Boeing’s Next Big Thing. And You Might Not Like It; Upper Middle Class Marks its Territory; To Brexit or Not to Brexit, Part Two

Coffee, tea or uranium enrichment?

ID-100217659

Image courtesy of vectorolie/FreeDigitalPhotos.net

Boeing reportedly just signed an agreement with Iran Air so that the official airline of the potentially rogue nation can buy about 100 commercial aircraft from the American company. Rumor has it that the deal is worth $25 billion but there are still plenty of details that need to be hammered out before you can plan your Tehran vacay. Iran is definitely hard up for some new aircraft because it has just 250 aircraft and only 162 of them can fly, if that. The rest need spare parts. But with sanctions that have been in place for decades, those spare parts have been impossible to come by. Apparently the U.S. government feels that Iran held up its end of the dubious nuclear accord, however, the U.S. treasury still needs to give its seal of approval, along with every other human being in DC and beyond. You may not like the idea of the U.S. doing business with Iran but Boeing factory workers feel otherwise, as do Boeing shareholders who are chomping at the bit to get in on the profitable action. The fact is, the country is seen – and not just by the U.S. – as a promising growth market and there is plenty of money to be made there. European aircraft companies, Airbus and ATR, already have their agreements lined up with the Islamic Republic. Unfortunately, the Supreme Leader Ayatollah Ali Khameni is not so enthusiastic about buying aircraft from the United States and doesn’t see it an a priority. But then again, his state sponsors terrorism. So do we really care what his priorities are? Didn’t think so.

So classy!

ID-100423898

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The upper middle class is thriving. At least that’s what the Urban Institute and economist Stephen Rose are saying. And just what makes a person upper middle class anyway? Glad you asked. If you find yourself in a three-person family that generates an annual income between $100,000 and $350,00, then you, my friend, are a thriving member of the upper middle class. Congratulations. I think. Stephen Rose argues that the true divide is not between the rich and poor, but rather it’s divided between the wealthy combined with the upper middle class, and everybody else. Warms the heart, no? The upper middle class was, once upon a time in 1979, 13% of the population. But in 2014, that class made up almost the 30% of the population. While the wealthy used to be just .1% of the population, that group is now 1.8% of the population. The middle class shrunk, presumably because some became wealthier and some…did not, and now makes up 32% of the population, compared to almost 39% back in 1979. The middle class, by the way, is defined as a family generating income between $50,000 to $100,000 annually. Just as there is an upper middle class, there is also a lower middle class which is defined as generating an annual income between $30,000 – $50,000. Generating an annual income anything less than that is probably not where you want to be. But on a high note, the standard of living has gone up for nearly all Americans, no matter what class they’re in.

 

Rate a moment…

ID-100395854

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

 

Janet Yellen appeared before the Senate Banking Committee and among the many fiscal pearls she imparted, she said that the Central Bank would go forward cautiously on its plan to gradually increase rates. Even though many experts were sure a June rate increase was in the works, “considerable uncertainty” with regard to the  U.S. economic outlook, global economic issues, a hiring slowdown and the looming “Brexit” vote in Britain nixed any thought of an increase. Janet Yellen did stress that the U.S. is not taking sides on the Brexit issue but cautioned that there will likely be economic consequences to the U.S, which sounds awfully ominous. There is concern that a Brexit would increase the value of the dollar, and that is not always a good thing, as evidenced by the dozens of companies that have lost millions of dollars in revenue and profits this year because of the strong dollar overseas. Ms. Yellen would like to see, among other things, a rebound in hiring and some growth improvement in the economy. No major surprises from the Brits would be nice too. Also during the meeting, Sen. Elizabeth Warren commented on the lack of diversity among the members of the Central Bank. Ten out of the 12 members are men, not there is anything wrong with those gentlemen. But still. Anyways, Chairwoman Yellen graciously replied: “It’s important to have a diverse group of policy makers who can bring different perspectives to bear.”Amen!

