Fed Chairwoman Shuts Down Congressman; Mattel Goes For Big With Alibaba; Apple Hits New High On iPhone Dreams

Sit back down…

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Almost everyone’s favorite Federal Reserve Chair, Janet Yellen, was in the hot seat today. First she graciously explained in a letter to Republican Congressman Patrick McHenry that, in fact, the Fed possess the authority and has the responsibility to work and consult with foreign entities with regard to financial industry oversight and the development of international banking rules. McHenry, who is Vice Chairman of the House Financial Services Committee, didn’t appreciate that the Fed had already engaged in international talks before President Trump had a chance to put his peeps into play to conduct their own reulatory review. But no dice for McHenry as Chairwoman Yellen explained that such efforts were to the benefit and in the best interests of the United States and its financial stability. In other news, Ms. Yellen was mum on whether the Fed would raise rates at its next meeting in March but said waiting too long wouldn’t be a good idea. Besides inflation and the labor market, Yellen and co. are looking to see what policy changes President Trump is going to make before making any major announcements from the Fed’s end. Which seems like a prudent plan, especially from someone who was appointed by President Obama, but is doing her best to keep from playing sides since she has still has a few years left on her term during the current administration. And also because Trump criticized her during the campaign when he said that she was deliberately keeping rates low in order to benefit President Obama. Yikes.

Ni-Hao Barbie…

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Mattel’s wound licking might just be on hold for now, despite losing some major Disney-Princess licensing mojo to Hasbro awhile back. The toy company has begun to forge a new path with Chinese e-commerce giant Alibaba. Nothing like gaining a foothold in the $7 billion Chines toy marketplace to ease those Disney-licensing blues. By the way, the United States’ toy industry is estimated at over $20 billion. Just saying. The company that makes Barbie dolls and Hot Wheels cars is in a partnership with Alibaba to create and promote interactive and educational toys, in addition to producing entertainment content based on Mattel products. Because hey, who doesn’t love shows based on toys – and vice-versa? Mattel will be selling its new wares via Tmall.com, which is Alibaba’s business-to-consumer retail site. Incidentally, Mattel had already been selling on Tmall.com for about six years now and rumor has it that its selection of Fisher-Price toys have actually been the top-sellers for five years in a row on Alibaba’s November 11 Singles Day. Mattel’s new products for Alibaba will hit Alibaba’s virtual shelves by mid-2017.  Mattel could really use the boost, especially since sales of Barbies have not been doing as well as they have in the past, and despite throwing some more realistic features onto the doll. Also, the company reported an earnings miss February 1, taking in 52 cents per share on an 8% revenue decline to $1.83 billion, when analysts expected 71 cents per share. But with Alibaba boasting over 440 million active buyers, chances are Mattel has the ability to turn that last earnings report into a mere distant bad memory.

Apple of my i-Phone…

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For the first time in two years, Apple hit a new high of $134.90 and a market cap of $701 billion. And in case you don’t own any shares, that probably means a whole lot of nothing to you. The last time it hit a new high was back on April 28, 2015, when the stock hit $134.54. But that 36 cents means a whole lot to investors who are hoping, and probably betting, that Apple will release a new iPhone, dubbed the iPhone 8, or the iPhone X – if you dare –  that will magically lift blah sales for the tech giant. While the company reported impressive earnings in its last earnings report, its outlook was less so, and the fact that Apple’s revenue decreased by 8% for 2016 didn’t help the mood on Wall Street as of late, even if it is the most valuable company in the world.  Rumor has it, the new phone is going to be even more expensive than previous ones, which is always a good way to get Wall Street tongues wagging.

GM’s Defect Debacle In Rearview Mirror; Overseas Deal Might Have Big Impact Here; Zen-tastic Quarter for Lululemon;

Emboldened or embattled?

