Apple Throws Billions Towards U.S. Manufacturing; Ferrari Speeds into Double Digit Margins; Republicans Wage War on Dodd-Frank

iManufacture…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

China’s about to get some very unwelcome manufacturing competition from Apple. The tech giant just announced that it is starting a $1 billion fund promoting advanced manufacturing. Gosh, is the President going to take credit for this too? In fact, CNBC host Jim Cramer had the dubious distinction of being the first person to hear the news on his show “Mad Money.”  For those of you wondering what the difference is between manufacturing and “advanced manufacturing,” it means Apple will basically have to offer specialized skills and training for the latter and fill job gaps with these newly-trained, highly-skilled workers. In any case, Apple has thus far created some two million jobs in the U.S. and can hardly wait to create even more. But how does Apple plan on spending that $1 billion it’s setting aside for this latest project? Well, don’t get too excited just yet, because some of that cash is first going to a company that Apple has partnered with for this initiative. And the name of that lucky company has yet to be announced.

Magnifico!

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Image courtesy of Teerapun/FreeDigitalPhotos.net

Ah Ferrari. What could be better than tooling around in a machine like that? How about its earnings, for one. The Italian automaker just released its first quarter earnings report and they were everything you’d expect from the maker of one of the world’s finest sports cars. Shares are up well over 6% today after the company announced a 36% earnings increase along with a 50% surge in deliveries. And by the way, those earnings were even better than expected, coming in at around $265 million  – which equals 242 million euros – in case you were curious. Estimates, mind you, were for 222 million euros. Revenues also impressed and elated investors, as they increased 22% to 821 million euros, easily beating expectations of 767 million euros.  Sure, those numbers are almost magical, but that’s not really what’s got Wall Street tongues wagging. It was Ferrari’s margins, which are now right up there with the aforementioned tech giant we call Apple. But I guess that’s to be expected when you’re selling cars whose ticket prices start well into the six-figures and can exceed $2 million. After all, we are talking about a company who sold out of a car, the Aperta convertible, before the car even made its official debut.

Let’s me be Dodd-Frank with you…

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Image courtesy of Tony Dowson/FreeDigitalPhotos.net

Things are looking grim for Dodd-Frank, the Wall Street Reform and Consumer Protection Act. The Republican-led House Financial Services Committee argued that the law sucks for the economy since it slows it down, and today passed a bill that would overhaul and repeal parts of it. It certainly helps Republicans that President  Trump promised way back in his campaign to overhaul the law, which he says costs banks a fortune in compliance and limits lending way too much. Democrats argue the opposite and are convinced that the bill, if passed, will once again create the same conditions that led to the 2008 fiscal crisis. In case it wasn’t obvious, the law was initially passed under President Barack Obama. Naturally, Democrats voted against the bill and lost 34-26.

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No-GoPro on Earnings; Could a Pfizer/Allergan Merger Become the Next Big Thing?; Wal-Mart Offers NO Free Shipping (limitations apply)

Worst. Day. Ever….

Image courtesy of jesadaphorn/FreeDigitalPhotos.net

Image courtesy of jesadaphorn/FreeDigitalPhotos.net

GoPro released its earnings yesterday only to tell us that it did not nail them. This came as a surprise to…no one.  Wall Street echoed its disappointment by sending shares down. Very down. So down, in fact, that the stock is hovering too close to its IPO price of $24 from back in 2014. GoPro miraculously managed to score $400 million in revenue, adding 25 cents per share. Too bad predictions called for almost $434 million and 29 cents per share. Meanwhile, the stock is down 67% for the year and the company is looking to buy back company shares, hoping to increase their value. While GoPro saw second quarter sales kick up by 72%, third quarter sales only increased by 43%. And the picture only gets grimmer as the company actually thinks sales will shrink during the ever-fiscally critical holiday season.  Part of GoPro’s problem is that it can’t seem to figure out how to transform itself from a product for a niche market to a product that spews mass appeal. Then we turn to GoPro’s Hero4Session. Besides the fact that the company initially charged too much for the product, GoPro also insists that the marketing budget for the already too-high priced product wasn’t large enough. Analysts aren’t too optimistic that they are gong to see much, if any, growth in GoPro’s camera unit in 2017. However, they are forecasting $500 million worth of revenue for GoPro’s other products. Go figure.

