Twitter Buyout Hoax Sends Shares Up; Colorado’s Schools Getting Built on Pot; June Consumer Spending Blues

Nothing to get all tweeted up about…

Image courtesy of  winnond/FreeDigitalPhotos.net

Image courtesy of winnond/FreeDigitalPhotos.net

It’s the big news that wasn’t. A story about a $31 billion Twitter buyout made its way online on a website that looked suspiciously like it came straight out of Bloomberg headquarters. Except that it didn’t. A Bloomberg spokesperson said that the story was “fake and appeared on a bogus website that was not affiliated with Bloomberg.”In fact, the website was created just a few days ago, was rife with typos and referred to Twitter’s former CEO Dick Costolo as “Richard ‘Dick’ Costello.”  Talk about rookie mistakes. It’s too bad the story was false as the news caused shares of Twitter to spike more than 8%. I guess this means Wall Street digs the idea of a Twitter buyout. It’s not the first time a bogus story caused a stock to artificially inflate. Avon Products had a similar situation months back when a company calling itself PTG Capital Partners filed a bid to buy the company for $8 billion. Now, Avon’s great and all but that price seemed a bit too high for a company that hadn’t had a good quarter in too long of a time. This, of course, raised some red flags and now the perp behind the phony filing is facing the legal wrath of the SEC.

High-er education…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

Ever since Colorado decided to legalize recreational marijuana, schools in the Rocky Mountain State have been emerging victorious. A special fund from marijuana sales, set aside for Colorado schools, has been setting records thanks to a 15% excise tax. In 2014, $13.3 million in pot taxes for school construction was raised. But in just the first five months of 2015, that fund already surpassed $13.7 million. Part of the reason for the huge price increase is because marijuana businesses received a one time tax exempt transfer of medical plants. But it also helps that there are three different taxes imposed on marijuana, including a 2.9% sales tax, a 10% special marijuana sales tax and a 15% excise tax on wholesale marijuana transfers. Unfortunately, pot still has its haters and those opponents are coming out in full force using a racketeering law – that was initially established to bring down organized crime – by suing not just pot businesses, but their banks, their bond companies and even their accountants. Now if only there was a way for marijuana businesses to sue the pot opponents and level the playing field.

June gloom…

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Well it looks like the Fed won’t be rushing to hike rates anytime soon all thanks to the Commerce Department’s latest report for June. In case you missed it, consumer retail sales were pretty depressing. The numbers were weak and that is a problem since consumer spending accounts for 70% of the economy, suggesting that the economy isn’t growing as it should. Sales of automobiles and other goods took quite the hit as would-be spenders are playing it cautiously about spending their hard-earned cash lest they need it for a rainy day. The fiscal crisis of 2008 is still managing to spook a lot of people even though hiring is pretty decent and the labor market is fairly healthy. To be fair, though, wages are kind of flat and everyone would appreciate a little rise on that front. Even the revised growth rate for May was disappointing coming in at 1.0% as opposed to the 1.2% that was first reported. Here’s hoping July brings better fiscal news.

Intel’s Feeling “Chipper”; Hey Big Spender…Where Have You Gone?; BlackBerry: Buh-Bye Seacrest

Just because you don’t care, doesn’t mean it doesn’t affect you…

Image courtesy of phasinphoto/FreeDigitalPhotos.net

Image courtesy of phasinphoto/FreeDigitalPhotos.net

There’s some big juicy merger news coming down the fiscal/tech pipeline. Intel announced it’s plunking down $16.7 billion for fellow chipmaker, Altera. In case you were wondering – because I know you were, that comes out to $54 per share. Last year Altera pulled down revenues of close to $2 billion. So it stands to reason that Intel knows what it’s doing. It should be duly noted, my dear reader, that these are not just any personal computer chips we’re talking about either, but rather, programmable chips that can be used in smart cars, clothes and other everyday use items. Pretty rad, huh? Of course, like any multi-gazillion dollar deal, regulatory approval is still needed and shareholders also need to give their thumbs up. But at least Wall Street seems to be showing its enthusiasm in its own special fiscal way.

