Lookout China! Here Comes Walmart. Again; To Brexit? Or Not to Brexit? That is the Question; Volkswagen’s Emission Impossible

Ni-hao, Walmart…

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Because Walmart isn’t big enough, the retailer has now teamed up with China’s number two e-commerce site to take on…China. Alibaba, in case you hand’t heard, holds the illustrious top spot. In any case, Walmart will be selling its commerce marketplace in China to JD.com and in return Walmart will gain about 5% of JD.com’s total shares, which comes out to about 145 million shares, give or take. Those shares are said be valued at about $3 billion, depending on whom you ask. By the way, in terms of revenue growth, JD.com has outpaced Alibaba for almost the last two years. Walmart currently has a marketplace platform in place in China called Yihaodian, but JD.com will be taking it over in hopes of finally achieving some solid retail love in China, which has eluded the mega-tailer, thus far. Walmart’s thinking positive thoughts that this deal will help increase its market-share in one of the biggest economies in the world. Walmart opened its first store in China back in 1996, yet it is a bit bummed because it only has about 430 stores there as expansion in China has been underwhelming.

Hail or not to the Brexit?

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June 23rd’s Brexit vote is just around the corner so it would be prudent to discuss why the U.S. should care about British politics, even if its politicians aren’t nearly as entertaining as ours. So, in case you hadn’t heard, at issue is whether Britain should exit from the EU. Hence, the term “Brexit.” Catchy, huh? Brexit advocates cherish their sovereignty and find that as a member of the EU, they don’t find themselves enjoying their sovereignty quite the way they’d like. While that is awfully patriotic, there are major MAJOR economic drawbacks to a Brexit. British Prime Minister David Cameron is worried that a Brexit will hurt wages and usher in an era of uncertain economic stability. Economists and other assorted experts on the matter are worried that the pound, Britain’s currency, will plunge in value, should Britain make a run for it. A plunge in value of a currency is never a good thing, especially for the country whose currency is sent plunging. Of course, tourists and others buying Bristish goods and services might not mind that so much since everything for sale there would become a relative bargain. It’s also important to consider the potential epic losses for Americans whose economic interests are heavily dependent on exports to the U.K. But there are also plenty of other Americans who might become inclined to ditch their investments and other economic opportunities in Britain as well. An exit from the EU would require all sorts of new trade agreements – for everyone  – and those things just take forever to draw up. Britain’s interests would almost certainly take a back seat to the bigger and more profitable interests of the loftier EU. As of now, there are no tariffs between the 27 members of the EU. A Brexit would change that for Britain and make tariffs a way of life, together with high tea and Harrod’s. So I guess it’s a good sign – just not for Brexit advocates – that polls show a Brexit isn’t likely.  The British sterling rose and one of its indexes, the FTSE  (rhymes with tootsie) also picked up some steam as a result of the anti-Brexit poll numbers.

Smelling a rat…

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Ex-Volkswagen CEO Martin Winterkorn is under investigation, which probably shocks no one. He is under investigation because German prosecutors suspect that Winterkorn violated securities laws since he waited too long to disclose to investors the potential cost of the ugly emissions scandal that continues to plague the auto maker. If you recall, the EPA is more than a bit peeved that Volkswagen manipulated results of emissions tests on its vehicles, with more than 11 million diesel vehicles poisoning the air we breathe. Winterkorn apparently knew about the emissions problems for over a year before he made any comments on it. He should have said something well before September 22, 2015. But he didn’t. And herein lies the problem. Even if he did resign days later. Of course, blame games in major companies have become somewhat of a sport, or in this case, a veritable comedy. Executives at the company are pointing fingers at a handful of mid-level employees – I kid you not – and assume that the public is going to believe them when they say that top management were completely oblivious to emissions manipulations taking place right under their executive-polished noses. Incidentally, there is another executive who is also under investigation but his/her identity has yet to be revealed. What has been revealed is that it is not ex-Volkwagen CFO Hans Dieter Poetsch. Lucky him.  According to the investigation, 17 people are said to be involved. But in the meantime, hundreds of lawsuits continue to mount against Volkswagen, and the car company has plans to pony up a $10 billion settlement in the U.S. come June 28.

It’s Not Puerto Rico’s De-fault. Yet; VW Sales Stink Worse Than Emissions; Amazon Coasts to Black Friday Sales Highs

In the name of the ‘claw’…

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The good news is that Puerto Rico didn’t default on a scheduled loan payment today. That’s awesome news if only because defaults have a nasty little way of creating lawsuits and freaking out investors. The bad news is that the commonwealth does expect to default on a payment down the road even if it did just manage to eke out a $354 million payment today on principal and interest bonds. Of that $354 million, $267 million of that was guaranteed by Puerto Rico. Phew. All this happened even as the commonwealth continues to talk – and plead, no doubt – with its creditors to get them to eat some of that ugly $70 billion debt looming menacingly above its economy. Governor Alejandro Garcia Padilla explained that Puerto Rico is running out of money which is a fact that has failed to surprise… no one. The Governor used a “Clawback Provision” for top priority payments that carry constitutional protection. In this case, revenues that were promised to public corporations were instead clawed back (catchy, huh?) and used to keep public services operating. Not sure who wins here. In any case, if Puerto Rico defaults on a payment at some point in the future, it wouldn’t be a first. The commonwealth already defaulted on a $58 million payment back in August when it paid a very very small portion of it to the tune of $628,000. Another zero added to the end of that check might have mitigated the situation even a smidge. Or not.

No good November…

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Sales at Volkswagen dropped a lot, much to the surprise of…no one. Still unable to shake off its emissions software rigging scandal, the car company saw November sales tank a whopping 25%, selling just under 24,000 cars even when ridiculously deep discounts were being offered on VW automobiles. Especially hit hard were sales of Jettas and Passats. Passats were actually down 60%! Even those adorable Beetles saw sales decreasing 39%. Oddly enough, sales of its crossover vehicle, Tiguan, were up 88%, having sold 3,907 of them. Go figure. I guess the price was right. Really right. Experts, however, feel numbers could pick up, albeit slightly, if VW would just share with the rest of the world its plan -assuming they actually have one – of how it intends to right its wrongs and repair the offending vehicles that continue tooling around our roads, polluting the air we breath. There are some 500,000 cars in the U.S. that need some fixing as they are emitting 40 times the legal limit of pollutants. And did I even mention that the scandal has spread to India where another 323,700 of the company’s automobiles were just recalled? Well, I just did now so…you’re welcome.

Sales away…

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In more unsurprising news, Amazon had a very good weekend and presumably excellent Cyber-Monday, as well. Especially excellent because consumers weren’t just using the site to buy merchandise, they were using it to buy Amazon merchandise. Shoppers scooped up Amazon Fire Tablets and Fire TV sticks making them Black Friday best-sellers. In fact, the company sold six times more Fire TV streaming devices than it did last year at this time and three times as many Amazaon Tablets than it did last year during this period. Another top seller was Amazon’s Echo, a nifty little device that does just about everything except for laundry, pretty much. But don’t expect Amazon to give you specifics on numbers since they don’t that sort of thing. Ever. If you happened to have been out and about on Black Friday, you might have noticed that the crowds weren’t as large as in years past. That’s because online purchases outnumbered purchases made in real stores as consumers realized they don’t have to brush their teeth and actually get dressed to score those awesome Black Friday deals. Wal-Mart saw twice as much online action than it did last year with half of its purchases coming from mobile devices. Even target.com saw major action, apparently selling an iPad every second. Does that include even the times when the site went down?