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

Energized…

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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…

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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!

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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.

 

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Heads Will Roll At Microsoft, Morgan Stanley Shows the Other Banks How It’s Done and, Barbie’s Not Looking Too Fabulous This Quarter

Giving the (pink) slip…

Image courtesy of jscreationzs?FreeDigitalPhotos.net

Image courtesy of jscreationzs?FreeDigitalPhotos.net

Things are looking…well…not so good over at Microsoft, particularly for those working for the Nokia division which Microsoft bought back in April for the not-so-modest sum of $7.2 billion. Over 12,000 head are expected to roll. Another 6,000 Microsoft employees – give or take – will also get pink their slips. And while folks at Microsoft are not too happy, Wall Street actually celebrated the news by sending shares of the company up 3%. CEO Satya Nadella, in his post just five months, announced that the time has come (actually it came awhile ago) for Microsoft to step up its “A” game to compete with Google and Apple. So he wants to help shift things from its mostly software centered business to more online services, apps and devices. A respectable endeavor, no doubt. Nadella is Microsoft’s third CEO and this is the company’s largest round of lay-offs in its 39 year existence.

On top of the world…

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Image courtesy of hywards/FreDigitalPhotos.net

Looks like Morgan Stanley’s Chairman and CEO James Gorman doesn’t need to polish his resume. The last of the big banks to announce their earnings this week, Morgan Stanley reported boffo numbers for its second quarter with major props going out to its wealth management and investment banking divisions. Net income rose to $1.86 billion – a 131% increase over last years $803 million. Its clients’ assets exceeded $2 trillion (note the “t”). Its earnings gain was helped by a $609 million tax benefit amd its profit margins for the first time hit 21%. All while rivals Citigroup, JP Morgan Chase and Bank of America posted lower than expected profits. Boohoo.

Toy-ing with earnings…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Looks like Barbie is not enjoying her fabulous fifties. The iconic buxom blond doll, which turned 55 this year, and its parent company, Mattel, are having a very bad second quarter with a 60% drop in revenue. It might have been worse were it not for Mattel’s Disney Frozen toys and its American Girl products. But Barbie, well she was down 15%. Apparently she’s not as relatable as her Monster High competitiors. Hot Wheels and Fisher-Price brands were also down. Net income for the toy company was $28.3 million – a far far cry from last year’s $73.3 million. But it wasn’t all Barbie’s fault. Mattel’s purchase of MEGA Brands, its attempt at competing with the Lego powerhouse, also put a dent in those figures.

Going Postal Over Staples, Amazing Quarter for Amazon and Microsoft is Looking Up

Postal smackdown over staples…I mean Staples…

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Image courtesy of Gualberto107/FreeDigitalPhotos.net

Postal workers across the country are fuming over a new program to install postal counters in Staples (SPLS) stores. Yesterday union postal workers showed up at several of the chain’s locations to show they are so not into it. The program first began last year in Massachusetts and has spread to over eighty stores. But postal workers think the government is trying to privatize the post office and break up the unions – which may or may not be true. But what is true is that the United States Postal Service took a $5 billion hit in 2013, and Uncle Sam has been eagerly searching for ways to cuts costs and boost revenue for the struggling entity. Unions are also angry because they don’t want well-paid union postal workers to be replaced by low-wage non-union members. Union postal workers rake in about $25.00/hour. Yeah, nice work if you can get it. A Staples salesperson takes in about a third of that.

Amazing earnings…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Looks like Amazon (AMZN) is having a good week. The online retailer announced its first quarter earnings and yeah, they were that good. Besides beating Wall Street’s predictions, which always leaves a company and its investors feeling giddy with joy, it also posted revenue 23% higher than it did for the same period last year while profits grew 18%. According to Jeff Bezos, founder and CEO of Amazon,“We get our energy from inventing on behalf of customers, and 2014 is off to a kinetic start,” Awww isn’t that sweet. Naturally the stock took a nice little bump on their shares from all the excitement. Then there were all those fun announcements from Amazon, like, for instance its deal with HBO to stream their older shows. And don’t forget Prime Pantry,where for a flat fee of $5.99 (a pittance, really) you can order all the groceries you need to your heart’s content – as long as it fits into a 45 lb. box.

This cloud’s got a green lining…

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Things are looking up for newly coronated Microsoft (MSFT) CEO Satya Nadella. You do remember Microsoft don’t you? It’s the company whose shares you always wished you had bought. Yeah me too. Especially since it beat analysts prediction by $0.05 this week earning $0.68 a share. Sure sales of Windows to businesses and cloud momentum helped pull in those nice figures. But never forget the power of gaming either as the very entertaining and highly addictive (at least in my home) Xbox console was a big contributor to this quarter’s success.

 

Citigroup Just Can’t Handle the Stress, Microtastic! and Turning Lululemon Into Lemonade

Citigroup fail!

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Shares of Citigroup fell 5% today because it failed the Federal Reserve’s “Stress Test.” The US government feels Citigroup has “a number of deficiencies” and wouldn’t be able to handle another economic downturn, like the one from 2008 that keeps rearing its ugly face. The Fed also doesn’t want to have to bail Citigroup out  – again. The Fed has what they call “qualitative concerns” about Citigroup and some other banks that have over $50 billion in assets. For people like you and me that means they need more money on which to fall back should economic disaster strike and they need to up their business practices A game. They have ninety days to fix these problems. Or else….I don’t know what else. I guess they just get another deadline. Other banks that also failed the stress test include HSBC North America, RBS Citizens Financial Group and Santander Holdings USA.

iPad…therefore iMicrosoft…

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Image courtesy of twobee/FreeDigitalPhotos.net

iPad users the world over can breathe a collective sigh of relief. Microsoft Office for the iPad has arrived. Phew! Microsoft chief Satya Nadella finally FINALLY made the big announcement today. But apparently Wall Street knew way before and was very excited because shares of Microsoft (NASDAQ:MSFT) began climbing last week. Probably the $1.4 billion in projected revenue helped the Street’s enthusiasm. You can go to the Apple App store and get the free download. But if you actually want to create and edit, you’re going to have to purchase an Office 365 subscription.

These lemons aren’t so sour after all…

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Image courtesy of lamnee/FreeDigitalPhotos.net

Lululemon Athletica clearly has some great karma. Despite hitting a major snag this year with see-through yoga pants, the athletic wear company struck its best warrior pose and beat Wall Street’s fourth quarter estimates by going up 7%. Lululemon (NASDAQ:LULU) sales hit $521 million when it was expected to only reach $515 million. Newcomer CEO Laurent Potdevin, who also worked at TOM’s and Burton Snowboards, has big plans for bringing Lululemon to the rest of the world. Wall Street loves talk of expansion, especially global expansion. And it also loves it when companies beat expectations.