Friday Finance Weekly 85th Edition

Greetings folks and a warm welcome to the 85TH Edition of Friday Finance Weekly. We have finally transitioned to a new system so I hope you like it. After having a month of sunshine it looks like the rains are back, but at least you won’t have to water the garden over the long weekend.

The biggest retail news this week was that Saks is going to be purchased by the Hudson Bay Company. Yes, a Canadian retailer is purchasing an American one. The offer is for a total of $2.4B. The Bay had to do something to fend off Nordstrom’s launch into Canada and what better brand than Saks. In Canada, a total of 6 – 7 Saks stores will be opening by way of new construction and conversions of existing stores. In addition, twenty five Saks Off 5TH stores are planned as well. The brands will operate as two entities and as a result, the management of Saks will remain in New York. In general Saks hasn’t performed well compared with Neiman Marcus and Nordstrom as it has been burdened by underperforming stores. The company has gone through some cost cutting and now runs 41 stores compared with 54 in early 2007. Overall good move, especially for the Bay, but I think Nordstrom is going to come out on top. In my opinion there is a real gap in friendly, high-end fashion retailers and this is a clear differentiator for Nordstrom. Saks is more of the same, maybe a little more traditional than Holt Renfrew. The markets have reacted well to the HBC take over and the shares are up 6.12% for the week. All things considered, I don’t think the selection in Canada was the issue, it was always price. Hey at least it will boost up Canada’s employment figures. (Source: Bloomberg)

Alternative currencies are all the rage and if you need help understanding some of the major ones a recent TED talk provided a good perspective. Please find the top 5 biggest/most interesting (in my opinion) below:

  •  Bitcoin: The world’s best-performing currency, according to Kemp-Robertson, Bitcoin’s value is tied to the performance of a computer network. It’s “completely decentralized—that’s the sort of scary thing about this—which is why it’s so popular,” Kemp-Robertson says. “It’s private, it’s anonymous, it’s fast, and it’s cheap.” Bitcoin is a case study in the increasing desire to place trust in technology over traditional institutions like banks.
  • Litecoins: A virtual currency based on the Bitcoin model, Litecoins have a higher limit: “The number of coins that can be mined is capped at 21 million Bitcoins and 84 million Litecoins,” explained a recent Wall Street Journal post, which also noted that Bitcoins are worth more and currently accepted more widely.
  • Tide detergent: This is a barter system that’s about as far from government-backed as you could get: in 2011, it was discovered that across the US, thieves had been stealing 150-ounce bottles of Tide detergent to trade for $5 cash or $10 worth of weed or crack cocaine. An article in New York Magazine from earlier this year details the fascinating story and what it says about Tide’s super-successful branding. Link to the article: http://nym.ag/Uzhrb6
  • Linden Dollars: Linden Dollars, usable within the online community Second Life, can be bought with traditional currency or earned by selling goods or offering services to other Second Life residents. Many people earn actual Linden salaries—some to the tune of a million Linden Dollars. Don’t get too excited though 1M Linden Dollars is around $3,950 USD at the moment.
  • Starbucks Stars: Use of Starbucks’ Stars is limited not to a particular geographic locality, but to the corporate ecosystem that is Starbucks. Once you get a Starbucks Card, you can earn Stars—which buy drinks and food—by paying with the card, using the Starbucks app, or entering Star codes from various grocery store products. According to Kemp-Robertson, 30 percent of transactions at Starbucks are made using Stars.

If you have time over the long weekend and wanted to explore the other currencies please refer to the original article: http://bit.ly/16ed4CZ To be honest all these alternative currencies are a bit of a blur to me and now when someone says, “I am a millionaire”, you actually have to ask, “what kind”? Imagine a complication of filling out a personal net worth statement at a bank? (Source: TED Talks)

