All posts in "Business"

EpiPen maker’s $98 million payout is just way too much, shareholders say


Mylan CEO grilled by Congress over EpiPen price hikes
Mylan CEO grilled by Congress over EpiPen price hikes

EpiPen maker’s $98 million payout is just way too much, shareholders say

EpiPen maker Mylan got a rare scolding from shareholders who are fuming over a $98 million pay package for its former CEO.

A majority of Mylan shareholders on Thursday rejected the drug company’s 2016 plan for paying its executives. Critics have blasted the plan as outrageous given the controversy over EpiPen price hikes.

It’s highly unusual for investors to vote down “say-on-pay” proposals. The Mylan vote signals deep dissension over the $98 million in compensation awarded to former CEO Robert Coury, who is now the drug maker’s executive chairman. Mylan CEO Heather Bresch was also awarded $13.8 million in total compensation and a larger equity award in 2016.

The shareholder vote was nonbinding. Mylan said its board of directors and compensation committee “will carefully consider these results” as it speaks to investors and designs its “compensation programs going forward.”

The company declined to tell CNNMoney whether the vote will trigger an adjustment to the 2016 pay awards that shareholders disapproved of.

The thumbs-down vote was a “rare and resounding” rebuke, said Eleanor Bloxham, the CEO of the The Value Alliance, which advises boards on corporate governance.

Bloxham said that just 2% or 3% of say-on-pay proposals fail to receive a majority of shareholder support. One high-profile rejection occurred in 2012 when Citigroup(C) shareholders rejected a $15 million raise for then-CEO Vikram Pandit.

Even though Mylan isn’t required to change its compensation plans, Bloxham strongly urged it to do so anyway.

“You can legally go through a yellow light, but is that the best way to drive? No. That’s exactly what got Mylan in the position it’s in today,” Bloxham said.

Mylan raised eyebrows earlier this year by awarding Coury $98 million despite the bitter public criticism the company got for jacking up the price on a two-pack of EpiPens by 400% over seven years. Mylan’s stock also plunged 29% last year.

Mylan has defended Coury’s compensation, saying most of it was earned during his 15-year tenure as a senior exec when he engineered the company’s “strong financial performance.”

A coalition of pension funds launched a campaign to oust Mylan’s directors, citing the compensation practices and a failure to provide adequate oversight in the EpiPen scandal. That campaign was backed by Institutional Shareholder Services, an advisory firm that recommended investors vote against all Mylan directors.

Despite the opposition, Mylan said the board of directors was re-elected. Mylan did not release vote totals yet so it’s not clear what level of support directors received.

It’s possible Mylan’s directors received less than a majority of the votes cast. That’s because the company’s bylaws require two-thirds of the votes cast at a meeting to unseat a director.

“It’s simply untenable for directors who received substantial opposition to remain in the boardroom. Doing so would further erode confidence in this company,” New York City Comptroller Scott Stringer said in a statement.

Stringer and New York State Comptroller Thomas DiNapoli led the campaign against Mylan’s board, citing “public relations debacles” and costly oversight failures.

Published at Thu, 22 Jun 2017 19:09:23 +0000

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Schedule for Week of June 25, 2017

Schedule for Week of June 25, 2017

by Bill McBride on 6/24/2017 08:11:00 AM

The key economic reports this week are Personal Income and Outlays for May, Case-Shiller house prices, and the third estimate of Q1 GDP.

—– Monday, June 26th —–

8:30 AM: Durable Goods Orders for May from the Census Bureau. The consensus is for a 0.4% decrease in durable goods orders.8:30 AM: Chicago Fed National Activity Index for May. This is a composite index of other data.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for June.

—– Tuesday, June 27th —–

Early: Reis Q2 2017 Apartment Survey of rents and vacancy rates.Case-Shiller House Prices Indices9:00 AM ET: S&P/Case-Shiller House Price Index for April.

This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the March 2017 report (the Composite 20 was started in January 2000).

The consensus is for a 5.9% year-over-year increase in the Comp 20 index for April.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for June.

—– Wednesday, June 28th —–

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.Early: Reis Q2 2017 Mall Survey of rents and vacancy rates.

10:00 AM: Pending Home Sales Index for May. The consensus is for a 0.5% increase in the index.

—– Thursday, June 29th —–

8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 239 thousand initial claims, down from 241 thousand the previous week.8:30 AM: Gross Domestic Product, 1st quarter 2017 (Third estimate). The consensus is that real GDP increased 1.2% annualized in Q1, unchanged from the second estimate of 1.2%.

Early: Reis Q2 2017 Office Survey of rents and vacancy rates.

—– Friday, June 30th —–

8:30 AM: Personal Income and Outlays for May. The consensus is for a 0.3% increase in personal income, and for a 0.1% increase in personal spending. And for the Core PCE price index to increase 0.1%.9:45 AM: Chicago Purchasing Managers Index for June. The consensus is for a reading of 58.2, down from 59.4 in May.

10:00 AM: University of Michigan’s Consumer sentiment index (final for June). The consensus is for a reading of 94.5, from the preliminary reading 94.5.

Published at Sat, 24 Jun 2017 12:11:00 +0000

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It’s official. Business isn’t investing in Britain.


The headaches of negotiating Brexit
The headaches of negotiating Brexit

 It’s official. Business isn’t investing in Britain.


The man running Britain’s economy has warned that uncertainty over Brexit is stopping businesses from investing in the country.

“There is a large amount of business investment that is being postponed until business can see more clearly what the likely outcome of [Brexit] is,” Treasury chief Philip Hammond said Thursday in a televised interview.

It’s not the only warning to sound in recent weeks.

Research from Bank of America Merrill Lynch showed that business investment dropped in the final quarter of 2016 to its weakest level in almost three years. And a recent survey of 700 businesses conducted by the Bank of England indicated that uncertainty was causing some companies to rethink investments.

The British government kicked off divorce negotiations with the European Union on Monday.

But it’s still not clear exactly what Prime Minister Theresa May hopes to achieve before the clock runs out on talks in March 2019. May had promised a clean break with the EU, but that was before a disastrous election wiped out her majority in parliament and emboldened rivals who want to maintain closer ties to Europe.

Investors have now been dealing with elevated uncertainty for a year. But huge risks still loom.

“If we leave the single market and the customs union, the costs involved will be significant,” said Vicky Pryce, an economist at the Centre for Economics and Business Research. “Businesses have been very worried.”

Corporate leaders are most anxious about a scenario in which Britain crashes out of the EU without a deal. They would face new trade barriers and huge amounts of red tape.

