Aired 5 d ago 0:13
Wintrust Business Lunch with Steve Bertrand | WGN Radio
Eddie Lampert, Edward Lampard And Sears discussed on Wintrust Business Lunch with Steve Bertrand
From the news
Aired 2 months ago 41:12
Sears: There Was More For Your Life
Before Sears filed for bankruptcy, it was run by a reclusive billionaire who'd call into meetings from his mansion on a Florida island. It was one of the unusual ways Eddie Lampert ran the department store chain. He also stopped investing in the stores. The CEO had outwitted kidnappers, and many thought he was defying skeptics on Wall Street, too. This is the story of how Sears stayed alive so long, and how it all fell apart.
Aired 3 months ago 13:57
Sears Final Chapter?
This episode of market flurry is brought to you by bamboo. HR. Do you run a business or work in HR bamboo. HR can manage all your employees data and automate countless task in one easy to use system, get an extended fourteen day free trial at bamboo, HR dot com. Slash fool bamboo, HR dot com. Slash fool. It's Monday, October, fifteenth, welcome to market fully. I'm Matt Greer and joining me in studio. We have motley for analyst Emily flippin and Matt ardor singer. Welcome back. How are we feeling on Monday? It's Monday that's come on. We need more enthusiasm here. Come on, bring it because we are going to be talking some Sears. Are you ready to talk Sears? I'm ready to talk Sears. Okay. It's kind of it's a sad chapter and it's it's it's it's not a altogether surprising chapter, but on Monday, Sears filing for chapter eleven bankruptcy protection. Now, that means for now is that Sears will close one hundred and forty. Two stores company has around seven hundred stores. Now, Matt, this is a last ditch effort to save the company. We knew this was going to come probably not surprising, but really could be the end of an era. I think it is the end. I mean, I know they're going to go through this chapter eleven process. Debtor-in-possession try to get through the holiday. His which can help a lot with, you know, covering a lot of outstanding costs and liabilities. But for all intents and purposes, I think this is pretty much the eleventh close to minute as you can get for a brand and a company that I mean, we've talked about this morning hundred over one hundred twenty five years in existence. When the average I looked this up the average fortune five hundred companies these days lasts less than fifteen years in existence started in the eighteen eighty amazing selling watches via mail order. Right? And then you know, yes, and then the mail order business. I mean, it really was if you think about it, the Amazon of the early twentieth century, it was reaching people across the country, enabling people not just in cities, but in rural areas in the country to get a catalog order, things happening, shipped, get a house, get house, you know, eventually by car and service a car. I mean, there's so many things at Sears impacted everyone's lives. And so just to see a kind of come. To this end. And we've seen this end approaching for a while now, but I believe we're pretty close to the end right now. So I did a little research here and I want to do the brief history and then Emily, I want to get your thoughts Sears. As we mentioned founded in the eighteen eighties, expands its catalogue and the eighteen ninety s in one thousand nine hundred six goes public. The nineteen eight catalogue. I love this nineteen thousand eight says we solicit honest criticism more than orders. So very Amazon, ask their, they opened their first department store in nineteen twenty five by the middle of the twentieth century. Sears domestic annual revenue is around one percent of the US's GDP amazingly. Yeah. It's clear that Sears had definitely made its impact on the American economy, the American consumer and manage to whether a lot of storms throughout its history. Especially when he looked through the twentieth century, what's really interesting is you know, kind of started out with this catalogue model where people in rural areas, we're having access to products that they wouldn't have otherwise. Have access to and they slowly change that to become a retail model, which allowed them to reach more consumers supply products at the price points that are most convenient and most profitable for them. Something that was kind of challenging with the catalog model, and then they, they expand. They get into lots of different industries. One, the ones that you know, we spent a lot of time talking about is by services. They tried to get into the financial services industry. They really wanted to become a one stop shop for the American consumer. And now it's interesting that coming into the twenty first century, you've seen this very slow but inevitable decline. Let's talk about that. There was a nine hundred quote by their head of their planning group. This guy, Phillip per cell, and he says, quote, there's no reason why someone shouldn't go into a Sears store and buy a shirt and a code, and then maybe some stock I find that I'm so glad you found that because that is so first of all, it's so nineteen eighties, right? It's the conglomerate era. It's it's all these