Advertisements

Jumping the Twitter Ship; Coffee, Tea or Nukes? Air Iran Might Be Headed Our Way; McD’s CEO Really Does Deserve a Break Today

And then there were six…

ID-10084715

Image courtesy of pixtawan/FreeDigitalPhotos.net

Twitter just got a whole lot lighter – except not in a good way. Four top executives are jumping ship from the social networking site, in addition to a top member over at Twitter-owned Vine. The news was tweeted (naturally) last night when Twitter CEO Jack Dorsey posted that all five people had “chosen” to leave and “will be taking some well-deserved time off.” That’s awfully sweet but it still begs the question as to why those folks chose to leave in the first place – especially because those four executive departures constituted 40% of Twitter’s top brass. Don’t bother looking up any job postings for the newly vacated positions. Dorsey seems to have at least one of them filled, apparently by a high-profile executive in the media industry. No word yet on the other positions but rumor has it they’ve also been filled. Not that any of this is news to those at Twitter. When Jack Dorsey returned to the top spot he did, after all, say that the board will eventually have to be replaced. Incidentally, upon Dorsey’s return, shares of Twitter have fallen about 50%.  Shares are now hovering below the IPO price as the company continues to struggle to find ways to attract more users.

Blackout dates…

ID-100357053

Image courtesy of ammer/FreeDigitalPhotos.net

Because nothing says romantic vacation getaway like hopping on a plane to Tehran, Iran is on a mission – not even a nuclear one! – to boost tourism and get back in the good graces of just about every country in the western hemisphere. Iranian President Hassan Rouhani is in Europe this week and just might strike (no pun intended) a deal with Airbus to purchase some 500 aircraft so that you can book your next vacay to the radically ruled country. Rumor has it that Boeing might also supply Iran with some aircraft too, and it would mean that it’d be the first time in 36 years – ever since that pesky Islamic revolution – that travelers could hop on a direct flight to a country that’s hostile to United States citizens. Looks like British Airways is itching to be among the first of the commercial airlines to start taxiing on an Iranian tarmac. Apparently, some analysts are expecting a bona fide economic boom – I SAID ECONOMIC! – to occur in Iran now that sanctions have been lifted in exchange for shelving its nuke fantasies.  And because banking sanctions have also been lifted, Iran will even be able to pay for the aircraft. And so much more…

Comeback kid…

ID-100375883

Image courtesy of lekkyjustdoit/FreeDigitalPhotos.net

Attention naysayers: McDonald’s CEO Steve Easterbrook’s turnaround plan seems to actually be working. How ’bout that. McDonald’s served up some tasty earnings with a special boost from its all-day breakfast offerings.  A big show of gratitude also goes to China where, as it turns out, diners continued to opt for the Golden Arches’ fast-food fare despite the nasty food safety scandal that erupted during the summer of 2014. Same store sales took a 5.7% jump and wouldn’t you know it, shares jumped on the news, especially because, after two years of little to no growth, the company finally experienced that wonderful sensation, posting its best quarter in four years. McDonald’s pulled down a profit of $1.21 billion, an almost 10% increase, while adding $1.28 per share. That’s a nice little smack down to analysts’ estimates of just $1.23 per share. And while a strong dollar did send revenue a bit south to $6.34 billion, it was still above and beyond expectations of $6.22 billion. The only bummer in the earnings was in France, where terrorist attacks have kept too many would-be McDonald’s patrons from enjoying the cuisine.

Is Xiaomi the Next Big Thing to Hit the Smartphone Scene?; Russia’s Ruble in the Rubble; Shake Shack Shaking Up Wall Street

Third’s the word…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Here’s a riddle for you: If Samsung is the number one smartphone maker in the world, with Apple perched at the number two spot, then who has taken third? Hint: It’s not LG. Or Nokia. Or Motorola. Or… In fact, the number three smartphone maker in the world has yet to reach our shores, even though the company’s got a $45 billion valuation and is slated to become the most valuable IPO. Ever. In case you haven’t figured it out – and it’s okay if you didn’t –  I am talking about Chinese smartphone maker Xiaomi. The company which, just pulled in another $1.1 billion in funding, is number one in the mammoth Chinese market. It also happens to be the fastest growing smartphone maker and the most valuable start-up in the world right now (yes, even more so than Über and Pinterest, if you can believe it). And by fast I mean the company’s sales are up 211% in the third quarter, having taken a 5% bite out of the market share. Xiaomi, whose Mi4 smartphone coincidentally, bears a striking – make that very striking – resemblance to the iPhone, actually makes most of its money from apps and add-ons, and not from the phone itself. It also apparently has some nifty marketing strategies, though I can’t weigh in on that one. Xiaomi is currently focusing on branching out into places like Indonesia, Russia and Mexico with no immediate plans to come to the US, which clearly hasn’t been a problem for it.