Hammond favors a transitional period to help British companies adapt to life outside the bloc.

“The earlier we can give business that reassurance the more quickly we will get businesses investing again,” he said on Thursday.

While there have been some big investments announced in the wake of the referendum — especially in the tech sector, broad momentum appears to be fading.

Several major banks have already announced they will move jobs and investment out of the country. The budget airline Ryanair(RYAAY) said it will pivot investment out of the U.K.

The German car maker BMW(BAYRY) is considering whether to produce the new electric version of its iconic Mini car in mainland Europe rather than at its main U.K. facility in Oxford.

“There have been some purchases, mainly because foreign companies took advantage of the weaker pound, but very little in terms of real investment,” said Pryce.

Bank of England Governor Mark Carney also raised warning flags this week. He said that Britain is in a vulnerable position because it imports more goods and services than it exports.

“The U.K. relies on the kindness of strangers at a time when risks to trade, investment, and financial fragmentation have increased,” he said in a speech to financial titans.

Published at Thu, 22 Jun 2017 15:50:26 +0000

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U.S. Demographics: The Millennials Take Over

U.S. Demographics: The Millennials Take Over

by Bill McBride on 6/22/2017 02:29:00 PM

From the Census Bureau The Nation’s Older Population Is Still Growing, Census Bureau Reports

New detailed estimates show the nation’s median age — the age where half of the population is younger and the other half older — rose from 35.3 years on April 1, 2000, to 37.9 years on July 1, 2016.

“The baby-boom generation is largely responsible for this trend,” said Peter Borsella, a demographer in the Population Division. “Baby boomers began turning 65 in 2011 and will continue to do so for many years to come.”

Residents age 65 and over grew from 35.0 million in 2000, to 49.2 million in 2016, accounting for 12.4 percent and 15.2 percent of the total population, respectively.

U.S. Population by AgeClick on graph for larger image.

This graph uses the data in the July 1, 2016 estimate released today.

Using the Census data, here is a table showing the ten most common ages in 2010 and 2016.

Note the younger baby boom generation dominated in 2010.  By 2016 the millennials have taken over.  The six largest groups, by age, are in their 20s – and eight of the top ten are in their 20s.

My view is this is positive for both housing and the economy.


Population: Most Common Ages by Year
2010 2016
1 50 25
2 49 26
3 20 24
4 19 23
5 47 27
6 46 22
7 48 55
8 51 28
9 18 21
10 52 55


Published at Thu, 22 Jun 2017 18:29:00 +0000

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Solar Energy to Cost Less Than Coal by 2021


Solar Energy to Cost Less Than Coal by 2021

By Shoshanna Delventhal | June 20, 2017 — 7:45 PM EDT

A recent survey by Bloomberg New Energy Finance expects solar energy to outrun coal and natural gas with lower costs much sooner than previously forecasted. Within a few years, renewables will be cheaper than coal almost everywhere in the world, according to the research group.

The study concluded that in the U.S. and Germany, solar already rivals the cost of new coal power plants, and is expected to do the same in high-growth markets such as China and India by 2021.

The cost of electricity from solar energy, or photovoltaic panels has fallen nearly 25% since 2009, and is expected to to decline another 66% by 2040. Onshore wind, after experiencing a 30% reduction in price over the same period, is forecast to slash costs another 47% in just over two decades. (See also: 2017: A Turning Point for the Solar Industry.)

Renewable Energy Prices Are Falling

If the projections turn out correct, total global carbon dioxide pollution from fossil fuels may actually begin to decline after 2026. By contrast, the International Energy Agency’s central forecast sees emissions continuing to grow for decades to come. “Costs of new energy technologies are falling in a way that it’s more a matter of when than if,” said BNEF researcher Seb Henbest, the lead author of the report.

Total coal-powered generation in the United States is estimated to be slashed in half by 2040, compared to an 87% drop in Europe, where environmental laws have increased the price of using fossil fuels. A whopping 369 gigawatts of coal projects stand to be canceled, amounting to the entire electricity output of Germany and Brazil combined.

Despite President Donald Trump’s decision to pull out of the Paris Agreement on climate change and his stated commitment to bringing back the U.S. coal industry, BNEF expects the world’s hunger for coal to subside in less than 20 years as governments work together to reduce emissions. “Beyond the term of a president, Donald Trump can’t change the structure of the global energy sector single-handedly,” wrote Henbest.

Wind and solar are expected to make up nearly half of the world’s total installed generation capacity by 2040, compared to just 12% now. (See also: Oil Giant Total Sees Bright Future in Electricity.)

Published at Tue, 20 Jun 2017 23:45:00 +0000

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No holy guacamole: Chipotle sinks on weak outlook


5 Stunning stats about Chipotle

No holy guacamole: Chipotle sinks on weak outlook

Good news for Chipotle: Customers have come back following the chain’s E.coli nightmare a few years ago. Bad news for Chipotle: Higher marketing costs and surging avocado prices may eat into its profits.

Shares of Chipotle(CMG) tumbled 6% Tuesday — making it the worst performer in the S&P 500 — after it said in a regulatory filing that operating costs in the second quarter would be higher than originally expected and potentially up from the first quarter as well.

Chipotle said specifically that an increase in marketing and promotional expenses was the main reason for the higher costs.

That’s why Wall Street is worried. Instinet analyst Mark Kalinowski cut his earnings forecast and price target for Chipotle by 6% Tuesday following Chipotle’s new outlook.

But Chipotle, which launched a major national ad campaign earlier this year, must feel it needs to get the word out to convince any customers still skeptical about food safety that it’s okay to go back and eat burrito bowls and sofritas.

Sales plunged in late 2015 after the E.coli outbreak was first reported — and sales continued to fall as more and more illnesses throughout the U.S. were linked to the chain. The CDC ultimately found that 60 people in 14 states wound up getting sick.

But the increase in marketing is working — even if it is proving to have a bit of a negative impact on profits.

Chipotle reiterated in its filing with the Securities and Exchange Commission that it still expects same-store sales (which measures the performance of restaurants open at least a year) to rise in the high single digits for the full year.

And shares of Chipotle are up nearly 15% so far in 2017 — despite the big drop on Tuesday.

Still, a recent surge in avocado prices due to concerns about a shortage in Mexico could be another problem for the company as well.

For now, Chipotle still thinks that food costs will account for a little more than 34% of its sales in the second quarter — the same as what it told Wall Street in April. But avocado prices have shot up in recent months.