America is still the world’s biggest source of capital, but a tightening of their immigration system is making it harder and harder for entrepreneurs to set up shop. So what’s the solution? A company in the US has come up with a novel way of approaching this issue. They are building a cruise ship 12 nautical miles from the coast of San Francisco (international waters) that will house 380 startups. Companies will have to give up equity in addition to $1,200 – $3,000 a month. There will be a ferry that goes directly into San Francisco and work permits won’t be required. Residents on the boat will only require visitor visas that are considerably cheaper to obtain. Great idea, but the company is still in fundraise mode. Also, small matters such as policing need to be considered. In my opinion this seems too much like a modern day version of Alcatraz. (Source: Blueseed.co)

The low-price air carrier GoAir of New Delhi announced in June that in the future it would hire only females for the cabin crew — because they weigh less than men (and expects eventually to save the equivalent of $4 million annually in fuel based on average weights). I am sure saving fuel was the only reason. (Source: The Times of India)

Have a fantastic long weekend folks and please don’t hesitate to forward this newsletter. Many thanks,

Sam

Friday Finance Weekly 77TH Edition

Greetings folks and a warm welcome to the 77TH Edition of Friday Finance Weekly. Washington politicians hoping the end of the world would prevent them from having to deal with the fiscal cliff…will have to think again.

News from the economy in general:

  • It is apparent that Uncle Sam is getting strict with foreign banks. HSBC was fined $1.9B for money laundering. Nobody was arrested of course and the bank agreed to pay the fine and admitted to violating the Bank Secrecy Act and the Trading with the Enemy Act. Their shares are actually up over the last month and it is apparent that the bank is easily able to absorb the fine. ING also agreed to pay a $619M fine due to their dealings with Cuba and Iran. Even UBS was fined $1.5B for a single wire transfer that manipulated LIBOR. I sincerely hope these large fines are helping the US close the deficits!  In addition to the hefty fines, more than two dozen foreign banks with at least $50 billion of global assets face stricter U.S. capital rules under a Federal Reserve plan that’s aimed at lowering risks to the financial system.   The Fed proposed that most of the banks also be forced to comply with more stringent liquidity rules and pass stress tests analyzing how they would fare in a severe economic downturn.  Lenders with more than $50 billion of global assets and more than $10 billion in the U.S. will be required to house their U.S. businesses, including securities trading, within regulated holding companies. Yikes, its hammer time! Somehow I don’t think American banks face the same level of scrutiny. In fact during the financial collapse some banks were forced to take government bailouts even though they didn’t need them. (Source: WSJ, Bloomberg)
  • Americans swiped their credit cards more often in October and borrowed more money to attend school and buy cars. The increase drove U.S. consumer debt to an all-time high.  The Federal Reserve said that consumers increased their borrowing by $14.2 billion in October from September. Total borrowing rose to a record $2.75 trillion.  Borrowing in the category that covers autos and student loans increased by $10.8 billion. Borrowing on credit cards rose by $3.4 billion, only the second monthly increase in the past five months. Hey tis the season for giving so give consumers a break, and the more you give the more you get… Bailouts that is. (Source: Post Crescent)
  • Just when you thought the online coupon industry was dead, JP Morgan decided to get in to the game. This time however, I think it’s a good idea. J.P. Morgan is buying daily-deals startup Bloomspot Inc. as it looks to target customers with merchant offers to spur card spending. The deal could enable J.P. Morgan, the largest U.S. credit-card lender and a major processor of card transactions for merchants, to generate new sources of revenue by tailoring discounts and other deals for retailers to cardholders based on spending patterns. The bank will use your spending habits to generate customized coupon solutions. This was always the missing link in the online coupon market. (Source: WSJ)

Let’s get into some consumer news:

