Get Your Resume Ready – The List of Highest Paying Companies is Out; Online Lending Risks Exposed; Home Sales Spring Forward

Benefits and all…

ID-100263187

Image courtesy of iosphere/FreeDigitalPhotos.net

Glassdoor just put out its latest list of companies that are better than yours. This time you get to hear the list of highest paying companies in America for 2016. In order to even be considered for the list, companies had to have at least 50 salary reports on Glassdoor. The top spot goes to Chicago-based business consulting firm A.T. Kearney who pays its employees a median salary of $167,534. Strategy&, another consulting firm, ranked number two while tech firm Juniper Networks took the number three spot. With the exception of Visa, which came in at number 11, no other financial firms made the list of twenty five companies. Instead consulting firms and tech companies dominated the list. Consulting firms are all about contacts, connections and a ” who you know”culture. Other “barriers of entry” include a good reputation and specialized skills and knowledge. Which explains why they are willing to shell out big bucks for sky-high salaries. Tech companies, however, value”what you know” that leads to a “war for talent” in that industry. Incidentally, there’s a big shortage of skilled workers in tech. Just saying. As for other notable companies who made the list, Google weighed in at number 5, Facebook ranked twelfth and Twitter appeared at number 13.

Borrower’s remorse…

ID-100377914

Image courtesy of Geerati/FreeDigitalPhotos.net

Online payday loans might seem like a great idea to many, but have actually turned into a major nightmare after borrowers were hit hard with major bank fees and account closures. The Consumer Financial Protection Bureau conducted a study – its third in the industry – and found that about half of the borrowers who took out these high-interest loans had to eat a $185 bank penalty for overdraft and non-sufficient funds fees.  In case you were wondering, that high-interest rate is 300% – 500% on an unsecured loan.  Ironically, and tragically, I might add, this type of loan is favored by low-income consumers who use the method to pay off expenses in between paychecks. The penalties were incurred when the online lenders submitted repayment requests to the borrower’s bank. But if the accounts were low, and they usually were, the borrower got slapped with heavy fees. Online lenders would make repeated debit attempts on borrowers accounts, adding their own fees on top of the bank fees incurred. For the first unsuccessful debit repayment, the online lender would hit the borrower with a $97 penalty. A second unsuccessful debit repayment resulted in a $50 penalty. If multiple requests were made in a single day, the borrower would have to eat another $39. As a result, 23% of borrowers in the study had their accounts closed at the end of the 18 month period of the study. Fortunately, new regulations are on the horizon. It’s just too bad that no one is discussing the possibility of any retroactive recourse for the credit-scarred borrowers.

Home run…

ID-100406095

Image courtesy of iosphere/FreeDigitalPhotos.net

Existing home sales are up for March, according to the National Association of Realtors and Wall Street is rejoicing since February’s 7% decrease still induces cringing . Economists only predicted that sales would go up around 4% at an annual rate of 5.28 million, but instead they were up over 5% at an annual rate of 5.33 million homes. No doubt a healthy labor market and low mortgage rates contributed to those lovely figures and analysts feel secure in saying that it signals a strong start to the spring selling season. The median sale price of a home is sitting at $222,700, a 5.7% increase over last year at this time. Sales are up in all four of the country’s regions, with a big 11% boost in the Northeast. Unfortunately, sales at both the low and high ends weren’t as impressive, with a big shortage plaguing the low-end. The homes that sold in March sat on the market for an average of 47 days as opposed to February’s home sales that sat on the market for an average of 59 days.  Approximately 30% of the homes sold in March were purchased by first-time homebuyers while mortgage applications rose to their highest levels in nine weeks.

