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

Easy does it?

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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…

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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…

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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.