Barclays Busted; Ford Ditches Mexico for China; UPS Gives Heads Up on Holiday Shipping

Cheerio…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Looks like 2008 is not done haunting banks that allegedly played dirty back then. Today’s banking scandal, that includes charges of conspiracy to commit fraud, is brought to us by Barclays and four of its former executives. The trouble started in 2008 when Barclays reached out to Qatar for some substantial cash that the bank was going to use to avoid a major government bailout. Barclays was inclined to hit up Qatar investors for some big money instead of getting a governmental bailout because a governmental bailout comes with major governmental oversight. And for banks, governmental oversight is a four letter word. Of course, asking help from the Qataris wasn’t exactly the problem. While there were two rounds of fundraising from Qatari investors, with one involving a $3 billion loan for Barclays, the UK bank also paid the Qataris $406 million in “fees.” It seems that last bit might not have been honestly and properly disclosed to shareholders. And that got authorities wondering if Barclays was trying to cover up the the gist of the plan because it might not necessarily have been totally legit. Besides, anytime there is suspicion of toying with shareholders, you can expect that there will be hell to pay.  These charges mark the first time that any bank in Britain got busted for questionably lawful behavior during the 2008 fiscal crisis. So congrats, Barclays. You now hold that dubious distinction. If convicted, the bank faces a nasty fine and the former execs each face up to ten years in prison if found guilty. As for the Qatari’s, they’re off the hook. Completely.

Adios…

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Ford is ditching Mexico for China, at least as far as the Ford Focus is concerned.  Rumor has it that by ending all production of the vehicle in the U.S. and moving production to China instead of Mexico,  Ford will end up saving a whopping $1 billion. Which is especially weird since it is cheaper to build and import cars from Mexico as opposed to China. But here’s where the logic enters: Ford will now spend money to revamp just one factory in China instead of two in North America. Hence, billions of dollars in savings. While no U.S. jobs are expected to be affected, the United Auto Workers remained conspicuously silent regarding the news. This latest decision is the very first major one to come from Ford’s newly installed CEO Jim Hackett. However, what analysts are finding interesting is that this move shows how Ford is putting the focus – no pun intended – on SUV’s and trucks, as opposed to smaller, more fuel efficient cars, thanks to lower fuel costs. Besides, sales of the Ford Focus are down way over 20% since low gas prices are no longer standing in the way of those coveted SUV’s. The only question now is how is this move going to sit with President Trump and what will he tweet about it.

It’s beginning to look a lot like Christmas…

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Start saving up. Christmas is just around the corner and UPS wants to let you know that it will be charging you extra to ship those holiday presents. Between November 19 and December 2, the package carrier will slap on a 27 cents surcharge and then again, from December 17 – 23. If you want your package delivered via next day air, then prepare to whip out 81 cents and 97 cents for two or three day ground delivery.  UPS typically delivers around 30 million packages a day during the holiday season and analysts are expecting that will rise even more. And who can blame UPS for charging more money to deliver your goods? After all, the holidays are the company’s peak season where not only can their internal systems become over-whelmed, but mother-nature can throw out a few unhelpful surprises as well.

 

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French Company Goes Organic for U.S. Acquisition; U.S. Airlines Gear Up for Cuba; U.S. Banks Bond Over Brexit

Let them eat organic cake!

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Dannon Yogurt’s parent company, Danone (said with a French accent) is looking to pick up  a major U.S company that will effectively double its size. That’s assuming all goes according to plan. Danone wants to offer organic food provider, WhiteWave, purveyor of favorites like Silk Almond and Soy Milk, Horizon Milk and Earthbound Farms, $10.4 billion in cash for the fiscal pleasure of its company. That’s a 24% premium over WhiteWave’s thirty day average closing price and comes out to about to $56.25 per share. But for Danone, whose looking to make itself a bigger presence in the United States, it’s well worth it, since WhiteWave’s offerings tend to attract wealthier consumers. WhiteWave generates annual sales of about $4 billion and with this acquisition, Danone expects to see a $300 million boost in operating profit. Danone has also been struggling in other parts of the world and this acquisition would ease the burden of some of those lesser-performing markets. FYI, when companies offer to buy other companies, their offers tend be at least at a 30% premium. Because this offer was not, it theoretically means that the bidding door is still open to other offers from companies like Coca Cola, PepsiCo and Kellogg Co, to name but a few. In a regulatory filing, though, WhiteWave did graciously say that it wouldn’t solicit other offers. However, there are exceptions. Should WhiteWave go with another offer, Danone still wins because it will get a $310 million break-up fee.

