Moody's Warns That Private-Label Credit Card Issuers Will Be Crushed By Retail Implosion

We"ve spent a lot of time of late talking about the retail implosion currently underway in the United States courtesy of a massive oversupply of retail square footage and a simultaneous shift in demand toward more online purchases.  In fact, we recently highlighted a report from Credit Suisse which suggested that nearly 9,000 retail locations could permanently close their doors in 2017, the most since at least 2000.

According to the Swiss bank"s calculations, on a unit basis, approximately 2,880 store closings were announced YTD, more than twice as many closings as the 1,153 announced during the same period last year. Historically, roughly 60% of store closure announcements occur in the first five months of the year. By extrapolating the year-to-date announcements, CS estimates that there could be more than 8,640 store closings this year, which will be higher than the historical 2008 peak of approximately 6,200 store closings, which suggests that for brick-and-mortar stores stores the current transition period is far worse than the depth of the credit crisis depression.

And here were those closings broken down by retailer:

Of course, the store closures are only part of the story as the broader economic impact of the coming retail apocalypse will be felt through a whole host of industries.  As Moody"s points out today, one such space that will be hit particularly hard is the "private-label" credit card issuers with just 5 companies accounting for nearly 80% of all credit balances outstanding.  

A small number of banks dominate US private-label card issuance, with the top five accounting for 79% of balances as of early last year. The largest issuers are: Synchrony Financial Inc. (unrated); Citigroup Inc. (Baa1, stable); Alliance Data Systems Corporation (unrated) via its Comenity Bank (unrated) subsidiary, which was formerly known as World Financial Network National Bank; Capital One Financial Corporation (Baa1, stable); Wells Fargo & Company (A2, stable) and TD Group US Holdings LLC (A2, stable).

"As retailers close stores in an effort to improve profitability over the coming years, the trend will put upward pressure on private label charge-offs, owing to the fact that some cardholders will lose access to geographically convenient stores, even as a portion of those cardholders shift at least a portion of their spending to online channels," Jody Shenn, a Moody"s Vice President says.

Meanwhile, the hardest hit names will likely be Synchrony and Alliance Data as they rely almost entirely on private-label credit cards.

Additionally, sales challenges could create incentives for retailers to push for looser underwriting standards by their card issuing partners, which would weaken the credit quality of these accounts, especially new accounts.

"Among the largest private-label card issuers, only Synchrony and Alliance Data rely heavily on the business," Warren Kornfeld, a Moody"s Senior Vice President, says. "Private-label and cobranded cards account for almost the entire loan books of both, each with heavy retail card concentrations."

Citi and Capital One rely on private-label and co-branded card loans for a high single-digit percentage of their earnings, also with heavy retail concentrations. Wells Fargo and TD Bank have very modest retail private-label and co-branded credit card exposures relative to their overall loan portfolios.

While showing up on the right-hand side of this chart was probably sold to investors as a "yugely" positive thing over the past couple of years, we suspect the messaging in future presentations will have to be "tweaked" (chart per Alliance Data investor presentation).

Meanwhile, it seems that both Alliance Data...

...and Synchrony are already starting to show some signs of stress.

But we"re sure it"s no big deal.

You Won't Believe This Stupid New Law Against Cash And Bitcoin

Authored by Simon Black via SovereignMan.com,

This one is almost too ridiculous to believe.

Recently a new bill was introduced on the floor of the US Senate entitled, pleasantly,

“Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017.”

You can probably already guess its contents.

Cash is evil.

Bitcoin is evil.

Now they’ve gone so far to include prepaid mobile phones, retail gift vouchers, or even electronic coupons. Evil, evil, and evil.

These people are certifiably insane.

Among the bill’s sweeping provisions, the government aims to greatly extend its authority to seize your assets through “Civil Asset Forfeiture”.

Civil Asset Forfeiture rules allow the government to take whatever they want from you, without a trial or any due process.

This new bill adds a laundry list of offenses for which they can legally seize your assets… all of which pertain to money laundering and other financial crimes.

Here’s the thing, though: they’ve also vastly expanded on the definition of such ‘financial crimes’, including failure to fill out a form if you happen to be transporting more than $10,000 worth of ‘monetary instruments’.

Have too much cash? You’d better tell the government.

If not, they’re authorizing themselves in this bill to seize not just the money you didn’t report, but ALL of your assets and bank accounts.