businesses buying other totally non related businesses because they. Think having this umbrella of all these different businesses enhances your revenue, increases your diversification. And it's just so funny to think that Sears, you know, some of the stuff's logical. I mean, Sears sold insurance. Well, that makes sense. A lot of cases, if you bought a car or another or implying it's at Sears getting insurance to go along with that makes sense, but then going in and maybe buying a stock. So they bought Dean Witter brokerage company. At the time they bought it real estate brokerage firm. The the combined all these things and it just, you know what it did, and I thought the article that you point out from the Atlantic, the one by by Derek, dare Thompson kinda point out that you know, they dailies things and it actually worked all of these businesses. They actually bought worked, but it masked a fundamental decline in their core retail business, which I think is one of the. We'll talk a little bit going forward about some the lessons out of this, but that was one of the reasons why I think the beginning of the end so to speak for the Sears retail business. So let's talk a bit more about that. If people haven't followed the recent history of Sears, we're talking about older history but recent history, you've got to kind of begin with the name Eddie Lampert Philipson there. That's right. So any Lampard's this kind of very highly regarded hedge fund manager. He comes in, he turns around KMart well turns around and under air quotes, but you choirs KMart and it gets credited for kind of turn around that business and then does something just extraordinary time. He. Mart and merges it with Sears. And under the idea that I'm gonna take two struggling retailers so to speak, put them together and together they're gonna, be stronger together. They're going to be able to compete with the walmarts of the world, the targets of the world, the home depots of the world, all these big emerging mass merchant retailers, and you know, at the time and I remember this kind of being starting at the full into dozen eight. There was just a lot of credit given to Lampert. He's gonna do this. He's going to pull this off. He's a genius, and you know he's going to be it'll financial engineer his way to create a lot of value to shareholders. He's going to focus on the real estate. He's going to focus on some of the brands like the crafts and Brandon the Kenmore brand land's end. And we've seen what's happened over the last ten years or so. It certainly has not worked out at Emily. One of the things we were talking about before the show today is how Lampert really saw Sears in some ways as more of a collection of assets. But not so much a steward of this. Great. American brand. Yeah, I definitely don't think of course, hindsight's. Twenty twenty and I'm relatively young. So I never got to live in the air of Sears dominance. But I think Lampert from my perspective, never really came into this company with the intention of saving it. You could look the way he ran the company, the interest that is hedge fund had in it. What he did was he consolidated a bunch of assets and the proceed to sell off the most valuable assets leaving Sears is kind of broken retailer while his hedge fund got tons of origination fees and interest payments for giving the debt to, I guess, quote, unquote, save this American icon. So I'm not sure if any Lampert really went into the CEO role with the intention of being stewardess of the Sears legacy so much as he went into it thinking, how am I as a CEO going to make money off of this investment? And I think that's what it was for him a long term investment. So if I'm looking for good washer, dryer, Eddie Lampert probably not. The guy talked to probably not. Okay. Well, before we pull this thread forward and talk about what it all means for the future for the future of Sears for the future. Of a company like Amazon I want to. I mentioned that this episode of market fuller is brought to you by bamboo HR. If you have your own small or medium-sized business, or if you work in HR, you know how crazy it can be spreadsheets, paperwork employee issues and so much more well, that's where bamboo HR can help bamboo HR can manage all your employees data and automate countless task in one easy to use system so you can focus on people what a concept focusing on people right now. Bamboo HR's giving market flory listeners a special extended free trial. That's right. Try out bamboo HR for a full fourteen days free by going to bamboo, HR dot com. Slash fool again. That's bamboo, HR dot com. Slash fool. Okay. So let's pull the thread forward here and I want to go back to Eddie Lampert here, Matt. He says that by declaring chapter eleven here, and I should back up and say that he has resigned as CEO of Sears, but he's still the chairman and he still the company's largest investor. And he says bankruptcy will allow Sierras to strengthen its balance sheet and return to profitability. Wishful thinking, I think very wishful thinking, and I'm not surprised at this. I mean toys r. us, for example, to use a recent example declared chapter, limping bankruptcy at least twice