NEW YORK — U.S. oil prices traded below $40 a barrel for the first time since the 2009 financial crisis, ending 2 percent lower Friday on signs of U.S. oversupply and weak Chinese manufacturing and notching the longest weekly losing streak in almost three decades.
U.S. crude slipped below the $40 threshold following weekly data that showed U.S. energy firms added two oil drilling rigs last week, the fifth increase in a row. The rise in the number of rigs emerging after a second quarter lull in prices is adding to concerns U.S. shale production is proving slow to respond to falling prices, prolonging a global glut.
Everyone is still looking at it saying, ‘Wow, you still don’t have production coming down.’
“Everyone is still looking at it saying, ‘Wow, you still don’t have production coming down,’ ” said Tariq Zahir, founder at Tyche Capital in Laurel Hollow, New York.
U.S. October crude settled 87 cents, or 2.1 percent, lower at $40.45 a barrel, having touched a new 6½-year low of $39.86 a barrel. Front-month U.S. crude has fallen 33 percent over eight consecutive weeks of losses, the longest such losing streak since 1986.
It pared some losses late in the trading session, as U.S. RBOB gasoline futures rebounded from a contract low, on news of a fire in a gasoline-making unit at PBF Energy’s (PBF) 182,000 barrels a day Delaware City, Delaware, refinery.
Brent oil ended $1.16, or 2.5 percent, lower at $45.46 a barrel. It hit a low of $45.07 and threatened to break below $45 a barrel for the first time since March 2009.
Energy markets slid early in the day as world stock and currency markets joined an extended rout across raw materials this week, a slump accelerated Friday by data showing activity in China’s factory sector, a huge user of many commodities, shrank at its fastest pace in almost 6½ years in August.
With deepening gloom over demand growth from the world’s second-biggest oil user, and expectations for a significant build-up in surplus oil stocks this autumn, dealers said most oil traders were unwilling to fight the tide.
“The market is stuck in a relentless downtrend,” said Robin Bieber, a director at London brokerage PVM Oil Associates. “The trend is down — stick with it.”
Oil market speculators cut their bullish bets on U.S. crude to the lowest level in five years, reducing combined futures and options positions in New York and London by 14,884 contracts to 89,035 in the week to Aug. 18, the U.S. Commodity Futures Trading Commission said.
The current collapse in oil prices, the second this year, has raised alarm within the Organization of the Petroleum Exporting Countries, including some of its core Gulf members. However, there is no indication they will reverse their policy of keeping production wide open to defend market share, delegates told Reuters this week.
–With additional reporting by Christopher Johnson in London and Jacob Gronholt-Pedersen in Singapore.
“When accessing a voice mail phone answering system, one becomes lost, going down the wrong path or getting stuck in a loop, unable to get pertinent information or leave a message with the appropriate party.”
We’ve all been there, trying to get through to someone in customer service at a company, only to find there are a half-dozen menus we must navigate before reaching someone who can help. Or more likely, reaching a point where we’re put on hold waiting for someone who might be able to help …
Welcome to Voice Mail Hell. Please Take a Number
In 2013, Time magazine reported that the average American spends 13 hours a year on hold. Over the course of a lifetime, that’s 43 days spent on hold, says Huffington Post.
On a smaller scale, receptionist services company Conversational Receptionists reported last year that U.S. callers wait on hold for an average of 56 seconds a call. Andaccording to The Washington Post, calls to one notable suburb of voice mail hell — the IRS — kept taxpayers on hold as much as 30 minutes a call last tax season. And many of those calls were ultimately dropped through an Orwellian service described as “courtesy disconnects.”
Inc. magazine estimates that across the nation, time wasted in voice mail hell drains $130 billion from the U.S. economy every year in lost worker productivity. But it doesn’t have to be that way.
Time Is Money
As the Inc. statistic confirms, time (lost in voice mail hell) really is money. But two great companies are doing their best to put time back in your hourglass, and money back in your pocket.
The first, CallPromise, looks at the problem from the perspective of the company taking the calls. With products such as “in-call virtual queuing,” CallPromise enables a company to estimate the time a new caller will wait on hold before his or her call can be answered. In a prerecorded message, it then offers the caller the option of not waiting around, hanging up instead, and getting a callback when a customer service rep is available.
Putting You Back in Control
A second company tackles the problem from the consumer’s perspective.GetHuman will give you several options for avoiding voice mail hell.
