Trump’s Been Dealing it to Himself; Volkwagen Wants Your Love Back; Excuses, Excuses: Barnes & Nobles Whips One Out

Even more Trump’d up…

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President-elect Donald Trump’s foundation admitted it “self-dealt.” Self-dealing is when  leaders of non-profit organizations take money from the charities they lead, for themselves, their businesses and/or their families. It’s a big no-no and in case you were wondering where and why Donald Trump admitted such things, then look no further than his 2015 IRS tax filings, available on GuideStar, a website that tracks non-profits. But rest assured an investigation has been opened, brought to us by Attorney General Eric Schneiderman, who declined to comment due to the fact that the investigation is ongoing.  And in case you were wondering about this as well, Team Trump thinks Schneiderman’s investigation is politically motivated. In other Trump news, stocks were rallying and the Dow went above 19,000 points. Plenty of people on Wall Street are crediting Trump for all of this fiscally joyful news – whether they voted for him or not. After all, he did promise to slash taxes, ease regulations and go big on infrastructure spending. Experts see these initiatives as excellent means to boost the economy in a ways that have been lacking for years. Unfortunately, not every economic idea coming from Camp Trump is leaving investors and economists all warm and fuzzy. Take for instance NAFTA, which Trump refers to as “the worst trade deal in history.” Major havoc could be wreaked on the economy if Trump decides to scrap it. Millions of Americans rely on free trade with Mexico and slapping tariffs on it could spell fiscal doom.

You’re gonna love me, I just know it…

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Volkswagen, the Wells Fargo of the auto industry,  is betting – and hoping – that it can reclaim its former fahrvergnügen glory and make you love them all over again. Following its epic diesel-emissions scandal, Volkswagen chief Herbert Diess announced he wants to “fundamentally change Volkswagen” by focusing on on major tech advancements, developing battery operated vehicles and adding some some self-driving cars into the mix. Diess has got big eyes on the year 2025, by which time he hopes to sell a million electric cars. He wants to “massively step up” Volkswagen’s car tech and also introduce a greater variety of SUV’s to the North american market because, after all, Americans apparently love their SUV’s. But with those lofty goals comes a plan to eliminate 23,000 jobs in the more traditional areas of the auto-manufacturing industry. Instead, Volkswagen will take on 9,000 new employees to work on tech, while wisely offering those 23,000 employees the option of early retirement over a certain amount of time, perhaps in an attempt to soften the blow. In the meantime, Volkswagen already coughed up a hefty $15 billion settlement with both U.S. regulatory agencies and Volkswagen owners.

Uh, if you say so…

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Barnes & Noble reported yet another dismal quarter of declining revenue, except this time the bookseller is blaming the election for its poor fiscal performance. How convenient. Sales fell 3.2% and probably would have fallen even more were it not for sales of “Harry Potter and the Cursed Child.” Barnes & Noble also reported that their online sales improved 12.5%, however, that figure might be a bit more convincing if it provided an actual dollar amount in its report. Nook devices, digital content and accessories were down close to 20%. But can all of that really be blamed on the election? Hmmm. On the bright side, operating losses for the Nook this quarter were only $8.2 million. Hey, don’t laugh. Last year at this time that figure was $30 million. All in all, Barnes & Noble still has cause to celebrate as it only lost just over $20 million and 29 cents a share when last year it lost $39 million and 52 cents per share. B&N is hoping the holiday season will help its reverse course and give it a fresh dose of fiscal mojo. CEO Leonard Riggio is hoping the company’s new $50 Nook device, debuting on Black Friday, will be a big hit. In the meantime, he’s banking on some concept stores, including one that just opened in Eastchester, New York, boasting a full-service restaurant.

 

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Banks Behaving Badly; More Karma Headed Towards EpiPen Maker; Shamu Entertainer Ditches Dividend

D’oh!

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There are few things life more stupid than pissing off Senator Elizabeth Warren (D-MA). Yet Wells Fargo CEO John Stumpf managed to do just that with his prepared, yet sometimes absurd remarks that were carefully crafted for his much deserved beating by the Senate.  That beating came after the bank had to cough up a $185 million fine because employees opened up more than two million unauthorized checking accounts and credit cards. Senator Warren said, among many other colorful things, that Stumpf demonstrated “gutless leadership” and called for him to be personally criminally investigated by both the Department of Justice and the SEC. Yowza. Stumpf did attempt to explain that Price Waterhouse Coopers was brought in to review the accounts in 2015. The problem is that Senator Sherrod Brown (D-OH)  wondered very loudly why Wells Fargo didn’t do that immediately after a scathing L.A. Times article came out exposing the scandal way back in 2013.  In the meantime, Carrie Tolstedt, who headed the retail banking business that oversaw the fraudulent accounts, retired in July with $125 million from a previous stock compensation. Of course, the bank’s top executives attempted to point the finger at lower level employees who made between $35,000 – $60,000 a year. Wells Fargo fired 5,300 employees in the last few years for improper conduct tied to the fraudulent accounts. Senator Bob Menendez (D-NJ) made sure to ask Mr. Stumpf how much he took home last year: $19.3 billion was the answer. John Stumpf is still very much gainfully employed and is apparently “deeply sorry.”

