Latest Lousy Jobs Report; Wendy’s Is Losing its Buns. Sort of; Are Commercial Drones Finally Taking Flight

Book of jobs…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The private sector added 169,000 new jobs but that’s nothing to celebrate. Well those 169,000 people who will now be collecting paychecks can celebrate but that’s about it. While that number seems significant, and in some ways it is, it is actually the lowest number we’ve seen since January of 2014. Experts expected growth of up to 224,000, as last month’s job growth came in at 175,000. Celebrating occurs only when the numbers go up. Drops like these don’t necessarily mean the economy is about to head south, but it can suggest periods of sluggish growth are on the horizon. This gloomy news is brought to us by ADP, the largest private payrolls processor in the United State and they’ve got the dirt on the digits. But we’re still waiting on the U.S. Labor departments figures, due Friday, which are apparently more detailed and include both the public and private sectors, and may even supply us with better figures. And on the bright side, April’s growth rate wasn’t nearly as abysmal as March’s growth of just 126,000 jobs. So there’s always that heart-warming fact to fall back on.

Where’s the buns? 

Image courtesy of  atibodyphoto/FreeDigitalPhotos.net

Image courtesy of atibodyphoto/FreeDigitalPhotos.net

Wendy’s restaurants just came out with its earnings and announced it will be selling 640 restaurants. Taking a page from McDonald’s playbook, Wendy’s is hoping that franchising costs will help the chain take in between $400 million to $475 million. The restaurant plans to sell 380 restaurants in this year alone. So if your lifelong dream is to own a Wendy’s, this might be your chance. Wendy’s is definitely having a better quarter than McDonald’s, as the company, famous for its freckle-faced braided redhead, and I guess its food too, took in first quarter earnings of $27.5 million and 7 cents a share, just barely beating analysts expectations of 5 cents a share. However, revenue was down almost 11%. Oh well. Maybe next quarter. Wendy’s also announced that it’s selling its bakery operation in Zanesville, Ohio, which conveniently supplied the chain’s buns. While the folks in Zanesville might not be thrilled, the folks on Wall Street were and sent shares up over 7%. Shares of the company are up over 30% in the last twelve months so clearly someone over there knows what they’re doing.

Droning on and on…

Image courtesy of bplanet/FreeDigitalPhotos.net

Image courtesy of bplanet/FreeDigitalPhotos.net

Drone enthusiasts, rejoice! FAA Administrator Michael Huerta announced that the FAA is going to figure out how drones and other aircraft can share all that airspace safely. At the Unmanned Systems 2015 Conference, Huerta said, “Integrating unmanned aircraft into our airspace is a big job, but it’s one the FAA is determined to get right.” This exciting mission will be done through the Pathfinder Program, which will study commercial drones and all the great and lucrative ways they can be used. For instance, CNN wants to see how to gather news with drones in heavily populated areas. A company called PrecisionHawk wants to test it out for the agricultural industry to see how drones can help monitor crops. Then there’s Berkshire Hathaway company, BNSF, a railroad company, that wants to use drones to inspect tracks. Such clever usage. Surprisingly mum on these new developments was Amazon, who has long wanted to use drones to make deliveries. Amazon, if you recall, wasn’t too happy about the FAA’s rules that were proposed in February and let the FAA know it. And if you think the use of drones will take jobs away from actual human beings, then check out the reports from the  Association for Unmanned Vehicle Systems International which estimates that thousands of jobs would be created and  generate hundreds of millions of dollars. And judging by last month’s Labor report, this drone “thing” just keeps sounding better and better.

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Kraft Ketch-es Up; Amazon Wants FAA to Start Droning Around; Lumber Liquidators’ Slight Rebound

Ketchin’ Up…

Image courtesy of Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

HJ Heinz, as in, ketchup is teaming up with Kraft foods, as in Mac & Cheese and Philadelphia Cream Cheese, to become the world’s fifth largest food and beverage company. And just who is behind this master plan for food domination? None other than everybody’s favorite (and only) Oracle of Omaha, Warren Buffet – well, Berkshire Hathaway really, and Brazilian Venture Capital firm 3G. The two entities are throwing $10 billion at the deal, which seems like a relative bargain since the merger is expected to generate $28 billion in annual revenue.  Of course, federal regulators still need to give their seal of approval, along with Kraft shareholders. But considering that the stock went up a whopping 32% on the news I’m guessing they won’t mind. Plus, if you are one of the lucky shareholders, then look out for a cash dividend of $16.50 per share, not to mention a 49% stake in the new venture.

