Wanna Be a Billionaire? Then Move to China; Rainbows and Unicorns!: Twitter Might Finally Churn Out a Profit; Nike’s Game Plan Leaves No Room for the “Undifferentiated​”

Something tells me we’re doing it wrong…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

There’s a new report out published by UBS and PwC, called the Billionaires Insights report that tracked 1,542 billionaires all over the world and their combined $6 trillion. And while some might quickly assume that the United States might hold the top spot for the billionaires club, they would be wrong. As it turns out, Asia has the most billionaires, topping out at 637, whereas the United States can only boast 563 billionaire residents. In fact, every two days a new billionaire is minted in Asia, with China having the most.  But, to be fair, the wealth of the U.S. billionaires is much higher, coming in at $2.8 trillion, compared to Asia’s $2 trillion. So six in one, half dozen of the other, I suppose. Except not for long. The report also mentioned that the wealth of Asia and its billionaires will far surpass the U.S. in four years. One of the biggest “problems” listed for these poor billionaires face is how they intend to pass on their wealth. Rich people problems. But somehow they manage, whether they choose to pass it on to their heirs or leave it to charitable organizations. Decisions decisions. Of course, the more people the billionaires leave behind, the more complicated things get. But such is life when one is saddled with so much friggin’ cash.

Fairytales do come true…

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There’s a lovely rumor going around that maybe, possibly Twitter just might crank out its first-ever profit. We just need to wait until next quarter to see if that’s actually going to happen. But it’s not outside the realm of possibility since the social media company did make a major push to cut expenses while engaging in deals with other companies that don’t have them relying so heavily on advertising. Wall Street, at least is super stoked, causing shares of Twitter to soar 16% to over $20 per share.  And that company definitely needs all the share-soaring it can get. Twitter’s revenue was $590 million, a 4% dip from last year at this time but still decent since expectations were for $587 million. The other big news on the Twitter front is that the company made a very big mistake and is apparently trying to make amends for it. It seems that somehow an error was made in how user base was calculated for the last few years. But the company did revise the previous estimates, that had those numbers coming in a bit smaller than what was previously reported. Twitter insists that the difference amounted to less than one percent and that’s the story they’re sticking to. Their monthly active users, by the way, are up to 330 million and that number is supposed to be accurate, just disappointing since analysts expected that number to be 330.4 million. Oh well, Can’t win ’em all.

You’re out!

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Nike’s annoyed at under-performing retailers and has put them on notice. Which is definitely one way to make enemies. But hey, Nike is all about competing and if a struggling retailer is unable to “just do it,” then they’re out. Because Nike has a plan – a big one – that’s got them trying to hit $50 billion in sales by 2020. Nike wants to just do it, naturally. However, Wall Street is not so sure it can. I have yet to decide who my money’s on at this point in time. Apparently, 40% of Nike’s wholesale business comes from “differentiated” retailers and they want to up that to 80%.  Those retailers have a way of presenting the merchandise that gets customers wanting to spend their money at those establishments. According to Nike brass, “undifferentiated mediocre retail” just won’t cut the mustard and can expect a nasty goodbye within five years. Ouch. Nordstrom and Foot Locker apparently have nothing to worry about. For now. There were some obvious omissions, though, including Macy’s and JC Penney. Just saying. Whatever Nike has in store for those “undifferentiated” retailers doesn’t seem to bother Wall Street. Investors sent the stock up 3.5% today.

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Amazon Shatters Sales Records. Again.; Apple Plays Nice With China’s New Laws; U.S. Gov’t Says Nyet to Cybersecurity Company

Primed for purchase…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

If you haven’t heard by now, yesterday was Prime Day, which is basically Amazon’s answer to Black Friday deals in the middle of summer. Laugh and poke fun all you want. But if you do, the joke’s on you. Because according to preliminary figures from Amazon, not only were sales up 60% over last year’s Prime Day, but “Prime” sales for July 11 even blew past 2016’s Black Friday and Cyber Monday. In fact, Amazon called it it’s “biggest day ever.” To be fair, this year’s Prime Day was 30 hours long, compared with last year’s 24 hours. But it wasn’t just about the deals that has Amazon all giddy today. Prime Day also brought in a significant amount of brand-spanking new Prime members.  Because as everyone on Amazon already knows, if you want those super deals, you need to be a Prime member, and yesterday saw more Prime membership sign-ups than any other time in Amazon’s history. As for the most popular Prime purchase, that would be the Echo Dot for the ultra-bargain price of $34.99, which usually sells for around $50. The most popular non-Amazon item sold in the U.S. on Prime Day was an Instant Pot Pressure Cooker. I could not make that up if I tried.

Apple of China’s eye….