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Score one for GM, the not-so-embattled-anymore auto company that just won a second lawsuit in a series of bellwether cases. In case you have been hanging out in another solar system for the last couple of years, tons of drivers are filing tons of lawsuits against GM because they got into accidents which they say can be blamed on GM’s faulty ignition switches. After a two week trial and a single day of deliberations, two Louisiana plaintiffs, who crashed their car back in 2014 during a freak ice storm, will not be awarded any damages despite their automobile’s defect. This win bodes well for GM and it’s a good thing because there are hundreds more waiting in the legal wings.This case is the second in a series of six cases that will be used to test strategies, with each side getting to choose three cases to argue. This case was GM’s selection and the next bellwether case is scheduled for May. GM already paid out a lofty $2 billion to resolve a slew of legal claims against it, in addition to recalling millions of vehicles. That includes a $900 million settlement to Uncle Sam so that the government would graciously agree to drop its criminal probe into GM. Another $575 million was paid out to settle close to 1,400 civil cases. Then GM set up a $95 million victims compensation fund. In the meantime, 15 people were fired over the defect debacle – that would have cost a buck to fix, by the way –   as GM CEO Mary Barra has been on a mission to change the company culture. Good luck with that one.

Deal or no deal…

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You might not be so familiar with a Taiwanese company called Foxconn but it’s more than likely you’re using its product. That is, if you happen to use a very popular mobile device known as an iPhone. Turns out Foxconn assembles those nifty little phones. But that’s not news. What is news is that the company is set to snap up Japanese company, Sharps Electronics for $3.5 billon. And if you can believe it, some analysts think it’s a bad move. And that’s even after Foxconn knocked a couple of billion off of their initial offer when it was discovered that Sharp has literally billions of dollars worth of problems. But, oh well. In any case, if and when the deal goes through, it will be the biggest acquisition by a foreign company in Japan. But that’s beside the point. Foxconn is unofficially hoping that this acquisition, however fiscally risky it may be, will help give it an edge, albeit a slight one, for its production contracts with Apple, especially considering that Apple uses Sharp screens. Foxconn is well aware that Apple has been giving out production contracts to other companies too, and competition like that can’t be all that good for Foxconn. Hence, besides assembling the phone, Foxconn would also own the company that supplies the screens and well, wouldn’t that put Foxconn in a nice, cozy, almost secure spot with Apple.

Make lemonade yoga pants!

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Lululemon doesn’t seem to be bothered by increased competition from Nike and Under Armour, as evidenced by its fourth quarter earnings which were nothing short of…zen. And by zen, I mean that the athleisure company beat the Street’s predictions. The athletic apparel company enjoyed a nice little holiday shopping season with increased sales that gave it a profit of $117.4 million with 85 cents added per share. Analysts predicted the company would pick up just 80 cents per share. Maybe those analysts need to pick up some new Lululemon yoga pants, no? Revenue kicked up to $704.3 million, up from last year’s $602.5 million, and again, analysts only expected $692.6 million this quarter. Last year the company only earned $111 million and 78 cents per share. Lululemon is expecting to whip out a fourth quarter that is sure to please investors by picking up earnings between $483 million to $488 million and adding 28 cents to 30 cents a share. However, the perennial buzzkiller we call Wall Street would rather see Lululemon rake in $486.1 million adding 37 cents per share. In what might seem like an awfully bold statement, the yoga apparel company plans on doubling its earnings by 2020. In the meantime, it expects its full fiscal 2016 year to gain between $2.05 and $2.15 a share and that’s nothing to sneeze at. Except that Wall Street is hoping for earnings that will look more like $2.16 per share. Lululemon is pulling out all the stops to improve its margins and part of that means switching over to ocean freight as opposed to air freight. Apparently, air freight is a gigantic margin-money eater. Who knew.

