Billionaire Gets Booed Over Trump Support; Pes -Oh No! Clinton Investigation Hurts Chances and Currency; Lumber Liquidators Low on Liquid

Are you sure about that?

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Image courtesy of fotographic1980/FreeDigitalPhotos.net

Tech billionaire Peter Thiel s taking a lot of heat for his support of Republican presidential candidate Donald Trump. People are enraged that Thiel, who happens to be a PayPal co-founder, had nothing better to do with his money than throw $1.25 million into Trump’s campaign coffers. In fact, there are some who would like to see Thiel ousted from his board positions at Facebook and Y Combinator. However, Mark Zuckerberg has already said he wouldn’t do that and while Y Combinator CEO Sam Altman can’t stomach Donald Trump, he also has no plans to boost Thiel despite his political leanings. “What Donald Trump represents isn’t crazy, and it’s not going away,” Thiel said during his speech at the National Press Club in Washington where he griped about all the problems that America continues to face. From not benefitting from free trade, to watching taxpayer money go down the toilet to fund overseas conflicts, to raging about America’s over-priced healthcare system, Thiel’s speech had all the makings for a Trump rally. Well, except for assaulting women and imposing bans on Muslims entering the U.S. At least Thiel does not agree with all of Trump’s statements and sentiments and he even finds Trump’s comments about grabbing women “clearly offensive and inappropriate.” And that is oddly reassuring.

Trump-ed Up Currency…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Speaking of the election…The peso, while maybe not the preferred currency for many, is actually a fairly reliable gauge of how the markets feel about our Presidential candidates. Today, the Mexican currency was down as the FBI investigation of Hillary Clinton’s emails on Anthony Weiner’s computer continues to rear its ugly inconvenient head. The Peso favors Hillary and when she does well, it goes up. Following the debates, the peso experienced a nice boost, as it was not keen on Trump’s plans to build a wall along the Mexican border and renegotiate NAFTA with terms more favorable to the United States. Back in September, the peso hit a record low when Trump began making considerable gains in the election. But alas, it was news of this latest FBI investigations that sent the peso tumbling to its worst fall in seven weeks. On the bright side, if you can call it that, today the dollar rebounded signaling that the investigation isn’t affecting the U.S. currency. It also presumably means that the dollar would like to see Clinton installed in the White House.

No kidding…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Speaking of things that make you sick, we now shift our attentions to Lumber Liquidators and its ongoing saga over its formaldehyde-laced flooring.  Investors had hoped the stock would rebound right about now. But those hopes were dashed when the company reported its third quarter earnings with the stock taking a 14% hit. The company posted an $18.4 million net loss, losing 68 cents per share, which was way over the expected 21 cents per share loss. The worst part of that figure was that the loss was larger than expected as legal fees continue to plague the company and no timeline has been established for when the company will finally settle its litany of lawsuits.  Interestingly enough, sales were actually up and hit $244 million, beating expectations of $232 million. Who would have thunk it? In the meantime, the company saw half its value go down the proverbial toilet since the scandal broke out in March, courtesy of “60 Minutes” and its relentless investigative journalism.  At least the U.S. Consumer Product Safety Commission ended their investigation back in June, issuing no recall. Shares closed at $15.51.

Global Markets Fight Back Terrorists; Lumber Liquidators Whacked with Another Settlement; Starbucks Feeds America’s Hungry

The terrorists have not won…

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Image courtesy of FrameAngel/FreeDigitalPhotos.net

Markets all over the world took a beating because of the cowardly terrorist attacks in Belgium that left dozens dead and many more wounded and forever haunted. Companies dealing in travel and hospitality industries suffered the most today with Royal Caribbean losing almost 4% and Carnival Cruise Lines taking its own 3% hit. Online booking site Priceline Group endured a 3% loss as airlines like Delta Airlines and American Airlines Group lost a couple of percentage points, as well. It’s no surprise, I suppose, that healthcare stocks actually saw increases, as did material stocks. But in a big f.u. to terrorism, the Dow Jones actually picked up a point as global markets rebounded later in the day, even those in Europe. Gold also rose, because well…gold always rise. Investors consider the precious metal as a perennially safe bet. Seems fair.