 Droning on and on…

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Amazon is taking on the FAA, telling them they lack the “impetus” to develop drone policies in a timely manner – said in the nicest possible way, of course. The e-commerce giant wants the agency to move quicker on issuing permits for drone testing. Like a lot quicker. Like before the model drones Amazon plans to use for its Prime Air Delivery Service become obsolete. Oops. Too late. Even Senator Cory Booker agreed with Amazon saying that if the FAA had been around during the time of the Wright Brothers, then commercial flying would have literally never taken flight. Then there are all those restrictions associated with the testing. For instance, drones can’t fly higher than 400 feet, and in some cases 200 feet, and the drones must also always be in view of the pilot. Where’s the fun in that? Amazon, and several other companies are wondering why it takes so long for the U.S., on average, six months longer to issue these permits when in other countries it takes about 1-2 months?  The drone industry is also irritated by it all seeing as how drone delivery is apparently way more economical, faster and cheaper with the added bonus of less traffic and pollution? Who doesn’t like that? But to be fair, the FAA has some not-so-minor concerns about the potential for drones to collide with commercial carriers carrying passengers. Not to mention the potential loss of link between a drone pilot and the drone.

Lumbering on…

Image courtesy of  Sira Anamwong/FreeDigitalPhotos.net

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Lumber Liquidators stock went up today by 8%, which actually came as somewhat of a surprise since the stock is down 59% for the year after a scathing “60 Minutes” report that found high levels of formaldehyde in its laminate flooring from China. The reason for its little upswing is presumably because the U.S. Consumer Product Safety Commission has entered the fray by launching a federal investigation into the claims, also involving the EPA, CDC and Federal Trade Commission. Lumber Liquidators is said to be fully cooperating in the investigation. No kidding. But don’t bother holding your breath for results – they won’t be in for several months. Lumber Liquidators, by the way, says “60 Minutes” used a test that is considered unreliable, by Lumber Liquidators standards anyways. The company, which has 350 locations throughout the United States, has graciously offered to come test the flooring in your home. If high levels of formaldehyde are found to be present, then rest assured…Lumber Liquidators will do more testing. If those tests keep coming back positive then yeah, they’ll finally agree to replace the questionable, carcinogenic flooring.

Are You There Shareholders? It’s Me, Warren (2015); Forbes’ Magazine Names the A-Listers; Costco: AmEx Out, Visa and Citi In

Best Regards, Warren…

Image courtesy of  Boians Cho Joo Young/FreeDigitalPhotos.net

Image courtesy of Boians Cho Joo Young/FreeDigitalPhotos.net

Warren Buffet’s annual letter to Berkshire Hathaway shareholders arrived over the weekend, regaling us –  I meant them – with so many insights and wisdom about the economy and the ways of the investment Samurai. Among the many pearls, Mr. Buffet wanted to let folks know that “America’s best days lie ahead.” Things might have been a bit shaky the last few years, but darn be the naysayers  and things can and will only get better. Mr. Buffet also wished to remind people that “Market forecasters will fill your ear but will never fill your wallet.” Aw, Warren. There’s something very moving about the way the Oracle of Omaha advises people that all these financial experts surrounding us are good for nothing. He also offered some poetic words regarding his failed investment in British supermarket chain, Tesco: “In the world of business, bad news often surfaces serially: You see a cockroach in your kitchen; as the days go by, you meet his relatives.” The venture ultimately cost him a whopping $400 million and the Oracle attributes the loss, to among other things, not being decisive and fast enough about pulling out of the investment. Meanwhile, during an interview on CNBC, Warren Buffet said Sen. Elizabeth Warren (D-Massachusetts) should be “less angry and demonizing” and should be more open to compromise. Ouch. I guess those two won’t be hanging out together anytime soon.