Give a shot…

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West Virginia joins the list of states gunning for Mylan ever since the company hiked the price of their life-saving EpiPen drug to $600 for a 2-pack. Mylan argues that it recoups less than half of that $600 Epipen price tag yet the drug accounts for 40% of the company’s operating profits. The state’s attorney general, Patrick Morrisey is going after the drug-maker, filing a petition to find out information that might just lead to some very unpleasant Medicaid fraud charges for Mylan. The subpoena could determine whether Mylan underpaid on rebates so that it could participate in the state’s Medicaid program. And while Mylan has yet to comment, its CEO Heather Bresch has a very unpleasant date planned for Wednesday with the House Committee on Oversight and Government Reform. You might have heard that her father is Senator Joe Manchin (D-W.VA) Awkward. Also problematic, in terms of West Virginia’s Antitrust Act, is how Mylan sued Teva Pharmaceuticals for patent infringement when the latter wanted to make a considerably cheaper, generic version. The two companies settled but in the meantime, blame it on the FDA for not yet approving the generic version. This latest investigation, by the way, is completely separate from New Attorney General Eric Schneiderman’s investigation.

Nothing to sea here folks….

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More rough waters for SeaWorld Entertainment (SEAS) as the theme park company hit a new low today of $11.77. While it did rebound a bit, the company still plans to issue its last dividend – 10 cents a share – on October 7, which is down from the 21 cents it had previously issued. But after that, the dividend will be put on hold…indefinitely. Instead, SeaWorld will use that money to buy back shares as the company stares at a future without killer whales in captivity.  Starting next year, SeaWorld in San Diego will bid a salty farewell to its Orca shows, with San Antonio and Orlando following suit in 2019. The brutal publicity from the 2013 Orca documentary, Blackfish, has put a significant damper on earnings and attendance at the theme parks, with visitors down 8% to about 6 million for the year. Interestingly, SeaWorld thinks the drop in attendance has more to do with other factors like Tropical Storm Colin and a shift in holidays. Whatever the real reason is, the fact remains that revenue was down 5% to $371 million from last year’s $392 million for the same period.  Add to that a drop in profit of $5.8 million from $17.8 for the same quarter last year and you’ve got yourself a hot fiscal mess.

 

 

What Goes Around Comes Around for EpiPen Maker Mylan; Fox News Says Sorry With $20 million; About LEGO’s Brick Shortage

Karma anyone?

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There’s nothing like a ridiculous over the top price hike to get the US attorney general’s unwanted scrutiny. Attorney General Eric Schneiderman is now taking a cold hard look at Mylan in the form of a very unflattering antitrust investigation. The AG would like to know if Mylan violated antitrust laws when it gave schools free devices while contractually barring them from purchasing products from other competitors for a whole year. Mylan unwittingly invited this unwelcome attention when it drastically increased the price of its life-saving devices from $100 in 2009 to $600 today. You reap what you sow, I suppose. Mylan’s EpiPen4Schools program has so far given 700,000 pens to 65,000 schools, and according to Mylan, it followed all the rules and had no purchase requirements for the devices. But according to the investigation, it seems that Mylan may have cheated schools by handily placing certain terms into the sales contracts which seem awfully anti-competitive. Well, at least the company is offering a generic version for $300. Isn’t that special?

Speaking of karma…

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Former Fox News broadcaster, Gretchen Carlson, is getting $20 million from Fox News to settle the sexual harassment lawsuit she filed back in August against former Fox News CEO Roger Ailes. If you recall, Carlson filed suit because she said that her contract wasn’t renewed after she refused to sleep with Ailes. Ailes, of course, denied the allegations and said the lawsuit was just retaliation for when the network didn’t renew her contract. Strangely enough – or not – once she filed her lawsuit, many many other women at Fox News also started coming forward with even more sexual harassment claims, some of which have since been settled. Apparently, Roger Ailes had complaints against him going back to the 80s. Ailes has several supporters at Fox including Brit Hume, Sean Hannity, Bill O’Reilly, Maria Bartiromo and Greta Van Susteren who, by the way, just announced that she’s now leaving the network. Some said her departure has to do with a financial disagreement, while others strongly believe it has to do with Ailes demise at the network he founded back in 1996. Fox, however, did publicly apologize to Gretchen Carlson and praised her work and career. And while Fox has been a veritable ratings juggernaut, this last incident spooked investors by exposing a weakness. Shares of 21st Century Fox, which owns Fox News took a dive, albeit a slight 1%. And if for some inexplicable reason you feel bad for Roger Ailes, don’t. He walked away with a $40 million severance package.

