The Mouse is Going After the Fox; Dollar Wise for Fast Food; A Wrinkle in Allergan’s Plan

Fox-y mouse…


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Today’s juicy merger gossip is brought to you by Fox and Disney. Apparently, a deal is thisclose that will have Disney scooping up Fox’s studio and television production assets. The deal, which is rumored to be worth about $60 billion, will also include the acquisition of Fox’s stakes in Hulu and Sky. As for its news and sports division, Disney is taking a pass on those entities. But Disney isn’t the only one with its sights set on Fox. Comcast and Verizon are also trying to get in in some Fox action. It’s just that right now Disney seems to be getting the best crack at the media conglomerate. Wall Street seems to like the news considering it sent shares of Fox up over 3%. But the question you might be wondering about is why Disney even needs  $60 billion worth of Fox’s assets? Doesn’t it have more than enough of its own? Well,  yes, it does. However, in case you missed it, the entertainment industry is changing, with a big push towards streaming and direct to consumer models and believe it or not, picking up those particular assets over at Fox will give Disney a much much bigger global reach. And who couldn’t use some more global reach, right?

Bucking the trend…


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Fast food restaurants are engaged in a bloody dollar war. But that just means good news for consumers. McDonald’s is bringing back its dollar menu, which it ditched just four years ago because it didn’t pull down the kind of cash McDonald’s wanted to see. As for the term “dollar,” well that might be a bit generous in its definition. To be clear, the fast-food chain is offering the $1-$2-$3 Dollar Menu. If you’re in the mood for a sausage burrito, cheeseburger or any-size soft drink, well then, feel free to fish out that dollar bill that’s burning a hole in your wallet. Otherwise, prepare to shell out more. Not to be left out of the fast food fiscal fun, Burger King and Wendy’s are also trying to woo you with their version of “value” menus. But it’s Taco Bell that’s really taking aim at the Golden Arches with 20 items listed for just a dollar.  For McDonald’s, the cheapy menu is its answer to win back customers. The company apparently lost out on some “500 million transactions” because it didn’t have a value menu. Ironically, or not, Taco Bell’s dollar menu actually generated $500 million in sales. To make up for the lack of profitability that comes with McDonald’s having a value menu, the chain is expanding its “Signature Crafted Recipes” – which is really just code for more expensive menu items that will offset the value items.

A wrinkle in time…


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There’s a new Botox sheriff in town and Allergan doesn’t like it. Not one bit. Enter Revance Therapeutics Inc., a small biotech company that holds the formula for RT002, aka “the better, longer-lasting botox.” If it’s approved people can start sticking their faces with the stuff as early as 2020. Which is great news for everyone. Well, everyone except for Allergan, the pharmaceutical giant behind Botox, the original, whose stock fell over 4% on the news today. In fact, today Allergan hit its lowest price since 2013, after losing a third of its value in the last five months. And, while RT002 uses the same main ingredient for wrinkle reduction as Botox does, that being botulinum toxin Type A, it also uses the company’s proprietary peptide technology, which is apparently the reason why this particular formula lasts about a month longer than Botox.  In any event, Allergan wasn’t especially impressed by Revance’s new data released today and called it “underwhelming.” As for Allergan’s response, you could probably just call it sour grapes.


Sears Dives Into “Dump Trump” Fray; Allergan Goes From Face to Body-Contouring; Teva Beats Despite Turmoil

To dump Trump or not to dump Trump?


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Sears is the latest company caught up in the great retail debate over its decision to discontinue carrying Trump branded merchandise. It would seem that the merchandise of both President Donald Trump and his daughter, Ivanka, have been dropped from Sears and Kmart stores – which Sears owns. However, while Sears and Kmart have put the kibosh on 31 Trump Home items, there’s still plenty more Trump merchandise available online for sale via third-party vendors. Believe it or not, Sears goes by the numbers, at least the ones attached with a dollar sign, and has been putting great efforts into kicking up its online presence. So if items are profitable, they get to stay. If they are not? Well, you get it. This is in the wake of Nordstrom’s decision last week to ditch Ivanka’s line completely. Rumor has it that sales of her merchandise tanked more than 70% for most of October, compared with the same time period last year, when the would-be president still hadn’t yet managed to offend an almost an entire gender of the electorate. Since the Trump brand has been unpopular these days, plenty of customers have little desire to purchase many of its products.  But make no mistake, if the items in question had been selling, either at Sears or Nordstrom, don’t think for a second that the stores wouldn’t have kept the merchandise on its shelves, no matter what the President said – or tweeted.

