Are You There Shareholders? It’s Me, Warren (2015); Forbes’ Magazine Names the A-Listers; Costco: AmEx Out, Visa and Citi In

Best Regards, Warren…

Image courtesy of  Boians Cho Joo Young/FreeDigitalPhotos.net

Image courtesy of Boians Cho Joo Young/FreeDigitalPhotos.net

Warren Buffet’s annual letter to Berkshire Hathaway shareholders arrived over the weekend, regaling us –  I meant them – with so many insights and wisdom about the economy and the ways of the investment Samurai. Among the many pearls, Mr. Buffet wanted to let folks know that “America’s best days lie ahead.” Things might have been a bit shaky the last few years, but darn be the naysayers  and things can and will only get better. Mr. Buffet also wished to remind people that “Market forecasters will fill your ear but will never fill your wallet.” Aw, Warren. There’s something very moving about the way the Oracle of Omaha advises people that all these financial experts surrounding us are good for nothing. He also offered some poetic words regarding his failed investment in British supermarket chain, Tesco: “In the world of business, bad news often surfaces serially: You see a cockroach in your kitchen; as the days go by, you meet his relatives.” The venture ultimately cost him a whopping $400 million and the Oracle attributes the loss, to among other things, not being decisive and fast enough about pulling out of the investment. Meanwhile, during an interview on CNBC, Warren Buffet said Sen. Elizabeth Warren (D-Massachusetts) should be “less angry and demonizing” and should be more open to compromise. Ouch. I guess those two won’t be hanging out together anytime soon.

Speaking of Warren…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Omaha’s most famous resident made it to the number 3 spot on Forbes’ list of billionaires. Microsoft’s Bill Gates claims the top spot – again –  with a net worth of $79.2 billion while Mexico’s Carlos Helu Slim comes in for second. There are 1,826 billionaires on the list who have a combined total net worth of $7.05 trillion. However, the average net worth of the billionaires is actually down by $60 million this year to $3.86 billion. I know, how sad.  Seventy-one of those billionaires are breaking onto the list of the very first time. Among those first-timers is basketball great Michael Jordan who makes his big billionaire list debut this year with a little help from having increased his ownership stake in the Charlotte Hornets. But his restaurants, deals with Nike, Gatorade, Hanes, etc…allow him to claim the 1,741st spot with a net worth of about $1 billion. Forty-six of the billionaires are under the age of 40 with Snapchat’s Evan Spiegel having the distinction of being the youngest billionaire on the list.

Well hello, pardner…

Image courtesy of stock images/FreeDigitalPhotos.net

Image courtesy of stock images/FreeDigitalPhotos.net

Club goers rejoice! Costco has officially entered into agreements with Citigroup and Visa to become the wholesaler’s partner in credit. In the meantime, the retailer is bidding a not-so-fond farewell to American Express, who for the last 16 years had an exclusive deal with the chain. Citigroup will be putting out a Costco/Citi credit card with perks and generous rewards aplenty, in keeping with the Costco spirit, of course. Unfortunately, Costco shoppers must wait until April of 2016 to whip out the new plastic. However, debit cards know no bounds – or labels – and those will continue to be warmly accepted regardless of the issuer, at Costco’s 674 warehouses worldwide. And while AmEx is expecting to take some type of beating on Wall Street for the next two years, shares of Visa hit an all-time high today over this very exciting fiscal news.

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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.

Jack Ma’s One Singular Sensation; Google Gets New Lease on…Space; Best Buy’s Gobble Gobble

You’re celebrating what?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

If you despise Valentine’s Day you might want to consider moving to China where November 11, as in 11/11, the holiday known as Singles day, was jubilantly and fiscally celebrated. Started in 1993 by group of Chinese students who decided to celebrate their singledom every year on 11/11, retailers savvily recognized a highly lucrative opportunity and now slash prices on this day in honor of “eligible” shoppers splurging on …themselves. It’s like Cyber-Monday and the opposite of Valentine’s Day all rolled into a neat little discounted package. E-commerce giant Alibaba and its CEO Jack Ma were certainly feeling the Singles Day love as his company hit a record-breaking $9.3 billion mark in sales. And even though Americans might not have been rejoicing in the retail festivities taking place in China, some American retailers, like Costco and Calvin Klein, still got to participate and reaped some good fortune.

