McDonald’s European Tax McMess; OPEC Member Smackdown; Unemployment Ups and Downs

Did the Hamburglar do it?

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Hold on to your McMuffins because the Golden Arches are under investigation by European regulators. Apparently McDonald’s neglected to pay taxes on its franchise profits earned in Europe and Russia since 2009. The EU says that 250 million euros made just in 2013 wasn’t  even taxed and McDonald’s had an unfair advantage over its competitors. Gasp. McDonald’s European franchise office is based in the teeny tiny country of Luxembourg. The trouble seems to have started when authorities in Luxembourg decided that McD’s was exempt from paying taxes on its profits because the U.S. was also taxing them on those profits.  McDonald’s, however, says the allegations are false and that it paid over $2 billion in corporate in taxes, besides other taxes, between 2010 and 2014. Starbucks, Fiat and Apple also faced similar investigations and Starbucks and Fiat ultimately found themselves forking over $34 million each in back taxes and penalties.

Can’t we all just get along?

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OPEC members just can’t seem to get along these days which is a bit unsettling considering they control a trillion dollar oil supply. Because of the oil glut and the fact that oil prices are so low –   a barrel closed at $42.49, the lowest price since 2009 – Venezuela is finding itself cash-strapped as oil is a big chunk of the country’s bread and butter. Together with a few other cash-strapped countries, including Ecuador and Algeria (don’t laugh), they want Saudi Arabia to cut back on its oil production output to help bring prices back up and make them less cash-strapped. Saudi Arabia doesn’t want to, but might consider doing so if Russia and Mexico do the same. Saudia Arabia, by the way, is the world’s largest oil exporter and is not cash-strapped so they don’t really feel the need to cut back. Saudi Arabia also said it would listen to what the other countries have to say. Which is nice and all. But it still intends to do what it wants. Like it always does. Russia also has no plans to cut back since it does not see a point in doing so. And besides, who tells Russia what to do? Iran wants OPEC to reduce output just so that it can make room for its re-entry into the wonderful lucrative world of petroleum production. But to be clear, Iran has no intention of capping its own output to help out with the current oil glut. Maybe, just maybe, Iran will agree to cap its oil production once it reaches its pre-sanction levels. After all, its gotta make up for lost times, you know?  OPEC pumped over 32 million barrels a day in November. Once Iran and Indonesia (yes, that country’s back, too) return, expect that number to be much much higher. While annual revenue for OPEC was $550 billion last year, in the five years prior, the organization was pulling down $1 trillion annually.

You say that’s a good thing?

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Applications for unemployment benefits rose to 269,000 applicants, gaining 9,000 newbies from last week and apparently that’s good news. Well, maybe not to the 269,000 applicants, but we won’t go there just yet. And even though that means that there are now approximately 2.16 million Americans right now collecting unemployment benefits – is that term an oxymoron? – unemployment is still considered to be at historically low levels. Believe it or not, this report actually points to a healthy job market. And why shouldn’t it? The number of unemployment benefit recipients is 9.3% less than it was a year ago. An average of 206,000 jobs have been added per month in the last year with a whopping 270,000 jobs added just in October. Even average hourly earnings are up 2.5% in the last twelve months. You can be sure the Fed will be considering this latest report as it mulls its decision to raise interest rates, which by the way, is more than likely to happen in about two weeks.

 

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Is There An iPhone 6+ in the House?; Jack Ma’s Very Good Day; Clorox Says “Adios” to Venezuela

Best. Ever…

Image courtesy of jannoon028/FreeDigitalPhotos.net

Image courtesy of jannoon028/FreeDigitalPhotos.net

Apple had an awesome weekend selling more than 10 million new iPhones in what has turned out to be Apple’s best debut weekend for an iPhone. Ever. There were of course some major movie debuts, as well. But who cares because it seems everybody was standing on line waiting to grab their new iPhones instead. The big mystery, it seems, is which iPhone did people buy? Was it the $199 iPhone 6 or the $299 iPhone 6+ aka “the bigger one.” By September 26, 20 more countries will be afforded the opportunity to purchase the device. Which brings us to another big mystery – namely, that China, undoubtedly one of the largest smartphone markets will not be one of those countries.  In fact, it’s not known, if or when China will ever be launching the iconic devices on its shores because apparently…wait for it…the device still needs “government approval” from the Chinese government, that is.

Speaking of China…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

It’s official. After all the hype and hoopla, Alibaba, the New York Stock Exchange’s newest “it” stock, did live up to all the chatter surrounding its debut.  The stock now holds the record for being the biggest IPO. Ever. In the world. Ever. Easily leaving Facebook’s IPO record in the dust. CEO Jack Ma, with minimal effort, raised $25 billion and the stock began trading on Friday at 35% higher than its $68 IPO price. Today, however, shares are down – below $90, still way way way above it’s IPO price. The ticker symbol, by the way, is BABA. Catchy, right? I thought so too.

Adios…

Image courtesy of artur84/FreeDigitalPhotos.net

Image courtesy of artur84/FreeDigitalPhotos.net

Venezuela is about to get a whole lot dirtier as Clorox pulls the plug on its operations over there. For the last three years, the price of Clorox products remained frozen, courtesy of the Venezuelan government. Not all of Clorox’s products had a price freeze -but 2/3s of them did, which made it pretty difficult not to operate at a regular staggering loss. But the price freeze alone wasn’t the only problem. Triple digit inflation led to higher prices for raw materials, packaging, wages, transportation, and other very important things necessary to run a company. Of course, the suits at Clorox graciously tried to explain the arithmetic to the Venezulan government officials but they just wouldn’t play ball. Sure they agreed to increase prices, but not enough. In fact, it was nowhere near enough. Wall Street clearly thought the decision to bail on Venezuela to be muy bien and sent shares of company north (no pun intended – okay, well maybe just a little).