Tiiiiiiimmmmbbbberrrr…

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Image courtesy of FrameAngel/FreeDigitalPhotos.net

The settlements just keep coming in for Lumber Liquidators Holdings. Today’s award goes to the California Air Resources Board (CARB) – I laughed at the acronym too – in the amount of $2.5 million. The number seemed a bit low to me, especially since 40 of Lumber Liquidators 375 stores are in California, not to mention, the company’s flooring has the potential to cause cancer from the high levels of formaldehyde present in them.  Not exactly minor details, I feel. But the other reason I’m scratching my head is because there was no formal finding of any violation, nor was there any admission of wrongdoing by Lumber Liquidators. Just saying. This settlement, by the way, has nothing to do with Lumber Liquidator’s previous settlement with the DOJ that had the flooring company shelling out $10 million to the government agency. Naturally, shares of Lumber Liquidators are up by almost 16% and closed at $13.93. But considering that shares lost more than 70% of their value since that scathing “60 Minutes” report last March, and there are still plenty of class-action suits headed toward Lumber Liquidators, you probably don’t want to hold your breath waiting for the company to fully fiscally recover. In fact, if you ask Kase Capital’s Whitney Tilson,  who is a big fan of shorting Lumber Liquidators, he thinks the flooring company actually has a 50% chance of going bust.

Bon appétit…

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Image courtesy of FrameAngel/FreeDigitalPhotos.net

Don’t feel so bad skipping that sandwich you’ve been eyeing at Starbucks. If nobody buys it, you might just help feed someone who is considered “food insecure.” The plan came from baristas and now the coffee chain has made a pledge to donate 100% of its unsold food through FoodShare and Food Donation Connection (FDC). It’s all in an effort to feed the 48 million Americans who don’t have the luxury of knowing if or when their next meal is coming.  It is estimated that 15% of American households are considered “food insecure” while at the same time an estimated 70 billion of food waste is produced by Americans that are far more fortunate. Starbucks had already been donating pastries and other types of foods that had longer shelf lives since 2010. The challenge, however, was how best to preserve the highly perishable products like salads and sandwiches. But now the FDC will send refrigerated vans to all of Starbucks 7,600 plus U.S. locations, pick up all those unsold goodies and fill the bellies of those who could really use them. Starbucks plans to have given out 5 million meals by the end of 2016.

 

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.

Things are Looking Up on Wall Street. For Now; Could it Get Any Worse for Lumber Liquidators?; Will you Remain Loyal to Starbucks?

Could it be?

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Image courtesy of Teerapun/FreeDigitalPhotos.net

Oil and other commodities had a nice little surge today with a lot of thanks to just released jobs numbers and inflation figures.  The surge helped the market achieve a moment of zen by stabilizing it and even almost erasing all the declines it took on Friday. All ten major S&P sectors were up. Yes, there are ten major ones. Some of these major sectors include oil, metals, autos and even retail. Stocks are also up, as is the Dow, which took in around 22o points. Not to be a downer but the S&P is still down around 5% for the year with oil hanging out at 12 year lows. However, U.S. crude is up around 7% checking in at about $31.44 per barrel. The International Energy Agency says that the U.S. is taking the “biggest hit right now,” but by 2021 it will lead in oil production. So where does that leave the U.S. for the next five years? Hmmm. Something to think about.

Don’t breathe easy…

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Image courtesy of Teerapun/FreeDigitalPhotos.net

Lumber Liquidators is on a roll. Except it’s not a very good one. First, the flooring company agreed to a $13 million penalty and five years probation for a criminal settlement after it acknowledged that it illegally imported wood from forests that are home to endangered species. So not cool. Then, just when Lumber Liquidators was about to breathe a big sigh of relief over a February 10 CDC report that found its formaldehyde-laced wood floors weren’t that toxic, the CDC announces that they were mistaken. Its revised report indicated that their floors are, in fact, that bad and that certain types of Lumber Liquidators’ flooring from China are actually three times more likely to cause cancer than what was previously thought. Oops. It seems an error was made in the calculations when incorrect figures were used for ceiling height in determining the risks of exposure from the offending floors. Serious arithmetic issues are at work. Before, it was thought that 2 – 9 cases could be developed in 100,000 people. But now the figure is closer to 6 – 30 cases in 100,000 people that could develop cancer. Of course, that cancer risk is separate from other the many other ailments people could develop, including respiratory issues and eye, nose and throat irritations. Just this morning the company lost about a quarter of its market value, besides being down 83% for the last twelve months. But at least Lumber Liquidators has suspended sales of flooring from China and is strengthening its quality controls, which is cute and all but probably too little too late.

