Things are Looking Up on Wall Street. For Now; Could it Get Any Worse for Lumber Liquidators?; Will you Remain Loyal to Starbucks?

Could it be?

ID-10052312

Image courtesy of Teerapun/FreeDigitalPhotos.net

Oil and other commodities had a nice little surge today with a lot of thanks to just released jobs numbers and inflation figures.  The surge helped the market achieve a moment of zen by stabilizing it and even almost erasing all the declines it took on Friday. All ten major S&P sectors were up. Yes, there are ten major ones. Some of these major sectors include oil, metals, autos and even retail. Stocks are also up, as is the Dow, which took in around 22o points. Not to be a downer but the S&P is still down around 5% for the year with oil hanging out at 12 year lows. However, U.S. crude is up around 7% checking in at about $31.44 per barrel. The International Energy Agency says that the U.S. is taking the “biggest hit right now,” but by 2021 it will lead in oil production. So where does that leave the U.S. for the next five years? Hmmm. Something to think about.

Don’t breathe easy…

ID-100156938

Image courtesy of Teerapun/FreeDigitalPhotos.net

Lumber Liquidators is on a roll. Except it’s not a very good one. First, the flooring company agreed to a $13 million penalty and five years probation for a criminal settlement after it acknowledged that it illegally imported wood from forests that are home to endangered species. So not cool. Then, just when Lumber Liquidators was about to breathe a big sigh of relief over a February 10 CDC report that found its formaldehyde-laced wood floors weren’t that toxic, the CDC announces that they were mistaken. Its revised report indicated that their floors are, in fact, that bad and that certain types of Lumber Liquidators’ flooring from China are actually three times more likely to cause cancer than what was previously thought. Oops. It seems an error was made in the calculations when incorrect figures were used for ceiling height in determining the risks of exposure from the offending floors. Serious arithmetic issues are at work. Before, it was thought that 2 – 9 cases could be developed in 100,000 people. But now the figure is closer to 6 – 30 cases in 100,000 people that could develop cancer. Of course, that cancer risk is separate from other the many other ailments people could develop, including respiratory issues and eye, nose and throat irritations. Just this morning the company lost about a quarter of its market value, besides being down 83% for the last twelve months. But at least Lumber Liquidators has suspended sales of flooring from China and is strengthening its quality controls, which is cute and all but probably too little too late.

Hey big spender…

ID-100101565

Image courtesy of Teerapun/FreeDigitalPhotos.net

It’s time to decide what your Starbucks loyalty is worth. The coffee chain is tweaking its rewards program and that will have you spending more cash to get the coveted perks. Under the current rewards program, customers earn stars for every purchase they make, and after 12 stars a customer can score a free food or drink item. Some shrewd customers have figured out that in one visit they have baristas ring up multiple items separately so that their rewards rack up quicker. With one star earned per purchase, this tactic has managed to infuriate other customers since the strategy increases wait times at the register. But that’s about to change as the new rewards program is based on dollars earned, regardless of how many purchases you manage to make, even in a single visit. Consumers will now earn two stars for every dollar spent and 125 stars gets you a free item. Figure it’ll cost you upwards of $60 before you hit that freebie. If you happen to be a Starbucks customer who miraculously manages to spend less than $5 in a single visit, you probably won’t like the coming changes. So now, like most rewards programs, from airlines to credit cards, the more you spend the more you earn. The goal, Starbucks says, is to get more people to sign up for the program. Of course, the new programs also conveniently increases store sales and profit.

Advertisements

To Hike or Not to Hike: That is the Fiscal Question; Doggone it, Home of the Whopper Gets Frank; Is Lumber Liquidators Finally in the Clear?

 

1,2,3 – Hike!

ID-100127517

Image courtesy of jscreationzs/FreeDigitalPhotos.net

The Fed will most likely not be lowering rates so don’t hold your breath. Not that you were planning on it. But the Fed is likely to do one of two things: raise rates according to its plan of “gradual adjustments” – meaning regularly raising those rates a smidgeon.  Or the Fed will choose to do nothing. Zero. Zilch. Nada. You might have thought that China is messing up our economy in unimaginable financial ways and therefore a rate reduction is justified. However, the Fed doesn’t feel that China is messing it up enough to warrant lowering rates. In fact, Janet Yellen and company also don’t feel that the rest of the world’s economic troubles are affecting the U.S. so much either. Instead, Yellen feels the U.S. economy will grow no matter what, oil gluts, falling global stocks, and all. None of it is our problem and we shouldn’t waste time worrying how it will all affect the U.S. economy. What is our problem is that the Dow fell 1,700 points since the Fed announced its first rate hike back in December. Even so, Ms. Yellen sees employment gains and wage growth, despite financial tightening conditions, and said that the U.S. financial sector has been resilient.” Be on the lookout for a potential rate hike (or not) next month when the Fed holds its next meeting March 15-16.

