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Monthly Archives: July 2014

The Container Store CEO Says the Consumer in Still Stuck in a Polar Vortex….But Wait it’s Summer

“Following a chilly winter that froze economic growth, economists have been forecasting a sharp snapback in activity for Q2 and the second half of the year.

Recent reports on jobs and auto sales confirm as much. Add the fact that the stock market is near an all-time high, and you would assume the consumer would be feeling pretty confident.

But new comments from a major U.S. retailer contradict all of the optimism out ther.

On Tuesday afternoon, The Container Store Group announced that its comparable store sales fell 0.8%, which led to a wider than expected net loss of $0.07 per share.

CEO Kip Tindell warned that weakness at his stores wasn’t a company-specific problem.

“Consistent with so many of our fellow retailers, we are experiencing a retail ‘funk,'” Tindell said in the company’s earnings announcement…..”

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One More Reason to Respect Gaia

This is a great vid on the natural world, and why you need to have MAD RESPECT for Gaia.

We must change our thought process and find respect…..

[youtube://http://www.youtube.com/watch?v=XI5frPV58tY 450 300]

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A Heads Up on Some Stocks Going Into Earnings Season

“After the worst U.S. winter in decades, scores of companies will show plenty of quarter-over-quarter sales and earnings improvements starting this week.

But looking beyond the weather will be of more interest, because many companies that suffered the worst earnings declines in the first quarter are also expected to show hugeyear-over-year earnings growth for the second quarter.

To highlight those, we began with the S&P 1500 Composite Index, which includes the components of the S&P 500 SPX -0.76% , the S&P MidCap 400 MID -1.02%  and the S&P SmallCap 600 SML -1.28% . In order to show which companies posted the worst earnings decreases during the first quarter, we limited the list to stocks with positive earnings per share for both periods.

So here are the 10 profitable S&P 1500 companies showing the worst year-over-year EPS declines for the first quarter:

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Investors might have expected to see a list of retailers, because shoppers stayed at home during the frigid temperatures. But the list is varied, in part, because we focused on EPS. Many of these companies reported lousy results that had nothing to do with the weather.

Here’s where it gets interesting: Seven of those stocks are expected to show year-over-year EPS growth for the second quarter, based on consensus estimates among analysts polled by FactSet. Six may report double-digit increases in EPS:

Here’s more on all 10 companies, beginning with the ones showing the largest year-over-year EPS declines for the most recently reported quarter….”

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Irrational Exuberance Part Deux

“PORT WASHINGTON, N.Y. (MarketWatch) — When good news is good news, and bad news is good news, it’s time to take some money off the table.

Call it irrational exuberance, part two. Like old man river, the stock market just keeps rolling along. Last week it was Dow 17,000. Will this week see the market go even higher?

Before you jump on the bulls’ bandwagon, let me call to your attention a couple of salient statistics. At today’s level, the Dow industrials DJIA -0.72%  are up 5% since the beginning of this year. This is on top of a 35% leap in 2013. And in case you are keeping score, the Dow is now a whopping 155% above its low back in March 2009.

All that said, there are a number of warning signs out there that suggest the party may soon be over.

For one thing the economy has not grown anywhere near as much as stocks over the past 5-1/3 years; neither have corporate profits.

AFP/Getty Images

Additionally, price-to-earnings ratios are well above average. Robert Shiller, the noted Yale professor, economist and author, thinks that the market today is about at the valuation it was running at in 2008, just before stocks plunged.

In the past, the stock market has managed to avoid such excesses by dropping in price. A decline of 10% (a.k.a. a correction) used to occur about once every 12 months.

This bull market has managed to avoid a correction for 33 months — far longer than average. And correction or no, the current bull market is the fourth-longest since the Crash of 1929.

If you don’t have angst yet, here is another bit of history to chew on: Stocks usually take a header late in the third quarter, as well as in October. Indeed, some of the market’s biggest declines have occurred during this period.

Here is another tidbit: Bond prices are up…..”