Hey big spender…

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Image courtesy of Teerapun/FreeDigitalPhotos.net

It’s time to decide what your Starbucks loyalty is worth. The coffee chain is tweaking its rewards program and that will have you spending more cash to get the coveted perks. Under the current rewards program, customers earn stars for every purchase they make, and after 12 stars a customer can score a free food or drink item. Some shrewd customers have figured out that in one visit they have baristas ring up multiple items separately so that their rewards rack up quicker. With one star earned per purchase, this tactic has managed to infuriate other customers since the strategy increases wait times at the register. But that’s about to change as the new rewards program is based on dollars earned, regardless of how many purchases you manage to make, even in a single visit. Consumers will now earn two stars for every dollar spent and 125 stars gets you a free item. Figure it’ll cost you upwards of $60 before you hit that freebie. If you happen to be a Starbucks customer who miraculously manages to spend less than $5 in a single visit, you probably won’t like the coming changes. So now, like most rewards programs, from airlines to credit cards, the more you spend the more you earn. The goal, Starbucks says, is to get more people to sign up for the program. Of course, the new programs also conveniently increases store sales and profit.

To Hike or Not to Hike: That is the Fiscal Question; Doggone it, Home of the Whopper Gets Frank; Is Lumber Liquidators Finally in the Clear?

 

1,2,3 – Hike!

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The Fed will most likely not be lowering rates so don’t hold your breath. Not that you were planning on it. But the Fed is likely to do one of two things: raise rates according to its plan of “gradual adjustments” – meaning regularly raising those rates a smidgeon.  Or the Fed will choose to do nothing. Zero. Zilch. Nada. You might have thought that China is messing up our economy in unimaginable financial ways and therefore a rate reduction is justified. However, the Fed doesn’t feel that China is messing it up enough to warrant lowering rates. In fact, Janet Yellen and company also don’t feel that the rest of the world’s economic troubles are affecting the U.S. so much either. Instead, Yellen feels the U.S. economy will grow no matter what, oil gluts, falling global stocks, and all. None of it is our problem and we shouldn’t waste time worrying how it will all affect the U.S. economy. What is our problem is that the Dow fell 1,700 points since the Fed announced its first rate hike back in December. Even so, Ms. Yellen sees employment gains and wage growth, despite financial tightening conditions, and said that the U.S. financial sector has been resilient.” Be on the lookout for a potential rate hike (or not) next month when the Fed holds its next meeting March 15-16.

Hot diggety dog…

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It might be the home of the Whopper but Burger King’s new menu offering is taking on a whole different shape. Starting on February 23, Burger King will be serving up hot dogs at all of its 7,100 + locations in the U.S. Burger King brass are calling it “the most obvious product launch ever” and feel that hot dogs are a natural fit with the chain. Besides, the dogs were already tested in five markets bringing in sales increases that also apparently proved a natural fit for the company. It will make Burger King the biggest hot dog seller in the country and bonus: There will be no boiling or rolling involved in crafting these fine specimens. Instead, the dogs will be flame broiled and come in two variations: the $1.99 “classic” version and the $2.39 “chili cheese” version.  Burger King is partnering with Oscar Mayer to make a proprietary 100% beef delicacy. But the best part – to me anyway – Snoop Dogg and Charro (not sure how they came up with that combo) will be starring in training videos, hoping to make it more exciting for employees. Hey, whatever works.

Hold your breath…

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Lumber Liquidators Holdings Inc. is almost out of the fiscal woods. Sort of. After testing conducted by the U.S. Consumer Product Safety Commission, the results are in and Lumber Liquidators’ suspect flooring has a very low risk of causing cancer. Phew. What is more likely to result from the toxic floor coverings are breathing problems and other irritations – besides the emotional irritations brought on by purchasing flooring that contains formaldehyde. Lumber Liquidators has already paid up $13.2 million in fines and forfeitures for its formaldehyde-laced floors produced in China between 2012 and 2014. If you recall, it was just almost a year ago when “60 Minutes” ran a very (financially) damaging piece exposing the company. But now, with any good news on Wall Street, shares have been rising steadily today, hovering at about 12.63. Its 52 week low was 10.53.

