Jumping the Twitter Ship; Coffee, Tea or Nukes? Air Iran Might Be Headed Our Way; McD’s CEO Really Does Deserve a Break Today

And then there were six…

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Twitter just got a whole lot lighter – except not in a good way. Four top executives are jumping ship from the social networking site, in addition to a top member over at Twitter-owned Vine. The news was tweeted (naturally) last night when Twitter CEO Jack Dorsey posted that all five people had “chosen” to leave and “will be taking some well-deserved time off.” That’s awfully sweet but it still begs the question as to why those folks chose to leave in the first place – especially because those four executive departures constituted 40% of Twitter’s top brass. Don’t bother looking up any job postings for the newly vacated positions. Dorsey seems to have at least one of them filled, apparently by a high-profile executive in the media industry. No word yet on the other positions but rumor has it they’ve also been filled. Not that any of this is news to those at Twitter. When Jack Dorsey returned to the top spot he did, after all, say that the board will eventually have to be replaced. Incidentally, upon Dorsey’s return, shares of Twitter have fallen about 50%.  Shares are now hovering below the IPO price as the company continues to struggle to find ways to attract more users.

Blackout dates…

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Because nothing says romantic vacation getaway like hopping on a plane to Tehran, Iran is on a mission – not even a nuclear one! – to boost tourism and get back in the good graces of just about every country in the western hemisphere. Iranian President Hassan Rouhani is in Europe this week and just might strike (no pun intended) a deal with Airbus to purchase some 500 aircraft so that you can book your next vacay to the radically ruled country. Rumor has it that Boeing might also supply Iran with some aircraft too, and it would mean that it’d be the first time in 36 years – ever since that pesky Islamic revolution – that travelers could hop on a direct flight to a country that’s hostile to United States citizens. Looks like British Airways is itching to be among the first of the commercial airlines to start taxiing on an Iranian tarmac. Apparently, some analysts are expecting a bona fide economic boom – I SAID ECONOMIC! – to occur in Iran now that sanctions have been lifted in exchange for shelving its nuke fantasies.  And because banking sanctions have also been lifted, Iran will even be able to pay for the aircraft. And so much more…

Comeback kid…

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Attention naysayers: McDonald’s CEO Steve Easterbrook’s turnaround plan seems to actually be working. How ’bout that. McDonald’s served up some tasty earnings with a special boost from its all-day breakfast offerings.  A big show of gratitude also goes to China where, as it turns out, diners continued to opt for the Golden Arches’ fast-food fare despite the nasty food safety scandal that erupted during the summer of 2014. Same store sales took a 5.7% jump and wouldn’t you know it, shares jumped on the news, especially because, after two years of little to no growth, the company finally experienced that wonderful sensation, posting its best quarter in four years. McDonald’s pulled down a profit of $1.21 billion, an almost 10% increase, while adding $1.28 per share. That’s a nice little smack down to analysts’ estimates of just $1.23 per share. And while a strong dollar did send revenue a bit south to $6.34 billion, it was still above and beyond expectations of $6.22 billion. The only bummer in the earnings was in France, where terrorist attacks have kept too many would-be McDonald’s patrons from enjoying the cuisine.

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Newspapers Gone Charitable; Not All is Golden in Europe for McDonald’s; Starbucks Not Letting an Itty Bitty Downturn Get in its Way

Read all about it…

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Not-for-profit has been taking on a whole new meaning lately for some unlikely reasons: newspapers. The Philadelphia Inquirer, the Philadelphia Daily News and Philly.com have gone tax-exempt. It’s probably not the first place you think of when you want to make a charitable contribution, but it’ll gladly take one now. Along with an additional $20 million donation, billionaire H.F. “Gerry” Lenfest, who controlled these publications, took the Philadelphia Media Network, tweaked things around a bit and morphed the newspapers into a public benefit corporation (PBC) that will be called The Institute for Journalism in New Media.  A little wordy, maybe, but the entity itself is dedicated to “independent public service journalism and investigative reporting that positively impacts the community, while also creating innovative multimedia content.” Got that?  The paper will still be run as a “for-profit” biz while getting you a tax deduction in the process.  In case you didn’t know, Kickstarter is also a PBC. Just saying. It’s an interesting idea just not an original one for a newspaper as there are a few other newspapers in Florida and Connecticut that have taken this approach. It’s a way to try and make newspapers relevant and successful in a digital era, not to mention, a last-ditch attempt to try and keep a publication from going bust

Hamburglar?