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Leave it to Apple to not let some vague, burdensome, newly enacted cyber-security legislation get in the way of setting up a data center in China. China’s new cyber-security laws require that any data collected on its citizens needs to be stored on servers in China. If companies want to transfer any of that information, they need to go through regulatory review and approval…in China. For Apple, complying with Chinese law means an opportunity to improve the speed and reliability of the company’s products and offerings. While other foreign firms are still busy complaining about these new regulations, calling them a burden and a threat to proprietary data, Apple gets to become the very first of those foreign companies to make the necessary changes and set up shop. The province of Guizhou will play host to the tech giant, and Apple is making down a $1 billion investment to hunker down in that region of China. However, in order for any company to do legit business in China, it needs to team up with a local entity.  So Apple will be partnering up with the Guizhou-Cloud Big Data Industry firm, where all kinds of personal information, belonging to people who own Apple devices, will be stored.

Nyet so fast…

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It seems like just yesterday when you would walk into your local big box electronics retailer and have salespeople urging you to get Kaspersky Labs security for your computer. The company already has some 400 million users worldwide and generated $374 million in sales in 2016 just from the U.S. and Western Europe. But it looks like those days are about to go buh-bye now that the U.S. government is moving to block federal agencies from buying the cyber-security software from the Russian-based company. It seems that Kaspersky may have enjoyed a much much cozier relationship with Russia’s intelligence agencies than it was letting on, and apparently even helped develop security technology for Russia’s spy agency, FSB. However, Kaspersky Labs is calling foul and said it is being unjustly accused. The company also voiced its complaint that there’s an inherent assumption that because it’s a Russian company, that it must be tied to the Russian government. Besides calling the claims “unfounded conspiracy theories” and “total BS,”  CEO Eugene Kaspersky also said “…as a global company, does anyone seriously think we could survive this long if we were a pawn of ANY government?”  But it seems that the U.S. intelligence and law enforcement agent seriously do think that and said as much at an open Senate hearing.

 

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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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

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.

 

Not in the Moody’s: China Gets a Downgrade; Tiffany & Co. Fails to Shine; Can’t Contain The Container Store’s Earnings

Awkward…

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Look like Moody’s wont be getting a warm reception from China in the near – and probably far – future. It took thirty years, but the investor service downgraded China’s sovereign credit rating. Moody’s is more than a bit skeptical that the country can get its debt issues under control while at the same time trying to maintain economic growth. Hence, it bumped China’s rating down a smidgen from a respectable A1 to a not-as-respectable Aa3.  On the bright side – though I highly doubt China sees it that way – Moody’s did upgrade its outlook for the country from negative to stable. That’s gotta count for something, right? Well, maybe not to the Chinese. In any case, even though China has enjoyed pretty fast growth rates that easily surpassed 6%, it is apparently due in large part to its mounting pile of debt, and Moody’s said that it expects that rate to soon come down closer to 5%. As for China, the Finance Ministry is, shall we say, unhappy about this downgrade and called the move “inappropriate”  and “absolutely groundless.” Oh well. So much for diplomacy.

Not so Gaga for Tiffany…

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All is not bling-y for Tiffany & Co. as the luxury jeweler took a nasty 4% hit on its comparable sales, even during the fiscal quarter that brings us Valentine’s Day. Of course, with that ugly bit of news came an even uglier hit to its stock, taking it down around 10%. Like with so many other brands, the company just can’t seem to get a hold on that finicky demographic we call millennials.  And that’s even after the luxury brand made Lady Gaga its poster gal while poaching Coach’s Creative Director, Reed Krackoff to add a little millennial-desirability to the the label.  Naturally, some blame also went to that pesky strong dollar of ours which seemed to put a crimp on tourist spending.  Net sales were up close to $900 million. Too bad expectations were for $914 million On the bright side, Tiffany & Co. added 74 cents to its shares, beating analyst estimates by four cents. Last year at this time, the company hauled in over $891 million in revenue with 69 cents added per share.

Can’t contain myself…

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Shares of The Container Store Group surged 37% after announcing it not only beat expectations, but it also has a restructuring plan in the works. If any company knows a thing or two about restructuring and organization, it’s gotta be The Container Store, right? At least when I walk into one of their stores, I always find myself feeling grossly inadequate and disorganized. In any case, the company took in sales of $221 million, easily blowing expectations of $213 million out of the water. The company also took in 17 cents per share which was 140% higher than last year at this time. Yes, you read that correctly. 140%. Analysts expected 11 cents per share. But mind you, the company’s stock had been down around 50% since it hit a one year-high back in December.  As for the restructuring plan, sadly, there will be layoffs. It’s an unfortunate result of trying to combat all the e-commerce competition that has dogged The Container Store and countless other businesses.