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Ukrainian Rulers aka Nazis Surrender Sovereignty to EU

“Amid massive public opposition and behind-the-scenes globalist scheming, the new regime in Ukraine took a major step toward surrendering the nation’s sovereignty to the Brussels-based European Union super-state. In exchange for giving up self-government and independence to the unelected, perpetually expanding EU bureaucracy that now dominates policy across the 28-member bloc, Ukraine will be able to sell its exports without paying tariffs. Meanwhile, armed conflict continues to rage across wide swaths of Eastern Ukraine as the death toll rises.

As part of the far-reaching scheme between Kiev and Brussels, known as the “Association Agreement” and the “Deep and Comprehensive Free Trade Area,” Ukraine’s economy and society are set to be radically restructured under the supervision and dictates of so-called “eurocrats.” The avalanche of regulations and decrees coming from the EU will also be imposed. The Ukrainian people, as with other peoples under the thumb of the EU, will have little say in the process.

Unsurprisingly, the establishment and the rulers of Ukraine and Europe celebrated the plot. The self-styled “president” of the EU,Bilderberg operative and unelected “global-governance” monger Herman Van Rompuy, for example, claimed the agreements with Ukraine are “milestones in the history of our relations and of Europe as a whole.” Speaking at the signing “ceremony” in Brussels, Van Rompuy, who regularly calls for “convergence” with Moscow, also claimed that people in Kiev and elsewhere “gave their lives for this closer link to the European Union.”

In reality, of course, even Western polls going back to the start of the foreign-backed uprising in Ukraine showed significantly less than half of the public supported closer ties to the sovereignty-destroying super-state. Other surveys of the population suggested that even fewer backed the EU agreement, despite fiendish globalist efforts to portray the sole options for Ukraine as oppression from Moscow or Brussels. However, as with virtually everything about the emerging regime in Brussels, the voice of the people matters little — indeed,EU “integration” has itself taken place largely in direct defiance of voters.     

Ukrainian “President” Petro Poroshenko, meanwhile, claimed while signing the thousands of pages of “agreements” last week in Brussels that June 27 was “maybe the most important day for my country after independence day” in 1991, following the supposed “collapse” of the Soviet Union. “All of us would have wished to sign the agreement under different, more comfortable circumstances,” he added. “On the other hand, the external aggression faced by Ukraine is another strong reason for this crucial step.”

The controversial deals with the EU are essentially the same plot that ousted Ukrainian “president” Viktor Yanukovych was set to sign in November. However, under pressure from Moscow, which offered a more enticing “aid” package, the now-deposed former ruler in Kiev backed out at the last moment. With plenty of help from globalists such as George Soros and others at the Council on Foreign Relations, Western-backed forces helped stir up riots and eventually an armed uprising against Yanukovych’s corrupt regime…..”

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U.S. Equities Take Another Dip as Earnings Jitters Rise

“U.S. stocks declined Tuesday, pushing the Dow industrials below 17000, as investors showed caution ahead of a slew of corporate earnings reports.

The Dow Jones Industrial Average shed 109 points, or 0.6%, to 16915.

The S&P 500 index fell 12 points, or 0.6%, to 1966, and the Nasdaq Composite Index declined 47 points, or 1.1%, to 4404.

Traders said that volumes were muted even as stocks tumbled, and cited no single catalyst for the selling. After the broad stock-market rally, and ahead of the release of earnings reports, many investors were reluctant to commit more money to the market, traders said.

Jarred Kessler, global head of equities at Cantor Fitzgerald, said that he saw small orders to sell rather than chunks of stocks for sale from large clients, which would indicate higher conviction in further declines. Rather, he said that many investors appeared to be in a holding pattern.

“Every time there’s a move down, the market bounces back up,” Mr. Kessler said. “No one is fearful of anything.” ….”

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El-Erian: Janet Yellen Lays Out Her Policy Blueprint

“Over the weekend, I reread remarks that U.S. Federal Reserve chair Janet Yellen made last week at the International Monetary Fund and also read the transcript of her conversation with Christine Lagarde, the International Monetary Fund’s managing director.