Hot diggety dog…

ID-100323298

Image courtesy of atibodyphoto/FreeDigitalPhotos.net

It might be the home of the Whopper but Burger King’s new menu offering is taking on a whole different shape. Starting on February 23, Burger King will be serving up hot dogs at all of its 7,100 + locations in the U.S. Burger King brass are calling it “the most obvious product launch ever” and feel that hot dogs are a natural fit with the chain. Besides, the dogs were already tested in five markets bringing in sales increases that also apparently proved a natural fit for the company. It will make Burger King the biggest hot dog seller in the country and bonus: There will be no boiling or rolling involved in crafting these fine specimens. Instead, the dogs will be flame broiled and come in two variations: the $1.99 “classic” version and the $2.39 “chili cheese” version.  Burger King is partnering with Oscar Mayer to make a proprietary 100% beef delicacy. But the best part – to me anyway – Snoop Dogg and Charro (not sure how they came up with that combo) will be starring in training videos, hoping to make it more exciting for employees. Hey, whatever works.

Hold your breath…

ID-100162374

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Lumber Liquidators Holdings Inc. is almost out of the fiscal woods. Sort of. After testing conducted by the U.S. Consumer Product Safety Commission, the results are in and Lumber Liquidators’ suspect flooring has a very low risk of causing cancer. Phew. What is more likely to result from the toxic floor coverings are breathing problems and other irritations – besides the emotional irritations brought on by purchasing flooring that contains formaldehyde. Lumber Liquidators has already paid up $13.2 million in fines and forfeitures for its formaldehyde-laced floors produced in China between 2012 and 2014. If you recall, it was just almost a year ago when “60 Minutes” ran a very (financially) damaging piece exposing the company. But now, with any good news on Wall Street, shares have been rising steadily today, hovering at about 12.63. Its 52 week low was 10.53.

Google Exec’s Royal Pay Day; Why Chipotle Wouldn’t Serve Lunch Today; Yelping Early on Earnings

Does that include the corporate jet?

ID-100354109

Image courtesy of boulemonademoon/FreeDigitalPhotos.net

Sundar Pichai may not just yet be a household name – something that strikes me as totally weird – but remember that name. He is, after all, one of the highest paid CEO’s of a publicly traded company, and he just scored a record $199 million Google (GOOG) stock award  – the highest ever…for a Google exec. This not-so-minor tidbit was revealed following a February 3 regulatory filing where Pichai disclosed that he received…wait for it…a whopping 273,328 class C shares of Google. Google, by the way, closed today at 682.74. You do the math. Those shares are set to vest quarterly – as long as Pichai manages to last at Google through 2019. And why wouldn’t he. With his last stock award worth about $250 million, Pichai’s Google stake stands at a staggering $650 million. Although, to be fair, tech stocks did take a hit today, with shares of Google parent company Alphabet falling – if only just by 2%. But I suspect Pichai will still come out on top. So perhaps you might want to check Google’s job board. Diane Greene, who heads Google’s cloud business, snagged $42.8 million, while Google CFO Ruth Porat will be taking home $38.3 million in equity.

Muy bien…

ID-100178257

Image courtesy of Serge Bertasius Photography/FreeDigitalPhotos.net

You, like so very many others, probably didn’t get your Chipotle lunch fix today. And that’s not a bad thing. Stores were closed for the better part of the day as approximately 50,000 Chipotle employees gathered in 400 locations, ranging from movie theaters to conference centers, to discuss the Denver-based company’s food safety problems that have been plaguing sales at its 1,971 eateries. Chipotle CEO Monty Moran’s big plan for today’s gathering was to go over new procedures for food safety. That was probably a really great idea since an E. coli outbreak in October and a norovirus in December caused the company to temporarily shutter 43 locations, not to mention incur some brutal fiscal declines.To be fair, Chipotle’s 30% sales decrease are nothing compared to what happened to all those people who got sick. The fact that a Federal Grand jury issued a subpoena for a criminal investigation only adds insult to fiscal injury. But at least the CDC said that the outbreaks seem to be over. I’ll believe it when I hear that CDC employees themselves start ordering Chipotle’s legendary burritos. But if you don’t need those kind of assurances and are ready to chow down on a late lunch/early dinner of soft flour tacos, then bon appetite! Chipotle re-opened at 3:00 pm today.

