Housing Posts Impressive Digits; Banker Gone Bad; Anbang: Be Our Guest!

Pending your review…

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The National Association of Realtors is presumably in good spirits today thanks to some fantastic data from pending sales on previously-owned homes. Turns out, that figure is up 3.5%, with the pending home sales index clocking in at 109.1. That’s a nice little welcome after the previous month’s cringe-inducing 3% decline and index reading of 105.4, which by the way, was larger than the initially reported figure. It also marks a 5% increase in sales over the same time last year. What’s even better about this increase is that analysts only predicted sales would go up 1.2%. It’s always kind of fun when analysts get it wrong like that. With employment gains, a healthy labor economy and low borrowing costs, sales are up in most parts of the United States. Unfortunately, not in the Northeast where sales took a super-slight dip. But the Midwest more than made up for it by kicking up 11.4%. The median price of an existing home now stands at $210,800. Previously-owned homes make up 90% of the housing market and there was a nice supply of about 1.88 million homes up for grabs in February.

Bankers behaving badly…

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

It’s been a bad day for Andrew Caspersen and he’s got a whole bunch those ahead of him. Caspersen, who was until very recently a partner at PJT Partners, was arrested for trying to defraud investors out of $95 million. Apparently, the misbehaved banker raised money using all kinds of fraudulent means and illegal tactics, including fake email accounts and even fake employees. He told an unsuspecting hedge-fund employee that he was looking to raise $80 million for a private equity fund so that it could buy stakes in companies owned by other private equity firms. Got that? He then explained that he already raised $30 million and, with that, the hedge-fund employee forked over $25 million from his hedge fund’s charity. The hedge-fund employee also ponied up an additional $400,000 from his own personal funds. The very smarmy Caspersen then took $8 million of his new found cash to cover money he already lifted from PJT – without authorization, of course. As for the rest of the money, Caspersen plopped it right into his own brokerage account. But the fun doesn’t stop there, because Caspersen lost all of it by trading stock options. After that, Casperesen hit up the hedge fund employee for another $20 million infusion, weaving into his tale the aformentioned fake employee, fake email address and domain. However, Caspersen told the hedge-fund employee that the fake employee worked for a very real private equity firm. The unnamed hedge-fund employee called the very real private equity firm to verify some details about the fake employee and that’s when Caspersen’s fraudulent cookie started to crumble. Classy, huh.

Ante up…

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You may not have heard of Anbang Insurance Group but you might just end up staying at one of their properties in the not too distant future. The China-based company, together with a consortium that includes J.C. Flowers & Co. and Primavera Capital, just raised their offer for Starwood Hotels and Resorts, the company that also owns Sheraton hotels, the St.Regis and W Hotels, to a whopping $14 billion. All in cash. That price tag easily trumps Marriott International Inc.’s $13.6 billion offer. Anbang is willing to shell out $82.75 per share of Starwood, easily making Marriott’s $78 per share offer chump change in comparison. But, for now anyways, Starwood shareholders are still seriously considering Marriott’s offer and are set to vote on it come April 8. There’s no word yet on whether or not Marriott will even attempt to raise and match Anbang’s offer. But if Starwood does diss Marriott in favor of Anbang’s very generous and enticing offer, Starwood would have to fork over a $450 million break-up fee to Marriott. Marriott would really love to add Starwood to its collection, that also includes Ritz-Carlton, so that it could become the world’s largest lodging company, with over 5,700 hotels. But Anbang’s goal is to simply increase its real estate assets in the United States, like it did last year when it scooped up New York’s Waldorf Astoria to the tune of $1.95 billion. If Anbang does manage to snap up Starwood, whose real-estate is rumored to be valued at $4 billion, it would be the biggest acquisition by a Chinese company in the United States. Of course, a deal that big by a foreign investor would have to go through the ringer by the Committee on Foreign Investments in the United States (CFIUS), a group that basically reviews deals of this magnitude to determine if they pose a threat to national security. But spoiler alert: experts think it’ll pass muster.