That could put pressure on the company to raise prices for guacamole, which, of course, is one of its key menu items. (Chipotle, to its credit, has resisted the urge to jump on the Millennial-fueled avocado toast train.)

An increase in guac prices could potentially alienate customers who may still be skittish about Chipotle to begin with after the E.coli outbreak. But if Chipotle doesn’t raise prices to deal with rising commodity costs, that may lead to another drop in profits.

So Chipotle could be in a bind for the rest of the year.

It can’t afford to cut back on its TV commercials since it still needs to woo back former customers who have yet to return. And it may have to eat those higher avocado costs too because a big price hike won’t help its reputation either.

Published at Tue, 20 Jun 2017 17:17:09 +0000

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Has Alphabet Topped Out?


Has Alphabet Topped Out?

By Alan Farley | June 19, 2017 — 10:11 AM EDT

Alphabet Inc. (GOOGL) has rewarded institutional and retail shareholders for months, but its impressive uptrend may be coming to an end, replaced by an intermediate correction that could relinquish 200 or more points before committed buyers return in force. As a result, investors and market timers who have profited from this rally should tighten up stops, take profits or institute options plays to protect their hard-earned gains.

While the tech giant has delivered a broad assortment of innovations and initiatives in the past decade, search engine advertising revenues still comprise a much greater share of quarterly revenues than cloud computing, self-driving cars or artificial intelligence. That cyclical force could dampen profitability in coming quarters, given weaker-than-expected U.S. growth in the first half of 2017. This type of shortfall is typical late in an economic expansion, often presaging a recession lasting one or two years. (For more, see: The Business of Google.)

GOOGL Long-Term Chart (2004 – 2017)

The company came public at $50 in August 2004, after adjustment for the 2014 split that created two equity classes and a new corporate identity. It ground sideways for two weeks following its introduction and took off in a historic uptrend that continued into the first quarter of 2006, when it stalled at $237.55. The stock then eased into a broad trading range, ahead of a cycle-ending rally burst that ended at $373 in November 2007. (See also: Why Google Became Alphabet.)

The stock plunged in two broad waves during the 2008 economic collapse, coming to rest at a two-year low just above $120 in December. The subsequent recovery wave lagged other tech stocks, requiring nearly four years to complete a 100% round trip into the prior-decade’s high. A 2013 breakout caught fire, lifting the stock in a stairstep pattern that featured quick rally bursts interspersed with long periods of sideways consolidation.

A 2015 breakout lost momentum in the first quarter of 2016, giving way to choppy sideways action, ahead of a 2017 breakout that mounted a four-year trendline of rising highs in April. The uptick then ran into a buzzsaw of selling pressure, declining to new support in a testing process that is still under way as we head toward the third quarter. This marks a binary setup in which new highs will continue the uptrend while a breakdown may signal the rally’s end, ahead of a multi-month trading range or long-term top. (To learn more, check out: Identifying Tops and Topping Patterns With Surprising Accuracy.)

GOOGL Short-Term Chart (2015 – 2017)

A July 2015 gap ended more than a year of lagging performance, generating a two-step rally that topped out near $800 at the start of 2016. The stock stretched toward $840 in the second half of the year, grinding out a rising wedge pattern that finally broke to the upside in April 2017. That uptick also broke long-term resistance at the rising highs, reaching $1,000, where aggressive selling pressure triggered an intermediate reversal.

The quick downturn at the magic number raises the odds that the April rally signaled a climax event that will soon give way to a multi-month correction. However, bulls will retain control as long as the price holds above new support at the unfilled gap between $890 and $920. Sidelined players should avoid long and short positions between that level and the all-time high at $1,008 until one side takes control with a breakout or breakdown. (See also: The Anatomy of Trading Breakouts.)

On-balance volume (OBV) has faithfully tracked price action since 2014, also rising in stairstep increments. It reached a new high in May 2017, signaling bullish convergence that keeps bulls in charge, at least for now. However, the first leg of the downturn at $1,000 generated the highest selling volume since the fourth quarter of 2016, when the stock fell nearly 100 points in under four weeks.

The Bottom Line

Alphabet broke out above a multi-year rising trendline in April 2017, highlighting significant relative strength, ahead a rally burst just above $1,000. Aggressive sellers then triggered a sizable reversal, setting up a key test of the uptrend, with a decline through $890 signaling the start of a major correction or long-term market top. (For related reading, see: The Tech Bubble Will Burst: The Question Is When.)

Published at Mon, 19 Jun 2017 14:11:00 +0000

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Verizon Now Biggest Dog in the Dow


Verizon Now Biggest Dog in the Dow

By Alan Farley | June 19, 2017 — 1:22 PM EDT

Dow component Verizon Communications Inc. (VZ) completed its controversial acquisition of key Yahoo! Inc. (YHOO) assets on June 13, but sidelined market players hardly took notice, dropping the stock into a weekly loss. This bearish turn continues a long string of misfires that have now dumped the telecom giant into the 30th slot in Dow component relative strength.

Wireless subscriber growth has stalled in recent years due to worldwide saturation, with heavy competition from AT&T Inc. (T), T-Mobile US, Inc. (TMUS) and Sprint Corporation (S) eating into profit margins. Rival AT&T’s DirecTV and pending Time Warner Inc. (TMX) acquisitions have been tough to duplicate, highlighting doubts about the Yahoo purchase. Taken together, Verizon stock may have peaked for this bull market cycle, opening the door to profitable short selling. (See also: Verizon Officially Now Owns Yahoo, Mayer Resigns.)

VZ Long-Term Chart (1993 – 2017)

The stock underperformed in the first two-thirds of the 1990s, gaining ground in a shallow uptrend that stalled in the low $30s in 1993. It tested that level three years later and pulled back, ahead of a 1997 breakout that posted healthy gains into the October 1999 all-time high at $64.75. It built a volatile topping pattern at that level and broke down into the new millennium, joining the market universe in the bursting of the dotcom bubble.

Selling pressure ended in the third quarter of 2002 at a seven-year low in the mid-$20s, ahead of a recovery wave that posted a lower 2003 high at $41.29. That level resisted three breakout attempts into 2005, highlighting significant relative weakness during the mid-decade bull market. The stock tested that barrier for the fourth time in October 2007 and reversed once again, in perfect timing with the multi-year market top. (For more, see: Verizon to Lay Off 1,000 Across AOL, Yahoo: Report.)

