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►  Equifax says it’s looking into another possible hack

Equifax has taken one of its web pages offline following a report that an independent security researcher encountered malicious links during multiple visits to the company’s website.

“We are aware of the situation identified on the equifax.com website in the credit report assistance link,“ Equifax spokesman Wyatt Jefferies said in a statement. “Our IT and Security teams are looking into this matter, and out of an abundance of caution have temporarily taken this page offline. When it becomes available or we have more information to share, we will.“

On Thursday, Ars Technica reported that security analyst Randy Abrams was prompted to download fraudulent Adobe Flash updates when he visited the Equifax website to contest his credit report. Abrams determined that when those updates were clicked, adware would infect a visitor’s computer. Abrams also encountered those links during at least three subsequent visits, according to Ars Technica.

The web page in question currently displays an error message that tells visitors “the website is currently down for maintenance.“ Previously, people could access the page under the “Credit Report Assistance” heading.

The possibility of another malicious hack at Equifax comes just a week after the company’s former chief executive, Richard Smith, was grilled by angry lawmakers over a massive data breach that may have compromised the sensitive information of as many as 145 million people. Equifax first disclosed that breach in September. But lawmakers and several federal agencies, including the FBI and the Federal Trade Commission, are investigating the company’s response to the breach, why it took Equifax more than a month to notify the public and whether executives engaged in insider trading.

Equifax and the Internal Revenue Service also are facing pressure from lawmakers over a $7.2 million contract that Equifax was awarded, after the breach was made public, for the company to verify taxpayer identities and help prevent fraud.


►  Real average hourly earnings decrease 0.1% in September

Real average hourly earnings decreased 0.1 percent in September, seasonally adjusted.

Average hourly earnings increased 0.5 percent, and CPI-U increased 0.5 percent. Real average weekly earnings decreased 0.1 percent over the month.


►  CPI for all items increases 0.5% in September as gasoline index rises sharply

In September, the Consumer Price Index for All Urban Consumers increased 0.5 percent seasonally adjusted; rising 2.2 percent over the last 12 months, not seasonally adjusted.

The index for all items less food and energy rose 0.1 percent in September (SA); up 1.7 percent over the year (NSA).

U.S. Market Weekly Summary – Week Ending 10.13.2017

S&P 500 Posts 0.2% Weekly Rise as Real Estate, Staples, Utilities Lead Gainers But Telecom, Financials Weigh
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The Standard & Poor’s 500 index edged up 0.2% this week as gains across a number of sectors led by real estate, consumer staples and utilities managed to slightly outweigh declines led by telecommunications and financial stocks.

The market benchmark ended the week at 2553.17, up from last week’s closing level of 2,549.33. Despite the weekly gain being so slight, the S&P 500 also reached a new record high Friday at 2,557.65.

On the upside, the real-estate sector rose 1.8% this week, the largest percentage gain among the sectors. Its advancers included Host Hotels & Resorts (HST), which added 6.5% as Deutsche Bank upgraded its investment rating on the hotel owner’s stock to buy from hold. The upgrade comes ahead of the real-estate investment trust’s Q3 report, set for release Nov. 1.

The consumer-staples sector, which rose 1.5% this week, reflected the market’s more defensive positioning amid some trepidation ahead of Q3 reports. Consumer staples are considered defensive because they are seen as necessary regardless of how the economy performs.

The sector’s gainers included Kroger (KR), whose shares rose 3.2% this week as the supermarket operator unveiled a plan for creating shareholder value and reaffirmed its 2017 guidance. The plan includes the investment of an incremental $500 million in human capital over the next three years as well as redesigning the front end to maximize stores for self-checkout, including the expansion of its currently 20-store Scan, Bag, Go pilot to 400 stores in 2018.

The utilities sector, which rose 1.3% this week, also benefited from investors’ defensive as they tread cautiously ahead of companies’ Q3 financial reports. Utilities are typically considered defensive because they provide services that are seen as necessary regardless of how the economy is doing. Among those due to report by the end of the month, Edison International’s (EIX) shares edged up 0.5% this week.