Yoga, it ain’t…


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Allergan, the maker of everyone’s favorite wrinkle-fighter, Botox, is going to scoop up Zeltiq Aesthetics Inc. for about $2.5 billion, or about $56.40 per share. That’s more than a 14% premium from Friday’s closing price. Naturally shares of Zeltiq went up, because, hey, who would’t want to join the Botox family, right? But here’s the fun part, in case you have never heard of Zeltiq. The company makes a body-contouring product, called the CoolSculpting system, that will fit in nicely at Allergan. Your face and your butt get contoured and primed all from one company. If there’s a regulatory issue with that, then I don’t care. Zeltiq has already been approved by the U.S. Food and Drug Administration and yes indeed, that kind of makes it more legit. CoolSculpting apparently reduces the appearance of fat by freezing it, however, I’m not sure that it actually gets rid of the junk in the trunk. Instead, it just shapes it into your body, like play-doh. Or something like that. Laugh all you want but there’s nothing funny about the 37% worth of revenue brought in by CoolSculpting systems products, which helped Zeltiq take in a net revenue of $374 million for 2016. Allergan CEO Brent Sanders must be onto something, since the body-contouring market is a whopping $4 billion industry and, according to him, is the fastest growing field in medical aesthetics.

Not the usual generic stuff…


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Not all pharmaceutical companies are having as much fun as Allergan. Last week, shares of Teva pharmaceuticals seemed to be in an ugly state of free fall, and matters didn’t help when its CEO Erez Vigodman suddenly left the company. The official word is that Erez Vigodman’s decision to leave Teva was part of a mutual agreement. At least that’s the story they’re sticking to. But even before that, the company was having fiscal issues in the way of delayed drug launches and major acquisitions that wreaked all sorts of ugly fiscal havoc on the company’s stock price. Then, lo and behold, the company reported an earnings beat this morning and all seems right in the world once again for the company.  Teva took in revenues of $6.5 billion, adding $1.38 per share when estimates were for $6.24 billion and $1.35 per share.  Also from the good news front, the company didn’t even see the need to adjust its forecast for the year, and still expects to score between $23.8 billion to $24.5 billion in revenues and adding between $4.90 to $5.30 to shares.  Interim CEO and President Yitzchak Peterburg took the call and said it was “a critical time for Teva, and we are here to fix what is not working.” Which basically means they are desperately trying to figure out how they can get the company to start pulling down some major cash, ditch  a lot of debt and improve its prospects.  Rumors are swirling that the company will split into two: one to focus on its generic offerings and the other for its branded products. According to some experts, a move like this could solve a ton of problems. Just maybe not all of them. Another possibility is to sell off its branded generic drugs biz in an effort to unload some its major debt. Time will tell.  Because I certainly can’t.

Starbucks Betting on $10 Coffee; Trump Ready to Dump on Pharmaceuticals; Trump’s June Stock Dump



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Starbucks CEO Howard Schultz is stepping down from his post in April with plans to build a Starbucks’ prestige brand where he will serve as its Executive Chairman. The idea is that by going upscale Starbucks will be able to raise its profile with those pesky millennials. Besides that, the company needs to compete with a number of other upscale rivals that keep rearing their gourmet heads all over the place. One thousand “Reserve” brand stores are slated to set up shop with another 30 large Reserve Roastery (expect to find that word added to a dictionary near you) and Tasting Rooms expected to open up all over the globe. In case you were wondering what one orders from this new prestige brand, you might consider purchasing a $10 cup of coffee that you can sip daintily from a glass siphon.  Or perhaps you’re up for paying $50 for an 8 oz. bag of an exotic, small-lot coffee? I’m sure you’ll find something worth depleting your funds.  In any case, Starbucks also announced plans to open another 12,000 stores –  that’s in addition to its already existing 25,000 stores –  in the next five years.  Five thousand stores are slated just for China. The company also plans to annually boost revenue by 10% while adding between 15% – 20% to its shares, and increase its focus on its food offerings since the coffee giant is convinced it can double its growth in that area.