If you build it, they will buy…

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Lego, maker of everybody’s favorite plastic toy bricks, posted some positively unimpressive numbers that included flat sales in the U.S. All because there was simply not enough of the plastic bricks to go around. That’s right. After posting a record profit last year, the world’s largest toymaker – sorry, Mattel – didn’t have the resources to get out its shipments according to the demand. Net profit for the company slipped to about 3.49 billion Danish kroner from last years’ 3.55 billion Danish kroner. 3.49 billion kroner, by the way is equivalent to about $523 million. But revenue was still up 11% to 15.7 billion kroner which translates to $2.35 billion. So the company went ahead and took money that would have gone towards profits to make some investments to increase and improve its supply chain. That included adding 3,500 jobs, bringing the total amount of Lego employees to 18,500, and building up factories in Mexico and China, amongst other locations. At least Lego doesn’t have to answer to demanding shareholders seeing as how it’s a family-controlled company.

Singular Sensation for Alibaba; Don’t Bet On It: Online Daily Fantasy Sports Gone in a New York Minute; In: Higher Minimum Wage. Out: Tipping

Singled out…

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Image courtesy of bplanet/FreeDigitalPhotos.net

Did Alibaba just throw down the gauntlet to Black Friday? China’s biggest e-commerce site knocked it out of the fiscal park on November 11, aka Singles Day, shattering last year’s $9.3 billion record for the auspicious shopping event. In fact, just by midday the company had already hit $9 billion in sales. Some of the top sellers were Nikes and baby-related products. CEO Jack Ma kicked off the Singles Day shopping festivities by launching the event Tuesday evening with James Bond actor Daniel Craig and House of Cards Star Kevin Spacey. After all nothing says Chinese e-commerce like British and American actors, right? The earth-shatterting sales left many wondering what many are worried about a flagging Chinese economy and its October report that the country hit a particularly slow pace in the third quarter. What didn’t hit a slow pace i was mobile sales for Alibaba’s Singles Day, where 68% of the day’s transactions occurred.

You bet-or not…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

New York Attorney General Eric Schneiderman just might be the least popular person on the planet right now. The AG sent “cease and desist” letters to fantasy sports companies FanDuel and DraftKings, ordering them not to accept bets from New Yorkers anymore. The AG called the companies a “new version of online gambling” and said the contests are “neither harmless nor victimless” because they lure in people who are predisposed to gambling addiction. AG Schneiderman went on to say that the companies are basically perpetrating “a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country.” Ouch. FanDuel and DraftKings, however, argue that what they offer is “a game of skill.” There are currently 34 lawsuits in 13 states pending against the daily fantasy sports companies accusing its proprietors of unfair and/or illegal activity. DraftKings and FanDuel actually stopped doing business in Nevada after the state’s attorney there ruled that the business models meet the state’s definition of gambling and would therefore have to pay for a license.  Both companies are valued at about $1 billion each. Major League Baseball has a stake in FanDuel while the NBA has its own stake in DraftKings. FanDuel also has big money ad deals in place with both the Brooklyn Nets and the New York Jets. At least the AG isn’ t looking to get back any proceeds from New Yorkers who placed bets and actually won. Well, for now anyway.

Not tipsy…

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Image courtesy of maya picture/FreeDigitalPhotos.net

No more bragging rights for big tippers at Joe’s Crab Shack. Well, at least in 18 of the chain’s 131 locales. Parent company Ignite Restaurant Group has decided to do away with the “tip” model and the idea behind it is quite simple: The restaurant scraps tipping and then increases the minimum wage of its employees to $14 per hour.  It means that for some servers, it makes up for lost tip wages. “I personally believe tipping is an antiquated model,” CEO Ray Blanchette said investors at a recent meeting. That’s lovely and all but he also believes it helps improve service and reduces employee turnover. Besides, servers will get paid the same whether they work a busy shift or a slow one with fewer diners. Of course, that tip model means menu prices are heading north from anywhere between 12% to 15%. But considering that most tippers tip around 18%, there’s no great loss there. While Joe’s Crab Shack is the first national restaurant chain to try this out, restaurateur Danny Meyers Union Hospitality Group also put this model into place in New York. Joe’s started doing this back in August and incidentally, or not, its restaurant that adopted this no tipping model the longest has gained the most traction. Which is good since overall sales for Joe’s Crab Shack in the third quarter went down 6.6%. Ironically, the National Restaurant Association does not care much for the model because the “median hourly earnings for servers range from $16 – $22.” Do the math and you realize that could actually mean a nasty pay cut for plenty of restaurant employees.