Spendthrift?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

April was a wash and I am not talking showers here. According to the Commerce Department, there was no rise in spending for April. Nor was there any decrease  – which I guess is a positive too. Consumer spending flat-lined and gave us the worst showing in three months. Gee, thanks April. While personal income was up a whopping 0.4%, Americans are choosing to save save save all that cash that they didn’t have to shell out for gas lately, much to the chagrin of economists who were certain Americans would be whipping out their wallets and just buy buy buy. Wages also didn’t increase that much which definitely helped spoil some much-needed spending fun. In fact, the personal savings rate (yes, that is a real thing) jumped to 5.6%, the highest rate since December of 2012. Burned by that awful fiscal nightmare of 2008, would-be consumers are discovering the joys of saving, in addition to paying down the odious burden of debt. Economists are expecting – and very much hoping (because it would be embarrassing for them if they were wrong) – that spending will pick up in the coming months and put some much needed oomph back into the economy, since spending does account for 70% of it. Here’s hoping they get it right.

So random…

Image courtesy of adamr/FreeDigitalPhotos.net

Image courtesy of adamr/FreeDigitalPhotos.net

Remember BlackBerry? Not the fruit but the device? Just admit it that you had one right before you unceremoniously ditched it for a first generation iPhone. Well the once-beloved device actually kicked the iPhone’s tush today. And Ryan Seacrest’s tush too. Sort of. The company, whose products are still quite the rage in other parts of the world, finally settled some “outstanding legal disputes” with a company called Typo Products, which happens to be backed by everyone’s favorite karaoke host, Ryan Seacrest. Typo was making iPhone cases with a QWERTY keyboard that bore a striking resemblance to a BlackBerry design. Talk about “F” for lack of creativity. In any (iPhone) case, Typo ponied up some settlement cash, tweaked the design and presumably found a way to, as they say on American Idol, make it their own.

Home Short Supply Home; Fast-Food Chains are Losing Their Artificial Appetite; Cabling Up

Home-y don’t play that…

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

There’s no place like home, that is, if you can actually get your hands on one. Homes in the U.S. seem to be in short supply, causing the ones that are already for sale to increase in value. Great news if you’re selling but bad news for buyers who are watching those prices rise because of that limited supply. The demand, however, is still there and people are continuing to buy up those homes as evidenced by the 5% increase in homes sales for the month of April. Experts thought that number would go up only 4.6%. Who can blame these eager buyers willing to shell out a few extra (thousand) bucks for a place to rest their heads. A decent job market and low interest rates are making this limited home supply that much more attractive. According to the ever informative Commerce Department, 517,000 homes were sold last month which was 6.8% more than last year at this time. Again, analysts only anticipated that 508,000 homes would find new owners. March saw only 484,000 new homes being sold. If you happen to be in the market for some new digs, take note that the median price for a house has gone up 8.3% over the last year to $297,300.

All the cool kids are doing it…

Image courtesy of Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

Artificial out. Natural in. And so it begins for both Pizza Hut and Taco Bell, two chains that have decided to throw in the artificial towel and kick the offending ingredients to the curb. It’s actually quite a big undertaking as this will affect 95% of their menus. But don’t worry about feeling it in your wallets. As least that’s what the people in charge are saying. The chains, which both happen to be owned by the same parent company, Yum Brands, are losing the fun colors and preservatives that you’ve come to expect in your fast-food cuisine. Your nacho cheese may not look as yellow by the end of July as Taco Bell gets set to say adios to the ingredient dubbed “yellow number 6.” And prepare yourself, diners, as you get set to munch on actual black pepper in it, as opposed to black pepper flavoring. Imagine that. Real black pepper. Who would’ve thunk it? Perennial offenders high-fructose corn syrup and palm oil will also be making an exit from the menu as well, and something tells me they won’t be missed.

Un-Charter-ed territory…

Image courtesy of manostphoto/FreeDigitalPhotos.net

Image courtesy of manostphoto/FreeDigitalPhotos.net

You may not care about this next piece of merger news as it may not affect you at all, especially if Netflix is your main provider of quality entertainment (in which case, I totally get it). But in the not-so-glamourous world of mergers and acquisitions, the fact that Charter Communications is scooping up Time Warner Cable is quite epic. It’s big news because 1.) two huge companies are coming together 2.) it will make Charter Communications the second biggest television and internet provider in all the land (of the United States, that is) and 3. there’s a ton of money being exchanged – over $55 billion or roughly the equivalent of the GDP for like a dozen developing countries combined (I may have exaggerated that one a little – but only a little). Interestingly enough, Time Warner Cable is much bigger, but that’s not stopping Charter from offering to shell out $195.71 per share to take on the company and bring its total customer base to 24 million. Of course, it’ll be no Comcast Communications, who comes in first with 27.2 million customers, but for now, it’s still a big – make that huge – step up for Charter.