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So what are the Golden Arches accused of doing this time? Three Italian consumer organizations are charging that the fast-food chain is causing franchises in Italy to inflate the cost of menu items. You see, in order to snag a European franchise lease, a lessee must sign a twenty year contract – a contract that is twice as long as what other franchises require. But then, McDonald’s is also accused of licensing the premises for above market rates – by about ten times –  making it nothing short of a big pain in the but to switch competitors. So, in order to defray the costs of these above-market lease rates, European McDonald’s franchises jack up the prices on menu items with consumers bearing the brunt of the cost. At least that’s according to a survey cited by the coalition filing the complaint. Apparently, a whopping 68% – 97% of McDonald’s menu items in various Italian cities are more expensive in franchises than in company stores. Franchises make up 75% of McDonald’s European revenue and worldwide McDonald’s has made $9.27 billion in revenue from these franchises. But before the EU even considers launching a formal investigation into these alleged shifty practices, authorities will first send out a formal questionnaire. Depending on how well those questions are addressed will determine if there is sufficient cause to even open an investigation. Besides, those same EU authorities are already busy investigating McDonald’s in Luxembourg over allegations that it managed to evade paying $1 billion in taxes on its European operations.

Slowdown? What slowdown?

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There might be an economic downturn in China, but that’s not stopping Starbuck’s from expanding its empire there. Sure there are already 2,000 Starbucks stores caffeinating the world’s second largest economy. However, Starbucks feels that the country could use at least 1,400 more stores and plans to have them all serving up lattes by 2019. Starbucks CEO Howard Schultz feels that China has the potential to become the company’s biggest market. And that’s not so crazy considering that China is already Starbucks’ second largest market and is the fastest growing one too. At a recent Starbucks event in China called the “Starbucks China Partner-Family Forum” (Alibaba’s Jack Ma was at the event so you know it was a big deal), Schultz wanted to reassure the Chinese that he totally gets their culture and has tremendous admiration for it. Hence, he made sure to acknowledge and give major props to the parents of its baristas. In fact, Starbucks wants so badly play nice with China and shower the country with oodles of corporate respect that he is offering to cover 50% of monthly housing expenses for Starbucks employees in China. For baristas there who so valiantly served up drinks for ten years, Starbucks is offering them a “career coffee break” – a year long paid sabbatical. Hěn hǎo!

 

McDonald’s European Tax McMess; OPEC Member Smackdown; Unemployment Ups and Downs

Did the Hamburglar do it?

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Image courtesy of bplanet/FreeDigitalPhotos.net

Hold on to your McMuffins because the Golden Arches are under investigation by European regulators. Apparently McDonald’s neglected to pay taxes on its franchise profits earned in Europe and Russia since 2009. The EU says that 250 million euros made just in 2013 wasn’t  even taxed and McDonald’s had an unfair advantage over its competitors. Gasp. McDonald’s European franchise office is based in the teeny tiny country of Luxembourg. The trouble seems to have started when authorities in Luxembourg decided that McD’s was exempt from paying taxes on its profits because the U.S. was also taxing them on those profits.  McDonald’s, however, says the allegations are false and that it paid over $2 billion in corporate in taxes, besides other taxes, between 2010 and 2014. Starbucks, Fiat and Apple also faced similar investigations and Starbucks and Fiat ultimately found themselves forking over $34 million each in back taxes and penalties.

Can’t we all just get along?

