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Costco Stock Gets Pummeled Despite Upbeat Quarter

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Costco Stock Gets Pummeled Despite Upbeat Quarter

By Alan Farley | October 6, 2017 — 11:33 AM EDT

Costco Wholesale Corporation (COST) shares are getting pummeled in the aftermath of Thursday evening’s fiscal fourth quarter earnings report, dropping more than nine points to a four-week low despite beating EPS and revenue estimates. Weak gross margins have been cited for the decline, while fears of growing competition from Amazon.com, Inc.’s (AMZN) Whole Foods acquisition have also weighed on sentiment.

RBC, Stifel and Telsey analysts retained positive ratings after the news, insisting that investor fears are overblown and that the stock will prosper despite growing headwinds. Rapid e-commerce growth and solid traffic numbers have underpinned those optimistic outlooks, which may limit the downside in coming days. However, Morgan Stanley issued a downgrade ahead of the open, and others may follow, adding selling pressure that drops the price into critical support near $153. (See also: 7 Retail Stocks Hammered by Amazon May Be Good Buys.)

COST Long-Term Chart (1995 – 2017)

The stock tested the 1987 low near $5.50 at the end of 1994 and took off in a strong uptrend that cleared the top of a multi-year trading range near $15 in 1997. Rally momentum increased after the breakout, contributing to a powerful thrust that quadrupled the stock’s price into the 2000 high at $60.50. It plunged off that peak a few weeks later, dumping into the mid-$40s, with that price level holding support throughout the dotcom bear market.

Costco stock tested the bear market low in the first quarter of 2003 and turned higher, taking four years for the advancing price to reach the 2000 high. It broke out in the summer of 2007 and ticked higher into May 2008, when it topped out at $75.23, ahead of a steep decline during the economic collapse. That selling impulse settled at a four-year low at $38.17 in March 2009, giving way to a stair-step recovery that reached the prior high in the first quarter of 2011. (For more, see: Behind Costco’s 180% Rise in 10 Years.)

It broke out immediately, entering a powerful trend advance that posted the strongest gains so far this century. Buying pressure finally eased in February 2015 near $150, yielding a shallow rising channel that remains in force more than two years later. The relatively weak uptrend added more than 30 points into the May 2017 all-time high at $183.18, with price action since that time carving a triple top breakdown.

COST Short-Term Chart (2014 – 2017)

A base near $110 in the first half of 2014 gave way to strong rally into the February 2015 high at $156, printing the first peak in the rising channel. A decline into August undercut new support, leaving behind a candlestick shadow, ahead of less volatile price action that added three highs at resistance and two lows at support. The final high above $183 in May 2017 posted the middle peak of a triple top pattern that broke down in June when it undercut range support near $165. (See also: Costco’s Business Model Is Smarter Than You Think.)

Selling pressure ended in July at channel support near $150, generating a small-scale double bottom reversal, followed by a bounce into new resistance ahead of this week’s earnings report. The violently bearish reaction confirms the triple top breakdown, dropping the stock to $157 in the first hour of Friday’s session. In turn, this exposes a trip into channel support, which has now lifted to $153.

On-balance volume (OBV) topped out in March 2015 and entered an aggressive distribution wave that ended in August 2015, while an upturn into August 2016 fell short of the prior high. Bulls took control once again in the fourth quarter, lifting the indicator to an all-time high, while the June 2017 breakdown triggered violent downside that hit a three-year low. This bearish sequence raises the odds that the stock will eventually break support and enter a secular downtrend. (To learn more, see: Uncover Market Sentiment With On-Balance Volume.)

The Bottom Line

Costco stock fell nearly 10 points and 6% in the first hour of Friday’s session after a highly bearish reaction to fiscal fourth quarter earnings. Major technical damage in the second and third quarters could now generate a bearish feedback loop, breaking multi-year channel support and dropping the retailer’s shares into a bear market. (For additional reading, check out: Can Costco Recover From Amazon-Driven Decline?)

 

Published at Fri, 06 Oct 2017 15:33:00 +0000

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Fall is right time to rethink your Medicare drug plan options

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By HansLinde from Pixabay

Fall is right time to rethink your Medicare drug plan options

CHICAGO (Reuters) – Forewarned is forearmed – and for U.S. seniors, the warning just arrived in the mail.

Each September, enrollees in Medicare prescription drug and Advantage plans receive letters from their insurance companies detailing any changes in coverage for the year ahead. Called the Annual Notice of Change, the document is well worth reviewing, because it arrives just ahead of the annual fall plan open enrollment period, which runs from Oct. 15 to Dec. 7.

In many cases, the letter should be a wake-up call to re-shop coverage, especially where Part D drug plans are concerned. These plans often change their premiums from year to year, along with their rules for cost-sharing, coverage of specific medications – and even whether a specific drug will be covered.

Medicare eligibility begins at age 65, and the first choice is between traditional Medicare and an Advantage plan, an all-in-one managed-care alternative that usually includes prescription drug coverage. Advantage plans also cap out-of-pocket expenses. Seniors who choose traditional Medicare usually add a standalone drug plan; many also add a Medigap supplemental policy. But all drug coverage features can change annually, and Advantage plans can make changes to their networks of healthcare providers at any time.

“What worked for you in the past won’t necessarily be best for you in the future,” said Casey Schwarz, senior counsel for education and federal policy at the Medicare Rights Center, a nonprofit consumer advocacy group. “It’s important to look at your options and evaluate whether you should switch plans.”

Few Medicare plan users re-shop their coverage, and those who do tend to focus only on premiums, said Schwarz. “People often mistakenly just choose the least expensive premium, or one that is middle-of-the-road.”