Apple Throws Billions Towards U.S. Manufacturing; Ferrari Speeds into Double Digit Margins; Republicans Wage War on Dodd-Frank

iManufacture…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

China’s about to get some very unwelcome manufacturing competition from Apple. The tech giant just announced that it is starting a $1 billion fund promoting advanced manufacturing. Gosh, is the President going to take credit for this too? In fact, CNBC host Jim Cramer had the dubious distinction of being the first person to hear the news on his show “Mad Money.”  For those of you wondering what the difference is between manufacturing and “advanced manufacturing,” it means Apple will basically have to offer specialized skills and training for the latter and fill job gaps with these newly-trained, highly-skilled workers. In any case, Apple has thus far created some two million jobs in the U.S. and can hardly wait to create even more. But how does Apple plan on spending that $1 billion it’s setting aside for this latest project? Well, don’t get too excited just yet, because some of that cash is first going to a company that Apple has partnered with for this initiative. And the name of that lucky company has yet to be announced.

Magnifico!

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Ah Ferrari. What could be better than tooling around in a machine like that? How about its earnings, for one. The Italian automaker just released its first quarter earnings report and they were everything you’d expect from the maker of one of the world’s finest sports cars. Shares are up well over 6% today after the company announced a 36% earnings increase along with a 50% surge in deliveries. And by the way, those earnings were even better than expected, coming in at around $265 million  – which equals 242 million euros – in case you were curious. Estimates, mind you, were for 222 million euros. Revenues also impressed and elated investors, as they increased 22% to 821 million euros, easily beating expectations of 767 million euros.  Sure, those numbers are almost magical, but that’s not really what’s got Wall Street tongues wagging. It was Ferrari’s margins, which are now right up there with the aforementioned tech giant we call Apple. But I guess that’s to be expected when you’re selling cars whose ticket prices start well into the six-figures and can exceed $2 million. After all, we are talking about a company who sold out of a car, the Aperta convertible, before the car even made its official debut.

Let’s me be Dodd-Frank with you…

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Things are looking grim for Dodd-Frank, the Wall Street Reform and Consumer Protection Act. The Republican-led House Financial Services Committee argued that the law sucks for the economy since it slows it down, and today passed a bill that would overhaul and repeal parts of it. It certainly helps Republicans that President  Trump promised way back in his campaign to overhaul the law, which he says costs banks a fortune in compliance and limits lending way too much. Democrats argue the opposite and are convinced that the bill, if passed, will once again create the same conditions that led to the 2008 fiscal crisis. In case it wasn’t obvious, the law was initially passed under President Barack Obama. Naturally, Democrats voted against the bill and lost 34-26.

Fed Chairwoman Shuts Down Congressman; Mattel Goes For Big With Alibaba; Apple Hits New High On iPhone Dreams

Sit back down…

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Almost everyone’s favorite Federal Reserve Chair, Janet Yellen, was in the hot seat today. First she graciously explained in a letter to Republican Congressman Patrick McHenry that, in fact, the Fed possess the authority and has the responsibility to work and consult with foreign entities with regard to financial industry oversight and the development of international banking rules. McHenry, who is Vice Chairman of the House Financial Services Committee, didn’t appreciate that the Fed had already engaged in international talks before President Trump had a chance to put his peeps into play to conduct their own reulatory review. But no dice for McHenry as Chairwoman Yellen explained that such efforts were to the benefit and in the best interests of the United States and its financial stability. In other news, Ms. Yellen was mum on whether the Fed would raise rates at its next meeting in March but said waiting too long wouldn’t be a good idea. Besides inflation and the labor market, Yellen and co. are looking to see what policy changes President Trump is going to make before making any major announcements from the Fed’s end. Which seems like a prudent plan, especially from someone who was appointed by President Obama, but is doing her best to keep from playing sides since she has still has a few years left on her term during the current administration. And also because Trump criticized her during the campaign when he said that she was deliberately keeping rates low in order to benefit President Obama. Yikes.

Ni-Hao Barbie…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Mattel’s wound licking might just be on hold for now, despite losing some major Disney-Princess licensing mojo to Hasbro awhile back. The toy company has begun to forge a new path with Chinese e-commerce giant Alibaba. Nothing like gaining a foothold in the $7 billion Chines toy marketplace to ease those Disney-licensing blues. By the way, the United States’ toy industry is estimated at over $20 billion. Just saying. The company that makes Barbie dolls and Hot Wheels cars is in a partnership with Alibaba to create and promote interactive and educational toys, in addition to producing entertainment content based on Mattel products. Because hey, who doesn’t love shows based on toys – and vice-versa? Mattel will be selling its new wares via Tmall.com, which is Alibaba’s business-to-consumer retail site. Incidentally, Mattel had already been selling on Tmall.com for about six years now and rumor has it that its selection of Fisher-Price toys have actually been the top-sellers for five years in a row on Alibaba’s November 11 Singles Day. Mattel’s new products for Alibaba will hit Alibaba’s virtual shelves by mid-2017.  Mattel could really use the boost, especially since sales of Barbies have not been doing as well as they have in the past, and despite throwing some more realistic features onto the doll. Also, the company reported an earnings miss February 1, taking in 52 cents per share on an 8% revenue decline to $1.83 billion, when analysts expected 71 cents per share. But with Alibaba boasting over 440 million active buyers, chances are Mattel has the ability to turn that last earnings report into a mere distant bad memory.