 

Chip Cards Get Moving; Netflix Growing Pains; Harley-Davidson Earnings Not Cruising

Feeling chipper…

ID-100215855

Image courtesy of vectorolie/FreeDigitalPhotos.net

There are around 265 million Visa credit and debit chip cards floating around that have been providing some much needed security. Big merchants who upgraded their terminals for chip-enabled cards have noted an 18% decrease in fraudulent activity.  Five of the 25 biggest merchants who were not chip-enabled actually saw an 11% uptick in fraudulent activity. And while everyone is happy about the added security, both merchants and customers don’t care for the much longer transaction times. But now Visa finally finally made some improvements to its software with a “Quick Chip” upgrade. The new upgrade is expected to reduce wait times and shave off about 18 seconds from transactions times. Instead of dipping your card in the terminal and waiting a number of endless seconds until the terminal angrily beeps that you need to remove your card, you’ll dip it in and take it right out in two seconds. Wal-Mart also took cues from disgruntled customers and figured out a way to shave 11 seconds of their transaction times: by skipping the prompt that asks shoppers to confirm the transaction amount. Not sure how I feel about that one.  If you recall, merchants had to meet a deadline last October to upgrade their terminals. If fraudulent activity occurs, the merchant now has to pony up and banks are now OFF the hook.

Growing pains…

ID-10063866

Image courtesy of digitalart/FreeDigitalPhotos.net

Netflix is in 190 countries and can be accessed from just about everywhere. The company gleefully announced that it picked up 6.74 million new subscribers in its latest earnings report and its total subscriber-ship is hovering at 81.5 million paying viewers. The streaming video service has even managed to produce more original content than HBO  and figures that by the end of the year, it will have 600 hours of original programming under its belt. But that’s where the fun ends because today the stock fell 11%, experiencing its biggest same day drop in eight months, falling to $95.84. Investors are super-curious and worried about Netflix’s growth plans after giving the disappointing news about the amount of new subscribers it expects to gain…and lose. That’s right. Netflix expect some people to drop out and dare I say it…not lay their eyes on another episode of Orange is the New Black once subscription prices go up. Oh well. You win some, you lose some. The company is thinking it’ll add only about 2.5 million subscribers next quarter, and expects just 500,000 of them to be in the U.S. Then of course there’s all that competition from Hulu and Amazon. Because, after all, its not enough for Amazon to dominate e-commerce. More than eight brokerages decided that maybe now is a good time to announce that their target price for Netflix stock is going to get somewhat smaller, with the average price target coming in at $123. However, with all that bad news, Netflix still has big plans to surpass 100 million subscribers…by next year.

Not-so-easy rider…

ID-100277744

Image courtesy of digitalart/FreeDigitalPhotos.net

Harley-Davidson (HD) bikes might carry major street creed but its earnings tell a whole different story. The legendary motorcycle company just posted its earnings and well…they just weren’t as impressive as the product themselves. HD took in a $250.5 million profit, picking up $1.36 per share, but this time last year the company earned way more, topping out closer to $270 million and adding $1.27 per share. Analysts, by the way, only expected $1.29 per share to be added. That 7.2% year-over-year decrease had Wall Street scratching its head. At least revenue was up 4.8% to $1.75 billion from last year’s $1.67 billion. But while increased revenue is a good thing, HD’s .5% sales decrease in the United States is most definitely not. The company sold only 35,326 bikes in the United States and lost some market share to competitors, especially Polaris’ Indian Motorcycles. Apparently, Harleys have failed to attract younger consumers (read: milllenials). However, globally, Harley Davidson fared much better, selling 57,458 bikes, and expects to sell a total of between 269,000 and 274,000 bikes for the year – which is more than what was initially expected. Harley-Davidson graciously explained that “retail sales trends have significantly improved.” Which seems to be true, at least for Polaris, who has taken a big bite out of Harley-Davidson’s market share.

Panama Paper Scandal Just Getting Started; Riding into the Pac Sun-set; How Victoria Secret Plans to Stay on Top