On the downside, the telecommunications sector shed 4.6% this week. AT&T (T) shares fell 7.5% as the company warned investors that damage and related impacts from recent hurricanes and earthquakes will reduce its reported Q3 consolidated revenue by nearly $90 million. The company also said it expects a hit of about $210 million, or $0.02 per diluted share, to its reported pretax earnings, and warned it anticipates “further reductions in the fourth quarter as we continue to assess damage to our network and fully restore service.“

The financial sector declined 0.9% this week as some of the reports from big banks that began this week included some disappointments. The Q3 results released from JPMorgan Chase (JPM) included a decline in revenue from fixed income market activity while Wells Fargo (WFC) posted weaker-than-expected revenue. Shares of JPMorgan were down 1.1% on the week while Wells Fargo’s shares dropped 3.4%.

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►  Trump to issue stop-payment order on health care subsidies

In a brash move likely to roil insurance markets, Donald Trump will “immediately” halt payments to insurers under the Obama-era health care law he has been trying to unravel for months.

Before sunrise Friday morning, Trump went on Twitter to urge Democrats to make a deal: “The Democrats ObamaCare is imploding,” he wrote. “Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”

The Department of Health and Human Services had made the announcement in a statement late Thursday. “We will discontinue these payments immediately,” said acting HHS Secretary Eric Hargan and Medicare administrator Seema Verma. Sign-up season for subsidized private insurance starts November 1, in less than three weeks, with about 9 million people currently covered.

In a separate statement, the White House said the government cannot legally continue to pay the so-called cost-sharing subsidies because they lack a formal authorization by Congress. Officials said a legal opinion from the Justice Department supports that conclusion.

However, the administration had been making the payments from month to month, even as Trump threatened to cut them off to force Democrats to negotiate over health care. The subsidies help lower copays and deductibles for people with modest incomes.

Halting the payments would trigger a spike in premiums for next year, unless Trump reverses course or Congress authorizes the money. The next payments are due around October 20.

The top two Democrats in Congress sharply denounced the Trump plan in a joint statement.

“It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America,” said House and Senate Democratic leaders Nancy Pelosi of California and Chuck Schumer of New York. “Make no mistake about it, Trump will try to blame the Affordable Care Act, but this will fall on his back and he will pay the price for it.”

In a subsequent tweet, Trump asserted, “Obamacare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves.”

The president’s action is likely to trigger a lawsuit from state attorneys general, who contend the subsidies to insurers are fully authorized by federal law, and say the president’s position is reckless.

“We are prepared to sue,” said California Attorney General Xavier Becerra. “We’ve taken the Trump Administration to court before and won.”

Word of Trump’s plan came on a day when the president had also signed an executive order directing government agencies to design insurance plans that would offer lower premiums outside the requirements of President Barack Obama’s Affordable Care Act.

Frustrated over setbacks in Congress, Trump is wielding his executive powers to bring the “repeal and replace” debate to a head. He appears to be following through on his vow to punish Democrats and insurers after the failure of GOP health care legislation.

On Twitter, Trump has termed the payments to insurers a “bailout,” but it’s unclear if the president will get Democrats to negotiate by stopping payment.

Experts have warned that cutting off the money would lead to a double-digit spike in premiums, on top of increases insurers already planned for next year. That would deliver another blow to markets around the country already fragile from insurers exiting and costs rising. Insurers, hospitals, doctors’ groups, state officials and the U.S. Chamber of Commerce have urged the administration to keep paying.

Leading GOP lawmakers have also called for continuing the payments to insurers, at least temporarily, so constituents maintain access to health insurance. Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander, R-Tenn., is working on such legislation with Democratic Senator Patty Murray of Washington.

The so-called “cost-sharing” subsidies defray copays and deductibles for people with low-to-modest incomes, and can reduce a deductible of $3,500 to a few hundred dollars. Assistance is available to consumers buying individual policies; people with employer coverage are unaffected by the dispute.

Nearly 3 in 5 HealthCare.gov customers qualify for help, an estimated 6 million people or more. The annual cost to the government is currently about $7 billion.

