Oh Nyet You Didn’t!: Yahoo Cyber Attacks Courtesy of Russia; Homebuilders Are Feeling Fine; The Fed (Finally) Comes Through With Rate Hike

Busted…

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There is a first time for everything and today marks the first time that Russian officials were officially busted by U.S. federal prosecutors for cyber attacks. These officials, who are actually Russian officers, allegedly paid other hackers to break into Yahoo to steal information from hundreds of millions of users. So clearly, the officials weren’t the talent behind the scheme. Of the six people charged in the attacks, one of them is a hacker named Alexsey Belan, who had the dubious distinction of being ranked the FBI’s numero uno most wanted cyber-criminal for three years.  But don’t expect any swift justice. While one of the alleged perps was picked up in Canada and headed here to await his fate, the Russian intelligence officers are staying put and probably living large seeing as how there is no extradition in place between Russia and the United States. Among the numerous charges outlined are economic espionage and computer hacking, to name just a few. The attacks, which were revealed last September, were the ones that caused the search engine giant to drop its selling price to Verizon by $350 million. According to the indictment, it appears the attacks were state-sponsored, which has me wondering if things will now be awkward between Presidents Trump and Putin.

Exuding confidence…

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The magic number is 71. No really. It is. At least if you’re looking at the National Association of Home Builders/Wells Fargo Housing Market index.  That means that homebuilder confidence is very high. Very. To put this number in perspective, anything above the number 50 is good. In March of 2016, that number was 58. So yeah, confidence abounds this year. Sure, the usual reasons are being given, including the fact that we are entering the season that homebuilders love, low mortgage rates and a solid labor market. But there’s another reason: President Trump. Yep. It appears he has begun rolling back on regulations, some of which are environmental, and that’s got homebuilders kicking up their heels in joy since they attribute 25% of the cost of homes to regulations. The regulation currently being rolled back is the Clean Water Rule, a rule that many builders call “burdensome” and which has nothing to do with putting dirty water into homes, I assure you.  Homebuilders see this rollback as a sign that even further de-regulation is in the wings, which would make home-building easier and quicker. And that is making builders positively giddy. And confident, of course.

Done deal…

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It’s official. The fed raised the benchmark lending rate by a quarter of a point. But that’s not the only big news. We are told to expect two more rate increases this year, which is especially weird since this is just the third rate hike in over a year. You may not feel the interest rate change now. And you may not feel it at all. But if you comb over your paperworks, from mortgages to credit cards to bank statements,  then you’ll notice the difference, albeit a subtle one. For now.  So subtle in fact that rates are still at historic lows. But it wont stay that way forever because by 2019 the rate is expected to hit 3% and stay there for quite awhile.  Hey what do you expect? Inflation is rising to the mark where the Fed wants it to, times are good, economically speaking and, just like with home builder sentiment, the strong labor market is putting a fiscal smile on a lot of faces.

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Cyber-Attack on U.S. Law Firms Nets Big Illicit Gains for Chinese Hackers; Alexa Gave Amazon a Very Fiscal-Merry Christmas; Fred’s Whips Out the Poison

All hacked up…

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Some of New York’s finest, most prestigious law firms fell victim to a few Chinese hackers when they hacked into the firms’ computer systems and stole valuable information regarding mergers and acquisitions. That information was then used for insider trading which netted the cyber-attackers over $4 million in illegal profits. The attacks happened between April of 2014 – 2015 when the hackers installed malware on the computer networks of the law firms and then downloaded the information from email accounts. U.S. Attorney for the Southern District of New York, Preet Bharara said, “This case of cyber meets securities fraud should serve as a wake-up call for law firms around the world: you are and will be targets of cyber hacking, because you have information valuable to would-be criminals.” The 13 count indictment details how the suspects purchased shares from certain companies involved in mergers and acquisitions and then sold those shares for a massive profit once those mergers and acquisitions were announced.  In the meantime, the SEC has filed its own parallel civil suit against the alleged perps and has asked to have their assets frozen lest they try and cash out on their ill-gotten gains.

It’s all about Alexa…

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The results are in. Well, some of them, anyway. In this case, Amazon is claiming to be the big merry winner (cue the surprised facial expressions) of the retail game we call Christmas – and Hanukah too, of course. Amazon said it shipped more than one billion items through Prime and fulfillment services and, apparently, four of Amazon’s very own devices were the biggest sellers on the e-commerce giant’s site. Go figure. Those top sellers include the Echo Dot Smart Speaker, Amazon’s Fire TV Stick Media Streamer, the Fire Tablet and the regular (plain-old?) standard Echo Speaker.  Just don’t bother asking Amazon for specific sales figures. The company has a nasty habit of not divulging such useful information. Incidentally, the Fire Tablet and Fire TV Stick were also hot sellers last year. With the exception of the Amazon Echo Smart Speakers, the other three cost $5o or less and at those prices it’s easy to see why consumers scooped them up. In fact, sales for Echo devices were nine times higher than they were last year. All the devices, by the way, come with the Alexa voice assistant and Amazon saw a record number of orders for devices that come with Alexa. Only problem was those Echo speakers went too fast. Amazon sold out of them by the middle of December.

