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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Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

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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Image courtesy of Sira Anamwong/FreeDigitalOhotos.net

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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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

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.

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Mo’ Money, Mo’ Brexit Problems; DOJ V. Health Insurance Industry: The First Round; No News is Not Good News at Yahoo

It’s all Brexit to me…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The bad Brexit news just keeps on coming with the IMF now sharing its unpleasant thoughts. The fund has cut the global forecast for the next two years, expecting global economic growth for 2016 to come in at 3.1% and 3.4% for 2017. And those figures are on the bright side since the IMF feels that there is “sizable increase in uncertainty” about how bad the Brexit damage will be. That forecast is riding the wave that the EU and British officials will graciously reach new trade agreements that won’t make trading conditions any more challenging than necessary. If officials can’t hash out the details then Britain just might be staring down the wrong end of a recession. All because of the Brexit vote. Perhaps the pro-Brexiters really didn’t expect investors would ditch Britain in favor of more fiscally welcoming euro areas. And who can blame the ditchers, seeing as how the pound has dropped an ugly 12% against the dollar since the ominous vote. The IMF, however, still anticipates actual growth for the UK, if only by a paltry 1.7%. By the way, this is the IMF’s fifth time cutting its forecast in just 15 months. In fact, had the Brexit vote gone the other way, the IMF was set to upgrade global projections. Way to go Britain! As for the impact in the U.S., the IMF thinks it will go relatively unscathed. How reassuring.

Put up your dukes…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Looks like there won’t be any big health insurance company mergers. At least not if the Department of Justice has its way. Which it usually does. Anthem’s proposed $48 billion merger with Cigna and Aetna’s proposed $34 billion merger with Humana are on hold, and maybe permanently, as the Justice Department gets set to file antitrust lawsuits to block their ambitious plans. The Justice Department, which has been scrutinizing these deals for a year, is worried that these mergers would reduce competition and harm the little people a.k.a. the consumers with much higher prices. But the health insurance companies argue that they’ve endured some challenges with President Barack Obama’s Affordable Care Act and would like to prove the Justice Department wrong by shedding assets to competitors which would help them achieve cost savings and better results. Anthem and Aetna argued that their proposed mergers would provide them with the right scale to create more savings. And who doesn’t like savings? But the Justice Department isn’t biting. A merger between Anthem and Cigna would give the  newly combined company 54 million members with $117 billion in yearly revenue. The health insurance industry would shrink to three humongous players from five massive ones. United Health Group would sit smack dab in the middle of them. Expect a fight. A very long and costly one. Investors apparently are as shares went down today at all four health insurance companies.

How much is that website in the window?

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

What’s to talk about at Yahoo is that there is not much to talk about at Yahoo. Still no word on who will buy the site’s core internet assets, though today is the last day that bids will be accepted. Offers are expected to be between $3.5 billion and $5 billion. Rumors are swirling that Verizon will be the lucky/likely buyer. Not that that has been confirmed. What has been confirmed is that Yahoo managed to eke out earnings of nine cents per share. Too bad expectations were for ten cents.  To add insult to fiscal injury, last year at this time Yahoo took in 16 cents per share. Want to hear about Yahoo’s net loss? Of course you do. The company ate $448 million in net losses. Just to put that into perspective, last year at this time Yahoo only lost $22 million. Yahoo also found itself writing down the value of Tumblr. Again. The first time it did that this year it was for $230 million. Now it was for $382 million. Yahoo bought the internet site just three years ago for the whopping sum $1.1 billion. Oh well. It’s like paying full price for something that went to clearance shortly after. Yahoo also slashed its work-force, going from 11,00 employees to 8,800 employees. And just so you know, Yahoo CEO Marissa Mayer said that the cost-cutting measures are working. It’s just not clear for whom.

 

Greek Banks Open for Business Again. Sort of.; Avengers: Age of Ultron Beats the Street; Morgan Stanley Profit Beat

Bank on it…

Image courtesy of patpitchaya/FreeDigitalPhotos.net

Image courtesy of patpitchaya/FreeDigitalPhotos.net

After one long, fiscally painful week where Greek Prime Minister Alexis Tsipras begrudgingly agreed to terms for a bailout with Greece’s creditors, the country’s banks are finally back up and running. It only took three weeks to get to this point. But at least now both the IMF and ECB can look forward to getting some of their money back and Greece gets to stay in the euro. It’s a win-win. Sort of. And while here in the states, running to the bank can be nothing short of a tedious errand, in Greece, that one act is now reason enough to celebrate. Of course with the sales taxes in Greece increasing so dramatically  – from 13% to 23% –  celebrating such an event might become prohibitively expensive. But like I said, at least Greece gets to stay in the euro. As these austerity measures take effect, Greeks will now be able to make deposits, access their safety deposit boxes and above all else, make withdrawals. Only now, they aren’t limited to daily withdrawals of $65 per day anymore. Instead, Greeks can actually withdraw a whopping max of 420 euros ($455 bucks)  a week. As for transfers abroad…those are gonna have to wait.

Dinosaurs, Avengers and Star Wars – oh my!