CEO’s Paychecks Getting the AFL-CIO Mad; Americans Didn’t Whip Out Their Wallets Much in April; In: DuPont Proxy War, Out: Boxing

So what’s the problem?

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

The AFL-CIO is all worked up about CEO salaries and just how disproportionately higher they are than everybody else’s. The organization came out with a new report detailing all the juicy numbers found in an average CEO’s salary and the insane wage inequality crisis that goes along with it. AFL-CIO President Richard Trumka said, “America faces an income inequality crisis because corporate CEOs have taken the raising wages agenda and applied it only to themselves.”  CEO’s apparently rake in an average of $13.5 million a year, about $37,000 a day and a whopping 373 times more than the average worker, who gets a very average $36,000 a year. That $13.5 million figure is, by the way, a 16% increase over the previous year. But when a company starts increasing wages, it decreases profit for the company, which poses quite the dilemma for a company like say, Wal-Mart, with whom the AFL-CIO took particular issue. Wal-Mart’s CEO, Doug McMillon, gets about $20 million a year, according to the AFL-CIO’s report. However, Wal-Mart adamantly disputes that number since 75% of his paycheck is based on reaching his performance goals – which he did not – and hence, received less. Like maybe a couple of million less. According to other statistics, of the 250,000 CEO’s in the nation, the average pay is closer to $180,000.

Speaking of money…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Americans didn’t show the money in April, according to the Commerce Department, at least for cars, furniture, department stores…well, you see where I’m going with this. Some find this a bit unnerving since spending accounts for 70% of the economy. In fact April’s spending flatline is surprising considering all the steady hiring gains we’ve been seeing in the last twelve months, not to mention the 3 million jobs added that pay people money which they presumably were not inclined to spend. Even March saw a 1.1% increase in spending. April’s digits might have been worse had it not been for gains in restaurants, apparel and online spending offsetting those decreases in other areas. So what gives? Analysts aren’t too concerned since finding gainful employment hasn’t been a problem, a fact which tends to calm everybody’s nerves. Except paychecks don’t seem to be getting fat enough (see previous item) which does put a crimp on those spending figures.

Them’s fightin’words…

Image courtesy of Boians Cho Joo Young/FreeDigitalPhotos.net

Image courtesy of Boians Cho Joo Young/FreeDigitalPhotos.net

Boxing is so over. But some real fighting took place in the Delaware boardroom at DuPont where a months long proxy war took center stage and made Pacquiao vs. Mayweather look like a “Golden Girls” rerun. A clear and decisive winner emerged and it was NOT Nelson Peltz’s Trian Fund Management Fund. The activist investor had four nominees up for board positions but not even one scored a coveted spot. Ouch. Trian started it all back in January, with activist investor Nelson Peltz’s big dreams, and real plans too, to split DuPont into two different parts. CEO Ellen Kullman, along with many other in DuPont’s management, did not particularly care for Mr. Peltz’s idea, feeling it would basically destroy shareholder value. Apparently, they weren’t the only ones who shared this sentiment and hence won the war. This time, anyway. But Trian still has a 2.7% stake in the company which is worth about $1.8 billion so despite the epic loss, Nelson Peltz probably won’t be going away too quickly. In a statement, the company said “We are proud of the role we played as a positive change agent at DuPont. The vote was close. … We will continue to closely monitor DuPont’s performance.” Awkward.

Elon Musk’s Mighty Tweet-ful; Confident Are We? Yes We Are; Cable Companies Unite

Surprise!

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Tesla shares continued its climb today all because of one itty bitty tweet Tesla CEO Elon Musk tweeted yesterday. It helped, by the way that he has close to two million followers and the tweet in questions was re-tweeted thousands upon thousands of times. The tweet went as follows: “Major new Tesla product line – not a car – will be unveiled at our Hawthorne Design Studio on Thurs 8pm, April 30.” Hmmm. Whatever could that be?, thought everybody on Wall Street, and beyond. The top guess is a battery for buildings that stores energy from a home’s solar cells. Definitely a useful item, provided it works. Incidentally/conveniently, Mr. Musk is chairman of Solar City. His tweet-timing was impeccable, as pre-suspense-filled tweet, shares of Tesla were hovering around $181.80, which might seem impressive, just not for Tesla. Shares of the company had been going south on news that competition is fierce and things in China aren’t going as smoothly as thought. Post-suspense-filled tweet, shares went upwards of $192.