In cooperation with CallPromise, GetHuman permits you to look up a company or government agency on its website — the IRS, for example — enter your phone number in a callback box, and then … Just go about your business, and wait for the IRS to call you back. No 30-minute wait times. No dropped calls.
Alternatively, the company collects tips from consumers, and conducts its own research as well, to discover the best phone numbers to call to quickly drive through voice mail hell and reach a human customer service rep. For example, for cable company Comcast (CMCSA)(CMCSK), GetHuman offers you:
a general support number right up front
a different number for new customers to call to set up service
a third number to check out deals and packages Comcast is offering
plus the CallPromise get-a-callback tool as well.
Of course, even the numbers GetHuman digs up sometimes have voice mail systems attached to them. For these instances, GetHuman provides a cheat sheet of which buttons to push to move quickly through the system (without having to listen to each prerecorded menu option).
For example, when calling Comcast, GetHuman suggests you “Press 0# each time it asks for a phone number,” and then wait. If you’re a current customer, you’ll always want to have the last four digits of your Social Security number handy and be ready to enter those, followed by dialing 1, then 2, on the next two menus.
Is All This Really Necessary?
It depends. Presumably, most companies have all this information on their websites … somewhere. But the great thing about GetHuman is that it starts saving you time from the get-go. Search for any company name at all, and if it’s in their database, they’ll give you a number to call right away, without having to click around a website looking for it.
And if you don’t think that’s enough to save you some time… grab a stopwatch, click through to Comcast’s website, and see how long it takes you to find a customer service number yourself. Go ahead. I dare you.
Motley Fool contributor Rich Smith has no financial interest in any company named above. But he just bookmarked two of their webpages — and will give you three guesses which ones.
Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.
Stories like Hosseini’s aren’t uncommon. According to the Institute for Women’s Policy Research, a woman’s earnings generally take a 30 percent dive after being out of the workforce for two to three years.
“There’s a ton of discrimination for women who’ve taken time off to care for their kids, which is technically illegal but doesn’t stop people from doing it,” says Sarah Jane Glynn, director for women’s economic policy at the Center for American Progress.
There’s even a name for the phenomenon: “the mommy penalty.”
From an employer’s perspective, Glynn recognizes the rationale used in paying less. Should someone who hasn’t been working for an extended time really command the same type of salary and position as someone who’s been consistently working and keeping their skills fresh?
The answer, says Glynn, depends on your industry and your role.
“If you’re talking about someone who works in technology, it can make an enormous difference in terms of whether or not you’re up-to-date on skills,” she explains. “But if you’re a high school teacher, taking time off probably isn’t going to mean that you’ll be unable to keep up with your peers if you return to work.”
However, she argues that, in most cases, women can be brought back up to speed pretty quickly. So why are so many women still being hit with the mommy penalty even if they’re able to hit the ground running?
It may be about more than just the amount of time spent away.
The way moms are perceived in the workplace can be an additional salary factor — whether or not they took a break from their job.
Dads who live with their kids experience an over 6 percent pay bump. On the flipside, mothers are hit with a 4 percent pay decrease for each kid they have.
Battling the Mommy Bias
According to research out of the University of Rhode Island, working moms are often viewed as being less competent, committed and productive as their childless peers.
“We don’t have these same assumptions about men,” Glynn says. “There are actually studies that show the reverse — people assume that fathers are going to be more dedicated to work because they now have an additional mouth to feed.”
One recent study from the research group Third Way found that, on average, dads who live with their kids experience an over 6 percent pay bump. On the flipside, mothers are hit with a 4 percent pay decrease for each kid they have.
“People have this idea that, when you’re a mom, your life is going to revolve around your kids in particular ways — that’s going to be your No. 1 priority. And it’s going to distract you from being a good worker,” Glynn says.
All of these factors, adds Glynn, can make women who take a break more financially vulnerable to unexpected changes — from a partner’s job loss to divorce — in their family’s financial situation.
Angelina Capalbo, a 35-year-old administrative worker in Unionville, Connecticut, dealt with this firsthand.
When she had her daughter six years ago, the original plan was for Capalbo to stay home until her child was ready for kindergarten, while relying on her husband’s salary to keep them afloat.
But when they divorced two years later, Capalbo was hastily thrown back into the workforce.
Prior to having her daughter, she’d been making $75,000 a year, plus bonuses, as an executive assistant. Unfortunately, walking back into that type of setup proved impossible.
