Banks Behaving Badly Get Slapped with Billion Dollar Fines; Target’s Earnings Bullseye; Hormel Ears on All That Spam

Busted…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The fun is over for a group of foreign exchange traders who brazenly dubbed themselves “The Cartel” and went about manipulating the price euros and dollars to score some extra cash. Now, because of them, five major banks have to shell out over $5 billion in settlement fees. Citicorp, J.P. Morgan Chase, Barclays and Royal Bank of Scotland all admitted their fiscal misdeeds that began in December of 2007. UBS pleaded guilty to one count of wire fraud and has to pay over half a billion dollars in fines. But the Swiss bank dodged some other penalties and gained conditional immunity for being the first to report on the criminal activities taking place. These forex traders would share confidential information about their clients’ orders and then plan out trades that would conveniently boost their own profits. Entrance into the group was by invitation only and one participant said at one point, “If you ain’t cheating, you ain’t trying.” Charming, huh? The resourceful plan proved quite profitable until January 2013 when investigators finally honed in on what was going on. Even though no criminal charges were brought, as per the settlement agreement, investigations into other foreign exchange issues are not going away any time soon.  And of course, plenty of traders were given their walking papers. As for the movie rights…well, I suppose you can expect to see this play out in theaters within a few years. No sense in Hollywood not profiting off this, right?

Hit it…

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Seems like only yesterday when Target was rocked by a data breach that cost the retailer tens of million of dollars. Then there was the fiasco, also known as “Target’s Canadian Expansion,” that saw the retailer pulling the plug on the 133 stores located there. But those not so minor hiccups seem to be water on the fiscal bridge as Target released its latest earnings that hit their mark and saw its third straight quarter of sales growth, especially in home goods and apparel. So how good were these earnings? How does a a 52% increase in profits sound? That’s right, Target scored $635 million in net income, up from $418 million just one year ago, gaining $1.10 per share. Analysts were only predicting $1.02 per share. Clearly, those analysts were not amongst the many consumers lined up at five in the morning hoping to score some limited edition Lilly Pulitzer merchandise. Revenue was also up 2.8% which had everybody on Wall Street marveling at the fact that Target’s great earnings put Wal-Mart’s not great earnings to shame. Especially because sales at Target were up 38%, which is about double what Wal-Mart pulled in.

Talking turkey…

Image courtesy of vectorolie/FreeDigitalPhotos.net

Image courtesy of vectorolie/FreeDigitalPhotos.net

Hormel, the original Spam maker, long before it was known for crowding our inboxes, just released its earnings and there’s good news. And bad news. The good news is that profit for the company increased 29% to $180.2 million with sales of $2.3 billion. The company pulled in 67 cents per share while analysts expected 62 cents per share. You may not be eating Spam, but somebody out there is. Besides, Hormel, being the largest meat processor in the United States, makes tons of other products including Roast Beef Hash and, I kid you not, Wholly Guacamole. In case you didn’t realize, Hormel’s got big business going in the refrigerated foods industry. The company also has a Jennie-O turkey store business, which brings us to the bad news: bird flu. There is a new bird-flu outbreak and if you want to sound sophisticated you can refer to it as avian influenza. Not only is this expected to take a big bite out of Hormel’s numbers, but it is also predicted that this outbreak is going to wreak havoc on the rest of the turkey industry as well. Forgive me if I just put an extremely early damper on your Thanksgiving.

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Southwest Goes Global (Almost), Chrysler Goes Up and Hormel Goes For More Protein

Going (more) places…

Image courtesy of ping phuket/FreeDigitalPhotos.net

Image courtesy of ping phuket/FreeDigitalPhotos.net

Southwest is headed even more south…and west. The airline made its first flights today to Jamaica, the Bahamas and Aruba, as part of its new venture to go international. Plans for flights to Mexico and the Dominican Republic are also in the works. This was all part of the plan when the airline bought AirTran back in 2011 to expand and take over its routes. Southwest has been struggling to compete with other airlines like JetBlue. Its traffic grew a very miniscule 1.4% this year. Even though Southwest is the largest carrier of passengers within the United States, it’s but a blip compared to its fellow carriers who soar high above international waters. If you’re looking to book your next trip across the pond with Southwest, you’re going to have to wait a while…a really long while as Europe, Asia and South America have yet to become amongst its destinations.

Increasing-ly popular…

Image courtesy of sattva/FreeDigitalPhotos.net

Image courtesy of sattva/FreeDigitalPhotos.net

Chrysler is having better luck (and sales) than GM these days (but then again, who isn’t?). The third largest US automaker just came out with earnings and reported a 9% increase in sales. In fact, it was the auto company’s best June since 2007, which is a mighty feat considering the company had filed for chapter 11 back in 2009. The company, which is a subsidiary of Fiat, saw a particularly nice 28% sales increase from its Jeep brand and an even nicer 113% sales increase from its Fiat 500L. Unfortunately, Chrysler’s own brand dropped 12%. But at least it’s not experiencing issues like GM, who once again, announced yet another recall of 8 million vehicles and barely broke even in its earnings.

Rich in protein…

Image courtesy of lamnee/FreeDigitalPhotos.net

Image courtesy of lamnee/FreeDigitalPhotos.net

Nothing says hip, cool protein like Spam and milk. That’s just what you were thinking, right? With a winning combo like that it’s no wonder Hormel Foods (HRL) just plunked down $450 million to buy CytoSport, maker of the very muscular Muscle Milk. Hormel, which in addition to its Spam line also makes foods like chili and Skippy Peanut Butter, feels it wants to attract a younger demographic that’s like totally into its protein consumption and well…Spam just wasn’t doing the trick. Apparently, the younger generation wants their protein through a straw. With Muscle Milk, Hormel will have a cool hip brand that younger people can totally dig. Wall Street will dig the purchase as well since CytoSports, which also makes powders and bars, is expected to pull in a very wholesome and hearty $370 million.