No Churning Back: France Needs Your Butter!; The New “It” Couple; Americans Are Spending! Yay.


Très mal…

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Nothing screams “It’s time to panic!” quite like a butter shortage in France. Oui oui. The country is in the throes of a shortage of the stuff that dreams and croissants are made of, primarily because the cost of the creamy spread has gone up and the supermarkets aren’t forking over the euros to pay for it. So how exactly does an entire country find itself in the midst of such a supply shortage? First, France has been dealing with some bad weather which has somehow affected the supply of cow feed. Don’t ask me the mechanics here because I have no idea. Then we get to New Zealand. Yes, New Zealand. Did you know that New Zealand is a leading butter producer? Neither did I. New Zealand, with its own issues, has been decreasing its exports of the stuff, which in turn has contributed to France’s shortage and price increases.  However, the all-time proverbial buzz-killer/price-increaser is basically an overall global increase in demand for butter. When the whole world is eating more of the stuff, the price magically, and inconveniently goes up. In fact, butter went from $2,800 per ton in April 2016, to $8,000 per ton this past September. Crazy, right? And like Americans stockpiling batteries and water before major storms, the French have been stockpiling…butter. I dare you not to laugh. Out loud. In any case, if you don’t believe me, just check out Twitter for all sorts of French/butter humor. You won’t believe how many jokes this is churning out – sorry, had to do it.

Let’s get together…

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There are some things in life that are just meant to be. For instance, peanut butter and jelly, macaroni and cheese, and of course, beer and cannabis. Hence, Corona beer maker Constellation Brands just scooped up a 10%, $191 million-stake in Canopy Growth Corp, a Canadian company that makes cannabis and medical-marijuana products.  As for Constellation Brands, a company valued at $42 billion, it now has the dubious distinction of becoming the very first major company that specializes in wine, beer, and spirits to invest in this budding – no pun intended –  pseudo-legal industry.  The fact is, the issue of legalizing marijuana seems to be on the table in the U.S. and Canada, and not just for medical use. But Constellation really isn’t planning on doing anything major with its stake. Just yet, anyway. It plans on maybe just starting to produce some cannabis-infused drinks. Interestingly enough, the more marijuana gets legalized, the less alcohol gets consumed. For Constellation Brands, it was a pre-emptive move, positioning itself at the forefront of the industry, enabling it to take advantage of the all the opportunities that await once legalization, on the federal level, is securely in place. Nice little fun-fact: Canopy Growth Corp’s ticker symbol, which trades on the Toronto Stock Exchange is…wait for it…WEED. Catchy, huh?

You “auto” know…

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U.S. consumer spending went up quite impressively last month – a whopping 1% (yes, that is whopping) –  in large part because of the auto industry.  That’s especially important since consumer spending accounts for 2/3  of the U.S. economic output.  And who doesn’t love strong economic output, right? Yes, spending rose a lot, the most since August 2009, because there seemed to be a major increase in consumers buying cars. Sadly, that surge in car-buying was helped by the two recent major storms that ravaged a large swath of the United States and effectively destroyed a ton of vehicles. Incidentally, August 2009’s rise in spending was also attributed to the auto industry. At the time the government put out a program called “cash for clunkers” that fueled its own surge in pending.  Along with that nifty bump in consumer spending came a 0.4% increase in personal income. And bonus: wages increased by the same amount.

Uh Oh Canada: Trump Starts Up With Our Neighbors to the North; Marissa Mayer Walks Away Golden; Nasdaq Yowza!

Good Tariffs don’t make good neighbors…

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As if things weren’t awkward enough between the President and Mexico, now it’s the U.S.’s relations with Canada that are getting the Trump treatment. This time it’s Canada’s lumber industry that’s getting caught up in the import debate as the President’s plan calls for a tariff of up to 24% on Canada’s lumber products. Canadian lumber companies are pretty ticked off and Canada’s Prime Minister, Justin Trudeau, is itching to fight back. Just how remains to be seen. In case you didn’t know, Canada is the world’s largest soft-wood lumber exporter and the U.S. is its biggest customer, reportedly importing $6 billion worth of the resource just in 2016. But here’s where things get dicey, well for the U.S. anyway – shares of home-building companies took a very unwelcome dive on the soft-lumber dispute, as Wall Street realized raw materials could get a whole a lot pricier. That will likely end up leading to a very unpleasant domino effect on other related industries. If you’re looking to buy a home, take note that this Canada lumber is issue is sending home prices up as well. Incidentally, Canada is going to stop importing U.S. dairy products, as a sort of retaliatory action. Sort of. But basically, this means dairy farmers are getting screwed here too. And don’t you hate when that happens? On the flip side, U.S. lumber producers said that cheap lumber imports from Canada, which are they say are unfairly subsidized by the Canadian government, have put a major crimp in their business and these tariffs will give the domestic lumber industry a much needed reboot.

