No Churning Back: France Needs Your Butter!; The New “It” Couple; Americans Are Spending! Yay.


Très mal…

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Nothing screams “It’s time to panic!” quite like a butter shortage in France. Oui oui. The country is in the throes of a shortage of the stuff that dreams and croissants are made of, primarily because the cost of the creamy spread has gone up and the supermarkets aren’t forking over the euros to pay for it. So how exactly does an entire country find itself in the midst of such a supply shortage? First, France has been dealing with some bad weather which has somehow affected the supply of cow feed. Don’t ask me the mechanics here because I have no idea. Then we get to New Zealand. Yes, New Zealand. Did you know that New Zealand is a leading butter producer? Neither did I. New Zealand, with its own issues, has been decreasing its exports of the stuff, which in turn has contributed to France’s shortage and price increases.  However, the all-time proverbial buzz-killer/price-increaser is basically an overall global increase in demand for butter. When the whole world is eating more of the stuff, the price magically, and inconveniently goes up. In fact, butter went from $2,800 per ton in April 2016, to $8,000 per ton this past September. Crazy, right? And like Americans stockpiling batteries and water before major storms, the French have been stockpiling…butter. I dare you not to laugh. Out loud. In any case, if you don’t believe me, just check out Twitter for all sorts of French/butter humor. You won’t believe how many jokes this is churning out – sorry, had to do it.

Let’s get together…

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Image courtesy of Zuzuan/FreeDigitaPhotos.net

There are some things in life that are just meant to be. For instance, peanut butter and jelly, macaroni and cheese, and of course, beer and cannabis. Hence, Corona beer maker Constellation Brands just scooped up a 10%, $191 million-stake in Canopy Growth Corp, a Canadian company that makes cannabis and medical-marijuana products.  As for Constellation Brands, a company valued at $42 billion, it now has the dubious distinction of becoming the very first major company that specializes in wine, beer, and spirits to invest in this budding – no pun intended –  pseudo-legal industry.  The fact is, the issue of legalizing marijuana seems to be on the table in the U.S. and Canada, and not just for medical use. But Constellation really isn’t planning on doing anything major with its stake. Just yet, anyway. It plans on maybe just starting to produce some cannabis-infused drinks. Interestingly enough, the more marijuana gets legalized, the less alcohol gets consumed. For Constellation Brands, it was a pre-emptive move, positioning itself at the forefront of the industry, enabling it to take advantage of the all the opportunities that await once legalization, on the federal level, is securely in place. Nice little fun-fact: Canopy Growth Corp’s ticker symbol, which trades on the Toronto Stock Exchange is…wait for it…WEED. Catchy, huh?

You “auto” know…

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U.S. consumer spending went up quite impressively last month – a whopping 1% (yes, that is whopping) –  in large part because of the auto industry.  That’s especially important since consumer spending accounts for 2/3  of the U.S. economic output.  And who doesn’t love strong economic output, right? Yes, spending rose a lot, the most since August 2009, because there seemed to be a major increase in consumers buying cars. Sadly, that surge in car-buying was helped by the two recent major storms that ravaged a large swath of the United States and effectively destroyed a ton of vehicles. Incidentally, August 2009’s rise in spending was also attributed to the auto industry. At the time the government put out a program called “cash for clunkers” that fueled its own surge in pending.  Along with that nifty bump in consumer spending came a 0.4% increase in personal income. And bonus: wages increased by the same amount.

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It’s All About the Bonus; Colorado’s State Budget Gone to Pot; Vera Bradley’s Headed Overseas

Fat cats…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Good news, that is, if you work on Wall Street. According to new data from New York State Comptroller Thomas DiNapoli, bonuses are up 3% in broker-dealer firms. Those bonuses managed to increase even though profits at most Wall Street firms took major hits. Together, all those lucky bonus takers took home (or are expected to take home) a very grand total of $28.5 billion, with the average earner scoring $172,860. They might have even taken home more but all those legal settlements stemming from the firms’ pernicious little roles in the 2008 fiscal crisis managed to put a crimp in profits. The securities industry also added 2,300 jobs, presumably ones that come with bonuses too. Has your jaw hit the floor yet?  Even all those pesky new regulatory changes couldn’t stop those bonuses from rising. So why exactly might this information make the New York State comptroller so giddy? Because Wall Street accounts for 19% of New York State’s revenue and when the tide is high, all boats rise.