Where Has All the Farfegnugen Gone?; Amazon’s Getting Crafty With It; Lumber Liquidators Liquidating to DOJ

Have you driven a Ford lately?

Image courtesy of emptyglass/FreeDigitalPhotos.net

Image courtesy of emptyglass/FreeDigitalPhotos.net

Execs at GM must be having a very good day as the recent auto industry-related scandal has nothing to do with them. The same can’t be said of Volkswagen and its U.S. CEO, Michael Horn, who had the dubious distinction of testifying before Congress in front of the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee. His testimony was basically one big long apology over his company’s “emission’s scandal.” But he also said that he truly believes that American workers did not know a thing about it. Which seems kind of weird because would you now consider buying a car from a company whose workers didn’t know what was going on with the cars they presumably work on? Just wondering. But anyways, Horn said Volkwagen would fix the approximate 500,000 affected cars. So if you happen to have one of them, don’t expect a buyback. There’s no time-frame either so don’t hold your breath as the fix could take a couple of years. Horn did say that Volkswagen would take full responsibility and that responsibility could result in an $18 billion fine. And while that seems awfully steep, even for a car company, then consider that the affected cars were emitting pollutants at a rate that was 40 times more than the acceptable U.S. standards. So boo hoo for Volkwagen.

Craft cheese…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Because e-commerce dominance just isn’t enough, Amazon is even going after the little-er guys. This time the target is recent IPO’er, Etsy, who continues its rocky relationship with Wall Street. Today, Amazon unleashed Amazon Handmade a marketplace for artisans to peddle their wares. Translate: no factories allowed. And indeed, that is one of the reasons why it distinguishes itself from Etsy and might prove to be a big lure for those artisans irritated by fellow crafters who choose to outsource their manufacturing. Amazon thinks it has way more to offer the fiscally-driven yet crafty-inspired peddler than Etsy has. A much much bigger customer base, free phone and email support and a host of other tools are just some of the benefits of being an Amazon Handmade seller. But, first you have to qualify. Again: No factories! No major manufacturing. Check out Amazon’s site If you’re really curious to see if you’ve got what it takes (or what it doesn’t) to sell your crafty goods. But know this, fearless artisan, Amazon takes a 12% cut and, starting August 2016, a $40 monthly fee if you’re industrious enough to sell more than 40 items a month. If all that doesn’t scare you away, then come join the approximately 5,000 sellers, in 60 countries, who have already begun hawking their more than 80,000 items.

Unsettling…

Image courtesy of suphakit73/FreeDigitalPhotos.net

Image courtesy of suphakit73/FreeDigitalPhotos.net

Lumber Liquidators has finally reached a $10 million settlement with the Department of Justice. Except, this settlement has nothing to do with the still ongoing investigations into Lumber Liquidators’ formaldehyde-laced laminate flooring scandal. That’s a whole other fairly recent mess. This settlement is from allegations stemming from 2013 where Lumber Liquidators was accused of violating the Lacey Act. This U.S. conservation law basically protects plants, fish and wildlife and forbids companies, corporations etc. from hogging more than their share of mother nature’s not-so-abundant resources. Lumber Liquidators did just that when it was busted importing more than the permitted amount of timber from foreign countries. As part of the settlement, Lumber Liquidators is on probation for 5 years and must make generous donations to conservation charities. If the company violates the terms of its probation, then its toast. Heck, the company’s already is toast. However, shares of the company went up a smidge today on the news of the settlement. Of course that increase does nothing to mask the fact that the stock is down 75% over the last year

Colt Arms Itself With Chapter 11 Protection; Target Teams Up With CVS; Another One Bites the Sawdust as Lumber Liquidator CMO Ousted

Out with a bang?