What a pill…


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Donald Trump’s latest executive plans involve bringing down drug prices and the pharmaceutical companies that keep increasing them with seemingly reckless abandon. Which is kind of ironic since pharmaceutical stocks saw a huge surge following Trump’s election. And here they thought they had an ally. Hah! A Kaiser Family Foundation survey leading up to the election found that people felt drug prices were the number one healthcare issue for the next President. Well, I guess the President-elect is ready for it then. Sort of. Trump has yet to outline any concrete plans on how he is going to achieve this goal. But during his campaign, Trump did say that he is all in favor of consumers having their meds re-imported. He also wants Medicare for the elderly to renegotiate drug prices directly with pharmaceutical manufacturers. That should be fun to watch, especially because both the industry and many many Republicans are vehemently against that idea. Stay tuned for that drama. Just today, Pfizer Inc. and Flynn Pharmaceutical Ltd. were slapped with some massive record fines in the UK after raising drug prices by…wait for it…2,600%. Now, Pfizer will cough up about $106 million, while Flynn will fork over approximately $6.5 million. I guess they should be happy that they were busted in the U.K. and still have time to clean up their act in the United States before Trump-dom takes effect. In the meantime, Allergan Plc. CEO Brett Saunders is bracing himself for the new president’s impact and said Trump could end up being more “vicious” on pharmaceuticals and their drug pricing than Hillary Clinton might have been. But he also pledged to limit price increases to less than 10% per year. Or perhaps he did that lest Trump unleash his Twitter wrath on Allergan, just like he’s done to several other individual companies including Carrier Corp., Ford and Boeing.



Image courtesy of Stuart Miles/

Yesterday, President-elect Donald Trump’s team announced, with no explicable reason as to the timing, that he sold off all of his stocks back in June. Don’t hold your breath for proof of that sell-off as none was provided. While being interviewed today on the “Today” show by host Matt Later after being named Time Magazine’s “Person of the Year,” Trump explained that he decided to unload his stock holdings in order to avoid any conflicts of interest. How very gallant of Mr. Trump.  And even though the press was not made aware of it until yesterday, Donald Trump insisted that everybody already knew. We just don’t know who “everybody” is. Mr. Trump went on to say that he sold off his stocks since he knew he would win the election and would be making deals for the United States that could affect various companies in all sorts of different ways. That was indeed very thoughtful of him. He also said he didn’t even own that much stock.  Which is debatable at best since a recent filing from December of 2015 valued his holdings at $40 million. But in all fairness, his stock market holdings pale in comparison to his real estate holdings which apparently make up the bulk of his net worth.  Ethics experts, however, are suggesting those real-estate holdings might also be a conflict-of-interest as well. Just saying. It’s worth noting that since his sell-off, the S&P 500 went up over 10% while the Dow Jones Industrial Average hit some very impressive all-time highs. Since Trump’s victory, many stocks have also hit all-time highs and, of course, he’s taking credit for it.


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

Breaking up is hard to do…


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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…


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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…


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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.


In: Tax Inversions, Out: Pres Obama’s Opinion on Them; Tyson’s Earnings Nothing to Cluck at; Wal-Mart is Shaking Up the Calendar

Invert this…


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Pfizer and Allergan are thisclose to becoming the world’s largest pharmaceutical company through a $160 billion merger. Even though Pfizer is substantially bigger, with a $200 billion market cap to Allergan’s $122 billion market cap, Pfizer wants Allergan to “buy” it, in a structured reverse merger all in the name of a tax inversion. It’s a practice that President Obama, unironically, calls unpatriotic and the Treasury Department has even set rules to make it difficult to execute them. Yet, the corporate tax rate in the United States is the highest in the industrialized world so that no matter how difficult the Treasury Department tries to make the practice, big corporations have too much incentive to overcome the obstacles and move their entities overseas, in this case Ireland. Pfizer CEO Ian Read argues that the U.S. corporate tax rate leaves U.S companies competing with overseas companies “to fight with one hand tied behind our back.” Once the merger is finalized, the newly formed company can expect to pay a corporate tax rate of 17% – 18% in the first year. That rate will go up to about 20%. But even at 20%, that rate is nothing compared to the 25% rate it would have to pay in the United States. It’s expected to be a savings of  billions of dollars that would go into research and development of drugs instead of the governments coffers. Of course, shareholders still need to weigh in with their votes but given the billions at stake, it’ll most likely pass.