if not three times before the eventual liquidated. And I think this is inevitable for Sears as well. They're going to close some stores. They're going to try to get some debtor and financing and place so they can get through the holiday season, get a little bit boost to their revenue and maybe try to pay off some liabilities. But this is a company that I think just from a retail point of view has really no chance of balancing back. The brand has lost. A lot of the connection once had to consumers by. The way they still have something like one point, five billion in pensions alive, pendulum ability, outstanding, which how in the world are they going to be able to cover that at some point. So in my mind, even though they're going to go through this process, a lot of companies do. I don't see a light at the end of the tunnel Italy. Yeah, I completely agree. I think continuing to pull that threat forward where Lampert really went wrong was just not focusing on the court demographic not focusing on the consumer at all. I think Sears succeeded a lot for as long as it did because it was obsessed with the consumer. It was constantly kind of changing its business and innovating and moving to where they saw the markets. And sometimes that was misguided. Their financial services, for example performed well. But like Matt said, it didn't make sense to go and buy shirt and its stock. Maybe it made sense to buy batteries. I'm insurance but not assured in the stock. So really trying to understand the core demographic, I don't think is something that Lampert spent any time trying to understand. I think what he did was focused a lot on tech buzzwords saying, we're gonna make this technology driven company and didn't act. Provide any value in that sense. So, yeah, just losing the focus on the core business and the core customer is really where Sears went wrong. In my opinion, we'll Matt earlier, you mentioned Derek Thompson. He's a writer for the Atlantic. He spoke at one of our member events has a book called hit makers, and he had an interesting piece of fears. Go really interesting piece about how Sears was the Amazon of its time until it made some preventable mistakes. In fact, that's essentially the title of the piece in here four lessons that he says, Amazon can learn from Sears. I wanna spot you up with these and get your thoughts. His lesson one retail is in a state of perpetual metamorphosis lesson to even large technological advantages for retailers are fleeting less than three. There is no strategic replacement for being obsessed with people and their behavior. And the fourth lesson adding more business is not the same as building a better business. Those are all four. Fantastic. And I think when I think about them all. Together it, it speaks to being flexible. It speaks to you have to constantly adapt to your customer to the environment to your competition and look at WalMart. If we, if we think about WalMart, WalMart came in, you know, in the sixty seventies, but really eighties nineties really started get into Sears turf and it was not because they necessarily had more products. It was really, it was a technology story. WalMart had figured out supply chain, the distribution, they just got ahead of Sears in so many ways, and we're so more so much more efficient than they could offer these low low prices. So Sears and other retailers couldn't compete. And that was just an example of Hayes Sears you're focusing on expanding and diversifying into all these other areas, but wait, there's a lot of things. Your competitors are doing. A lot of interesting things to get their customers lower prices. You're not doing that. And so when you think of Amazon, you think of other businesses the -bility to be flexible to adapt your customer to adapt a trend. To adapt to technology. If you're not, you're set to your setup to lose. And let's be clear here. I think innovation takes capital. You do as a company have to put your money where your mouth is. You can't say, I'm going to be a data driven company and then not follow through with the investments that's necessary to make that a reality and for the time being, I think Amazon has done that really well. They've made a lot of strategic acquisitions and use that free cash flow to further grow and innovate and and change their company to match the future of tomorrow. Now, of course, we can't know if that's going to continue, but I think that president putting your money where your mouth is and putting the capital behind the necessary innovation is key for making that succeed. Emily flippin magazine. Thanks for joining me. Thanks back. Thanks if you have a thought on series. If you have a seer story, you want to share. If you have a question or comment for us or Email is market full yet full dot com. That's market flory at full dot com. Thanks as always for joining us as always people in the show may have intr-. Interest in the stocks they talk about and the motley fool may have recommendations for against Simone pyre cells talks based solely on what you hear. That's it for this edition market full ring. The show is mixed by Austin, Morgan. I'm macrey. Thanks for listening and we will see them on.
