Toxic Times at Lumber Liquidators; Warren Buffett’s Rose-Colored Portfolio; Argentina Gets Back in Some Good Graces

End in sight?

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Not that this comes as any great shock but Lumber Liquidators took another hit on Wall Street today, this time posting a bigger drop than expected for its third straight quarter. Instead of sales falling an expected 12%, the embattled company ate a much harsher 17% loss. It’s almost hard to believe that it was just last year when the company pulled in a $17.3 million profit with shares gaining 64 cents. But that was just days before the scathing “60 Minutes” report that found that Lumber Liquidators’ wood flooring from China contained excessively high levels of cancer-causing formaldehyde. Today, the company reported that it lost $19.8 million and saw 73 cents shaved off of its shares. The company took in a net loss of $56.4 million, a major 180 from the $63.4 million it reported in 2014. Shares fell 10% today and hit a 7 year low as the company decided not to issue a financial forecast for 2016 – a prudent decision since the company’s not sure if they will be left with any customers. Then there are all those legal and regulatory issues still plaguing the company, the $29 million in legal expenses and a $13.2 million settlement stemming from an entirely unrelated investigation. But at least Lumber Liquidators finally named a new COO, former Lowes exec Dennis Knowles. If he can turn the company around he just might be eligible for a Nobel prize. That’s a big “if.” Lumber Liquidators currently has over 370 stores in the U.S. and Canada and on Sunday, in what seemed like an incredible act of desperation, took out full page ads in Sunday newspapers across the country attempting to reassure customers that its other products are of the highest quality and made using the highest safety standards. Just stay away from their flooring products made in China which are three times as likely to give you cancer.

Everything’s coming up roses…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Warren Buffett addressed his ever faithful shareholders over the weekend and shared with them his thoughts and wisdom gleaned from a storied and insanely successful lifetime in finance. The 85 year old Oracle of Omaha stressed the importance of optimism – an outlook, he feels, our current group of candidates lack since they “can’t stop speaking about our country’s problems (which, of course, only they can solve).” He took some time to share his thoughts on the role of a good effective leader which he feels involves the ability “to define reality and give hope.” Apparently he thinks Hillary Clinton is capable of doing this since that is the candidate he is rumored to be backing. Mr. Buffett’s optimism extends to the U.S. economy – its long-term prospects, anyway – which he feels is only going to get better, especially for the babies being born today whom he calls, “the luckiest crop in history.” And why shouldn’t the world’s third richest man express his optimism? His company, Berskshire Hathaway, was up 21% and took in a record full-year profit of $24.08 billion. Incidentally, Warren Buffett was also rather optimistic about IBM, even though the company has lost a whopping $2.6 billion since the major investment he plunked into it. Go figure. What Mr. Buffett wasn’t optimistic about is the climate change which he calls a major problem for the planet. I guess you would have to agree with him on that. Especially since Leonardo DiCaprio had similar sentiments in his Oscar acceptance speech last night.

You debt-or believe it…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

It seems like only yesterday when hedge fund billionaire  Paul Singer sued Argentina – yes, the country – for full repayment of the biggest sovereign default. Ever. Actually, it was closer to thirteen years ago but at least the two sides settled. Finally. Besides the enormous legal fees that both sides ate, Argentina was often unable to dock its naval ships or fly its Presidential planes in certain cities, lest they get seized by Singer and company. But now the settlement frees up Argentina  to hit up other countries and financial entities for more cash to borrow. Which is probably not the kind of thing you want to hear about a country whose commodities-based economy is on the skids. Oh well. As for the terms of the settlement, Argentina will be forking over $4.65 billion in cash – 75% of the principal – to Singer’s Elliott Management, besides the three other largest remaining creditors, including Aurelius Capital Management, Davidson Kempner and Bracebridge Capital. The agreement still needs approval from the Congress of Argentina which will hopefully check its drama at the door.