Intel’s Feeling “Chipper”; Hey Big Spender…Where Have You Gone?; BlackBerry: Buh-Bye Seacrest

Just because you don’t care, doesn’t mean it doesn’t affect you…

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Image courtesy of phasinphoto/FreeDigitalPhotos.net

There’s some big juicy merger news coming down the fiscal/tech pipeline. Intel announced it’s plunking down $16.7 billion for fellow chipmaker, Altera. In case you were wondering – because I know you were, that comes out to $54 per share. Last year Altera pulled down revenues of close to $2 billion. So it stands to reason that Intel knows what it’s doing. It should be duly noted, my dear reader, that these are not just any personal computer chips we’re talking about either, but rather, programmable chips that can be used in smart cars, clothes and other everyday use items. Pretty rad, huh? Of course, like any multi-gazillion dollar deal, regulatory approval is still needed and shareholders also need to give their thumbs up. But at least Wall Street seems to be showing its enthusiasm in its own special fiscal way.

Spendthrift?

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

April was a wash and I am not talking showers here. According to the Commerce Department, there was no rise in spending for April. Nor was there any decrease  – which I guess is a positive too. Consumer spending flat-lined and gave us the worst showing in three months. Gee, thanks April. While personal income was up a whopping 0.4%, Americans are choosing to save save save all that cash that they didn’t have to shell out for gas lately, much to the chagrin of economists who were certain Americans would be whipping out their wallets and just buy buy buy. Wages also didn’t increase that much which definitely helped spoil some much-needed spending fun. In fact, the personal savings rate (yes, that is a real thing) jumped to 5.6%, the highest rate since December of 2012. Burned by that awful fiscal nightmare of 2008, would-be consumers are discovering the joys of saving, in addition to paying down the odious burden of debt. Economists are expecting – and very much hoping (because it would be embarrassing for them if they were wrong) – that spending will pick up in the coming months and put some much needed oomph back into the economy, since spending does account for 70% of it. Here’s hoping they get it right.

So random…

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Image courtesy of adamr/FreeDigitalPhotos.net

Remember BlackBerry? Not the fruit but the device? Just admit it that you had one right before you unceremoniously ditched it for a first generation iPhone. Well the once-beloved device actually kicked the iPhone’s tush today. And Ryan Seacrest’s tush too. Sort of. The company, whose products are still quite the rage in other parts of the world, finally settled some “outstanding legal disputes” with a company called Typo Products, which happens to be backed by everyone’s favorite karaoke host, Ryan Seacrest. Typo was making iPhone cases with a QWERTY keyboard that bore a striking resemblance to a BlackBerry design. Talk about “F” for lack of creativity. In any (iPhone) case, Typo ponied up some settlement cash, tweaked the design and presumably found a way to, as they say on American Idol, make it their own.

Apple’s iPhone Sales Bursting at the Screens; Social Media Bets on Real-Time Ads for Superbowl; Shake Shack IPO Just Keeps Getting Tastier

And the magic number is…

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Image courtesy of SOMMAI/FreeDigitalPhotos.net

Apple’s first quarter earnings shocked everybody…that is, except for Apple. It was shocking because analysts didn’t come even remotely close to the numbers Apple posted. Besides its other products, including iPads, iPods, Macs, etc, Apple sold a whopping 74.5 million iPhones taking in about $74.6 billion with earnings of $3.06 per share. Analysts estimated that, Apple, the world’s most valuable company (valued at $178 billion, by the way) would only pull in a paltry $67.7 billion and $2.60 per share. Consumers are clearly digging the bigger screens of the iPhone 6 and 6 Plus. Apple graciously waited until after the market closed yesterday to announce its earnings, following a fiscally dismal day that saw the Dow drop close to 300 points. Now keep an eye on Apple’s second quarter when it begins gracing the universe with its Apple Watch, which is rumored to be going for about $350.

