARDING PASS

The spokesman says the 13 crew members helped the 197 passengers safely deplane and the airline was working with passengers to provide accommodations overnight.

He said customers would fly on Monday afternoon to Newark, New Jersey, and from there to Amsterdam, arriving Tuesday morning. Details about the cabin pressurization issue weren't available.

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A 2005 AP story exploring the Bangor airport's role as a haven for diverted planes said the airport created from the former Dow Air Force Base is the last U.S. airport for outgoing flights to Europe.

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2019-10-07 07:38:53Z
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China to narrow scope for trade deal ahead of talks - Fox Business

FOX Business' Jack Otter, who hosts the new 'Barron's Roundtable,' commented on the upcoming interview with Blackstone CEO Stephen Schwarzman.

The next round of talks between U.S. and China trade representatives is scheduled for later this week in Washington.

A major result from the upcoming meeting may fall short of expectations.

Chinese officials are signaling they’re reluctant to agree to the kind of broad trade deal that President Trump wants, according to Bloomberg.

People familiar with recent meetings say senior Chinese officials have indicated the range of topics they’re willing to discuss has narrowed considerably.

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Vice Premier Liu He will lead the Chinese contingent in high-level talks that begin Thursday.

The Chinese delegation reportedly won’t be looking to include commitments on reforming Chinese industrial policy or the government subsidies, according to Bloomberg.

That offer would take one of the Trump administration’s core demands off the table.

People close to the Trump administration say the impeachment inquiry isn’t affecting trade talks with China.

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China’s markets will return to trading on Tuesday following a weeklong holiday.

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2019-10-07 07:21:41Z
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Minggu, 06 Oktober 2019

The Trumponomics experiment is failing before our eyes - Business Insider

Trump at manufacturing lab Ivanka President Donald Trump at a tour of an advanced manufacturing lab in Iowa in 2018.AP

Economic data is pointing toward a recession, and no one should be surprised.
Yes, it's late in our economic cycle, and that matters. But President Donald Trump's policies are also very much to blame here.
Trump promised to buck economic thought and go full protectionist. Economists warned him this would damage the global economy, but he didn't listen.
Feel free to walk by the White House and scream "I told you so!"
Visit Business Insider's homepage for more stories.

When Donald Trump became the 45th president of the United States, he promised to launch an economic experiment.

Ignoring the past few decades of economic liberalization, multilateralism, and openness, Trump promised to close the economy, renegotiate our trade deals nation by nation, and refocus the US economy on a relatively small sector, manufacturing, which makes up less than 20% of the economy.

To some, that experiment was a refreshing turn from the steady plod toward globalization that Americans have experienced for the past 50 years. To others — especially to economists — this was folly.

Protectionism, as experts well know, is bad news. They reminded Trump that steel tariffs have only brought the US pain — but Trump slapped them on our allies anyway. He was warned about his tax policies; about disrupting the North American Free Trade Agreement, our trade deal with Canada and Mexico; about ripping up the Trans-Pacific Partnership, a major trade deal forged by the Obama administration and supported by members of both parties; and about confronting China alone. But Trump did it all anyway.

And so the world found out what happens when the most powerful country in the world takes 100 years of economic knowledge and flushes it down the toilet. Experiment, on.

Voila, America

Here we are, three years into the Trump administration's experiment, with a recession rapping at the door of the US economy. How do we know?

The pesky yield curve keeps inverting, showing us that investors are worried about what's around the corner for the US economy.
For the first time in a long time, Wall Street waited with bated breath for one number, from the ISM services survey, which told us that 80% of the US economy had slowed to levels unseen since 2016.
The services contraction came amid manufacturing's slump, which has been with us since last year and just reached its lowest point since 2009.
People have lost interest in buying big-ticket items like washing machines.
Chief financial officers across the country are feeling gloomier than they have in three years.

consumer appetite for durable goods Deutsche Bank

Employment numbers remain strong — though hiring is slowing — and consumer confidence remains somewhat steady. But allow me to remind you that those are lagging indicators. When a recession comes, the consumer is the last to know.

Running with scissors

Recessions are cyclical; that's a fact. But there are things you can do to hasten them, and the Trump administration has done all it can to do that. His policies have basically been the economic equivalent of running at breakneck speed with a pair of very sharp scissors.

Trump ran on a platform of ignoring the rules of economics and turning personal grievances into policy. Now we know what that can do to the mightiest economy on the planet.

Trade wars have disrupted agriculture and manufacturing, ripping up supply chains and costing the government billions in aid. Erratic policies have spooked Wall Street and exhausted and frustrated our allies. The world is now a place where the United States cannot be trusted, and that is a world where growth is slower. Just about every respectable economist in the game told Trump this would happen, but he and his allies didn't want to hear it.