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Oil-Vey! Glut Messing with Global Economies; Apple Sets its Sights on India; Who Will Represent the “World’s Most Hated Man”?

Dow-n and out…

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The Dow took a nasty 400 point fall today fueled (a little pun intended) in large part because of the oil glut that’s got barrels of the not-as-hot commodity trading at about $27.50 a pop – a very low low price. The S&P also fell as stocks were trading much lower. In fact, more than 1,000 New York Stock Exchange stocks hit 52 week lows, while on the other side of the pond, European and Asian markets followed suit, performing just as badly on seeing oil hit thirteen year lows. Experts (I am not one of them) are thinking we’re on the threshold of bear market territory – a nasty fiscal phase where market index prices are falling so much that people just want to sell off what they’ve got. Considering that the MSCI All Country World Index (which is basically a global market index mash-up) fell 2.4%, that just might be the case. China’s flailing economy and the United States’ strong dollar aren’t helping matters. Even Royal Dutch Shell is expecting profits to tank 42% to around $1.6 billion – a brutal cry from the $3.3 billion it reported last year at this time. But box-office fave Leonardo DiCaprio isn’t crying for Shell, or any other oil producers for that matter. At the World Economic Forum in Davos, Switzerland, where the A-lister was receiving some award, he graciously lashed out at big oil and corporate greed calling them, “Those entities with a financial interest in preserving this destructive system…covered up the evidence of our changing climate.” Hey! Maybe he’ll use that in his Oscar acceptance speech…

An Apple a day…

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It took awhile but Apple is now working to bring its tech magic to India where the Cupertino, California-based company finally finally filed an application with the Indian government to set up shop there. No word yet on how many stores it plans on opening or even how big of an investment it’s going to be. Of course, Apple products are already available in the country that boasts the second largest telecom market in the world. But in order to buy those products, consumers purchase the merchandise through a network of Indian-owned distributors. There are some who feel that Apple had been willfully ignoring India since it took this long to make the leap there. But Apple argues otherwise saying that restrictions on foreign investment in the retail sector weren’t exactly winning them over. India typically requires a single brand  – in this case, Apple – to locally procure 30% of its goods sold in the country. But rumor has it Apple brass had a little conversation with the Indian authorities to ease up on things.  Also India, unfortunately, doesn’t have the boffo spending power of say, China, where people pounced on iPhones from day one. In India, cheaper alternatives dominate the smartphone market while Apple only has about a 2% market share on the devices.  Apple, however, had been trying to make its products more affordable by offering buyback programs, installment programs and giving discounts on older phones. And then something wonderful happened – Apple sales in India crossed the $1 billion mark back in March and the tech company presumably began to see things differently.  The fact that India has the fastest growing smartphone market and is poised to take over the number two spot from the United States (China is first, duh) in 2017 might also have something to do with the change of heart.

Dumb and dumber…

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Martin Shkreli aka “Pharma bro”is switching lawyers though, why exactly remains a mystery. Marcus A. Asner, an attorney at the soon-to-be-ex firm of Arnold & Porter did not give an explanation as to why the change was being requested but he was probably not broken up that he will no longer represent what many call the world’s most hated man. Shkreli, 32, by the way, takes exception to that moniker, as he mentioned in a recent interview. But considering he raised the price of a life-saving drug by 5000% – well, what else are you gonna call him?  Perhaps we should give him the benefit of the doubt and assume he needed the extra cash so that he could buy the only known copy of a Wu-Tang Clan Album for $2 million. Just kidding. He has multiple accounts at multiple brokerage firms. Shkreli says that the lawyer switcheroo has nothing to do with the interview he did with The New York Times and called the explanation  a “dumb theory.” But you know what’s really dumb? Raising the price of a single pill from  $13.50 to $750.00. Shkreli, who is charged with blowing investors’ cash on some bad trades and then taking money out of his pharmaceutical company to pay for those trades said “the government’s case is fictitious.” He has pleaded not guilty to securities fraud and conspiracy.