The only gig Capalbo was able to secure was an administrative position that paid just $15 an hour. Since then, she’s bounced around to similar jobs and is currently earning $22 an hour as a temp-to-perm office worker.
And short-term financial struggles aren’t the only concern for Capalbo. She’s also had to put building up her emergency fund and saving for retirement on the back-burner — moves that could put her future in jeopardy.
“I think that’s a nasty surprise that women, in particular, end up experiencing when they’ve taken extended spells out of the labor force [to stay with children],” Glynn says. “Anybody who understands how compound interest works knows that it’s really important to be putting money away during your 20s and 30s, so if those are the years that you’re taking off, that can really hit you down the line.”
How to Get Back in the Game — and Get Paid Your Worth
When Alison Risso, now a public relations professional in the Washington, D.C., area, had her second child nine years ago, her boss assumed that a slower work pace might be a better fit for her.
“While I was on my maternity leave, I got a call saying I’d be switched over to a smaller department,” recalls Risso, 42. “I wasn’t expecting it — and wasn’t consulted about it.”
The lateral move came with the same salary, but a less hectic workload. And Risso says her boss, also a mom, had good intentions, thinking she was doing Risso a favor by lightening her load a bit.
The new department was indeed less hectic — because it was generating less revenue and not performing as well as others. And this all played into the reason why Risso was laid off later that year.
The situation had a happy ending, though: Risso snagged a better position at another company, and was able to negotiate a higher salary.
According to Evelyn Murphy, former lieutenant governor of Massachusetts and founder of the WAGE Project, knowing your worth — and being ready to negotiate — is critical for moms who are navigating a return to the workforce.
Many women — regardless of where they are in the earning spectrum — don’t know how to assess their worth in the marketplace.
“It shouldn’t really matter if you’ve been out of work for several years raising kids or not,” Murphy says. “It’s about what you’d bring to the job.”
And that’s why Murphy advises moms who are just getting back in the game to approach the situation without assuming they’ll have to take a demotion or pay cut just to secure a job.
Murphy, who’s been leading salary negotiation workshops for nearly a decade, says that many women — regardless of where they are in the earning spectrum — don’t know how to assess their worth in the marketplace in an independent way.
Her advice? Before you walk into any interview, thoroughly research what the current going rate is for that particular job in your given area — and then use that information during the negotiation process.
Glynn adds that women opting out of full-time work for a few years should also think about their big-picture plans. Do you want to eventually return to your career? If so, staying connected to your industry can be the key to a smooth reentry.
This might mean working part-time, or doing some freelance work during the years you’re at home, which will help keep your resume fresh and current.
“Even if it’s something as simple as keeping in touch with your colleagues and regularly having coffee with them, just maintaining that network is super important,” Glynn says. “Not only so you’re abreast of what’s happening in your field, but also because those kinds of networks, frankly, are increasingly how people find jobs.”
How do you go from being on top of the world with a multimillion-dollar contract to filing for bankruptcy? By spending like it is never going to end. Former football superstars are finding that out the hard way.
Studies have shown that a high percentage of NFL players declare bankruptcy after their playing days, and many others suffer financial difficulties. A Sports Illustrated article from 2009 indicated that after two years of retirement, a whopping 78 percent of former NFL players went bankrupt or suffered financial stress due to joblessness or divorce — although in fairness, that analysis falls into the heart of the Great Recession.
A recently released study by the National Bureau of Economic Research focused on the bankruptcy aspect. The NBER working paper studied NFL players who had been drafted between 1996 and 2003. The authors found that bankruptcy filings began relatively soon after retirement and continued all the way through the first dozen post-retirement years.
Taken in total, almost 16 percent of the players studied declared bankruptcy during the first twelve years of retirement. The bankruptcies didn’t correlate with the amount of money made over a career or the length of time in the league.
Keep in mind that there are plenty of undrafted players who spend some time in the NFL (just over 31 percent in 2013 according to the Elias Sports Bureau) and most make nowhere near the money that drafted players do. Adding those players could skew the statistics either way — the undrafted players made less money to save, yet the undrafted player may have a greater sense of how short the NFL experience can be and may be more likely to engage in financial planning.
Financial planning, or more precisely the lack of it, is the main point. While the NFL Players Association started a financial wellness program around the time of the Sports Illustrated article, too many players either don’t take the advice or don’t fully understand it. It is hard for an NFL athlete to fully grasp the fact that his career is short-lived and that he must plan for the future.
