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

Busted…

id-10095540

Image courtesy of freedooom/FreeDigitalPhotos.net

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…

ID-100426331

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

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…

id-100377914

Image courtesy of Geerati/FreeDigitalPhotos.net

 

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.

Oil-vey! Trump’s Secretary of State Pick Putin Us On; Trump vs. Silicon Valley; Rate Hike Sends Joy Throughout Wall Street

Energized…

id-100303902

Image courtesy of hywards/FreeDigitalPhotos.net

Trump’s latest pick, this time for Secretary of State, has naturally already ruffled more than a few political feathers. Enter Exxon Mobil Corp. CEO Rex Tillerson, a man who happens to be very very cushy with Russia and its fearless leader, Vladimir Putin. If you recall, Russia is very brazenly messing with Ukraine, to the point where the U.S. felt compelled to impose sanctions. Now, the CIA said the country also launched cyber attacks against the U.S. in an effort to influence the election results. But that very same country awarded Tillerson the Friendship Medal in 2013.  Tillerson, who has never held a public office, has been at Exxon, the world’s largest energy firm, for 40 years and during that time spent many many hours cultivating relationships and establishing major business deals with countless foreign countries and companies. But he’ll still need to be confirmed by the Senate. However, considering that former Secretaries of State Condoleeza Rice and James Baker are big fans, not to mention Defense Secretary Robert Gates, he shouldn’t have too much of an uphill battle. By the way, Condoleeza Rice also happens to be a consultant at Exxon Mobil, and Robert Gates was a consultant at one point too. Rumor has it that they all plan to vouch for the CEO.  Lindsay Graham and John McCain, however, are just not that into him, presumably because of his chummy relationship with Putin, of whom they are not particularly fond. Also not in Tillerson’s favor is the fact that Exxon currently has billions of dollars in deals with Russia, not to mention one valued at $500 billion that involves exploring and pumping for oil in Siberia. Those deals can only go forward if the U.S. decides to lift its sanctions against Russia and, fyi,  Tillerson was never much of a fan of the sanctions. And just so you know, according to a filing from a year ago, Tillerson owns $218 million in Exxon stock along with a $70 million pension plan. Shares of Exxon Mobil went up 2.2% on the news of Tillerson’s nomination.

 

Speaking of Trump…

id-100437524

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Tomorrow is a big day at Trump Towers as some of Silicon Valley’s top execs head over to the President-elect’s digs for a little quality time with Donald Trump. Expected to attend the power meeting are: Apple’s Tim Cook, Facebook’s Sheryl Sandberg, Microsoft’s Satya Nadella, Amazon’s Jeff Bezos, Tesla’s Elon Musk and Google’s Sergey Brin and Eric Schmidt…to name but a few. While the agenda’s not public, there are some predictions about what might be discussed tomorrow. There’s the not-so-minor issue of antitrust enforcement and those pesky government demands for user data. But much higher on that list is Trump’s immigration policies and how they have the potential to put a very major damper on the inner workings at many of these Silicon Valley companies. The fact that these companies bring in a lot of employees on special visas, not to mention that they also send plenty of jobs overseas, doesn’t exactly jibe well with Trump’s vision of “Making America Great Again.”  To be fair, Apple did say it has 80,000 employees in the United States and is also responsible for creating another 2 million jobs from all the business opportunities Apple creates. However, Trump did say, in his very eloquent way, that he wants to “get Apple to build their damn computers and things” right here.  Donald Trump is all for establishing major tax reforms and is acutely aware that all these tech companies have a lot of cash offshore. Major reform will help bring that cash back to the States. So its in everyone’s best interests to work together towards that goal, whether they supported Trump’s presidential aspirations or not. And for the record, they did not.