 

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Rotten Apple Earnings; Housing Boom Surge; Coke Is It With Earnings Beat

Who would have thunk it…

Image courtesy of zirconicusso/FreeDigitalPhotos.net

Image courtesy of zirconicusso/FreeDigitalPhotos.net

Apple lowers its forecast? Say it isn’t so. But shares of the tech giant are taking a hit today as the world’s largest and most expensive company dealt a major buzzkill to Wall Street yesterday with earnings that left many Apple enthusiasts downright bereft. The Cupertino-based company announced that it was expecting to hit between $49 billion to $51 billion in sales for the next quarter, much to the horror of analysts who expected Apple would try to bank $51.13 billion. The company also sold just (gasp!) 47.5 million phones instead of the expected 49 million. Profits hit $10.68 billion adding $1.85 per share. Except that analysts were still disappointed because Apple beat those earnings by a small 4 cents per share margin. And then it got weird. Apple brass said that sales of the Apple Watch beat expectations. The problems is no actual figures were given. So we’re just going to have to take their word for it. But, the Apple watch allegedly sold better than both the iPhone and iPads, in the same period following their launches. However, once again, we’re going to have to take their word for it. So what does this all mean for sure? Who knows. What was so peculiar is that because everyone was so focused on the numbers that they didn’t like, it obscured some other impressive figures. For instance, Apple more than doubled its sales in China from a year ago to $13.23 billion. Unfortunately, China’s economy is kind of iffy these days, so there’s no guarantee that sales there will grow significantly…or at all. So maybe the analysts do have some legitimate gripes after all.

The home is where it’s at…

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

It’s official. Sales of existing homes in the U.S. have nailed their highest pace, a whopping 3.2%, in eight years. Not since February of 2007, way before the prospect of a recession reared it’s ugly head, have people rushed out to scoop up pre-existing homes, according to the National Association of Realtors. 5.49 million homes took on new owners when analysts only expected 5.4 million to be sold. Experts think this increase might have a bit to do with a steady job market, not to mention the fact that mortgage rates are slowly climbing their way back up and people want to get in their purchases before those rates get too high.  Add to that a limited supply of homes and you’ve got yourself some houses that are getting a lot more buck for their bang. In fact. the median cost to buy a house is up to $236,400, 6.5% more than it was last year at this time.

Coke is it…

Image courtesy of Naypong/FreeDigitalPhotos.net

Image courtesy of Naypong/FreeDigitalPhotos.net

Behold, the world’s largest beverage company has beat the Street. This, despite the fact that for the last decade, the soft drink industry has been experiencing some major declines. This decline has been happening overseas as well, which is a huge problem since 40% of Coca Cola’s sales come from international markets. In any case, Coca Cola scored a profit increase of 20% at $3.1 billion, adding 63 cents per share on $12.2 billion in sales. Analysts only expected 60 cents per share. In fact, it was the beverage maker’s first quarterly sales gain in two years. I guess someone gets to keep their job for yet another quarter. So how did the Atlanta-based company manage to finagle this beat? By simply raising raising prices, but in a way hardly felt by consumers, at least most of them. A tactic that is both so simple, yet so genius. Then Coca Cola pulled another genius move when it started selling smaller cans of soda for more money. Can you believe that? Less product for more cash. And consumers drank it up. As for its “Share a Coke with…” campaign…it worked. Just wish they made a can with my name on it. Oh well. Kudos, Coca Cola brass. Perhaps you could impart some of your fiscal wisdom on Greece now.