  • Bausch & Lomb Inc. has hired investment bank Goldman Sachs Group Inc. to explore a sale after receiving informal expressions of interest from several large health-care companies, said people familiar with the matter. The eye-care company is hoping to command at least $10 billion, people familiar with its thinking said.  The Wall Street Journal reported in July that Bausch & Lomb could be ready to go public at the end of this year if it didn’t receive an attractive offer first. The Journal also reported that Bausch had received informal takeover inquiries from larger companies.  The decision to formally explore a sale instead of an initial public offering came partly because Bausch executives felt the company would secure a price that would meet its expectations in a sale, the people said. The IPO market is lukewarm right now and the strategy of trying to find a purchaser is a smart one. I have a feeling a company like Johnson and Johnson will make a move to further strengthen their position in this sector. (Source: WSJ)
  • Hudson’s Bay Co. trumpets high-profile brands such as Coach as a big part of its turnaround efforts, but behind the scenes the retailer is building an arsenal of its own private labels to fight growing competition from its suppliers’ standalone stores.  While HBC and other department stores count on stocking well-recognized lines to draw customers, the merchants also contend with those same companies running their own shops nearby – often in the same mall or down the street.  Now, HBC, which reports its first quarterly results as a reborn public company, is putting a new push on its own labels. In-house brands give merchants more leeway in setting prices without having to match a competitor’s discount, while scaling back on middlemen. Retailers are betting they can generate higher profit margins from their own brands, while taking on their suppliers on their own turf. The stock has barely moved since its IPO indicating that it was actually fairly priced. What a novel concept, fair pricing. Results over the holiday season may give it a boost. (Source: Globe and Mail)
  • This isn’t really finance news, unless you use it as a bellwether for higher than expected revenue figures. The top 10 accessory designer list was released and it is as follows 1. Coach 2. Gap 3. Calvin Klein 4. Guess 5. Nine West 6. Liz Claiborne (tie) 6. Tommy Hilfiger (tie) 8. Ralph Lauren 9. Ugg 10. Fossil. Guys you can thank me later. (Source: Glamour – afraid to admit it)

Plastic surgeons in Turkey and France told CNN in November that mustache implants have suddenly surged in popularity as Middle Eastern men use their increased lip bushiness to convey power and prestige. Surgeons extract follicles from hairier parts of the body in procedures that cost the equivalent of around $7,000 and show full results in about six months. An anthropology professor told CNN that, by tradition in Arab countries, a man of honor would “swear on my mustache,” use mustaches as collateral for loans, shave off a vanquished foe’s mustache as a reward, and gravely insult enemies with “Curse be upon your mustache!” Okay, so how does Movember fit into all this? (Source: CNN)

Have a Merry Christmas and a Happy New Year. My next newsletter will be out in 2013. Please don’t hesitate to forward this newsletter.

Many thanks,

Sam

Friday Finance Weekly 71ST Edition

Greetings folks and a warm welcome to the 71ST Edition of Friday Finance Weekly.

Let’s start with some tech news:

  • As much as I try to avoid writing about Apple, they are in the news again. Also like every Apple monkey, I waited last night and ordered an iPhone 5 online as soon as it was available. News reports have indicated that sales are unprecedented and Apple shares hit a record high. Apple shares closed up 1.2 percent at $691.28 on the NASDAQ. The shares earlier touched an all-time high of $696.98. Shares are up 70.69% for the year! For a well-established company these numbers are astounding. What really got missed in all this hype is that Apple basically destroyed the mobile payments market. By not including NFC technology the mobile phone wallet concept is now going to slow down. NFC is supposed to stand for Near Field Technology (tap your phone on a reader and the payment is made), but eBay CEO stated that it is Not For Commerce. I totally agree, how else will people know you have a Black American Express card? (Source: Reuters, CNBC)
  • Yelp the company that lets users review neighborhood businesses, and is mostly used to review restaurants; has benefitted from integrating with Apple. Yelp climbed 23% to $22.37 at the close in New York. The stock has gained 49% since its’ March 1st initial public offering. Inside investors are eligible to sell about 53 million shares of the company 180 days after its IPO, a period that extended through yesterday. They seemed to have beaten the trend of other sites such as Groupon and Facebook. Their revenues are up 67% and the market has obviously responded well. That being said on a long-term basis this is a risky stock. They don’t have the market size of Facebook and there is really nothing unique about their service. I personally think Yelp is one idea away from being extinct. (Source: Bloomberg)
  • In a direct challenge to Apple Inc.’s dominance of the tablet market, the online retailer Amazon.com Inc. unveiled more powerful versions of its Kindle Fire tablet on Sept. 6th. Including one nearly as large as the iPad but priced hundreds of dollars less and a version of its e-reader that feature a next-generation screen from E Ink Corp.  The new Kindle Fire HD will be available with either a 7-inch screen for $199 or an 8.9-inch screen, at prices ranging from $299 to $599. By contrast, Apple’s iPad has a 9.7-inch screen and is priced from $499 to $829.  Top-of-the-line units will include the ability to access 4G LTE wireless Internet services at $49 a year; previous versions were offered with Wi-Fi and 3G cellular connectivity. No company has managed to effectively compete against Apple in full-size tablets; only smaller devices like the Kindle Fire and Google Inc.’s Nexus 7 have done well. One reason is that all other full-size tablets have cost as much as or more than the iPad. Shares are up a marginal 0.82% for the week and 50.94% for the year. (Source: Boston.com)

