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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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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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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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…

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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?

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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.

 

Russia is Not Kicking the Right Game for Adidas, Will Brian Cornell Hit His Target? And BofA’s Boffo Payout

From Russia with loss…

Sira Anamwong/FreeDigitalPhotos.net

Sira Anamwong/FreeDigitalPhotos.net

Adidas lowered its full year profit target thanks to Russia. And golf. But not Russian golf, it should be duly noted. Despite the fact that Russia is hosting the 2018 World Cup, the world’s second largest sporting goods maker and World Cup sponsor decided to shutter a bunch of stores and scrap plans to open a bunch more in that region. But hey, that’s what happens when your governmemt supports Ukranian rebels. The German-based company is weary of Russia and its ability to pull in the sales it has in the past because of all those sanctions coming courtesy of Europe and the US. Which is really too bad because sales in Russia for the brand were over 1 billion euros in 2013. Now Adidas expects net profit of 650 million euros when it previously expected those numbers to be between 830 million euros and 930 million euros. Go ahead and do the dollar conversion math. Just kidding. Adidas initially expected net profit between $1.1 billion and $1.2 billion but now it doesn’t even expect to go past $870 million. As for the company’s Taylor-Made golf division…well, it’s golf. And not soccer. And across the pond that means a lot.

Hit or miss?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Target’s making big news today. And no it’s not for any security breaches or lousy earnings. Well at least for now, anyway. The news out of the Minneapolis-based company is the appointment of its new CEO Brian Cornell, the first CEO in Target’s history to come from outside the company’s ranks. The 55 year old Cornell recently held a big gig over at Pepsi and some rumors said he was going to be the successor to the throne there. But instead he made his way to the embattled Target, which is currently experiencing declining same store sales, a troubled Canadian expansion (Oh, Canada) and continuing fall out from its holiday season security breach. So take a seat and let’s watch to see if the seasoned exec can pull the retail giant out of its slump and get that stock back on the upswing.

Another one bites the dust…

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Image courtesy of hin255/FreeDigitalPhotos.net

And this time it’s Bank of America as a Manhattan judge ordered the bank to pay a $1.3 billion fine for mortgage fraud. Mind you this is not part of settlement talks that Bofa is currently having with the US Department of Justice. This latest penalty was from an actual lawsuit that BofA lost that and was connected to “The Hustle” program. As sexy as that sounds it is anything but as loans that were made at Countrywide Financial were rushed to “High Speed Swim Lanes (HSSL)” and sold to Fannie Mae and Freddy Mac. Oh if only the actual dealings were as playful as the terms used to describe the dubious actions behind them. Bofa was found guilty of getting its employees to take bad loans off the books and put them right into the hands of unwitting investors. As for the DOJ settlement, the US wants BofA to pony up $17 billion while the bank was looking more toward the area of between $12 billion to $13 billion. The two sides continue to hash out the ugly details, even, I am sure, as I write this. The company released its second quarter earning weeks ago to the tune of a 43% drop thanks to its declining mortgage business and increasing legal fees.

 

A Big Slice of Heaven, Are You There Shareholders? It’s Me, Warren and Russia’s Closer Than You Think

I’m in the mood for pizza simply because…I’m watching Oscar goers eat some…

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Image Courtesy of digitalart/FreeDigitalPhotos.net

It may not be a publicly traded company, but Big Mama’s & Papa’s Pizzeria can expect some big earnings in the near future.  TMZ expertly timed Oscar host Ellen DeGeneres’ pizza bit and estimated that the pizzeria got itself about $10 million worth of FREE AIR TIME. Other telecast sponsors pony up close to $2 million for a slice of the Oscar publicity pie. And what of the newly-minted celebrity pizza delivery guy, Edgar?  No word yet on how much of a tip he made on that run, but rumor has it Ellen collected a whopping $300 – most of which reportedly came from the illustrious wallet of Harvey Weinstein.

From the mouth of babes…er…billionaires…

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Image Courtesy of jscreationzs/FreeDigitalPhotos.net

The Oracle of Omaha has spoken…that is in his annual letter to his shareholders over at Berkshire Hathaway.  The billionaire believes (as many of you do) that the economy is growing.  And, if he says it then it must be true.  FYI, his company is continuing to buy stock in a company in the United Kingdom.  Just no word on which company that is.  He also said he likes to focus on a business’ prospects and not on the state of the economy or world events.  Feel free to disagree with that investing philosophy but clearly the man seems to know what he’s doing because he’s ranked number four in Forbes magazine’s latest billionaire rankings.  And in case you were wondering, Bill Gates took the top spot.

So far away yet so very very close…

Image Courtesy of Grant Cochrane/FreeDigitalPhotos.net

Image Courtesy of Grant Cochrane/FreeDigitalPhotos.net

Just because the Olympics In Russia are over doesn’t mean the drama coming out of there is.  Don’t kid yourself for even the teeniest tiniest second that the tensions between Russia and Ukraine can’t affect your wallet.  Next time you fill up your car with gas take a look at how much more it cost you.  Crude prices are rising about 1.5%.  You might want to think about making that Tesla dream more of a reality. Financial markets don’t like tension, especially when major world powers are involved.  There’s more than a few reasons we should give peace a chance.  And some of them are coming out of your bank account.