The IMF event brought together a virtual who’s who of the international economic and financial community, and in one of her most significant policy speeches to date, Yellen seized the opportunity to address head-on some of the major questions confronting modern central bankers. Many of these center around the burden of trying to restore, almost singlehandedly, economic growth, more dynamic job creation, price stability, and durable market stability.

There are seven major takeaways from Yellen’s IMF speech. They collectively signal that the Fed will maintain a gradual policy approach for now. Markets, conditioned to expect strong and steadfast monetary support from the Fed, welcome that stance. But Yellen’s statements also point to the need for a delicate transition from policy-induced growth to more organic economic growth. If that transition is mishandled, it would trigger renewed financial and economic instability.

First, Yellen recognizes that we could well be in a world of steady-state interest rates that, in both nominal and inflation-adjusted terms, are lower than what historical experience would suggest.

Second, such rates, as Yellen noted, can “heighten the incentives of financial market participants to reach for yield and take on risk.” Indeed, she added, “such risk-taking can go too far, thereby contributing to fragility in the financial system.”

Third, financial stability cannot be divorced from the pursuit of economic well-being, because “a smoothly operating financial system promotes the efficient allocation of saving and investment, facilitating economic growth and employment.”

Fourth, this situation places even greater importance on the effectiveness of macro-prudential policies as “the main line of defense” against financial excess in the marketplace.

Fifth, while progress has been made in strengthening crisis prevention through better macro-prudential measures, more is needed at the policy level. With that in mind, Yellen stated that she “has not taken monetary policy totally off the table as a measure to be used when financial excesses are developing.” Since macro-prudential tools “have their limitations,” monetary policy should be “actively in the mix” even though it is “not a first line of defense.”

Sixth, central banks have to continue to think imaginatively about additional tools they can deploy to bolster the economy and maintain financial stability given the constraints they face in using interest rates as an effective macroeconomic tool…..”

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Mike Maloney: The Dollar As We Know It Will Be Gone Within 6 Years

“This week’s podcast sees the return of Mike Maloney, monetary historian and founder of precious metals broker GoldSilver.com.

Based on historical patterns and the alarming state of our current monetary system, Mike believes the fiat US dollar is in its last years as a viable currency. He sees its replacement as inevitable in the near term — as in by or before the end of the decade:

All of this is converging with the crazy experiments the Federal Reserve has done.


I absolutely believe that there are economic consequences to this that are inescapable. The Fed is not just in a box; a trap has been set. And before the end of this decade, if there is still a US Dollar around it will not be this US Dollar. It will be a dollar that is tied to a very different monetary system.


The last three shifts in our monetary system were little baby steps off of the classical gold standard where it was fully backed. We went down to a 40% reserve ratio with the Federal Reserve in the United States during the Gold Exchange Standard. Then the Bretton Woods system didn’t have a reserve ratio specified, but I believe the dollar was about 8% backed by gold by the time Nixon took us off of gold in ’71. Now, the only backing that the US Dollar has is the promise to tax us all in the future: it is US Treasury bonds, or the Fed doing its quantitative easing and buying mortgage-backed securities.


And how corrupt is the notion that you can give some entity the power to have a check book that has a $0 balance and they can go out and buy anything they want with that and it just creates currency? That is corrupt in itself.


Think about how immoral this is. First of all, the Fed whipped up that currency not out of thin air but by indebting the public. They buy a Treasury bond or a mortgage-backed security, and now they own the mortgage on your house or they own a Treasury bond that you are going to work for in the future and pay taxes to pay off. And so they give all of this currency to the banks, and then they pay them interest to not loan it out or otherwise stimulate the economy. So they are giving them the gift of interest.


By the way, any profits that the Fed has at the end of the year are supposed to get turned over to the Treasury. Well, they are paying the banks interest that reduces the amount that they give to the Treasury by exactly that amount. So in other words, the public is paying those banks interest. That’s where all of the interest comes from. We’re not seeing those profits passed on to the Treasury anymore…..”