In confidence…

Image courtesy of Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

More jobs. More money from those jobs. Americans are confident that these pleasant things are in store for the U.S. economy and if you don’t believe me you can just check out the latest reading from the Consumer Confidence Index. Americans aren’t just a little confident, either. They’re a lot confident. A lot more confident than they were last month and a lot more confident than the 96.4 predicted by analysts. A year ago, that reading was a paltry 83.9. Last month’s reading stood at a respectable 98.8, and analysts expected little if any change to these digits. Instead, the reading took a major jump to 101.3, the second largest reading since December 2007. Americans are sure that spending will improve and increase when and if the weather (ever) gets better. I did say if, mind you. According to the Commerce Department, spending didn’t change much in February but since it accounts for 70% of the economy, everything really will be awesome (thank you, Lego movie) if and when it goes up, according to our confident expectations.  Interestingly enough, when polled, a majority of consumers confidently said they were in the market for a car. Just not so much a house. Or a major appliance for the house. Or a even a vacation to get away from their house. Maybe next month they’ll feel differently.

Charter this…

Image courtesy of  ratch0013/FreeDigitalPhotos.net

Image courtesy of ratch0013/FreeDigitalPhotos.net

So cable companies are finding themselves in a bit of a bind lately because non-cable entities are putting a huge damper on their sales. By non-cable entities, I do mean companies such as Netflix, Amazon’s version of television and other purveyors of finely produced, amply-entertaining, award-winning, nail-biting, binge-worthy fare. So what’s a cable company to do? Well lately, several of them have begun merging/buying/joining with each other in an effort to pick up subscribers and soften the blow to their sales figures. Today’s latest deal involves the fourth largest cable company in the U.S., Charter Communications. Charter is looking to pick up Bright House networks, the sixth largest cable company in the U.S, to the tune of $10.4 billion. For this lofty sum of money, Charter will pick up 2 million more subscribers and become the second largest cable company in all the land. Because Bright House has all these customers in Central Florida, Alabama, Michigan, Indiana and California, it’ll give Charter a nice big hold on those areas, provided the deal goes through, of course. News of the deal sent shares of Charter north. As for Bright House, well, it’s a privately held company.

Expedia Challenges Priceline With its Latest Acquisition; Retail Sector: Where Have All the Shoppers Gone? Costco Breaks Up With Amex

Book it…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Priceline look out! And you too, William Shatner. Expedia just announced its lofty plans to buy Orbitz Worldwide Inc.for $1.34 billion, which squares out to about $12 a share at a 25% premium. The folks at Expedia feel it’ll help them give Priceline Group Inc. a real run for its money – and reservations, I suppose. Orbitz already picked up Travelocity a while back for $280 million and now the online travel booking service also gets CheapTickets, and ebookers as part of this latest deal. As you may recall (and it’s perfectly fine if you don’t), Priceline itself made a few purchases itself last year when it scooped up a stake in ctrip.com International and OpenTable Inc. Apparently, mergers and acquisitions in the online booking arena are all the rage right now but let’s just see how it pans out fiscally for the consumers booking all those services.

Show me the money…

Image courtesy of stockimages/FreeDigitalPhotos.net

Image courtesy of stockimages/FreeDigitalPhotos.net

Will the retail sector get it right already? January proved to be a colossal fiscal bummer as the Commerce Department announced that sales in the retail sector fell, yet again, to 0.8%. Economists forecasted it would only drop 0.4% and it’s the second straight month to drop after December’s dismal 0.9% plunge. So what gives? After all, gas prices are low, employment numbers are rockin’ and even wages are coming up…a smidge. Apparently, Americans have been more inclined to actually pay down some of their debt and even save up some cash for a rainy day. The nerve of those fiscally responsible Americans, I tell you. But economists, the same ones who predicted those retail numbers would only fall to 0.4% instead of the 0.8% it did fall, are predicting that those numbers should come right back up to a more respectable level, if we give it some…space. Let’s just hope they’re right this time.