What color is your parachute?

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Yahoo might have gone bust but Marissa Mayer will be walking away from the entity with $186 million lining her pockets. That’s even after Verizon agreed to buy the  beleaguered company. She’s sitting on 4.5 million shares of the failed internet company and she’ll get that substantial wad of cash once she pays to exercise her options. That $186 million is based on Monday’s closing price, in case you were wondering, and while Mayer may not have had the best run at Yahoo, the stock still tripled during her five-year CEO stint there. And as Verizon plunks down $4.5 billion for Yahoo, Mayer will take in another $3 million as part of her golden parachute. That’s besides the fact that last year she lost out on her bonus following the massive data security breaches that affected one billion Yahoo accounts.

Making a break for it…

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The Nasdaq broke the 6000 mark with a lot of help from big corporate gains and, believe it or not, even President Donald Trump. That’s because the President has big “tax reform and reduction” plans which involve reducing the United States’ onerous corporate tax rate from a whopping 35% to a more corporation-friendly, and globally competitive, 15%. Plans like that could mean a big boost all-around on Wall Street. Companies including Apple, Microsoft and McDonald’s, to name a few, reported impressive gains, sending the Nasdaq all the way up to 6034.74. If you’re finding Trump’s contribution hard to swallow, consider that the result of France’s Presidential election also factored into that 6000 point breakthrough. French Presidential Candidate Emanuel Macron’s first-round victory helped matters, probably because of his centrist politics, which apparently Wall Street digs. It wasn’t since March 7, 2000, that the Nasdaq broke the 5,000 barrier. But alas, that remains nothing but a very distant memory.  The Nasdaq, incidentally, is up over 10% since the beginning of the year and up way over 20% in the last twelve months.

Apple Bites Back at EU; IMF Chief Found Guilty But She’s Still Allright; Lands’ End Going for New Beginning with Latest CEO

An inconvenient target…

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The EU might be demanding a whopping $14 billion from Apple, but it’s not going to happen so quickly. Or easily. Or at all, if Apple has its way. Back in 2014, the EU accused Ireland of skirting international tax laws when it let Apple park tens of billions of dollars there in order to keep it from getting into the grubby hands of pesky tax collectors. Apparently, Apple only paid a corporate tax rate of 3.8% on $200 billion of overseas profits. In exchange for keeping its profits there, Apple kept jobs there, all safe and secure. The EU said the tax deal amounted to illegal state aid and Apple needs to cough up the record setting fine. Both Apple and Ireland deny that they did anything wrong and think the EU needs to get its stories straight.  Apple says it was singled out by the EU because of its massive success – “a convenient target” as its lawyer so eloquently put it, and that the EU commission conveniently blew off tax experts that were brought in special by authorities in Ireland.  In the meantime, Ireland says that other countries should close their own loopholes and is accusing the EU of overstepping its boundaries as it interferes in member states’ sovereign affairs.

Guilty but not…

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She may have been found guilty of negligence over a payout that happened back in 2008, but it’s not entirely clear if IMF Chief Christine Lagarde is actually guilty of anything.  The trouble started when Lagarde was France’s Finance Minister. Her boss was none other than President Nicholas Sarkozy (half-brother-in-law to Mary-Kate Olsen, fyi). President Sarkozy’s good buddy was this tycoon named Bernard Tapie who got really angry with the French government and then sued it. You see, Tapie sold his stake in athletic company, Adidas, to French bank Credit Lyonnais, which as luck would have it, was state owned. The bank then went ahead and sold that very same stake for a whole lot more money than what Tapie was paid. Tapie cried fraud on the government and became embroiled in a fifteen year legal battle. Enter Lagarde, who against official advice, recommended private arbitration in lieu of continuing to pursue the expensive legal battle. Tapie was awarded an outrageously high 400 million euros (roughly $417 million), and for this Lagarde was found guilty because she didn’t contest the award (which came from public funds, mind you). Incidentally, investigators suspected that the arbitration process was not kosher and was actually rigged in Tapie’s favor. He has since been ordered to pay the award back. In the meantime, Lagarde isn’t even facing any jail time, much less a fine. That’s because the state, according to its own opinion, had a weak case, while Lagarde has an excellent reputation and is in good international standing. Boom.

