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

iManufacture…

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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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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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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.

UnFriendly Skies Take a Well-Deserved Beating; FY-Infosys – Americans Getting on Payrolls; Paid Internships vs. Actual Job

Turbulent…

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The day of reckoning has finally come for airlines and their awful and questionably lawful treatment of its passengers. If you recall, the impetus for this day stemmed from a recent United Airlines flight, where a passenger, David Dao, was forcibly dragged off a plane and left with a litany of injuries including a concussion and broken teeth. So over at the House Transportation and Infrastructure Committee there was a hearing where airline execs insisted that they’ve been working to improve the situations that have been responsible for all the recent bad press. United CEO Oscar Munoz apologized again at the hearing for the recent tussle that cost his airline a presumably hefty settlement.  Of course plenty of blame has been pointed at unruly passengers. But then again who can blame them? Flights have gotten more crowded, equipment and tech failures have been resulting in delays on a fairly regular basis and obnoxious fees keep cropping up like a bad fungus. And don’t even get me started on the practice of over-booking flights. Apparently, a few airlines are rethinking their policies on that issue.  In the meantime, lawmakers are warning they’ll slap on major legislation if things don’t improve and they promise it wont be pretty.

Trump’d…

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A company based in India, with 200,000 employees worldwide, is now on the line to hire 10,000 workers in the U.S. Enter Infosys, one of a number of companies who engage in outsourcing – a four letter word according to the President – because the practice takes jobs away from Americans. Now, the company announced plans to open four new centers in the United States in the next two years. In the past, Infosys and other similar companies have relied on work visas for its employees. But now President Trump has ordered a major review and overhaul of that program. That’s expected to lead to some very unpleasant changes for companies who are used to employing foreigners in the United States, instead of tapping into the talent pool already present in the country. As for Infosys’s CEO, Vishal Sikka, who happens to be based in Palo Alto (oh, the irony), he explained that “…bringing in local talent and mixing that with the best of global talent in the times we are living in and the times we’re entering is the right thing to do. It is independent of the regulations and the visas.” Of course it is.

How do you like your coffee?

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If you’re not having the easiest time finding a job, maybe getting a position as an intern might be the better way to go. And leave it to Glassdoor to unearth the 25 highest paying internships in the United States. You see, the median annual salary in the U.S. for a full time worker is $51,350 – or about $4,300 a month. An internship gig at Facebook – provided you can even get one  – is worth $8,000 a month. Plus, as a Facebook intern, you get room and board, free food, transportation…Does it get any better than that? Just good luck. You’ll need it. Actually, you’ll really need computer science skills. But that’s besides the point. Microsoft comes in second with a paycheck that is about a thousand dollars less a month than what you’d get at Facebook. But former interns can’t stop raving about the projects they got to work on. Rounding out the third spot is ExxonMobil. While it’s not tech-related, it is a company that is highly focused on professional development of its interns. And who couldn’t use some of that? Amazon and Apple take spots fifth and sixth, respectively, and they’ll both keep you in style for about $6,400 a month. While the tech companies seem to dominate much of the list, there are still plenty of opportunities to map out a career in banking. If you’re sure that’s your thing.

White House Tax Plan Causing Quite the Stir; Twitter’s Very Good Day/Quarter; Silicon Valley Start-Up Eats $1.6M for Discrimination

So taxing…

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The White House whipped out its opening bid for what it’s calling the “biggest tax cut.” Well, in U.S. history anyway. So who’s supposedly getting a nice break? The middle class, for one, along with some businesses and, naturally, some wealthy individuals, among others.  While President Trump’s top economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin want corporations to pay a 15% tax rate, the plan also calls for a one-time tax payment on earnings that U.S. companies keep outside the U.S. Apparently this new tax cut is meant to be all about simplicity, giving a much-needed boost to the small-business sector while putting some cash back into pockets of the middle-class. Individual rates would change, with the top rate dropping from almost 40% to 35%, and instead of having seven brackets of rates, we’d have just three.  Those cuts sound great, in theory, however, questions remain as to who will be paying for these cuts and how will they be paying for them.

It did what?!

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We’ll start with the bad news. Twitter’s year-over-year revenue declined for the first time  ever to $548 million. But miracle of miracle – hey, we are talking about Twitter, after all – the social media company beat analysts expectations on everything else. TWITTER BEAT EXPECTATIONS. While last year’s revenue at this time was a much higher $595 million, it still wasn’t anywhere near dismal expectations of $512 million for this quarter. User growth has been a fiscal thorn in Twitter’s side. But perhaps the social media tide is turning because Twitter added 9 million more monthly active users bringing its grand total to 328 million users. 9 MILLION users added. You know what anaylyst expected? 2.3 million. Twitter effectively blew those estimates out of the water. As for the other numbers, the company earned 11 cents per share when expectations were for one single solitary cent. In other words, Twitter beat those estimates by a dime. Twitter explained that its impressive earnings were due in part to increased political interest – which sounds about right, especially given President Trump’s highly entertaining tendency to tweet before he thinks. Also, Twitter’s efforts to simplify use on the platform and putting greater focus on stamping out abuse seem to have helped matters…and figures.  Naturally, shares enjoyed a much appreciated increase today, soaring way past $16 a share.