Stocks, and bonds and hikes…Oh my!

id-100302304

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Stocks all over the world rejoiced today by going up while the Dow Jones Industrial Average came thisclose to hitting the 20,000 mark following its 9% surge since Election Day. Actually, the index came within 50 points of the 20,000 mark which sent Wall Street into fits of fiscal joy. The S&P got in on the action by going up .8% to its very own all-time high. The reason for all this excitement is because the Federal Reserve is expected to officially and finally finally announce a rate hike tomorrow, marking the second time in ten years that we get to witness and take part in that elusive increase. Rate hikes are welcome since they signal that the economy is strong and steady in all the right ways. Low interest rates have this nifty little effect on stocks that makes them cost higher. Problem is low interest rates are just no good  for the savers among us who like high interest rates because of the income they get from bonds and bank accounts.  Even though borrowing costs are about to get that much higher, investors are still positively giddy at the prospect that the President-elect intends to usher in an era of potentially lower corporate tax rates, less regulation and lots more infrastructure spending.

 

Pharmaceutical Phraud; Yellen for a Hike; Wells Fargo-away

There’s a fungus among us…

id-100267967

Image courtesy of emily9/FreeDigitalPhotos.net

There’s another pharmaceutical company today that’s in big trouble today and this time it has nothing to do with EpiPens. Today’s alleged fraudulent crimes are brought to us by former Valeant Pharmaceutical Inc. executive Gary Tanner and defunct Philidor Pharmaceutical Services LLC chief executive Andrew Davenport. Tanner and Davenport allegedly participated in a fraud and kick-back scheme that netted the two tens of millions of dollars. Gosh who knew the pharmaceutical industry could be such a hot bed for illicit activity? The two execs apparently didn’t disclose to insurers that the two companies were connected. Valeant played the part of the big fancy drug company and Philidor played the supporting role of the mail-order pharmacy that conveniently helped boost sales of Valeant’s drug offerings by making sure they filled Valeant prescriptions. Philidor graciously assisted patients in getting insurance coverage for considerably pricier Valeant drugs instead of cheaper alternatives. In the meantime, Philidor would then request to be reimbursed by the insurance companies. Davenport apparently scored over $40 million from the scheme while Davenport only walked away with a paltry $10 million worth of kickbacks. Clearly he needs to hone his fraud “A” game. The scheme ran from December 2012 until September 2015 with the criminal complaint being filed in Manhattan Federal Court. Back in August of 2015, Valeant’s stock hit an all-time closing high of $262.52. But it should come as no surprise that the stock has since lost more than 80% of its value for a number of reasons, each worse than the next. The stock was trading under $18 today.

1-2-3 hike!

id-100377914

Image courtesy of Geerati/FreeDigitalPhotos.net

Janet Yellen (thankfully) stole the Wall Street spotlight from Donald Trump today announcing that a rate hike “could well become appropriate relatively soon.” Loosely translated, it means it could and most likely will happen soon so feel free to hold your breath. The decision not to raise the rate at the last meeting was because the labor market still wasn’t quite where the Fed wanted to see it.  But now things are looking up…fiscally speaking, that is, and with steady job growth, wage gains and signs that point to firming inflation, that rate hike is looking like a done deal. But I guess we’ll have to wait until December 13-14, the date of the Fed’s next meeting, to see when that move might officially happen. As for Janet Yellen herself, she stayed mum on the presidential election but said she plans to stay on in her post until January of 2018, when her term officially ends. Many assumed that Yellen would resign once Trump was elected considering he’s not exactly a fan of her monetary policies.  But the Dove of Wall Street let ’em know that she’s staying put, Trump or not.

Cry me a river…

id-10070285

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Wells Fargo is getting some heavy doses of fiscal karma as it reported today that there were 44% fewer new account openings in October of 2016, compared to October 2015. That’s in addition to a 27% drop just from last month. As for credit card applications, those dropped by half to just 200,00 in October. There was a 3% increase in customer initiated closings over previous months as well. Because after all, why wouldn’t you choose to close an  account that you didn’t choose to open in the first place? However, Wells Fargo was at least savvy enough to make such predictions as October marked a full month since the lid was blown off the bank’s unauthorized accounts scandal as the settlement was disclosed on September 8 to the whopping tune of $185 million. But at least the bank finally and wisely decided to chuck sales goals for consumer bankers which were the primary culprit that ultimately led to the scandal. As for former CEO John Stumpf, he’s a free agent now, not that anyone’s going to be checking out his LinkedIn profile anytime soon.