But the subsidies have been under a legal cloud because of a dispute over whether the Obama health care law properly approved them. Adding to the confusion, other parts of the Affordable Care Act clearly direct the government to reimburse the carriers.

For example, the ACA requires insurers to help low-income consumers with their copays and deductibles.

And the law also specifies that the government shall reimburse insurers for the cost-sharing assistance that they provide.

But there’s disagreement over whether the law properly provided a congressional “appropriation,” similar to an instruction to pay. The Constitution says the government shall not spend money unless Congress appropriates it.

House Republicans trying to thwart the ACA sued the Obama administration in federal court in Washington, arguing that the law lacked specific language appropriating the cost-sharing subsidies.

A district court judge agreed with House Republicans, and the case has been on hold before the U.S. appeals court in Washington. Up to this point the Trump administration continued making the monthly payments, as the Obama administration had done.

While the legal issue seems arcane, the impact on consumers would be real.

The Congressional Budget Office estimated that premiums for a standard “silver” plan will increase by about 20 percent without the subsidies. Insurers can recover the cost-sharing money by raising premiums, since those are also subsidized by the ACA, and there’s no legal question about their appropriation.

Consumers who receive tax credits under the ACA to pay their premiums would be shielded from those premium increases.

But millions of others buy individual health care policies without any financial assistance from the government and could face prohibitive increases. Taxpayers would end up spending more to subsidize premiums.


►  Social Security benefits to rise by 2 percent in 2018

Millions of Social Security recipients and other retirees will get a 2 percent increase in benefits next year. It’s the largest increase since 2012 but comes to only $25 a month for the average beneficiary.

The Social Security Administration announced the cost—of-living increase Friday.

The COLA affects benefits for more than 70 million U.S. residents, including Social Security recipients, disabled veterans and federal retirees. That’s about one in five Americans.

By law, the COLA is based on a broad measure of consumer prices generated by the Bureau of Labor Statistics. Advocates for seniors claim the inflation index doesn’t accurately capture rising prices faced by seniors, especially for health care.

“It’s squeezing them. It’s causing them to dip into savings more quickly,” said Mary Johnson of The Senior Citizens League. “The lifetime income that they were counting on just isn’t there.”

Some conservatives argue that the inflation index is too generous because when prices go up, people change their buying habits and buy cheaper alternatives.

Consumer prices went up only slightly in the past year despite a recent spike in gasoline prices after a series of hurricanes slowed oil production in the Gulf Coast, said Max Gulker, senior research fellow at the American Institute for Economic Research.

“For the most part, there was a decline in energy prices for a lot of the year,” Gulker said. “But at the end of the year we saw that uptick in gas from the hurricanes.”

The average monthly Social Security payment is $1,258, or about $15,000 a year.

Congress enacted automatic annual increases for Social Security in 1975. Presidents often get blamed when increases are small or zero. But Donald Trump has no power to boost the increase, unless he persuades Congress to change the law.

In 2009, President Barack Obama persuaded Congress to approve one-time payments of $250 to Social Security recipients as part an economic stimulus package.

Over the past eight years, the annual COLA has averaged just above 1 percent. In the previous decade, it averaged 3 percent.

Johnson noted that multiple years of small or no COLA’s reduces the income of retirees for the rest of their lives.

“Think about the length of a retirement period. Eight years is about a third of a (healthy) retirement,” Johnson said.

The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broad measure of consumer prices. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.

The August report says energy prices are up 6.5 percent from the previous year, while the cost of medical care is up just 1.7 percent. The cost of food is up 1.1 percent.

The COLA is calculated using the average CPI-W for July, August and September, and comparing it to the same three months from the previous year.

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►  U.S. pickup truck buyers demanding more luxury

Heated and cooled seats. Backup cameras. Panoramic glass roofs.

Not exactly what springs to mind when you think of a pickup. But that’s what American truck buyers increasingly want, spending an average of $46,844 on a pickup, according to Kelley Blue Book. That’s more than the starting price of luxury SUVs like the Mercedes GLC or the Lexus RX. In 2016, pickup trucks made up a little more than a third of all vehicles that sold for over $50,000.