The real estate in this town, I tell ya…

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Google subsidiary Planetary Ventures is dishing out over $1 billion for some real estate. That’s not to mention the $200 million more it will pay just to fix up the joint. But at  least it’s a sixty year lease, so that’ll give it plenty of time to make it feel like home…or work, I guess. The real estate in question is actually the famous Hangar One at Moffett Field in Silicon Valley (where else?), built in the early 1930’s by the Navy and later transferred to NASA. In case you were wondering what Google plans to do with a massive 350,000 hangar that comes with two runways and a golf course (yes, a golf course), then wonder no more. Google’s looking to broaden its horizons – and portfolio, no doubt – into robotics, drones, balloons and, of course, space. Naturally, there are detractors, like Consumer Watchdog, which feels Google will use the land as it pleases, and not necessarily for the good of mankind. But others, including Congresswoman Anna Eshoo, D-Palo Alto, argue that it provides a great opportunity to restore famed Moffettt Field. Besides, now NASA doesn’t need to to pay over $6 million a year for all those irritating maintenance fees.

Another one bites the turkey dust…

Image courtesy of hin255/FreeDigitalPhotos.net

Image courtesy of hin255/FreeDigitalPhotos.net

In the lack-of-Thanksgiving-spirit, Best Buy becomes the latest relatailer to spoil family time and a tryptophan high by serving its Black Friday deals on Thursday as in, Thanksgiving. You can get going on your chaotic Black Friday shopping as early as 5pm, just as you begin to digest your poultry. How convenient. Then you waddle it iff as you meander through aisles and aisles of discounted electronic offerings, until 1 am. Surely with over 1000 stores in 47 states, you’ll able to score a bunch of merchandise at some great prices. But if you just don’t want to destroy the spirit of a national holiday devoted to sitting down at an actual meal with your loved ones and offering thanks for all that you have, Best Buy will still be offering discounts on the actual Friday for which “Black Friday” is aptly named.

Black Friday Offers “Creep-y” New Sales Trend: Visa Vis your Wallet; Defensive Save for the GDP

On your mark, get set, shop!

Image courtesy of Feelart/FreeDigitalPhotos.net

Image courtesy of Feelart/FreeDigitalPhotos.net

Black Friday keeps coming sooner and sooner. Expect to see Kohl’s, JC Penney and Macy’s all unlocking their doors while your still trying to pry yourself out of your chair, post turkey. In fact, Kohl’s is opening at six pm, two hours earlier than last year. But that’s nothing compared to Amazon which is starting its Black Friday deals on Saturday. This Saturday, November 1, nearly four weeks before the actual “Black Friday.”  This trend even has a name. It’s called “Black Friday Creep.” How clever, sort of. You can thank the recession we endured a few years ago for all this Thanksgiving retail interruption. Several retailers aren’t too thrilled with their sales forecasts and are hoping those added shopping hours and Thanksgiving day will give their sales a much needed boost. But don’t bother standing on line at Gamestop or Costco. Those companies feel Thanksgiving should be spent with families. However, GameStop will be flinging it’s doors open at midnight. Not sure how that fits into the quality-family-time equation. Costco, however, strongly feels its employees need time with their families and that they work especially hard during the holiday season. So what does that say about how Walmart executives feel about their employees, whose stores will be open all day on Thanksgiving?

Speaking of transactions…

Image courtesy of Michelle Meiklejohn/FreeDigitalPhotos.net

Image courtesy of Michelle Meiklejohn/FreeDigitalPhotos.net

Visa reported its fourth quarter earnings and how do you think the largest credit and debit card company did? I am being rhetorical. The company reported $3.23 billion in revenue, a whopping 9% increase over the same time last year. Analysts expected only $3.19 billion. Net income for the company came in at $1.4 billion which came out to a sweet $2.18 per share. That pretty little figure was 17% higher than last year’s fourth quarter and $0.07 higher than what Wall Street predicted. One of the reasons these numbers are so darn plump has to do with Visa’s growing payment volume. The company processed almost 17 billion transactions with about $1.2 trillion changing hands. Note the use of the “t.”  For the year, the company can already boast almost 70 billion transactions. That’s nothing to sneeze at, I am sure you know. All eyes are always on Visa, which is seen as a barometer of our collective spending habits and other financial aspects of our lives.

