Is Walmart in trouble?

Walmart, the largest public corporation and the biggest private employer in the world has recently posted a 1.4% decline in earning for last quarter. Sales have been declining at walmart retail stores in the US and traffic has very slow in most walmart stores. Over the past decades, Walmart has been a strong retail force and an indicator of shoppers’ sentiments. Walmart has always enjoyed higher traffic compared to competitors. Consequently, buyers have snatching products off the shelves quickly which is good for walmart. In contrast to the higher traffic and consumers snatching goods off shelves, Walmart has been unable since 2011 to replenish stocks as quickly as the items have been flying off the shelves. In an attempt to rectify the issue, Walmart even hired consultant and redirected some of their employees to help replenish shelves and products. Unfortunately for Walmart, products were not back on shelves early enough. Customers perhaps while unable to get what needed at walmart, went elsewhere. But couple of with the inability to replenish their shelves quickly, Consumers shopping habits have been shifting toward specialized stores instead of big box retailers and online stores. Generation shifts and shopping habits are having an impact on big box retailers. In an effort to remedy that, Walmart has been opening neighborhood store which are smaller and catered to the demographic where the stores are located instead of operating like a big box retailer.

Online shopping has pushed a lot of big retailers to the brink and even some out of business.

All of Walmart efforts have produced a little improvement for the company but it looks like shoppers tend to associate Walmart with product of lower quality and shoppers prefer to invest their hard earned money elsewhere to get a better value.

THere is no need to panic yet, since Walmart is not like Kmart, Sears and other big retailers who suffered a bad fate. Walmart has the resources and the innovation needed to improve its quality and perhaps cater to its customers.

One very important thing to keep in mind as we progressing in the future is the shift in people's shopping habits. No company is immune from the change in habit but now will walmart be able to readjust its strategies and still be able to preserve its position?

More than 50% of student loans are delinquent

A College education is a very important tool to have nowadays. Having a college degree can help one lands the job of his/her dream, obtain a better salary, being able to have what one needs to have better life.

With the economy rebounding slowly, more people have been flocking back to school to further their education.  Unfortunately, with the high cost of education, opportunity cost of being in school, it is very difficult for folks to afford the tuition out of pocket. Therefore, students or parents get loan to pay for their education.  

According to a study from Transunion more than half of student loans are in deferred status where the loan payment has been delayed. Deferred loans now represent 43.5% of all student loan balances.
According to the same study, the deferred loans balance has grown from $228 billion in 2007 to $388 billion in 2012, an increase of 70%. During those years, there has been an average growth of 30% per student debt the average number in dollar is $23,829.
According a government data that was analyzed by the study, the reason for the increase in the loans being deferred is due to the fact that more than 50% of graduates under the age of 25 are either unemployed or underemployed (earning way less than what they should be). The same study point out that that borrowers prefer to obtain federal student loans than obtaining private student loans. Thus a jump of 97% in the federal student loan balance from 2007 to 2012, while the private sector only saw a very small rose of 4%.
In contrast, the private student loans industry saw a drop in delinquency of 2% while the federal student loan balance rose to 27%.
Education is a very important tool to have in our society in order to obtain jobs and better wages but yet, the same tool is enslaving and burying folks in debts for a long time after graduation.

Looking for a Job? Apply at small businesses.

With folks loosing their jobs everyday, the cost of living increasing, the economy trying to improve, people are looking for better jobs or even just looking for a job for their livelihood.

Traditionally, we are taught to look at big companies since they give the impression of better stability, job security and better salary. Since 2008, we have learned otherwise. In fact big business have been cutting thousands, millions job due to poor financial performance, due to mismanagement or just to generate more profits. Big companies known as too big to fail have proven not to be as reliable for those seeking jobs or even their employees, since there is always a job cut cloud looming over their head.

While big companies have been focusing on cutting jobs, small businesses have been hiring workers. According to the labor department, small businesses added 3 million new jobs in the second quarter of last year which more than half of the new jobs. Let’s mention that small businesses only accounts for just 30% of all private sector jobs.

For those looking for new jobs, perhaps it will be best to also consider small businesses in your quest.

New banks ATM Giving out $5 and $1 bill

 

If you only have $9.00 in your account, chances are that you will not be able to take out from the ATM and it is embarrassing to the teller and ask to withdraw only $9.00 from your account when it is only what you have. In hard times, every penny is important to be able to face every struggle on your way. Banks are adjusting their strategies to attract more customers.

PNC and Chase are launching new ATMs machines that will customers to take as low as $1.00 out of the ATM. Chase is even pushing the envelop to allow customers to take even pennies from the ATM machines.

 "We are always looking for ways to upgrade our ATM network with new functions that will make banking easier for our customers," PNC spokesperson Marcey Zwiebel told TODAY.

The ATMs has already been installed at multiple locations as a test to better analyse the results. Happily for the banks, customers are using the new ATMs more and fewer customers are going into the banks for check cashing and to withdraw money. PNC and Chase are planning on doubling the new ATMs location by the end of the year.

Therefore, we can see how banks will be saving a lot of money on having those ATMs handling banking transaction instead of humans. The ATMs are able to cash checks, disburse from $1.00 bill to $100.00 bill in a single transaction. No need to go in the bank just go the drive through if you are in a hurry. The new ATM machines are able to handle most of the human tellers’ transaction. Thus we can foresee a reduction in human teller and more layoff in the future unfortunately.  We all love the ease that technology provides but yet we seem to be competing with it for our jobs.