Going for the poison…

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Last week Fred’s was on top of the world, after agreeing to buy 865 RiteAid stores for $1 billion. The deal was a win-win. RiteAid needed to dump those stores in order to get regulatory approval to merge with Walgreens Boots Alliance. By purchasing those 865 stores, Fred’s basically doubled its size overnight, going from a market cap $450 million to $1.3 billion. It also experienced a massive stock increase and effectively became the third largest drugstore chain in the U.S. as well as the new darling of the retail pharmacy industry.  But then came activist investor Alden Global, which apparently picked up a 25% stake in Fred’s when no one was paying attention. When the Fred’s board noticed the unusual activity going on with its shares, it unanimously approved a nifty little tactic affectionately dubbed a “poison pill.” A poison pill is simply a shareholder rights plan that kicks into place in the event of a hostile takeover. The targeted company tries to make shares look less valuable and attractive, i.e. “poisonous” to a potential acquirer.  If control is taken, at least shareholders will then be compensated accordingly with a “poison pill” in place.  Fred’s poison pill is meant to take effect when an individual or a group scoops up 10% or more of the company shares. Alden thinks Fred’s shares are undervalued and see their acquisition as a great investment opportunity. Although, Fred’s did deny they threw together the poison pill plan because of a potential takeover bid.

Anthem Hits a Sour Note With Major Cyber Attack; Under Armour’s Over the Moon Ratings; Sony Executive Amy Pascal Down But Not Out

Cyber-sickening…

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Image courtesy of chanpipat/FreeDigitalPhotos.net

Anthem now joins the illustrious list of major companies to get cyber-hacked, although the health insurance company has yet to definitively say how many of its 80 million current and former customers are affected. It can definitively be said that all sorts of personal information was taken, including social security numbers, names, birthdays, employment data etc. – the kinds of details that can facilitate a very rude and inconvenient identity theft. Anthem says no credit card information was taken. Just everything else of significance. Customers can expect to be notified if they haven’t already been, and in keeping with corporate-cyber-attack tradition, affected customers will also get free credit monitoring and identity protection.  Anthem, which just happens to be the second largest health insurance company, with Anthem Blue Cross, Anthem Blue Shield, Amerigroup and Healthlink under its wings, just might earn itself the uncoveted distinction of having suffered the largest data breach in the health care industry. Ever. However, it’s still looking to sign up new customers for that pesky February 15 Obamacare deadline. Naturally the Feds are involved and if it’s suspected that information was stolen, the FBI has graciously established the Internet Crime Complaint Center website: www.ic3.gov. Anthem also wanted everyone to know that the data of its associates was also breached if that’s at all reassuring, though I don’t know why it would be. Now go and change your passwords!

Bringing it on…

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Image courtesy of iosphere/FreeDigitalPhotos.net

Don’t you just love a good athletic apparel smackdown? Today’s  smackdown is brought to you by Under Armour and its CEO Kevin Plank, who not so graciously told Nike and Adidas to get used to being number two during a CNBC interview. Charming, right? But after posting some boffo earnings that boasted 31% revenue growth to $895 million, I guess he earned the right to say that. Except that Under Armour is, in fact, currently the number two fitness apparel maker, behind Nike. Just saying. In any case, CEO Kevin Plank’s numbers were no accident. The company’s profits were up 37% to $88 million coming out to $0.40 per share. That, my virtual pals, was one cent more than what analysts predicted. Plank’s fiscal logic for Under Armour is pure fitness genius: The more people exercise, the more exercise apparel they’ll need. To add to its fitness arsenal, Under Armour picked up not one, but two calorie-counting, fitness-tracking apps: MyFitnessPal for the very robust price of $475 million and Denmark-based Endomondo, for a cool $85 million. MyFitnessPal currently has 80 million users with Endomondo coming in at 20 million users, mostly in Europe, and with those two acquisitions under its svelte belt, Under Armour hopes to become “the world’s largest digital health and fitness community.” How nifty.

Hack Attack Comeback…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Sony Pictures Entertainment studio head Amy Pascal may be stepping down from her cushy spot at the top, but she’s not out of the picture. The executive, whose emails figured prominently in the Sony hack attack in December, if only because she made some racist comments about President Obama and called Angelina Jolie a spoiled brat (though she did say sorry), will now get a four year production deal with Sony.  While it’s safe to assume she won’t be working with Jolie, or Adam Sandler, or the President for that matter, she will get distribution rights to the the films she does. Not bad for someone who put her foot in her mouth, via email, subsequently earning herself some of the biggest A-list enemies imaginable. The movie “The Interview,” starring the cuddly duo of Seth Rogen and James Franco, was allegedly the source for all the hacking misery, as it poked fun at North Korean dictator Kim Jong Un. The scandal cost Sony $15 million which coincidentally is the same amount of money the “The Interview” made from 2 million digital downloads – in its first few days of its release.