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OPEC members just can’t seem to get along these days which is a bit unsettling considering they control a trillion dollar oil supply. Because of the oil glut and the fact that oil prices are so low –   a barrel closed at $42.49, the lowest price since 2009 – Venezuela is finding itself cash-strapped as oil is a big chunk of the country’s bread and butter. Together with a few other cash-strapped countries, including Ecuador and Algeria (don’t laugh), they want Saudi Arabia to cut back on its oil production output to help bring prices back up and make them less cash-strapped. Saudi Arabia doesn’t want to, but might consider doing so if Russia and Mexico do the same. Saudia Arabia, by the way, is the world’s largest oil exporter and is not cash-strapped so they don’t really feel the need to cut back. Saudi Arabia also said it would listen to what the other countries have to say. Which is nice and all. But it still intends to do what it wants. Like it always does. Russia also has no plans to cut back since it does not see a point in doing so. And besides, who tells Russia what to do? Iran wants OPEC to reduce output just so that it can make room for its re-entry into the wonderful lucrative world of petroleum production. But to be clear, Iran has no intention of capping its own output to help out with the current oil glut. Maybe, just maybe, Iran will agree to cap its oil production once it reaches its pre-sanction levels. After all, its gotta make up for lost times, you know?  OPEC pumped over 32 million barrels a day in November. Once Iran and Indonesia (yes, that country’s back, too) return, expect that number to be much much higher. While annual revenue for OPEC was $550 billion last year, in the five years prior, the organization was pulling down $1 trillion annually.

You say that’s a good thing?

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Applications for unemployment benefits rose to 269,000 applicants, gaining 9,000 newbies from last week and apparently that’s good news. Well, maybe not to the 269,000 applicants, but we won’t go there just yet. And even though that means that there are now approximately 2.16 million Americans right now collecting unemployment benefits – is that term an oxymoron? – unemployment is still considered to be at historically low levels. Believe it or not, this report actually points to a healthy job market. And why shouldn’t it? The number of unemployment benefit recipients is 9.3% less than it was a year ago. An average of 206,000 jobs have been added per month in the last year with a whopping 270,000 jobs added just in October. Even average hourly earnings are up 2.5% in the last twelve months. You can be sure the Fed will be considering this latest report as it mulls its decision to raise interest rates, which by the way, is more than likely to happen in about two weeks.

 

Golden Earnings for the Golden Arches; European Bitcoin Victory; Say It Ain’t So: Lego Brick Shortage

You deserve a break today…

Image courtesy of tiverylucky/FreeDigitalPhotos.net

Image courtesy of tiverylucky/FreeDigitalPhotos.net

Looks like McDonald’s CEO Steve Easterbrook’s job looks pretty secure for the foreseeable future now that McDonald’s posted some awesome third quarter earnings. The numbers were so good that shares of the company jumped 8% and took the Dow Jones Industrial Average up more than 250 points as well. Sales in the U.S. brought a nice little surprise of a 1% increase. And even though wage raises and benefit improvements did take a big chunk out of the Golden Arches operating costs, the company still earned $1.31 billion and $1.40 per share. That was a 23% jump over last year’s $1.07 billion with $1.09 added to shares, and marked the first time in two years that McDonald’s saw improved sales.The much-hyped turnaround plan is actually working with thanks in part to McDonald’s All-Day Breakfast and the introduction of the Premium Buttermilk Crispy Chicken Deluxe Sandwich. Try saying that one five times fast. Or even three. Some franchises, however, are’t digging this all-day breakfast because, besides adding many more menu items, those breakfast items tend to be cheaper and negatively affect sales at some stores. Revenue fell to $6.62 billion, but it was only a 5% drop from last year’s $6.99 billion. And considering that Wall Street expected  McDonald’s to pull in only $6.41 billion and $1.27 per share, nobody’s too upset over that 5% dip.

VAT do you want already?