Verizon stock broke the 2002 low during the 2008 economic collapse, descending to a 16-year low at $21.48. That deep print finally ended the nine-year string of lower highs and lower lows, ahead of a powerful bounce that reached a 12-year high at $54.31 in 2013. That level has marked resistance in the past four years, triggering a July 2016 reversal that is still in control of price action nearly one year later.

The monthly stochastics oscillator fell into a sell cycle in the summer of 2016 and bounced just above the oversold level in the fourth quarter, yielding a lower high in the first quarter of 2017. This marked a significant failure, ahead of fresh downside move that reached a 14-month low in May. The indicator finally hit an oversold technical reading earlier this month, but the first quarter failure used up considerable buying power that is likely to undermine the next recovery attempt. (For more, see: Stochastics: An Accurate Buy and Sell Indicator.)

VZ Short-Term Chart (2015 – 2017)

The 2013 top near $54 gave way to a two-year decline that finally ended at $38.06 after the August 2015 mini flash crash. Multiple swing highs in the lower $50s into that climactic low reinforced long-term resistance that was tested repeatedly in 2016. Slightly higher highs between $54 and $57 failed to attract momentum buying interest, generating a series of failure swings that trapped breakout buyers.

On-balance volume (OBV) topped out in 2013 and entered a steep distribution wave that failed to respond to 2015 and 2016 breakout attempts. The indicator fell off a cliff at the start of 2017, pointing to wholesale institutional abandonment, breaking 2016 range support while dropping to the lowest low since 2012. This signals a major bearish divergence when taken together with range-bound price action, raising the odds for a secular downtrend that could last for many years. (See also: On-Balance Volume: The Way to Smart Money.)

The Bottom Line

Verizon topped out in 2013 and has built a multi-year trading range that could signal the end of gains for this bull market cycle. Even through deep support in the upper $30s may delay long-term sell signals, war-weary shareholders may now wish to reduce or eliminate exposure to this market laggard. (For more, check out: How to Pick the Best Telecom Stocks.)

Published at Mon, 19 Jun 2017 17:22:00 +0000

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Why Mattel Is Down 30% While Hasbro Is Up 30% in 2017


Why Mattel Is Down 30% While Hasbro Is Up 30% in 2017

By Shoshanna Delventhal | June 17, 2017 — 2:17 PM EDT

U.S. global toy maker Mattel Inc. (MAT) saw its stock take another hit this week as its newly instated Chief Executive Officer (CEO) Margo Georgiadis unveiled plans to revive sales by slashing the company’s dividend in half to support its modernization in the digital age and expand into emerging markets.

Shares fell nearly 8% on Thursday as analysts rubbed salt in the wound in a series of bearishresearch notes. In the aftermath, MAT stock reflects an approximate 30% loss so far this year compared to a 30% return secured by its top U.S. toy rival, Hasbro Inc. (HAS). (See also: Mattel Tanks as It Slashes Dividend to Fund Turnaround Plan.)

Applauding Hasbro’s Diversification

D.A. Davidson analyst Linda Bolton offered a downbeat view on Mattel given the El Segundo, Calif.-based company’s “deteriorating near-term business fundamentals.” Bolton downgraded MAT to neutral and cut her price target from $30 to $24 per share, compared to a Friday close at $20.72.

UBS also downgraded shares of the struggling toy maker on concerns over a lack of specifics in the CEO’s turnaround plan that she hopes to fund. Analyst Arpiné H. Kocharyan suggests that Georgiadis’ presentation fell short of details, especially regarding Mattel’s recovery time and left questions regarding how its reinvestment plan will change the company’s profit profile next year.

Jefferies chimed in with another negative view, indicating that a lack of clarity means “a full de-risking of estimates in unlikely,” as the investment firm reiterated a hold rating on MAT and cut its price target to $19. Earlier this month, Jefferies named Pawtucket, R.I.-based Hasbro as their favorite toy player, echoing the Street’s sentiment that the firm will continue to gain from improving leverage, a strong digital focus and a pipeline of new content helping drive multiyear earnings per share (EPS)upside. (See also: A Tale of Two Toy Makers: Mattel and Hasbro.)

Published at Sat, 17 Jun 2017 18:17:00 +0000

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Amazon is buying Whole Foods for $13.7 billion


Why Amazon is buying Whole Foods
Why Amazon is buying Whole Foods

Amazon is buying Whole Foods for $13.7 billion


Amazon is making a big bet on physical stores and the business of food.

The online retail giant announced Friday that is buying organic grocery chain Whole Foods(WFM) for $13.7 billion in cash. The deal values Whole Foods at $42 a share, 27% higher than where the stock was trading Thursday.

Amazon(AMZN, Tech30) said Whole Foods stores will continue operating under that name as a separate unit of the company. Whole Foods CEO John Mackey will stay on to lead Whole Foods, which will keep its headquarters in Austin, Texas.

The deal shows Amazon’s interest in moving into the business of operating traditional brick-and-mortar stores, even as many retailers that have been crippled by Amazon’s growth have announced a series of store closings.

It also shows Amazon’s growing interest in groceries. The company has its own delivery service, AmazonFresh, and is experimenting with a “click and collect” model, offering customers to buy groceries online, then pick them up in person.

The supermarket business, like many other parts of retail, has been hit hard by increased competition from Amazon itself, as well as Walmart(WMT).

Grocery giant Kroger said Thursday that its profits for the year would be lower than Wall Street expected, sending its stock plunging nearly 20%.

Then Kroger’s stock plummeted 13% further on Friday after the Amazon-Whole Foods detail was announced.

Shares of other retailers with a big presence in groceries, such as Target(TGT), Costco(COST), SuperValu(SVU) and Sprouts(SFM), plunged as well.

And Walmart was down 5%, despite announcing another online commerce deal of its own Friday. It bought men’s apparel company Bonobos.

But Amazon’s stock rose 3% on the news. Investors don’t seem too concerned by how much the company is spending. A warning of a possible credit downgrade by ratings agency S&P Global Ratings didn’t hurt Amazon either.

S&P said that Amazon may need to take on more debt as a result of the acquisition. But Amazon finished the first quarter with $21.5 billion in cash and securities on its balance sheet — and only $7.7 billion in long-term debt.

Amazon’s deal for Whole Foods also further demonstrates the financial might of the Jeff Bezos-led company, whose market value is greater than that of the 12 largest traditional general retailers combined.

“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” said Bezos.

Whole Foods, founded in 1978, is widely credited with helping to make organic food go mainstream. The company now has about 87,000 employees and more than 460 stores — mostly in the U.S. But Whole Foods has also expanded to Canada and the U.K.