Bienvenido…

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Believe it or not, Hillary Clinton wasn’t the only topic of conversation today coming out of Washington DC. President Obama announced a proposal to allow eight U.S. airlines to provide nonstop service between Cuba and ten U.S. cities, beginning this fall. This will mark the first time in 50 years that travel of this kind will be available. And all this just one year after diplomatic relations were re-established. The city and airline selections were made by the Department of Transportation and the lucky airline winners are: Alaska Airlines, American Airlines, Delta Airlines, Frontier Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines and United Airlines. American Airlines is actually no stranger to the island nation, as it has been offering charter services there since 1991. Just last year the airline made over one thousand chartered flights to Cuba, while JetBlue made over 200 chartered trips. That’s awfully welcome news for an industry that took a fiscal beating lately. The cities that can look forward to the new service had to have have substantial Cuban-American populations already in place. Hence, Florida finds itself the recipient of 14 out of the 20 daily nonstop flights, since it boasts the largest Cuban-American population. The cities include: Atlanta, Charlotte, Fort Lauderdale, Houston, Los Angeles, Miami,  Newark, New York City, Orlando and Tampa. According to Cuban officials, the number of American travelers to Cuba is up 84%, compared to last year, in just the first half of the year.  But there is still a trade embargo in place, which does include a travel ban. However, there are twelve convenient categories of reasons to fly to Cuba that you can check off should you decide to make your way to Havana any time soon.

Come together…

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It’s a fiscal kumbaya as four U.S. banks offered up their sincerest support for London following the Brexit vote. The gracious supporters include, JPMorgan, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley. The banks agreed to help British Finance Minister George Osborne find ways to ensure that the U.K. remains the prominent financial player that it always was, pre-Brexit. And of course they all will try and find new and exciting ways to lure and retain big banking to London so that the consequences of the Brexit don’t do the country in completely. While that sentiment no doubt warmed the hearts of investors all over the world, the investment banks could not offer up as much optimism as far as the jobs situation is concerned. After all, “no one in their right mind would currently invest in Britain.” Keeping those jobs there might might be the biggest challenge of all and no one wants to make any promises on that. Especially Jamie Dimon, who had previously mentioned that around 4,000 jobs could make their way out of London. In the meantime, the French wasted no time – I mean NONE! – in announcing to the world that it would make its tax regime as enticing as possible, in a not at all subtle attempt to grab some pricey banking business from London.

No Slowing Down Alibaba; Feeling Taxed: Google’s Italian Problem; Ads Abuzz for Super Bowl

What economic slowdown?

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China’s economy might be on the skids but apparently Chinese e-commerce giant Alibaba Group Holding Ltd. didn’t get the memo. The company released its earnings and reported that its sales rose 32% to $5.3 billion, easily beating analysts estimates of $5.13 billion. Alibaba even scored a profit of $1.93 billion, picking up 99 cents per share and beating predictions of 89 cents per share. The reason for these positively fabulous numbers have a lot do with insane revenues posted from November’s Singles’ Day. Singles’ Day saw 115 million buyers scooping up $14 billion in purchases. Alibaba CEO Jack Ma is also on a fiscal quest to bring China’s rural countryside onto the mobile shopping bandwagon and it’s been paying off royally.  Of course, shares of the stock rose in pre-market trading, just as they should. Alibaba needed the boost as its shares have declined 14% so far this year after falling back in 2015.  But then shares fell this morning by 2% (as did Yahoo since it owns a sizable chunk of it). Go figure. Ma’s grand plans for the company extend far beyond China and he would really love it if at least half of Alibaba’s revenue started flowing in from outside of China. Good thing he’s already got plans in motion to make that happen.

Google that…

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Authorities in Italy have set their investigative sights on Google charging that the tech giant evaded an estimated 327 million euros in taxes between 2009 and 2013. Of course, a Google spokesperson graciously noted that Google always pays its taxes wherever it operates and even explained how it paid 2.2 million euros in taxes on 54.4 million revenues back in 2014. Problem is Italian authorities aren’t buying it and estimate that Google’s revenues were ten times higher than what it reported. Italian authorities say Google basically redirected revenue to its regional offices in Ireland where the corporate tax rate is much more hospitable to big companies. Last week Google’s parent company Alphabet Inc. forked over $186 million to U.K. authorities for a different tax settlement. While that might seem a considerable sum, there was a huge outcry, particularly by those in Britain’s Labour Party, because they felt that the amount was way too small considering how much profit the company made. Incidentally, back in December, Apple had to settle with Italian tax authorities and ended up paying back 318 million euros.