Growing, growing not gone…

Image courtesy of jannoon028/FreeDigitalPhotos.net

Image courtesy of jannoon028/FreeDigitalPhotos.net

Our fourth quarter grew at 3.5%. Economists only predicted a growth rate of 3% How ’bout that? But don’t pop open the champagne just yet because it didn’t grow as much as the previous quarter’s 4.6% rate. But it’s not fair to compare the quarters. After all, we were just coming off a brutal and fiscally inconvenient winter so the economy did have a jump of rebound there. So what kinds of things contributed to this quarter’s growth? One of the big contributors, whose spending frenzy helped growth is the government. Yes, in this case, major government spending proved to actually be healthy for the economy. But it wasn’t just any kind of government spending that sent our GDP into upward glee. For that we need to give a big shout out to defense spending, which played a prominent and much appreciated role in our economy this quarter.

 

 

Jessica Alba, “A” List Mogul; Hooray for Hollywood and CA Lawmakers; Get Your Motors Running;

Yeah really, Jessica Alba = Financial News…

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

Is there anything she can’t do!!!!! Now Jessica Alba is even considered a bona fide mogul all thanks to Santa Monica-based The Honest Company which she co-founded in 2011 together with Christopher Gavigan, Sean Kane and Brian Lee. The company makes all sorts of useful, organic-y, non-toxic household products like cleaners and diapers. Now The Honest Company is gearing up for some major IPO action. Good thing it’s been valued at close to a billion dollars. For 2014, the company is expected to pull in $150 million in revenue. While 80% of the business comes from monthly subscribers, The Honest Company’s products can also be conveniently purchased at Target, Costco and Whole Foods, to name a few. And if Jessica Alba’s “A” list status isn’t enough to sell you on the products then how about the company’s social mission: It regularly donates diapers and cribs to those in need.

Speaking of Hollywood…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Well at least there wont be any major tax inversions coming out of the film industry. For the next five years anyways. After years of losing million upon millions of dollars to other states and countries, California will once again be fiscally alluring to filmmakers. That’s because California Governor Jerry Brown and other California lawmakers finally reached an agreement that would triple the tax credits for moviemakers –  a commitment valued at $330 million a year. Producers can now get up to a 30% refund on production costs. At least 40 states and 30 countries have offered better tax incentives than Hollywood’s own home state – up til now. Go figure. The credits can be used for up to the first $100 million of a film’s budget. After that, you’re on your own. Now if they can just figure out what to do about that pesky drought…

Filler’ Up…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

Go fill up your cars and start guzzling. This Labor Day is going to be a most affordable one, at least as far as gassing up your car is concerned. Gas prices haven’t been this good since 2010. Thanks to a relatively low-key hurrican season (so far, anyway), and the fact that world conflicts haven’t much affected the US fuel demand, website and app GasBuddy reported that the national average price of gas hit $3.42 today. Last year at this time the price was $0.11 higher. Last month it was $0.09 higher. Cha-ching, baby! And GasBuddy ought to know a little about that since this ridiculously helpful app allows users to compare gas prices in their area. But expect some traffic because according to AAA, 300 million American will be road-trippin’ this weekend, with another 14 million racking up some frequent flier miles.

Zynga Zinger, Supreme Cyber Smackdown and Fannie Mae is Back on Top

Game over?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Zynga took a nasty little hit to its second quarter earnings by barely breaking even. And that’s being generous. While Wall Street was hoping to see revenue of $157 million, the San Francisco-based gaming company, currently notable for “Farmville,” took in $153 million in revenue with a $.07 per share loss. Ah! But what is a mere $.07 in the grand scheme of things, you might be wondering? Well that grand scheme adds up to a $62.5 million loss. Last year at this time the company’s loss was but a mere $15.8 million. However, there is hope on the mobile horizon, or so Zynga feels, as “Farmville 2: Country Escape” has become an Editor’s Choice in the Apple App store – a very significant barometer of what makes a game successful. Then there are those handy licensing deals with the NFL and Tiger Woods, among others, that Zynga is counting on to turn those earnings in the up direction.