The company has been moving aggressively in big cities, targeting millennial shoppers with a store format called 365 by Whole Foods Market that, like rival Trader Joe’s, has lower prices than the ones found at core Whole Foods stores.

High prices, of course, have been a problem for Whole Foods. The company is often derisively referred to as Whole Paycheck since the company charges a pretty penny for spelt and quinoa.

The company was accused of overcharging customers by regulators in New York City in 2015 and that had a huge negative impact on Whole Foods. Sales plunged for several quarters.

And the company became the butt of jokes by late-night comedians. HBO’s John Oliver did a savage skit about the company’s high prices. (HBO, like CNNMoney, is owned by Time Warner.)

Oliver ran a mock commercial showing, among other things, a block of ice with an avocado balanced on top for $25.99, a pomegranate that listened to NPR for $64.99, and tilapia-wearing yoga pants for $84.99.

Mackey eventually wound up apologizing to customers. But the damage was done.

Sales growth at Whole Foods has slowed and profits have yet to return to levels before the price scandal. That may be one reason why Whole Foods was willing to sell to Amazon.

It will be interesting to see if Amazon — which has a reputation for keeping prices low — will turn Whole Foods into more of a bargain retailer as well.

It’s also worth noting that Whole Foods stock did not move much higher than $42 on Friday — the price that Amazon agreed to pay. That could be a sign that Wall Street does not expect a bidding war for the company that would push the sale price higher.

So it looks like Bezos will inherit the bad PR baggage that comes with Whole Foods. I wonder if it’s too soon for people to ask Alexa where they can find stalks of asparagus in a bottle of water for $6.

Published at Fri, 16 Jun 2017 19:47:30 +0000

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Tobacco Stocks Probing New Highs


Tobacco Stocks Probing New Highs

By Alan Farley | June 15, 2017 — 1:39 PM EDT

Tobacco stocks have offered perfect investment vehicles for patient shareholders in the past decade, paying sizable dividends while posting a near endless series of new highs. Of course, taking exposure in this controversial industry isn’t for everyone, especially if loved ones have paid the price for nicotine addiction. However, buying shares of a company isn’t the same thing is supporting their business practices, and it’s our job to seek out superior returns wherever we can find them.

Strong Asian growth now drives industry profits, along with a resurgence in U.S. consumption triggered by modern vaporizer technology. In addition, the current administration has plans to strip away regulations across a broad swath of industries, making it unlikely that producers will get singled out for criticism in coming years. Given these tailwinds, tobacco stocks are likely to perform well into the next decade. (For more, check out: Back From the Dead: Why Tobacco Stocks Are Soaring.)

Philip Morris International Inc. (PM) carries the highest sector capitalization for tobacco producers trading on the U.S. exchanges at $184 billion. It spun off from parent Altria Group, Inc. (MO) at $50 in March 2008 and entered an immediate downtrend that posted an all-time low at $32.04 in March 2009. The subsequent recovery wave reached the upper $90s in 2013, giving way to a multi-year correction that found support in the mid-$70s.

The stock rallied above the prior high in 2016 and stalled out, building a base on new support and then spiraling lower in November. That marked the washout low, ahead of a strong buying impulse that reinstated the breakout in January 2017, followed by a powerful trend advance to an all-time high at $122.90 on June 6. Philip Morris stock has been pulling back in a bull flag pattern since that time, while daily stochastics have dropped into the oversold zone. (See also: Philip Morris, the Best Is Yet to Come: Wells Fargo.)

Both monthly and weekly indicators have held buy cycles through this period, signaling a bullish divergence and potential pullback buying opportunity ahead of continued upside. Even so, a more advantageous trade entry might come if aggressive sellers break short-term support and knock the stock down to the top of the first quarter range and 50-day EMA at $115.

Altria Group expanded into spirits and finance leasing services following the Philip Morris spin-off,​ but tobacco remains its biggest profit component. It fell just 7 points during the 2008 economic collapse, returning to the prior high in 2010, ahead of a 2011 breakout that reached $70.14 in July 2016. A pullback into the fourth quarter settled near $60, ahead of a January 2017 rally into March’s all-time high at $76.54. (See also: Altria Optimistic on FDA’s Filing of Heated Products.)

Altria Group shares sold off into May, testing new support near $70 and turning higher into June, settling into a narrow platform that traded within 60 cents of resistance this week. On-balance volume (OBV) has already risen to a new high, highlighting strong institutional sponsorship that should support a fresh rally leg into the low $80s, where a two-year rising-highs trendline could trigger another reversal.

Reynolds American Inc (RAI) rallied above the 2008 high in 2011 and entered a rising channel that accelerated into a steeper channel in 2014, highlighting impressive relative strength. The uptrend stalled near $50 at the end of 2015, giving way to a shallow correction that ended with a high-volume October gap to a new high in the mid-$50s. It took three months to clear the high posted in that session, yielding a long series of new highs into last week. (For more, see: Reynolds Announces Leadership Roles Post Acquisition by BAT.)

The stock sold off with the broad market, dropping into the first test at the 50-day EMA since January, and it is still testing that level. Weekly stochastics fell into an unconfirmed sell cycle in reaction to the decline, raising odds for an intermediate correction lasting a minimum of eight to 12 weeks. Given this scenario, a pullback into deep support at $50 could offer a buying opportunity.

The Bottom Line

Tobacco manufacturers and distributors are leading the broad market, resistant to broad headwinds facing other high-yielding instruments. This resilience could last into the new decade, given humankind’s addictive interest in the controversial crop. (For additional reading, see: Behind Tobacco Stocks’ Recent Strength.)

Published at Thu, 15 Jun 2017 17:39:00 +0000

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Tough Times Ahead for Kroger


Tough Times Ahead for Kroger

By Alan Farley | June 16, 2017 — 11:21 AM EDT

Supermarket giant The Kroger Co. (KR) saw its shares fall nearly 19% on Thursday after meeting first quarter EPS and revenue estimates but lowering fiscal year 2018 profit guidance, now calling for 0% to 1% growth. The stock took a second hit on Friday morning, following a wave of downgrades that list stiff headwinds due to steep discounting by Wal-Mart Stores, Inc. (WMT) and other big-box retailers as well as online portals that have sliced off grocery market share at a quicker-than-expected pace.