Aired 6 d ago 27:41
This marketplace podcast is brought to you by Sino an enterprise e signature solution, create custom workflows and get documents. Like triclean signed from any device, save thousands of dollars on paperwork closed deals up to four times faster and enjoy seamless integration. With the cloud platforms. You already use? Visit sign now dot com slash marketplace. And get a free thirty day trial and by link din instead of posting on a job board post your job on linked in the place where people go every day to make connections grow in their career. And discover new opportunities. It's the best place to find the right person who will help grow your business. Go to Lincoln dot com slash marketplace. And get fifty dollars off your first job post. That's linked in dot com slash marketplace. Terms and conditions apply. Shutdowns? It seems can make the corporate heart grow fonder from American public media. This is marketplace. In Los Angeles. I'm Carl result is Wednesday. The sixteenth of January as always to have your long everybody day. Twenty six is where we find ourselves no signs of relief in the offing. And so as happens when you go without something for a while, a certain wistfulness has come over some parts of corporate America, along ING if you will for a little good fashioned government bureaucracy because while it may slow things down without it. It is tough to get anything done from Washington. Marketplace's Kimberly Adams gets us going. Justin, Cox is suing the federal government because he can't sell his beer, specifically our spring, seasonal beer. The precious. One was in Africa, Cox is CEO of atlas brew works a craft brewery here in DC, the company is stuck in a holding pattern because the agency that would approve the new label for the precious one is shutdown. We're in this. Various position. Now, we have beer sitting in our tank that we don't have a place to put it into the market without this label Bridget dueling with the George Washington regulatory study center. I mean, it's hard enough to run a small business. But when you're waiting for someone else to make a decision, those are hours and days, and maybe even weeks when you're not able to proceed she says, lots of industries could use a little more government decision making right now drugmakers can't bring new products to market automakers are waiting for emission sign offs. And that label issue comes up for the meat industry to make a label change of meat and poultry you have to go to USDA and actually have that label change of crew many federal food inspections aren't happening. But Richard Williams who spent almost three decades in food safety at the FDA says we shouldn't worry too much have set of for food manufacturer to keep his food safe a pretty strong in this country. No one wants to be at the. Leaving end of a recall, even if the recall happens after the shutdown is over whenever that might be in Washington. I'm Kimberly Adams for marketplace. British Prime Minister Theresa may is going to keep her job at least for now. She won by the most slender of margins a no-confidence vote in parliament today, whether she's happy about that. Or not as tough to know because she still has Brexit smack in her lap. Will it still happen after yesterday's parliamentary torpedoing of the deal that may negotiated with the EU? Not sure when Dono are all the possibilities known in the vernacular as a hard Brexit, assault Brexit, or no Brexit still out there. Yeah. I guess a commonsense observer would say all of this uncertainty should be taking a toll on global markets and the water me, right? We'll see here's got Tom key markets gave rather ho-hum reaction. Yesterday's no votes on the British government's Brexit plan. London. Stocks rose a bit the pound gave up a tad because many investors predict the UK is moving to a softer divorce from Europe or none at all. In other words, a win for economic connectedness. Jonathan Portis teaches economics at King's College in London compared to the US China trade war breaks today, actually, pretty small veer nonetheless, it might be traps to signal of swing back against poke protectionism, but they could be wrong political indecision could lead to a chaotic Brexit in March goods piling up at the British border grounded planes, European economic pain. Many companies wanna stock extra parts inventory just in cases shortages, but today's global supply chains don't always allow for that says a communist Peter homes at the university of Sussex is spoke by Skype. Just in time systems is you don't have spare capability to do that the food industry. Simply conned expand frigerator well house because their own sunny Brexit uncertainty adds to a global laundry list of question marks US, China trade Iran Oil Sanctions, North Korea. But Ian, Bremmer president of the Eurasia group says none of these are immediate crises yet. I