Canvas is so last year…

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Lands’ End is going luxe again. After dumping its posh CEO, Federica Marchionni – after less than two years –  the company just announced it hired Jerome Griffith, formerly of Tumi, who just this year wrapped up selling the company to Samsonite Luggage to the tune of $1.8 billion. Griffith also held posts at Gap Inc. and Tommy Hilfiger and has a solid reputation for turning companies around. It was only three months ago that the company booted Marchionni, who previously held posts at Dolce & Gabbana and Ferrari. But alas, she couldn’t make it past the two year mark, as her vision for making Lands’ End an upscale brand, via the Canvas line, did not resonate with a customer bas that wasn’t even looking for upscale. Hence, she went the way of acid wash and parachute pants. Her vision was, in fact, so at odds with the Lands’ End customer base that the company had to eat a $4.4 million loss from the line.  The company also didn’t care for the fact that she stayed put in New York while Lands’ End offices were already comfortably situated in Wisconsin. Geography won’t be an issue for Griffith who is gearing up to set up house and home in the in the state. Lands’s End is counting on Griffith’s business acumen. During his run at Tumi, he saw revenues increase from $196 million in 2009 to $547 million in 2015.  And Lands’ End needs all the help it can get after watching its sales take in a loss last year of close to $20 million.

French Company Goes Organic for U.S. Acquisition; U.S. Airlines Gear Up for Cuba; U.S. Banks Bond Over Brexit

Let them eat organic cake!

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Dannon Yogurt’s parent company, Danone (said with a French accent) is looking to pick up  a major U.S company that will effectively double its size. That’s assuming all goes according to plan. Danone wants to offer organic food provider, WhiteWave, purveyor of favorites like Silk Almond and Soy Milk, Horizon Milk and Earthbound Farms, $10.4 billion in cash for the fiscal pleasure of its company. That’s a 24% premium over WhiteWave’s thirty day average closing price and comes out to about to $56.25 per share. But for Danone, whose looking to make itself a bigger presence in the United States, it’s well worth it, since WhiteWave’s offerings tend to attract wealthier consumers. WhiteWave generates annual sales of about $4 billion and with this acquisition, Danone expects to see a $300 million boost in operating profit. Danone has also been struggling in other parts of the world and this acquisition would ease the burden of some of those lesser-performing markets. FYI, when companies offer to buy other companies, their offers tend be at least at a 30% premium. Because this offer was not, it theoretically means that the bidding door is still open to other offers from companies like Coca Cola, PepsiCo and Kellogg Co, to name but a few. In a regulatory filing, though, WhiteWave did graciously say that it wouldn’t solicit other offers. However, there are exceptions. Should WhiteWave go with another offer, Danone still wins because it will get a $310 million break-up fee.

Bienvenido…

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Believe it or not, Hillary Clinton wasn’t the only topic of conversation today coming out of Washington DC. President Obama announced a proposal to allow eight U.S. airlines to provide nonstop service between Cuba and ten U.S. cities, beginning this fall. This will mark the first time in 50 years that travel of this kind will be available. And all this just one year after diplomatic relations were re-established. The city and airline selections were made by the Department of Transportation and the lucky airline winners are: Alaska Airlines, American Airlines, Delta Airlines, Frontier Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines and United Airlines. American Airlines is actually no stranger to the island nation, as it has been offering charter services there since 1991. Just last year the airline made over one thousand chartered flights to Cuba, while JetBlue made over 200 chartered trips. That’s awfully welcome news for an industry that took a fiscal beating lately. The cities that can look forward to the new service had to have have substantial Cuban-American populations already in place. Hence, Florida finds itself the recipient of 14 out of the 20 daily nonstop flights, since it boasts the largest Cuban-American population. The cities include: Atlanta, Charlotte, Fort Lauderdale, Houston, Los Angeles, Miami,  Newark, New York City, Orlando and Tampa. According to Cuban officials, the number of American travelers to Cuba is up 84%, compared to last year, in just the first half of the year.  But there is still a trade embargo in place, which does include a travel ban. However, there are twelve convenient categories of reasons to fly to Cuba that you can check off should you decide to make your way to Havana any time soon.

