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

iManufacture…

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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.

Tesla Deliveries Anything But Electrifying; Sec’y of State Nominee’s Future Looks Green; Trump’s SEC Chairman Pick

Not electrifying…

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Tesla’s fourth quarter sales rose 27%, yet deliveries fell short with CEO Elon Musk pointing to production delays. And Tesla didn’t fall short according to Wall Street’s predictions but rather its very own.  It may seem like a convenient excuse, but it’s a valid one that was also used to blame the company’s second quarter shortcomings. The electric car company delivered 22,000 cars in its last quarter, which was over 5,000 more than the same time last year. That might seem awfully impressive except that Tesla wanted that figure to top 25,000 vehicles. So now, that 3,000 car miss becomes an ugly smudge on the company’s fourth quarter earnings report. Tesla’s grand total of car deliveries for the year hit over 76,000. But once again, because Tesla went ahead and predicted that number would hit 80,000, it disappointed only itself.  Setting forecasts he just can’t meet is a nasty habit that Elon Musk can’t seem to break.  Production delays or not, maybe Tesla’s should stop trying to predict the future.  Shares were down 11% for 2016 which marks the first time that Tesla reported an annual decline since its 2010 IPO. But miraculously those shares still rose today because Wall Street clearly has a thing for Elon Musk. Well, his company, anyway.  Wall Street and consumers alike are waiting with bated breath to see if the much anticipated $35,000 Model 3 will actually surface this year. Some experts, however, think the more affordable model will only be making its grand debut in 2018. That still has’t stopped loyal Tesla buyers and enthusiasts from shelling out a total of $350,000 worth of deposits for the car.

Hatched…

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President-elect Donald Trump’s pick for Secretary of State, Rex Tillerson, reached a very lucrative retirement deal with ExxonMobil. If Tillerson does in fact get confirmed – and that’s still kind of iffy – then he’ll walk away from his post with $180 million comfortably nestled in a trust account. And that’s the approximate value of Tillerson’s 2 million deferred shares of the energy giant. Because he would not be allowed to own shares of the company if he took the post, the shares would get cashed out and put into an independently managed trust account. Besides dumping his ExxonMobil shares, Tillerson will not be allowed to work in the oil and gas industries for a period of ten years. Plus, he has to give up a cash bonus and other benefits that are worth another $7 million because he won’t be there in March, when he’ll have reached the company’s official retirement age that affords him the opportunity to collect on that $7 million package. But, that $180 million ought to tide him over. He’ll also need to agree to sever ties in order to avoid any conflicts of interest. Should he decide to return to the industry, then all that money would be given to charities of the main trustee’s choosing. But I did write that his confirmation is”iffy” because there are plenty of Congressional members who aren’t down with Tillerson’s cushy relationship with Russian president Vladimir Putin. That’s going to come up a lot during the confirmation hearings and it’ll probably be ugly, if not wholly entertaining.

And I choose you…

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Trump just announced his pick for Securities and Exchange Commission Chairman and it’s one that should surprise…no one. Enter Jay Clayton, a lawyer with the law firm Sullivan and Cromwell, who has plenty of experience with banks. Well, representing them, anyway. Besides banking clients, Clayton also defended a variety of “large financial institutions” against such entities as the Department of Justice, other government agencies and regulators and – get this – even the SEC itself.  Some of his more notable achievements include representing everybody’s favorite Chinese e-commerce giant, Alibaba, when it made its grand IPO debut. He’s also represented Barclays when it unceremoniously scooped up Lehman Brothers, and Bear Stearns when JP Morgan took it on. You didn’t think we’d leave out Goldman Sachs, did you?  Because he repped that one too.  Word on the street is that Carl Icahn interviewed Clayton, along with several other candidates for the post. Presumably the two gentlemen discussed how to best undo obstructive banking regulations, Dodd-Frank and all those other pesky rules that have been casting a major downer on the financial world.

Target-ing the Preppy; No Clowning Around, Cirque du Soleil Goes to Private Equity Firm; Former Fed Chief Wants Overhaul, But Does Anybody Care?

I guess that means it was a success…

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Image courtesy of cuteimage/FreeDigitalPhotos.net

Things are looking up for Lilly Pulitizer (did they ever look down?) as the line of 250 pieces it made for Target  – from dresses to beach chairs – nearly sold out within hours, with many crowing the moment as “Preppy Black Friday.” Just darling. In fact, the line of merchandise was so successful that 16,000 of the line’s items even made it onto eBay, priced much much higher than Target’s prices. Target’s website nearly crashed because of the traffic caused by the hype for the Lilly Pulitzer merchandise. Good thing Target already learned its lesson the hard way back in 2011, when it launched a line with Missoni, which did, in fact, cause the site to crash. This time, however, Target just made the site inaccessible for 15 minutes to deal with the onslaught. Much to the annoyance and disappointment of many, Target has no plans to restock the line since that might make the 250 items not as precious. No doubt the opportunists selling the marked up merchandise on eBay aren’t too sad about this decision. You know who’s not disappointed, or even annoyed? Oxford Industries, that’s who. Parent company to Lilly Pulitzer, Oxford Industries’ stock surged 9% because of all the success and excitement surrounding the Lilly Pulitzer/Target merchandise.

Send in the clowns…

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Image courtesy of vectorolie/FreeDigitalPhotos.net

There’s no clowning around at TPG, the private equity firm that just picked up a majority stake in the world-famous circus sensation, Cirque du Soleil. Its founder, Guy Laliberté, has decided to take on new creative challenges instead of grooming his five children to take over the family biz. TPG has already helped companies, including J. Crew, Neiman Marcus and Ducati. So it’s safe to assume they know a thing or two about how to grow a brand. Quebec pension fund manager the Caisse de depot, and Chinese investment firm, Fosum, will take on minority stakes in the entertainment company. While the price for the deal is being kept under wraps, some analysts have pegged the deal between $1.5 and $2 billion. Not bad for a guy who started a traveling show with a bunch of street performers back in 1984. Laliberté will stay on with the company and its 1,400 employees to continue to offer strategic and creative advice. It pays for him to do so as he’ll still be left with a 10% stake.  Cirque du Soleil sells 11 million tickets a year and has been seen by 160 million people in 330 cities and 48 countries.

I said Volcker! Not Vulcan!

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Image courtesy of sdmania/FreeDigitalPhotos.net

Way harsh words from former Federal Reserve chief Paul Volcker who slammed the current U.S financial regulatory system during a speech in Washington, D.C. The former chief and close financial advisor to President Obama said if we don’t revamp the current system, it will only “…make us more vulnerable to the next financial crisis.” Mr. Volcker wants a complete overhaul of a system he says was developed piecemeal over the last 150 years in response to fiscal emergencies. He says the Dodd-Frank financial reform act of 2010 is not enough to head off an even greater economic disaster and wants to see a smoother, streamlined regulatory system instead of the current one we have in place which he thinks is “…highly fragmented, outdated and ineffective.” Ouch. In his fiscal eden, banks and other select Wall Street firms would be centralized. Then he’d merge the SEC and CFTC into one big happy family. In case you haven’t guessed it by now, plenty of people on Wall Street don’t seem to care for what the former fed chief had to say.