think the markets will say there's nothing really to worry about because we don't have these problems. But we're not resolving any of them. He says when the next real crisis comes the global economic pain could be big I'm Scott Tong for marketplace. Today's man bites economic dog dog story comes to us from Sears and the federal bankruptcy code the men who drove Sears into bankruptcy just made a deal to buy Sears in a bankruptcy auction the retailers once and I guess future. CEO Eddie Lampert is gonna pay just over five billion dollars for. The company used on the deal does still have to be approved by judge which say that. But as we have reported on this program, Sears has been struggling for a long time. So why exactly does Lampert one pour more money into it? Marketplace's Mariel Sagarra has that one win it company files for chapter eleven bankruptcy. There are a couple of things can go. It can reemerge with a plan to pay back its creditors. The banks and businesses that owes money to or it can liquidate your broken up and sold in pieces and the creditors are repaid in some shape, or fashion. Robert Rostan is principal at training the street. Most of Sears is creditors want the company to liquidate. But a liquidation would be real bad for any Lampert. He could have walked quite a bit of money 'cause Lampert and his hedge fund ESL investments are Sears is largest creditors. They've lent Sears more than a billion dollars. And in a liquidation that could get wiped out Lampert. Hedge funder also. So the retailers biggest shareholders and as an equity investors. Good chance that you're not gonna get anything back the equity. Investors are only paid. If the creditors are paid. So Lampard is making this bid to keep Sears alive. At least that way, the company can still generate cash, for instance, years ago, a real estate firm Lampert owns bought hundreds of Sears stores. Merlo compelling teaches finance Cornell that could be some, you know, cashflow that can be expected such as the payment of the rent that goes to Spock Lampert negotiated one other benefit for himself in this deal. It would protect them from lawsuits by creditors who accused him of stripping Sears of assets representatives for Lampert declined to comment for this story, a Merial Sagarra for marketplace. Wall Street on this Wednesday, you can take your government shutdown, and you can take your Brexit and you're slowing Chinese economy. And you know, what you can do with them. Well, what you can do with them. So you can stack them up against corporate profits, and that'll explain why the major. Indices were up today. We'll have the details when we do the numbers. There's a special section of the Detroit auto show, which is more properly. The North American International auto show, which is in full swing this week. That's all about the car of the future fully self-driving more experiential than I don't know. A minivan your slept kids and the groceries back and forth in and while those kinds of cars is still a ways away from showing up at your local dealership partially autonomous cars are on the roads right now loaded with things like beeping alerts to let you know, if there's a car, you're blind spot or steering wheels vibrate when you drift into another lane. It's cool and it can save lives. But as marketplace, Ben Bradford reports drivers might be relying on that stuff. Just a bit too much turn on your TV these days, and you could be forgiven for thinking the self driving car is already here. The ability to make thousand decisions before you even make wine the confidence. Three sixty dollars. Nissan, pro pilot assist with the push of a button the line between man and machine was blurred. With pilot in the brand names and ads showing drivers releasing the steering wheel as their cars, keeping from drifting. Even savvy drivers can overestimate the capabilities of their advanced safety features fifty seven year old Scott Berg, bought his Volkswagen. Atlas a couple of years ago in part for the tech. Yeah. So this is my favorite part. What's great about this card? We're on a freeway north of Los Angeles when he pushes the button on a steering wheel. And then takes his foot off the pedals adaptive cruise. I'm gonna get behind this guy. And I'm gonna tell the car that I wanted to go eighty it starts to accelerate and recruiting up on the car head of us as we get close. He still not touching the pedals. But the car slows down pretty much set. It forget it. Almost Burg explains. The sensors can detect moving cars, but can't read tight turns or suddenly stopped vehicles. I mentioned they can also get jammed by mud or snow. I did not know that. And it makes me glad that I live in LA now Burg's researched vehicle even flipped through the owner's manual. But he still has knowledge gaps about his cars. Advanced features a recent AAA study found he's like a lot of people four out of