While we’re on the topic of retail…

Image courtesy of photoraidz/FreeDigitalPhotos.net

Image courtesy of photoraidz/FreeDigitalPhotos.net

Costco shoppers rejoice. Next year when you go shopping at the wholesale warehouse you needn’t bother whipping out your Amex card anymore. The world’s second largest retailer and the charge card company just couldn’t work things out and thus an exclusive relationship between Costco and American Express is coming to an end March 31, 2016. The exclusive agreement allowed for Costco to pay a much smaller rate than other companies but alas, all good things must come to an end. The rate was so low , in fact, that it explains why the deal even lasted as long as it did. And thus, a sixteen year relationship has thrown in its fiscal towel. Sniff sniff. In Canada, a similar deal also came to an unfortunate demise last year. Oh Canada!  On Wall Street shares of American Express, took a bit of a hit while Costco shares actually went up. Perhaps next year, as you find yourself stocking up on a year’s supply of toilet paper and deodorant, you might just get to use your Visa or Mastercard, two cards that have so long yearned to be a part of the Costco magic.

Doggy Doo Quarter at JPMorgan Chase; No December Retail Magic; Carnitas Crisis at Chipotle

Dog poo days…

Image courtesy of imagerymajestic/FreeDigitalPhotos.net

Image courtesy of imagerymajestic/FreeDigitalPhotos.net

Jamie Dimon, CEO of JPMorgan Chase, the biggest bank by assets, is not having a very good day, it seems. Mr. Dimon said the bank will “try to avoid stepping in dogs**t.” A highly technical term coming from the mouth of one Wall Street’s most powerful (and presumably, potty-mouthed) bankers. I guess when you have had better fiscal quarters, “stepping in dogs***” seems an adequate description. Sure the bank pulled in $1.19 per share. So yeah, it made money. There are a ton of companies who would be thrilled to pull in earnings like that. But the bank missed expectations. When you’re JPMorgan Chase and analysts expect you to pull in $1.31, well then, missing analyst expectations is more than a bit of a drag. It also suggests that its competitors will fare similarly. JPMorgan Chase took  a 6.6% hit in its quarterly profit. A $1 billion plus legal bill, courtesy of Uncle Sam’s litany of investigations, is certainly partly responsible for putting a crimp in those earnings.  “Banks are under assault,” says Mr. Dimon when asked about all those legal fees. And I’m sure you’re hurting for him. But let’s face it, that $1 billion is nothing compared to that $13 billion settlement JPMorgan Chase ponied up back in 2013 over its less than desirable role in the sub-prime mortgage crisis.

Not so merry after all…

Image courtesy of ratch0013/FreeDigitalPhotos.net

Image courtesy of ratch0013/FreeDigitalPhotos.net

The most wonderful time of the year was not the most wonderful, fiscally speaking. Far from it, in fact. The Commerce Department and the National Retail Federation regaled us with the lousy news that December showered us with bad tidings of a .9% drop in retail from the previous month. Sales hit $616 billion, which seems awfully jolly. It was even a 4% increase over the same period last year. But again, I reiterate – a .9% drop, month to month. Is it too late to say bah humbog? I think not. Interestingly enough, some of that drop in consumer spending was actually because not as much money was being spent on gas. Dropping oil prices made holiday driving a bit more fiscally festive, just not lucrative. Fun fact: About 10% of retail sales comes from gas purchases. But those steep discounts from retailers, as they desperately attempted to lure shoppers, actually proved to be a major downer for those retail numbers. Hence, there is no good fiscal cheer to be had. But we’re not supposed to get too worked up over this drop since it marks the first time since 2011 that holiday sales even increased by more than 4%. So carry on then.

Big problemo…

Image courtesy of KEKO64/FreeDigitalPhotos.net

Image courtesy of KEKO64/FreeDigitalPhotos.net

Chipotle has put the kibosh on its barbecued pork offerings at about 600 of its eateries after it was found that one of its major pork suppliers was not acting with integrity i.e. not complying with animal welfare standards. So uncool on so many levels.  Chipotle’s policy of serving “food with integrity” should do much to strengthen the beautiful bond between diners who appreciate the sentiment  and the restaurants that seek to uphold it . But alas, it’s not known if and how badly this carnitas crisis will affect Chipotle’s quarterly sales and profits.