Who you callin’ chicken?


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It’s the largest meat processor in the U.S., so why shouldn’t it see its highest intra-day jump in 22 months. And that’s exactly what happened when Tyson Foods Inc. announced its earnings and beefed up its projected forecast for the year. The company now expects to earn $3.50 – $3.65 per share, even more than what analysts had predicted. Those numbers were helped a lot by poultry, chicken especially. Beef? Eh. Not so much, as that division took a $33 million operating loss compared with an operating income this time last year of $153 million. Apparently, there’s a lot more demand for chicken lately. But Tyson’s earnings were also helped by the fact that the food the chickens eat, very uncreatively called feed, has gone down in price. (In case you were wondering, chicken feed is made up of corn and soybean.) Even though, Tyson missed profits by a nickel, coming in at 83 cents per share, it beat sales estimates posting $10.5 billion, a 4% increase over last year and $300 million more than what was projected for the quarter.

Cyber showdown…


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Forget Cyber Monday. Wal-Mart’s wants you to start your cyber-holiday shopping on Sunday night instead, which is just so…2014. Wal-Mart doesn’t feel its necessary to limit Cyber Monday to just Monday. According to Wal-Mart Chief Executive Fernando Madeira, “now everyone has internet.” As in, the high-speed kind. Consumers now have access to high speed internet and no longer need to wait until the official “Black Monday” to use their employers high-speed connections. So why, Wal-Mart argues, wait until then to take advantage of all those smoldering deals, right? To make your cyber Wal-Mart shopping experience more enticing, the world’s largest retailer will attempt to lure you in with bargains including a Microsoft Surface Pro for $599, and a 48” Samsung 4K TV for $598. But those are just a few of the expected 2,000 deals (last year there were only a paltry 500 deals) that are expected to start rolling out online beginning at 8pm on November 29. Expect to see three times as many Star Wars toys, lots of drones and 3D printers to make a nice showing. Besides, the retailer needs to up its “A” game on e-commerce giant Amazon. Last year, $2 billion was spent just on Cyber Monday. But with 21 million visitors expected, Cyber Monday sales could hit $3 billion. So why not start the experience the sooner the better?


Uber of a Mess in California; Starbucks Bids Adieu to La Boulange; Botox Plumps Up With Kythera

This could pose a problem…

Image courtesy of digitalart/

Image courtesy of digitalart/

Things could get very ugly for ride-hailing app Uber, now that the California Labor Commission decided that Uber drivers are actual employees, like taxi drivers and pizza deliverers, and not independent contractors, as Uber sees them. The trouble for Uber began when a woman named Barbara Ann Berwick filed suit for additional compensation and the company denied her request. She took her case to the California courts where she was awarded $4,152. However, that $4,152 could actually end up feeling like billions. The company, which is privately held and has a $40 billion valuation, is appealing the ruling, as it has the potential to set a big bad precedent not just for Uber, but for other ride-sharing apps as well. Because, if Uber is forced to call its one million drivers employees, it will have to start accounting for all the expenses that go with it, like social security, workers comp, etc. and that will likely mean that  not only will Uber’s operating costs go up, but the costs for the riders go up too. By a lot.

Gone gourmet…

Image courtesy of Witthaya Phonsawat/

Image courtesy of Witthaya Phonsawat/

It seemed like a good idea at the time, but alas, no dice as Starbucks gets set to shutter all 23 of its La Boulange bakery cafes. Even though Starbucks saw 16% growth in food with a 35% increase from just its breakfast sandwich offerings this past quarter, the gourmet goods apparently just don’t fit in with Starbucks’ long term growth plans. Translation: La Boulange may be bringing in cash now, but Starbucks isn’t convinced that it’s fiscally prudent to keep it around for the long haul. Starbucks bought La Boulange for $100 million back in 2012 because the coffee chain wanted to offer expensive fancy food that you could purchase with your extra fancy mocha drinks. While the cafes are closing, you can still get your La Boulange fancy food fix at regular Starbucks cafes. As for all those La Boulange employees who are about to be sans paycheck? Puhlease, you didn’t think a socially conscious company like Starbucks  would leave them high and dry, did you? (Insert jokes about Starbucks flopped campaign to talk about race here.) Starbucks will be helping those folks find new gainful employment, hopefully at establishments that Starbucks is not looking to unload.