They even go so far as to specifically name “safety deposit boxes” among the various assets that they can seize if you don’t fill out the form.

(Yet another reason to consider storing cash, gold, and silver in an overseas safety deposit box.)

This is unbelievable on so many levels.

It’s crazy to begin with that these people are so consumed by the fact that someone has $10,000 in cash.

But it’s even crazier that they’re threatening to take EVERYTHING that you own merely for not filling out a piece of paper, without any due process whatsoever.

Oh, and on top of civil asset forfeiture penalties, there are also criminal penalties.

Right now according to current law they can imprison you for up to FIVE YEARS for not filling out the form. Five years.

But apparently that doesn’t go far enough to protect us against evil men in caves.

So this bill aims to double the criminal penalty to TEN years in prison.

And if that weren’t enough, this bill also gives them with new authority to engage in surveillance and wiretapping (including phone, email, etc.) if they have even a hint of suspicion that you might be transporting excess ‘monetary instruments’.

Usually wiretapping authority is reserved for major crimes like kidnapping, human trafficking, felony fraud, etc.

Now we can add cash to that list.

It’s not just government spy agencies to worry about, either.

Banks in the US are already unpaid government spies, required by law to fill out suspicious activity reports on their customers.

Then Congress started expanding those requirements to include other businesses and industries that might come into contact with cash.

Stock brokers. Casinos. Currency exchanges. Precious metals dealers. Pawnbrokers. The Post Office.

According to the law (section 5312 of US Code Title 31), those industries are also required to spy on their customers for the government.

But under this new bill, they want to forcibly recruit even more unpaid spies, including any business which issues or redeems ANYTHING that’s prepaid.

Prepaid credit cards. Prepaid phones. Prepaid retail gift cards. Prepaid coupons.

So, Amazon.com, which issues and redeems prepaid gift cards, will be required under this bill to file reports to the government.

For that matter, TGI Fridays and Chuckee Cheese will also become unpaid government spies since they both issue and redeem prepaid vouchers.

Truly these Senators have figured out how to strike at the heart of ISIS.

Further, their bill wants to pull any business which “issues” cryptocurrency under the anti-money laundering regulatory umbrella.

Here’s where these people demonstrate that they have no idea what they’re talking about.

No one “issues” Bitcoin. There’s no Bitcoin central bank. There’s no Chairman of Bitcoin who decides on a whim to increase the supply.

Bitcoin is created automatically amounts that are pre-determined by its code. It’s software.

So the Senate is essentially trying to force the Bitcoin core software to comply with money laundering regulations.

How pathetically clueless.

The bill also attempts to drop a major bomb on Bitcoin by including it in the list of monetary instruments that must be reported when entering or leaving the US.

So theoretically if you leave the US with more than $10,000 in Bitcoin or Ether, you’d have to confess this fact to the authorities or otherwise face the aforementioned penalties, i.e. prison time, civil asset forfeiture, etc.

As Smaulgold.com"s Louis Cammarosano  explains, the bill contains a provision that would require the Secretary of Homeland Security and the Commissioner of U.S. Customs and Border Protection to devise a “border protection strategy to interdict and detect prepaid access devices, digital currencies, or other similar instruments, at border crossings and other ports of entry for the United States, including an assessment of infrastructure needed [emphasis added] to carry out the strategy.”

The respective Secretary and Commissioner would present their findings to Congress no later than 18 months after passage of the bill.

The obligation to declare amounts in any form over $10,000 exists, irrespective of whether custom officials have a way of detecting such holdings. Since digital currencies technically travel with the holder where ever the holder goes, one would have to declare one’s entire crypto portfolio each time the holder entered the U.S.

Such a declaration is not required for travelers who may happen to have bank accounts or precious metals worth more than $10,000 stored outside the United States.

The type of infrastructure required to detect foreign holdings may come in the form of (i) expanding Foreign Account Tax Compliance Act to currently unregulated foreign crypto currency exchanges and to non U.S. citizens. FATCA currently only applies to U.S account holders of certain foreign financial and non financial institutions; (ii) some type of global monitoring of blockchain activity; or (iii) extreme vetting at the border and penalties for non disclosure that would encourage full disclosure.

HOORAY FREEDOM!

