Barclays Busted; Ford Ditches Mexico for China; UPS Gives Heads Up on Holiday Shipping

Cheerio…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Looks like 2008 is not done haunting banks that allegedly played dirty back then. Today’s banking scandal, that includes charges of conspiracy to commit fraud, is brought to us by Barclays and four of its former executives. The trouble started in 2008 when Barclays reached out to Qatar for some substantial cash that the bank was going to use to avoid a major government bailout. Barclays was inclined to hit up Qatar investors for some big money instead of getting a governmental bailout because a governmental bailout comes with major governmental oversight. And for banks, governmental oversight is a four letter word. Of course, asking help from the Qataris wasn’t exactly the problem. While there were two rounds of fundraising from Qatari investors, with one involving a $3 billion loan for Barclays, the UK bank also paid the Qataris $406 million in “fees.” It seems that last bit might not have been honestly and properly disclosed to shareholders. And that got authorities wondering if Barclays was trying to cover up the the gist of the plan because it might not necessarily have been totally legit. Besides, anytime there is suspicion of toying with shareholders, you can expect that there will be hell to pay.  These charges mark the first time that any bank in Britain got busted for questionably lawful behavior during the 2008 fiscal crisis. So congrats, Barclays. You now hold that dubious distinction. If convicted, the bank faces a nasty fine and the former execs each face up to ten years in prison if found guilty. As for the Qatari’s, they’re off the hook. Completely.

Adios…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Ford is ditching Mexico for China, at least as far as the Ford Focus is concerned.  Rumor has it that by ending all production of the vehicle in the U.S. and moving production to China instead of Mexico,  Ford will end up saving a whopping $1 billion. Which is especially weird since it is cheaper to build and import cars from Mexico as opposed to China. But here’s where the logic enters: Ford will now spend money to revamp just one factory in China instead of two in North America. Hence, billions of dollars in savings. While no U.S. jobs are expected to be affected, the United Auto Workers remained conspicuously silent regarding the news. This latest decision is the very first major one to come from Ford’s newly installed CEO Jim Hackett. However, what analysts are finding interesting is that this move shows how Ford is putting the focus – no pun intended – on SUV’s and trucks, as opposed to smaller, more fuel efficient cars, thanks to lower fuel costs. Besides, sales of the Ford Focus are down way over 20% since low gas prices are no longer standing in the way of those coveted SUV’s. The only question now is how is this move going to sit with President Trump and what will he tweet about it.

It’s beginning to look a lot like Christmas…

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Start saving up. Christmas is just around the corner and UPS wants to let you know that it will be charging you extra to ship those holiday presents. Between November 19 and December 2, the package carrier will slap on a 27 cents surcharge and then again, from December 17 – 23. If you want your package delivered via next day air, then prepare to whip out 81 cents and 97 cents for two or three day ground delivery.  UPS typically delivers around 30 million packages a day during the holiday season and analysts are expecting that will rise even more. And who can blame UPS for charging more money to deliver your goods? After all, the holidays are the company’s peak season where not only can their internal systems become over-whelmed, but mother-nature can throw out a few unhelpful surprises as well.

 

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Oil Vey 2: The Wrath of Iran; Virtual Company with Real Billions; Dr. Pepper’s Outlook Fizzing Out

Double double oil and trouble…

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Image courtesy of jk1991/FreeDigitalPhotos.net

Oil surged 6% today. Yay. It finally finally went above $30 a barrel today. Another yay.  But maybe you’re thinking that positively sucks as you notice that you have a quarter of a tank of gas left in your car. However, in the grand scheme of things, a very grand scheme which does not fit in this blog today, a gradual price increase in gas is a healthy economic indicator. Plenty of folks on Wall Street are attributing this healthy surge to some conversations that were held recently between OPEC and non-OPEC members. Namely, Russia and Saudi Arabia. Oh yeah, Qatar and Venzuela were also allowed to participate. The deal is that these oil producers will cap their crude production – just as long as other major producers follow suit. The last time an  OPEC/non-OPEC “deal” was made was 15 years ago. And like the one 15 years ago, this one is not expected to do much, except act as a starting point. How reassuring. Now, guess which country has NO plans to cap, curb or freeze oil production? Iran, of course.  Sure, the totalitarian-run country thinks it’s a bummer that oil prices are so low, but its leaders are so hell-bent on re-grabbing its market share after all those pesky international sanctions it had to endure for the last 30 years, that it has no intention of curbing production. By the way, conspicuously absent from any talks was Canada, a country that just happens to have the third largest oil reserves, and China, the world’s fourth largest oil producer. Hmmm. Wonder what we ought to take away from that?

All in a maze work…

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Image courtesy of Nutdanai Apikhomboonwaroot/FreeDigitalPhotos.net

At least virtual reality doesn’t bite. Swiss-based company MindMaze, a neural virtual reality platform – which is just as cool as it sounds – now has a pretty amazing valuation. After scoring $100 million in its latest round of funding, the company upped its valuation to over $1 billion. The company’s technology uses virtual and augmented reality and sells electronic headsets to hospitals in order to help rehabilitate stroke patients. The company also has plans to use its rehabilitation features for other injuries, and even amputations. Of course, since we are talking virtual reality, or VR as the cool kids call it, other versions will be available for video gaming as well. In an effort to boost profitability, the company is toying with the idea of selling the hardware separate from the software. It is the fifth start-up company of its kind, and joins the ranks of Oculous VR and Magic Leap. Apparently, investors dig the technology too, seeing as how they have dumped around $4 billion into various VR companies since 2010.

I’m not a Pepper…

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Dr. Pepper Snapple Group posted their fourth quarter earnings and there’s good news…and not so good news. Of course, the good news is the company’s profit. The beverage company, which also makes Canada Dry and A&W Root Beer, among other products, scored a $185 million profit, adding a buck per share and shooting down analyst estimates of 98 cents per share. Last year at this time the company earned $150 million with 77 cents added per share. The Texas-based company also pulled down $1.55 billion in revenue, a nice little boost from 2015’s $1.51 billion. But when we turn to the company’s outlook, we then find the not so good news. Despite people’s thirst, Dr. Pepper’s outlook is weak, expecting just a 1% increase in net sales. Even in 2015, the company took in a 3% increase. The company is figuring it’ll earn somewhere between $4.20 to $4.30 per share for the full year, even though predictions were for $4.34. Dr. Pepper may not be blaming the oil glut on the weak outlook, but there is another culprit – the ever blame-worthy strong dollar, which even managed to sully the beverage industry’s numbers.