Paper fail…

ID-100260495

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The Panama Papers continue their entertaining journey of embarrassing plenty of world leaders. For instance, British Prime Minister David Cameron has been haplessly defending himself after some documents in the Panama Papers unflatteringly revealed how he profited from his late father’s offshore investments, set up by scandalized Panamanian law firm, Mossack Fonseca. His father’s investment fund, Blairmor, shrewdly avoided paying taxes in the United Kingdom by having company board meetings in Switzerland and the Bahamas. Four months before David Cameron became the Prime Minister, he had the good sense to sell his stake for a not-so-whopping $42,000. The Prime Minister called the revelations a ”private matter” but then went on to say that all of his assets are totally legit.  Except it was said eloquently and with a British accent, which always makes things sound even better. Chinese Communist Party Leader Xi Jinping’s brother-in-law, in addition to a few other party members, also owned a piece of a Mossack Fonseca created shell company. But it’s doubtful Jinping’s power and status will be affected. Especially because the (shell) companies in question were conveniently gone with the wind by the time he assumed his leadership role. Interestingly, only one American has been spotted, so far, amongst the 11.5 million documents. It belongs to that of Chicago-based author Marianna Olszewski. But like I said, there are millions of documents to sift through so it could take awhile before other misbehaving Americans are discovered. Or not. These documents were from one but one firm out of hundreds or thousands of firms, both American and foreign, that perform these types of services. Besides, the U.S. is itself a tax haven. Just look no further than Nevada and Delaware. In fact, the U.S. is ranked as the world’s third most popular tax haven. Panama is much less popular, ranking way down at number 13.

Not so gnarly…

ID-100144076

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

SoCal-based company PacSun is the latest retailer to file for Chapter 11 bankruptcy after posting a $10 million net loss in its fourth quarter. The retailer only managed to nail a profit in just one quarter out of the last six. Add to that increased competition and you’ve got a whole big fiscal mess. But fear not, if you’re a frequent PacSun shopper, as there will be “no immediate impact” on customers at any of the chains approximate 600 stores. As for the retailer’s 2000 employees, their jobs are safe…for now, anyway. Pac Sun, incidentally, also carries the Kendall and Kylie Jenner line, just in case you felt like handing over your hard-earned cash to the Kardashian/Jenner/Kanye clan. Private investment firm Golden Gate will be the lucky group to take PacSun back to being a privately-held company. The investment firm previously lent Pac Sun $60 million back in 2011 and will now magically turn 65% of the company’s debt into equity. Okay, so there’s no magic involved, but there’s definitely some creative math at work. After its bankruptcy reorganization, the company will secure a $100 million revolving line of credit from Wells Fargo. The skate/surf California retailer owes plenty of cash to creditors including $5.7 million to Nike and another $3.8 million to Simon Property Group Inc., the mall operator that is home to many a PacSun stores. Shares of the company plunged as much as 97% in the past 12 months and took another nasty dive today, losing over 40% of its value at one point, as it hit 5 cents. The retailer will join a long and less-than-illustrious list of retailers who also recently filed Chapter 11, including Quiksilver, American Apparel, Wet Seal, Delia’s, Sports Authority…well, you get the grim picture.

In on the secret…

ID-100256541

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Victoria’s Secret (VS) is one retailer that is most definitely NOT filing for Chapter 11 bankruptcy. The company is actually at the top its fiscal game, posting a 3% sales gain over the previous year and record sales for 2015. But that isn’t stopping the insanely recognizable brand from making some pre-emptive changes, lest the retail climate fiscally change at some inconvenient point. Unfortunately, those changes involve some restructuring that will leave 200 employees without jobs in both the company’s New York and Ohio offices. Victoria’s Secret, whose parent company is L Brands, wants to streamline its operations by separating and concentrating on its top three units: lingerie, beauty and, of course, teen-centric brand, PINK. So what becomes of all the rest of Victoria’s Secret’s other categories of merchandise? They’re going buh-bye. VS, which also owns Bath & Body Works, plans to gradually shift gears away from its iconic catalog. Apparently, the internet managed to make the catalog, among other sales methods, a virtual relic – no pun intended.