As you can see, this bill criminalizes or delegitimizes the most mundane and harmless financial activities, all under the guise of keeping us safe.

Of course nothing in this bill is about keeping people safe.

ISIS couldn’t care less about forms and penalties.

This bill is nothing more than another weapon in their ongoing War on Cash… and now cryptocurrency too.

Do you have a Plan B?

Bitcoin Spikes Above $2800 For First Time As "Japanese Buying Frenzy" Continues

It appears the Japanese bought the f**king dip in Bitcoin last week, as tonight"s session has seen s sudden surge in the price of the virtual currency, taking out prior record highs and topping $2800.

Additionally, Bloomberg reports, the speculative frenzy in bitcoin is spilling over into several small cryto-currency-related stocks on the Tokyo Stock Exchange.

But it"s not just Bitcoin that is soaring, Bloomberg reports that Remixpoint Co., Infoteria Corp. and Fisco Ltd., have all seen volatile swings in their share prices after announcing businesses related to digital currencies.

Remixpoint, which has more than doubled since tying up with Peach Aviation Ltd. to let customers pay for tickets with bitcoin, fell as much as 9 percent in Tokyo on Tuesday.

Infoteria, up more than 50 percent in the past month, is testing ways to let shareholders vote by proxy using blockchain, bitcoin’s underlying technology. 

Fisco, a financial information services provider, began operating a bitcoin exchange last year and is up about 25 percent since early May.

All of these gains coincide with bitcoin’s rally, with the value of the virtual currency doubling against the U.S. dollar since early May. That has made the stocks of the these small-cap companies an attractive way for speculators to invest in cryptocurrency markets without buying them directly. That’s because investors can make bets via their brokerage accounts instead of taking risks with bitcoin exchanges, according to Naoki Murakami, a well-known day trader in Japan.

“From about a month ago when all these virtual currencies started spiking like crazy, we began seeing the so-called ‘stocks of the virtual currency bubble,”’ said Murakami, a frequent speaker at investor conferences.

“Not everyone is sure they can trust bitcoin exchanges. And some don’t have accounts there. That’s why they’re using the stock market to speculate.”

Another reason why these stocks can become proxies for bitcoin is due to Japan’s relatively loose listing laws, some of which require no income and a market value of as little as $10 million before a company can go public. That’s made the Tokyo Stock Exchange home to hundreds of small companies.

“It’s pure frenzy,” Murakami said.

In April, Prime Minister Shinzo Abe’s government legalized digital currencies as a form of payment and placed rules around audits and security. That lent credibility to digital currencies, leading to some Japanese companies seeking partnerships with bitcoin startups.

Barclays Server Crash Leaves Customers Unble To Withdraw Cash, Use Debit Cards

Having managed to stem its recent earnings rout, reporting a Q4 rebound in income from continuing operations which rose to £380 million after reporting a loss of £2.24 billion a year ago, UK"s Barclays is facing a more traditional problem: on Saturday Barclays customers have reported problems using their cards in shops and withdrawing money from some cash machines according to the BBC.

Barclays customers tweeted about problems using their cards when out shopping or trying to access online banking on Saturday afternoon. "Wondered why my card was declined when paying for lunch. Barclays servers have crashed. Brilliant," said one customer, James. Other echoed his sentiments.

Major problem with Barclays Bank as their server is down effecting all branches nationwide!

— Jason Endress (@JasonEndress) February 25, 2017

Barclays are having a major server issue - all card transactions are being declined and you can"t use ATM"s either #nightmare

— Tammy Lei (@xtlhx) February 25, 2017

According to the BBC, The bank said it was "working to fix" a problem and advised customers to use other banks" cash machines. It added that telephone banking and in-branch payments were also affected and apologised "for any inconvenience".

We’re still experiencing issues affecting Barclays Debit Card and ATM transactions. Our teams are working to get this restored.

— Barclays UK (@BarclaysUK) February 25, 2017

It is not yet known how many of Barclays" 15 million card customers have been affected by the problems. In a tweet, the bank said: "We"re still experiencing issues affecting Barclays Debit Card and ATM transactions. Our teams are working to get this restored." Barclays added: "Technical issues are affecting some digital services. We"re investigating this and apologise for any inconvenience."

Technical issues are affecting some digital services. We"re investigating this and apologise for any inconvenience.