The NBER paper points out that NFL players don’t follow the “life-cycle model” of savings. In this model, people try to balance their consumption over their lifetime and save for the future, instead of simply consuming more in proportion with their current income. One could argue that most Americans don’t follow that model either — but most Americans don’t get annual contracts averaging millions of dollars, especially knowing in advance that the income is short-term.
The author of the 2009 Sports Illustrated article, Pablo Torre, created four general categories that often lead NFL players astray.
The Lure of The Tangible — Owning a restaurant, bar, or car dealership is a tangible, sexy idea. Investing a portion of your wealth in a diversified portfolio containing lower risk assets isn’t.
Misplaced Trust — Bad financial advice is a common thread. Too often there is a trusted adviser who didn’t deserve that trust, whether through incompetence or fraud. Players that lack the financial understanding to understand risk or spot fraud can easily fall for “can’t miss” investments.
Family Matters — Divorce is common among athletes; prenuptial agreements aren’t. Divorces with NFL athletes tend to occur after retirement, when the athlete has far less income (if any) than during his playing days. In essence, he loses a disproportionate amount of his likely lifetime wealth.The other aspect of family matters involves prolific procreators such as former running back Travis Henry. Paying child support for one child can be a financial burden. Multiply that by 11 children with 10 different women, and you end up in jail for failure to pay child support (as Henry did).
Great Expectations — Your peers are living large, and you have a new set of “friends” that sap your resources. What is an NFL athlete to do? Young NFL players often follow the pack with spending and don’t think about being taken advantage of by hangers-on.
If the NFLPA’s efforts succeed in raising financial awareness among NFL players, perhaps a follow-up study in a few years would show dramatic improvement. While no one can blame these working players for having fun both on the field and off, this research shows that a hard-hitting tackle of spending trends will prevent them from being blindsided in retirement.
The appraisal lets a bank or lender know what the loan collateral will sell for in a worst-case scenario.
“The appraisal lets a bank or lender know what the loan collateral will sell for in a worst-case scenario,” says Bart Jackson, an appraiser in Charleston, South Carolina, who is also a real estate agent with Charleston Preferred Properties, a residential real estate brokerage firm.
In other words, to go with an extreme example, the bank doesn’t want to be stuck with a home they lent the borrower a million dollars for but can only sell for $100,000 because that’s all it is worth. The homebuyer shouldn’t want that either, of course.
So appraisals exist for good reason, but what can make them a tense time for all parties is that they’re conducted after you’ve negotiated a price, agreed to buy or sell the house and signed the contract. So it’s in everyone’s best interest that the appraisal is close to the price that both seller and buyer have agreed on.
That said, if it turns out you’re about to buy a house for a wildly inflated price, that doesn’t necessarily mean you’re obligated to buy the house. But if you aren’t careful, it could mean just that.
The sales-and-purchase agreement should address the possibility that your appraisal comes in below the purchase price, and allow you to terminate the contract or renegotiate the price, says Robert Pellegrini, a real estate attorney based in Bridgewater, Massachusetts.
“If not, you could be obligated to cover the difference for a lowball appraisal, and that could mean you’re on the hook for thousands,” Pellegrini says.
Who pays for the home appraisal?Usually, it’s the seller who pays for it at closing, which can be as high as several hundred dollars. The national average cost for a property appraiser is $309, according to data compiled by HomeAdvisor.com.
How do home appraisals differ from home inspections? The two often get confused, but they aren’t the same thing. Both an appraiser and inspector will walk around the house and take a good look at it (usually, the inspector comes first), but they’re each at the house for different reasons. The appraiser is looking at the value of the home; the inspector is looking for any defects with the home that may cause you financial grief later.
Of course, if the appraiser notices a problem, she won’t ignore it. If the appraiser spots a leaky sink or some loose wiring, she may request an inspection, says Staci Titsworth, regional manager for PNC Mortgage in Pittsburgh.
How long does the appraisal process take? It used to take a couple of days, but in recent years, ever since the recession — when federal guidelines changed the appraisal process — it’s more often a week or two. Underwriters can request more information about the house than they could in past years, and gathering that data and photos can take time for the seller and real estate agent, which can mess up the closing date, putting everyone on edge.
What factors go into deciding the worth of a house? Plenty. “The appraiser is looking at the key characteristics of the property including square footage, number of bedrooms and bathrooms, condition of the home, current recently sold comparables that are close in proximity and health and safety issues,” Titsworth says.