Obama Dashes Pfizer/Allergan Inversion Dreams; Oil-Vey: The Wrath of the DOJ; Verizon Gets Awesome(ness);

Breaking up is hard to do…

ID-100211699

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Pfizer can kiss its $160 billion merger with Allergan goodbye all thanks to some new treasury rules that seemed to have been designed just with this particular deal in mind. President Obama unveiled the new rules that make it harder for corporations to do inversions and basically make them not fiscally worth it. The rules make sure to target “serial inverters” which are foreign companies that became corporate giants by buying up American companies for tax reduction purposes. President Obama and the Treasury are trying to end corporate inversions and calls the practice “one of the most insidious tax loopholes out there, fleeing the country just to get out of paying their taxes.” Plenty of American companies have moved parts of their operations to countries where the corporate tax rates are more hospitable and essentially reincorporate in those places. The Pfizer/Allergan deal would have been the largest deal of its kind and would have effectively knocked off a $1 billion chunk of change from Pfizer’s corporate tax bill. Which explains why Pfizer was so eager to do its deal with Ireland-based Allergan. According to President Obama, global tax avoidance is a “huge problem.” So is climate change and the roster of presidential candidates, by the way, but Obama was only able to do something to curtail inversions. Just saying. Now experts suspect other foreign companies with large American operations will fall under the microscope and things could get ugly for them as well. Pfizer will now have to pay Allergan $150 million to reimburse the company for expenses from the deal that wasn’t. At least its not as much as the $1.6 billion AbbVie had to pay Shire back in 2014 when that $55 billion deal fell apart. Why Congress can’t make the corporate tax rate just as hospitable in the United States as it is in other countries, and maybe even attract foreign companies to come here and pay billions in taxes is a mystery to me. If someone has an answer, I’d love to hear it.

Oil drink to that…

ID-100126507

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Pharmaceutical Corporations aren’t the only ones displeased the with the U.S. government today. Enter two of Big Oil’s biggest players who have some unkind thoughts for the Department of Justice. Halliburton and Baker Hughes happen to be the second and third largest oil companies and control 15.8% of the market share. Together, the two companies pulled down a combined revenue of $39.3 billion. Halliburton alone scored over a $5 billion profit for 2014. But in 2015, the oil giant didn’t fare nearly as well and instead posted a $165 million loss with a major decline in revenue. The drop in oil prices have left dozens of oil companies filing for bankruptcy as hundreds of thousands of people in the industry are now without jobs. Halliburton and Baker Hughes think a merger would help keep both of them from going under but the DOJ is not buying it. The DOJ says anti-trust is written all over this deal, calls it anti-competitive and feels it would make the newly-formed entity way too powerful. The DOJ argues that the deal would lead to much much higher prices and consumers would be at the mercy of the companies. But maybe Baker Hughes can console itself with the $3.5 billion break-up fee it gets to collect from Halliburton now that the deal won’t be going through. At least for now…

Everything is awesome…

ID-10094208

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

As wireless companies hunt for new ways to make money, Verizon figured out one way to do it – through the very hip and very lucrative teen demographic. So like any eager telecom giant, it found a business to buy that it hopes will help them pull in some of more cash. Enter AwesomenessTV, a company that’s home to some of YouTube’s most popular channels and features all sorts of short videos, from dating advice to celebrities. Verizon plunked down $160 million for a 24.5% stake in the company that boasts 3.6 million subscribers. DreamWorks Animation SKG Inc already owns a 51% stake while Hearst Corp owns the remaining stake. DreamWorks Animation was prescient enough to buy AwesomenessTV back in 2013 for the bargain price of just $33 million. This new deal puts AwesomenessTV’s latest valuation at a very cool $650 million. Part of the deal includes Verizon creating a mobile video service for the endeavor and it will be a part of Verizon’s go90 mobile video app – which of course, will be exclusive to Verizon.  Double boom for Verizon because there tends to be lots of juicy revenue in mobile video that comes from both data usage and advertising. AwesomenessTV already had an exclusive deal with Verizon to provide content for go90 so this new development ought to fit in nicely. DreamWorks Animation’s Jeffrey Katzenberg must also be pretty stoked about the deal since he expects annual revenue for AwesomenessTV to double because of it.

Banking Scandal or Ben Affleck Movie?; Airline Ranks and Tanks; Drones to the Rescue

Who gets the movie rights?