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$GS Expects Feds to Raise Rates in Q3 of 2015

“Goldman Sachs Group Inc. brought forward its forecast for the Federal Reserve to raise interest rates after U.S. employers added more jobs than forecast, sending five-year Treasuries lower for a fourth day.

The Fed will increase its benchmark in the third quarter of 2015, rather than the first three months of 2016, Goldman Sachs Chief Economist Jan Hatzius wrote in a report yesterday. The investment bank joins companies including JPMorgan Chase & Co. and Bank of Tokyo-Mitsubishi UFJ Ltd. in moving up its Fed estimates after U.S. data last week showed the economy added 288,000 workers in June, compared with the 215,000 projected by a Bloomberg News survey of analysts.

“We might see more U.S. banks bringing forward their rate-hike expectations this week,” said Piet Lammens, head of research at KBC Bank NV in Brussels. “It was an important jobs report. It may be that we get more losses for Treasuries and higher yields today.”

The U.S. five-year yield climbed two basis points, or 0.02 percentage point, to 1.75 percent at 6:49 a.m. New York time, according to Bloomberg Bond Trader prices. The 1.63 percent note maturing in June 2019 dropped 3/32, or 94 cents per $1,000 face amount, to 99 13/32.

The two-year yield rose one basis point to 0.52 percent and the 10-year yield was little changed at 2.64 percent after rising 10 basis points last week.

Spread Widens….”

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Barclays: Draghi’s $1.4 T Liquidity Plan is No Silver Bullet

“Mario Draghi’s plan to end the euro area’s lending drought risks missing the target.

While the European Central Bank president says a program to hand as much as 1 trillion euros ($1.4 trillion) to banks has built-in incentives to spur lending to the real economy, analysts from Barclays Plc to Commerzbank AG have doubts on how well it will work. In fact, the measure allows banks to borrow cheaply from the ECB even without increasing credit supply.

Draghi has identified weak lending as an obstacle to the euro area’s recovery and is committed to reversing a slump that has eroded more than 600 billion euros in loans to companies and households since 2009. The risk is that if the latest plan fails, the currency bloc slips closer to deflation and to the need for more radical action such as quantitative easing.

“It’s not the silver bullet,” said Philippe Gudin, chief European economist at Barclays in Paris. “Every incentive for banks to lend is a good thing, but I wouldn’t say I’m reassured that credit will pick up.”

The ECB’s latest plan differs from its previous liquidity measures in the way it tries to nudge banks into lending more to the real economy. In contrast, three-year loans issued in late 2011 and early 2012 were used largely to buy higher-yielding government bonds, a practice known as the carry trade.

Attractive Option

Targeted longer-term refinancing operations will offer banks an initial total of as much as 400 billion euros this year that they can hold until 2016 with no strings attached. They can keep it another two years if they meet specific new lending targets set by the ECB, and they can borrow more funds starting in March if they exceed those thresholds. At his monthly press conference on July 3, Draghi said the total take-up could be 1 trillion euros.

“If this sounds a little complicated, I think you’re right,” he told reporters in Frankfurt. “But I’m confident that the banks will quickly understand that even though it’s complicated, it’s also quite attractive.”

Still, to keep the initial batch of funding for the full term, banks aren’t required to expand their loan books. They are only obliged to boost credit if they wish to borrow more cash starting next year, when the ECB will provide as much as 3 euros for every 1 euro of net new lending.

Bank Review….”

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Documentary: OBEY – The Death of the Liberal Class

Cheers on your holiday weekend!

[youtube://http://www.youtube.com/watch?v=hH6UynI5m7Y 450 300]

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[youtube://http://www.youtube.com/watch?v=5H8G7aotaXQ 450 300]

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Make No Mistake That De-Dollarization is Chugging Along Underfoot

“While numerous massively indebted administrations around the world hope to divert the attention of what’s left of their struggling middle class away from its daily impoverished existence and distract it with flashing lights and glitzy animations showing another all time market high on a daily basis, a significantly more important shift taking place behind the scenes is appreciated by very few: the ongoing de-dollarization of the world. For the latest example of how increasingly more countries are setting the stage for the final currency war, we go again to Russia where VOR’s  Valentin Mândr??escu explains that slowly but surely the BRICS – that proud Goldman acronym which was conceived to perpetuate the great American way of life by releasing trillions in US-denominated debt in heretofore untapped markets – are morphing into an anti-dollar alliance.