— Barclays UK (@BarclaysUK) February 25, 2017

This is the latest in a series of technical "glitches" to hit the bank recently. Today"s problems come months after thousands of Barclays customers in the north of the UK had payments wrongly taken from their accounts. Last October, Barclays said customers were refunded after they had duplicate debit card payments taken.

An amusing, if accurate comment following the news, highlights just how "safe" one"s cash held in the bank is these days:

@zerohedge seems like money these days is backed by the "full faith and credit" of an institutions IT dept

— StockCats (@StockCats) February 25, 2017

Is a Global Wide Cash Ban Coming?

Anyone who has been paying attention over the last four years knows the Europe is ground zero for Central Planning insanity.

Europe was created as a union with open borders with the open flow of capital. However, the elites have clearly demonstrated that they are willing to lie cheat and steal in order to maintain their agenda.

Case in point, Europe has already seen:

1)   The implementation of border and capital controls during a crisis (2012-2013).

2)   The confiscation of bonds or savings deposits to “bail-in” insolvent entities (Netherlands in 2011, Spain in 2012, Cyprus in 2013).

3)   The implementation of Negative Interest Rate Policy or NIRP in which savings are taxed by banks (2014 until today).

Put simply, Europe is where Central Planners in the developed world first implement their policies to see if they can get away with them.

Which is why the following should be on everyone’s radar.

Proposal for an EU initiative on restrictions on payments in cash

As preventing the anonymity linked to cash  payments  is  the  main  driver,  the objective  can  be  attained  by restricting cash payments through an EU legislative instrument, and thereby forcing payments through means that are  not  anonymous  (bank  transfers,  checks,  etc.).  But the same objective could also be attained by, while  still allowing  unrestricted  cash  payments,  imposing  a  declaration  to  a competent  authority.  This would allow the continuous reliance on cash payments, with its benefits in terms of simplicity and cost.

http://ec.europa.eu/smart-regulation/roadmaps/docs/plan_2016_028_cash_re...

Put simply, Europe is now proposing a potential “threshold” on cash payments for the EU as a whole.

Individual EU member countries have already passed similar laws: France has banned any transaction over €1,000 Euros from using physical cash. Spain has banned transactions over €2,500. Germany is now proposing banning cash from transactions of €5,000 or higher.

However, the above proposal marks the first such proposal for a cash ban that would exist across the entire EU.

As we have been stressing for the last few months, the elites war on cash is not over, by any means. If anything it’s about to intensify.

Indeed… we"ve uncovered a secret document outlining how the US Federal Reserve plans to incinerate savings.

We detail this paper and outline three investment strategies you can implement

right now to protect your capital from the Fed"s sinister plan in our Special Report

Survive the Fed"s War on Cash.

We are making 1,000 copies available for FREE the general public.

To pick up yours, swing by….

http://www.phoenixcapitalmarketing.com/cash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Here's How Your State Ranks On Credit Card Debt Per Household

As parents all around the country wake up this morning and instantly regret adding $1,000"s of dollars to their credit cards over the holidays (at a 30% interest rate nonetheless) so that little Johnny could have the latest iPad, gaming console and sneakers, here is a list of the states where consumers have racked up the most revolving debt.

Ironically, when color coded based on political preference, with the notable exception of Alaska, Democratic-leaning states seem to carry higher credit card debt balances than conservative states.  Imagine that, conservatives expect their government to run budgets the way they run their own households.

Meanwhile, as MarketWatch points out, in the worst states it would take the average family over a year and a half to pay off their credit debt if they contributed 15% of their median income to debt repayment.  But who wants to pay down credit card debt anyway?  We can"t very well have economic growth if people are unwilling to borrow all the way up to the point that they can no longer afford the minimum payment...right, Janet?

According to ValuPenguin, millennials carry an average credit card balance of $5,800 while, shockingly, even those American"s past retirement age are carrying credit card balances over $6,000 well into their 70"s. 

And, of course, the more you make the more you borrow...because why not?

Meanwhile, Experian"s State of Credit 2016 report highlights the top/bottom 10 cities in the United States based on credit score.  Minnesota and Wisconsin absolutely dominate that the top 10 list while California, Texas and Louisiana account for 8 out of the 10 worst cities.

Oh well, at least little Johnny will love the new Xbox and sneakers for at least a week and it made for a great Facebook pic!