Erin Go Bragh…

Image courtesy of Pansa/FreeDigitalPhotos.net

Image courtesy of Pansa/FreeDigitalPhotos.net

Today’s latest tax inversion plans are brought to us by Pfizer and Allergan Plc who are in “friendly talks” to create the world’s largest drug maker.  While no actual agreement has been reached, the deal would have Pfizer heading towards Ireland where corporate tax laws are far more favorable there than they are here. Can’t you just smell the politics that are about to invade this deal? Tax inversions happen when huge companies set up shop overseas in countries where they don’t get as brutally taxed as they do here. For instance, while Pfizer has the pleasure of shelling out a 25% tax rate to Uncle Sam, Ireland-based Allergan only has to deal with a 15% tax rate. The prohibitive tax rate can put many U.S. companies at an unfair advantage, they argue. Democrats think these companies should just suck it up and stay put. They also think drug companies should simply slash their high prices. However, these drug companies say they can’t do that with such high tax rates imposed. Republicans want those tax laws changed to make them more favorable for these big companies so that they’ll stay put because they want to. Not because they are being forced to. If any deal goes through, it will likely be the biggest deal. Ever. Estimates for Pfizer to buy Allergan range from about $113 billion to $157 billion. But isn’t it worth every cent if it means adding everybody’s favorite aesthetic filler into your drug fold?

No such thing as ‘free shipping?’

Image courtesy of SundayMorning/FreeDigitalPhotos.net

Image courtesy of SundayMorning/FreeDigitalPhotos.net

If you can’t beat ’em…well do something they can’t do.  And that’s exactly why Wal-Mart is scrapping free shipping this holiday season on items that are less than $50. The idea is to instead offer free shipping – for in-store pick up. After all, there are approximately 4,600 Wal-Mart stores from which to choose. Besides, Wal-Mart’s hoping that while you’re picking up an ordered item, you’ll impulsively pick up some other items.  And companies love impulse shoppers.  To entice you to use this method, Wal-Mart is even allowing you to check-in at the store with your smart phone for expedited service. Wal-Mart’s hoping that this new shipping policy will help its profit margins, which have taken a bit of a hit, in part, because of shipping costs. And with 210 million consumers expected to use Wal-Mart’s mobile app, the giant retailer is banking that in-store pick-up will reverse those hits.

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.

 

Delia*s Final Chapter;New Mortgage Nirvana Thanks to Fannie Mae and Freddie Mac; Frech Toast Crunch Epic-y Comeback

Down and out…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Delia*s is joining the ranks of the bankruptcy protected now that it has officially filed for Chapter 11. While several of Delia*s teen apparel cohorts, including Abercrombie & Fitch and Urban Outfitters, are merely posting very unfashionable earnings, Delia*s will be getting $20 million just to help liquidate and close down its stores. The retailer, to which bright-eyed teenagers once flocked, can no longer compete with the H&M’s and Forever 21’s of the world. And don’t even get me started on competing with the behemoth that is Amazon. The New York-based chain has 92 stores scattered in malls across the country. With $74 million in assets and over $32 million in debt, its no wonder that Delia*s CEO Tracy Gardner and COO Brian Lex Austin-Gemas resigned. It’s probably safe to say that no one is mourning their departure – well, except maybe for them.

It’s baaaaaaaack…

Image courtesy of foto76/FreeDigitalPhotos.net

Image courtesy of foto76/FreeDigitalPhotos.net

Justin Timberlake brought sexy back so its only fair that General Mills is bringing back French Toast Crunch. Yes, my fellow cereal aficionados, the dark days are behind us as the maker of Cheerios, Yoplait and Progresso Soups has finally found the wherewithal to bring us back our French Toast Crunch. The sister cereal to the ubiquitous and oft-loved Cinnamon Toast Crunch has been absent from grocery shelves in the United States for almost a decade – I shutter to think. With the invasion of Greek yogurt and fast-food wars breaking out, the cereal was unceremoniously discontinued as other alternatives shoved their way onto the breakfast scene. But consumer demand brought General Mills to its corporate knees, together with an online petition and a Facebook page dedicated to resurrecting the sweet, breakfast sesnation. Besides, General Mills figures those kids who group in the nineties downing French Toast Crunch are now at that age where they are paying for their own cereal now (at least they should be) and can buy it themselves (at least they should be).

3% down with that?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

There are some very lucky soon-to-be first-time homeowners milling about thanks to Fannie Mae and Freddie Mac. New terms established by the companies are allowing applicants to put up just 3% down payment to get them into a new home. That’s down from 5%, fyi. Fannie Mae is starting to offer that deal December 13. Looking to refinance? How does reducing your equity to 3% sound? If you haven’t owned a home in three years, guess what? You still qualify.  Starting in March, Freddie Mac will let lower-income first-time home-buyers hand over a 3% down payment provided they agree to housing counseling. Melvin Watt, head of the Federal Housing Finance Agency and the dude who oversees Freddie Mac and Fannie Mae, wants to spur lending to minorities and young adults because the lenders have made more stringent standards following the crash, and the tens of billion of dollars they had to pay towards lawsuits for underwriting less than ideal loans. Republicans, however, are not digging the idea, finding the whole thing too risky and eerily reminiscent of the policies that led up to that awful crash – from which the country is still not fully recovered.