Pony up…

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Palantir Technologies may be valued at $20 billion, but it’s about to lose $1.6 million of it as part of a settlement with the U.S. Department Labor. Charges were brought against the data-analytics company that it discriminated against Asians. Besides the money the company has to cough up, which will go towards back pay and stock options to affected applicants, Palantir also has to hire eight people, who had previously applied to the company, for two different types of engineering roles. According to the government’s complaint, Asians were “routinely eliminated” on the basis of their resumes and telephone interviews. But apparently, Palantir should consider itself lucky that the case didn’t end up going to court. If it had and lost, the penalties would have been so much worse. That $1.6 million is chump change compared to what it might have been had the company been found guilty. And that would be in addition to being added to a list that bars certain companies from doing business in the government sector. Palantir has so far enjoyed hundreds of millions of dollars from such contracts. Of course, Palantir disagrees with the allegations, refuses to admit to any wrongdoing and claims that it only settled so that it could carry on business without further interruptions. Incidentally, Palantir’s co-founded is Peter Thiel, one of President’s Trump’s biggest Silicon Valley supporters and cheerleaders from the start.

VW Still Writing Checks for its Bad Behavior; Lululemon’s Sour Outlook; Economy Shows Some Impressive Muscle

Putting this baby to bed…

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Looks like Volkswagen will be handing over $157 million to ten U.S. states to settle environmental claims over the auto company’s notorious diesel emissions scandal. Among the lucky – if you can call it that – recipients of these funds are New York, which snagged $32.5 million, Connecticut which took in $20 million, Massachusetts, Pennsylvania, Delaware, Maine, Rhode Island, Oregon, Vermont and Washington, which all took in various amounts of the remaining settlement.  Incidentally, that $157 million was well below what the states originally sought. There was already a previous $603 million settlement with 44 other states, but this latest one is separate from that. In fact, the German car company has agreed to spend up to $25 billion to settle claims and make buyback offers. Just wondering if that means it will actually hit that figure or will the company try and do their best to come in as under as possible.  As part of this latest ten-state settlement, VW now has to offer three new electric vehicles in those states. Two of those vehicles need to be SUV’s. Which to me, looks like a bit of a win for VW, but hey, what do I know. In the meantime, as part of a $4.3 billion settlement with the Department of Justice, VW pleaded guilty to fraud, obstruction of justice and falsifying of documents in a district court in Detroit earlier this month. The company can also look forward to major audits, oversight and monitoring for the next three years. Sort of like what Wells Fargo has to go through as payback for its fraudulent account scandal. Am I seeing a pattern?

Soured…

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Fancy trendy yoga apparel maker Lululemon was upsetting Wall Street’s zen today after announcing that its first quarter sales marked a “slow start” to the year. Which is  really just CEO code for “Yikes! Our quarter sucked.” And with that news, shares of the company took a very ugly 23% plunge to $51 a pop, a stock price the company hasn’t seen since December of 2015. This news was especially weird because Lululemon did better in holiday sales than most other clothing retailers. Yet now, this quarter now becomes the very first one in seven years to see same store sales go down. The company took in almost $790 in revenue with a $136 million profit that added 99 cents per share, even though analysts were expecting that figure to be closer to $784 million with a $1.01 profit per share. Last year at this time the company made off with a $117 million profit that added 85 cents per share. Competition from Nike and Under Armour definitely turned up the heat on the super-pricey Lululemon, with their vast offerings and more affordable selections. But CEO Laurent Potdevin blamed the company’s neutral offerings instead, arguing that they lacked  “depth and color for spring” that consumers are apparently craving. That’s got to be it, right?

Yes, you need to know this…

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There was a lot of spending this quarter. A lot. In fact, consumer spending was so strong that it caused the economy’s GDP to grow at a 2.1% rate, more than what was thought in initial estimates. In the process, that impressive growth rate even made up for areas of the economy that didn’t perform up to snuff, like trade and business investing. In fact, for all of 2017, analysts are actually expecting to see a 2.3% rate of growth. Of course, the fact that the labor market is strong, with higher incomes and wages, helps with all that consumer spending as well. Naturally. That 2.1% rate is a major upward shift from last year at this time when that rate stood at 1.6% and had the dubious distinction of being the weakest period of growth in five years. This next bit may cause you to cringe, but one of the reasons for this anticipated impressive growth rate is President Trump. He’s got plans, in case you hadn’t heard, for tax cuts and spending. Say what you will, but moves like that help economies. And who doesn’t like a little economic boost.  However, if it makes you feel any better, Trump thinks he can get that rate up to 4%, and economists are laughing on the inside at him for even thinking he can pull off that feat.