Come together…

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It’s a fiscal kumbaya as four U.S. banks offered up their sincerest support for London following the Brexit vote. The gracious supporters include, JPMorgan, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley. The banks agreed to help British Finance Minister George Osborne find ways to ensure that the U.K. remains the prominent financial player that it always was, pre-Brexit. And of course they all will try and find new and exciting ways to lure and retain big banking to London so that the consequences of the Brexit don’t do the country in completely. While that sentiment no doubt warmed the hearts of investors all over the world, the investment banks could not offer up as much optimism as far as the jobs situation is concerned. After all, “no one in their right mind would currently invest in Britain.” Keeping those jobs there might might be the biggest challenge of all and no one wants to make any promises on that. Especially Jamie Dimon, who had previously mentioned that around 4,000 jobs could make their way out of London. In the meantime, the French wasted no time – I mean NONE! – in announcing to the world that it would make its tax regime as enticing as possible, in a not at all subtle attempt to grab some pricey banking business from London.

Google’s Tax Troubles Continue in Madrid; Will Oreo Scoop Up Hershey?; Pier 1 Not Feeling the Outdoor Love

Mucho dinero…

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It was just another day in the life of Google as authorities raided its offices, this time in Madrid, Spain. At issue, yet again, is the search engine giant’s corporate tax practices in Europe and the looming question as to whether or not Google, and other big corporations like it, are steering their profits legitimately, in order to score a reduced tax rate. Spanish authorities are investigating the search engine giant to see if it has been in engaging in the  dark art we know as tax evasion. Back in May, France investigated Google for “aggravated financial fraud” and “organized money laundering” which both sound awfully sinister. France is hoping to get $1 billion from its investigation. Even Italy’s authorities are in on the action and looking to see if Google underpaid its taxes there as well.  Google already forked over $175 million in back taxes to British authorities, whose politicians are still whining because they feel that the amount was too low. Expect more post-Brexit griping. Naturally, Google and its peers are calling out their innocence and are adamant that they comply fully with tax rules. But, at any rate, the investigations still seem far from over.

Yummm…

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The mood is sweet on Wall Street with talk of a Hershey takeover from Oreo maker Mondelez International. Given that there’s a trend to cut back on the amount of sugar people have been consuming, the timing seemed opportune for a buyout of a company that makes the world’s most beloved -in my opinion, anyway – chocolate bar. Mondelez, which also makes Cadbury chocolates, is currently the second largest confection manufacturer in the world. If the buyout goes its way, it will become the number one sweets maker, as 90% of Hershey’s revenue comes from North America. Shares of Hershey shot up 22% on the tasty news, hitting a record high of $117.79. Shares of Mondelez also went up, just not as much. Hershey’s market value is about $21 billion, give or take. But in order for the buyout to go forward, the Hershey Trust would have to give its blessing. After all, it controls 81% of Hershey stock and voting rights. However if you’re looking for some hostile action, might I suggest you look elsewhere. Mondelez already pledged to not shed any jobs and to keep the illustrious Hershey name intact.

Missed it…

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It’s looking like a long walk off a short Pier 1 as revenue for the home store chain came in at a disappointing $418.4 million. That number might seem impressive, except that it wasn’t to analysts, who were expecting revenue closer to $420 million. The company lost $6 million in profits and 7 cents a share when predictions were for a 5 cent per share loss. If those figures weren’t depressing enough, then consider that last year at this time, Pier 1 took in revenue of $436.9 million with a $7 million profit and an 8 cents per share gain. Shares of the company are now 50% less than what they were a year ago. The big area to disappoint was outdoor furniture. Darn you, outdoor furniture. That category was supposed to bring in some boffo results, but instead proved to be a real downer. The table top category did nicely. Just not nice enough. Taking a page from Chipotle, the company will now attempt to march out a rewards program and even add a gift registry. Which is weird, because I assumed the company already had a gift registry. I even went to check just now and wouldn’t you know it? It doesn’t. In any case, the company is forging ahead with plans to close 20 stores, while it already shuttered 8 this past quarter. Pier 1 did, however, open another three stores, presumably in more economically hospitable areas.