That said, most real estate agents will tell you that it’s the recently sold comparables — that is, houses that are similar to your own — that are the main factors in appraising a home. It’s all about property values.
If you’re a homeowner, what can you do to improve the process?Nothing, once it starts. “You’re powerless during the appraisal process,” Pellegrini says. But before the appraiser comes by, you can take these common-sense steps.
“It’s important to have the property look as good as it possibly can. You want to help the appraiser see your property’s potential so they will possibly reconcile a value closer toward the upper end of the range,” Jackson says.
After all, appraisers are only human. You could have a really cool house easily worth between, say, $300,000 and $325,000, but if it’s junkie, it’s easy to imagine the appraiser coming down closer to $300,000.
To that end, Jackson says the day the appraiser comes, the lawn should be mowed, the landscaping weeded and the bushes trimmed. Clean the house. Get out the air freshener. Turn on the lights and open the blinds, Jackson says.
“It’s also very helpful to sit down the day or night before the appraiser arrives and make a list of repairs and improvements that have been done to the house over the past several years,” he says.
So if you’ve put on a new roof or bought a new hot water heater, let the appraiser know, Jackson says. “Note anything you can think of — the appraiser will decide what is important to the value. It does not have to be formal or detailed. Just thoughtfully note everything so you can give it to the appraiser before he or she leaves.”
But don’t get too excited if you’ve spent a lot on repairs and renovations. Your $30,000 kitchen remodel may help the appraisal, but it won’t automatically mean your house is worth an extra $30,000.
What a good real estate agent will do. If you’re selling the home, your agent will be there to meet the appraiser and share the home improvements you’ve jotted down — and offer other data as well.
“In the past, we would just meet the appraiser to open the door so that they could view the home,” says Josh Muncey, a real estate agent in Jamaica Plain, Massachusetts. Now, Muncey will come armed with a folder of information on comparable homes that justify the sale price.
“We even call around to other brokers to ask what other properties that have not closed yet are currently under contract for since they are often slated to sell for a price well above asking, and it’s critical that the appraiser has this information.”
Basically, says Melissa Terzis, a real estate agent in the District of Columbia: “The more information a seller and their agent can give an appraiser that they can’t find out just from checking the listing and walking through the home, the better.”
For centuries, Americans who wanted to stock up on fresh fruits and vegetables have had to hop in the car (or horse and cart) and head out to the supermarket (or general store) to fill their shopping carts. More and more often today, though, shoppers are getting the option to fill “grocery carts” online — and have produce delivered right to their front door.
Two years ago, Amazon.com (AMZN) introduced us to AmazonFresh, the e-commerce giant’s Seattle-only pilot project to deliver groceries in and around the city. Amazon soon expanded the service to cover the metropolis of San Francisco, and today says it delivers fresh groceries (with a $50 minimum order) in “select zip codes” within Southern and Northern California, the Pacific Northwest, New York City and Philadelphia. Amazon doesn’t provide a map or a detailed listing of locations serviced, but if you live in any of these vicinities and think you might have a shot at signing up, there’s a tool you can use to check if they’ll deliver to your address.
Meanwhile, other companies are moving fast to beat Amazon to the punch — and to your doorstep. Kroger (KR) subsidiary Harris Teeter, for example, and the well-known Peapod, both offer grocery delivery services from their brick-and-mortar stores. Walmart’s (WMT) Asda subsidiary is rolling out a similar service in geographically compact Great Britain. And back on this side of the pond, perhaps the biggest surprise of all:
Overstock.com (OSTK) wants to deliver your groceries.
From Stale Retail to Fresh Ideas
The idea of buying fresh produce from a company called “Overstock” seems a bit strange, but it may be best to think of Overstock.com as a holding company for two very different businesses.
One of these businesses, the most famous, sells retail dry goods — books, shoes, trampolines — over the Internet. But a new business under Overstock’s corporate umbrella is called Farmers Market, and its stock in trade is “the freshest produce … [from] farmers and growers in your area who can deliver right to your doorstep.”
Overstock actually began rolling out Farmers Market late last year, and expanded the service again in July. Says Overstock, it’s a way to buy from local farmers, and to get “products close to you delivered to you.”
Like Amazon, Overstock’s Farmers Market has limited geographic coverage at present. But already, it seems to be outrunning Amazon in getting new service rolled out. Management set a target of reaching “70 percent of the U.S. population by the end of last year.” It’s unclear if it’s met that goal yet, but according to Overstock’s map, Farmers Market is delivering fresh fruit and vegetables in 24 markets across the nation. And according to its latest press release, the service actually extends to 35 states. From San Francisco to Portland, Maine, and from Milwaukee, Wisconsin down to … really, just about the entire state of Florida, Overstock has apparently lined up farmers ready and willing to bring produce right to your front door.