Image courtesy of vectorolie/FreeDigitalPhotos.net

Image courtesy of vectorolie/FreeDigitalPhotos.net

The maker of everybody’s favorite M16 rifle, gunmaker Colt Defense, has filed for bankruptcy. Famous for perennial firepower darlings, the Colt .45 and the “Peacemaker” – aka the gun that won the West – Colt saw delays in orders from both the US and foreign militaries, not to mention less demand for the company’s sport rifles, that caused its numbers to go into the red. Filing for chapter 11 in Wilmington, Delaware, the arms company already hit up Morgan Stanley for a $70 million loan, back in November, just to make an interest payment. Colt currently has about $500 million in assets and Chief Restructuring Officer Keith Maib wants to assure the public that “Colt remains open for business” while it attempts to figure out how to redo its balance sheets. Incidentally, this is not the company’s first trip down bankruptcy road. Colt, which was started by Samuel Colt back in 1836, also hit the bankruptcy skids back in 1842. The company rebounded and Samuel Colt went on to become one the country’s wealthiest men.

If you can’t beat ’em, join ’em…

Image courtesy of dream designs/FreeDigitalPhotos.net

Image courtesy of dream designs/FreeDigitalPhotos.net

Target’s ditching its pharmacy business in a $1.9 billion deal with CVS. The retailer came to some conclusions about the whole operation which basically had to do with money, and how much of it the pharmacy division wasn’t making. In fact, Target was actually losing money on it. Part of the problem is that the Affordable Care Act was just making everything so darn complicated and well, CVS is more equipped to handle the constantly changing landscape of healthcare while Target is best suited to sell stuff that consumers want and need but that don’t require prescriptions. So basically, Target is taking the pharmacies it already has housed in its locations and magically transforming them into CVS stores. Target expects that will bring in more traffic to its stores as CVS enthusiasts will flock to Target/CVS stores to get their prescriptions filled and then be compelled to step inside the store, filling up their red shopping carts with the kind of merchandise on which Target intends to place an increased focus to increase sales. Funny how that works, huh?

Saw it coming…

Image courtesy of sattva/FreeDigitalPhotos.net

Image courtesy of sattva/FreeDigitalPhotos.net

The latest executive to bite the Lumber Liquidators’ sawdust is Chief Merchandising Officer William Shlegel. The executive was on the job for four years before that scathing “60 Minutes” report aired back in March accusing the company of using formaldehyde-laced laminate flooring form China. Shlegel will be replaced by Chief marketing Officer Marco Pescara, who will pull double duty as he stays in his post while assuming his soon-to-be-former colleague’s role as well. No statement or comment was offered by Lumber Liquidators as to why Shlegel was shown the door, nor were there any comments about what, if any, his role was in the formaldehyde-laced flooring disaster. Of course, this latest switcheroo doesn’t even begin to solve the company’s tsunami of problems as the Justice Department is still seeking criminal charges against Lumber Liquidators, while it faces more than 100 class-action lawsuits. Sales of all the toxic flooring from China has been halted at the 360 locations. In the meantime, Lumber liquidators founder Thomas Sullivan has been playing CEO since the previous one, Robert Lynch ungraciously bowed out last month. The stock, to the surprise of…no one, has lost over 70% of its value in the last twelve months.

Lumber Liquidated CEO; Best Buy’s Earnings Electrifying; Home Sweet Lack of Homes

Gee I wonder why…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

If you find yourself up for a challenging career change, look no further than embattled Lumber Liquidators, who now has a job opening…for a new CEO. After months of scrutiny and criticism following a scathing “60 Minutes” report about its dangerously high-levels of formaldehyde-laced flooring, Lumber Liquidators CEO Robert Lynch threw in his corporate towel. He officially resigned from the company and stepped down from the board of directors. Shares of the company took a 16% hit before the market even opened following the news of Lynch’s resignation, adding to the slide that Lumber Liquidators has been taking for months now. In fact, its stock is down more than 60% for the year. However, in Lumber Liquidator’s defense, 97% of its products found in its flooring already installed in customers’ homes was found to be within protective guidelines. As for that other 3%…well, I suppose that explains why the company is under federal investigation.

Best ever?