France Says Non Vive La Uber; Smuckers Jells Up Some Tasty Earnings; Is Larry Page Channeling George Jetson?

Let them eat cake…

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Uber, the multi-billion dollar company that operates in 60 countries and can’t seem to stay out of legal trouble is making headlines, yet again. The ride-sharing app just got slapped with an almost million dollar fine – half of which was suspended – for running an illegal taxi service in France. But that fine is the least of Uber’s problems considering it just raised another $3.5 billion in funding. The French court took aim at Uber POP, an app that connects riders with nonprofessional drivers who use their own cars to transport passengers. Licensed taxi drivers in France took exception to the app and put pressure on French officials to bid adieu to Uber POP by getting the service suspended there last year. Last week, a German court also gave a big nein to Uber, upholding a previous ruling that banned Uber POP there for violating local transport laws. Besides Uber getting slapped with a big fine, two Uber execs also got hit to the tune of 50,000 euros, which is nothing compared to the five years of jail time and million dollar fine that they could have received. This case marks the first time that actual executives from the company had to stand trial. The employees were found guilty of deceptive commercial practices, acting as accomplices in operating an illegal transportation service and, just for good measure, violating privacy laws. That’s in addition to being held responsible for inciting others to break the law by employing them, causing riots and taxi strikes. However, this latest ruling is far from the company’s first legal tussle since it was founded in 2009. The company continues to grapple with numerous regulatory issues in Europe and Africa and there is a long road ahead. And in case you didn’t see it coming, Uber is appealing the French court’s ruling.

I don’t think you’re ready for this jelly…

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It’s just jelly to you but to its shareholders, it’s a profit of $191 million. I am talking about J.M. Smucker Co., whose latest earnings positively dazzled Wall Street, sending shares jumping 25% today, to a record high of $142.27. Of course, it wasn’t just an increased urge for PB&J’s, with Smucker’s Jif peanut butter, that sent those sales soaring. Dunkin’ Donuts Brand Coffee, Folgers Coffee and…wait for it…pet food figured prominently in Smucker’s epic 39% profit surge. Smucker’s coffee products account for the company’s biggest market and pulled down a 9% increase in the fourth quarter, while its pet foods, that include Meow Mix and Milk-Bone, accounted for a third of all sales. It helped that the company offered up plenty of promotions to drive demand for its K-cup offerings. The company’s acquisition of Big Heart Pet Brands last year also helped a lot to drive up the impressive earnings. Revenue surged 25% to $1.81 billion when analysts only expected $1.75 billion and Smucker’s added $1.44 to its shares when predictions were only for $1.20. Those earnings were especially welcome since last year at this time, the company posted a 41% profit loss.

Just because he can…

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Alphabet CEO, Larry Page is into cars. Especially if they can fly. These days, the Google co-founder is funding two companies that are currently building and tweaking prototypes of small, all electric planes that can take off and land similar to helicopters. Just like the flying saucers you saw on the Jetsons. Page has already plunked down $100 million into Zee.Aero, a start-up launched in 2010, that has been testing two prototypes in Hollister, California. But why fund just one company when you have the means to fund two? That’s why Larry Page has also poured money into Zee.Aero competitor, Kitty Hawk, led by Sebastian Thrun, the Google X founder who is also behind Google’s self-driving car program. Coincidence? I think not. But it’s sure to be a crowded race to the finish as there are at least a dozen other companies around the world that are hoping to churn out a similar prototype, well before Larry Page’s darlings.

 

Ralph Lauren’s Man with a Plan; Voila! French Rogue Trader Gets Last Laugh…Almost;Ya-Who Will Get the Winning Bid?

 

Plan of attack…

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Ralph Lauren will bite the very preppy bullet and start cutting jobs, closing stores and cashing out on some real estate as the retailer tries to climb out of a dismal fiscal year. Out of its 15,000 full-time employees, 1,000 of them will soon be getting their walking papers so the company can restructure itself and go from nine management layers to six. Spearheading these new changes are CEO Stefan Larrson, who is the person responsible for lifting Gap Inc.’s Old Navy out of its own retail funk awhile back. And Larsson’s got his work cut out for him. The retailer posted sales losses for every quarter of fiscal 2016, resulting in a full year sales decline of 3% and a 30% decline in shares in the last twelve months. Part of Larsson’s plan to lift Ralph Lauren out of its misery is to speed things up. Literally. It currently takes well over a year for a design to hit shelves ,which accounts for improperly forecasting supply and demand. Instead, Larsson will shorten that turnaround, as he feels that nine months is a perfectly reasonable amount of time for designs to reach stores. Unfortunately, 50 of those stores will be closing. But at least there will be over 440 other stores from which to purchase those expedited designs. Phew. While this restructuring will cost Ralph Lauren a whopping $400 million, not to mention an additional $150 million in inventory reduction, this new plan will also help the retailer save $220 million a year and Ralph Lauren needs every million it can get.