So now we're here, in a moment that the World Trade Organization says could produce "a destructive cycle of recrimination." When there is no trust between counterparties in markets and everyone gets desperate, there can be unintended consequences. Monetary and fiscal policies will shift as countries try to get used to a world growing more slowly, and this could, the WTO said, "destabilize volatile financial markets" and "produce an even bigger downturn in trade."

Sometimes rules are rules for a reason.

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2019-10-06 12:01:09Z
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World's Best-Run Pension Funds Say It's Time to Start Worrying - Yahoo Finance

(Bloomberg) -- Back in 2012, the world’s best-managed pension market was thrown a lifeline by the Danish government to help contain liabilities. That was when interest rates were still positive.

Seven years later, with rates now well below zero, even Denmark’s $440 billion pension system says the environment has become so punishing that it may be time for a change in European rules.

Henrik Munck, a senior consultant at Insurance & Pension Denmark, an umbrella organization, says the way liabilities are currently calculated “could cause a negative spiral” that forces funds to keep buying low-risk assets, drive yields lower and the value of liabilities even higher.

The warning comes as pension firms across Europe struggle to generate the returns they need to cover their growing obligations. In Denmark, some funds saddled with legacy policies guaranteeing returns as high as 4.5% have had to use equity to meet their obligations.

To calculate liabilities, pension firms use a complex mathematical formula constructed by the European Insurance and Occupational Pensions Authority (EIOPA). The formula is intended to shield funds from erratic market swings that artificially inflate or hollow out balance sheets. But with negative rates more entrenched, there are signs the EIOPA curve, as it’s called, may not be working as intended.

“When pension funds across Europe de-risk simultaneously, it may actually become pro-cyclical: it increases the price movements, and it could result in yet more downward pressure on the EIOPA yield curve, exacerbating the problem,” Munck said.

The curve is comprised of several elements. Its backbone -- the euro interest-rate swap curve -- has sunk since its implementation about four years ago, driving up the value of liabilities.

Sinking Swap Rates

The European Commission has started reviewing the regulatory framework around insurers -- Solvency II -- with a view to proposing improvements by the end of next year. Insurance Europe, an industry group, is urging the commission to address the curve in its evaluations.

In the meantime, pension funds have been coping by buying up riskier assets. The Dutch, ranked with Denmark as the world’s best performing pension providers by Mercer, have complained to the European Central Bank about the fallout on the industry.

And Then...

And then there’s the headache of what’s called the volatility adjustment (VA), which is set on a country-by-country basis and is designed to cushion the impact of erratic markets. According to Bloomberg Intelligence senior analyst Charles Graham, there’s “widespread” agreement that VA is “flawed.”

“It is something that EIOPA is considering recommending changing, but the challenge is still what to replace it with, or how to fine tune it,” Graham said.

Earlier this year, EIOPA unexpectedly slashed Denmark’s VA to roughly a third its previous level, causing considerable alarm in the industry.

According to Anders Damgaard, the chief financial officer of Denmark’s biggest commercial pension fund, PFA, which has about $100 billion in assets, EIPOA’s reason for the adjustment made sense: The new VA incorporates call options that let Danish borrowers buy back the bonds that fund their mortgages. The long-term covered bonds to which those call options are attached are a cornerstone of Danish pension funds’ investment portfolios.

With interest rates at unprecedented lows, a record number of borrowers are now taking advantage of those call options to refinance their mortgages. Damgaard says the way EIOPA calculates the volatility adjustment means the very device that’s intended to mute market swings has itself become more volatile. Worse, because it’s “an artificial number,” pension funds can’t hedge it, he says.

“That’s really where the main challenge is for us,” Damgaard said. “We have an unhedgeable component of the yield curve -- which is actually active on the entire yield curve -- and you can’t hedge it, which means that the balance sheet posts are very volatile.”

PFA, like many Danish pension funds, started scaling back guaranteed products for retirees many years ago. That’s given it a buffer to help absorb some of the shock of growing liabilities. But not everyone’s as well prepared. “If the discount curve is more volatile and you can’t hedge it, you can -- if you don’t have enough capital -- be forced to lower risk on the more hedgeable space, to compensate,” Damgaard said.

Olav Jones, deputy director general of Insurance Europe, says the pension industry “does not see any need to change the way the risk-free curve is generated, but there is a need to improve how the VA is generated.” Right now, it’s “generally too low and generally leads to liabilities that are inflated” and creates artificial volatility in insurers’ balance sheets, he said.

To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net;Paul Sillitoe at psillitoe@bloomberg.net

For more articles like this, please visit us at bloomberg.com

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2019-10-06 08:13:32Z
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World's Best-Run Pension Funds Say It's Time to Start Worrying - Bloomberg

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World's Best-Run Pension Funds Say It's Time to Start Worrying Bloomberg
https://www.bloomberg.com/news/articles/2019-10-06/world-s-best-run-pension-funds-say-it-s-time-to-start-worrying

2019-10-06 04:00:00Z
CAIiEBG_SOnxl0GAHqF4yaQo0lUqGQgEKhAIACoHCAow4uzwCjCF3bsCMIrOrwM

Sabtu, 05 Oktober 2019

Will ending curbside pickups for Uber, Lyft and taxis help LAX's traffic? - Los Angeles Times

Even in a city infamous for its traffic, the congestion at Los Angeles International Airport was growing dire.