UnderArmour Gets a Chink; McDonald’s Deserves a Break Today; Rate a Minute! No Hike in Sight

Fit to be bit…

ID-100121028

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Under Armour seems to have suffered a chink in its earnings as its profits took a particularly brutal 57% dive. The primary culprit is Sports Authority, a company that is thisclose to becoming retail history, but was also one of Under Armour’s biggest retailers carrying tons of its merchandise. Hence, Under Armour took what’s called an impairment charge, and impairing it was, to the tune of $23 million. Last year at this time, the Maryland-based company hauled in an impressive $14.8 million profit. This year, however, that profit was a very disappointing $6.3 million. On the bright side, Under Armour is headed to Kohl’s 1,100 department stores next year. Apparently, it’s a way to connect with female consumers. Who knew. Under Armour brass think this new foray into Kohl’s will make women’s sales hit the $1 billion mark. Besides, since Nike, Under Armour’s biggest competitor, also happens to have a strong – very strong – presence in Kohl’s,  Under Armour hopes its new endeavor will take a big chunk out of the competition’s sales. But if Under Armour’s numbers still fail to impress next quarter, it might have to do with the exorbitant real estate it just leased in New York City – the renowned FAO Schwarz toy store. The rent on that baby ought to set the company back. But the athletic apparel company is banking heavily that the location location location will more than compensate by bringing in some boffo sales.

Mac-attacks need not apply…

ID-100373326

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The Golden Arches seemed to have lost their luster this quarter with worse than expected earnings and profit falling over 9% to $1.1 billion. But how could that be if you and everyone you know was there all the time dining on its delectable all-day breakfast selections? And herein lies the problem. Well, part of it anyway. You see, McDonald’s breakfast offerings skew cheaper than the rest of its menu items. Apparently consumers really like having the option to eat breakfast for lunch…and dinner. And they did. A lot. Instead of the pricier items. Incidentally, Dunkin Brands Group Inc, Starbucks Corp and Wendy’s, to name a few, also reported unsavory earnings and shares of McDonald’s took a nasty tumble, bringing along the rest of the industry with it. It seems McDonald’s menu prices also had a negative impact on earnings. The cost of food went down in grocery stores and because of it, more would-be diners chose to eat at home. The curious thing is that the cost of food also went for McDonald’s, which ought to mean that its selections should have been cheaper, or at any rate, stayed the same price. Except that they didn’t because McDonald’s had to increase menu prices to compensate for increased labor costs.

Fed-up…

ID-100218125

Image courtesy of sheelamohan/FreeDigitalPhotos.net

In case you were holding your breath to see if the Fed is going to raise rates, you can let it out now. It won’t. At least not before September. Or maybe even December. Apparently the money experts want hard-core evidence of a pick-up in inflation before the Fed decides to make any changes. The Fed wants to see a 2% inflation rate, which might seem like an incredibly minuscule number, yet it’s one that carries incredible weight.  Then there’s the not-so-slight issue of the relatively healthy U.S. economy in the face of the not-as-healthy global economy. Even as the markets here reached new highs, with a labor market that saw an impressive 287,000 jobs added in June, experts – me not being one, mind you –  expect maybe one rate hike this year. From the Brexit to China and other assorted EU drama coming down the pike, the Fed’s not too eager to put in for any hikes until the rest of world cooperates they way it ought to, fiscally speaking anyway. After tomorrow, the Fed’s got three more meetings this year to decide its next move, so sit tight. Or don’t.

In: Charter Spectrum, Out: Time Warner Cable; So Over-time; Has the Fed Finally Made Up its Mind?

Thanks for the memories…

ID-100262407

Image courtesy of iosphere/FreeDigitalPhotos.net

As the Charter Communications $55.1 billion acquisition of Time Warner Cable comes to a close, we can now bid a final adieu to the latter. And that’s no great loss since Time Warner Cable had the dubious distinction of earning the worst customer service score according to a survey done by the American Customer Satisfaction Index. Yet, strangely enough, TWC still managed to pick up some 32,000 video subscribers and another million high-speed internet users in 2015. In any case, this acquisition joins Charter’s other recent acquisition of Bright House Networks LLC to the tune of $10.4 billion. Charter will scrap the Time Warner Cable name, which nobody is likely to miss, and the newly formed company will be named “Charter” while its products and services will be sold under the name “Spectrum.” Catchy, no?  With that, Charter Spectrum becomes the second largest cable operator in the country, picking up 27.5 million new customers and playing second to Comcast Corp. As for Time Warner Cable’s outgoing CEO, Rob Marcus, he can wipe away his tears with his $92 million severance package, while trying to polish up his LinkedIn profile.

