With corporate profits declining in three of the past four quarters, signs are pointing to a recession. Bloomberg View columnist Barry Ritholtz conducted a Q&A with James Bianco, president of the Bianco Research LLC. Bianco told Ritholtz that looking back to 1940, earnings turned negative either during or just after all of the 12 recessions between then and now. In fact, Ritholtz noted that research from JPMorgan pointed out that when markets see consecutive quarters of earning declines, a recession follows 81 percent of the time. Bianco stated that the last time earnings turned negative without a recession was in September 1998, when the Volcker Fed was easing monetary policy following the Long-Term Capital Management collapse and the Asian financial crisis. The only other time before that was in 1952, he said.
Regulators Start Sniffing Around Online Lenders
Online lending platforms, like Lending Club and Prosper, have been a boon to borrowers, individuals willing to lend them money, and even financial advisors who have a new investment opportunity for their clients. The portals, which can almost instantly approve a loan from a pool of capital contributed be individual investors, threaten to make an end-run around traditional banks where smaller loans are harder to get and more time-consuming. Now, state and federal regulators may be starting to bring them under review. The Consumer Financial Protection Bureau this week notified borrowers to alert them of any complaints they have about the services, according to the Los Angeles Times. This comes at the same time California state regulators called for 14 marketplace lenders to submit detailed information on their businesses. The California announcement comes on the heels of revelations that Syed Rizwan Farook, one of the San Bernadino shooters, borrowed $28,500 on the Prosper platform weeks before the Dec. 2 tragedy. State officials say that event is completely unrelated to their request for information.
Financial Advisors Don't Make Bank
The health, legal and technology fields pay the highest salaries. Financial advisors don't even crack the top 25 highest-paying careers, according to a new survey compiled by job site Glassdoor.com. Yet nearly 70 percent of people say that compensation is the biggest factor when determining what job to take. That could be a problem for an industry attempting to bring in younger talent. Almost half (45 percent) of millennials polled by Pershing and working at financial services firms said compensation is the reward that motivates them the most. According to PayScale, the average total annual paycheck for an entry-level financial advisor is about $51,000—and commissions account for about 40 percent of that. Meanwhile the average graduating college student has about $29,000 in debt. A career in technology doesn't look so bad, right?
The financial advisor of former University of Alabama football star Kenneth Darby pleaded guilty to fraud on Tuesday, al.com is reporting. According to the Alabama Securities Commission, Keith Michael Rogers misled clients by claiming their investment funds would be used to obtain a return. Instead, Rogers used $2.5 million worth of client money to pay for personal expenses and in a Ponzi scheme-like manner to pay returns to earlier investors. Darby, who played for the Crimson Tide between 2003 and 2007, lost more than $250,000 in the fraud.
