Barclays Busted; Ford Ditches Mexico for China; UPS Gives Heads Up on Holiday Shipping

Cheerio…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Looks like 2008 is not done haunting banks that allegedly played dirty back then. Today’s banking scandal, that includes charges of conspiracy to commit fraud, is brought to us by Barclays and four of its former executives. The trouble started in 2008 when Barclays reached out to Qatar for some substantial cash that the bank was going to use to avoid a major government bailout. Barclays was inclined to hit up Qatar investors for some big money instead of getting a governmental bailout because a governmental bailout comes with major governmental oversight. And for banks, governmental oversight is a four letter word. Of course, asking help from the Qataris wasn’t exactly the problem. While there were two rounds of fundraising from Qatari investors, with one involving a $3 billion loan for Barclays, the UK bank also paid the Qataris $406 million in “fees.” It seems that last bit might not have been honestly and properly disclosed to shareholders. And that got authorities wondering if Barclays was trying to cover up the the gist of the plan because it might not necessarily have been totally legit. Besides, anytime there is suspicion of toying with shareholders, you can expect that there will be hell to pay.  These charges mark the first time that any bank in Britain got busted for questionably lawful behavior during the 2008 fiscal crisis. So congrats, Barclays. You now hold that dubious distinction. If convicted, the bank faces a nasty fine and the former execs each face up to ten years in prison if found guilty. As for the Qatari’s, they’re off the hook. Completely.

Adios…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Ford is ditching Mexico for China, at least as far as the Ford Focus is concerned.  Rumor has it that by ending all production of the vehicle in the U.S. and moving production to China instead of Mexico,  Ford will end up saving a whopping $1 billion. Which is especially weird since it is cheaper to build and import cars from Mexico as opposed to China. But here’s where the logic enters: Ford will now spend money to revamp just one factory in China instead of two in North America. Hence, billions of dollars in savings. While no U.S. jobs are expected to be affected, the United Auto Workers remained conspicuously silent regarding the news. This latest decision is the very first major one to come from Ford’s newly installed CEO Jim Hackett. However, what analysts are finding interesting is that this move shows how Ford is putting the focus – no pun intended – on SUV’s and trucks, as opposed to smaller, more fuel efficient cars, thanks to lower fuel costs. Besides, sales of the Ford Focus are down way over 20% since low gas prices are no longer standing in the way of those coveted SUV’s. The only question now is how is this move going to sit with President Trump and what will he tweet about it.

It’s beginning to look a lot like Christmas…

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Start saving up. Christmas is just around the corner and UPS wants to let you know that it will be charging you extra to ship those holiday presents. Between November 19 and December 2, the package carrier will slap on a 27 cents surcharge and then again, from December 17 – 23. If you want your package delivered via next day air, then prepare to whip out 81 cents and 97 cents for two or three day ground delivery.  UPS typically delivers around 30 million packages a day during the holiday season and analysts are expecting that will rise even more. And who can blame UPS for charging more money to deliver your goods? After all, the holidays are the company’s peak season where not only can their internal systems become over-whelmed, but mother-nature can throw out a few unhelpful surprises as well.

 

Activist Investor Sets His Fiscal Sights on Congress; Ferrari Races to IPO; UPSet

Icahn do it…

Image courtesy of  iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Many U.S. companies are taking a breather for the moment since billionaire activist investor, Carl Icahn, has shifted his attentions away from struggling businesses and instead to Washington D.C. And just like he ousts under-performing CEO’s, he now plans to give the boot to under-performing congressman.  Icahn tweeted  earlier today, “I am starting a Super PAC with my initial commitment of $150 million to help end the crippling dysfunction in Congress.” I’m just wondering why his millions are going to be more effective than the millions of taxpayer dollars Americans have been throwing at congress until now. But I digress. Icahn, by the way, happens to be a dear pal of Presidential candidate Donald Trump. “Basically he’s by far the best of what I see out there,” and “The Donald” would like to install Carl Icahn as his treasury secretary. Laugh all you want, but with Trump pulling in some great numbers, you might end up crying come November 2016. This Super PAC has  more than a bit to do with the letter Icahn sent out to Congress this week demanding that it pass corporate tax reform legislation that would dissuade U.S. companies from leaving to other countries with more favorable tax laws at what Icahn calls “the worst time imaginable.” He also wants Congress to offer companies like Apple a “tax holiday” that would allow it to bring back its trillions of dollars at much much lower rate. That cash can then be used to invest and create jobs. Sounds fair.  Boom.