five drivers didn't know their blindspot detectors can miss pedestrians or vehicles at certain speeds, a quarter said they no longer always check their blind spots. That's the attitude than it's only a matter of time before you get an accident UC, Irvine vehicle technology researcher, Hilary Abraham. Doesn't blame drivers for their misconceptions. Most people looked to their car salesman to explain their. Hi tech features. But she says they don't always have the answers the onus is really being placed on the consumer to find information, but it's really difficult to find first drivers have to sort through all the jargon advanced cruise control on one car is active cruise control on another or intelligent cruise control or distract plus automatic emergency breaking has over forty different names and Alex Stein. At the nonprofit national safety council says each one works differently. Some don't stop you. Some just slow you down some can't see pedestrians others can. And the problem is there's no common nomenclature out there. There is no commonality. He says many drivers deactivate the features because they don't understand them and find them annoying automakers acknowledged the confusion Andy christianson works on advanced safety features for Nissan. He says automakers shouldn't try to explain all the complex limitations instead customers need to keep in mind. One guiding rule these allergies aren't driving for them. They are still driving. They're still in full control. These systems of helping in the background the national safety council thinks drivers should know the individual limitations to explain them. The council's launched a website and a smartphone game of all things. But Epstein says there's only one real solution to educating drivers education needs to be done by the automakers in the vehicle because every system is different. Because if even the smartphone game can come with two to'real when you first open it why can't a car in Los Angeles. I'm Ben Bradford for marketplace. We did some reporting earlier this week about retail over the holidays who did well, and who did it less. Well, Macy's JC. Penney are firmly in that latter category. But it got us thinking this morning about Alanna forgo. She manages the Butte plaza Molin Butte, Montana. We talked to her every now, and then conversations that turned not infrequently to the retail apocalypse. That's been happening past couple years. She even lost her own JC Penney at the buke plaza mall, which is where we got her on the phone today. Halonen chi? How are you Harvey new year happy new year to you too? Thanks for taking the time to call us. I I understand you had a nose bleed situation there. So I appreciate less. Yeah. There's there's walking program today. And you know, they come in from the cold. Not locking. Yeah. So how'd you just pass off some tissue? Everything's good. Everything's good show. The walking program is just people walking around the mall. Yes. Yeah. Our local community health. She has organized a program they used to walk outside. But then things got a little smokey. So that drove them into the mall, and they have enjoyed it so much they have coordinated their walking program inside. Well, that's good. 'cause you know, you're getting people in the mall, and and look it's that's what that's why we're calling right to find out what life is like in the plaza them all these days better. Well, that's good. Because honestly last time we spoke. It was maybe not so good. First of all how we're the holidays for y'all holidays were strong, people were just wonderful. They shopped local they they shopped small they shopped strong on there really seemed to be a commitment to that this year, so small dollar purchases. But a lot of them a lot of them. Yes. It was just very joyful in very supportive. Good one of the things that bid kind of bummy out last time. We spoke was that one of your anchor stores was closing. And you had I think it was a it was a hotel nearby. Using one of your big stores is like storage space. Right, right. They were doing a remodel. So they were staging all of the new furniture here. And then moving it to the hotel as the emptied the rooms. But now you have filled that space with a tenant. I have that. Right. We have least that space. Yes. Talk to me about that. So they actually are a call center business. They provide support for about seventy clients. It is a call in center, not telemarketing. So they won't be calling. You. It's the people you wanna talk to. I I was thinking before we got on the phone today that that really your job as the manager of that mall is basically to keep the square footage rented, right? And and it doesn't much matter really. Whether it's a big department store, maybe or or call center, you know, we we've talked about this sustainability of exclusive retail properties really needed to be looked at properties