Atlantic City, NJ Collapses Financially; Immediate State Takeover in progress! Post by Newsroom Superstation95.com - Nov 09, 2016 The local government of Atlantic City, New Jersey has financially collapsed! After years of problems from over-spending, and failure to properly assess taxes, the city government in the gambling casino mecca of the JErsey Shore, is no longer able to function. Gov. Chris Christie's administration on Wednesday was granted the authority to immediately seize control of financially distressed Atlantic City. The state Local Finance Board voted 5-0 to approve a five-year state takeover of the local government in the seaside gambling resort — an effort Christie says is the best way to keep the city from becoming the first New Jersey municipality since 1938 to go bankrupt. The decision gives the state the power to assume key functions usually controlled by local leaders: renegotiating union contracts, hiring and firing employees, selling city assets, reversing decisions of the city council, and more. Mayor Don Guardian had said in recent days that if the takeover was approved, the city would challenge the move in court. But after Wednesday's vote, he said local leaders will meet with state officials first before deciding their next step. City Council President Marty Small said: "All of our options are still on the table." "This is definitely a sad day in the history of Atlantic City," Small noted. Five casinos have closed in Atlantic City since 2014, causing the city's tax base to plummet and blowing a $100 million hole in its budget. The 39,000-resident city is also more than $500 million in debt. After months of arguments among state lawmakers of how to help the city fix their problems, Christie signed a rescue package in May that gave local leaders 150 days to come up with a five-year plan. The state could impost a takeover if the plan was rejected. The state Department of Community Affairs shot down the city's proposal last week. The Local Finance Board then voted to finalize the takeover. The only power the board did not grant the state was the ability to file for bankruptcy on behalf of the city. Timothy Cunningham, director of the department's Division of Local Government Services, who will oversee the takeover, called the move "unchartered territory. Asked if he was pleased to have these powers, Cunningham said "pleased" is not the word he'd use. "I did not sleep over the couple of days heading into this," he added. "And I'm sure I'm not going to sleep much tonight." Ted Light, a board member, said the decision was not an easy one. "It almost make you feel you've one to be a god to do these things, and I'm no a god," Light said. "But you have to make the decisions you feel are best." Guardian told the board the city put forth "an excellent plan" and asked instead for the state to simply lend a hand — not assume power. "The city is not going to fix itself by itself," the Republican mayor said. "It's the partnership that we need." But is there hope for the city?The vote comes a day after Republican Donald Trump was elected America's president. Christie, one of Trump's top advisers, could be given a post in the new administration, forcing him to resign as governor.
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Banks warn clients to brace for FX volatility after U.S. vote Beforeitsnews.com Major banks have formally told clients to expect volatile currency markets in the aftermath of Tuesday’s U.S. presidential election, with the gap between buying and selling prices that determines the cost of trading expected to widen sharply if Donald Trump were to win. The warnings issued by the electronic trading platforms run by the market’s largest player Citi and rivals Barclays and Goldman Sachs, seen by clients of the banks, have over the past two years become standard ‘red flags’ ahead of big political and economic set-pieces. But issued broadly for the first time since Britain’s vote to leave the European Union in June, they are also a measure of the scale of risks being attached to Tuesday’s vote. Banks have forecast falls of up to 5 percent in the dollar’s value against the yen if Trump were to win and a bounce of 1-2 percent for the greenback on a victory for Hillary Clinton. A number of retail currency trading platforms have also already raised margins clients must hold against open currency bets for fear of sharper moves in the dollar and Mexican peso. One Goldman Sachs client said the bank told clients on Monday it would not accept new stop loss orders on the peso until further notice. Citi and Goldman Sachs declined to comment. Barclays said: “Barclays is always available for clients during macro events, providing extra staffing in London, New York and Singapore ensuring 24 hour coverage to monitor markets and handle client trades throughout US election night.” The head of trading with one large London-based investor, a client of Barclays and Citi, said both had issued formal warnings in line with standard procedure since the sudden and dramatic surge in the Swiss franc in January of last year. “It is very polite and seems like just a box-ticking exercise really: as you are probably aware markets may be more volatile, expect thinner liquidity and wider spreads. It has clearly become the legal norm to do this,” the head of trading said. A second client of several of the larger banks confirmed he had seen such warnings. “On the Citi system they are just a pop-up. On Barclays it is an email,” a second source said. “Similarly to the action we saw ahead of Brexit, Goldman also told us they would not accept stop loss orders on the peso as of 3 p.m. yesterday. The restaurant recession has arrived