Bill Gates Is So Not Into President’s Budget Blueprint; Does Uber Have Some High-Level Job Openings?

Just letting you know…

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Chances are if Bill Gates is not into your budget blueprint, then maybe it’s worth it to make a few (hundred-billion dollar) changes to it.  Which explains one of the reasons why the world’s richest man is in DC today, to have a little chat with the President of the United States.  Bill Gates, who knows a thing or two, isn’t taking too kindly to President Trump’s budget blueprint, particularly the part about cutting foreign aid. Gates is of the very informed and highly researched opinion, that providing foreign aid not only assists the world’s poorest individuals, but it also helps Americans. A lot. Gates said as much in a recent TIME op-ed piece, explaining how foreign aid actually decreases global conflicts, strife and get this…political instability. There’s a joke in there somewhere, but I’ll leave you to make it. Feel free to leave it in the comments. In any case, Mr. Gates went on to say, “These projects [foreign aid] keep Americans safe. And by promoting health, security and economic opportunity, they stabilize vulnerable parts of the world.” I think the philanthropist billionaire/Microsoft co-founder just might be onto something, no?

Outta here…

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As if a lawsuit from Google and claims of sexual harassment couldn’t make things any worse for Uber, things are about to get even more awkward – if that’s possible – with two very high-level execs saying buh-bye to the ride-hailing app. First we have President Jeff Jones, who is leaving after less than a year on the job. It seems that a few weeks ago, Uber CEO Travis Kalanick announced he was seeking new leadership, along with plans to install a new COO. Rumor has it that that bit might have had something to do with Jones untimely departure. In the meantime, Jones explained, in his own special spin that “…the beliefs and approach to leadership that have guided my career are inconsistent with what I saw and experienced at Uber, and I can no longer continue as president of the ride sharing business.” You just know there’s an ugly, yet presumably very juicy story behind that articulate statement. But I guess we’ll just have o wait for the book to come out. Naturally, Uber officially thanked Jones and wished “him all the best” no doubt with the utmost sincerity. The other Uber exit is brought to us by Brian McClendon, who is set to ditch his post of Vice President of Maps and Business Platforms. Mr. McClendon announced plans to return to his native Kansas to pursue a career in politics. He’s apparently very disenchanted with the state of Kansas’ fiscal crisis and presumably the rest of the political climate. At least that’s the story he’s sticking to.

Buy buy baby…

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Well, at least somebody has finally stepped up who has a bit of faith in Snap Inc. Enter James Cakmak, a Wall Street analyst with the firm Monness, Crespi, Hardt, who gave the app its very first – and only –  “buy” rating, slapping it with a $25 price target. And fyi, Snap identifies itself as a camera company. Got it? Having the dubious distinction of being crowned as the biggest tech IPO in two years, Snap managed to raise a whopping $3.4 billion its first day out. It went up almost 60% on its first day but since then came barreling back down over 25%. Its shares have been losing steam over concerns that the company has a ridiculously high valuation, yet grim prospects for profits. Cakmak graciously said that he’s giving Snap the benefit of the doubt because, even though he himself is unsure if Snap will be able to crank out an actual profit, he likes the way the company stacks up against its competitors. Awww.

 

Trump-y’s Bumpy Budget Plans; McDonald’s Unknowingly Picks Fight with President; The Goose is Loose: Luxury Coats Hit Wall Street

Did you say…trillion?

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There’s nothing like a $1.1 trillion budget proposal to perk up a Thursday. The big winner in Trump’s plan is defense, which gets a $54 billion boost if the President gets his way. Losers of the $54 billion corresponding cuts include  – but are not limited to – the Department of Housing and Urban Development and the Environmental Protection Agency – which you had to have seen a mile away. The National Endowment for the Arts, legal aid for the poor and low-income heating assistance would also be history. Because why bother helping poor people pay for heat when you can spend $1.5 billion on a down payment to build a wall along the Mexican border. Wasn’t Mexico supposed to foot the bill for that one, by the way?  In any case, the outline was described as a “hard power budget” – if you have to laugh, then g’head – by Mike Mulvaney, the President’s director of the Office of Management and Budget. In case it wasn’t painfully obvious, it means that this plan caters to defense and building up the military, while foreign aid and diplomacy can go suck it. Sort of. Naturally, the Democrats are just not that into this budget and are wondering how smart it is to cut spending in areas that work with defense to facilitate diplomacy in more volatile parts of the world. On the bright side, the plan calls for slashing funds to the United Nations. If the President could find away to turn all that pricey UN real estate into affordable housing, then we’d really be onto something. But now it’s up to Paul Ryan to get that budget passed in Congress, which is not likely, though, since rumor has it that this plan is Dead On Arrival.

