Banks Behaving Badly Get Slapped with Billion Dollar Fines; Target’s Earnings Bullseye; Hormel Ears on All That Spam

Busted…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The fun is over for a group of foreign exchange traders who brazenly dubbed themselves “The Cartel” and went about manipulating the price euros and dollars to score some extra cash. Now, because of them, five major banks have to shell out over $5 billion in settlement fees. Citicorp, J.P. Morgan Chase, Barclays and Royal Bank of Scotland all admitted their fiscal misdeeds that began in December of 2007. UBS pleaded guilty to one count of wire fraud and has to pay over half a billion dollars in fines. But the Swiss bank dodged some other penalties and gained conditional immunity for being the first to report on the criminal activities taking place. These forex traders would share confidential information about their clients’ orders and then plan out trades that would conveniently boost their own profits. Entrance into the group was by invitation only and one participant said at one point, “If you ain’t cheating, you ain’t trying.” Charming, huh? The resourceful plan proved quite profitable until January 2013 when investigators finally honed in on what was going on. Even though no criminal charges were brought, as per the settlement agreement, investigations into other foreign exchange issues are not going away any time soon.  And of course, plenty of traders were given their walking papers. As for the movie rights…well, I suppose you can expect to see this play out in theaters within a few years. No sense in Hollywood not profiting off this, right?

Hit it…

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Seems like only yesterday when Target was rocked by a data breach that cost the retailer tens of million of dollars. Then there was the fiasco, also known as “Target’s Canadian Expansion,” that saw the retailer pulling the plug on the 133 stores located there. But those not so minor hiccups seem to be water on the fiscal bridge as Target released its latest earnings that hit their mark and saw its third straight quarter of sales growth, especially in home goods and apparel. So how good were these earnings? How does a a 52% increase in profits sound? That’s right, Target scored $635 million in net income, up from $418 million just one year ago, gaining $1.10 per share. Analysts were only predicting $1.02 per share. Clearly, those analysts were not amongst the many consumers lined up at five in the morning hoping to score some limited edition Lilly Pulitzer merchandise. Revenue was also up 2.8% which had everybody on Wall Street marveling at the fact that Target’s great earnings put Wal-Mart’s not great earnings to shame. Especially because sales at Target were up 38%, which is about double what Wal-Mart pulled in.

Talking turkey…

Image courtesy of vectorolie/FreeDigitalPhotos.net

Image courtesy of vectorolie/FreeDigitalPhotos.net

Hormel, the original Spam maker, long before it was known for crowding our inboxes, just released its earnings and there’s good news. And bad news. The good news is that profit for the company increased 29% to $180.2 million with sales of $2.3 billion. The company pulled in 67 cents per share while analysts expected 62 cents per share. You may not be eating Spam, but somebody out there is. Besides, Hormel, being the largest meat processor in the United States, makes tons of other products including Roast Beef Hash and, I kid you not, Wholly Guacamole. In case you didn’t realize, Hormel’s got big business going in the refrigerated foods industry. The company also has a Jennie-O turkey store business, which brings us to the bad news: bird flu. There is a new bird-flu outbreak and if you want to sound sophisticated you can refer to it as avian influenza. Not only is this expected to take a big bite out of Hormel’s numbers, but it is also predicted that this outbreak is going to wreak havoc on the rest of the turkey industry as well. Forgive me if I just put an extremely early damper on your Thanksgiving.

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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.

 

Alibaba Love Story; CVS Gets the Last Hacking Laugh; Holiday Retail Shaming

Like you expected anything different?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Chinese e-commerce giant Alibaba dished out its very first earnings report since going public and surprised NO ONE! Revenue was up an insanely impressive 54% to $2.74 billion even though analysts only expected a “modest” $2.61 billion figure. Net income for the company was up 16% to $485 million which, incidentally, was not as much as hoped. But hey, that’s literally the price you pay to become a record-setting $25 billion IPO. If you recall, Alibaba (BABA) began trading at $68 per share when it made its Wall Street debut back in September. But if you’d like to purchase some shares today, you’re going to have whip out over $104 per share. I bet your kicking yourself over that one, huh? Alibaba’s active buyers are up 52% to 307 million users while the number of its mobile monthly users doubled. Yes. Doubled. No major IPO success story (or quarter) would be complete without bringing a little Hollywood glamour into the mix. Which is precisely why Alibaba Chairman, Jack Ma, has been kicking it in La La Land recently.