Ciao bella…

Image courtesy of sattva/FreeDigitalPhotos.net

Image courtesy of sattva/FreeDigitalPhotos.net

Ferrari, one of the world’s most valuable and utterly fabulous brands, made its U.S. stock market debut today in true Ferrari-style. Several of the high-performance, extremely pricey automobiles were parked by Wall Street, as the company stock opened at $52, the high-end of its range. And from there, the stock even cruised a bit higher. $893 million was raised and 17.18 million shares were dished out under the ticker symbol RACE. Catchy, huh? And just like it’s hard to come-by cars, there was more demand than there were shares. The IPO is a way for Fiat Chrysler to finance a $54 billion investment program that will help expand the Jeep, Alpha Romeo and Maserati brands. As for the Ferrari family, the founder’s son, Piero Ferrari, has a 10% stake and has now earned his billionaire badge with this IPO.  The Agnelli family, however, remains the biggest shareholder with more than a 30% stake in the company. In the meantime, Fiat Chrysler CEO, Sergio Marchionne, took time out of his busy morning from ringing the opening bell at the New York Stock Exchange to let the world know that he thought the EU’s charges that his company evaded $23 million in taxes “absolutely ludicrous.” He should really start hanging out with Carl Icahn.

Brown paper packages tied up with false claims…

Image courtesy of Iamnee/FreeDigitalPhotos.net

Image courtesy of Iamnee/FreeDigitalPhotos.net

UPS is not having a very good day after having to fork over $4.2 million to settle charges that it over-charged 17 states and three local entities. It seems the company falsely recorded packages reaching their destination on time when, in fact, they didn’t.  Customers paid to have packages delivered via next day service, however, those packages did not arrive by the promised time. These incidents ran from 2004-2014. UPS employees used “exception codes” and filed false claims that would excuse late arrivals for reasons like inclement weather and other difficult circumstances.  By using these codes, customers could not even file a claim to get a refund. And while whistleblower Robert Fulk can look forward to a piece of that $4 million pie, UPS has no plans to acknowledge any wrongdoing, even though the company already had to pay $25 million for a different settlement with the U.S. Department of Justice back in May for similar allegations. The company says it ponied up the settlement cash in order to avoid a costly litigation trial. Uh huh.

Nothing Luxurious About Coach’s Earnings; Just Ship It; Can It Get Any Better for Apple?

Not on trend…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Consumers just aren’t feeling the love for Coach, at least in the United States, as evidenced by its third quarter earnings. Those earnings can best be described as short on style and long on disappointment, as sales here took a nasty 24% dive to $493 million. Last year at this time sales hit $648 million in the U.S. As for the rest of the world, the company saw sales plunge 15% to $929 million, a far cry from the $949 million analysts were predicting. It wouldn’t be right not to put some of the blame on the strong U.S. dollar. After all, it’s the thing to do these days. But that excuse can only go so far. At least Coach managed to beat Wall Street’s profit expectations by a whole penny. Yeah you read that right. Coach’s net income came in at $81.1 million and 36 cents per share. That figure might have been somewhat impressive if not for the fact that last year at this time Coach saw a profit that was more than double at $191 million and 68 cents per share. The leather goods company better hope its $547 million Stuart Weitzman acquisition pays off as Coach has some very unflattering plans to shut down 43 shops and twelve outlets.

Brown paper packages tied up with string…

Image courtesy of tigger11th/FreeDigitalPhotos.net

Image courtesy of tigger11th/FreeDigitalPhotos.net

You know whose earnings didn’t suck? Hint: Brown delivery trucks. Indeed, UPS delivered some very impressive digits, which is especially awesome considering the hit it took during the holiday season. Just how impressive were these earnings? Well, the company took in $14 billion worth of revenue, a 1.4% increase from last year. That’s a lot of packages. Actually, it’s about 1.1 billion packages, 2.8% more than last year, to be precise. Unfortunately, Wall Street analysts actually expected more from the shipping company and hoped it would reach $14.3 billion. But, oh well. No one seems to be too upset since UPS managed to score $1 billion in profits at $1.12 per share, easily taking down analyst estimates of $1.09 per share. Last year at this time UPS saw a profit of $911 million with 98 cents per share. The tricky part, however, is that even though the stock is up 14% from a year ago, it is still down 11% for the year. Strange how that works out.

Keeps getting better and better and…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Apple has done it again. Yawn. The iPhone/iPad/Master of the Universe reported another epic quarter of earnings that leave just about every single other company – in the world – green with envy. With $58 billion in sales, Apple scored $13.8 billion in profits adding a very plump $2.33 per share. I guess that’s what happens when you sell 61 million iPhones. For those lucky enough to own shares of the company, their dividends went up too. The company is oozing money  – like, $194 billion of it – with $33 billion of it just in cold hard cash and the rest in investments, which, knowing Apple, will pay off handsomely. Oh, and did I mention the stock hit a new high? Well, I just did. All this, and the Apple watch barely hit the market. Have you ordered yours yet? They’re going for between $349 – $17,000. That ought to make Apple’s next earnings report a bit more interesting.

FedEx-cellent Earnings; Santa’s Not So Little Helpers; New Home Confidence Booster

Can I get that overnight?