Wait a minute…

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Societe General Bank’s very own rogue trader, Jerome Kerviel, just got his day in court. Even though his poor trading skills cost the French bank billion in euros, and got him convicted of fraud and breach of trust in the process, the trader still managed to win a wrongful dismissal case against his former employer. What was, in fact, wrongful, was that SocGen waited too long between the time it discovered Kerviel’s misdeeds and the time it booted him from the firm. French labor code allows companies a grand total of two months to sanction those who have been found guilty of misconduct. Kerviel, however, was dismissed in 2008, many many months after the time, in 2007, when it was discovered that he went rogue and lost 4.9 billion euros. The Labor Court has now ordered SocGen to pay Kerviel 450,000 euros, which is roughly equivalent to $510,000. SocGen’s lawyer, Arnaud Chalut, called the ruling “scandalous,” presumably in French, and plans to appeal the decision. Kerviel, however, is not in the clear just yet and neither is his $510,000. France’s highest court already ruled that the three years of jail time to which Kerviel was sentenced was justified. But the court didn’t feel that he should be liable for the whole 4.9 billion euros. So the bank has brought a civil suit against Kerviel, which begins next week, to determine exactly how much he should pay back to SocGen.

Bid adieu…

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Verizon is on the prowl for some internet business and it is honing in on Yahoo. The telecom giant is said to be bidding $3 billion for the privilege of owning Yahoo’s core internet biz, however, Verizon is not the only company looking to scoop up that entity. AT&T is said to be licking its chops at the opportunity, in addition to private equity firm TPG , Advent International and Vista Equity Partners, to name but a few. Experts were thinking that bids would come in between $4 billion and $8 billion. But then some bidders lost interest after Yahoo CEO Marissa Mayer made a presentation last month showing how Yahoo’s online ad biz is headed south, losing digital advertising ground to Facebook, Google and even Twitter. Yahoo, however, might just prove to be the perfect fit for Verizon, which already picked up AOL last year for $4.4 billion. Together with AOL, the two companies attract over one billion users every month. There is probably going to be one more bidding cycle before any deals are reached and it’s still anybody’s guess where Yahoo will land. But if I were a betting man…well, I’m not.

Using Wallets to Fight Terrorism; Marriott Hotels Gains More Hospitality; Urban Outfitters Now Satisfies Pizza Cravings

Insult to injury…

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Image courtesy of basketman/FreeDigitalPhotos.net

Because terrorists are pure evil on so many levels, they’ve likely calculated that besides causing devastating loss of life, they can also harm an economy as well. And thus, as the holiday season is upon us, while the French are still in the midst of mourning the tragedy that befell its people just days ago, they are likely to endure yet more damage and fallout as businesses, both big and small, see less traffic and sales in the days ahead. In fact, hospitality chains and airlines have been seeing little activity in major markets and indexes, and several shops, cafes and markets remain closed. American performers Papa Roach and Marilyn Manson had to cancel shows this week and artist Prince canceled performances scheduled for December. As the sixth largest economy in the world, and the second in the eurozone, these losses could have a ripple effect on several other economies as well. However, economists and investors all tend to agree that the economic fallout will be minor and brief. Already today, European indexes either remained flat or rebounded from the dips they took before the markets opened. Unfortunately, tourism might not be as fortunate. Back in 2013, France saw almost 85 million tourists who brought in 42 billion euros in revenue with them. With almost 8% of France’s gross domestic product coming from the tourism industry, it might be the one area to suffer most, as major tourist destinations like the Eiffel Tower and Louvre lost two days of business and other places, like EuroDisney, still have their doors closed.  But as President George W. Bush urged American following the September 11, 2001 attacks “go out shopping more.” And if that’s one way to defeat those terrorist, then I’m happy to travel to Paris to do so.