Laboring on…

ID-100396351

Image courtesy of saphatthachat/FreeDigitalPhotos.net

The Labor Department’s got some new rules headed your way, but you might not want to try breaking these, particularly if you find yourself working plenty of overtime. Because if you earn less than $47,476 a year, then congrats…sort of. You will now qualify for overtime and a half if you work more than forty hours a week. That’s a far cry from the $23,660 that served as the previous threshold. The reason for nearly doubling that threshold, by the way, is that the Labor Department hadn’t changed the rules since 2004. So I guess it’s kind of making up for lost time.and now has plans to change the numbers up every three years. In any case,  4.2 million workers will be positively affected by these new changes, with a big chunk of that being the millennial demographic. The new rules, however, could have unintended negative consequences. For instance, employers might decide to limit the amount of hours employees can work in order to avoid having to pay them overtime. Employers also might wish to start giving out raises. That might, at first, seem like a very good thing. However, it would be so that they can pay employees more than the $47,476 in order to, once again, avoid paying overtime. But then there are the “highly compensated employees” who may become eligible for overtime as well. By highly compensated, I mean getting paid at least $134, 004. In order for these highly compensated employees to get their overtime paid,  they must pass a “minimal duties test.” Problem is the Labor Department isn’t entirely clear about that part and is leaving it to the discretion of the employers. And before you start slaving away on all those extra hours, know that these rules wont take effect until December 1.

To hike or not to hike…

ID-100213544

Image courtesy of iosphere/FreeDigitalPhotos.net

It’s official. Or not. The minutes of April’s Fed meeting were released and the would-be experts think there will indeed be a rate hike in June of .25%-.50%. Members of the Fed were pinning their hopes and dreams on finding some hard-core data that the economy is growing. It seems they got it. For one, inflation is headed in the right direction towards that 2% target rate the Fed has its sights on. And unlike George Soros, the Fed is not as freaked out by the prospects of an economic slowdown. Throw in a good labor market, respectable consumer spending and even more respectable manufacturing output numbers and you just might be witness to a June rate hike. News of the likely hike sent the dollar to a seven week high and had markets all over the place. But there is that little issue about April’s disappointing jobs data which came out so inconveniently after the Fed had its meeting. Despite the fact that the labor market is looking fairly decent, those April digits can spook even the most optimistic of economists. So it’s still entirely possible that a rate hike might also get nixed.

The Middle’s Not Where It’s At; Unemployment Blame Game; The Fed’s Milky White Problem

Stuck in the middle…

ID-100348972

Image courtesy of kittijaroon/FreeDigitalPhotos.net

The middle class is shrinking and that’s not necessarily a good thing. Studies done by the Pew Research Center show that between 2000 and 2014, the middle class actually shrank in 9 out of ten U.S. cities. Of the 229 U.S. cities cited in the study, the amount of households classified as middle class dropped in 203 of those cities. Sure, some of those households left their socioeconomic perches because they graduated to the upper class. But that’s mostly not the case. In fact, the middle class now makes up less than half the population in the cities studied while the income inequality gap keeps growing. That could trigger some ugly economic consequences. The wider the gap gets, the more it is likely to inhibit economic growth. At least that’s what some experts think. What’s worse is that children raised in areas that are predominantly low-income, are less likely to reach the middle class. In case you were wondering, the middle class is defined as a household that earns an annual income between 2/3 to two times the median income. In 2014, a three-person household was considered middle class if its annual income was between $42,000 to $125,000. The largest middle class populations were found to be in the good old midwest. I’m sure there is irony in there somewhere. The largest low-income populations were found to be in the southwest, particularly near the Mexico border, while the highest populations of upper class were found to be in the northeast and the west coast. No matter where you stand on the issue, it’s one that is going to figure prominently in the November elections.