E-commerce competition!

Image courtesy of cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

It’s about to get a whole lot nastier – but luckily, not for consumers – in cyberspace thanks to the nifty new alliance that was forged between Barnes & Noble and Google. Yes. I did write Google – well Google Shopping Express, to be more precise. The two companies have teamed up to provide a little competition to Amazon. But that’s not in the official statement, of course. The partnership, which should give a much needed boost to the bookseller, will provide same-day delivery in certain areas, just like rival Amazon. After all the trouble Amazon caused for book publisher Hachette, this new deal probably couldn’t have come at a better time as consumers are feeling a little less affectionate towards the e-commerce giant. Google Shopping Express has already teamed up with major retailers like Target and Costco. By the way, you can subscribe to Google Shopping Express free for the first six months, with a subscription fee to be determined at the end of that time. Or you could just plunk down $4.99 per order. Happy shopping!

Pay it backwards…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Fannie Mae, who once upon a time had to hit up taxpayers to the tune of $116 billion at the height of the financial crisis is about to have paid us all back in full. Sort of. The mortgage lending company just reported its tenth straight profitable quarter – $3.7 billion in profits, in fact.  And a check for that amount is in the mail…to the US Treasury. After the Treasury cashes that out, Fannie Mae can take a breather as it will have more than fully repaid its debt. And while that $3.7 billion profit might seem impressive, that figure is actually a 63% decrease over the same period last year, where Fannie Mae pulled in over $10 billion in profit.  Incidentally, Fannie Mae earned $84 billion in 2013. Not bad for a year’s work, huh?

 

 

Ballmer a Baller? The British Are Coming…To Make Bourbon! Costco Goes Hip But Still Misses a Couple of Cents

Clipped…

Image courtesy of sippakorn/FreeDigitalPhotos.net

Image courtesy of sippakorn/FreeDigitalPhotos.net

Steve Ballmer wants to become an official baller. Well sort of. The former Microsoft CEO just inked a deal to take over the LA Clippers to the tune of $2 billion. He outbid a few groups to earn the position of the team’s newest owner, wresting it from the hands of embattled owner/alleged racist Donald Sterling and his estranged wife, Shelly. It’s a record price paid for an NBA team which was originally purchased by Sterling back in 1981 for a little over $12.5 million. Oprah Winfrey and David Geffen were at one point also considering buying the Clippers but dropped out of the bidding. The league still needs to approve the sale. However, Sterling, who swears he’s not a racist despite the numerous racist comments he made during an audio recording, has plans to make the sale difficult.

Bourbon State….

Image courtesy of artur84/FreeDigitalPhotos.net

Ŷ Image courtesy of artur84/FreeDigitalPhotos.net

The British are coming to Kentucky but I suspect the state will welcome this latest invasion. Diageo, the London-based liquor company whose brands include perennial favorites Johnnie Walker, Smirnoff and Ciroc has plans to build a 300 acre, 1.8 million proof gallon (yeah, I know you like the sound of that) distillery in Shelby County. The $115 million project will create thirty new jobs and lots and lots of bourbon. Fun fact: Bourbon is the fastest growing beverage in the spirits category. How very spirited! Kentucky is a very gracious home to the growing Bourbon industry. Naturally, local government officials will need to provide approval.  I’ll bet a bottle of bourbon that permission will be spiritedly granted.

A cooler, hipper Costco?

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Costco (COST), unfortunately, is not having as good a day as Kentucky. Or Steve Ballmer. Net income for the company was $473 million and revenue climbed over 7% to about $28 billion with a special thanks to higher sales and more membership fees. The warehouse wholesaler to the masses posted earnings of $1.07 per share but that just wasn’t enough for those fancy Wall Street analysts who were hoping for $1.09 per share. Those two cents really put a downer on things. The chain, which currently operates 655 warehouses worldwide, is trying to attract a younger demographic. It’s hoping a partnership with Google (GOOG) offering same day delivery and adding more hipper categories and products will achieve the desired effect. I just hope they crank out some more of their tiramisu cakes, which always seem to be in short supply at my local Costco.