That Amazon scooped up Whole Foods last week for $13.7 billion is, in fact, old news. But it’s also unpleasantly fresh in the minds of a number of competitors including Target, Costco and Krogers, who are feeling a slow burn in the form of tumbling shares. All while Amazon’s stock hit a new high today of $1017 per share. That’s right. A. New. High. And who can blame Amazon’c competitors for getting antsy about this new development? After all, we are talking about a $700 billion grocery industry in the United States. You can bet Walmart won’t be taking Amazon’s latest acquisition lightly, especially seeing as how 56% of its $486 billion revenue comes from its grocery sector. On the bright side, all those high prices that shoppers typically find at Whole Foods are rumored to be coming down, now that Amazon’s taking over the reins. On a sort of completely different note, it seems shares of Whole Foods have been steadily going up, causing many to wonder if the organic grocer will still be selling itself for that promised $42 per share.
Warren and peace…
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Looks like Senator Elizabeth Warren wont be doing her banking at Wells Fargo any time soon. The Democratic Senator from Massachusetts has set her sights on taking down some Wells Fargo board members and my money’s on Senator Warren. She wants the Federal Reserve to take action by ousting twelve board members who were around during 2011-2015, while the fraudulent account scandal was in full swing and rearing its ugly head. If you recall, over two million accounts were opened and the problem with that was that the customers whose names were on the accounts never actually approved opening them. Warren is arguing that under a Congressional statute the Fed has all the right in the world to give those twelve board members the old heave-ho if the financial institution in question engages in naughty business practices that involve breaking laws and other unsafe business practices that cause major losses. Warren told the Fed that it’s “done nothing” to hold the bank accountable so I guess she’s trying to steer it along.
Snap to it…
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Snapchat had a nice little boost today after news broke that the the company plans to make original programming with Time Warner. In fact, Time Warner is actually going to be handing over some $100 million to Snap for show development and advertisement for the next two years. Not bad for a company whose shares already tanked right back to its very recent IPO price last week. Snap already has one show a day you can watch on its platform, but with this new deal, viewers will get to watch two more shows a day. In case you were wondering who might be entertaining you via Snap’s original programming, rumor has it that Samantha Bee and Ellen DeGeneres will be making appearances. And as part of he deal, HBO, Turner and Warner Brothers will get to advertise to their heart’s delight on the platform. Sounds fair, no?
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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…
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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?
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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.
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Looks like Time Warner has no love for Rupert Murdoch. The media tycoon, who reigns over 21st Century Fox, put out an offer last month to buy its rival for $80 billion, or about $85 a share in stock and cash. He even graciously offered to sell off CNN, to avoid any anti-trust and regulatory issues. But he was still denied since it was “not in the best interests of Time Warner.” Many feel, however, that Murdoch was unfettered by this rejection and will likely come at Time Warner with an even better offer , especially because Murdoch is such a big fan of HBO. I’m sure he likes the hit show Girls, but it’s probably more about HBO’s $20 billion value that really makes him a super fan. That, and the fact that a “merger” like this could pull in $65 billion a year in revenue. Wall Street also appreciated news of the rejection and sent Time Warner shares up over 15%.
Banking on lawyers…
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Bank of America came out with its earnings today and yeah…they had profits. Too bad they were down over 40% from a year ago, which means there was nothing for them to brag about today. Unless it wanted to brag about how its legal bills went up from $471 million last year to $4 billion this year. BofA can thank its lawyers for its $2.3 billion profit which was down from $4 billion a year ago. The Charlotte-based bank gained $0.19 a share instead of analysts’ predictions of $0.29 a share. Mortgage revenue was also down but man, it was those legal bills that really put a crimp in profits. Good thing (or not?) that it reached a $650 million settlement with AIG for some outstanding mortgage bonds. However, the bank’s legal bills are far from coming to a halt. If it could just hammer out a deal with the DOJ for all the damage it caused leading up to the financial crisis by selling bad mortgages…
Not so sweet on this…
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Hershey’s is about to induce a migraine. With commodities like cocoa and dairy going up, the number one candy maker in the United States is hiking up its prices by 8%. It’s the first time in three years that they’re doing this and who can blame them (well, I can) since cocoa and its fellow chocolate making ingredients are almost at three year highs. You can expect other companies like Nestle SA and Kraft to follow (though maybe they wont, but they probably will). At least you’ll have some time to prepare as you won’t feel it in your wallets until next year, when the hikes are set to take effect.