who've embraced mixed use concepts. That's the direction that's going to be our reboot. But you know, if we can bring up to three hundred people that's definitely going to bring some life back to this block three hundred jobs. That's what you mean. Right. Yes. We couldn't have asked for a better happy new year. Now talk to me about the rest of the mall Hauer, not the big anchor properties. But some of the smaller retail spaces through that mall. Do you know things still been tough, we closed our PayLess shoe store? Yeah. And our our managers. She's. With the company thirty four years, a personal friend of mine that was really hard. You know, if there's one thing that retailers do as we adapt if you don't adapt you will go the way of the dinosaur. I know things are going to pick up a lot of go. She's the manager at the plaza mall and Butte Montana. Thanks a lot with. Two. Coming up all of my nervous energy, everybody. Remember running around the house cleaning, everything got to keep your mind off the shutdown. Somehow right first, though, let's do the numbers. Now industrials up one hundred forty one points today about a half percent twenty four thousand two seven the NASDAQ picked up ten points. One tenth of one percent seven thousand thirty four five hundred advanced five points about two tenths percent twenty-six and sixteen Marielle about Eddie Lampert bid to save. What's left of Sears? Sears shares. Surged fifty five five five percent that they'll nickel elsewhere in retail Wal-Mart gained a tenth of one percent. Macy's down two percent day Ford is forecasting softer than expected. Fourth-quarter earnings for says is not going to be offering any kind of full forecast for the full year. Shares down six percents day just yesterday Ford and manufacturing lines with Volkswagen. Volkswagen down a tenth of one percent overseas. Trading GM up three tenths percent bonds fell yield on the ten year treasury note rose to two point seven two percent. You're listening to marketplace. Not everybody gets a chance to learn about the economy in school. Marketplace helps you continue your education in a way that smart accessible, and hopefully even a bit fun. Your donation is not only an investment in your own learning. But also in helping us make more people smart about the economy, and that is good for everyone to learn how you can help. Visit marketplace dot org slash investors. And thanks. That's marketplace podcast is brought to you by with Sabi. Hot cloud storage. If your company's thinking about moving data storage to the cloud, check out the company. That's rethinking cloud storage with Sabi is less expensive than just the maintenance on your current on premises storage. Plus, it's eighty percents cheaper and six times faster than Amazon S three with no egress fees. Experience. It for yourself with free unlimited storage for a month. Go to Asaba dot com. Click free trial and use the offer code was ambi-. This is marketplace, I'm KAI result. We talk with some degree of regularity about bonds on this program government bonds, first of all, and they're also important interest rates also corporate bonds debt that companies issued borrow money to expand an invest, but not all debt is created equal. There are bonds that are super safe, and there are bonds that are less safe, but more remunerative and that slice of the corporate bond. World has been showing some signs of trouble. Marketplace Justin ho has that one corporate bonds are. Graded by the ratings agencies ratings like a AA. Triple b Karen Rothman is at John Hancock asset management the credit rating comes from the perceived risk of default bonds that score low are considered junk, the formal phrases high yield. And this is not an insult. It's a wager. Higher return higher risk of the fault. Rothman says junk bonds or common for companies that tend to carry a lot of debt a good number of bonds are issued by energy companies other issuers in the market that are quite large. Telecommunications companies media and technology companies and healthcare companies sprint has been sewing. Billions in junk bonds to help build its giant five G network. Del Sol junk bonds to finance acquisition, twenty sixteen junk bonds are part of a normal growing economy. But when there are signs the economy is slowing down that could mean that default rates in in the corporate space will pick up. That's Jeffrey Cleveland chief economist at paid in regal. He says that could explain why investors withdrew a record amount from junk bond funds last year. The volatile stock market isn't helping investors appetite for risk either. Cleveland says junk bonds or a barometer for economic slowdowns the times when you see the worst performance in high yield are around the time of a recession. So if that's why money is leaving the space and that it that is more worrisome phenomenon. Investors aren't the only ones