On the Verizon…

ID-10042111

Image courtesy of xedos4/FreeDigitalPhotos.net

Nothing like unemployment numbers to ruin an otherwise pleasant Thursday. The number of first time applicants rose by 20,000 to a grand total of 294,000 seeking jobless benefits. Unfortunately it marked the third straight week of increases of first-time applicants. But at least that number was still below the 300,00 mark  – for 62 weeks straight, mind you  – so the situation isn’t that alarming. Well, except maybe for those who find themselves out of work. Also, economists are actually pointing the finger at Verizon – or rather the 40,000 Verizon workers who went on strike back in April. They are likely the ones who have applied for jobless benefits while on strike.  Economists predicted that the number of applicants would fall to about 270,000, which makes perfect mathematical sense if you figure that the Verizon strike is apparently responsible for that unwelcome surge and without it the numbers would have dropped.

White as a sheet…

ID-100282969

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The Fed’s been taking a lot of heat lately. And some of that heat has absolutely nothing to do with the fact that it hasn’t raised rates, yet again. Instead, top lawmakers penned a letter to Janet Yellen and company calling out the lack of diversity at the Central Bank which is “disproportionately white and male.” Ha! Who would have thought the Central Bank and the Academy Awards have something in common? Signed by 116 members of the House and 11 senators, the letter expressed disappointment over the Fed’s failure to “represent the public” and would like it to consider a number of factors, including race, when filling posts in the future. The letter did, however, praise Yellen for her strong leadership. So props to her on that. So just how disproportionately white and male is the Fed? Well, of the five current Fed governors, all of them are white. However, to be fair, two of them are women, including Janet Yellen, who happens to be the first women to head the Central Bank in its 100 year history. If that’s not disproportionately white and male, then I don’t know what is. Since monetary policy strongly correlates with hard-working Americans of every ilk, it does seem odd that the Fed is primarily made up of mostly one ilk. Give or take. At least minorities make up 24% of regional Fed bank boards. While that’s not an ideal representation, it’s still a 16% increase from 2010.

 

Rate Hike? What Rate Hike?; Chipotle’s Rocky Road to Recovery; McCormick’s Spicy Good Earnings

Easy does it?

ID-10030403

Image courtesy of twobee/FreeDigitalPhots.net

Well, if you’re looking for the Fed to raise rates, don’t hold your breath. Despite the fact that the Fed’s next meeting is planned for April 26th and 27th, experts think a move like that probably wont happen before July. It was initially believed that there would be four rate hikes over the course of the year, after the Fed raised the rates for the first time in nine years back in December. But now it looks like there will be just two.  Federal Reserve Chair Janet Yellen is still promising a gradual pace of rate increases, but even she admits that the economic climate just isn’t quite impressing these days. The Central Bank is paying very close attention to all the annoying economic issues going on in the world, like the global economic slump, the very very low oil prices and a relatively volatile stock market. Of course, it wouldn’t be right not to mention China’s own economic downturn.  Plus the Fed’s not too stoked about the rate of inflation, which has been holding steady at about 1% when its target is closer to a 2% rate. Add to that weak consumer spending and you’ve got a Fed that’s not looking to stir any fiscal trouble. Hence, the Fed has assured the country that it plans to “proceed cautiously” in its rate hike plans, which is awfully considerate, according to some people, anyway.

Burned burrito…

ID-100317042

Image courtesy of rakratchada torsap/FreeDigitalPhotos.net

Free burritos or not, Chiptole’s road to fiscal recovery is looking very far off.  Wedbush Securities analyst Nick Setyan came out with a new report that says he doesn’t expect the fast food chain to recover before 2018 – calling it “the best case-scenario” – and even lowered Chipotle’s price target from $450 – $400. Ouch. Before the food safety crisis, each Chipotle restaurant was pulling down $2.5 million in sales on average. But that’s not expected to happen again for quite some time, especially given the fact that Chipotle’s operating costs are only going to get higher and higher because of its more comprehensive and stringent food safety measures. And even though the company sent out coupons for nine million free burritos, with another 21 million free burrito vouchers en route, Chipotle will still eat a $62 million tab for that, as a burrito typically costs $7.10. But hey, whatever it takes to try and erase the ugliness of E. Coli and norovirus outbreaks, right? Even with all those vouchers being sent out, the company only expects that a quarter of them will actually get redeemed. Naturally, news of the report sent shares south when the stock is already down 37% since August. Shares of Chipotle closed today at 460.10.