Image courtesy of patpitchaya/

Image courtesy of patpitchaya/

Allergan, maker of everybody’s favorite wrinkle freezer, Botox, is buying itself some new plastic surgery fun, picking up biopharmaceutical firm Kythera for $2.1 billion. Allergan is paying 80% of that $2.1 billion in cold hard cash, with the rest paid out in shares of Allergan. And who doesn’t want a few shares of a biopharmaceutical company whose main focus is facial aesthetics? At that price, Kythera is getting about $75 per share, which seems like a lot… because it is – it’s about a 24% premium on Tuesday’s closing stock price. But hey, it’s totally worth it since Kythera also has its own beloved cosmetic treatments, including one for double chins called Kybella. Don’t laugh. Kythera’s double chin fix is currently the only non-surgical treatment for that pesky double chin issue. Of course, it entails a needle that needs to be inserted. But what’s a little needle if it gets rid of a double chin, right? Kythera’s also got something in the works for male pattern baldness. This company has GQ written all over it. In any case, Allergan, which also has Latisse and Juvederm in its cosmetic collection, is currently the fifth biggest pharmaceutical company. Which is great. Except, what to do about the fact that insurance companies don’t usually cover any of its treatments?


The Bitter End Might Have Just Arrived For Valeant Pharmaceuticals; Cocoa: Get it While You Still Can; It Seems Japan Is Not As Far As It Seems

Has their time finally come to an end?

Image courtesy of patpitchaya/

Image courtesy of patpitchaya/

Could it be that the Valeant/Allergan saga has finally come to an anti-climactic end? Just when things seemed to be getting juicy, in walks generic drug-maker Actavis with an offer of $219 per share, making Valeant’s impending hostile takeover nothing more than a bad memory for Allergan. If you recall, everyone’s favorite (and only) Botox-maker had been fighting off Valeant’s fiscal hostilities for months. And in one fell money-minded swoop, Actavis put in an offer for Allergan that not only values it at about $66 billion, but also makes it so that it doesn’t have to deal with Bill Ackman and his Pershing Square Capital Management, which by the way, has almost a 9.7% stake in Allergan. Neither Pershing Square nor Valeant had any comment on the new offer and why would they. Besides, they win either way. This new deal adds quite a few billion dollars to Pershing Square’s already plump portfolio. As for Valeant, well it has already begun to set its fiscal sights on animal care company Zoetis.

Start hoarding the Hersheys…

Image Courtesy of Danilo Rizzuti/

Image Courtesy of Danilo Rizzuti/

It just might be that the world really is coming to an end. If a recent report by Bloomberg is correct (and seriously, it’s Bloomberg so I am sure it is), then the world will be in the throes of a chocolate shortage, with demand outpacing supply in the year 2020 by one million metric tons. If that’s not considered armageddon, then I don’t what is. Some of the factors to blame: Ebola. Yes that obnoxious, noxious deadly virus has given us ample reasons to hate it and here’s yet one more. West Africa supplies us with almost 75% of the world’s cocoa. The fact that the countries afflicted with Ebola are so close to the countries that supply cocoa are basically freaking people out on so many levels. Of course drought always manages to play a menacing role in crops and cocoa is no different. In fact the price of cocoa, whether you realized it or not (or simply just tried to feign ignorance) has gone up 60% since 2012. Combine that with pests and other plant diseases and that Hershey bar with almonds is becoming but a distant memory. So start stockpiling those candy bars. In a few years you might just be able to pay your mortgage with them.

So what’s the big deal?

Image courtesy of ddpavumba/

Image courtesy of ddpavumba/

Japan is staring into the wrong end of a recession after reporting its second straight quarter of growth contraction. Never a good thing especially when we’re talking about the world’s second largest economy. So why should we, on this side of the planet, care? Well for one, its toying with our financial markets. Our markets don’t particularly like it when other markets in other parts of the world have fiscal issues and Japan’s are quite large. Then we must take into account that our European friends across the pond aren’t too thrilled, as are we,  with state of their financial markets, which have seem to have come to a slowdown/standstill. When that happens, the United States ends up having to support more than its fair share of the global economy which, naturally extends on over to us, the taxpayers. See how that all works out so unpleasantly?