Oh Nyet You Didn’t!: Yahoo Cyber Attacks Courtesy of Russia; Homebuilders Are Feeling Fine; The Fed (Finally) Comes Through With Rate Hike

Busted…

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There is a first time for everything and today marks the first time that Russian officials were officially busted by U.S. federal prosecutors for cyber attacks. These officials, who are actually Russian officers, allegedly paid other hackers to break into Yahoo to steal information from hundreds of millions of users. So clearly, the officials weren’t the talent behind the scheme. Of the six people charged in the attacks, one of them is a hacker named Alexsey Belan, who had the dubious distinction of being ranked the FBI’s numero uno most wanted cyber-criminal for three years.  But don’t expect any swift justice. While one of the alleged perps was picked up in Canada and headed here to await his fate, the Russian intelligence officers are staying put and probably living large seeing as how there is no extradition in place between Russia and the United States. Among the numerous charges outlined are economic espionage and computer hacking, to name just a few. The attacks, which were revealed last September, were the ones that caused the search engine giant to drop its selling price to Verizon by $350 million. According to the indictment, it appears the attacks were state-sponsored, which has me wondering if things will now be awkward between Presidents Trump and Putin.

Exuding confidence…

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The magic number is 71. No really. It is. At least if you’re looking at the National Association of Home Builders/Wells Fargo Housing Market index.  That means that homebuilder confidence is very high. Very. To put this number in perspective, anything above the number 50 is good. In March of 2016, that number was 58. So yeah, confidence abounds this year. Sure, the usual reasons are being given, including the fact that we are entering the season that homebuilders love, low mortgage rates and a solid labor market. But there’s another reason: President Trump. Yep. It appears he has begun rolling back on regulations, some of which are environmental, and that’s got homebuilders kicking up their heels in joy since they attribute 25% of the cost of homes to regulations. The regulation currently being rolled back is the Clean Water Rule, a rule that many builders call “burdensome” and which has nothing to do with putting dirty water into homes, I assure you.  Homebuilders see this rollback as a sign that even further de-regulation is in the wings, which would make home-building easier and quicker. And that is making builders positively giddy. And confident, of course.

Done deal…

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It’s official. The fed raised the benchmark lending rate by a quarter of a point. But that’s not the only big news. We are told to expect two more rate increases this year, which is especially weird since this is just the third rate hike in over a year. You may not feel the interest rate change now. And you may not feel it at all. But if you comb over your paperworks, from mortgages to credit cards to bank statements,  then you’ll notice the difference, albeit a subtle one. For now.  So subtle in fact that rates are still at historic lows. But it wont stay that way forever because by 2019 the rate is expected to hit 3% and stay there for quite awhile.  Hey what do you expect? Inflation is rising to the mark where the Fed wants it to, times are good, economically speaking and, just like with home builder sentiment, the strong labor market is putting a fiscal smile on a lot of faces.

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Starwood Inhospitably Says Buh-Bye to CEO; US Homebuilders Have No Loss of Confidence Over Latest Digits; Higher-Debt Education

Paasschen pit…

Image courtesy of Salvatore Vuono; FreeDigitalPhotos.net

Image courtesy of Salvatore Vuono; FreeDigitalPhotos.net

Starwood Hotels & Resorts, which also owns Sheraton and the “W” hotels, had its CEO, Frits Van Paaschen, do his final checkout (note the two a’s and two s’s). Apparently his resignation was a mutual decision (aren’t they all?) between van Paasschen and Starwood. But in a statement, Chairman Bruce Duncan said: “The board believes now is the right time to take steps to accelerate Starwood’s growth, improve performance and sharpen our focus,”  What are you really saying, Mr. Duncan? That growth slowed under Paasschen’s leadership? Actually, it did. News of the resignation sent shares up 4.3% hitting $81.07. But to be fair, and you have to be fair to a guy with a name as fun as Frits Van Paasschen, under his leadership the company pulled in $234 million and $1.33 per share for the fourth quarter when analysts predicted Starwood would only pull in 76 cents. Now that’s Paasschen! Just sayin’. Don’t feel too sad for the guy, though. He is getting a severance package upwards of $12 million. The company will be now helmed by interim CEO Adam Aron until a permanent replacement is found. But one thing is for sure…there will never be another Frits Van Paasschen  – with two a’s and two s’s. So there.

Show me the confidence…

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Image courtesy of cooldesign/FreeDigitalPhotos.net

So today we get some info from the National Association of Homebuilders/Wells Fargo builder sentiment index telling us exactly how builders are feeling. Well, they’re feeling about a 55. Which is good news because a number above 55 is good. It means confidence. Optimism. Money. Happiness…you know all the things that matter, except for health, which isn’t measured in this index. Whatever.  Not to be a downer, but this is the second month in a row that that number fell – last month it was 57 – and the lowest number it has been in four months. By the way, those economists who spend their days away forecasting what that number might be guessed it would be closer to 58. Ah, well. You can’t win (predict?) ’em all. So why, exactly, are builders still so optimistic? Because those numbers, which are not awful anyway, are probably the result of this painfully annoying, snowy frigid winter which isn’t exactly sending people running out of the warm comfort of their cozy homes to look for new ones.  Once the weather begins to cooperate, builders expect to see more traffic. Add to that low mortgage rates and major job gains and you get home-builder confidence, my fiscal-loving friends.