BRICS is morphing into an anti-dollar allianceFrom VOR

Before the crucial visit to Beijing next week, the governor of the Russian Central Bank, Elvira Nabiullina met Vladimir Putin to report on the progress of the upcoming ruble-yuan swap deal with the People’s Bank of China and Kremlin used the meeting to let the world know about the technical details of its international anti-dollar alliance.

On June 10th, Sergey Glaziev, Putin’s economy advisor published an article outlining the need to establish an international alliance of countries willing to get rid of the dollar in international trade and refrain from using dollars in their currency reserves. The ultimate goal would be to break the Washington’s money printing machine that is feeding its military-industrial complex and giving the US ample possibilities to spread chaos across the globe, fueling the civil wars in Libya, Iraq, Syria and Ukraine. Glaziev’s critics believe that such an alliance would be difficult to establish and that creating a non-dollar-based global financial system would be extremely challenging from a technical point of view. However, in her discussion with Vladimir Putin, the head of the Russian central bank unveiled an elegant technical solution for this problem and left a clear hint regarding the members of the anti-dollar alliance that is being created by the efforts of Moscow and Beijing:

“We’ve done a lot of work on the ruble-yuan swap deal in order to facilitate trade financing. I have a meeting next week in Beijing”, she said casually and then dropped the bomb: “We are discussing with China and our BRICS parters the establishment of a system of multilateral swaps that will allow to transfer resources to one or another country, if needed. A part of the currency reserves can be directed to [the new system].” (Prime news agency)

It seems that Kremlin chose the all-in-one approach….”

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U.S. Jobs Report Shows Growth of 288k, The Unemployment Rate Falls to 6.1%


“NEW YORK (MarketWatch) — Investors have been content to take a summer slumber as central bankers sing easy-money lullabies. But don’t discount the possibility that a strong jobs report could shake traders awake.

It would take a particularly strong U.S. nonfarm payrolls report on Thursday to alter market expectations about the economy. But should it sharply exceed expectations of 215,000 nonfarm jobs and a steady 6.3% unemployment rate, it could force a rethink toward a Federal Reserve that’s less committed to low-rate policies, investors and strategists say.

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Wednesday’s report from Automatic Data Processing Inc. provided one surprise:281,000 new private-sector jobs last month, and the most since November 2012. The report is often used as an early indicator of the payrolls number. Despite its mixed record in predicting that part of the official monthly jobs report, it’s the latest in a string of improving data points that many say shows an economy gaining steam.

“The risks are on the upside in terms of the number of jobs created” after that ADP report, said Robert Tipp, chief investment strategist at Prudential Fixed Income.

Think about Fed rate expectations like a trip in the family minivan. Federal Reserve Chairwoman Janet Yellen and her policy committee are in the driver’s seat, slowly and steadily cruising toward the first rate hike. The numbers on employment and inflation are quietly cooperating in the back seat. But if data keep improving more rapidly, that will add to the “are we there yet?” clamors, and Yellen eventually may speed up.

If that happens, the S&P 500 SPX +0.07% , already near record levels, could rise further, Treasury yields10_YEAR -0.04% could climb, and the dollar DXY +0.14% could strengthen against its rivals.

For now, Yellen has been keeping the steering wheel steady…”

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What to look for in the report

Full employment report


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Bill Gross: Covenant-Lite Loans Enters Bubble Territory

“Many financial commentators are concerned about banks loosening their standards on loans, and Bill Gross, chief investment officer at Pimco, is one of them.

“There are bubbly aspects in the terms and conditions of bank loans,” he told CNBC.

Financial institutions are issuing covenant-lite loans at a record pace. Covenants are financial restrictions placed on companies that borrow to give lenders assurance that they will receive their money back. Covenant-lite loans carry fewer of these restrictions.