Retail therapy as always:

  • Walgreens reported August sales of $5.9 billion, a decrease of 4.5% as compared with the same month in fiscal 2011.  Prescriptions filled at comparable stores decreased 6.8% in August. Higher incidence of the flu positively impacted comparable store prescriptions filled by 0.4% points. The negative impact on comparable-store prescriptions filled due to not being part of the Express Scripts pharmacy network was 10.7 percentage points in August. Prescriptions processed by Express Scripts comprised 12.6% of Walgreens prescriptions in August 2011. August pharmacy sales decreased 7.2%, while comparable-store pharmacy sales decreased 12.4%. Okay I admit that was a little confusing. Wondering how they plan to prop up sales? By becoming a drug dealer (“the bad kind”). The DEA actually shut down their distribution center in Florida for endangering the public. They were accused of selling prescription painkillers in the black-market. (Source: USA Today, Drugstore News)
  • Two of the oldest department store chains in North America are on the verge of a public stock listing.  Plans for an initial public offering are in the works for the Hudson’s Bay Company, the parent of The Bay stores in Canada and Lord & Taylor in the United States, according to two people briefed on the talks.   A successful I.P.O. would be a windfall for Richard Baker, the New York real estate developer-turned-retailer. In 2006, just before the markets seized up, Mr. Baker acquired Lord & Taylor for $1.2 billion. He later acquired Hudson’s Bay and merged the two into a single company. It will be interesting if Bloomingdale’s makes an effort to acquire The Bay as they were rumored to be partnering. (Source: NY Times Deal Book)
  • The year’s strongest performances by Honda and Volkswagen helped lift U.S. auto sales to their fastest pace in three years last month.  American Honda sales soared 60 percent and Toyota Motor Sales’ volume jumped 46 percent for the month as the Japanese automakers continued to bounce back from severe quake-related product shortages last summer. The Detroit 3 and Hyundai-Kia posted double-digit gains, while Nissan North America was up 8 percent.  U.S. sales rose 20 percent to 1.28 million light vehicles in August. That produced a seasonally adjusted annual selling rate of 14.5 million, fractionally the highest SAAR this year and the best pace since August 2009’s 14.6 million. That’s when the U.S. cash-for-clunkers program rescued an industry from its free-fall. Yeah we actually forgot that the US government gave you cash for your car, regardless of its state. So old unused cars were traded for cash which was used to purchase new cars, which in turn increased oil consumption. Why are we still confused about high gas prices? (Source: Autonews)

The Treasury Department’s inspector general reported in August that the IRS doled out more than $5 billion in fraudulent income tax returns in 2011 (owing to its mission to provide refunds promptly without first vetting the claims). The agency “refunded” $3.3 million to a single address in Lansing, Mich. (supposedly the home of 2,137 different tax filers) and nearly $4 million to three Florida addresses (518 to one in Tampa, 741 to one in Belle Glade, and 703 to a post office box in Orlando). In all, refunds were claimed by, among others, 105,000 dead people. So the department of vital statics doesn’t speak with the IRS. (Source: Associated Press, South Florida Sun-Sentinel)

Have a fantastic weekend folks and don’t hesitate to forward this newsletter. I am going on vacation for 3 weeks, so you may not hear from me until I’m back…hope you enjoyed the extra-long Friday Finance Weekly.

Many thanks,

Sam