Greece’s Finances are Messing Everybody Up; Puerto Rico’s in a Debt “Death Spiral”; Housing Up and About

It’s all Greek to me…

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

They gave us philosophy and high-protein yogurt. But now Greece is giving us nothing but global fiscal chaos as its banks are on the verge of collapse while the country prepares to maybe give a big fat default on its loans tomorrow. That is assuming it doesn’t pony up a $1.8 billion re-payment. Greek Prime Minister Alexis Tsipras gave a very unwelcome surprise to Greece’s creditors on Friday when he called for a referendum to take place on July 5 on whether or not Greece should follow the plan that the creditors have in store – which is, basically, good old-fashioned austerity and some deep deep spending cuts. Greeks will have plenty of time to ponder all this as they wait on endless lines just to withdraw about $60 bucks. That is, if the ATM’s still even have cash in them, since hundreds are already empty. Too bad the banks will be closed for the next six days. As for the question surrounding the “Grexit,” as in, Greece’s potential ugly exit from the European Union…well that remains to be determined. But, I’m guessing those creditors really want Alexis Tsipras to think long and hard about that 240 billion in euros the country has been getting since 2010 and how much they would really appreciate getting it back. Actually, I’m guessing everyone wants Alexis Tsipras to do something, as the situation in Greece is messing with financial markets all over the world.

Speaking of debt-laden countries…

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Puerto Rico seems to be inadvertently channeling Greece’s debt problem as its Governor, Alejandro Garcia Padilla, said the island’s debt is “not payable” and even asked for help to be pulled from its fiscal “death spiral.” His words. Not mine. Puerto Rico’s debt is a lot less than Greece’s but no less daunting with its $72 billion price tag. One of the problems facing Puerto Rico is that because it’s not a state, it doesn’t even get to file for bankruptcy. This puts the territory in quite the pickle. So like any other borrower, Puerto Rico is going to attempt to restructure some of those loans and see about getting some deferments. Otherwise, fiscal disaster looms and it could be years before it climbs its way out of that menacing “death spiral.”

And not in Greece or Puerto Rico…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Housing recovery is…recovering. At least based on the number of pending sales from previously owned homes. But hey, we’ll take it. That figure, brought to us courtesy of the National Association of Realtors, is up .9% for May and up to 112.6. And bonus: that was the fifth straight gain. And more bonus: it’s at its highest point in nine years. And who doesn’t like straight gains and high points? Better employment, (slightly) increasing salaries and lower borrowing costs are all helping in this arduous recovery process. Interestingly enough, those higher sales came from the markets located in the Northeast and West part of our country. Not so much from points in the Midwest and South which actually took a bit of a hit. A teensy one. Well, teensy enough that it was over-shadowed by those impressive gains in other parts of the land. In case you were wondering, the median price for a home these day is $228,700, almost 8% higher than last year.

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?

March Goes In Like a Lion and Out With Impressive Housing Numbers; McDonald’s Earnings: Not Lovin’ It; Why Chipotle’s Not Very Chipper Today

Single homes, town homes, and condos, oh my!

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

Don’t you just love it when good things happen in the economy? Today’s bearer of fiscal sunshine is brought to us by the folks over at the National Association of Realtors who have been very busy calculating some delightful numbers from March’s existing home sales. And wouldn’t ya know it? Sales of previously owned homes picked up well over 6%.That, number, by the way, is more than a 10% increase over the same time last year.  If that doesn’t put a smile on your Wednesday, than I don’t what does. Because there was so much more inventory and lots more from which to choose, 5.19 million transactions of several different types of abodes took place, definitely shadowing February’s underwhelming 4.89 million figure. March’s existing sales, believe it or not (though, why wouldn’t you), hit its highest levels in 18 months. Curious what the median price for a home was in March? How does $212,000 sound? If you don’t like it than you should have tried buying a house a year earlier because that $212,000 is a 7.8% increase over last year’s $196,700 median price tag.