Speaking of Warren…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Omaha’s most famous resident made it to the number 3 spot on Forbes’ list of billionaires. Microsoft’s Bill Gates claims the top spot – again –  with a net worth of $79.2 billion while Mexico’s Carlos Helu Slim comes in for second. There are 1,826 billionaires on the list who have a combined total net worth of $7.05 trillion. However, the average net worth of the billionaires is actually down by $60 million this year to $3.86 billion. I know, how sad.  Seventy-one of those billionaires are breaking onto the list of the very first time. Among those first-timers is basketball great Michael Jordan who makes his big billionaire list debut this year with a little help from having increased his ownership stake in the Charlotte Hornets. But his restaurants, deals with Nike, Gatorade, Hanes, etc…allow him to claim the 1,741st spot with a net worth of about $1 billion. Forty-six of the billionaires are under the age of 40 with Snapchat’s Evan Spiegel having the distinction of being the youngest billionaire on the list.

Well hello, pardner…

Image courtesy of stock images/FreeDigitalPhotos.net

Image courtesy of stock images/FreeDigitalPhotos.net

Club goers rejoice! Costco has officially entered into agreements with Citigroup and Visa to become the wholesaler’s partner in credit. In the meantime, the retailer is bidding a not-so-fond farewell to American Express, who for the last 16 years had an exclusive deal with the chain. Citigroup will be putting out a Costco/Citi credit card with perks and generous rewards aplenty, in keeping with the Costco spirit, of course. Unfortunately, Costco shoppers must wait until April of 2016 to whip out the new plastic. However, debit cards know no bounds – or labels – and those will continue to be warmly accepted regardless of the issuer, at Costco’s 674 warehouses worldwide. And while AmEx is expecting to take some type of beating on Wall Street for the next two years, shares of Visa hit an all-time high today over this very exciting fiscal news.

Twitter Gets Schooled at MIT; Warren Buffet, Car Salesman?!; Hooray for Shorter Lines at the Unemployment Office

Twi-gifted…

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

MIT got a nice little gift from Twitter recently. Well, maybe little isn’t the right word for the $10 million dollars that the social media company is giving to one of the world’s most important academic institutions. The money is to be used for the advancement of…wait for it…social network research. The Laboratory for Social Machines, or LSM for those in the know, housed at MIT’s Media Lab, will seek to explore how people use social media networks and figure out new beneficial ways to use these tools. The researchers will have access and get to slog through every single archived tweet and real-time tweets too. Lucky them. The research should take about five years and will be headed by Twitter’s very own media scientist, Deb Roy, who also conveniently happens to be an associate professor at this extremely distinguished media lab. Roy hopes to, among other things, find ways to “…act on pressing societal problems.” How very useful.

Vroom vroom…

Image courtesy of suphakit73/FreeDigitalPhotos.net

Image courtesy of suphakit73/FreeDigitalPhotos.net

The Oracle of Omaha has welcomed yet another new company into the exclusive and pricey Berkshire Hathaway fold. This time, the lucky seller is the Van Tuyl Group. In case you were wondering, because I know you were, the Van Tuyl group just happens to be the largest privately-owned auto-dealership in all the land, with 78 locations and revenues in the $8 billion range. No word yet on how much Warren Buffet paid for his latest acquisition. Naturally, shares of Berkshire Hathaway went up on the news (seriously, do they ever go down?) of the purchase. By the way, if you’d care to purchase some Berkshire Hathaway stock, it’ll only set you back about $206,000 – per share.

Stake your claim…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

And in keeping with the spirit of yesterday’s exciting and gripping news from ADP about all that job growth, the Labor Department came out with its latest report that the number of people filing for unemployment benefits dropped by 8,000. Which is just what I (and by “I,” I do mean those very intelligent economic experts) suspected would happen. Oh, wait a minute…our very intelligent experts actually predicted that the number of applicants for jobless claims would rise. Whoops. Whatever. The number of claims being filed haven’t been this low since June of 2006, way before that odious Great Recession began to wreak havoc on our fiscal sensibilities. By the way, expect President Obama to take some (maybe more) credit for those promising numbers (whether you agree with that assessment, or not).