In a sharp marketing move, Overstock takes an opposite tack from Amazon on customer declensions. Whereas Amazon politely declines to deliver to most zip codes entered into its search box, if Overstock doesn’t have local farmers signed up in your area, it refers you to its “Farmstand” products instead. There, you can order an array of less perishable groceries shipped to you through ordinary package delivery. These might include apple pies or fruit baskets, raw honey or gourmet cheese. Amazon sells many of these same goods. Overstock is using Farmers Market as a way to remind you that it sells them, too.
What It Means to You
As for the lucky few to whom Overstock’s actual Farmers Market also delivers, here’s how it works. Enter a zip code, and you’ll be presented with a list of “farmers in your area” who’ve signed up for the program. For each farmer, Farmers Market will tell you what day(s) of the week they deliver, what products, and at what prices.
At present, the pickings look slim — much slimmer than the many products offered via AmazonFresh in the zip codes it services. A quick survey of Florida, for example (the most extensively covered state), suggests that with Farmers Market, there may be only one seller covering the whole state: “My Organic Food Club.”
This seller offers three products, of which none receive particularly glowing reviews overall. The most reviewed product, a “produce box” priced at $60 and reviewed by four shoppers, is variously described as “extremely overpriced for what you get,” and containing fruit that “was soft or bruised” by some shoppers, but also “awesome” and “amazing” by others. Viewed in the most charitable light, this suggests that selection is meager at this still-early date, and quality spotty.
That said, relatively speaking, this is an early date in Overstock Farmers Market’s rollout — and for early adopters willing to roll the dice and hope for the best, at least Overstock is offering them a grocery delivery service in Florida (as well as many other locales). For the time being, that’s more than we can say about AmazonFresh.
Motley Fool contributor Rich Smith does like fresh fruit, but doesn’t like hurricanes. Should he move to Florida? Decisions, decisions. He doesn’t own shares of any company named above.
The Motley Fool recommends and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. Check out The Motley Fool’s one great stock to buy for 2015 and beyond.
From an annual rite in video gaming making its 2015 debut to a small-box retailer trying to hold its ground in a challenging climate, here are some of the things that will help shape the week that lies ahead on Wall Street.
Monday — Coming in for a Physical
The new trading week kicks off with Premier Inc. (PINC) reporting quarterly results after the market close. Premier unites an alliance of 3,400 hospitals and 110,000 other health care providers to help lower costs and improve efficiency.
The model’s working, at least for Premier. Analysts see year-over-year growth of 11 percent in revenue and 6 percent in earnings per share.
Tuesday is the day that die-hard gamers and football fans have been waiting for: Electronic Arts’ (EA) “Madden NFL 16” hits stores. The popular video game series rolls out every year, just ahead of the upcoming football season.
It’s a popular purchase, since it’s the only way to get updated rosters. Who is on the cover? Fans get to vote for which player gets the honor of gracing the annual game’s cover, and this time it’s New York Giants wide receiver Odell Beckham Jr. leading the charge.
Wednesday — Retailers on Parade
Many of the companies stepping up with quarterly results Wednesday will be merchants. Abercrombie (ANF), Tilly’s (TLYS) and Chicos FAS (CHS) are just some of the mall chains that will be reporting. Expect an early read on how the early days of the back-to-school shopping season are faring.
Thursday — Game On
We’ll get to check the pulse of the video game industry on Thursday when GameStop (GME) reports fresh financials. The country’s largest retail chain dedicated to the PC and console gaming market has managed to hold up well in a climate that seems to favor digital delivery over physical purchases. GameStop has thrived given its low overhead and its winning model, where it scores fat margins on trade-ins that it can resell at much higher price points.
Friday — Narcos Are Coming
There’s something different about the latest original series to debut on Netflix (NFLX) come Friday. “Narcos” is the streaming video service’s latest foray into non-English content. The series about the Colombian drug cartel features a well-rounded cast of popular Latin American actors.
The series should have healthy appeal in the U.S. given the tantalizing subject matter and the country’s strong Hispanic population, but the goal here is for Netflix to smoke out more subscribers throughout Latin America.
Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days and check out our free report for one great stock to buy for 2015 and beyond.