New rules to make mortgages safer for borrowers

 We are all aware of the big housing mess that happened recently. Lending institutions offered mortgages to folks who they knew were not able to afford them. Lenders had little requirements when offering a mortgage such as low credit scores were ok, no down payments, and no due diligence to ensure borrowers could make payments. This reckless behavior inevitably caused many homeowners to be foreclosed on and as results, the economy took hit and big banks suffered as well.

In an effort to prevent such reckless behavior from the lenders and also from the borrowers, federal officials enabled a law to protect both borrowers and bankers as well.

They have defined what is called a qualified mortgage. What is a qualified mortgage?. The steps are used to judge whether a loan is qualified, lenders must consider these factors:

• Income and assets must be sufficient to repay the loan;
• Borrowers must document their jobs;
• Credit scores must meet minimum standards;
• Monthly payments must be affordable;
• Borrowers must be able to afford other debts associated with the property such as home equity loans;
• Borrowers must be able to afford all home-related expenses such as property taxes; and
• Lenders must consider a borrower's other obligations like student loans, car loans and credit cards.

If a borrower meets those guidelines, the mortgage payments cannot exceed 43% of the borrower’s pre tax income.

Once a borrower’s mortgage is deemed qualified and approved, the lender cannot be sued or be liable for any complication arising with the payments or mortgage.  For folks with high income, paying up to 43% of one’s income might not be a big issue but for folks making low income ( Ex: $2500 a Month, 43%= 1075 of the Pretax pay meaning the person will be left with $1425 before paying for income taxes and others).

Some consumer advocates are arguing that the new rules are meant to protect lenders more than borrowers.

Banks see the legal protection as a big win for them. 

This week alone 10 big banks settled to pay $8.5 billion to homeowners

Consumer credit rises for 4 consecutive months.

In November, Consumer credit rose for the 4^th consecutive month.

According to the Federal Reserve, consumer credit rose from $14.08 billion in October to  $16.05 billion in November.

The rise in consumer credit beat the street estimate of $12.75 billion.

The rise put the total outstanding consumer credit jumped 7% to $1.910 trillion in November.

With strong gain in the job market with 155,000 new jobs in December and a strong demand for students loan and car loan, economist are expecting the trend to continue into the early 2013. Consumer spending accounts for 70% of the US economy. Therefore, a rise in consumer borrowing power could help expand the US economy.

The report doesn’t track debt secured by real estate, such as home equity lines of credit and home mortgages.

“We’ve seen four straight months now of very significant increases in overall consumer credit,” Thomas Simons, a money market economist at Jefferies Group Inc. in New York, said in a phone interview. “I would expect that’s going to continue.

Revolving debt, which includes credit cards, rose by $816.9 million in November, after a $3.44 billion increase the prior month.

The government provided about $4.9 billion in loan mainly in education.

“People might be caught by surprise in January, when they see how much smaller their take-home pay is, and we might see some fuel for the consumer-credit number,” Englund said in a phone interview. “The likely pattern is that we will see some run-up in consumer credit for three or four months.”

10 Big banks announce a settlement of $8.5 billion to homeowners

10 major banks including JPMorgan Chase, Bank of America and Wells Fargo, will pay billions to homeowners to end a review process of foreclosure files that was required under a 2011 enforcement action. The settlement comes after a review on Banks’ handling of foreclosure documents showed that banks did not properly followed foreclosure procedures which resulted in a lot home being foreclosed and or homeowners having to pay high fees to the banks.

The banks settled to pay $8.5 billion to homeowners. Consumer advocates argue that banks got an easy bargain; since by paying $ 8.5 billion, they are avoiding paying a substantial amount of money to homeowners who were subject to the banks negligence and mishandling of the foreclosure documents and steps.

 The banks will pay about $3.3 billion to homeowners to end the review of foreclosures. The remaining $5.2 billion will be used to reduce mortgage bills and erase principal on home sales that generated less than borrowers owed on their mortgages.

Homeowners, who were denied a loan modification as a result of the malpractice, could receive small payments, while homeowners who lost their homes unfairly and then sold by the banks would be eligible for the biggest payments.

The deal "represents a significant change in direction" that ensures "consumers are the ones who will benefit, and that they will benefit more quickly and in a more direct manner," Thomas Curry, the comptroller of the currency, said in a statement. Diane Thompson, a lawyer with the National Consumer Law Center, complained that the deal won't actually compensate homeowners for the actual harm they suffered. The deal "caps (banks') liability at a total number that's less than they thought they were going to pay going in," she said

The company subject to the action include: Citigroup, MetLife Bank, PNC Financial Services, Sovereign, SunTrust, U.S. Bank ,Aurora, GMAC Mortgage, HSBC Finance Corp., EMC Mortgage Corp, including JPMorgan Chase, Bank of America and Wells Fargo.

 The settlement is separate from a $25 billion settlement between 49 state attorneys general, federal regulators and five banks: Ally, formerly known as GMAC; Bank of America; Citigroup; JPMorgan Chase and Wells Fargo

Let’s note that the settlement comes on the same day that Bank of America agreed to pay $11.6 billion to government-backed mortgage financier Fannie Mae to settle claims related to mortgages that went bad during the housing crisis, mostly loans issued by Countrywide Financial, now a BofA subsidiary