Losing its luster…

Image courtesy of Stuart Miles/FreeDgitalPhotos.net

Image courtesy of Stuart Miles/FreeDgitalPhotos.net

The numbers are in for the Golden Arches and well, and it ain’t pretty. After announcing yet another quarter of disappointing earnings, the stock actually went up today. That’s because McDonalds CEO Steve Easterbrook announced that on May 4 he will unveil initial details of a plan that ought to turn the tides of fiscal woe at the world’s biggest burger chain. McDonald’s needs it now, more than ever, as chains like Chipotle and Taco Bell also announced earnings that McDonald’s would kill for right about now. While a shortage of pork and a bummer of a winter did some damage to Chipotle, its earnings still  managed to climb over 10%. As for Taco Bell, who has been taking digs at McDonald’s in an effort to boost its breakfast offerings, saw a 6% increase in its earnings. All this while McDonald’s pulled in a whopper of a failure (no offense, Burger King) coming in with earnings of $812 million and 84 cents a share. But wait a minute, the chain made money, so what’s the problem? The problem is that last year at this time, McDonald’s made way more money, like 32.6% more. Like $1.2 billion worth adding $1.21 to its shares. But as of late, McDonald’s numbers just keep going down. To be fair, 9 cents of that loss can be blamed on the strong U.S. dollar. But the rest of the losses belong all to McDonalds.

Speaking of Chipotle…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Chipotle, which has been happily stealing a nice chunk of McDonald’s clientele with its more wholesome offerings, could find itself in a similar pickle as the Golden Arches. While the Mexican Grill did do much better than McDonald’s, the chain still missed analysts’ estimates. Then to add hot sauce to the fiscal wound, the chain anticipates continued “rolling blackouts” until the end of the year, due to a shortage of pork, an essential ingredient in its beloved carnitas. Naturally, the news sent shares of the stock down over 8% at one point. Shares of the company, that has about 1,800 restaurants, are hovering around $640. Yes, per share.

Louisville Slugger is “Finnished”; eBay’s Big Changes; Housing Bummers

Take a swing at this…

Image courtesy of vectorolie/FreeDigitalPhotos.net

Image courtesy of vectorolie/FreeDigitalPhotos.net

It seems like only yesterday when John Hillerich carved out the iconic wooden baseball bat that would eventually become the Louisville Slugger. Actually it was closer to 1884, but details, my friend. Since then, more then 100 million Louisville Sluggers have been sold and it is the official bat of Major League Baseball. It’s been used by 60% of the ball players including Babe Ruth and Mickey Mantle. Now,  Hillerich & Bradsby descendant, John A. Hillerich, announced he’s selling the company to Wilson, a company owned by a larger Finnish company, called Amer Sports. Not finish – as in , wood finish, mind you. That would make more sense. I wrote Finnish. As in Helsinki. As in, do they even have baseball in Finland? The reported cost for selling off this iconic brand to a company based nowhere near Kentucky, or the United States  for that matter, is about $7o million. Louisville Slugger, alone, raked in $75 million in revenue in a $2.4 billion global baseball and softball industry. The U.S. is responsible for $1.4 billion of that. The move will cost 52 employees their jobs.

Board to tears…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Things are heating up at eBay as it gets set to bid adieu to PayPal later this year. If you recall, investor Carl Icahn wanted eBay and PayPal to do the splits. Venture capitalist Marc Andreessen was not down with that idea at all. Considering that Carl Icahn is the largest shareholder in eBay, he managed to get his way. Thus, Andreessen said buh-bye back in October and a whole new crew is set to run the show. For now we only know a few of them. Devin Wenig will be the new eBay CEO while Dan Schulman takes the CEO spot at PayPal. So where does that leave current eBay CEO John Donahoe? Good question but one to which I have no answer. But the exciting news today is the announcement of two new board members added to eBay. GoPro president and former Skype exec Tony Bates joins the board along with American Red Cross CEO Gail McGovern. McGovern becomes the third woman to join the board, by the way.