Do not disturb…

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Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

The “Deal of the Day” award goes to Marriott International, as in the hotel chain that has over 5,500 properties and 1.1.million rooms, which just scooped up its rival, Starwood, to the handsome sum of $12.2 billion. The deal, in which Marriott will pay approximately $72.08 per share, means it becomes the world’s biggest hotel chain, leaving the second largest chain, Hilton Worldwide and its 4,500 properties, in the dust. This deal also gives Marriott some nice new brands, including the push-posh St. Regis. And who doesn’t like a little pish-posh? According to research firm STR, 67% of available hotel rooms were filled in the first nine months of the year by occupants who shelled out an average of $120.35 a night. However, there are many watching, from investors to travelers alike, to see how this merger is going to affect the various partnerships on both sides. Marriott has partnerships with Chase and United Airlines, while Starwood has deals with American Express, Delta and Über. Wall Street seems to think this is the start of a new trend of hotel chain mergers, as companies like Airbnb, have been eating up a chunk of the industry. Sit tight and you might just see another deal coming ’round the Wall Street bend.

Cheesy…

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Because nothing says trendy like tomatoes and cheese, Urban Outfitters is getting into the pizza business. I’m serious. The company, whose apparel tends to attract millennials, is plunking down an undisclosed sum to buy the Vetri Family Group of restaurants, which includes the Pizzeria Vetri chain. You’re not the only one who finds this acquisition…strange. Investors think so too and sent the stock down 10%. But it’s not like Urban Outfitters has anything to lose. The retail sector has been hitting the fiscal skids with companies like Nordstrom and Macy’s reporting sales that are nothing short of disappointing. It’s also got many wondering if the brick and mortar model is passé. Urban Outfitters has 240 locations, in addition to the Anthropologie and Free People brands (and more than a couple of them already have food establishments in them). And while other retail companies are looking to amp up their e-commerce and tweak their brands in an attempt to improve those sales, Urban Outfitters is taking an entirely different approach by acquiring a business in an industry that is making tons of money at the moment. Marc Vetri of the Vetri Family Group likes the deal and calls it “a perfect match.” It means his company gets to focus more on the food it serves, while Urban Outfitters has to figure out how to help those restaurants expand. Now if only Urban Outfitters can figure out how to grow and expand its own business instead of losing money…

Deutsche Bank CEO’s are Leaving Early and No One is Shedding Tears; McDonald’s Numbers Not Totally Horrible; Smack Talk at the G7 Summit

You’re Fitschen kidding me…

Image courtesy of biosphere/FreeDigitalPhotos.net

Image courtesy of biosphere/FreeDigitalPhotos.net

In case you were wondering how Wall Street feels about Deutsche Bank’s outgoing co-CEO’s Anshu Jain and Juergen Fitschen, then just look at the company’s stock price. Shares of Deustche Bank gleefully shot up over 8% at one point, on the news that the two men would be ditching their digs even earlier than planned. However, those gains weren’t just from the sheer joy of those early departures but also because investors totally dig their replacement, British banker John Cryan, who also happens to have a pretty decent track record. Cryan is what the cool kids call a “takeover specialist” which is something Deutsche Bank could use now more than ever seeing as how Jain and Fitschen couldn’t seem to stem the tide of legal issues that have been plaguing the bank, including a massive $2.5 settlement claim the bank had to fork over after some traders very rudely – and illegally, I might add – rigged some benchmark interest rates. In fact, most of Deutsche Bank’s troubles and scandals seemed to to come out of its investment bank, which coincidentally, was/is under Jain’s watch. The question remains as to whether or not Cryan can pull the largest German bank out of its funk. Except, first he’s got to come up with a plan. At least he speaks German. So score one for Cryan.

You deserve a break today…

Image courtesy of  atibodyphoto/FreeDigitalPhotos.net

Image courtesy of atibodyphoto/FreeDigitalPhotos.net

Things at McDonald’s weren’t nearly as bad as everyone thought they were going to be. They weren’t great but we’ll get to that. The Golden Arches saw same store sales drop .3% , which is definitely not good. However, at least those sales didn’t drop by .9%, the figure expected by all those super-educated analysts. To that I say booyah.  And then there was Europe. While everywhere else on the planet McDonald’s saw sales fall, McDonald’s needs to give much danke to Germany, France and the UK who showed the burger chain some major love in the form of a 2.3% gain. Analysts only expected Europe to bring in a tres  modest .6% gain. So you see, Chipotle, Panera and Shake Shack haven’t taken over the fast-food world. Yet. McDonald’s is in the midst of bringing about a “turnaround plan” which apparently includes offering breakfast all day. Except that’s only in – where else? – Southern California. Also, as part of the plan to reclaim its rightful place in the fast-food kingdom, CEO and President Steve Easterbrook has big lofty plans to rebrand McDonald’s as “a modern, progressive burger company.” Did you get all that?