Spice spice baby…

ID-100362915

Image courtesy of jk1991/FreeDigitalPhotos.net

Of all the companies to report earnings lately, this one’s pretty…spicy. Yes. I had to go there. McCormick & Co. just released its first quarter results and considering that the company’s products aren’t items typically used in bulk, the $13 billion company pulled in some very impressive figures. In the process, McCormick & Co. even managed to raise its 2016 outlook, and unlike other major food producers that have been struggling to keep up with a health/organic revolution,  McCormick hasn’t faced quite the same challenges. In fact, its stock is up around 28% in the last twelve months with a little help from some recent acquisitions. The spice-maker was expecting to earn between $3.65 to $3.72 per share. But now it’s looking like it’ll pick up between $3.68 and $3.75 per share for the year. Incidentally, despite China’s economic downturn, the country still managed to give McCormick some boffo growth. Perhaps there’s a correlation between economic stress and and a desire for spicy food? Hmm. Will have to explore that one…In any case, McCormick picked up a profit of $93.4 million on $1.03 billion in revenue and adding 73 cents per share. Analysts only expected 69 cents on $1.03 billion in revenue while the year before the company took in a profit of $70.5 million on $1.01 billion in revenue with 55 cents added per share. And if that’s not enough, McCormick also scored a new 52 week high today of 99.90.

To Hike or Not to Hike: That is the Fiscal Question; Doggone it, Home of the Whopper Gets Frank; Is Lumber Liquidators Finally in the Clear?

 

1,2,3 – Hike!

ID-100127517

Image courtesy of jscreationzs/FreeDigitalPhotos.net

The Fed will most likely not be lowering rates so don’t hold your breath. Not that you were planning on it. But the Fed is likely to do one of two things: raise rates according to its plan of “gradual adjustments” – meaning regularly raising those rates a smidgeon.  Or the Fed will choose to do nothing. Zero. Zilch. Nada. You might have thought that China is messing up our economy in unimaginable financial ways and therefore a rate reduction is justified. However, the Fed doesn’t feel that China is messing it up enough to warrant lowering rates. In fact, Janet Yellen and company also don’t feel that the rest of the world’s economic troubles are affecting the U.S. so much either. Instead, Yellen feels the U.S. economy will grow no matter what, oil gluts, falling global stocks, and all. None of it is our problem and we shouldn’t waste time worrying how it will all affect the U.S. economy. What is our problem is that the Dow fell 1,700 points since the Fed announced its first rate hike back in December. Even so, Ms. Yellen sees employment gains and wage growth, despite financial tightening conditions, and said that the U.S. financial sector has been resilient.” Be on the lookout for a potential rate hike (or not) next month when the Fed holds its next meeting March 15-16.

Hot diggety dog…

ID-100323298

Image courtesy of atibodyphoto/FreeDigitalPhotos.net

It might be the home of the Whopper but Burger King’s new menu offering is taking on a whole different shape. Starting on February 23, Burger King will be serving up hot dogs at all of its 7,100 + locations in the U.S. Burger King brass are calling it “the most obvious product launch ever” and feel that hot dogs are a natural fit with the chain. Besides, the dogs were already tested in five markets bringing in sales increases that also apparently proved a natural fit for the company. It will make Burger King the biggest hot dog seller in the country and bonus: There will be no boiling or rolling involved in crafting these fine specimens. Instead, the dogs will be flame broiled and come in two variations: the $1.99 “classic” version and the $2.39 “chili cheese” version.  Burger King is partnering with Oscar Mayer to make a proprietary 100% beef delicacy. But the best part – to me anyway – Snoop Dogg and Charro (not sure how they came up with that combo) will be starring in training videos, hoping to make it more exciting for employees. Hey, whatever works.