Spurred by extensive construction, a surge in air travel and the arrival of Uber and Lyft, traffic volumes at the nation’s second-busiest airport rose by half over a decade, turning a drive through the 1.5-mile terminal area into a half-hour ordeal.

Without major changes, airport officials warned, traffic at LAX on an average summer day would soon resemble the bumper-to-bumper crawl on the Sunday after Thanksgiving.

On Friday, city officials unveiled a plan aimed at reducing the congestion.

Starting at the end of October, travelers leaving LAX will be required to board a shuttle or walk to a waiting area east of Terminal 1 to hail an Uber, Lyft or taxi. Drop-off policies, and pickups for family and friends, will not change.

The plan will remain in place until the completion of an elevated airport train, scheduled for 2023. The people-mover will arrive every two minutes and will whisk passengers between the terminals, a car rental facility, a ground transportation hub and a Metro station.

The sleek train and a $14-billion overhaul of the aging airport are major parts of L.A.’s efforts to improve transportation in traffic-choked Southern California before the 2028 Summer Olympics. Where pickups will occur after the people-mover opens is still unclear.

The idea of transferring to a shuttle bus to catch a ride home has frustrated and dismayed many travelers, who say more schlepping will make LAX more stressful.

“It’ll be a lot less convenient, and it will probably take a lot longer to get home,” Kristi Nichols, 23, an engineer who travels frequently for work and to visit family, said at the airport Friday.

Starting next month, she said, she’ll try to get picked up by family or book a SuperShuttle instead.

Officials are asking travelers to give the new system a try. Frequent bus service and a well-organized pickup area may be more efficient than today’s crowded curbsides, they said, where riders can wait for a half-hour or more while Uber and Lyft drivers inch through traffic.

“You will no longer have to fight the traffic to get out of the central terminal area,” said Keith Wilschetz, deputy executive director of operations at Los Angeles World Airports. “Once you’re in your car, you’re right on Sepulveda.”

Uber and Lyft account for 27% of the 100,000 vehicles in the LAX terminal area on an average day, Wilschetz said. Taxis make up 4%. Shifting pickups to a parking lot will eliminate about 15% of the vehicles in the terminal, he said.

During the first half of 2019, LAX saw 10% more vehicle trips than in the same time period in 2016, the first full year that Uber and Lyft operated there. The number of Uber and Lyft trips soared 123% over that period, while taxi trips fell 39%, according to city data.

Meanwhile, ridership plummeted on high-occupancy buses and shuttles, data show. Trips on LAX’s FlyAway buses fell by two-thirds, as did rides on shared vans such as SuperShuttle and Prime Time. Courtesy shuttles to car rental facilities, parking lots and hotels saw a 20% decline.

Passengers hoping to go home in an Uber or Lyft should order a ride as they pick up their bags, then board a shuttle on the lower level of the airport, Wilschetz said. Travelers looking for a cab should proceed directly to the waiting area, where there will be a taxi queue.

Curbside lanes on the arrivals level will be converted to bus-only lanes to speed travel times. Bright green shuttles are supposed to arrive every three to five minutes, and will make a maximum of two stops before going to the pickup lot.

The pickup area, at the corner of World Way and Sky Way, is a parking lot converted into a plaza with umbrellas, trash cans, bathrooms and phone charging stations. The area will offer food trucks that will operate from 5 a.m. to 1 a.m.

Many travelers will form their first impression of L.A. based on the waiting area, Wilschetz said, so “we want it to be a good one.”

City airport officials in August awarded a $65.5-million contract to set up and maintain the lot, operate the passenger shuttles, direct traffic and offer customer service for travelers who are lost or frustrated.

Uber has some concerns with the plan, a spokesman said, and company officials hope LAX will “listen to and incorporate” input on how to improve the system. Lyft said the company has been “working closely” with the airport to reduce congestion and shorten wait times.

Drivers for both companies currently wait near the airport, in an area that some drivers call “the pig pen,” until they are assigned a rider. Matching with a passenger and fighting through terminal traffic to reach the curb can take up to an hour, and drivers are not paid for that time.

“You should see Monday mornings,” said Lyft driver Jorge Ferran, 63. “It’s horrendous.”

If it works, the new system could help drivers pick up passengers more quickly, which would increase their earnings, said Harry Campbell, who publishes the Rideshare Guy website.

But that depends on whether passengers give the shuttles a try, he said. Already, he said, people are talking about being picked up by friends or family again, or trying buses that carry travelers from San Francisco to Los Angeles.

“There’s a psychological barrier to having to take a shuttle to an Uber,” Campbell said. “It’s just a hassle.”

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2019-10-05 12:00:00Z
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