ID-100234629

Image courtesy of cuteimage/FreeDigitalPhotos.net

The latest scandal to come out of the banking world has its very own name – “The Panama Papers.” It seems a Panamanian law firm called Mossack Fonseca helped a slew of politicians, celebrities, businessman etc. to create offshore accounts and shell companies for the last forty years. It’s estimated that 500 banks all over the world enlisted the help and resources of Mossack Fonseca to help them set up these shell companies since 1977. Fast forward to a year ago when an anonymous source leaked some 11 million documents to Germany’s biggest newspaper, Suddeutsche Zeitung, which then enlisted the help of the International Consortium of Investigative Journalists. The ICIJ shared information and hunted down leads for over a year in an effort to publicize “The Panama Papers” that contain information on some 214,000 offshore companies. The documents also have plenty of unflattering details about Russian President Vladimir Putin, FIFA officials and over 30 other people and companies that are blacklisted by the U.S. government. These include people indicted for corruption and have ties to drug trafficking and terrorism. Strangely enough, Mossack Fonseco only seems to know the true identities of just over 200 companies out of the over 14,000 that the firm managed to incorporate just in the Seychelles. Now banks across Europe find themselves under the microscope as regulators try to establish if and how those banks found ways to hide assets. The Kremlin, ironically, is calling the allegations “a series of fibs” and thinks its just an attempt to thwart Putins chances in upcoming elections, which are said to be rigged anyway. FIFA, another group that could use a lesson or two on business ethics, called the allegations “ridiculous.” To be fair, it’s not clear to certain people that any actual illegal activity occurred. Of course the banks denied any wrongdoing while Mossack Fonseca calls itself the victim of a data breach.

Bumpy landing…

ID-100261247

Image courtesy of cuteimage/FreeDigitalPhotos.net

Results are in for the Airline Quality Rating and you might just be surprised. Or not. Virgin America took the top spot, even earning the best score in the baggage handling rate category. While Virgin America no doubt takes pride in getting the best ranking, Sir Richard Branson is not exactly celebrating considering Alaska Airlines is buying him out for $2.6 billion. Alaska Airlines, by the way, is paying $57 in cash per share, – a 47% premium over Virgin America’s closing price on Friday. Incidentally, Alaska Airlines came in fifth, though it was ranked highest when it came to fewest customer complaints. But it is anyone’s guess how this buyout will impact Virgin America’s rating next year. In any case, JetBlue came in at number two with Delta, shockingly enough, earning a very respectable third place ranking. Overall industry performance improved slightly. Really slightly. Six carriers actually improved, while another six did not. Spirit came in dead last, but in all fairness, Spirit is new to the list. Also in all fairness, Spirit ranked the highest in customer complaints, which makes sense considering that its culture is best described as “take it or leave it.” Amerian Airlines plunged three spots from last year to number 10. Which sounds about right. American, by the way, is the largest carrier in the world, just not on the United States. United is and yet it doesn’t exactly boast an enthusiastic following. Hawaiian Airlines ranked number one for on-time performance. And that’s really great. Especially if you’re going to Hawaii. Which unfortunately, I am not.

Start-up STAT…

ID-100152850

Image courtesy of bplanet/FreeDigitalPhotos.net

Bay Area start-up Zipline just scored $18 million in funding  – but not from just any investors.  Microsoft co-founder Paul Allen and Yahoo Founder Jerry Yang saw fit to plunk down tons of cash for the drone company but the question is: what makes this drone company different from all the other drone companies? At least for Paul Allen and Jerry Yang. I suppose it has something to do with the fact that Zipline founder Keller Rinaudo is using his drone technology not for delivering books and groceries, but rather to save lives in third-world countries. Zipline’s drones will be delivering blood and much-needed medical supplies to remote, hard-to-reach areas in Rwanda. Rinaudo, a Harvard-trained scientist said that there is “nothing more precious than blood and medicine” and plans on making those items much more accesible than they have ever been. He also wisely pointed out: “Getting medicine to remote places is both a huge market and a global challenge.” As of now places in Rwanada get resupplied a few times a year. But Rinaudo is planning for his drones to make up to 150 drops a day come July. The government of Rwanda is footing the bill to make that happen. And unlike many other types of drones that can’t operate properly in inclement weather, Zipline’s drones can, are able to carry up to 3.5 lbs. and fly within a 75 mile range. Considering that Rwanda is one of the poorest nations in the world, it will become the first country to employ commercial drone delivery, all while Amazon and other companies continue fighting regulatory battles and FAA hurdles.