Turn the Street Around…; Best Buy’s Best Quarter?; Oui Oui Le Tax Pour Airbnb

Recovery?

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Image courtesy of rattigon/FreeDigitalPhotos.net

It’s only right to call today “turnaround Tuesday” since the stock market seems to be sort of recovering from the fiscal slaughter of the last few days, including all those sell-offs and Monday’s 588 point Dow drop. Part of the turnaround is because of China’s decision to cut interest rates. For the fifth time. Since November.  And then there are all those juicy stock bargains. Traders up for a good bargain are on the prowl and take bargain shopping to a whole new level. You might think you know how to spot a great discount but you’ve got nothing on these traders. These deals have nothing on post-Christmas sales. But at least the Dow soared today, with tech stocks leading the charge. Except that the day ended down by 200 points.

Rolex who?

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Image courtesy of Pixomar/FreeDigitalPhotos.net

Best Buy had a particularly impressive quarter but is it really all because of Apple and it’s highly coveted watch? Hmmm. Apparently, the Apple Watch has been quite a hit with the retailer and by the end of September you can stop into any one of Best Buy’s 1,000 plus locations and pick up the gadget. That much coveted watch also helped propel Best Buy’s online sales to a 17% increase, giving Amazon and Walmart a cyber run for their money. Of course, not all those sales were from Apple products, but still.  Apple doesn’t get all the credit since Best Buy also scored some impressive appliance sales.  And I’m pretty sure Apple doesn’t make refrigerators and dishwashers. Yet. The Apple thing really seems to be paying off for Best Buy so it seems logical that it will be increasing Apple’s presence in its stores and start to offer AppleCare and service in some extremely lucky locations. Best Buy earned a $164 million profit adding 46 cents per share. Analysts only expected 34 cents. Apparently those analysts don’t own an Apple Watch (nor do I, for that matter). A year earlier Best Buy raked in $146 million and 42 cents per share.

Let them eat cake…

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Image courtesy of pixtawan/FreeDigitalPhotos.net

If you’re traveling to Paris after October 1 (lucky you) and your accommodations come courtesy of Airbnb, be prepared to say au revoir to even more money than you might have planned. Your Parisian host will now be collecting a tourism tax from you in the amount of 83 euros per day, per person. In case you were wondering, because I know you were, 83 euros is equal to about 95 cents. Paris authorities made the request to Airbnb in an effort to encourage the home-sharing site to behave more like a hotel would. And, well, considering that Paris is the most visited city in the world, and Airbnb has over 50,000 listings there, it seems like the smart thing to do to comply with this request. Besides, that tourism tax helps generate local tax revenue and pays for all the extra infrastructure that results from tourism. Also, it gives Parisian hotels one less thing to complain about when it comes to the advantages of Airbnb and helps the site make nice with French authorities. Incidentally, New York attorney general Eric Schneiderman has taken issue with the $25 billion company. Schneiderman said that 75% of New York City listings are, in fact, illegal, since the hosts are/were not present and the rental periods were for less than 30 days. According to New York State Law, these tenants owe Uncle Sam some $30 million.

Not-So-Happy Meals; To Your Credit: Reporting Agencies (Finally) Agree to Play Nice; Ethical Corn Flakes

Just not that into you…

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Image courtesy of joephotostudio/FreeDigitalPhotos.net

Looks like things keep going south for the Golden Arches. McDonald’s, the world’s largest food chain and private employer, took a major hit with global sales tanking 1.7%.  Since it’s only CEO’s Steve Easterbrook’s second week on the job, no one is blaming him…yet.  While the chain’s 36,000 restaurants took a hit as whole, in Europe, sales actually went up 0.7%….for the month. Too bad things in Japan things were precipitously worse, as McDonald’s took a $186 million loss for 2014. Apparently diners there didn’t appreciate finding things in their food that weren’t supposed to be in food. China and other parts of Asia also dealt with problems, including shifty meat suppliers. McDonald’s mentioned that “consumer needs and preferences have changed” and then there’s that issue of “ongoing aggressive competitive activity.” Which is basically saying that people would rather eat someplace else, like at Panera and Chipotle, which have certainly taken big bites from McDonald’s sales. But in an effort to pump some fiscal juice back into its portfolio, customers at some 2,000 locations will get to customize their own burgers with its “Create Your Taste” program. Now if only there was a “Create Better Sales” program…