At the State Fair of Texas this month, Ford Motor Co. is displaying its most expensive pickup yet: The F-Series Super Duty Limited, a luxury heavy-duty truck with a starting price of $80,835. It has custom two-tone leather seats, a heated steering wheel wrapped in hand-stitched leather and high-tech features like a 360-degree camera system that guides drivers when they’re hitching up a trailer.

A fully-loaded F-450 — the biggest version of the Super Duty — will top out at $94,455. It’s capable of towing an Air Force F-35 fighter plane, but it also has massaging seats.

Fiat Chrysler’s Ram brand is also showing luxury pickups at the fair. The 2018 Laramie Longhorn Southfork edition has a walnut-trimmed steering wheel and 4G Wi-Fi capability. The Heavy Duty Lone Star Silver — sold only in Texas — has a luxurious bright chrome grille. Both start around $50,000 and will be available later this fall.

On a recent visit to the fair, some visitors balked at the prices. One said he’s rather buy a Mercedes S-Class if he had $80,000 to spare. But others took the high prices in stride.

“It’s awesome. I’d love to be going down the road in it right now,” said Paul Churchill as he sat in the cab of the Super Duty Limited. “If you’re looking for all the technology they have in these trucks now, it’s probably worth it.”

Demand for luxury trucks is strong. Ford says around half of the individual buyers who purchase Super Duty trucks opt for one of its three luxury versions — King Ranch, Lariat or Platinum. The Limited version will sit at the top of that heap.

Kendall Bachman, who works for an executive search firm in the renewable energy industry, paid $40,000 in 2013 for a limited edition 2011 Toyota Tundra CrewMax that’s upholstered in leather from San Antonio-based Lucchese Boot Co.

Bachman, of Redding, California, needed a truck to tow his fishing boat and camping trailer and haul lumber and landscaping materials for his 3-acre property. He also wanted something big to protect his four kids and leather that could withstand stains.

At the same time, Bachman wanted his truck to convey status.

“I wanted something that embodied who I am more than a luxury sedan, but that would still allow me to feel comfortable attending meetings for business people in town who drive luxury cars,” Bachman said.

The luxury trend has helped pickups outpace the industry in terms of the prices they command. So far this year, the average vehicle is selling for $34,671, up 38 percent from 2005. The average price of a full-size truck has jumped 54 percent in that same period, to $46,844.

Ford kicked off the luxury truck trend in 1999 when it introduced the Harley-Davidson F-Series. The King Ranch edition followed in 2001. General Motors Co. brought out its high-end GMC Sierra Denali pickup in 2002; the Chevrolet Silverado High Country followed in 2014. The Ram Laramie Longhorn arrived in 2010.

Todd Eckert, Ford’s truck group marketing manager, stressed that Ford is still meeting the needs of buyers who want an everyday work truck. The base model of the 2018 Super Duty starts at $32,890. But he said some customers are also demanding more comfort and safety technology, like forward collision warning systems and adaptive cruise control.

“They have come to a point where they want to reward themselves,” Eckert said. The Super Duty Limited goes on sale this winter.

Rebecca Lindland, an executive analyst with Kelley Blue Book, says luxury truck buyers cut across age spans but share a mindset. They could buy a German luxury car, she says, but they want the blue-collar brawn of an American truck — or, in Toyota’s case, a full-size truck built in Texas.

“These are people with money. These are people who have been very successful,” she said. “All they want is the most tarted-up pickup they can buy.”


►  U.S. demands raise fears that leaving NAFTA could hurt economy

The North American Free Trade Agreement is in its 23rd year. But there are growing doubts that it will survive through its 24th.

Donald Trump has threatened to withdraw from the agreement if he can’t get what he wants in a renegotiation. But what he wants — from requiring that more auto production be made-in-America to shifting more government contracts to U.S. companies — will likely be unacceptable to America’s two NAFTA partners, Mexico and Canada.

