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.

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Pharma-Karma; Avon’s Getting Knocked Out to PE Firm; 1-2-3 Hike!

Bitter pill…

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Big pharma’s least popular CEO is getting a taste of some very bitter medicine right now. Martin Shkreli, 32, arguably best known for raising the price of an HIV and cancer drug by 5,000%, was arrested today on allegations of securities fraud and is now facing charges from Brooklyn Federal Prosecutors. Shkreli’s arrest had nothing to do with his raising the price on those drugs. It just happened to work out nicely that way. Shkreli allegedly took money out of a biotech company he started in 2012 called Retrophin and used it to pay off debts that had nothing to do with that company. The company says he defrauded investors and is suing Shkreli him for $65 million, which he says won’t put a dent in his wallet. Charming, huh. Naturally, Shkreli was booted as CEO from Retrophin, yet still reigns supreme as the CEO of Turing Pharmaceuticals and KaloBios Pharmaceuticals, where shares of the company naturally sank on the news of his arrest. Shkreli increased the price of Daraprom, a drug that treats toxoplasmosis, a parasitic disease that wreaks havoc on people with weakened immune systems. The cost went from $13.50 a pill to $750 a pill. Shkreli’s greedy pricing activities incurred the wrath of many, including presidential candidates Hillary Clinton and Bernie Sanders, who will likely not be giving him any pardons should prison time figure in his future.

It’s not the Avon Lady anymore…

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Avon, the iconic company started in 1886, where women went door to door selling perfume, is getting bought up and going private. Private equity firm, Cerberus, is shelling out $605 million for a nice big chunk of Avon which, by the way, had a market cap of $1.8 billion as of yesterday. The goal of this action is to help the cosmetics company now focus more on markets abroad that have the potential to bring in way more revenue. Since 2007, shares of Avon have fallen steadily from the company’s all time high of $2.62 billion. At one point, there was an army of 600,000 Avon ladies knocking on people’s doors hawking their wares. That army has dwindled to around 400,000 salespeople and that lovely, perfectly made-up sales force has only been able to generate 14% of the company’s revenue. That’s a harsh number for a company that sells direct. Sephora, Ulta, Target and a crowd of other retailers have been able to offer great products at even greater prices making the Avon Lady’s offerings less appealing. Too bad Avon didn’t pounce on the $11 billion offer it had three years ago from rival cosmetics company Coty Inc.

In your best interest…

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It’s official. The rate hike happened and I’m guessing you hardly felt it. The hype leading up to it might have made the actual hike even seem anti-climactic to you. It did for me. In any case, let’s discuss how and if it matters to you now. For instance, do you plan on buying a home in the near future? The bad news here is that borrowing costs will likely be higher, as the rate on a 30 year fixed mortgage is now 3.94% . But the good news is that borrowing costs for buying a home fifteen years ago were almost twice as high, as rates were over 8%. It’s all a matter of perspective. The same goes for other loans and even credit card loans where rates will be a smidgen higher. But chances are, you’ll hardly notice it. Besides, rate hikes are indicative of healthy robust economies and who doesn’t like a healthy robust economy?  The one bright spot is for all you savers out there. If you like to plunk your hard-earned cash into a savings account where it could earn interest, you can now expect to earn a bit more on that money. Nothing that will brake the bank, but nothing to scoff at either.