Speaking of bonuses…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

The amount of money that keeps pouring into Colorado’s state budget from marijuana sales just keeps getting…higher. No matter how you feel about legalizing recreational marijuana, there’s no denying its fiscal benefits. Sales of cannabis have helped the state rake in close to $9 million…just in the month of January. That was a whopping 163% increase over January of 2014. First, there is a a fee imposed on businesses that sell marijuana. All those businesses paid about $1 million in fees just for the privilege of selling the stuff. In sales tax receipts alone the state took in $3.5 million on a 10% sales tax for recreational pot. Colorado also puts a 15% excise tax on the stuff with funds from that going toward school improvement projects. There is a joke in there somewhere but I’ll stay away from it.

Just not that into you…

Image courtesy of ddpavumba/FreeDigitalPhotos.net

Image courtesy of ddpavumba/FreeDigitalPhotos.net

Handbag and accessories maker Vera Bradley took a nasty 16% hit on its stock today as it announced its abysmal fourth quarter earnings. Revenue fell 3% from a year ago to $157 million. But its that 13% drop in its net income, falling to $17.3 million, that is leaving a nasty mark. Blaming it on the fact that Vera Bradley can’t seem to attract new customers, CEO Robert Wallstrom said “overall business trends remain difficult.” Well, for Vera Bradley, anyway.  Not only is the company closing up shop on its New Haven, Indiana plant where 250 people will be left without a job, but Vera Bradley will now take the necessarily evil step of manufacturing its products overseas, since it’s apparently 90% cheaper to do so.  The company, started in 1982, went public in 2010 at $16 a share. After hitting a high of close to $50, back in 2011, the stock has been taking a vicious little dive, hitting all-time lows. All this comes two weeks after Vera Bradley named Olympic gold medalist Meryl Davis as its celebrity ambassador.

Marijuana Score With Venture Capital Firm; Global Economic Issues Make For Happier Borrowers; Is Yahoo CEO’s Head on the Chopping Block?

Gone to pot…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

It just keeps getting better and better for Marijuana. Privateer Holdings, a private equity firm whose focus happens to be on the cannabis industry, just got a major cash infusion from a venture capital firm. But this is not just any venture capital firm, either. The one and only Peter Thiel, billionaire, and partner at venture capital firm, Founders Fund, just handed Brendan Kennedy, CEO and co-founder of Privateer Holdings millions upon millions of dollars to be a part of the cannabis magic.  Privateer Holdings, if you recall (and it’s okay if you don’t) scored a huge 30 year licensing deal with the family of Bob Marley to manufacture Jamaican cannabis strains and hemp-infused products for the Marley Natural brand. It’s an epic move by Founders Fund, and an even better one for Privateer Holdings because it marks the first time a major institutional investor invests in the marijuana industry. Recognizing that this is a relatively new industry with countless untapped resources and opportunities, and marijuana legalization occurring in 23 states and counting, Founders Funds figures its a great strategic move. I suspect Founders Fund knows what they’re doing seeing as how it invested in a few other companies you might have heard about including Facebook, Airbnb and SpaceX.