Round 4 of NAFTA talks began Wednesday in Arlington, Virginia. In a sign of how contentious things could get, the countries extended the negotiations for two extra days, through Tuesday.

“What is the administration going to do? Are they going to be patient and work through these things?” asks Phil Levy, senior fellow at the Chicago Council on Global Affairs. “Or are they going to take this as a pretext and say, ‘We tried negotiations; they failed. Now we need to blow this up?’ ”

Blowing up the deal appears to be Trump’s favored choice. On the campaign trail, he called NAFTA a job-killing disaster. And in an interview with Forbes magazine published Tuesday, Trump said: “I happen to think that NAFTA will have to be terminated if we’re going to make it good. Otherwise, I believe you can’t negotiate a good deal.”

Levy pegs the chance of NAFTA’s survival at less than 50 percent.

The end of NAFTA would send economic tremors across the continent. American farmers depend on Mexico’s market. Manufacturers have built complicated supply chains that cross NAFTA borders. Consumers have benefited from lower costs.

NAFTA erased most trade barriers along the United States, Canada and Mexico and led to an explosion in trade between the three countries. But critics say the pact sent hundreds of thousands of U.S. manufacturing jobs to Mexico, where corporations took advantage of low-wage labor.

Before the renegotiation began in August, many business and farm groups hoped the Trump administration would settle for tweaking rather than abandoning the trade deal — updating it, for example, to reflect the rise of e-commerce. But U.S. Trade Representative Robert Lighthizer declared at the outset that the U.S. wouldn’t be satisfied with anything but a major overhaul.

So the administration has been seeking to ensure that more auto production be made in America to receive NAFTA benefits, that more government contracts in the NAFTA bloc go to U.S. companies and that NAFTA expire unless the countries agreed every few years to extend it. It also wants to scrap a dispute-resolution process favored by Canada.

Those proposals are considered poison pills by Canada and Mexico.

Visiting Washington on Wednesday, Canadian Prime Minister Justin Trudeau told reporters that he thinks “it is very important and very possible to get a win-win-win” from the NAFTA talks. But he acknowledged that “we have to be ready for anything — and we are.”

The negotiators are under pressure to reach a deal this year — before presidential elections in Mexico and midterm elections in the United States raise the political temperature in 2018.

“The administration set itself the task of doing a really radical overhaul and having it done by Christmas,” says Levy, a former trade adviser to President George W. Bush. “I’m not surprised that Ambassador Lighthizer hasn’t been able to square that circle.”

Gary Hufbauer, senior fellow at the Peterson Institute for International Trade, says Trump “very likely” has the legal authority to withdraw from NAFTA on his own if talks collapse. But Congress can fight back. Lawmakers could pass a resolution calling on the president to obtain congressional authority before invoking the NAFTA clause that lets countries pull out. They could also threaten to block the president’s agenda unless he secures congressional approval to withdraw.

If the United States left NAFTA, trade barriers to Canada and Mexico would pop back up. Some of the tariffs wouldn’t be especially high. But Mexican tariffs on many American farm products could soar — to as high as 37 percent on corn, for example, notes Caroline Freund, a senior fellow at Peterson.

For that reason, many agricultural lobbies and lawmakers from farm states have urged the administration to “do no harm” in the NAFTA talks.

Daniel Ujczo, a trade lawyer with Dickinson Wright PLLC, predicts that Canada and Mexico would likely call a timeout if the United States insists on pushing contentious proposals.

“The Canadian and Mexican strategy will be to take a pause,” he says, and “allow the U.S. domestic process to play itself out” with business and farm groups and many lawmakers rising to defend NAFTA.

NAFTA supporters are already rallying. In a speech Tuesday in Mexico City, Thomas Donohue, president of the U.S. Chamber of Commerce, vowed: “We’re going to fight like hell to protect the agreement.”


►  PPI for final demand rises 0.4% in September; services increase 0.4%, goods advance 0.7%

The Producer Price Index for final demand advanced 0.4 percent in September, as prices for final demand services rose 0.4 percent and the index for final demand goods climbed 0.7 percent.

The final demand index increased 2.6 percent for the 12 months ended in September.

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