Is that a recession I smell…

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Russia’s not having a very good week. News is out now that the economy there shrank for the first time in five years. The GDP fell by .5% with the Russian government saying that next year the GDP could go down by as much as 4%. How do you say “yikes” in Russian? The ruble is continuing its slide,  falling the most in two weeks, and is about 40% weaker than the dollar. It’s down by about 70% since the beginning of the year. Of course the international sanctions imposed on Russia by other countries who were not cool with its incursions into the Ukraine are being blamed. And, of course, Russia then decided to block imported food – a move that has not been good for anyone on either side of the issue. Then there’s the price of oil which keeps dropping and dropping and…well, it’s no fun to see oil numbers drop if you happen to be the largest energy exporter and well, that’s exactly what Russia is.

Yeah, it’s that good…

Image courtesy of KEKO64/FreeDigitalPhotos.net

Image courtesy of KEKO64/FreeDigitalPhotos.net

Apparently the Shake Shack is so good that Wall Street will get to partake of its delicacies in the form of a $100 million IPO that the company just filed today. Conceived by restaurateur Danny Meyer, the chain will be listed on the New York Stock Exchange under the aptly named ticker symbol SHAK. The company began as a single “shack” in New York City’s Madison Square Park and quickly grew to 63 locations…worldwide, with half of those operated by licensees. Shake Shack reported sales of $140 million in 2013, a scrumptious $81 million gain from the year before. Investors are awfully curious to see how Shake Shack will fare considering the mixed results the market has seen from food companies like perennial fave Chipotle to less than stellar performer Noodles & Co. If that’s not enough to whet your IPO appetite, then how about the fact that they pay an average hourly wage of $10.70 with health benefits and paid time off?

GM Says Nyet to Russia Deliveries; Start Spreading the News: Gov Cuomo Bans Fracking; Kraft-y New CEO

Rubles the wrong way…

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Russian President Vladimir Putin gave his annual hours long press conference where he discussed the plunging ruble. He said the economic recovery could take up to two years and, of course, he made sure to point his country’s finger (presumably the middle one) at the US and the EU because he says plunging oil prices and economic sanctions are to blame. Oh and also the central banks messed up too because they apparently didn’t respond fast enough to economic issues as they arose. Darn central banks! Then GM went ahead and suspended deliveries to Russia, becoming one of the latest western companies to do so. And who can blame them. After all, when currencies drop, the companies lose big bucks.  But considering GM only sold 170,000 vehicles in Russia so far this year  – it sells more than that in a single month over here – its sure not to put any major crimp in their business. Apple also shut down operations while other companies, like BMW, took the route of raising their prices to make up for the drop in the ruble rate. Why his love life came up during the press conference is a mystery, but at least now we know that Vladimir Putin is in love –  and somebody even loves him back –  according to him anyway.

Frack off…

Image courtesy of xedos4/FreeDigitalPhotos.net

Image courtesy of xedos4/FreeDigitalPhotos.net

Governor Andrew Cuomo (D) has made it official: New York has become the first state to ban the ever-controversial fracking process, a decision that puts a major chink in the oil and gas industry. The process, which involves tapping into natural gas by using high-pressure water blasts and, of course, chemicals, has been under a moratorium in New York State since 2008 after it was felt that more research was needed to see just how bad the process is for the environment and our health. At a press conference, Governor Cuomo handed the reins over to health and environmental officials who said the issues are too great to allow it to happen and conveniently had several studies on hand to back up their claims. Now if they could just do something about those traffic jams…

Nothing cheesy about it…

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

In a move that shocked analysts, who generally make it a habit of predicting things, Kraft CEO Tony Vernon, who is but 58 years young, announced that his retirement from the company will officially take place on December 27. Vernon has been at the post since October of 2012 and will stay on as an adviser until March. His replacement will be John Cahill, who already has Pepsico  gracing his resume. Kraft, the intrepid force behind Velveeta cheese and the ever-malleable Jell-O, said that it needs to make big changes quickly if it wants to keep up with the constantly changing needs of the food industry. Sounds fair, considering Kraft saw an 11% drop in its third quarter profits.