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Best Buy managed to score some impressive earnings with a big fiscal shout out to big-screen tv’s and “iconic” smart-phones. In case it wasn’t obvious, CEO Hubert Joly deems the iPhone 6 and Galaxy S6 “iconic.” Other money-makers for the company were home appliances, which makes perfect sense since the housing market is easing up  (sort of, see below) making it easier for people to actually afford their homes, which they then need to fill with super convenient items like ovens and refrigerators. Just try living without them. Shares of the stock gleefully went up 7% before the market opened as the company announced it pulled in a profit of $129 million with 36 cents per share added, even though Wall Street only expected the electronics giant to post a 29 cent per share gain. A year ago the company pulled in a $461 million with $1.31 per share added, except that was all because of a tax change, so the year-over-year comparison is almost a moot point. The company saw revenues of $8.56 billion which was actually a slight drop from last year. But again, no one is too concerned because a.) analysts predicted revenues of only $8.46 billion b.) Best Buy is saying au revoir to 66 stores in Canada (yes, just like Target) so a loss of revenue was expected.  Oh, Canada. c.) the strong dollar has been messing with very company’s earnings and why should Best Buy be any different.

Is it? Or isn’t it?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Once again, leave it to the housing market to toy with our fiscal emotions.  April proved to be nothing short of a bummer as sales of existing homes dropped, according to the National Association of Realtors. The culprit, it seems, is the fact that there are not as many listing, and the prices for homes are higher. Supply and demand, I tell you. Arghh!!! Just a little over 5 million homes were sold in April representing a 3% drop. And nobody likes a drop. Part of the problem is that people aren’t listing their homes. Maybe they just like the ones in which they are currently living. Maybe they don’t see listings that they like. In any case, the median price for a home these days is hovering around $219,000, almost 9% more than a year ago.  Of course building more homes is a logical way to fix this housing inventory issue.  And builders are doing just that, as evidenced by the rise in new building applications recently reported. But the problem is that building a new home can take about a year and who wants to wait that long to see some housing recovery?

Nothing to Chirp About at Twitter; Lumber Liquidators Earnings Nearly Hit the Floor; Ben Bernanke’s Impressive Resume

Chirp…

Image courtesy of Mr-Vector7/FreeDigitalPhotos.net

Image courtesy of Mr-Vector7/FreeDigitalPhotos.net

What’s worse? Having your earnings leaked prematurely or the fact that those earnings were so bad? Hmmm. This one’s a toss up. Either way, Twitter’s bummed on all ends. Earnings reports are released only after the closing bell or right before the opening bell giving traders/investors/wannabes a chance to study the numbers and figure out how to proceed. Twitter’s “inadvertently” pre-maturely released earnings, which occurred on its very own platform, sent the stock south 20% and even caused trading of the stock to be suspended for a period. But that was only Twitter’s second worst day ever.  As for the horrible numbers, sales are actually up 74% over the previous year but the problem – and it’s a big one – is that Twitter’s growth rate is not up. User growth grew 18% to 302 million active users. But last month it grew 20%. Those figures are only supposed to go up. Never down. And herein lies one of social media company’s many many problems. Another is that CEO Dick Costolo’s credibility has come under fire and here’s why: It seems he didn’t see the writing on the wall, namely that all signs were pointing to a major slowdown.

Floor-ed…

Image courtesy of Serge Bertasius Photography/FreeDigitalPotos.net

Image courtesy of Serge Bertasius Photography/FreeDigitalPotos.net

Things at Lumber Liquidators keep getting worse as the company reported its first quarter earnings and to the surprise of no one, the company took a loss of $7.9 million and 29 cents per share on $260 million in revenue. I have to wonder if analysts didn’t hear about the scathing “60 Minutes” report that accused the company of selling formaldehyde-laced flooring because they expected the company to at least gain 15 cents a share. To give you an idea of just how bad those earnings really are, last year at this time the company took in a profit of $13.7 million and 49 cents a share. In case you were wondering how the company even made any money this quarter, most of it comes from January and February, before the damning piece even ran on March 1. Much of those losses are because of all those legal and professional fees the company has been shelling out to defend itself. But it’s safe to assume that people also are probably not buying from a company that would allow toxins to make their way into the company’s products. And the trouble just keeps coming. Lumber Liquidators says it is aware of the over 100 pending class action lawsuits against it. Even the Department of Justice has entered the fray seeking criminal charges against the company under the Lacey Act. Oh and one more thing, its CFO, Daniel Terrell, needs to brush up his resume as he’s leaving the company.