 Mortgage sweet mortgage…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Not that it’s polite to rejoice at the expense of our overseas friends and their fiscal shortcomings  – a veritable global schadenfraude – but their fickle unreliable little Euro and falling oil prices are doing wonders for our mortgage rates over here. Indeed, mortgage rates are dropping because other parts of the world are experiencing economic issues, and those issues are making investors eager to cozy up to the relative warmth and fuzziness of US government bonds. When investors start cozying up to these bonds, mortgage rates keep falling and falling and…In any case, if you’re looking to take out a mortgage, this week you can get one at a rate of 3.73% on a 30 year fixed. That’s not only down from 3.87% the week before but it’s the lowest rate it’s been in over a year and a half. Looking for a 15 year instead? How does 3.05% sound. That figure is also down from last week’s 3.15%. Clearly a lot of potential homebuyer’s are getting the memo on these falling mortgage rates as loan applications were up by 11% last week.

Can’t you take a hint?

Image courtesy of digital art/FreeDigitalPhotos.net

Image courtesy of digital art/FreeDigitalPhotos.net

In a not so subtle hint, Starboard Value Chief Jeff Smith told Yahoo CEO Marissa Mayer in a letter that, “Should you instead choose to proceed down a different path … such actions would be a clear indication to us that significant leadership change is required at Yahoo.” The path to which Mr. Smith is referring is if Ms. Mayer decides to pick up CNN or another cable outlet instead of taking his suggestion of merging with AOL for the benefit of the “cost synergies” this merger would bring. By the way, Starboard owns 7.7 million shares of Yahoo. Also, by the way, Starboard owns shares of AOL, as well. Lastly, by the way, Starboard famously (notoriously?) chucked the board of Darden Restaurents, of Olive Garden fame, last year.

Bob Marley’s Smokin’ Legacy; Oil Prices Are Down So Why Aren’t Airline Fares?; Urban Outfitters Unhip Earnings

Toke on this…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

He’s been gone a long time, smoking a big fat joint in the sky, but Reggae icon Bob Marley still managed to score a worldwide exclusive, 30 year licensing deal for the “world’s first cannabis brand” appropriately dubbed Marley Natural. With the help of a Seattle-based, cannabis-focused (how industrious!) venture capital firm, Privateer Holdings, Marley Natural will feature strains of heirloom Jamaican cannabis. Kind of like heirloom tomatoes, except I’d never put tomatoes into a batch of brownies. But it won’t just be cannabis that you can purchase under the Marley Natural brand. The brand will also be putting out other useful stuff like lotions and containers (in which to store your cannabis to optimize freshess). No doubt those items will certainly make nice gifts (but again, you can’t smoke ’em). And bonus: the products will even have a “strong social conscience.” Expect to see the cannabis and other products in places where Federal law allows this sort of thing.

Up up and away…

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The joys of dropping oil prices will only carry you so far – by car anyways. Because even though airlines saved over a billion dollars in fuel costs last year, they seem to be pretending that they didn’t get the memo about dropping airfares prices. And why should they? After all, we’re still booking tickets at the prices the airlines set. Those prices are coming in at an average of over $370 per ticket, which by the way, does not include fees and taxes. Planes are still full – and often oversold. Airlines are posting great profits and would much prefer to order new planes and give their terminals face-lifts than pass those fiscal delights onto the very contingent that brought about those profits in the first place.

Time to move to the suburbs?

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

Urban Outfitters is not looking as hip and cool as it used to be, at least according to its third quarter earnings. Sure the company posted growth, but mainly from its Anthropologie and Free People brands – not from its namesake. Which I suppose stings a bit in the portfolio. While the company beat its sales estimates by $1 million, coming in at $814 million, it was its earnings that provided the fiscal bummer. The company earned just over $47 million and $0.35 per share which might seem solid, but really Wall Street expected earnings of $0.41 per share. What made those earnings that much more fashion-backward was the fact that the same time a year ago the company pulled in $70 million and $0.47 per share. Some were wondering if maybe the company’s disappointing earnings had more than a little to do with some of its more offensive merchandising offerings, like the blood-spattered Kent State sweatshirt or the women’s “Eat Less” t-shirt. Even though the items were eventually pulled from the shelves, it still begs the question if they left an un-hip impression on the very consumers it tends to attract.