Apple of my i-Phone…

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For the first time in two years, Apple hit a new high of $134.90 and a market cap of $701 billion. And in case you don’t own any shares, that probably means a whole lot of nothing to you. The last time it hit a new high was back on April 28, 2015, when the stock hit $134.54. But that 36 cents means a whole lot to investors who are hoping, and probably betting, that Apple will release a new iPhone, dubbed the iPhone 8, or the iPhone X – if you dare –  that will magically lift blah sales for the tech giant. While the company reported impressive earnings in its last earnings report, its outlook was less so, and the fact that Apple’s revenue decreased by 8% for 2016 didn’t help the mood on Wall Street as of late, even if it is the most valuable company in the world.  Rumor has it, the new phone is going to be even more expensive than previous ones, which is always a good way to get Wall Street tongues wagging.

Trump Tweets Threats of Big Taxes to GM Over Small Cars; Ford Rearranges Plants Much to Trump’s Delight; Trump’s Trade Pick China’s Worst Nightmare?

Small-fry…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Trump is tweeting again, this time going after General Motors. The President-elect wants to slap some big ugly taxes on the auto company because it imports Chevrolet Cruzes from Mexico instead of making them in the United States. But here’s where things get dicey: According to GM, only the hatchback version of the car is made in Mexico, and are meant for global distribution. The sedans, however, are made in Ohio. Ohio. In fact, of the 172,000 Cruzes sold last year, only 4,500 of them came from Mexico.  Even the United Auto Workers Union doesn’t care if GM does assemble those cars in Mexico since the Ohio factory isn’t equipped to make the hatchbacks. (Incidentally, over 1,000 employees at this plant are getting laid off soon.)  Besides, it’s alot of fuss to make about a car whose sales were down 18% in November.  The fact is, low gas prices are leading to higher sale of of SUV’s and trucks.  And the Chevrolet Cruze doesn’t figure in very nicely here.  Which all probably explains why this latest Trump tweet didn’t even harm the stock.  While it did lose some juice early on, it rebounded into positive territory very very quickly.

Adios…

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In the meantime, just hours after Trump used his social media account to lash out at GM, Ford announced that it is officially scrapping plans to build a $1.6 billion assembly plant in Mexico. But that doesn’t mean its ditching our neighbor to the south. Instead, Ford will continue making Ford Focus compact cars in an existing plant there while taking $700 million from that budget to upgrade a plant in Michigan for building electric cars. And bonus: 700 jobs would be added to the mix for that Michigan plant. It’s all part of a bigger $4.5 billion plan that Ford had in place to manufacture 13 new models of both electric and hybrid cars. A win-win, no?  There are plenty who think it’s just a win for Trump, who made it clear that he’s not into NAFTA and that manufacturing cars in Mexico only hurts the U.S. economy.  They also think Fields scrapped his original plans in an effort to make nice with the incoming President, not to mention, avoid tariffs. However, Fields said he was planning to make this move anyway, whether Trump was elected or not. Which doesn’t explain why construction on the new plant already started in May. But anyway, you needn’t cry for Mexico…just yet. The existing plant in Mexico will be adding 200 jobs there as well, so that country doesn’t come out a total loser either. While shares of Ford rose on the news today, can you guess what happened to the peso? It took a .9% hit against the dollar.  How do you say “ouch” in Spanish?

In other Trump business news…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The President-elect has set his sights on his pick for the U.S. Trade Representative post. Enter Robert Lighthizer, a Reagan administration alum, who has spent the last thirty years representing major companies in anti-dumping and anti-subsidy cases. Presumably, he was incredibly successful in that aspect of his career, or else Trump might not have looked in his direction.  According to Trump,  Lighthizer has made some very effective deals that protected significant sectors and industries in the U.S. economy. Yowza. Trump’s banking that Lighthizer will do something about “failed trade policies which have robbed so many Americans of prosperity.” That’s a definite plus for working in the Trump administration. As Trump’s top trade negotiator, one of Lighthizer’s major duties will be to try and reduce that pesky trade deficit and apparently, he has a knack for making deals that do just that. Lighthizer doesn’t care for the trade policies we have in place for China, so be sure to watch the drama that unfolds as he goes after one of the world’s largest economies. You can expect some big changes in that arena and damned be the Word Trade Organization rules if it comes to that. Which it just might considering Lighthizer’s not that into the WTO.