Image courtesy of tigger11th/FreeDigitalPhotos.net

Image courtesy of tigger11th/FreeDigitalPhotos.net

You may not use FedEx on a regular basis but other people sure do. The shipping company’s earnings toppled Wall Street predictions earning $2.10 per share in its first quarter compared with an expected $1.96 per share. Nothing like giving those predictions a smack down. Those hefty earnings were a 37% increase over the same time last year which took in just $1.53 per share. If you’re in the market for some shares of this very useful company, you’ll need to plunk over approximately $159…again, per share. Revenue for the company came in at $11.7 billion while analysts short changed FedEx for a paltry $11.44 billion. In fact, just between June and August the express shipping company earned a whopping $606 million, which happens to be a not-so-modest 24% increase over the same time last year. Graciously enough, FedEx will be waiting until after the holiday season to raise its rates by almost 5%.

Elves, elves everywhere…

Image courtesy of suphakit73/FreeDigitalPhotos.net

Image courtesy of suphakit73/FreeDigitalPhotos.net

Speaking of the holiday season (and FedEx, for that matter) which is in fact a lot closer than you may (choose to) realize, FedEx and UPS have big plans to add to their workforces. Following last year’s debacle when the shipping companies received more packages than they could physically handle, with some arriving after the holiday, UPS and FedEx decided they would increase the amount of workers they hired last year so that there will be no doubt – make that little doubt –  that your packages make it on time. FedEx plans to hire 50,000 seasonal employees, as opposed to last year’s 40,000. UPS is pulling out all the stops by bringing in 95,000  extra workers for what they predict will be an epic  – at least as far as shipping needs are concerned – holiday season. But it’s not just shipping companies that are hiring extra staff. Kohl’s just announced its plans to hire approximately 50 associates per store. Considering Kohl’s has over 1,160 stores in 49 states, you just might find yourself at the right end of some decent customer service come December. Expect other stores to follow suit.

Home sweet home…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Which brings us to homebuilders confidence. Well really it doesn’t, but whatever. According to the National Association of Home Builders/Wells Fargo builder sentiment index (yeah, try saying that five times fast), the sentiment hit 59 in August. Analysts called for about a 55. So ha! Considering anything over a 50 is good news, this number deserves its own party. In fact, US home builder confidence for new single family homes (sorry, old homes)  hasn’t been this well…confident – and high – in nine years. All this seems to suggest sales for homes will rise – which is good, especially if you’re selling. It also helps that the job market is improving and interest rates are low. All things that make buying a new single family home (again, sorry old homes) that much more enticing.

UPS Gets Hacked; Dollar Store Battles: Short on Glamour, Long on Drama; Housing Hits It

Do I need to sign for that?

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

UPS now joins that distnguished, tadly crowded field of hacking victims. Between January 20 and August 11, over 100,000 transcations may have been affected by a data breach. But lucky for UPS that it is nothing like the Target behemoth, whose own data breach affected some 70 million customers. That’s because UPS stores are not interconnected, but rather individually owned. Hence, of the over 4,500 UPS locations, only a little over 50 stores in 24 states were affected. How convenient. Sort of. Anyways, UPS, which now became the 58th largest company, taking out a not-so-smug-anymore Eli-Lilly & Co., will offer customers affected by the breach free credit monitoring and identity theft protection for a whole year. How convenient. Sort of. Anyways, after that you’re on your own.

The buck stops here…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

In the drama-packed world of dollar stores, the latest episode has Family Dollar rejecting a $9 billion buyout offer from Dollar General. Instead, the dollar chain store is thought to be seriously considering another offer from contender Dollar Tree not so much because it’s offering more money – because it is not. Dollar Tree offered only $8.5 billion. Rather, because the deal from Dollar Tree would likely allow Family Dollar CEO Howard Levine to keep his day job. The deal from Dollar General would probably have Levine taking LinkedIn resume workshops by now. Apparently there are also some anti-trust issues associated with a deal from Dollar General. Allegedly. Back in June, activist investor Carl Icahn had a hefty 9.4% stake in Family Dollar. These days his stake is around 3.6%. What that tells us could be a lot. Or nothing at all. But probably a lot. And while all this talk about dollar stores might seem funny to you, just know that there is nothing funny about the tens of BILLIONS in cash that these discount stores rake in.

Home sweet affordable home…

Image courtesy of hywards/FreeDigitalPhotos.net

Image courtesy of hywards/FreeDigitalPhotos.net

It’s been an exciting July. Maybe not for you. But for the housing market it sure has been. And yes, the words housing market and excitement can go hand in hand, especially since July marks the fourth straight month that existing home sales increased – a sure sign that the housing market is headed in the right – up – direction. Unfortunately, as I have written several times, the housing recovery just hasn’t been happening quick enough. Sure, sales were up 2.4%, but that percentage is still way down from where it should be in a truly healthy market. Right now, it’s like the housing recovery is at the end stages of a cold, still some coughing and a slightly runny nose.  However, home construction surged a very impressive  15.7%. That and the fact that interest rates are low and there’s more inventory coming up should make for an equally riveting August. We hope.

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.