And they said it couldn’t be done…

Image courtesy of Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

CVS can take a non-emphysemic sigh of relief now that its earnings came out. The company’s idea to kick the tobacco habit from its shelves in close to 8,00 stores did not prove to be a fiscal disaster after all. On the contrary, the company posted better than expected earnings – across the board! Ha! Who says tobacco always wins? Actually I don’t know if anybody has ever said that…but moving on. True the company did take a bit of a hit over its initiative to pull smoking products from its shelves but revenue still went up. In fact, it was up by 10% and $35 billion – $250 million more than analysts’ predictions. But it gets even better. Retail sales were up over 3% to about $16.7 billion. It turns out that CVS got a little boost from Americans covered under ACA and Medicaid. But the big boost came from (drumroll please…) prescription drugs. Oh the irony…out with tobacco and in with prescription drugs.

Attention K-Mart shoppers…

Image courtesy of cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

Now you can get your Black Friday game on the day before. Which is, of course, Thanksgiving. In fact, if you are so jonesing for a shopping fix wile most people have yet to wake up and defrost their poultry, take comfort in knowing that you can mosey on over to you local K-Mart, which will be conveniently opening its doors at 6:00 am, and staying open until (Black)Friday November 28 at midnight. Warms the heart, no? While a slew of retailers have decided to begin the Black Friday chaos/fun/sales before most Americans even digest their Turkey, there’s a whole group of companies that have shunned the practice of opening on the national holiday and have taken to retail-shaming their fellow retailers. Why there’s even a page dedicated to the cause appropriately called Boycott Black Thursday. K-Mart insists that employees who work Thanksgiving day are doing so voluntarily for “holiday pay.” Even though K-Mart and other stores are opening earlier to beef up sales, oddly enough, last year K-Mart sales actually fell during the holiday season after instituting this new “working-holiday” tradition.

 

Black Friday Offers “Creep-y” New Sales Trend: Visa Vis your Wallet; Defensive Save for the GDP

On your mark, get set, shop!

Image courtesy of Feelart/FreeDigitalPhotos.net

Image courtesy of Feelart/FreeDigitalPhotos.net

Black Friday keeps coming sooner and sooner. Expect to see Kohl’s, JC Penney and Macy’s all unlocking their doors while your still trying to pry yourself out of your chair, post turkey. In fact, Kohl’s is opening at six pm, two hours earlier than last year. But that’s nothing compared to Amazon which is starting its Black Friday deals on Saturday. This Saturday, November 1, nearly four weeks before the actual “Black Friday.”  This trend even has a name. It’s called “Black Friday Creep.” How clever, sort of. You can thank the recession we endured a few years ago for all this Thanksgiving retail interruption. Several retailers aren’t too thrilled with their sales forecasts and are hoping those added shopping hours and Thanksgiving day will give their sales a much needed boost. But don’t bother standing on line at Gamestop or Costco. Those companies feel Thanksgiving should be spent with families. However, GameStop will be flinging it’s doors open at midnight. Not sure how that fits into the quality-family-time equation. Costco, however, strongly feels its employees need time with their families and that they work especially hard during the holiday season. So what does that say about how Walmart executives feel about their employees, whose stores will be open all day on Thanksgiving?