GM Gets Buffet-ed, Great Earnings Are Beautiful and Missed Earnings = Score for Killer Whales

Warren Buffet auto know…

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

There’s no denying GM had nothing short of a disastrous year. Not quite as disastrous as it was for the victims of their faulty ignition switches, of course. But as far as Wall Street was concerned their earnings were a fiscal nightmare (and deservedly so for not being on its safety “A” game). But despite GM’s lousy earnings and even lousier – make that non-existent profits – Warren Buffet’s Berkshire Hathaway (BRKA) holding company picked up 3 million shares of the embattled auto maker, according to an SEC regulatory filing. Laugh all you want but they don’t call him the Oracle of Omaha for nothing. The stock is at what you would call a “discount” and Warren Buffet loves himself a good discount. The man knows a thing or two about investing, seeing as how his company’s stock just hit  $200,00 a share. He also happens to think GM CEO Mary Barra is friggin’ awesome. Just don’t expect a quick turn-around as Mr. Buffet is known for holding onto stocks for the long-term. And in this case, that term might just be longer than usual.

Make-up retail wake-up….

Image courtesy of keakguru/FreeDigitalPhotos.net

Image courtesy of keakguru/FreeDigitalPhotos.net

Apparently the quest for beauty is well…priceless. Estée Lauder Companies Inc. released really good and very attractive earnings, especially considering lots of other retailers posted less than glamorous earnings and the US Department of Commerce reported that July retail sales were virtually flat, effectively spooking plenty on Wall Street. Estée Lauder Companies Inc. also owns MAC, Clinique and La Mer (famous as much for the cost of its products as it is for the products themselves). The $28 billion make-up company pulled in $2.73 billion in revenues. Wall Street clearly underestimated the love for make-up and had pegged estimates at $2.66 billion. As for net income – it more than doubled coming up to $257.7 million. The company’s guidance also expects some nice growth hopefully adding a little height to a very unsightly, flattened retail graph.

A whale of tale…

Image courtesy of bandrat/FreeDigitalPhotos.net

Image courtesy of bandrat/FreeDigitalsPhotos.net

Nothing like some bad earnings to get killer whales some new and much bigger digs. Following its really bad earnings the other day, with shares of SeaWorld falling 35%, the amusement park company is pledging $10 million for killer whale research and ocean health. Its CEO is also hoping that doubling the size of its Orca tanks will attract more people to its park and boost revenue. SeaWorld attributed some of its losses to the unflattering film “Blackfish” which SeaWorld called a “propaganda film. Two California lawmakers are hoping get a ban on killer whale performances. Of course PETA entered the fray telling whoever that a “bigger prison is still a prison.”

It’s Worth How Much?! Coca Cola Gets Energized and Not Banking on Terrorism

Buy high, sell higher…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

They don’t call him the Oracle of Omaha for nothing. Shares of Berkshire Hathaway, helmed by the prescient Warren Buffet, hit a new, very high, milestone. For the first time shares of the most expensive stock trading in New York hit and even surpassed the $200,000 mark going up to $201,720 a share. Yep. For a couple hundred grand you too can own a single share of Berkshire Hathaway. Mr. Buffet feels that by not splitting the stock, as most companies would have done by now, Berkshire Hathaway gets a better class of investor. By better, he means investors who are more focused on long-term results, rather than other investors who make emotional trades. My emotions would be very happy to own a few of those shares. If you were looking for a more wallet-friendly option, you could always buy B class shares of Berkshire Hathaway which trade at a little over $130.  Berkshire Hathaway’s earnings, by the way, pulled in $6.4 billion in profits. Why, that’s almost a $3,900 gain per share – for the A class shares.