shunning junk bonds companies have an issuing them because those high yields are expensive to pay out. There wasn't a single junk bond sale in December. But there are signs of recovery. In the junk bond market for one companies are selling them again this month. Putra squalor is managing director at Penn co Prisma if they want to expand or do wanna buy another company at some point some of the companies that are going to be pushed by the realities of their business to come to hail market. But there are still concerns. Pascall says right now investors are more worried about companies like General Electric, giant's beleaguered. Conglomerates whose corporate bonds haven't given a junk rating yet the question with certain companies like GE were to have a lot of debt on their balance sheet and their earnings are presumably on one trajectory, and that's downwards the are at risk of becoming downgraded to yield right now. There's roughly a trillion dollars of the kind of barely passing debt debt gets downgraded. It would flood the junk bond market making their values fall, even lower in their yields even higher in New York. I'm Justin ho for marketplace. President Trump signed the government employees fair treatment act of two thousand nineteen into law today unintentional irony aside, think about it for a second. It guarantees federal employees that they are actually going to get paid whenever the shutdown finally ends. But there is a whole another group of people who are affected by the shutdown and most if not all of them aren't going to be getting anything when they go back to work government contractors is talking about people who do everything from computer programming to food service to you name it for the government, and that gets us to a special shutdown edition of our series. My Conny stories of people in how they are making a go of it out there this time, it's a retired government contractor near Washington DC. I'm Janet Martin. And I'm retired software engineer used to work in government contracting. I started somewhere in the late eighties. So it was about twenty five years or so worked for many many different government contracting firms. Little ones big ones all across the spectrum the first shutdown. I went through was the Newt Gingrich shutdown which was before this one the longest one ever. And I was very lucky. It was early on in my career. So I was not contributing majority of income to the household. My husband had a good job at the time. It was just very stressful because I was home. I knew stuff was piling up. All I remember is ended up cleaning my house. In all of my nervous energy day. Remember running around the house cleaning, everything some of the shutdowns were we were very lucky. They were just like you. Now. Shuts down on Friday opens back up by Monday. But some of them went on for a while. Looking back on it. I realized that after that very first long shutdown that I was involved in. We always made sure we live inside our paychecks. So you know, we drive our cars till they literally fall apart in the driveway. We don't go on elaborate vacations. You know, we bought a house way back when thinking of Entschlie we would flip it for a bigger house. We've never done that. And it even affects me now. Even though I'm retired. I still kinda keep the expenses down as much as I can. We don't go out and go crazy. As I was listening to all of this shutdown information. I realized that's part of the decisions I've made over the years having this happen over and over and over again, you don't live. At the level that may be your paycheck would imply you could live 'cause you know that that paychecks not. It may not be secure. Can't do this series. Without your helps a hook us up. And let us know how your economy is doing just place can do that at marketplace dot org. Final note on the way out today in which I'm reasonably certain the Federal Reserve is just messing with the Fed's beige book came out today. The central banks regularly scheduled regional report on the American economy divided by its twelve district. Well, the fed said was that most of the American economy is growing at a modest or moderate pace, which is fine, except we looked it up modest, according to Mariam Webster's definition for a means limited in size or scope. Moderate again, burying Webster definition number. Five means limited in scope fact. I'm right, right. They're messing with us. And we are out of here. The down dust up one hundred and forty one points today about a half percent. The NASDAQ picked up ten tenth percent, yes. And five hundred advance five points about two tenths of one percent are media production. Team includes Sarah gear, Jake Gorski, drew justed, Jeff Peters, Dan Powell, Daniel Ramirez, Charlton Thorpe, and Ben tolliday. I'm calm Razon. We will see tomorrow. This is a PM.
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