Speaking of transactions…

Image courtesy of Michelle Meiklejohn/FreeDigitalPhotos.net

Image courtesy of Michelle Meiklejohn/FreeDigitalPhotos.net

Visa reported its fourth quarter earnings and how do you think the largest credit and debit card company did? I am being rhetorical. The company reported $3.23 billion in revenue, a whopping 9% increase over the same time last year. Analysts expected only $3.19 billion. Net income for the company came in at $1.4 billion which came out to a sweet $2.18 per share. That pretty little figure was 17% higher than last year’s fourth quarter and $0.07 higher than what Wall Street predicted. One of the reasons these numbers are so darn plump has to do with Visa’s growing payment volume. The company processed almost 17 billion transactions with about $1.2 trillion changing hands. Note the use of the “t.”  For the year, the company can already boast almost 70 billion transactions. That’s nothing to sneeze at, I am sure you know. All eyes are always on Visa, which is seen as a barometer of our collective spending habits and other financial aspects of our lives.

Growing, growing not gone…

Image courtesy of jannoon028/FreeDigitalPhotos.net

Image courtesy of jannoon028/FreeDigitalPhotos.net

Our fourth quarter grew at 3.5%. Economists only predicted a growth rate of 3% How ’bout that? But don’t pop open the champagne just yet because it didn’t grow as much as the previous quarter’s 4.6% rate. But it’s not fair to compare the quarters. After all, we were just coming off a brutal and fiscally inconvenient winter so the economy did have a jump of rebound there. So what kinds of things contributed to this quarter’s growth? One of the big contributors, whose spending frenzy helped growth is the government. Yes, in this case, major government spending proved to actually be healthy for the economy. But it wasn’t just any kind of government spending that sent our GDP into upward glee. For that we need to give a big shout out to defense spending, which played a prominent and much appreciated role in our economy this quarter.

 

 

Flipkart-ing Out, United Parcel Slip and You Debt-or Believe It

Prime Flipkart…

Image courtesy of Stuart Miles/FreeDigitalPhotos.com

Image courtesy of Stuart Miles/FreeDigitalPhotos.com

How do you say Amazon in India? Have you tried Flipkart? You could still say Amazon as it’s over there too and is major competition to Flipkart but that’s not why we’re here. In any case, India’s numero uno e-commerce site just raised a whopping $1 billion. Rumor has it, though, that the company’s value is probably closer to $7 billion. Several shrewd and presumably prescient investors have already raised their stakes in the company including Russian billionaire Yuri Milner’s DST Global. The company boasts 22 million registered users and sees 4 million visitors a day. Flipkart is currently developing its mobile-based business, which is probably very wise as India’s e-commerce market is expected to grow sevenfold by 2018.

Brown paper packages tied up with string…

Image courtesy of lamnee/FreeDigitalPhotos.net

Image courtesy of lamnee/FreeDigitalPhotos.net

UPS has a lot of work to do as profits of the shipping company fell a monumental 58%. Ouch. But at least the company has big plans to spend more money – $175 million – to make improvements and avoid another quarter like this one. Hey you gotta spend money to make money, right? Those improvements are geared specifically toward the holiday season which UPS flubbed the last time around when many many packages failed to make it to their intended recipients on time  – leaving many feeling very un-merry. It plans to operate on a full schedule on Black Friday and beef up its holiday season operations, as well. The company’s net income was down to $454 million from over a billion dollars a year ago. Revenue, however, was up $14.27 billion and even beat Wall Street estimates of $14.07 billion. UPS CEO Scott Davis said, “2014 is the year of investing for the customer.” Awww. So sweet. Now if they could just get those packages delivered on time.

More sucky stuff…

Image courtesy of jesadaphorn/FreeDigitalPhotos.net

Image courtesy of jesadaphorn/FreeDigitalPhotos.net

Disconcerting news out today courtesy of The Urban Institute. The institute conducted a study finding that more than a third of Americans have their own special relationship with debt collectors. I know you’re just filled with warmth and good feeling right now. Student loans, mortgages, credit card bills and so much more have contributed to the delinquency of consumers. The study was conducted on the credit files of more than 7 million Americans. Southern states for some reason had a higher percentage of delinquency than the rest of the country. However, Nevada came out the winner of the losers with a 47% share of collections, namely because that state was hit particularly hard by the recession. On average, Americans who have debt in collections owe around $5,200.