It’s a good time to be an airline. Last year, the price of crude oil swooned, from over $115 a barrel to barely over $55; these days it’s just below $50. This is a particularly good situation for air carriers, as far and away their No. 1 cost — aside from salaries — is fuel.
As a result, earlier this year the International Air Transport Association raised its estimate for collective 2015 profit for the airline business. It hiked its forecast a mighty 17 percent to $29.3 billion.
When a business or industry starts raking in more dough, they have more scope to be generous. Theoretically, with their windfall the airlines could cut us weary travelers a break in the form of lower ticket prices, a reprieve from pesky little fees for things like baggage, etc. Is it likely we’ll see that happen anytime soon?
Profits Are a Gas
American Airlines (AAL) is Exhibit A for current airline prosperity. The carrier posted an excellent second quarter, booking a $1.9 billion net profit for the highest quarterly bottom line in its history.
Even more impressive was Southwest (LUV). The always-scrappy airline announced last month that it had also booked a record quarter in its second quarter, netting $608 million. That was, by the way, the latest in a series of all-time-high quarterly net profit results for the company.
Such is the power of lower input costs. Collectively, in the first quarter of this year alone, American, Delta (DAL), Southwest and United Airlines (UAL) saved around $3.3 billion on fuel. That leaves a lot of room for profit to expand … and for airlines to bring back some of those perks and freebies we passengers used to enjoy.
Soaring Planes, Soaring Fares
Except that they almost certainly won’t.
There are numerous reasons for this. The first is plain and simple. Airlines have been raising fares habitually — and with great consistency — for years.
Figures from the Department of Transportation, which tracks the average U.S. airline ticket price, tell the story. From 1995 to 2014, adjusted for inflation, the average price rose by a cumulative 34 percent to $392. In all but six of those years, the average fare was higher than its predecessor, in some cases dramatically so.
The second reason is consolidation. In the early 2000s, 10 airlines did most of the passenger transport business in America. The business has consolidated greatly since then — US Airways is now a part of American Airlines, while Continental has been folded into United and AirTran absorbed by Southwest.
These days, a group of four incumbents — American, United, Delta and Southwest — rule the market. Data compiled by the Bureau of Transportation Statistics revealed that from June 2014 to May 2015, the quartet controlled around 62 percent of the domestic market. And of course, as with any industry, the tighter the consolidation, the less choice a consumer has for the offered product.
Lastly, there is quite simply more demand for seats on an airplane these days. The total number of passengers, following a dip in 2009 (the height of the Great Recession), has grown steadily. Across that stretch of time, the highest annual increase was recorded last year.
Airlines are introducing larger, higher-capacity planes to their fleets to accommodate this. But even with the extra space, the industry’s load factor — i.e., how full the planes are — is also on the rise.
With the exception of 2008, the load factor for domestic carriers has increased on an annual basis every single year over the past decade, with 2014 taking the crown at over 84 percent. These days, it seems that nearly every plane flies at or near capacity, which wasn’t the case in the recent past. The industry’s overall load factor in 2002, for example, was “only” 70 percent.
For their part, the airlines and their allies say carriers are using those bigger profits to benefit the consumers. Industry association Airlines For Americaopines that the sector’s newfound profitability is “modest,” pointing out that net margins are “far below” that of the average company in the S&P 500 index.
Additionally, writes the organization, carriers “are investing back into the business at a rate of $1 billion a month in improving airports, making the onboard experience better with larger overhead bins and increasing Wi-Fi access, and acquiring the equivalent of one new plane every day this year.”
Meanwhile, it’s anyone’s guess what’s going to happen with that big-cost item — the association emphasizes that dips in fuel prices are often short-lived. Although the current crude oil price trough seems to be a durable trend, many factors could cause that price to rise again, suddenly and without warning.
A Piece of the Action
Regardless, at the moment the only real way for us ordinary folk to directly profit from this perfect storm for airline profits is to own stock in a carrier. Over the past year, airline share prices have risen by 7 percent (American) to a jealousy-inducing 31 percent (Southwest).
That’s no surprise, given that they operate an increasingly in-demand service and there are very few of them. It’s just too bad that their good times won’t translate into lower ticket prices for the rising numbers of people traveling on their planes.
Eric Volkman has no position in any stocks mentioned, but somehow, in spite of all the negatives, he still likes to fly. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. Check out The Motley Fool’s one great stock to buy for 2015 and beyond.