Marketwatch.com Published: Nov 3, 2016 7:57 a.m. ET Moody’s slashes its profit growth outlook as consumers struggle to pay bills and restaurants grapple with weak traffic Restaurant companies should brace for a challenging period as consumers grapple with the rising costs of rent, prescriptions and car loans and take advantage of cheaper groceries to eat at home more. That’s the verdict of Moody’s Investors Service, which on Tuesday slashed its operating-profit growth forecast for the restaurant sector and revised its outlook to stable from positive. The ratings agency is now expecting operating profit to grow 2% to 4% in the next 12 to 18 months, down from a previous forecast of growth of 5% to 6%. “Consumers are wrestling with higher nondiscretionary spending needs, while restaurant companies face higher operating costs, predominantly labor and challenged traffic trends,” Moody’s analyst Bill Fahy wrote in a note. Sliding sales His comments come after a string of downbeat earnings from the sector, with the likes of Sonic Corp SONC, +2.90% , Burger King parent Restaurant Brands International Inc. QSR, +0.84% and Chipotle Mexican Grill Inc. CMG, +2.70% reporting declines in same-restaurant sales. Analysts who were warning of a restaurant recession in the summer are looking prescient right now — and agree that there is more pain to come. Stifel, which downgraded 11 restaurant stocks to sell in July, last week warned of the saturated and mature nature of the U.S. industry: “Investors should think about returns on invested capital (ROICs) on a ‘market-level’ basis as opposed to a ‘unit-level’ basis,” Stifel’s analysts wrote in a note. So what’s keeping consumers away from restaurants? ‘Consumers are wrestling with higher non-discretionary spending needs, while restaurant companies face higher operating costs, predominantly labor and challenged traffic trends.’ Bill Fahy, Moody’s One factor is pressure on discretionary income from the rising costs of staples such as rent, medicine and education. Then there’s the steady rise in the cost of eating out, which has come just as grocery bills are getting cheaper. The cost of food purchased for home use—that is, groceries—has fallen 2.4% in the past year, government data showed in October. That’s the biggest decline over a 12-month period since the end of the Great Recession in 2009, as MarketWatch’s Jeffry Bartash reported. Food costs have shrunk because of a global glut in farm products such as wheat, rice, soy and corn. Then there’s the effect of U.S. producers increasing the size of egg-laying chicken flocks and cattle herds, which has helped bring down the cost of eggs, beef and milk—egg prices alone have tumbled a staggering 50% in the last year.At the same time, the cost of food away from home—takeout dinners and restaurant meals—climbed 2.4% in September from the year-earlier period. “People need to eat, but they don’t need to go out to eat,” said Mark Kalinowski, restaurant analyst at Nomura, who said he believes there’s a “general consumer unease” that is also impacting spending habits. Companies like Wendy’s Co. WEN, +0.28% have talked of the impacts on consumer confidence of the contentious U.S. presidential election and general civil unrest, as well as terror attacks in Europe and elsewhere. Buffalo Wild Wings. Inc. BWLD, +1.03% said its earnings were hurt by higher wing prices, as well as the destruction caused by Hurricane Matthew, which caused severe flooding in the Carolinas in October. “[W]hen a store is closed for three days, you take it out of the comp group,” Chief Executive Sally Smith told analysts on the company’s earnings call last week. “We had a number of stores that were closed for two days. ”McDonald’s Corp. MCD, +0.12% CEO Stephen Easterbook lamented the lack of tailwinds for the sector on his company’s recent earnings call. “If you look hard, there aren’t many tailwinds at the moment,” he told analysts. “There’s not great economic growth to help provide a lift. Consumer confidence is muted. We’re at a rather unusual stage of the election cycle. So none of that is really providing a tailwind for us.” Competition from supermarkets Moody’s is expecting restaurant operators to increase the use of promotions and discounts to win back diners, further crimping earnings at a time when commodity costs are historically low. Commodity deflation has already created greater competition from supermarkets, which are better able to pass higher costs on to consumers. Already, restaurants looking to drive growth are investing in technology such as apps; using social media to reach millennials, in particular; and expanding loyalty programs. But that, too, is hurting margins and in some instances creates less interaction between customer and server. Casual-dining restaurants—such as or Olive Garden DRI, +0.44% or Cheesecake Factory CAKE, -0.32% —are expected to hurt most, while fast-casual and fast-food restaurants—including the likes of Shake Shack SHAK, +2.69% and Chipotle as well as McDonald’s and Wendy’s—should outperform. “Overall, the bifurcation between the better performers and laggards in each segment will continue to widen,” wrote the Moody’s analyst Fahy. |
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