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Score one for Bitcoin as the virtual currency is considered tax-free. Well, in Europe, anyways. Just like plain old, regular, not-so-virtual cash. Europe’s highest court ruled that  Bitcoin and other virtual currencies are on par with real money and European citizens can scoop up as much of the virtual stuff as they want without having to pay VAT – a  tax that presumably taxes the nerves of anyone who has to pay it. This piece of Bitcoin drama began with Swedish Bitcoin operator David Hedqvist who felt that the currency should not be taxed. However, the Swedish tax authority, Skatteverket, disagreed vehemently and brought the issue to EU’s highest court. And while David Hedqvist is no doubt celebrating this recent victory, there is still one aspect about Bitcoin that has yet to be determined: is it legal tender? To be continued…

Everything is not Awesome…

Image courtesy of  nonicknamephoto/FreeDigitalPhotos.net

Image courtesy of nonicknamephoto/FreeDigitalPhotos.net

Scary news from the world’s largest toymaker, Lego. It seems the Danish plastic brick manufacturer might not have enough brick’s to go around. But rest assured, that here in the States, our plastic brick supply is safe. For now. With The Lego Movie, Star Wars and The Avengers all part of the Lego family, the company can’t seem to make enough toys to keep up with the demand. In just the first half of the year, sales for the toys were up a whopping 18%. To help alleviate some of the shortage, Lego will be expanding three factories in Mexico, Hungary and, of course, Lego’s hometown in Denmark. The company even has plans to expand in China. But everything may still not be awesome in certain parts of Europe, as they are likely to be affected by this very tragic plastic brick shortage.

OMG-D-P!!!!; No Bling In Tiffany & Co. Earnings; McDiss Day

G.D.P-habulous…

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Image courtesy of cooldesign/FreeDigitalPhotos.net

China might be hogging center stage for its economic slowdown but the U.S. is stealing the spotlight now for the exact opposite reason. The exciting news off Wall Street today (okay, exciting is a stretch) is that the U.S. economy grew by a whopping (not a stretch) 3.7% instead of the initially estimated 2.3% growth rate. So let’s give a big shout out to the GDP for not repeating that awful first quarter growth rate of .6% which had everybody reeling and blaming a brutal winter and a slowdown at west coast ports. Business investments also saw a 4% increase even as low oil prices and a strong dollar continue to toy with our fiscal emotions. Shares went up across the indexes and the Dow Jones isn’t looking so scary right now, having gone up 1.4%. Consumer and government spending are up too. As if government spending ever goes down? So does this mean the Fed might once again forge ahead with its unwelcome plans to raise rates? Doubtful, for September anyway. But brace yourself because that hike is on the horizon.

You can forget breakfast…

Image courtesy of MR LIGHTMAN/FreeDigitalPhotos.net

Image courtesy of MR LIGHTMAN/FreeDigitalPhotos.net

Tiffany may have some sweet bling to offer but its earnings were anything but. The luxury goods retailer saw a 15.4% decrease in profits to $105 million, raking in 86 cents per share, a nickel short of estimates. So what gives? A strong dollar has got tourists shying away from Tiffany & Co. since they wouldn’t have been getting enough bang for their good old American bucks. However, Tiffany also saw a 21% increase in sales from Japan. The jeweler is also betting big on China, despite that fact that everyone else seems freaked about by the country’s slowing economy. Sales there are up. So clearly more than a few folks in China are plunking down lots of cash for some fancy Tiffany merchandise. Which makes perfect sense since China is the number two luxury market in the world. In fact, Tiffany is going ahead with plans to open two more stores there, adding to the thirty others already in the country and its 304 total stores. But shares of Tiffany are down 20% for the year and are currently hovering at an 18 month low. Interestingly enough (at least I thought so), less prestigious bling company Signet Jewelers Ltd., parent to both Kay and Jared Jewelers, saw some especially good earnings. Signet beat estimates of $1.15 per share to come in at $1.28 per share. Does this mean a shift in consumer preferences? Hmmm.