Hold your breath…

ID-100162374

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Lumber Liquidators Holdings Inc. is almost out of the fiscal woods. Sort of. After testing conducted by the U.S. Consumer Product Safety Commission, the results are in and Lumber Liquidators’ suspect flooring has a very low risk of causing cancer. Phew. What is more likely to result from the toxic floor coverings are breathing problems and other irritations – besides the emotional irritations brought on by purchasing flooring that contains formaldehyde. Lumber Liquidators has already paid up $13.2 million in fines and forfeitures for its formaldehyde-laced floors produced in China between 2012 and 2014. If you recall, it was just almost a year ago when “60 Minutes” ran a very (financially) damaging piece exposing the company. But now, with any good news on Wall Street, shares have been rising steadily today, hovering at about 12.63. Its 52 week low was 10.53.

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.

Waffle House: For All Your Shipping Needs; Home Deport Improves Earnings; Fed Chairwoman Ponders Millenials

Can you expedite that waffle?  

Image courtesy of rakratchada torsap/FreeDigitalPhotos.net

Image courtesy of rakratchada torsap/FreeDigitalPhotos.net

What do you get when you cross a restaurant chain known for its waffles with a delivery app? Roadie, of course. Haven’t heard of it yet? That’s probably because it’s only been up and running for a few weeks. However, it’s already got $10 million worth of funding with some of that cash coming from Google’s Eric Schmidt. The app is also being touted as the “Über of shipping.” The idea, created by founder Marc Gorlin is so simple yet so genius. It matches up people who need to ship something with other people who are already driving to that location, often for much less than what the usual shipping companies charge. And just where do the waffles come in? Enter Waffle House and its 1,750 locations which will serve as the meeting points for shippers and insured drivers. The cost to ship an item  – and yes it has to be legal! – with a “Roadie” could range from $12 – $200. First time “Roadie” downloaders are eligible for a free waffle. Get a free beverage to take along with you every time you make a delivery.  While it’s only available in 25 states , primarily in the southeast, there’s no need to fret. With 7,500 downloads and counting all signs point to some major expansion plans sooner rather than later.

Where can I find nails?

Image courtesy of zole4/FreeDigitalPhotos.net

Image courtesy of zole4/FreeDigitalPhotos.net

Home Depot had a particularly fabulous fourth quarter pulling in a 36% profit. Net income came in at $1.38 billion at about a buck per share Analysts only predicted Home Depot would gain 89 cents per share. A year earlier the company gained 73 cents per share. So what gives?  It seems the retailer earned some major cash from its website and its big push to improve customer service has paid off quite nicely for the world’s largest home improvement retailer. If you are lucky enough to be one of Home Depot’s esteemed shareholders , then congrats to you as you just earned 12 cents per dividend, which is now up to 59 cents per share. The company even has big plans to buy back $18 billion in shares. In the market for some gainful employment?  You might want to check out Home Depot’s job board. The company is looking to fill 80,000 jobs for the spring, the store’s busiest season. Unfortunately, the retailer’s forecasts for the year are tinged with a bit of disappointment as it is convinced that the exchange rate and that especially robust dollar of ours is going to put a 6% ding in the stock this year.

Everyone likes a good mystery…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Fed Chairwoman Janet Yellen is taking fiscal center stage today before the Senate Banking Committee.  The Fed Chairwoman gets to enjoy two days of back to back congressional testimony where she will be grilled on a loooong list of complaints, courtesy of the Republican controlled House and Senate. Among the questions with which she will be peppered is when exactly does the Fed plan on hiking those interest rates, an answer that has been eluding the American people and its elected officials for quite some time.  Not exactly the stuff that Oscar nominated movies are made of. But on Capitol Hill that testimony could give Game of Thrones a run for its money. Ms. Yellen also wondered aloud about that mysterious lot born in the eighties and nineties, a.k.a. Millenials. The Fed Chairwoman finds them to be a bit of a mystery and is unsure how the economy is going to affect them. If that’s what she’s wondering about them then I’m guessing she doesn’t get to Chipotle very often.