VIX Hits Historic Low in More Than Two Decades

Does history repeat itself? That seems to be the case with the CBOE VIX index.

The VIX which measures market volatility of the S&P 500 has gone past the ‘historic floor’ marker following a series of events that resulted in high market tranquility. VIX rates have been hovering between 9 and 10 in the past few days indicating its lowest closing levels since the 1990s. Recorded rates included a 9.84 and even a 9.72.

The Financial Times reported that the results of the French election brought indices to its current rates and mentioned that the European market has been experiencing the same. European equities faced losses as investors were hung up evaluating situations over speculations of Macron’s victory following the first round of voting last month. As a result, most European stock gauges plunged.

The good news for US investors is that local equities proved to be unaffected even though the VIX experienced a historic decline. Bloomberg shared market data showing that the S&P 500 achieved its third weekly gain and projections even point to a raise in interest rates from the Federal Reserve next month.

If that’s the case, then what does low VIX levels actually mean for the stock market?

Looking at the bigger picture, Schaeffer’s Investment Research explained that valuations remain high. This is an indicator that the performance of the stock market will be good long-term. Profit margins of S&P 500 companies are beating expectations and estimations for the remainder of the fiscal year lean on the positive side.

However, this does not accurately reflect the short-term periods. That’s where measurement tools like the VIX come in. The VIX looks at projections of the market’s performance within the next 90 days and for short-term traders, low levels are almost usually a cause for concern. Stock trading company Teramusu specified that major indices such as the S&P 500 are benchmarks of global markets and leading stocks values shift constantly which creates opportunities for profit. But when the market is tranquil, these opportunities decline in proportion to the decreasing rates of measurement gauges. This is why the VIX is also known as the ‘fear gauge’.

Nevertheless, using comparisons with previous incidences of VIX plunges, it was observed that the underperformance doesn’t last. There were usually low returns over the following week up to the three-month marker, but the market flipped back to positive levels around 80% within six months. One year later, the performance returned to 100% which was before the decline.

Hence, low VIX rates don’t necessarily mean a major dive in the stock market. There may be a high tendency to have poor returns within the coming weeks, but as active as the stock market is today, you can expect that it will bounce back as it always does.

Guaranty Bank Fails…107 Branches closing nationwide

Wisconsin based Guaranty Bank is DONE. According to this Patch report the small bank with just over 100 branches couldn’t recover from the housing crisis.

Wisconsin-based Guaranty Bank was closed Friday by federal officials, after the bank could not recover from the housing and mortgage foreclosure crisis.

Guaranty Bank is the fifth FDIC-insured institution to fail in the nation this year, and the first in Wisconsin.

A sale agreement brokered by the FDIC means that First-Citizens Bank & Trust Company, Raleigh, North Carolina, will assume all of the deposits of Guaranty Bank. Guaranty Bank did business as BestBank in Georgia and Michigan.

Guaranty Bank had 119 branches in five states, 107 of which were in retail outlets, such as grocery and general merchandise stores. The branches in retail outlets will not be reopening.

The 12 brick-and-mortar locations in Illinois, Minnesota, and Wisconsin will reopen as branches of First-Citizens Bank & Trust Company during their normal business hours. All depositors of Guaranty Bank, regardless of where they conducted business, will automatically become depositors of First-Citizens Bank & Trust Company.

San Francisco tech workers paying $1900 a month to sleep in bunk beds with 40 other people

According to this Venture Beat report tech workers are paying $1900 a month to sleep on bunk beds with 40 people. Welcome to the absurdity of San Francisco.

Zander Dejah, 25, pays $1,900 a month rent to live in a downtown San Francisco house with at least 40 other people, many of whom sleep in bunk beds.

Dejah is a resident of The Negev, a communal living space that styles itself as a home for millennial tech workers to brainstorm ideas, write code and create apps, even if they have to share toilets and bathrooms with dozens of others.

Houses like The Negev, located in a neighborhood known as “SoMa” or South of Market, have cropped up around San Francisco as an influx of young professionals, many of whom are tech workers, have faced the city’s notoriously high rents and apartment shortages. It has three floors and roughly 50 rooms, filled with bunk beds, beer bottles and laptops, according to residents.

Dejah, born and raised in New York, graduated last year with a degree in computer science and math from McGill University. Unemployed, he moved to California six months ago and found his room at The Negev on Craigslist.

“I thought New York was expensive,” said Dejah, who quickly landed a job as a virtual reality engineer at consulting firm moBack. “It’s basically an extension of college. We sort of live in a frat house.”

The home is certainly filled with parties on weekends, but the residents make sure to sit down every Sunday for a communal dinner, akin to a traditional family gathering.

While some say communal housing provides a solution for many first-time workers fresh out of college, such housing also has created its share of controversy. Housing advocates have complained that this new dorm-like style of living has pushed up rents and forced longtime residents to move out.