 

Russian Cyber-vengeance?;Insta-gram-ification!; A&Fitch Logo Ditch

Cyber-score?

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Now that a massive cyber-attack on JPMorgan Chase and a few other banks has been linked to Russian hackers, the question looms large: Was the hack attack in response to US imposed sanctions? Things that make you go hmmm. And while major amounts of data loss fell into the hands of these hackers, curiously enough, there hasn’t been an unusually high amount of fraudulent activity noted. At least for now. Which kind of suggests – in a really big way  – that yeah, this cyber attack was politically motivated. Incidentally, back in April, JPMorgan blocked a money payment from a Russian embassy to a US sanctioned bank.  That didn’t go over well – probably more so for JPMorgan than the Russians involved. In any case, with global conflicts on the rise, expect to see a lot more cyber-threats, kind of like the ones Iran has been throwing our way for years. Probably because they’re annoyed with US imposed economic sanctions. The attacks on banks are particularly impressive, more so than say those on Target, since banks have security and firewalls that are way more hardcore than those used in the retail sector. But banks have and will continue to step up their cyber-security precautions. JPMorgan is hoping $250 million and 1000 employees will do the trick.

I want it now!

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Look out Veruca Salt! If you want it all and want it NOW then give a big shout out to Instagram for redefining the shopping experince. Now when you see something on Instagram that you absolutely have to have, like, immediately, you don’t just get to like the item on Instagram. You don’t just get to love it the product on Instagram. You actually get to buy the darn thing too! No more brooding over a an Instagram shot while you frantically search the retailer’s products page. A new “Like2Buy” button will take you exactly where you need to go/be. Shopper ecstasy.

Abercrombie & Switch…

Image courtesy of Simon Howden/FreeDigitalPhotos.net

Image courtesy of Simon Howden/FreeDigitalPhotos.net

Shockingly…or not, depending on whom you ask, Abercrombie & Fitch had its tenth straight quarter of declining sales. Perhaps it has to do with the fact that retailers like Forever 21, Zara and H&M are offering much trendier clothing for much less. It probably doesn’t help that A&F is helmed by a loud-mouthed CEO, who was stripped of his chairman title for making such stupid, odious comments about how his company’s clothing is intended for cool, skinny and pretty people. But clearly the cool, skinnies don’t care as they have been clearly taking their business elsewhere. The company has now decided that, in the US anyway, it’s going to shed the logo that is so prominently featured on so much of its clothing. They’re hoping that a move like that will bring in more revenue since adding more larger sizes didn’t do the trick. Go figure! Same store sales fell 6% and news of the unimpressive earnings report sent shares south by 8%.

BofA Boffo Payout; Nyet to Big Macs; and HP’s Big Little Surprise

Would you like that in small bills?

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Bank of America just set a new record but they probably wont be bragging about this particular accomplishment. The bank officially (as of tomorrow, anyways) holds the dubious distinction of having to pay the largest settlement ever to settle a number of allegations brought by Federal and state authorities over its sales of mortgage-backed securities leading up to the 2008 financial crisis. That magical number weighs in at a monstrous $17 billion easily surpassing the paltry $13 billion that JP Morgan Chase had to pay to settle similar allegations. The money will be divided with $7 billion going towards consumer relief and the rest going towards paying back Uncle Sam for all the misery it caused. But that’s not all. As part of the deal, BofA actually has to admit – ADMIT – wrongdoing. Countrywide Financial and Merrill Lynch will also be held to the task as the bulk of bad mortgages came courtesy of them when BofA acquired them in 2008. Of course no actual heads will roll. Or will they? One Los Angeles US attorney filed a civil suit against Countrywide co-founder Angelo Mozilo. While BofA must not have been too happy about the settlement, Wall Street sure was as shares of the bank took a little climb following the news.