Off with their chicken supply…

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Image courtesy of joephotostudio/FreeDigitalPhotos.net

McDonald’s has cut ties with one of its chicken suppliers after some video was obtained from a Tennessee farm that supplies to Tyson, which in turn, supplies to McDonald’s. Unfortunately, these chicken farmers were allegedly using inhumane tactics on their farm – a big no-no if you wanna be in good with the Golden Arches. And while it was the right and noble thing to do to terminate their contact, McDonald’s still has not exactly landed in the good graces of Americans today. However, it has nothing to do with chicken. Only beef. As in a beef with Burger King. Perhaps you may have heard that today is National Burger Day. In a two page ad taken out in the New York Times and Chicago Tribune, Burger King wanted to join forces with McDonald’s on this auspicious day, put aside its McDiffferences, and offer up a McWhopper. Instead of graciously accepting this show of good beef, McDonald’s very undiplomatically declined the opportunity with CEO Steve Easterbrook writing, “We commit to raise awareness worldwide, perhaps you’ll join us in a meaningful global effort?” Can you say McOuch?

A Dow-ner of a Day on Wall Street; On Rate Hikes and Coffee; Chipotle’s Latest Effort Is Calorie-Free

All fall down…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Fewer things are uglier than a 1,089 point plunge on the dow. And that’s just how Monday started off, within the first few minutes of trading. By closing, however, the market was down only 588 points. Phew. Apparently the market is correcting itself, so the drops shouldn’t be too alarming. Also don’t look too much into last week’s 1,000 point drop. At least that’s what the experts are saying. The term “correction” is meant to reassure us. So are you reassured now? But correction or not, overnight there was a big sell-off in China that brought about a very unsightly 8.5% hit to the Shanghai Composite Index which the Chinese media is very unaffectionately calling “Black Monday.” Yes. It’s that bad. And worse since the repercussions of this hit are spreading through Europe, and yes, even our shores. Feel free to cringe now. The world’s second biggest economy is slowing a little too much for our liking. Countries that depend on China to buy its commodes and luxury goods companies that have enjoyed selling to the Chinese are  now freaking out and revising their outlooks. Although, Apple CEO Tim Cook graciously pointed out, much to the delight of Wall Street, that the Chinese are, in fact, still buying, albeit, at a slower pace and that Apple actually had a record few weeks in China. Well, lucky Apple.

As for that rate hike…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Whether you see it as a good thing or bad thing, plans for Janet Yellen and the Fed to hike rates in September just might have hit a wall thanks to the financial turmoil rocking the world as of late. Sell-offs, swings and losses (oh my!) just might have done the trick to put the kibosh on the Federal Reserve’s intention to raise rates next month, at least according to investors, who probably know a thing or two about that. In fact, that hike is now looking like it will take place around March. It’s all sort of ironic since the Fed seemed almost non-plussed about China’s fiscal comings and goings because the U.S. economy was the hogging the spotlight for the way it’s been picking up speed lately. Oh well. Guess that thinking caught up with the Fed. Incidentally, Starbucks CEO Howard Schultz, always at the forefront of the cause du jour, sent out an email advising employees to be sensitive to investors who seem a bit edgy, not from caffeine withdrawal, but rather from the volatile global market situation. He writes: “be very sensitive to the pressures our customers may be feeling, and do everything we can to individually and collectively exceed their expectations.” Can I get a kumbaya?