Intense competition has undermined traditional profit venues that include aggressive commodity management, i.e. taking advantage of futures market pricing anomalies that generate higher margins for key staples. Kroger also faces an uphill battle in competing with, Inc. (AMZN), now the nation’s third largest food retailer, intensified by Friday’s Whole Foods Market, Inc. (WFM) acquisition announcement. Of Kroger’s 2,796 storefronts, just 22% were offering online sales at the time of the March 2017 earnings call. (For more, see: Amazon to Buy Whole Foods in $13.7 Billion All-Cash Deal.)

KR Long-Term Chart (1988 – 2017)

The supermarket chain joined the national exchanges just above a buck (after three stock splits) in 1988 and entered a shallow uptrend that peaked at $3.06 in 1991. A narrow consolidation into 1992 gave way to a powerful trend advance that unfolded in a straight line into the 1999 high at $17.45, ahead of a multi-year correction that bottomed out at $5.50 in the fourth quarter of 2002.

Price action in the next 11 years held within the narrow boundaries of the three-year downtrend, with a multi-year uptick into 2007 stalling less than two points below the 1999 peak, while a bear market decline into March 2009 found support about four points above the 2002 low. Volatility dropped off a cliff into the new decade, with the stock grinding sideways in a three-point range that failed to reward long-suffering shareholders.

Kroger stock awoke from its long slumber in 2012, lifting off range support in a positive feedback loop that reached the prior century’s high in 2013. It broke out into 2014 and took off in the most productive period since the 1990s, lifting in a strong uptrend that continued into the March 2015 high at $38.87. A shallow decline into August found support in the upper $20s, yielding a December test of the high that attracted aggressive selling interest, carving the next stage of a broad top ahead of a 2017 breakdown. (See also: Kroger Nosedives on Downward Revised Guidance.)

KR Short-Term Chart (2015 – 2017)

A slow-motion decline off range resistance at the 2015 high reached range support in October 2016, yielding a modest bounce that posted a lower high in December. The price drifted back to support in March 2017, completing a head and shoulders topping pattern, and it broke the neckline on heavy volume earlier this week. This selling impulse signals the start of a secular downtrend that could reach the mid-teens in the coming months.

On-balance volume (OBV) topped out in the second half of 2015 and entered an aggressive distribution wave that reached a four-year low in the first quarter of 2017. A bounce into June has now ended, marking aggressive abandonment by institutional and retail shareholders getting out of the way of lower prices. Curiously, the company’s 1.59% dividend yield should have eased selling pressure, but it hasn’t, adding an additional bearish note to the long-term outlook. (See also: US Grocer Kroger Scrambles Before German Invasion.)

The broad uptrend between 2013 and 2015 should slow or stall downside momentum in coming weeks, with support near $20 likely to end the current sell-off wave. The 200-month EMA is rising slowly toward that price level, adding a significant support layer that should allow the company to catch its breath while considering aggressive steps needed to compete in the digital marketplace.

The Bottom Line

Kroger has broken down from a multi-year top after warning that annual sales may not grow in the current fiscal year. The bearish news follows a near endless string of warnings from a broad variety of brick-and-mortar retailers, signaling an escalation out of traditional sales and into e-commerce. (For related reading, check out: Evaluating Grocery Store Stocks.)

Published at Fri, 16 Jun 2017 15:21:00 +0000

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Imperial Brands Recruits Cannabis Expert to Board


Imperial Brands Recruits Cannabis Expert to Board

By Shoshanna Delventhal | June 14, 2017 — 8:50 PM EDT

British tobacco and cigarette giant Imperial Brands (IMBBY) has appointed Simon Langelier, the chairman of Canadian medicinal cannabis group PharmaCielo Ltd, to its board of directors. The marijuana industry expert previously held a 30-year career with rival Philip Morris International Inc. (PM).

The announcement comes as Imperial, one of the least diversified of the major tobacco companies, is shifting its strategy after posting a 6% decline in global tobacco volumes in the most recent six-month period.

Goodbye ‘Tobacco’

As Big Tobacco struggles to boost revenues due to declining global smoking rates and increased government regulation, including higher taxes and stricter packaging laws, major players have doubled down on innovation outside of traditional businesses. Global cigarette leaders have deployed billions of dollars in research and development (R&D) to build out vaping products, heat-not-burn sticks, e-cigarettes, low-calorie energy boosters and other alternative smoking products that they would like to market as “reduced harm.” Tobacco companies’ expertise in growing and distribution has led to many to believe that they could easily move into the high-growth cannabis market if legalization continues to expand. (See also: Tobacco Industry Earnings Reverse Winning Streak.)

Imperial Brands, which officially removed the word “tobacco” from its name 18 months ago, is clearly pushing ahead in its efforts to move beyond its legacy business. Given tobacco leaders’ transition into the cannabis space occurs, Imperial’s new new board member will leverage his background at the helm of a supplier of medicinal-grade cannabis oil extract and related products. Langelier also brings in his experience as president of Philip Morris’ next-generation product segment, including e-cigarettes, vape and heat-not-burn sticks called iQOS. Imperial’s chairman Mark Williamson highlighted Langelier’s extensive international experience in tobacco and “wider consumer adjacencies” as assets to the board.

Closing up 0.8% at $46.52 on Wednesday, IMBBY has lost 4.2% of its value in the most recent 12-month period, while gaining 6.8% year-to-date (YTD). (See also: Imperial Brands Ditching Tobacco for Caffeine.)

Published at Thu, 15 Jun 2017 00:50:00 +0000

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Global Oil Giant Total Sees Bright Future in Electricity


Global Oil Giant Total Sees Bright Future in Electricity

By Shoshanna Delventhal | June 14, 2017 — 9:10 PM EDT

Hedging against a foreseeable peak in demand for crude oil, France’s Total SA (TOT), one of the world’s largest oil companies, has revealed big plans to double down the production of electricity to its global network of businesses and consumers.

Last summer, a handful of Total’s top executives were sent to Silicon Valley to meet with tech investors and futurists, including a visit to Tesla Motors Inc.’s (TSLA) Bay Area factory. The French oil company’s Chairman and Chief Executive Patrick Pouyanné explained that the trip was an effort to “open the minds” of the business leaders, writes The Wall Street Journal.

Total’s ambitious plans would ultimately lead it to become one of the biggest suppliers of electricity, or what its CEO calls “the energy of the 21st century.”

Hedging Against Oil’s Decline

The corporation has made strategic acquisitions including a $1 billion deal to buy a French maker of industrial batteries and a takeover of a small utility that supplies gas and renewable power to households in Belgium. Total also owns a majority stake in San Jose, Calif.-based SunPower Corp. (SPWR) as it aims for 20% of its energy output by 2035 to be from low-carbon energy such as electricity from renewable sources including wind and power. Last year, the company’s recently added “gas, renewables and power” reporting segment accounted for 5% of Total’s $9.42 billion in net operating income.