Image courtesy of  Dr Joseph Valks/FreeDigitalPhotos.net

Image courtesy of Dr Joseph Valks/FreeDigitalPhotos.net

It’s been a super-hero kind of a quarter for Hasbro whose earnings had a major boost from Avengers: Age of Ultron, Jurassic World and perennial classic, Star Wars. The toy company actually posted a smaller than expected decline. Yes, you read that right. But what’s really weird – in a good way – is that the toys typically favored by boys were the big winners/earners this quarter. Usually, its the female driven categories that hog the earnings glory. Only this time, that category that includes Nerf Rebelle and My Little Pony took a 22% hit in net revenue. But, the company’s revenue didn’t go down as much as analysts thought it would. And that’s why everyone seems to be so stoked about the $779 million in revenue Hasbro did bank. That’s a welcome difference from the estimated $773 million Hasbro was expected to take in. And because it’s the cool fiscal thing to do these days, the strong dollar/foreign exchange rates took some flack for the drop in the toy company’s revenue. Otherwise, profit was a cool $41 million adding 33 cents per share when Wall Street only expected a paltry 29 cents per share.

They got the beat…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Morgan Stanley’s profit fell by 8.5% over last year’s results. But no one’s too upset. I mean, don’t get me wrong. Nobody’s whipping out the champagne (that I know of) but the bank still managed to score some impressive gains in all three of its main businesses so hope isn’t exactly lost. With a little help from brokerage fees and increased trading, Morgan Stanley banked a $1.8 billion profit adding 79 cents per share – after a tax benefit. Analysts only expected the bank to earn 74 cents per share. However, not be a downer but last year at this time the company scored a profit of $1.9 billion with 92 cents per share. However,  Morgan Stanley does get bragging rights – for this quarter anyway – as it had the biggest revenue increase out of all six major U.S. banks,  pulling down a whopping $9.7 billion. Last year at this time that figure was closer to $8.6 billion.The question is, can they keep pulling that trick off?

NYSE Gets Be-Glitched; Jobless Benefits Rise, But Nothing to Worry About. Yet; IMF Blames US Over World’s Slow Growth

Not such a NYSE day…

Image courtesy of  cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

Move over Greece and figure it out already. The outage glitch at the New York Stock Exchange (NYSE) is now taking center stage. The trouble is believed to have started Tuesday night when an upgrade was in progress. Problem is, by 7:00 am the next morning the issues seem to have not been resolved and traders were having difficulty connecting. At 11:00 am a warning was issued that the tech problems were being investigated. But, by 11:32 am, NYSE figured it would be a good time to halt trading. Good thing trading was able to shift seamlessly to other exchanges, as the US enjoys a system where there’s a lot of overlap in its financial markets. (Take that IMF: see below). As for NYSE, trading transferred to a back-up unit in New Jersey. So don’t bother making fun of anybody from there for a really long time. However, it still didn’t go unnoticed that it was the biggest outage in two years, that happened to coincide with technical glitches by United Airlines and the Wall Street Journal. Some suspect that it was no coincidence that all three of those systems experienced glitches. Even FBI Director James Comey said, “We’re not big believers in coincidence either. We want to dig into that part.” Although, at this point in time there’s no way to know what caused the glitches and if they’re at all related.

Speaking of glitches…

Image courtesy of xedos4/FreeDigitalPhotos.net

Image courtesy of xedos4/FreeDigitalPhotos.net

Well it’s not really a glitch…maybe just a hiccup – a summer hiccup.  The Labor Department released its numbers and well, it’s sort of a bummer. Turns out that applications for jobless benefits rose this week by 15,000 applicants to a total of 297,000 people. That is the highest number it’s been since February, when that awful figure hit a very unpleasant 327,000. However, there is a silver lining here, I kid you not. Most of those applications came from Michigan and Ohio and are likely due to auto-plant shutdowns who are in the midst of retooling its models for the next year. At least that’s what the experts think and well, they’re probably right. Anyways, it’s a lot more reassuring than any other reason experts can think of. As it stands, 2.33 million people are receiving jobless benefits (I’m pretty sure there’s an oxymoron somewhere in there), and while that figure may seem rather high, it is still 10% less than last year at this time. Besides, last week unemployment hit a seven year low and the number of folks applying for jobless benefits on a weekly basis has remained under 300.000 for over four months. All the more reason to breathe a sigh of relief. Sort of.

Blame it on the United States, why don’t you…

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Maybe they’re just bitter because the American Women’s Soccer team won the World Cup Finals, but according to the International Monetary Fund, the United States is to blame because the rest of he world is experiencing slow growth. The IMF is predicting that the world’s growth will grow at a pace of 3.3%, .2% less than what it predicted back in April. And that, my friends, is what you call a downgrade. That is apparently the slowest growth pace since 2009, when there was a recession in effect and the economy didn’t grow but, in fact, shrank. Because the United States economy is apparently the biggest one in the world, and because we had a particularly frightful winter, fiscally speaking, the economy shrank .2% between January and March. When the the U.S economy shrinks, it drags down the rest of the world. So they say. Meanwhile, Greece’s inability to balance its books has been dominating financial news, yet its troubles are predicted to have a limited impact on the rest of the world. Even China, which happens to have a gargantuan economy, is walking away unscathed despite the fact that its stock market plunged. According to Mr. pish-posh IMF research chief Olivier Blanchard, “We don’t see it as a major macroeconomic issue.” Whatever.