Scrumptious…

Image courts of Stuart Miles/FreeDigitalPhotos.net

Image courts of Stuart Miles/FreeDigitalPhotos.net

Chipotle’s got a plan. But this one has nothing to do with adding to its millennial-appealing menu. That part seems to be covered. It seems that a stronger economy, an increased demand for restaurant dining and a minimum wage increase across states and companies has put quite the crimp in the talent pool for Chipotle employees, resulting in fewer applicants and not enough workers to dish out the aforementioned millennial-appealing fare. To combat that, Chipotle is launching a “National Career Day” where on September 9, the Denver-based chain plans on hiring some 4,000 new employees. The company is hoping to attract talent with this latest initiative, throwing around terms like “six-figure salaries” for high-performers to earn (far) down the road. Chipotle’s already part of the the Starbuck’s led 100,000 Opportunities Initiative. Starbucks, McDonald’s, Wendy’s and a slew of other companies have all been offering up all kinds of new interesting perks to attract a greater talent pool, from college reimbursement to more paid vacation. Al things I can certainly appreciate. Chipotle already employs about 60,000 people and on September 9 the company will likely increase its workforce by 7%. All you have to do is register at http://www.nationalcareerday.com. All U.S. Chipotle restaurants will conduct interviews between 8 and 11 am and if you land a gig, look forward to making more than $10 per hour to start.

Deutsche Bank CEO’s are Leaving Early and No One is Shedding Tears; McDonald’s Numbers Not Totally Horrible; Smack Talk at the G7 Summit

You’re Fitschen kidding me…

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Image courtesy of biosphere/FreeDigitalPhotos.net

In case you were wondering how Wall Street feels about Deutsche Bank’s outgoing co-CEO’s Anshu Jain and Juergen Fitschen, then just look at the company’s stock price. Shares of Deustche Bank gleefully shot up over 8% at one point, on the news that the two men would be ditching their digs even earlier than planned. However, those gains weren’t just from the sheer joy of those early departures but also because investors totally dig their replacement, British banker John Cryan, who also happens to have a pretty decent track record. Cryan is what the cool kids call a “takeover specialist” which is something Deutsche Bank could use now more than ever seeing as how Jain and Fitschen couldn’t seem to stem the tide of legal issues that have been plaguing the bank, including a massive $2.5 settlement claim the bank had to fork over after some traders very rudely – and illegally, I might add – rigged some benchmark interest rates. In fact, most of Deutsche Bank’s troubles and scandals seemed to to come out of its investment bank, which coincidentally, was/is under Jain’s watch. The question remains as to whether or not Cryan can pull the largest German bank out of its funk. Except, first he’s got to come up with a plan. At least he speaks German. So score one for Cryan.

You deserve a break today…

Image courtesy of  atibodyphoto/FreeDigitalPhotos.net

Image courtesy of atibodyphoto/FreeDigitalPhotos.net

Things at McDonald’s weren’t nearly as bad as everyone thought they were going to be. They weren’t great but we’ll get to that. The Golden Arches saw same store sales drop .3% , which is definitely not good. However, at least those sales didn’t drop by .9%, the figure expected by all those super-educated analysts. To that I say booyah.  And then there was Europe. While everywhere else on the planet McDonald’s saw sales fall, McDonald’s needs to give much danke to Germany, France and the UK who showed the burger chain some major love in the form of a 2.3% gain. Analysts only expected Europe to bring in a tres  modest .6% gain. So you see, Chipotle, Panera and Shake Shack haven’t taken over the fast-food world. Yet. McDonald’s is in the midst of bringing about a “turnaround plan” which apparently includes offering breakfast all day. Except that’s only in – where else? – Southern California. Also, as part of the plan to reclaim its rightful place in the fast-food kingdom, CEO and President Steve Easterbrook has big lofty plans to rebrand McDonald’s as “a modern, progressive burger company.” Did you get all that?

Back at the G7 Summit…

Image courtesy of bplanet/Freedigitalphotos.net

Image courtesy of bplanet/Freedigitalphotos.net

There seems to be a bit of confusion coming from the G7 Summit. A French official told reporters that President Obama said the strong dollar is a “problem.” Then, the dollar slid against the euro. However, President Obama insists, “I did not say that.” But, still, the dollar still slipped, for the first time in three days, against the euro. In any case, other important stuff was presumably discussed at the conference where world leaders from the United States, Germany, France, Britain, Italy, Japan and even Canada talked about fiscal issues that are plaguing the world. But who doesn’t love a good “he said, he said,”  especially during a super important meeting between the world’s most powerful people. I could really see this one playing out on South Park.