A debt of gratitude…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

It all started with an investigation back in 2012 by New York Attorney General Eric Schneiderman. Actually it all started way before that when credit reporting agencies decided to make life difficult on consumers by making them jump through hoops if – heaven forbid – they had the audacity to dispute their credit reports. Following many many many complaints to the AG’s office, Schneiderman began his investigation followed by a lawsuit that led to an agreement which consumers are sure to appreciate (probably more so than the credit reporting agencies). The three biggest credit reporting agencies, also known as Experian, Equifax and TransUnion, who happen to report credit scores for a whopping 200 million Americans, have graciously agreed to behave a lot nicer and make things easier and quicker for consumers to dispute their reports. Since half of all debt reported comes from medical bills as a result of late insurance payments, the agencies will now give consumers 180 days to pay those bills. If you have other disputes, rest assured the process is about to get considerably easier. Under the new agreement, victims of fraud and identity theft should also have an easier time clearing things up. The agencies, however, were given three years to implement these new practices, so you might not want to hold your breath.

Not exactly the Oscars?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

You may have never heard of Wipro but if you’re in the market for a global information and technology consulting company, you might want to remember that name, as Wipro was just named 2015’s World’s Most Ethical Company. Every year Ethisphere Institute, a business consulting firm that focuses on best business practices, puts out its own list of “most ethical companies” with Wipro claiming the top title this year. So who else made the list? Gap Inc., H&M and Levi Strauss took home the top Ethical Prizes for “Apparel.” Hasbro and Mattel made the list for the “Toys and Games” category while Google took home the top spot for “Computer Services.”  Kellogg Co. made it onto the top five most Ethical “Food and Beverage companies for the seventh time, mind you, with The Hershey Company a few spots behind it. Petco took the number two spot for “Retail” while Starbucks Coffee Company took the top spot in the “Specialty Eateries” category. For the complete list of this year’s winners click on the link http://ethisphere.com/worlds-most-ethical/wme-honorees/

 

Barnes & Noble Doing the Splits, The Mood Darkens at Barclays and Wall Street Not So Cuckoo For General Mills

Splitsville…

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Image courtesy of adamr/FreeDigitalPhotos.net

While everyone loves a great love story, Wall Street is loving an impending break-up instead. Barnes & Noble just announced its earnings today which were less than spectacular. But it also announced its plans for the Nook – namely, that its future does not include the e-reader. Sales of the Nook have been dragging down the bookseller for awhile because it has been unable to compete with the likes of Apple and Amazon. The plan is either to make two separate companies where the Nook business would be its own public company and Barnes & Noble would keep its books, e-books and college bookstore division or the Nook business would perhaps get picked up in a private sale.Whatever the outcome, Wall Street cheered the news of the split by causing shares of Barnes & Noble to jump a little.

Dark matters…

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Image courtesy of Idea go/FreeDigitalPhotos.net

Looks like Barclays is the latest bank to get slapped with a lawsuit courtesy of New York State Attorney General Eric Schneiderman. The issue at hand: Dark pools. Indeed a term like that is filled with suspense and intrigue but more importantly, questionably ethical high frequency traders (or HFT’s as the cool kids call it). As necessity is the mother of invention, dark pools were crafted for institutional investors to trade huge amounts of shares under the mysterious cloak of anonymity. HFT’s were allegedly given special access to Barclays dark pools and now the bank stands accused of helping to hide the dubious ways of these HFT’s. What is the harm of all this to you? Glad you asked, telepathically, of course. HFT’s benefit by putting other investors (perhaps yourself) at a disadvantage. Some argue that HFT’s provide a public service by inadvertently (or advertently?) reducing trading costs. The SEC and Department of Justice argue otherwise.

Crumb-y sales…

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Image courtesy of rakratchada torsap/FreeDigitalPhotos.net

General Mills announced its earnings. Not that it made much difference as the company’s earnings came to resemble little more than a virtually flat line. So now the company, best known in my home for such classics as Coco Puffs and Cinnamon Toast Crunch, will embark on a “formal review” which is just corporate code for finding ways to cut costs and make a ton more money. But it wasn’t a complete flat line. After all the company did go down 7% in international sales. Here in the States sales fell 3% in categories including (but not limited to) frozen foods and yogurt. Cereal remained the same at $2.4 billion in sales. The CEO blamed some of the disappointing earnings on lots of promotional spending that fell flat – no pun intended. Well, maybe just a little.