 

GM’s Defect Debacle In Rearview Mirror; Overseas Deal Might Have Big Impact Here; Zen-tastic Quarter for Lululemon;

Emboldened or embattled?

ID-10049689

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

Score one for GM, the not-so-embattled-anymore auto company that just won a second lawsuit in a series of bellwether cases. In case you have been hanging out in another solar system for the last couple of years, tons of drivers are filing tons of lawsuits against GM because they got into accidents which they say can be blamed on GM’s faulty ignition switches. After a two week trial and a single day of deliberations, two Louisiana plaintiffs, who crashed their car back in 2014 during a freak ice storm, will not be awarded any damages despite their automobile’s defect. This win bodes well for GM and it’s a good thing because there are hundreds more waiting in the legal wings.This case is the second in a series of six cases that will be used to test strategies, with each side getting to choose three cases to argue. This case was GM’s selection and the next bellwether case is scheduled for May. GM already paid out a lofty $2 billion to resolve a slew of legal claims against it, in addition to recalling millions of vehicles. That includes a $900 million settlement to Uncle Sam so that the government would graciously agree to drop its criminal probe into GM. Another $575 million was paid out to settle close to 1,400 civil cases. Then GM set up a $95 million victims compensation fund. In the meantime, 15 people were fired over the defect debacle – that would have cost a buck to fix, by the way –   as GM CEO Mary Barra has been on a mission to change the company culture. Good luck with that one.

Deal or no deal…

ID-10036919

Image courtesy of digitalart/FreeDigitalPhotos.net

You might not be so familiar with a Taiwanese company called Foxconn but it’s more than likely you’re using its product. That is, if you happen to use a very popular mobile device known as an iPhone. Turns out Foxconn assembles those nifty little phones. But that’s not news. What is news is that the company is set to snap up Japanese company, Sharps Electronics for $3.5 billon. And if you can believe it, some analysts think it’s a bad move. And that’s even after Foxconn knocked a couple of billion off of their initial offer when it was discovered that Sharp has literally billions of dollars worth of problems. But, oh well. In any case, if and when the deal goes through, it will be the biggest acquisition by a foreign company in Japan. But that’s beside the point. Foxconn is unofficially hoping that this acquisition, however fiscally risky it may be, will help give it an edge, albeit a slight one, for its production contracts with Apple, especially considering that Apple uses Sharp screens. Foxconn is well aware that Apple has been giving out production contracts to other companies too, and competition like that can’t be all that good for Foxconn. Hence, besides assembling the phone, Foxconn would also own the company that supplies the screens and well, wouldn’t that put Foxconn in a nice, cozy, almost secure spot with Apple.

Make lemonade yoga pants!

ID-10010917

Image courtesy of Suat Eman/FreeDigitalPhotos.net

Lululemon doesn’t seem to be bothered by increased competition from Nike and Under Armour, as evidenced by its fourth quarter earnings which were nothing short of…zen. And by zen, I mean that the athleisure company beat the Street’s predictions. The athletic apparel company enjoyed a nice little holiday shopping season with increased sales that gave it a profit of $117.4 million with 85 cents added per share. Analysts predicted the company would pick up just 80 cents per share. Maybe those analysts need to pick up some new Lululemon yoga pants, no? Revenue kicked up to $704.3 million, up from last year’s $602.5 million, and again, analysts only expected $692.6 million this quarter. Last year the company only earned $111 million and 78 cents per share. Lululemon is expecting to whip out a fourth quarter that is sure to please investors by picking up earnings between $483 million to $488 million and adding 28 cents to 30 cents a share. However, the perennial buzzkiller we call Wall Street would rather see Lululemon rake in $486.1 million adding 37 cents per share. In what might seem like an awfully bold statement, the yoga apparel company plans on doubling its earnings by 2020. In the meantime, it expects its full fiscal 2016 year to gain between $2.05 and $2.15 a share and that’s nothing to sneeze at. Except that Wall Street is hoping for earnings that will look more like $2.16 per share. Lululemon is pulling out all the stops to improve its margins and part of that means switching over to ocean freight as opposed to air freight. Apparently, air freight is a gigantic margin-money eater. Who knew.

