Target: Canada, We’re Out!; Let’s Be Franc; Caesar’s Busted House

You call that neutral?

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

The Swiss National Bank did something today that had epic ramifications no matter how far away you are from the purifying air of the Swiss Alps, the amazing epicenter of fine chocolate and the home offices of Swatch. You see, up until today the Swiss had a cap on its currency, the franc. This cap was (is?) meant to keep the franc from going too high against the Euro. While it might seem like a good thing for a currency to be high, it’s actually problematic on so many levels. If you’d like to know all about it, then I suggest you Google the issue as it is a long megilla and I like to keep this blog on the short side. In any case, this cap was in place for three very peaceful fiscally pleasant years, since the European debt crisis back in 2011. And then POOF! The bank removed it just like that further weakening an already fickle Euro and sending Swiss stocks plummeting. Companies there who rely on exports are up in arms. Then there are those very justifiably upset folks in other parts of Europe who just discovered their mortgages got a whole lot pricier because they are in francs. In general, major market shake-ups, in any part of the world are not appreciated. Stability is much appreciated. Lack of stability and seismic shifts suggest people are about to – if they haven’t already – lose copious amounts of money, no matter where they reside on the planet.

Oh, goodbye, Canada…

Image courtesy of digitalart/freedigitalphotos.net

Image courtesy of digitalart/freedigitalphotos.net

It just wasn’t meant to be between Target and Canada. Like several other US based retailers, including BestBuy and Big Lots Inc., Target is packing up and heading back south of the Canadian border. The Minneapolis-based company has already begun liquidating its 133 stores just four years after it announced plans to head on over to our very polite neighbors to the North. Signs that the expansion might be a miss became clear in 2013’s third quarter earnings when Target saw a huge 46% drop in company wide profit. Growth was much slower than what was expected and the numbers from this holiday season were just not as good as they could and should have been. The clincher came when CEO Brian Cornell had an analysis done which indicated, much to everyone’s fiscal horror, that it would take this very costly endeavor six years before it would turn a profit. Experts believe that unloading this Canadian project gone awry will eventually turn Target’s earnings back in the right (as in, up) direction. As to the fate of some 17,600 Canadian Target employees, the company has graciously asked to set up a $59 million contribution into an employee trust that would provide all those folks 16 weeks of compensation.

Oh craps!

Image courtesy of artur84/FreeDigitalPhotos.net

Image courtesy of artur84/FreeDigitalPhotos.net

Caesars Entertainment Corp, the largest US casino, and the one with the white Bengal tigers went bust. Oh the irony! The house goes bust. With $18.4 billion in debt, the casino is looking to dump $10 billion of it and so has decided to file for chapter 11 bankruptcy. Again, cue the irony sentiment. Not everybody agreed on the bankruptcy plan. Junior noteholders stand to make back less than 10% of the many many millions they are owed and have filed a petition to get Caesars to go into involuntary bankruptcy so that they’d get better terms. The casino said it has every bit of intention of continuing to pay its suppliers and the casino will still remain open so as to give gamblers ample opportunity to go bankrupt, themselves. No word on how the tigers feel about all this.

 

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