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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Image courtesy of Teerapun/FreeDigitalPhotos.net

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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Image courtesy of Tony Dowson/FreeDigitalPhotos.net

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.

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Radio Shack’s Got Nick Cannon’s Talent; Fed’s Merry Rate Hike; Yah-who?

 

Going for broke…

 

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Radio Shack may have filed for bankruptcy protection back in February, but that hasn’t stopped the struggling electronics retailer from putting celebrity Nick Cannon on the payroll. Indeed, the America’s Got Talent host was just named Radio Shack’s CCO, as in Chief Creative Officer. Laugh all you want, but it’s not like its Nick Cannon’s first foray into business. He is a bona fide electronics entrepreneur…according to some, anyway. The retailer thinks Nick Cannon can lure in that magical, elusive millennial demographic into its over 1,700 stores by having him develop exclusive products, curate playlists for the shops and even sing a song or two in the process. Among his other duties, Nick Cannon will also be responsible for helping to advance Radio Shack’s education and STEM initiatives. Because, after all, isn’t Nick Cannon the first image that springs to mind when you think of the STEM fields?  As for his paycheck, well, Radio Shack’s not talking, but I suspect Nick Cannon won’t need to ask for a raise anytime soon.

3…2…1…Hike…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Fed Chairwoman Janet Yellen managed to put a little drama (okay, I’m getting carried away) into her talk at the Economic Club of Washington when she made it clear that this month interest rates, which have been sitting pretty close to zero, would finally receive its much overdo hike. It will be the first time in a decade that the Fed has raised the rates and many there feel that the economy is long overdue for this riveting moment. After all, the labor market is kicking butt, in a good way, and the economy is holding its own. Of course, Janet Yellen said it much more eloquently explaining that a rate hike is a testament to an economy’s recovery. But I am no Janet Yellen and could never take down Ralph Nader as graciously as she did last week. But I digress. Both the economy and the labor market have unwittingly met the Central bank’s goals which are resulting in that much-anticipated rate hike expected by December 16. Unemployment is staying put at 5%, when back in 2009, unemployment was 10%. Inflation is still not as high as the Fed would like it to be because of low oil prices and the strong dollar. But the Fed expects it will reach 2% – a natural and necessary component to a healthy economy. At least that’s what the experts say. There are those naysayers at the Fed who are not down with any hiking right now because they think its too soon and it might trip up a steadily recovering economy. But Janet Yellen says not raising those rate could have even worse consequences. So there. Besides, the time between putting monetary policy into place and seeing the results of it take so long that it’s almost like not raising those rates at all. Sort of. Okay, maybe not.  Any subsequent rate hikes will be based on data and reports so don’t assume that this is the beginning of constant stream of hikes.

Boohoo Yahoo…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Things are kind of iffy at Yahoo these days even though shares did rise more than 7%. But the reason they rose is because the board is meeting to make some big decisions that will hopefully reverse Yahoo’s downward spiral. One of the bigger questions on that conference room table is whether to sell its core internet business, which includes YahooMail and YahooNews. Shareholders value that particular biz at less than zero. To be fair, however, YahooNews is one of the most visited websites in the U.S., according to someone, anyway. But, if it’s sold, it could fetch around $3 billion. So it’s not that worthless. Then there’s the issue of Marissa Mayer who after three years has still been unable to reverse the company’s aforementioned downward spiral. Yahoo’s total market cap is around $34 billion. But that’s mostly because it has a huge $30 billion stake in Alibaba Holdings Group Ltd. and another big stake in Yahoo Japan. Corp. Which brings us to the next order of discussion: whether to spin off the billion dollar Alibaba stake into its very own company.  The problem, however, is whether or not Uncle Sam will find a way to make such a transaction taxable and sic shareholders with a $12 billion tax bill? Yahoo Activist Investor Starboard Value LP already considered this unpleasant scenario and last month put the kibosh on the idea of such a sale.