Total isn’t alone in its plans to build out a business unit to hedge against oil’s downfall and the realities of climate change. As oil prices plummet, automakers improve fuel efficiency and electric vehicles gain speed against traditional cars, even the leaders must adapt in order to survive the industry disruption. The world’s largest oil company, Saudi Aramco, has invested $5 billion to acquire renewable companies and help the kingdom reach its goal to product 10 gigawatts of power from solar, wind and nuclear in less than seven years. (See also: 2017: A Turning Point for the Solar Industry.)

While oil is forecast to remain a major source of energy for global economies for the time being, and companies such as Total and Saudi maintain their businesses as first-and-foremost for oil, the heightened focus on clean energy investment speaks volumes to the long-term direction of the industry. (See also: Saudi’s Aramco in $5B Renewable Energy Investment.)

Published at Thu, 15 Jun 2017 01:10:00 +0000

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Is the Completed Double Top on Apple the First Bearish Domino to Fall?


Is the Completed Double Top on Apple the First Bearish Domino to Fall?

Brandon Chapman June 14, 2017

Published at Wed, 14 Jun 2017 20:14:00 +0000

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Weak U.S. consumer prices, retail sales put spotlight on Fed

A shopper passes a window display at the Beverly Center mall in Los Angeles, California November 8, 2013. REUTERS/David McNew

Weak U.S. consumer prices, retail sales put spotlight on Fed

By Lucia Mutikani| WASHINGTON

U.S. consumer prices unexpectedly fell in May and retail sales recorded their biggest drop in 16 months, suggesting a softening in domestic demand that could limit the Federal Reserve’s ability to continue raising interest rates this year.

The Fed is expected to increase borrowing costs later on Wednesday, but the signs of retreating inflation pressures and moderate consumer spending could worry policymakers who have previously viewed the softness as transitory.

“For the Fed, today’s reports are a twin disappointment,” said Michael Hanson, chief economist at TD Securities in New York. “Continued softness in the economic data could call into question the Fed’s conviction, but that is unlikely to be a main theme at today’s meeting, in our view.”

The Labor Department said its Consumer Price Index dipped 0.1 percent last month, weighed down by declining prices for gasoline, apparel, airline fares, motor vehicles, communication and medical care services, among others.

The second drop in the CPI in three months followed a 0.2 percent rise in April. In the 12 months through May, the CPI rose 1.9 percent, the smallest increase since last November, after advancing 2.2 percent in April.

The year-on-year gain in the CPI in May was still larger than the 1.6 percent average annual increase over the past 10 years. Economists had forecast the CPI unchanged last month and advancing 2.0 percent from a year ago.

The so-called core CPI, which strips out food and energy costs, rose 0.1 percent in May after a similar gain in April as rents continued to increase moderately. The core CPI increased 1.7 percent year-on-year, the smallest rise since May 2015, after advancing 1.9 percent in April.

The Fed has a 2 percent inflation target and tracks an inflation measure which is currently at 1.5 percent.

While the U.S. central bank is expected to raise interest rates by 25 basis points on Wednesday, its second hike this year, the weakness in inflation and retail sales, if sustained, could put further monetary tightening in jeopardy.


“Clearly officials will be mindful of incoming inflation trends in the coming months before greater confidence can be made with second half of the year policy normalization plans,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

The dollar fell to a seven-month low against a basket of currencies on the data, while prices for U.S. Treasuries rallied. U.S. stocks were little changed ahead of the Fed’s interest rate decision.

In a separate report, the Commerce Department said retail sales fell 0.3 percent last month amid declining purchases of motor vehicles and discretionary spending after a 0.4 percent increase in April. May’s drop was the largest since January 2016 and confounded economists’ expectations for a 0.1 percent gain.

Retail sales rose 3.8 percent in May on a year-on-year basis. While some of the drop in monthly retail sales reflected lower gasoline prices, which weighed on receipts at service stations, sales at electronics and appliance stores recorded their biggest decline since March 2010.

Excluding automobiles, gasoline, building materials and foodservices, retail sales were unchanged last month after an upwardly revised 0.6 percent rise in April. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product and were previously reported to have increased 0.2 percent in April.

Consumer spending accounts for more than two-thirds of the U.S. economy. Despite last month’s weak core retail sales reading, low inflation could translate into higher consumer spending in the calculation of GDP.

The economy grew at a 1.2 percent annualized rate in the first quarter, held back by a near stall in consumer spending and a slower pace of inventory investment.

Output increased at a 2.1 percent pace in the October-December period. The Atlanta Fed is forecasting GDP rising at a 3.2 percent annualized rate in the second quarter.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci and Meredith Mazzilli)

Published at Wed, 14 Jun 2017 17:18:26 +0000

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Goldman Sachs CEO falls for prankster


Top CEOs to Trump: You're wrong on climate change
Top CEOs to Trump: You’re wrong on climate change

Lloyd Blankfein may think twice before accepting praise for his next witty tweet.

The Goldman Sachs(GS) CEO and Twitter newbie posted a message on Friday poking fun at President Trump’s attempt to divert attention from recent scandals. “Just landed from China. Trying to catch up…How did “infrastructure week” go?” Blankfein wrote on Twitter.

Blankfein’s tweet was showered with Twitter love, receiving 5,000 retweets and 20,000 likes.

It was followed up by an email over the weekend claiming to be from Harvey Schwartz, the chief operating officer of Goldman.

“Tweet won some online award for most humorous tweet — Trump will be so pissed ;)” the email read.

Blankfein took the bait, replying: “Seemed like a good way to bookend my trip.”

In reality, the Goldman CEO had just fallen for a prank by an online mischief-maker, who likes to embarrass banking executives.

“Absolute genius Lloyd. You’ve never thought of heading for Vegas with a standup act?” the prankster emailed Blankfein, adding that “all the girls and gambling” could cause a man to “get easily corrupted.”

“I’d settle for getting away with it,” Blankfein responded, according to screenshots of the emails posted online.

Goldman Sachs confirmed the authenticity of the email exchange, but declined to comment further.

Related: Goldman Sachs CEO tweets, slams Trump

Blankfein had only just begun his Twitter career, sending out his first-ever tweet on June 1 to slam President Trump’s decision to leave the Paris climate accord.