Getting buzzed…

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With the Super Bowl just around the corner, some of the ads are already making for bigger stories than the game itself. Take for instance Death Wish Coffee. Never heard of it? You’re not the only one. The small business won a contest held by tech company, Intuit, and you’ll be able to catch the 30 second ad during the third quarter of Super Bowl 50. Death Wish Coffee began in 2012 by Mike Brown, who like so very many of us, was on the prowl for a very potent, caffeinated brew. As of now, Death Wish sells about 1,000 packages a day. But after the Super Bowl that number will likely skyrocket considering the 100 million-plus people expected to tune in to the big game. Death Wish Coffee will set you back about $20 a pound. But hey, that’s a small price to pay for the ultimate coffee fix, I suppose. And maybe by next year, Death Wish Coffee will actually able to afford the $5 million price tag for that coveted slot instead having to enter a contest to try and win it.

Deutsche Bank CEO’s are Leaving Early and No One is Shedding Tears; McDonald’s Numbers Not Totally Horrible; Smack Talk at the G7 Summit

You’re Fitschen kidding me…

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Image courtesy of biosphere/FreeDigitalPhotos.net

In case you were wondering how Wall Street feels about Deutsche Bank’s outgoing co-CEO’s Anshu Jain and Juergen Fitschen, then just look at the company’s stock price. Shares of Deustche Bank gleefully shot up over 8% at one point, on the news that the two men would be ditching their digs even earlier than planned. However, those gains weren’t just from the sheer joy of those early departures but also because investors totally dig their replacement, British banker John Cryan, who also happens to have a pretty decent track record. Cryan is what the cool kids call a “takeover specialist” which is something Deutsche Bank could use now more than ever seeing as how Jain and Fitschen couldn’t seem to stem the tide of legal issues that have been plaguing the bank, including a massive $2.5 settlement claim the bank had to fork over after some traders very rudely – and illegally, I might add – rigged some benchmark interest rates. In fact, most of Deutsche Bank’s troubles and scandals seemed to to come out of its investment bank, which coincidentally, was/is under Jain’s watch. The question remains as to whether or not Cryan can pull the largest German bank out of its funk. Except, first he’s got to come up with a plan. At least he speaks German. So score one for Cryan.

You deserve a break today…

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Image courtesy of atibodyphoto/FreeDigitalPhotos.net

Things at McDonald’s weren’t nearly as bad as everyone thought they were going to be. They weren’t great but we’ll get to that. The Golden Arches saw same store sales drop .3% , which is definitely not good. However, at least those sales didn’t drop by .9%, the figure expected by all those super-educated analysts. To that I say booyah.  And then there was Europe. While everywhere else on the planet McDonald’s saw sales fall, McDonald’s needs to give much danke to Germany, France and the UK who showed the burger chain some major love in the form of a 2.3% gain. Analysts only expected Europe to bring in a tres  modest .6% gain. So you see, Chipotle, Panera and Shake Shack haven’t taken over the fast-food world. Yet. McDonald’s is in the midst of bringing about a “turnaround plan” which apparently includes offering breakfast all day. Except that’s only in – where else? – Southern California. Also, as part of the plan to reclaim its rightful place in the fast-food kingdom, CEO and President Steve Easterbrook has big lofty plans to rebrand McDonald’s as “a modern, progressive burger company.” Did you get all that?

Back at the G7 Summit…

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Image courtesy of bplanet/Freedigitalphotos.net

There seems to be a bit of confusion coming from the G7 Summit. A French official told reporters that President Obama said the strong dollar is a “problem.” Then, the dollar slid against the euro. However, President Obama insists, “I did not say that.” But, still, the dollar still slipped, for the first time in three days, against the euro. In any case, other important stuff was presumably discussed at the conference where world leaders from the United States, Germany, France, Britain, Italy, Japan and even Canada talked about fiscal issues that are plaguing the world. But who doesn’t love a good “he said, he said,”  especially during a super important meeting between the world’s most powerful people. I could really see this one playing out on South Park.