Alphabet Soup: Google Parent Hits a Milestone; Premium Quality: Tesla Could Get Even Pricier; SEC Gets SCOTUS-Smacked

Whoa…

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Google’s parent company, Alphabet, broke the $1000 per share ceiling and yes, that is a vey impressive feat. Even for Google. What’s more impressive, is that this milestone happened on the very same day that shares of Apple, the world’s most expensive company, was downgraded. Not that Google would be experiencing any schadenfreude, or anything of the sort. In any case, Alphabet can pat itself on the back for becoming the third S&P 500 company to break the $1000 barrier, following in the illustrious footsteps of Amazon – who achieved that milestone just last week – and Priceline. Yes, Priceline. Remember them? To be fair, Google had, once upon a time, hit $1,200 a share but then the stock split. And then it became Alphabet, and the rest is S&P history.  Of course Berkshire Hathaway also trades above $1000. Way above $1000. In fact, if you’re inclined to spending $250,156.00, you could pick up a single solitary share of Warren Buffett’s company. But then again, what’re you gonna do with just one share?

Cry me a river…

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A new Tesla was sounding really good, at least up until the weekend when Automotive News reported that AAA is gearing up to raise its insurance rates on the super-shmancy electric automobiles. But that’s just AAA insurance. The verdict is still out on whether other insurers will follow suit. It’s all because of some very unflattering data detailing Tesla’s higher-than-usual and more expensive claims for both the Models S and Model X. In fact, those pricey claims could mean a 30% premium increase on Teslas, which makes you wonder if the fuel savings is even worth it. Tesla seems to be offended by the new data, calling it “severely flawed” and “not reflective of reality.” Apparently, the data had the audacity to compare a Tesla to a Volvo station wagon. I mean, c’mon? A Volvo station wagon? Not that I have anything against Volvo station wagons. Some of my best friends drive Volvos. And station wagons. It’s just that a station wagon is the last thing on my mind when fantasizing about being behind the wheel of a Tesla. Just saying.  In all fairness, however, Tesla boasts some of the most advanced safety features in their automobiles. Yet, none of that seems to help given the car’s expensive collision costs. In fact, claims for the Model S are 46% higher than other cars, and its losses come in at 315% higher. Yikes. Station wagons aside, those are some very un-sleek numbers. Ironically, Tesla’s medical payment claim frequency is below average while its personal injury protection losses are very low. So take that, Volvo!

Can’t touch this!

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Score one for Wall Street because it looks like the SEC won’t get to grab all those ill-gotten gains like it used to. At least according to the U.S. Supreme Court, which just ruled – in a 9-0 decision –  that the SEC’s use of “disgorgement” now has to face the wrong end of a five year statute-of-limitations. Disgorgment is the act of repaying money that was attained illegally, typically by people and firms in the financial industry.  For this latest Wall Street victory, the securities sector can thank Charles Kokesh, a New Mexico-based investment adviser. It all started back in 2009 when the SEC sued Kokesh for misappropriating funds from his investors. He may not be a saint, but he was ordered to pay $2.4 million in penalties plus another $35 million – which was for disgorgement purposes. The problem, Kokesh and his lawyers argued, was that much of that $35 million disgorgment figure had happened outside a five year statute of limitations. Instead of $35 million, the disgorgment should have been closer to $5 million, which is quite a substantial difference. As for the SEC, this new ruling is going to prove to be a real downer for the agency seeing as how it has since collected $3 billion for disgorgment claims.  Oh well. Maybe it’ll discover a new way around that minor, yet pesky obstacle.

 

It’s All About the Brexit; Gearing Up for Some Star Spangled Traveling; Chipotle Wants to Reward You

The British are leaving, the British are leaving…

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Image courtesy of Chris Sharp/FreeDigitalPhotos.net

The Brexit vote continues to cause trouble and it probably will be awhile before it stops. Janet Yellen has canceled her appearance at a bank conference in Portugal that was organized by the European Central Bank. The Fed chief was supposed to speak on a panel with the Bank of England’s Governor Mark Carney and ECB president Mario Draghi. Carney now has more pressing matters to attend to, as does Draghi, who is now heading to Brussels for a summit with EU leaders to brief them on the impact of the Brexit vote and hash out a response to the U.K. referendum. The S&P yanked its AAA credit rating on the UK since the index feels that “this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the U.K.” Ouch. On Friday, the pound plunged to its biggest one day drop EVER, as Barclays Plc and the Royal Bank of Scotland Group Plc had their shares halted as a result of the plunge. Meanwhile, Treasury Secretary Jack Lew doesn’t get the feeling that there is a financial crisis brewing. Well, at least he said as much on CNBC recently. And if Jack Lew says it, then it’s good enough for me. I think. However, analysts aren’t as optimistic about the British economy and think the “Brexit” vote just might put the UK in a recession, besides dealing a major blow to European economic growth. Those analysts feel that the U.S. will also take a hit or two as well, but without any recession drama. And in case you were counting on a rate hike anytime soon, don’t. The Brexit vote put the kibosh on it and that’s not necessarily a good thing.