Back at the G7 Summit…

Image courtesy of bplanet/Freedigitalphotos.net

Image courtesy of bplanet/Freedigitalphotos.net

There seems to be a bit of confusion coming from the G7 Summit. A French official told reporters that President Obama said the strong dollar is a “problem.” Then, the dollar slid against the euro. However, President Obama insists, “I did not say that.” But, still, the dollar still slipped, for the first time in three days, against the euro. In any case, other important stuff was presumably discussed at the conference where world leaders from the United States, Germany, France, Britain, Italy, Japan and even Canada talked about fiscal issues that are plaguing the world. But who doesn’t love a good “he said, he said,”  especially during a super important meeting between the world’s most powerful people. I could really see this one playing out on South Park.

Everything Really Is Awesome for Lego; Southwest Gets Grounded; Target’s Earnings Hit and Miss;

Everything is awesome…

Image courtesy of ArtJSan/FreeDigitalPhotos.net

Image courtesy of ArtJSan/FreeDigitalPhotos.net

The Lego Movie movie might have been very rudely snubbed at this year’s Oscars but that didn’t stop Lego CEO Joergen Vig Knudstorp from belting out the hit tune “Everything Is Awesome” to reporters recently.  That’s because for him everything really is awesome. The privately held Danish company released its yearly earnings report and the consensus is that Lego is in demand. My basement, however, could have told you that. Demand in China, Russia, France, etc is only getting stronger and this year’s release of “The Lego Movie,” which earned a staggering $468 million, helped propel that awesome demand precipitously upward. Lego’s profits were 15% higher this year hitting about $1 billion. I can truly say I contributed considerably to that figure. Revenue for the company came in at $4.3 billion and move over Mattel because Lego has become the number one toy company in the world. There’s also a Lego Movie sequel in the works set to be directed by Rob Schrab with a 2018 release date. But if the Oscars snubs Lego again, it’ll have to answer to the forces of Ninjago, not to mention Batman,  whose Lego movies are set to be released in 2016 and 2017.

Yeah…that could be a problem…

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Everything is not awesome over at Southwest as the airline had to ground 20% of it’s fleet. In case you were wondering that is about 128 of its planes. Apparently Southwest missed inspections and immediately notified safety regulators, according to an airline spokesperson. How very diligent of them. Eighty flights bore the brunt of this gaffe but fear not intrepid traveler, as the FAA and Southwest have figured out a way to get those flights up into our friendly skies until all the aircraft can get properly inspected. How very reassuring.  In case you were still wondering, the part of the aircraft that requires immediate inspection on all these airplanes is the backup hydraulic system. It helps control the aircraft…in the event of a  main system failure. Awesome. The bulk of inspections ought to be completed by now and if you happen to be on one of the few remaining aircraft that have yet to be inspected? Well, then have a nice flight.

Oh Canada!

Image courtesy of Bill Longshaw/FreeDigitalPhotos.net

Image courtesy of Bill Longshaw/FreeDigitalPhotos.net

Target reported its earnings this week and the good news is that it lost $2.6 billion. That amounted to a loss of $4.10 per share. It’s good news because it’s a one-time loss from closing up shop, literally, on its disastrous foray into our neighbor to the north. But if you take into account that Canada is now officially off the Target grid, then you can calculate that the mega-retailer actually pulled in $1.50 a share. Which is really great news because analysts only thought that the retailer would gain about $1.46 per share. So you see, there is a bright side here. Somewhere. Sort of. Listen it’s not Canada’s fault. Canadians are really lovely people. Some of my best friends are Canadian. But they just didn’t appreciate all those empty shelves at their 133 stores, not to mention some annoying pricing discrepancies – among other issues, mind you. But back on our turf, Target’s sales increased to $21.8 billion – almost $2 billion more than last year, Canadian failure and all.