Rate Hike? What Rate Hike?; Chipotle’s Rocky Road to Recovery; McCormick’s Spicy Good Earnings

Easy does it?

ID-10030403

Image courtesy of twobee/FreeDigitalPhots.net

Well, if you’re looking for the Fed to raise rates, don’t hold your breath. Despite the fact that the Fed’s next meeting is planned for April 26th and 27th, experts think a move like that probably wont happen before July. It was initially believed that there would be four rate hikes over the course of the year, after the Fed raised the rates for the first time in nine years back in December. But now it looks like there will be just two.  Federal Reserve Chair Janet Yellen is still promising a gradual pace of rate increases, but even she admits that the economic climate just isn’t quite impressing these days. The Central Bank is paying very close attention to all the annoying economic issues going on in the world, like the global economic slump, the very very low oil prices and a relatively volatile stock market. Of course, it wouldn’t be right not to mention China’s own economic downturn.  Plus the Fed’s not too stoked about the rate of inflation, which has been holding steady at about 1% when its target is closer to a 2% rate. Add to that weak consumer spending and you’ve got a Fed that’s not looking to stir any fiscal trouble. Hence, the Fed has assured the country that it plans to “proceed cautiously” in its rate hike plans, which is awfully considerate, according to some people, anyway.

Burned burrito…

ID-100317042

Image courtesy of rakratchada torsap/FreeDigitalPhotos.net

Free burritos or not, Chiptole’s road to fiscal recovery is looking very far off.  Wedbush Securities analyst Nick Setyan came out with a new report that says he doesn’t expect the fast food chain to recover before 2018 – calling it “the best case-scenario” – and even lowered Chipotle’s price target from $450 – $400. Ouch. Before the food safety crisis, each Chipotle restaurant was pulling down $2.5 million in sales on average. But that’s not expected to happen again for quite some time, especially given the fact that Chipotle’s operating costs are only going to get higher and higher because of its more comprehensive and stringent food safety measures. And even though the company sent out coupons for nine million free burritos, with another 21 million free burrito vouchers en route, Chipotle will still eat a $62 million tab for that, as a burrito typically costs $7.10. But hey, whatever it takes to try and erase the ugliness of E. Coli and norovirus outbreaks, right? Even with all those vouchers being sent out, the company only expects that a quarter of them will actually get redeemed. Naturally, news of the report sent shares south when the stock is already down 37% since August. Shares of Chipotle closed today at 460.10.

Spice spice baby…

ID-100362915

Image courtesy of jk1991/FreeDigitalPhotos.net

Of all the companies to report earnings lately, this one’s pretty…spicy. Yes. I had to go there. McCormick & Co. just released its first quarter results and considering that the company’s products aren’t items typically used in bulk, the $13 billion company pulled in some very impressive figures. In the process, McCormick & Co. even managed to raise its 2016 outlook, and unlike other major food producers that have been struggling to keep up with a health/organic revolution,  McCormick hasn’t faced quite the same challenges. In fact, its stock is up around 28% in the last twelve months with a little help from some recent acquisitions. The spice-maker was expecting to earn between $3.65 to $3.72 per share. But now it’s looking like it’ll pick up between $3.68 and $3.75 per share for the year. Incidentally, despite China’s economic downturn, the country still managed to give McCormick some boffo growth. Perhaps there’s a correlation between economic stress and and a desire for spicy food? Hmm. Will have to explore that one…In any case, McCormick picked up a profit of $93.4 million on $1.03 billion in revenue and adding 73 cents per share. Analysts only expected 69 cents on $1.03 billion in revenue while the year before the company took in a profit of $70.5 million on $1.01 billion in revenue with 55 cents added per share. And if that’s not enough, McCormick also scored a new 52 week high today of 99.90.