Downtown Cleveland retail vacancies hit 10.4 %

Cleveland continues to be plagued by a terrible ‘Midwest’ economy. According to this Crain’s report, downtown retail vacancies have hit 10.4%.

Following trends in national retailing and its own market, CBRE Group Inc. has started reporting downtown Cleveland statistics as part of its just-completed annual retail survey covering eight Northeast Ohio counties.

CBRE reported downtown vacancy at 10.4% among the 1.6 million square feet of selling space on the city’s broad thoroughfares and the long-suffering enclosed malls The Avenue and Galleria.

Surprisingly, that’s not far from areawide averages as retail gets roiled by oversupply and competition from the internet.

CBRE estimates the region has 11.7% retail vacancy as of year-end 2016 from 10.3% a year ago. However, regional asking rental rates climbed to $12.13 a square foot at year-end 2016 from $12.02 a square foot a year ago.

In-demand retail locations are able to command far higher rates than the regional ask, with taking rates at some new retail centers commanding rents of $40 a square foot. Adding more downtown retail specifics required the realty brokerage to rejigger its approach for a different selling environment.

Brandon Isner, CBRE research analyst, and two other staffers had to physically canvass the storefronts to produce the figure. The national brokerage also had to report street retail for the first time, a big switch from its traditional way of surveying about 400 shopping centers above 50,000 square feet in size in eight Northeast Ohio counties. Isner said additional downtown retail data is a natural response to increasing urbanization in the U.S.

Keith Hamulak, CBRE vice president, said the firm is getting increased queries about downtown retail space as well as neighborhoods such as Tremont and Ohio City.

“This is so we can drill down our data properly,” Hamulak said. “In the past, there was little demand from national retailers about downtown space. Now, national retailers want to know about downtown and Main Street retail locations.”

Moreover, the market is changing between proposed downtown developments such as Stark Enterprises of Cleveland’s 48-floor nuCLEus project in the Gateway District, which has 150,000 square feet of proposed retail space, and developers converting office buildings to apartments also want to revitalize their first-floor spaces with new retailers. All told, CBRE estimates 550,000 square feet of retail is proposed downtown.

Michael Deemer, executive vice president of business development at Downtown Cleveland Alliance, said having a national brokerage firm produce such information will be helpful as he is getting increasing requests for it.

Deemer said he personally estimated the figure at about 10%, but he believes many building and business owners he works with peg it at a much higher level.

“For a lot of folks in the marketplace, that will be a real surprise,” Deemer said. “In a lot of ways, I wish we had an earlier benchmark. As the downtown residential market has taken off, we could show how much the market has improved.”

The report is also useful given the leading role that chefs and quick-serve restaurants are playing in the retail sector.

Stephen Taylor, a CBRE vice president who focuses on restaurants, said that when he works with chefs in Cleveland or other parts of the state, they actively seek sites in revitalizing neighborhoods.

“It’s the walkability of the environment that is drawing them. Breweries are also serving as a catalyst for neighborhoods,” Taylor said. “It’s the attraction of storefront retail that was popular from the 1920s to the 1940s.”

Staples and Office Depot to close a massive amount of stores in 2017

Staples, Inc announced today that the company is planning to shutter approximately 70 locations in the United States before the end of the year.  The revelation comes after the companies sales fell 4% from last year.

Staples will also have to develop a strategic plan after their proposal to merge with competitor Office Depot was halted by an injunction from the FTC over antitrust concerns.  The FTC argued that a merger between the two biggest office supply stores would be anti-competitive and result in higher prices of pens, printer toner, and fax-machine paper.  Like most retailers, Amazon has become a huge thorn in Staples’ side, posing a huge competitive threat as Amazon plans to develop business contracts for office supplies as well.

The store closings do not come to as much of a surprise when you realize that more than half of Staple’s sales are online, making them the fourth-largest online retailer in the U.S. behind Apple, Wal-mart, and Amazon. 

Office Depot on the other hand closed 65 of its stores during its fourth quarters, and now intends to close an additional 75 locations in 2017.  The company also says in its annual report that was released Wednesday that they expect sales to be lower in 2017 than they were in 2016.

While neither of these stores should be considered down for the count just yet, the closing of a combined 175 stores in one year in the same market implies that both could to be edging towards the chopping block, especially since their merger was taken off the table.  The appliance market is already experiencing similar fear with the likes of Sears and hhgregg becoming nearly extinct. 

Ford announces $9,000 bonus checks to employees, second best in companies history

Ford has announced they will be issuing bonuses to thousands of employees. According to this NWI report, the company will be paying out its second biggest bonus in history.

Ford, one of the largest employers in the Calumet Region, is going to pay out $9,000 profit-sharing bonuses to thousands of local workers this week in what amounts to a pre-tax $49.5 million injection of cash into the local economy.