U.S. cov-lite loan issuance totaled $83.6 billion for 2014 through mid-June, up 41 percent from $59.4 billion in the same period of 2013, according to Dealogic, CNBC reports.

“There can be easy types of covenants and restrictions,” Gross said. “Certainly the Fed sees, and we see as well, that over the past 12 to 18 months those standards have eased and perhaps are a little bit bubbly.”

He maintains that the prices of most risk assets stand at a “normal level if the new neutral [level for federal funds] stays low at 2 percent, which is where we expect.”

The Office of the Comptroller of the Currency, which regulates banks, also is concerned about the easing of banks’ lending policies….”

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Your Tax Dollars at Work: Forgive and Forget

“WASHINGTON—The Department of Homeland Security has awarded a $190 million contract to the company accused of methodically defrauding the government while carrying out background checks on millions of people, including former National Security Agency contractor Edward Snowden.

The department’s U.S. Citizenship and Immigration Services hired US Investigations Services LLC to help operate the nation’s immigration system.

USIS was able to win the contract because regulations require agencies to follow strict procurement procedures unless a bidder has been suspended or barred by the government from contracts. Despite questions about its work on background checks, USIS was never blocked from federal work.

Unless a company is suspended or barred, “by law and policy, we have to go with the lowest bidder,” said an official with U.S. Citizenship and Immigration Services.

The Department of Homeland Security said it takes “allegations of wrongdoing against its workforce and contractors extremely seriously,” but “at this time there is no conduct that has resulted in suspension or debarment of USIS.” The agency said the contract decision came after an 18-month review.

The Office of Personnel Management, which oversees background-check investigations, indicated that USIS had addressed concerns raised by the fraud allegations. “At this time we are satisfied with the steps taken by USIS to deal with actions by their employees and previous leadership,” the agency said.

USIS, based in Falls Church, Va., declined to comment on the contract award or its work with the U.S. government. After the fraud allegations, which were brought to the government’s attention in 2011 by a company whistleblower, USIS overhauled its management team and said the accusations were inconsistent with the company’s values.

The new contract, disclosed late Tuesday, is the first major federal award USIS has won since it became the focus of scrutiny last summer over its practices as the government’s largest provider of background checks for security clearances.

The Justice Department has accused USIS in a civil suit of cutting corners while conducting investigations of people seeking clearance for sensitive government jobs. Among those it screened was Mr. Snowden, the former NSA contractor who sought sanctuary in Russia after leaking classified U.S. government secrets.

Federal officials alleged that USIS carried out a flawed 2011 background check of Mr. Snowden before he secured an NSA job in Hawaii, where he collected top-secret documents and later gave them to journalists.

USIS also did a 2007 background check of Aaron Alexis, a military contractor who used his security clearance to bring a gun into the Washington Navy Yard last fall and kill 12 people before being shot dead by security officers.

USIS has defended its work investigating Mr. Snowden and Mr. Alexis and noted that the company provides information to government officials who have the final say over who gets security clearance.

In January, the Justice Department joined a whistleblower lawsuit against USIS and accused the company of defrauding the government. In addition, a federal grand jury launched an investigation last summer into USIS practices, according to people familiar with the situation, while some lawmakers have suggested the company be barred from government work….”

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Challenger, Gray, & Christmas: Planned Layoffs Fall 41% After Hitting 15 Month Highs

“After climbing to a 15-month high in May, planned job cuts announced by U.S. companies in June dropped 41 percent to 31,434, the lowest level of the year, according to a report released Thursday by Challenger, Gray & Christmas. So far, the pace of job cuts is down 5 percent from a year ago.

June job cuts were 20 percent lower than the same month a year ago, when employers announced 39,372 job cuts.

The June number was down sharply from May, with 52,961 planned layoffs announced—the largest monthly total since February 2013.

n the second quarter, a total of 124,693 job cuts were announced, up 3 percent from the 121,341 job cuts announced in the first quarter. Second-quarter job cuts also were up 9.5 percent from the same period last year, when 113,891 planned layoffs were announced…..”

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