But probably not buying a house anytime soon…

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Image courtesy of ddpavumba/FreeDigitalPhotos.net

The Federal Reserve Bank of New York just regaled us with some thoroughly disheartening new information that puts a damper on the American dream. It seems that the amount of loans due over at least 90 days has grown by over 11%. But wait…there’s more…a lot more. Like $1.16 trillion more. That’s how much money has been borrowed by students in the name of education this year and is more than 7% higher than last year. All those educated young Americans who are eager to scoop up jobs in the workforce may not be among the buyers for all those new homes that all those US homebuilders are building, no matter how reasonably priced they are. That’s because that newly highly educated contingent will be thrilled just to be able to pay down some of that mammoth debt.

FedEx-cellent Earnings; Santa’s Not So Little Helpers; New Home Confidence Booster

Can I get that overnight?

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Image courtesy of tigger11th/FreeDigitalPhotos.net

You may not use FedEx on a regular basis but other people sure do. The shipping company’s earnings toppled Wall Street predictions earning $2.10 per share in its first quarter compared with an expected $1.96 per share. Nothing like giving those predictions a smack down. Those hefty earnings were a 37% increase over the same time last year which took in just $1.53 per share. If you’re in the market for some shares of this very useful company, you’ll need to plunk over approximately $159…again, per share. Revenue for the company came in at $11.7 billion while analysts short changed FedEx for a paltry $11.44 billion. In fact, just between June and August the express shipping company earned a whopping $606 million, which happens to be a not-so-modest 24% increase over the same time last year. Graciously enough, FedEx will be waiting until after the holiday season to raise its rates by almost 5%.

Elves, elves everywhere…

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Image courtesy of suphakit73/FreeDigitalPhotos.net

Speaking of the holiday season (and FedEx, for that matter) which is in fact a lot closer than you may (choose to) realize, FedEx and UPS have big plans to add to their workforces. Following last year’s debacle when the shipping companies received more packages than they could physically handle, with some arriving after the holiday, UPS and FedEx decided they would increase the amount of workers they hired last year so that there will be no doubt – make that little doubt –  that your packages make it on time. FedEx plans to hire 50,000 seasonal employees, as opposed to last year’s 40,000. UPS is pulling out all the stops by bringing in 95,000  extra workers for what they predict will be an epic  – at least as far as shipping needs are concerned – holiday season. But it’s not just shipping companies that are hiring extra staff. Kohl’s just announced its plans to hire approximately 50 associates per store. Considering Kohl’s has over 1,160 stores in 49 states, you just might find yourself at the right end of some decent customer service come December. Expect other stores to follow suit.

Home sweet home…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Which brings us to homebuilders confidence. Well really it doesn’t, but whatever. According to the National Association of Home Builders/Wells Fargo builder sentiment index (yeah, try saying that five times fast), the sentiment hit 59 in August. Analysts called for about a 55. So ha! Considering anything over a 50 is good news, this number deserves its own party. In fact, US home builder confidence for new single family homes (sorry, old homes)  hasn’t been this well…confident – and high – in nine years. All this seems to suggest sales for homes will rise – which is good, especially if you’re selling. It also helps that the job market is improving and interest rates are low. All things that make buying a new single family home (again, sorry old homes) that much more enticing.

Another Typical Day At GM? JPM Not Welcome To Miami and Building Good Sentiment

What’s old is new again…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

On Wednesday, GM CEO Mary Barra heads to Washington DC to face yet another congressional grilling  – this time over how her company plans to fix the lax corporate culture that led to faulty ignition switches, 54 crashes and thirteen deaths. She’ll also be grilled on how GM plans to the compensate the victims of its lax corporate culture that fostered “negligence.” GM is in the midst of fixing its faulty ignition switches in 2.6 million vehicles. However, it’s only gotten around to about 7% of them, which amounts to about 177,000 cars, since the recall was announced four months ago. But the auto maker better step on it since 3.2 million more recalls were just announced on vehicles from 2000-2014. GM hopes, as we all do, that all the vehicles will be fixed by October.

Miami heat on JPM…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Miami is not shining bright on JP Morgan Chase these days. The city, yes the entire city, is suing the bank for discriminatory lending. Miami is one of the country’s leaders in “zombie” properties and foreclosures. It blames the mega bank for much of this claiming the bank issued loans that made it harder for minorities to pay them back which ultimately led to tens of thousands of foreclosures in the region. Miami alleges JPM violated the federal Fair Housing Act and wants all sorts of legal damages awarded to it for things like reduced property taxes and municipal services because of foreclosures. Providence, Rhode Island and Los Angeles have also filed lawsuits against banks for similar reasons. Bank of America has been sued for “red-lining” no-loan zones even when minorities qualified for better loans. Of course, a JPM spokesperson called the claims “baseless.”

Not the best of sentiments…

Image courtesy of Supertrooper/FreeDigitalPhotos.net

Image courtesy of Supertrooper/FreeDigitalPhotos.net

Homebuilders are feeling a little bit more confident as far as the new house market is concerned. According to the National Association of Home Builders/Wells Fargo sentiment index, that sentiment rose to 49. Which is almost good news. When that sentiment is above 50, then we can all breathe a collective sigh of relief. But there hasn’t been any relief sighing since before January. Yes, winter was bit of a culprit there. But that number, even if it is a bit shy of where we’d like it to be, still shows that the home-buying matket is on its way to stabilizing, albeit slower than we’d like. New home sales are still at half the rate of what they should be in an otherwise healthy market that is currently down 4% from what it was a year earlier.