No need to supersize that just yet…

Image courtesy of tiverylucky/FreeDigitalPhotos.net

Image courtesy of tiverylucky/FreeDigitalPhotos.net

You know Russia is royally ticked off at the US when McDonalds starts to suffer. Of course that wasn’t the official line coming out of the Kremlin, mind you. But it is true that four McDonald’s in Moscow were just shuttered for “sanitary reasons.”  One of the “temporarily” shuttered eateries happens to have been one of the most frequented McD’s in the world. In fact, Russia is one of the biggest markets for McDonalds. When asked if the closures had anything to do with the sanctions, officials referred to the “sanitary” statement without actually answering the question. Hmmm. However, there are still well over 430 McDonalds in Russia. For now, anyways.

Surprise surprise…

Image courtesy of jannoon028/FreeDigitalPhotos.net

Image courtesy of jannoon028/FreeDigitalPhotos.net

HP surprised everyone today, perhaps even itself, as it reported increased revenue in its earnings. While it was a modest 1% gain, it was nothing to scoff at. The increase was due in large part to its personal computer division which took in a plump 12% increase. The company is currently undergoing a major overhaul. Which is kind of ironic as my brand new HP laptop (I purchased it in February) is also undergoing a major overhaul at Geek Squad headquarters –  that is after already spending lots of quality phone time with several Geek Squad technicians over the last few months – but I digress. Profits came in at just under a billion which might seem impressive. But it’s not since last year at this time the HP reported $1.4 billion in profits.

 

 

Russia: Sanctions? Ha! I’ll Show You Sanctions! More Boffo Hits to BofA and Time Warner Not Feeling Foxy

Putin it out there…

Image courtesy of Simon Howden/FreeDigitalPhotos.net

Image courtesy of Simon Howden/FreeDigitalPhotos.net

Russian president Vladimir Putin always has to have the last word, doesn’t he. He’s like one of those inflatable punch toys. No matter how you much you punch it, it just floats right back up. I am talking about sanctions, mind you. The ones that Russia is imposing on the West, including the United States. Russia majorly one-upped the entities imposing sanctions on it over tensions in the Ukraine by banning agricultural products from the US, the EU, Canada and even Japan. They plan to have this ban in effect for a year!  Apparently it’s a very very long list of items too. So yeah, if the West wants to send Putin a message it’s going to have to think way beyond that teeny tiny economic sanctions box. Of course food prices are sure to rise in Russia with a move like this. But make no mistake that there’s also a steep $1.3 billion price to pay in the US and the rest of the West. And that’s going to be awfully hard to swallow.

And it’s official…

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Bank of America is out almost $17 billion (it will be anyways) all because it misled investors over mortgage-backed securities. This settlement comes just weeks after a New York judge ordered the bank to pay out $1.27 billion for its less than virtuous Countrywide Financial “Hustle” program which is just as bad as it sounds. Some of the settlement cash will actually go towards helping struggling homeowners by reducing their mortgages. The rest is fees fees fees and a few billion in penalties to various federal, state and local entities. BofA CEO Brian Moynihan and US Attorney General Eric Holder have been hashing out the details as of late. BofA was trying to get away with paying just under $13 billion but fate, the justice system and AG Holder’s impending lawsuit had other plans. Now BofA holds the dubious distinction of holding the record for the largest settlement payout, knocking JP Morgan off its $13 billion podium. But Bofa still comes out a winner since no criminal charges will be filed for what could arguably be considered awfully criminal behavior.

Time Warner is running out?

Image courtesy of dream designs/FreeDigitalPhotos.net

Image courtesy of dream designs/FreeDigitalPhotos.net

There was no shortage of love today on Wall Street for Rupert Murdoch and his 21st Century Fox empire now that his $80 billion bid for Time Warner has been scrapped. In fact, the media company’s stock surged while, ironically (or maybe not) Time Warner’s second quarter earnings took a hit. Sure its quarterly profits were up 10% with $6.8 billion in quarterly revenue. But the stock took an 11% dive thanks to Fox just because its interest in its rival came to a bittersweet end.