Brake for it…

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According to AAA, 43 million Americans are expected to travel this holiday weekend, beginning Thursday, June 30 thru Monday July fourth. That number is 5 million more than the amount of travelers on Memorial Day weekend and 1.2% more than the amount of travelers from last year’s holiday weekend. 84% of those traveling – 36.3 million, if you please – will be doing it by car, and if the the thought of heavy traffic congestion makes your skin crawl, then you can thank low gas prices for the increased congestion. The national average price for a gallon of gas is coming in at just $2.31, its lowest price since 2005 and 17% and 47 cents lower than it was last year at this time. But at least the traveling and the money being spent on those trips is good for economic growth. Americans saved a whopping $20 billion on gas spending this year so what better way to make up for it than by getting out on the road and commuting at least 50 miles from their homes. On a darker note, because of the increased traffic, the National Safety Council is expecting 450 auto-related deaths and 53,600 car-related injuries. But at least airfares will be lower and maybe even a safer way to travel this holiday weekend.

Muy caliente…

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Chipotle is biting the jalapeno-laced bullet and will now be offering up a rewards program. Yeah, that’s news. Before it’s food bore the makings of e. coli, salmonella and norovirus, Chipotle was a veritable rewards program snob, refusing to implement one. But I guess a slew of food-safety scandals and the fact that shares of the company have lost more than a third of their value since October gave the fast-food chain a fresh – no pun intended – perspective on its economics. Hence, we are now introduced to the Chiptopia Summer Rewards Program. It’s not clear if Wall Street feels this move is strategic as Chipotle does as the stock went down today almost 3%, closing at 388.78.The rewards program will begin July 1 and run until September. However, should the rewards program prove rewarding for Chipotle and actually help it reclaim any of the glory it lost last year as a result of its rash of food safety issues, then expect the rewards program to stay put. But diners beware as this loyalty program is not like other loyalty programs that require you to accrue points or spend a certain amount of money. Instead, Chiptopia rewards its customers by the amount of visits that they make in a given month. There are three levels customers can reach: mild, medium and hot. I will spare you the sordid and complicated details. However, in order to get those points customers will always need to purchase an entree with their order. Should they achieve the illustrious “hot,” status having visited Chipotle  eleven times – in one month -, then they get to enjoy three free burritos, which by the way, will count towards more rewards.

Jessica Alba, “A” List Mogul; Hooray for Hollywood and CA Lawmakers; Get Your Motors Running;

Yeah really, Jessica Alba = Financial News…

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

Is there anything she can’t do!!!!! Now Jessica Alba is even considered a bona fide mogul all thanks to Santa Monica-based The Honest Company which she co-founded in 2011 together with Christopher Gavigan, Sean Kane and Brian Lee. The company makes all sorts of useful, organic-y, non-toxic household products like cleaners and diapers. Now The Honest Company is gearing up for some major IPO action. Good thing it’s been valued at close to a billion dollars. For 2014, the company is expected to pull in $150 million in revenue. While 80% of the business comes from monthly subscribers, The Honest Company’s products can also be conveniently purchased at Target, Costco and Whole Foods, to name a few. And if Jessica Alba’s “A” list status isn’t enough to sell you on the products then how about the company’s social mission: It regularly donates diapers and cribs to those in need.

Speaking of Hollywood…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Well at least there wont be any major tax inversions coming out of the film industry. For the next five years anyways. After years of losing million upon millions of dollars to other states and countries, California will once again be fiscally alluring to filmmakers. That’s because California Governor Jerry Brown and other California lawmakers finally reached an agreement that would triple the tax credits for moviemakers –  a commitment valued at $330 million a year. Producers can now get up to a 30% refund on production costs. At least 40 states and 30 countries have offered better tax incentives than Hollywood’s own home state – up til now. Go figure. The credits can be used for up to the first $100 million of a film’s budget. After that, you’re on your own. Now if they can just figure out what to do about that pesky drought…

Filler’ Up…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

Go fill up your cars and start guzzling. This Labor Day is going to be a most affordable one, at least as far as gassing up your car is concerned. Gas prices haven’t been this good since 2010. Thanks to a relatively low-key hurrican season (so far, anyway), and the fact that world conflicts haven’t much affected the US fuel demand, website and app GasBuddy reported that the national average price of gas hit $3.42 today. Last year at this time the price was $0.11 higher. Last month it was $0.09 higher. Cha-ching, baby! And GasBuddy ought to know a little about that since this ridiculously helpful app allows users to compare gas prices in their area. But expect some traffic because according to AAA, 300 million American will be road-trippin’ this weekend, with another 14 million racking up some frequent flier miles.