More consumers have a FICO score of 800 or above, 19.9 percent of consumers in April 2015 vs. 16.9 percent in October 2005.
Fewer consumers have a FICO score of below 550, 12.5 percent of consumers in April 2015 vs. 14.6 percent in October 2005
The national average FICO score is at an all-time high at 695, compared to 688 in October 2005.
Ethan Dornhelm, FICO’s principal scientist in the firm’s analytic development group, notes that the time since the end of the Recession has made a world of difference to American consumers. In fact, they’re even seeing significant short term credit improvement.
“As we’ve observed for several years now, more consumers are scoring 800 or above, currently at 19.9 percent vs. 19.6 percent just six months ago,” he explains. “And fewer consumers are scoring below 550. In fact, there’s been a clear pattern of decline in this segment since the low point of the economy in late 2009 and early 2010.”
Some of this trend may be a result of the fact that the lowest-scoring consumers are “dropping out” of traditional credit usage, and by extension, no longer have valid FICO scores, Dornhelm says.
“Still, this decline is encouraging,” he says. “It indicates that overall more consumers using credit are managing it responsibly enough to not be among the lowest scorers.”
Clearly, Americans are focused on their financial health, and it’s starting to pay off. “When I opened my first credit card, I signed up for freecreditscore.com, because I wanted to learn more about how credit works,” says Melissa L. Masters, a San Diego-based public-relations professional. “One thing I learned that I’ve found people overlook is that you shouldn’t close your credit cards — the greater the average age of your accounts, the better your score.”
“Another thing I’ve seen people do is open multiple cards, because they think having more credit cards will help them,” Masters adds. “That just drags down the average age of the accounts.”
Financial experts say climbing from a 695 FICO score, to one that is 800-and-above, is doable — you just have to go after it.
“The number one thing needed to know for building a better credit score is paying on time every time,” notes Andi Wrenn, an Arlington, Virginia-based financial counselor and a specialist in credit and debt management. “Get your balances below 30 percent of available credit limits, and have a variety of credit types. This can mean loan, credit card, revolving accounts, and mortgages.”
Also, don’t close the account that you’ve held the longest, Wrenn adds. “It helps with your credit history, which is very important in your credit score,” she says. If you need to build credit, Wrenn also advises getting a small loan of $500 and pay that off in six months time. This shows that you are making payments on time every time and that you can pay back a debt that is owed. “Pay down as much debt as possible,” she says. “The less you owe, the better.”
Alex Gerard, a credit card specialist and founder of Cardsmix.com, a credit card data analytics firm, agrees there’s no “magic bullet” to beefing up a credit score. But he does offer a plan for consumers looking to get to the magic 800 FICO mark. “The hardest part is to pay off all credit card balances,” Gerard says. “But you have to clean up to raise your score. Consequently, close all due payments and pay off credit card balances.
Also, improve your “types of credit” you use to get some diversity. If all your credit is just credit cards — get yourself an installment loan.
“There are a lot of ‘credit builder’ one-year type of loans on the market,” Gerard says.
Then, start working on the “credit utilization” part of the score. “Pay off your balance in full every month,” Gerard advises. “Use only up to 10 percent of total credit line during the billing cycle. For example, if your total credit limit is $2,000, never use more than $200 on the card. If needed, refill the balance several times a month. Never carry a balance and miss a payment and pay several days in advance.” Many credit card experts are less conservative and recommend not exceeding 30 percent of your credit limit before settling a balance.
Do all that and in less than a year, your credit score will be given a large boost, Gerard says.
In the race to retirement, millennials (aged 18 to 29) are at the back of the pack, with those survey respondents least likely to be contributing to 401(k)s or IRAs.
Sure, their golden years are a long way off, but millennials are missing out big by delaying. Financial pros like to say that time is your greatest ally in saving for retirement because of the power of compound growth.
As for that good news? It turns out that 19 percent of Americans are socking away more this year than last, while only 14 percent are falling behind. (About half are holding steady.)
“We’ve never seen a gap that big in favor of those saving more — it’s a reversal over the past few years that’s consistent with greater job stability,” he points out. “And it suggests recognition that retirement savings won’t happen if you don’t do it.”
The pressure’s increasingly on you, the future retiree, and maybe that’s a reason why the overall sense of financial security declined, especially among women surveyed.
There isn’t necessarily a quick fix to get yourself into that 19 percent power group of savers. But you can watch out for these common retirement mistakes as you shore up your nest egg.