Early reviews are in…

ID-100207285

Image courtesy of boulemonademoon/FreeDigitalPhotos.net

Yelp’s earnings were released today –  a bit too early, mind you –  and brought with it the news that Yelp CFO Rob Krolik, who joined the company in 2011, will be stepping down. He will either stay on board until the company can find a suitable replacement or until December 15. Whichever comes first. Weird, I know. In any case, Yelp posted revenues of $153.7 million, handily beating estimates of $152.3 million, and also gained 11 cent per share even though analysts expected the company to report a loss of 3 cents per share. Shares of the company, incidentally, were down in the afternoon. Go figure. If you have yet to post an opinion/review to Yelp, rest assured that there were still 95 million other people who did it for you, letting you know the all the good, bad and ugly about our country’s countless dining establish, both fine and otherwise. Yelp’s been on a fierce mission to battle the competition out there by diversifying its restaurant bookings, offering event management and even doing payments. That’s in a addition to the company’s plans for expansion beyond the U.S. And Yelp has no time to waste as shares of its stock have been going down since March of 2014, when the company hits its high of $97.25.

 

 

Where Have All the PC’s Gone?; Chipotle Ready for Big Return; Lego’s New Policy is Awesome

Click away…

ID-100378516

Image courtesy of TAW4/FreeDigitalPhotos.net

PC’s did not have a very merry Christmas. Or fiscal quarter for that matter. In fact, this marks the fifth consecutive quarter of disappointing PC sales. For the fourth quarter, those sales tanked by a very un-jolly 8.3%. We’re talking Lenovo, HP and Dell. But it was Acer that did the absolute worst with a 15% decline for all of 2015. Shipments of PC’s, for the first time since 2008, fell under 300 million to a very disappointing 276.2 million, more than a 10% decline since 2014. There’s just too much competition from tablet and smartphones that consumers don’t feel the need the rush to upgrade their machines. However, analysts seem to think that sales will pick up later in the year as Windows 10 gets commercialized. The one bright spot, according to the International Data Corporation, were “detachable” PC’s that seem to be all the rage right now. That segment of the industry posted some impressive growth. But then it gets weird. You see Apple, seen as a premium brand in the United States and Europe, actually saw growth – 3% for the quarter and 6% for the year – selling 20.7 million machines. It’s weird, if only because Lenovo, HP and Dell still sold more computers separately than Apple did. So it’s all a matter of perspective, I suppose.

All wrapped up?

ID-100178263

Image courtesy of TAW4/FreeDigitalPhotos.net

All is not lost for Chipotle after analysts decided that the chain has the potential to get its mojo back. Apparently, none of those analysts suffered from any food-borne illnesses from eating at Chipotle. That may or may not have had to do with why shares of the company rose the most today in more than 5 months. In fact, despite the fact that Chipotle is still slightly reeling from its relatively recent food safety crisis, the chain has plans to open up more than a couple of hundred new restaurants in the coming year. Execs say that the company is implementing new food safety protocols and believe it will make Chipotle an industry leader when it comes to food safety. Go Chipotle! The restaurant chain took a heady 15% sales hit in the fourth quarter following a multi-state E.Coli outbreak at several of its locations. As a result, the company expects to see negative sales posted until at least 2017.  However, shares today went up as high as $432.30 Bear in mind that the company experienced a major 40% slump from the high it hit back in August to the tune of $757. 77 and lost about $10 billion of its market value. There are currently several lawsuits against the chain over its past food-safety practices. But hey, good news: Chipotle execs say that the CDC is just about done with its own investigation into the food chain. Yay. Just don’t confuse that with the separate federal investigation of Chipotle following a norovirus outbreak in California.

Everything is awesome…

ID-10030533

Image courtesy of TAW4/FreeDigitalPhotos.net

Chinese artist Ai Weiwei will now get to play with all the Lego his political artwork requires. The fuss all started when Weiwei requested a large bulk order for some artwork. It was intended for an exhibition in Australia featuring 20 portraits of pro-freedom figures – to be done in Lego. But Lego wouldn’t allow him to order the amount of bricks needed for the “art” because, at the time, Lego’s policy stipulated that it did not endorse the use of its plastic bricks for projects that carry a “political agenda.” Never mind that my own father is convinced that The Lego Movie had a major political agenda subtly woven into the script. But we’ll leave it at that. In any case, when Ai Weiwei aired his grievance with the toymaker, supporters in several countries began sending in their own Lego stockpiles to the artist. Weiwei ended up using plastic bricks from a Chinese company that were similar to Legos and considerably cheaper too. Lego decided to change its policy and will officially forego asking details about such projects. However, artists must clearly display that Lego does not support or endorse the theme, message  or politics of the Lego artwork in question. Voila!

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.