The Dearborn, Michigan-based automaker will pay the second-best profit sharing bonuses in company history Friday to about 4,200 workers at the Chicago Assembly Plant in Hegewisch and another 1,300 at the Chicago Stamping Plant in Chicago Heights. It’s down slightly from the record $9,300 Ford’s 56,000 United Autoworkers-represented employees took home last year.

Will appliance giants Sears and hhgregg make it through 2017?

It is only March, and already we have witnessed the increasing volatility of the retail industry. This year alone The Limited, Wet Seal, BCBG, and American Apparel have all filed for bankruptcy, and many other companies remain on the chopping block. In an attempt to avoid being next on the list appliance retailer hhgregg is taking drastic measures and laid out a plan this week that they hope will make the company profitable again.

Thursday hhgregg announced that the strategy would include closing three distribution facilities and 88 of their 226 stores that are underperforming, which is roughly 40% of their locations altogether. CEO Robert J. Riesbeck said in a press release, “This is a proactive decision to streamline our store footprint in the markets where we have been and will continue to be, important to our customers, vendor partners, and communities. We feel strongly that the markets we will remain in are the right ones for our customers and our business model.”

The states where stores are expected to close are Alabama, Delaware, Florida, Illinois, Georgia, Louisiana, Maryland, Missouri, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia. Distribution and delivery centers to close are in Maryland, Florida, and Pennsylvania.

Hhgregg has been in financial trouble for some time now. Their stock value has declined more than 60% over the last year, and they were even warned by the New York Stock Exchange that they could be delisted for failing to meet the minimum listing price requirement. Their financial trouble is very similar to that of competitor Sears.

It is no secret that Sears has been hanging on by a very thin thread over the last few years, and it appears that thread is about to spilt. They announced the closing of 150 stores to stop the hemorrhage of cash, but it could still prove to be too little too late.

Both Sears and hhgregg were considered top appliance stores during their hay days, but the continued poor economic climate and increase of competition has resulted in both stores losing their footing and stumbling into downward spirals financially.

Will these one-time appliance giants be able to make it through 2017? Because the question is no longer if, but when these companies will be forced to throw in the towel.

Boeing to lay off 1,800 Seattle area jobs

More bad news for Boeing as the Seattle area staple is ready to cut 1,800 jobs according to this Bloomberg report.

Boeing Co. is shrinking its Seattle-area workforce by at least 1,800 jobs this year as the company streamlines operations in a brutally competitive commercial-aircraft market.

The planemaker approved voluntary layoffs for 1,500 mechanics, according to a person familiar with the situation who asked not to be named because it hasn’t been made public. Another 305 engineers and technical workers are leaving voluntarily, Bill Dugovich, a spokesman for their union, said Thursday.

Boeing told employees in December that it would seek buyouts as part of an effort to cut costs and match employment to market requirements, company spokesman Paul Bergman said by email. Boeing also plans to cull commercial-airplane jobs by leaving open positions unfilled and through involuntary layoffs, he said. He declined to say how many buyouts have been approved.

Bitcoin is now worth more than an ounce of gold…

It’s a historic day for Bitcoin as the virtual currency has surpassed the price of gold according to this Market Watch report.

One unit of so-called digital gold is now worth more than an ounce of the real thing.

The price of a single bitcoin US:BTCUSD  rose to an all-time high of $1,251.32 on Thursday, surpassing the price of a single ounce of gold, according to CoinDesk’s bitcoin price index. Bitcoin traded on certain Chinese exchanges briefly overtook gold in early February. But this is the first time in the digital currency’s eight-year history that it has done so according to most widely used bitcoin-price benchmarks.

Many bitcoin watchers, including Charles Hayter, chief executive officer and founder of CryptoCompare, a company that provides data and analytics about digital currencies, have pointed out that bitcoin has a positive correlation with gold. They argue that investors are becoming more comfortable with the digital currency, making them more willing to buy it when more conventional markets like stocks are under duress.

Abercrombie & Fitch announces another 60 stores closing as sales continue to slide

Abercrombie & Fitch continues its downward spiral as the overpriced retailer announced sales slid 13% in the all-important holiday quarter. According to this Forbes report, the company will close another 60 stores.

Abercrombie & Fitch (ANF, +16.64%)said on Thursday it is closing 60 more U.S. stores this year as sales at its namesake brand keep collapsing despite a new look for the merchandise and a slick (but ineffective) ad campaign.

These new closings will mean A&F’s fleet will shrink to roughly 670 stores this year from 839 only five years ago. Other retailers to have drastically cut their fleets include Macy’s, (M, +0.61%), Gap (GPS, +3.06%) and J.C. Penney.

The paring of A&F’s footprint comes as its namesake brand reported comparable sales, a measure that excludes failing stores that have been closed in the last year, fell a staggering 13% in the key holiday season quarter. The brand, which is trying to remake itself after facing a consumer backlash over its large logos and sexy ads, blamed a “more promotional activity and a lower gross margin rate than planned” and weak shopper traffic.

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