Speaking of greasy of food…

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For some inexplicable reason, at 9:16 this morning,  McDonald’s official Twitter account unleashed this little gem:”@realDonaldTrump You are actually a disgusting excuse of a President and we would love to have @BarackObama back, also you have tiny hands.” Sure the message was deleted 25 minutes later but not before it was retweeted more than 600 times. Interestingly enough Trump is a mega fan of McDonald’s, and even starred in a commercial for the fast-food chain a few years ago. McDonald’s was initially mum on the incident but later said Twitter notified the company to say that its account had been compromised and the situation is currently being investigated. Incidentally, Barack Obama’s former press secretary and campaign adviser, Robert Gibbs, is McDonald’s head of communication. Not that that had anything to do with this particular tweet, mind you. However, my question is, if this Tweet boosts business, will they keep tweeting more insults to the President? Hmmm.

Warm and fuzzy…

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Snapchat look out. There’s a new Wall Street darling today and its one that actually warms hearts. Literally. Luxury Canadian coat maker Canada Goose made its much anticipated New York stock market debut, with 20 million shares being unleashed to the tune of $18 a pop. Initially priced at closer to $12 a share, the apparel company came out swinging raising a very impressive $255 million and hitting a market valuation of $1.88 billion. And why shouldn’t that be the case? After all, the coat maker scored close to $300 million in revenue for 2016 with a $27 million profit, proving that people really do dig the Canadian brand. Of course, no party is complete without a few crashers and for Canada Goose it was PETA, who were there to protest Canada Goose’s use of coyote fur on some of its offerings. The animal-rights organization even purchased $4,000 worth of shares, which might seem completely at odds with its mission. However, that $4,000 investment affords PETA the opportunity to submit its own letter to shareholders and buys it admission to Canada Goose’s annual shareholder meeting, where, presumably, the organization plans to up its protest game.

 

 

Oh Nyet You Didn’t!: Yahoo Cyber Attacks Courtesy of Russia; Homebuilders Are Feeling Fine; The Fed (Finally) Comes Through With Rate Hike

Busted…

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There is a first time for everything and today marks the first time that Russian officials were officially busted by U.S. federal prosecutors for cyber attacks. These officials, who are actually Russian officers, allegedly paid other hackers to break into Yahoo to steal information from hundreds of millions of users. So clearly, the officials weren’t the talent behind the scheme. Of the six people charged in the attacks, one of them is a hacker named Alexsey Belan, who had the dubious distinction of being ranked the FBI’s numero uno most wanted cyber-criminal for three years.  But don’t expect any swift justice. While one of the alleged perps was picked up in Canada and headed here to await his fate, the Russian intelligence officers are staying put and probably living large seeing as how there is no extradition in place between Russia and the United States. Among the numerous charges outlined are economic espionage and computer hacking, to name just a few. The attacks, which were revealed last September, were the ones that caused the search engine giant to drop its selling price to Verizon by $350 million. According to the indictment, it appears the attacks were state-sponsored, which has me wondering if things will now be awkward between Presidents Trump and Putin.

Exuding confidence…

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The magic number is 71. No really. It is. At least if you’re looking at the National Association of Home Builders/Wells Fargo Housing Market index.  That means that homebuilder confidence is very high. Very. To put this number in perspective, anything above the number 50 is good. In March of 2016, that number was 58. So yeah, confidence abounds this year. Sure, the usual reasons are being given, including the fact that we are entering the season that homebuilders love, low mortgage rates and a solid labor market. But there’s another reason: President Trump. Yep. It appears he has begun rolling back on regulations, some of which are environmental, and that’s got homebuilders kicking up their heels in joy since they attribute 25% of the cost of homes to regulations. The regulation currently being rolled back is the Clean Water Rule, a rule that many builders call “burdensome” and which has nothing to do with putting dirty water into homes, I assure you.  Homebuilders see this rollback as a sign that even further de-regulation is in the wings, which would make home-building easier and quicker. And that is making builders positively giddy. And confident, of course.

Done deal…

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It’s official. The fed raised the benchmark lending rate by a quarter of a point. But that’s not the only big news. We are told to expect two more rate increases this year, which is especially weird since this is just the third rate hike in over a year. You may not feel the interest rate change now. And you may not feel it at all. But if you comb over your paperworks, from mortgages to credit cards to bank statements,  then you’ll notice the difference, albeit a subtle one. For now.  So subtle in fact that rates are still at historic lows. But it wont stay that way forever because by 2019 the rate is expected to hit 3% and stay there for quite awhile.  Hey what do you expect? Inflation is rising to the mark where the Fed wants it to, times are good, economically speaking and, just like with home builder sentiment, the strong labor market is putting a fiscal smile on a lot of faces.