Housed…

Image courtesy of phanlop88/FreeDigitalPhotos.net

Image courtesy of phanlop88/FreeDigitalPhotos.net

As if we don’t have enough aggravation from this never-ending winter and unusually frigid March, leave it to the National Association of Realtors to disappoint us over sales of pre-existing homes. According to the NAR, February was less than spectacular. A lot less. While sales didn’t necessarily go down, they barely went up, by 1.2% to 4.88 million. That was especially annoying because January was no great shakes in terms of sales either. The median price of a home in February was $202,600, up from 2014’s $188,4000. So who’s to blame? Well, weather always plays its mean little part. But Mother Nature wasn’t the only factor toying with our fiscal emotions. Home values are going up way faster than paychecks are. That tends to put a damper on things. Also, there’s a lot less inventory out there. Part of that problem is that so many people owe more on their homes than their homes are actually worth. So, basically, they stand to lose by selling their homes. But luckily, there is still a chance to reverse the fiscal tide. The busiest time of the year for selling homes is just around the corner and with credit rules easing and an improving job market, there’s no need to fret. Yet.

 

The White House Comes After Wall Street Advisors; January’s Frigid Housing Numbers; Target’s New Shipping Policy Gives Cause to Shop

Hard sell…

Image courtesy of ddpavumba/FreeDigitalPhotos.net

Image courtesy of ddpavumba/FreeDigitalPhotos.net

The White House is coming after Wall Street, in particular, financial advisors who might be a little too loose with money saved diligently by America’s middle class. President Obama wants the Labor Department to revamp its rules ensuring that retirement advisors put clients’ fiscal needs before their own bank accounts by putting the kibosh on hidden fees and conflicts of interest. Currently, investment advisors have this practice of suggesting expensive products to their clients that could at best be categorized as “suitable”  – but not “ideal.” In fact, these “suitable” investment products could cost a retiree five years worth of savings. Investment advisors would actually now be required to follow, dare I say it – a “fiduciary standard.” Many Republicans and financial firms, not to mention Republicans who work in financial firms, are just not that into this whole new idea of revamping the rules for two reasons that aren’t likely to elicit any sympathy: 1. They’re worried a new system will considerably shrink all the money they make in compensation fees and 2. They think the current system works just fine. However, the current system, according to White House, anyway, says it has cost unsuspecting working middle-class families an estimated $17 billion a year.  So who is this system working for, exactly? Hmmm.

Bring it home…

Image courtesy of hywards/FreeDigitalPhoos.net

Image courtesy of hywards/FreeDigitalPhoos.net

The number of existing homes that sold in January was 4.82 million. In case you were ready to celebrate…don’t. Those numbers suck. They suck because it’s a 4.9% drop from December and is at the lowest rate it has been in nine months. Nine months ago, (which by the way,  was May  – in case you didn’t feel like doing the math) saw 4.9 million homes sold. The National Association of Realtors provided us with these disappointing figures but all is not lost because, as it turns out, this 4.82 million figure is still 3.2% higher than it was a year ago. Naturally it wouldn’t be right if much of the blame didn’t go to Mother Nature who, it seems, loves nothing more than setting the bitter wintry stage for gloomy fiscal numbers. But with low interest rates and strong jobs numbers, here’s hoping spring will kick winter’s fiscal butt.

Aw’ ship…

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

Target has graciously decided to offer free shipping for online orders on just a $25 minimum purchase – with no exclusions, allegedly. Be still my beating consumer heart. If you recall – as I certainly do – Target was offering “free shipping” with a minimum $50 order. The retailer was inspired by the success it had when it offered free holiday season shipping through December 20, this past holiday season. It was an effort to compete with the slew of online retailers, but it payed off in more ways than one.  The company set new sales records for Thanksgiving and cyber-Monday and saw 60% of its website traffic come from mobile users. Once upon a time Amazon also offered free shipping with a $25 minimum purchase but alas, its investors got their way and Amazon was forced to up its minimum to $35. In the meantime, Walmart, while raising its minimum wage, has yet to change their free shipping policy, which offers the perk on only certain “eligible orders,” which seems a little too open to interpretation, as far as I’m concerned. Target also has big gigantic plans to open online fulfillment centers and if that doesn’t bode a Target/Amazon smack down then I don’t know what does. Target’s inventive digital app has also been doing particularly well in the popularity contest picking up a couple new million users and shooting past that pesky $1 billion promo sales mark.