Ben…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Ben Bernanke’s LinkedIn profile seems to be filling up nicely. First he took a position as a distinguished fellow in residence at the Brookings Institution. Then he picked up a consulting gig at hedge fund, Citadel. Now, the former Federal Reserve Chairman has some new West Coast digs, thanks to PIMCO, who just announced that Mr. Bernanke would be joining its ranks as a senior adviser. PIMCO could definitely use Mr. Bernanke’s guidance right about now as investors have pulled about $100 billion from the fund following the departures of Co-Chief-Investment Officers, Bill Gross and Mohamed El-Erians last year. The former fed chairman will still have plenty of cash to play with as PIMCO handles about $1.59 trillion and runs the world’s biggest mutual fund. He’ll even get to “engage” with clients, which should help win back some of that $100 billion and assuage the fears of those finicky investors.

Kraft Ketch-es Up; Amazon Wants FAA to Start Droning Around; Lumber Liquidators’ Slight Rebound

Ketchin’ Up…

Image courtesy of Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

HJ Heinz, as in, ketchup is teaming up with Kraft foods, as in Mac & Cheese and Philadelphia Cream Cheese, to become the world’s fifth largest food and beverage company. And just who is behind this master plan for food domination? None other than everybody’s favorite (and only) Oracle of Omaha, Warren Buffet – well, Berkshire Hathaway really, and Brazilian Venture Capital firm 3G. The two entities are throwing $10 billion at the deal, which seems like a relative bargain since the merger is expected to generate $28 billion in annual revenue.  Of course, federal regulators still need to give their seal of approval, along with Kraft shareholders. But considering that the stock went up a whopping 32% on the news I’m guessing they won’t mind. Plus, if you are one of the lucky shareholders, then look out for a cash dividend of $16.50 per share, not to mention a 49% stake in the new venture.

 Droning on and on…

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Amazon is taking on the FAA, telling them they lack the “impetus” to develop drone policies in a timely manner – said in the nicest possible way, of course. The e-commerce giant wants the agency to move quicker on issuing permits for drone testing. Like a lot quicker. Like before the model drones Amazon plans to use for its Prime Air Delivery Service become obsolete. Oops. Too late. Even Senator Cory Booker agreed with Amazon saying that if the FAA had been around during the time of the Wright Brothers, then commercial flying would have literally never taken flight. Then there are all those restrictions associated with the testing. For instance, drones can’t fly higher than 400 feet, and in some cases 200 feet, and the drones must also always be in view of the pilot. Where’s the fun in that? Amazon, and several other companies are wondering why it takes so long for the U.S., on average, six months longer to issue these permits when in other countries it takes about 1-2 months?  The drone industry is also irritated by it all seeing as how drone delivery is apparently way more economical, faster and cheaper with the added bonus of less traffic and pollution? Who doesn’t like that? But to be fair, the FAA has some not-so-minor concerns about the potential for drones to collide with commercial carriers carrying passengers. Not to mention the potential loss of link between a drone pilot and the drone.

Lumbering on…

Image courtesy of  Sira Anamwong/FreeDigitalPhotos.net

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Lumber Liquidators stock went up today by 8%, which actually came as somewhat of a surprise since the stock is down 59% for the year after a scathing “60 Minutes” report that found high levels of formaldehyde in its laminate flooring from China. The reason for its little upswing is presumably because the U.S. Consumer Product Safety Commission has entered the fray by launching a federal investigation into the claims, also involving the EPA, CDC and Federal Trade Commission. Lumber Liquidators is said to be fully cooperating in the investigation. No kidding. But don’t bother holding your breath for results – they won’t be in for several months. Lumber Liquidators, by the way, says “60 Minutes” used a test that is considered unreliable, by Lumber Liquidators standards anyways. The company, which has 350 locations throughout the United States, has graciously offered to come test the flooring in your home. If high levels of formaldehyde are found to be present, then rest assured…Lumber Liquidators will do more testing. If those tests keep coming back positive then yeah, they’ll finally agree to replace the questionable, carcinogenic flooring.