It’s getting real-ly ad-dicting…

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Image courtesy of sumetho/FreeDigitalPhotos.net

Facebook is looking to pull a “Twitter” during this year’s Superbowl with “real-time ads.” For real. Just know that whatever gets posted or discussed on feeds during the “big game,” Facebook will be picking up on keywords and start sending out ads according to those posts and discussions. With 155 million daily users in the US and Canada alone, companies are hoping that this tactic will bring in some major revenue from the sheer force of this advertising tactic. Twitter, which is already a pro when it comes to “real-time ads” is even setting up a “war room” (Twitter’s term, not mine) for 13 advertisers, among them the ever-reliable PepsiCo and Anheuser Busch, in an effort to crank out on-the-spot/fly tweets, ads and other assorted means of subtle yet highly effective and entertaining advertising. Considering that NBC is raking in $4.5 million for a thirty second spot during the Superbowl, all this effort going towards digital advertising is a relative bargain.

Shake Shack-ing things up…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

As burger joint (with “joint” being a major understatement) Shake Shack gears up for its much anticipated IPO, the company just raised its IPO range to $17 – $19 per share, versus last week’s rage of $14 – $16 per share. Yes, the food is that good. The company’s valuation has now been raised to a staggering $675 million, with 63 stores worldwide and 31 in New York City alone. It’s incredibly hard to believe that restaurateur Danny Meyer started his shake and burger phenomenon out of a modest little hot dog cart in 2001, graduating to just a kiosk in 2004. But now, Shake Shack is grilling up burgers and serving up shakes in 9 countries and 34 cities. Its New York City restaurants, valued at over $10 million, are estimated to pull in over $7 million in annual sales. The other Shake Shack establishments scattered over the globe pull in closer to the $3 million range. 5.75 million shares of Shake Shack will be offered  – under the aptly named ticker SHAK, and are expected to pull in an additional $95 million.

Is There An iPhone 6+ in the House?; Jack Ma’s Very Good Day; Clorox Says “Adios” to Venezuela

Best. Ever…

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Image courtesy of jannoon028/FreeDigitalPhotos.net

Apple had an awesome weekend selling more than 10 million new iPhones in what has turned out to be Apple’s best debut weekend for an iPhone. Ever. There were of course some major movie debuts, as well. But who cares because it seems everybody was standing on line waiting to grab their new iPhones instead. The big mystery, it seems, is which iPhone did people buy? Was it the $199 iPhone 6 or the $299 iPhone 6+ aka “the bigger one.” By September 26, 20 more countries will be afforded the opportunity to purchase the device. Which brings us to another big mystery – namely, that China, undoubtedly one of the largest smartphone markets will not be one of those countries.  In fact, it’s not known, if or when China will ever be launching the iconic devices on its shores because apparently…wait for it…the device still needs “government approval” from the Chinese government, that is.

Speaking of China…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

It’s official. After all the hype and hoopla, Alibaba, the New York Stock Exchange’s newest “it” stock, did live up to all the chatter surrounding its debut.  The stock now holds the record for being the biggest IPO. Ever. In the world. Ever. Easily leaving Facebook’s IPO record in the dust. CEO Jack Ma, with minimal effort, raised $25 billion and the stock began trading on Friday at 35% higher than its $68 IPO price. Today, however, shares are down – below $90, still way way way above it’s IPO price. The ticker symbol, by the way, is BABA. Catchy, right? I thought so too.

Adios…

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Image courtesy of artur84/FreeDigitalPhotos.net

Venezuela is about to get a whole lot dirtier as Clorox pulls the plug on its operations over there. For the last three years, the price of Clorox products remained frozen, courtesy of the Venezuelan government. Not all of Clorox’s products had a price freeze -but 2/3s of them did, which made it pretty difficult not to operate at a regular staggering loss. But the price freeze alone wasn’t the only problem. Triple digit inflation led to higher prices for raw materials, packaging, wages, transportation, and other very important things necessary to run a company. Of course, the suits at Clorox graciously tried to explain the arithmetic to the Venezulan government officials but they just wouldn’t play ball. Sure they agreed to increase prices, but not enough. In fact, it was nowhere near enough. Wall Street clearly thought the decision to bail on Venezuela to be muy bien and sent shares of company north (no pun intended – okay, well maybe just a little).