But the Goldman CEO shouldn’t feel too bad though. The troublemaker, who calls himself “Email Prankster” on Twitter, later duped top execs at Citigroup.

The prankster, pretending to be Citigroup Chairman Michael O’Neill, sent an email containing a link to a news story about Blankfein getting pranked. Citi CEO Michael Corbat said, “Can’t open it..”

Stephen Bird, Citi’s consumer-banking chief, sent a lengthy reply. “At least Lloyd was responsive…in the new economy that’s something,” Bird said. “Some of his peers are still getting their messages printed out.”

Citi declined to comment, though the bank didn’t dispute the email exchange happened.

In both cases, bank execs were fortunate that they weren’t duped into divulging any sensitive information.

The email prankster previously duped Barclays boss Jes Staley and Mark Carney, the head of the Bank of England.

Embattled Barclays CEO Jes Staley was tricked into thanking someone he thought was the chairman of his bank John McFarlane for his support at the annual shareholder meeting. And Carney was fooled into discussing his predecessor’s drinking habits.

Published at Tue, 13 Jun 2017 20:58:29 +0000

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PayPal Holdings Inc.: Payment Tech’s Growth Opportunity


PayPal Holdings Inc.: Payment Tech’s Growth Opportunity

Lucas Downey June 12, 2017

Published at Mon, 12 Jun 2017 19:40:00 +0000

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Banks Rally After D.C. Theatrics


Banks Rally After D.C. Theatrics

By Alan Farley | June 9, 2017 — 10:46 AM EDT

The banking sector took off in a strong rally during the June 8 Senate hearing, posting the biggest one-day gain since March 1. The buying surge signals broad relief that D.C. disclosures are unlikely to derail President Trump’s tax cut agenda and its expected impact on U.S. growth and the yield curve. While it seems premature, market players have an excellent track record recognizing subtle shifts missed by pundits, politicians and the financial media.

Also, the rally was perfectly placed at 3-month support, predicting it will gain traction in coming days. This marks a significant turnaround because the financial sector has lagged badly so far in the second quarter, due to weaker than expected GDP and the slow pace of Federal Reserve rate hikes. It’s now possible that commercial and regional banks will lead a summer rally to new highs.

The SPDR S&P Bank ETF (KBE) sold off from $60 to $9 during last decade’s bear market and bounced to $29 in 2010. It took three years to mount that resistance level, ahead of a second period of lagging performance that lasted into the November 2016 election. It took off in the strongest rally since 2009 after Donald Trump’s triumph, driven higher by promises of deregulation and corporate tax cuts that would generate higher underwriting and lending activity.

The uptick stalled in early March held down by weak first-quarter growth and D.C. drama that continues to threaten the president’s agenda. The decline dumped the fund through support at the December high and then broke range support centered near $43. It settled at a 4-month low near $40 at the end of March and spent the last two-and-a-half months testing that level while failing to mount new resistance at the 50-day EMA.

The fund bounced at support for the fifth time earlier this week after tagging the 200-day EMA and turned higher into the Comey hearings, gathering strength as it became clear the president would survive the latest political assault. It ended the session above the 50-day EMA for the first time since early May, pointing to rising strength that could signal the start of the next leg of the November breakout.

The long-term chart highlights the potential of significant upside in coming months. The 2016 breakout also mounted the .618 Fibonacci bear market retracement level, a significant barrier to higher prices. This week’s bounce started right on top of new support, indicating the fund could now rally up to the 50% retracement level near $50. That price zone marks the final barrier ahead of a 100% round trip into the high posted before the 2008 economic collapse.

Which commercial banks will lead this advance if it unfolds as predicted? The top pick is a no-brainer because Dow component JP Morgan Chase and Co. (JPM) has outperformed its peers in the last decade, after surviving the crash with the industry’s strongest balance sheet. CEO Jamie Dimon has maneuvered skillfully through a minefield of legal and political issues since that time while the stock has lifted into a series of all-time highs.

This is an important technical consideration for prospective investors and market timers because it tells us Morgan has no overhead supply of unhappy shareholders to absorb, unlike rivals Bank of America, Corp. (BAC), Citigroup, Inc. (C) or Wells-Fargo and, Co. (WFC). While the next rally leg is likely to float all boats, market history predicts that smart money will head straight for the sector’s leadership, which is undisputed at this time.

The Bottom Line

Banks turned sharply higher during this week’s Senate hearing, with market players deciding the disclosures won’t derail President Trump’s tax cut agenda. This bullish turnaround could signal a corrective low, ahead of a strong recovery that lifts the sector to 2017 and multi-year sector highs

Published at Fri, 09 Jun 2017 14:46:00 +0000

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GE wants to unload its iconic light bulb business


GE factory jobs move from Wisconsin to Canada

GE factory jobs move from Wisconsin to Canada

GE wants to unload its iconic light bulb business


Thomas Edison may not think this is a bright idea: General Electric is trying to rid itself of the light bulb business that has symbolized the company for 125 years.

GE, a conglomerate cofounded by Edison, told employees on Thursday it has put the iconic lighting business up for sale.

The storied company cited a desire to “focus on its core digital industrial assets” and streamline a portfolio that today is centered on things like jet engines and health care equipment.

GE(GE) said talks with potential suitors have only just begun so it’s not clear how much the lighting division will fetch. The Wall Street Journal reported in April that a sale could be valued at $500 million.

The proposed sale of GE Lighting will not include GE’s professional lighting or Current, a division that sells LED lighting to businesses.

Getting rid of GE’s light bulb business is the most striking example of how the conglomerate continues to remake itself to keep pace with the modern economy.

GE’s origins stretch back to the beginning of light bulbs and the days of Edison’s inventions. GE was formed in 1892 through the merger of Edison Electric Light, Edison Lamp, Edison Machine Works and Bergmann & Co.

In 1935, GE lamps were used to light the first ever Major League Baseball night game, played in Cincinnati. GE would later invent the fluorescent lamp in 1938 and halogen lamp in 1959.

GE was long known for these light bulbs as well as appliances like refrigerators and microwaves. It later delved into media and even finance with NBC Universal and GE Capital. But GE has since sold off NBC and most of its finance arm.

Today’s version of GE has promised to lead the “digital industrial era.” CEO Jeff Immelt has refocused attention on areas the company feels it can lead, including healthcare, trains, wind turbines, jet engines and ways to make manufacturers more productive.

For instance, GE is investing heavily in the industrial Internet of Things by trying to digitize factories.

Published at Fri, 09 Jun 2017 16:20:12 +0000

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