Enjoy a Coke…with a Monster Beverage

Image courtesy of Naypong/FreeDigitalPhotos.net

Image courtesy of Naypong/FreeDigitalPhotos.net

Coca Cola (KO:US) just got a bit more monstrous now that it picked up an almost 17% stake in Monster Beverage (MNST:US) for over $2 billion. It’s all part of Coca Cola’s grand plan to take equity stakes in companies that have new emerging promising brands. In May, Coca Cola did a similar move with Keurig Green Mountain Inc. Shares of Monster Beverage went up 26% to around $90 a share. Not quite Warren Buffet territory but still not too shabby.

Would you like that in small bills?

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

Jordan-based Arab Bank is not sitting pretty in court as it stands accused of being one of the official banking institutions for terrorism. Not exactly the kind of clientele you want associated with your bank. A lawyer for a group of American terror victims said the bank funneled lots of money ear-marked under a file labeled “martyr operations” for certain designees related to terrorists and suicide bombers. These files contained a list of people who were slated to receive $5,300 a pop (definitely no pun intended). Lawyers for the bank, however, argue that the bank followed all regulations and none of the names listed were flagged by any international law enforcement organization. That probably had more to do with the fact the names linked to accounts were (intentionally?) misspelled. The transactions took place at branches in the West Bank and Gaza and the list came from the Saudi Committee for Supporting Al Quds Intifada. Arab Bank now holds the dubious distinction of being the first bank on trial under Anti-Terrorism Act.

Target-ing Hackers, No Love for the Coach and Warren Buffet’s Signature Bling

On target…

Image courtesy of Grant Cochrane/FreeDigitalPhotos.net

Image courtesy of Grant Cochrane/FreeDigitalPhotos.net

Target (TGT) is about to target your charge cards. With technology that sounds like it was ripped straight from a sci-fi/spy thriller flick, Target will be swapping your soon-to-be-obsolete magnetic strip cards for chip-and-pin cards that are supposedly far more secure and hacker-proof. With an embedded microchip that generates a different code every time it’s used, counterfeiters just might go bust. We hope. Even if the card is hacked (theoretically speaking, of course), it still couldn’t be used again. Incidentally, these cards have been the standard in Europe and several other parts of the world for some time. The US is a little late to the secure charge card party. The cost for this nifty little innovation runs in the $100 million range but what they’ll save in false charges…priceless – especially after that embarrassing data breach during last year’s holiday shopping season. By October 15, retailers and banks that don’t employ this new technology will be the ones liable for any counterfeit transactions.

Coached out…

Image courtesy of Simon Howden/FreeDigitalPhotos.net

Image courtesy of Simon Howden/FreeDigitalPhotos.net

It seems Americans just aren’t feeling the love for Coach (COH) products anymore. The luxury retailer, famous for its leather and logo handbags and other assorted merchandise, took a nasty hit to its third quarter revenue over the same time last year. Experts in both fashion and finance suspect Coach’s stylish competitors, Kate Spade (KATE) and Michael Kors (KORS), have been taking a big chunk out of their sales. Coach took in $1.1 billion this quarter when this time last year it took in $1.19 billion. But outside the US, you’d never know Coach isn’t a fan fave. Overseas sales grew 14%, but China truly showed its affection for the brand with a 25% increase in sales there.

Bedazzling Buffet…

Image courtesy of Boykung/FreeDigitalPhotos.net

Image courtesy of Boykung/FreeDigitalPhotos.net

If you’re in the market for some bling, you might want to talk to the world’s second wealthiest person, Warren Buffet. He’s got some ice he wants to sell, provided you’re a Berkshire Hathaway shareholder who will be of the fortunate few to attend the annual shareholders meeting on May 3. These aren’t just any diamonds. These stones, from Borsheims Fine Jewelry and Gifts, have the Oracle of Omaha’s signature laser-etched into them, a souvenir of sorts that will range in size from .75 carat to five carats and could set you back anywhere from between $5000 and $200,000. After all, why buy jewelry from Tiffany & Co. when you can blow all that cash on jewelry that’s personalized…for Warren Buffet. But like I said, you still have to be a Berkshire Hathaway shareholder whose stock price closed at $192,545.00. Per share. No, that’s not a typo.