She urges people also to evaluate the network of providers – pharmacy delivery options in the case of standalone drug plans, and healthcare providers in the case of Advantage plans. Also read carefully the so-called formulary, which describes the rules for coverage of a medication – whether any quantity limits are imposed, or if the red tape of “prior authorization” will be invoked.

MORE COMPLEXITY

Drug plans are becoming more complicated. Most have deductibles, and just over half will charge the full amount permitted under Medicare’s rules ($405), according to the Kaiser Family Foundation (KFF). And most plans have shifted to using multiple copayment (flat fee) or coinsurance amount (percentage of total cost), rather than a single coinsurance rate. This is especially true for high-cost medications.

“Cost-sharing was more simple in the early days of Part D,” said Juliette Cubanski, associate director of the program on Medicare policy at KFF. Higher coinsurance rates could leave enrollees with substantial out-of-pocket costs, especially for high-cost specialty drugs.

Low-income seniors may face an additional challenge this year in finding a good-fit plan. A low-income subsidy program covers most or all insurance costs for roughly 12 million older Americans. But the number of plans that provide no-premium coverage will fall 6 percent next year – and seven regions will have no more than four plan offerings. Most notably, Florida will have just two.

One bit of good news is the continued shrinking of the notorious “donut hole,” the gap in coverage that affects plan enrollees with intensive drug needs. The gap next year begins when total combined spending by you and your insurance company reaches $3,750 in drug costs, and coverage resumes when total out-of-pocket spending reaches $5,000.

Outside the gap, your plan pays 75 percent of total costs, but that plunges to just 15 percent inside the gap. Under the Affordable Care Act, costs borne by enrollees inside the donut hole are shrinking gradually. In 2018, enrollees who fall into the gap will receive a 65 percent discount on brand-name drugs (up from 60 percent this year). The discount on generics will rise from 49 percent to 56 percent.

HOW TO SHOP PLANS

The best starting point for shopping plans is the Medicare Plan Finder at the Medicare website (bit.ly/1AezyE7). Plug in your Medicare number and drugs (you will need each drug’s name and dosage). The plan finder then displays a list of plans that match your needs, including their estimated total cost (premiums and out-of-pocket expenses); which drugs are covered; and customer-satisfaction ratings. The finder also will give you advice about drug utilization and restrictions.

If your drug needs are complicated, a range of expert help is available.

State Health Insurance Assistance Programs (SHIPs) provide free counseling on coverage options (click here to find your local SHIP bit.ly/1OU0sfN). The Trump administration and congressional budget writers have proposed to eliminate SHIP, but any cuts – if they do come at all – will affect this fall’s enrollment season.

The Medicare Rights Center also offers free counseling by phone (1-800-333-4114).

Finally, if you are willing to pay to obtain expert help with plan selection, hire an independent, fee-based counseling service such as Allsup Medicare Advisor (here) or Goodcare (bit.ly/2yHKL4J). For a few hundred dollars, these firms will provide a written, personalized plan analysis and offer phone consultations.

Editing by Matthew Lewis

 

Published at Thu, 05 Oct 2017 16:15:44 +0000

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Column: Pre-tax retirement contributions at risk in tax reform

 

Column: Pre-tax retirement contributions at risk in tax reform

NEW YORK (Reuters) – If you like the income tax reduction you get for your 401(k) contribution then make sure to max out now, because you may not get the chance in the future.

Tax reform proposals of past years from both political parties have targeted the break people get for 401(k)s because it is a gigantic source of untaxed money – perhaps more than $580 billion over five years, according to a 2016 Joint Committee on Taxation estimate.

The Tax Policy Center suggests that Congress needs to find $2.4 trillion over 10 years to avoid increasing the deficit with the current tax reform proposal. So the temptation to end the 401(k) tax break could be intense. Currently, 401(k) contributions come from pre-tax earnings, and the government waits until you take the money out in retirement to tax it and the returns it has earned.

If Congress gets rid of this system, saving for retirement would be more like saving in a Roth IRA or Roth 401(k). With a Roth, you do not get any tax benefit when you contribute, but the money grows tax-free in the accounts. These accounts are also not subject to required minimum distributions, which retirees must take from 401(k)s beginning at age 70 1/2.

Roth rules can be a great benefit because people can count on every cent after retirement without worrying about Uncle Sam taxing it. Retirees also are not forced to spend their nest egg, so they can pass it along to heirs with fewer restrictions if they have money left over.

It is not clear, however, how the fine print would shake out, because there is no specific proposal on the table yet from Congress. Nevertheless, retirement saving advocates are bracing for a potential fight over preserving the 401(k) system’s tax breaks as negotiations over tax reform progress. They know Congress will start looking for sources of billions of dollars so it can cut taxes without adding to the nation’s budget deficits, notes Brigen Winters, an attorney with Groom Law Group and lobbyist for 401(k) advocates such as the Plan Sponsor Council of America.

Jack VanDerhei, research director for the Employee Benefit Research Institute, is already studying the potential impact, so he is ready at any time.

The big fear among experts like Winters and VanDerhei is that if people cannot contribute pre-tax money to their 401(k), they will cut back on saving and the nation’s looming retirement savings crisis will worsen. Americans already are saving so little that 52 percent of Americans are on track to struggle in retirement, according to the Center for Retirement Research at Boston College.

The way it works now takes some sting out of saving. For every $1,000 a person in the 25 percent tax bracket socks away, they pay $250 less in taxes, notes the H&R Block Tax Institute. If that money cannot go in pre-tax anymore, they would need to pay tax on all of their income and their take-home pay would diminish.

People do not like to see their take-home pay slip at all, says Aron Szapiro, director of Morningstar Public Policy Research. He calculated that a 30-year-old earning $50,000 and now saving 10 percent of pay, would cut savings to 7.5 percent to maintain the same level of take-home income while working. By retirement, the reduced savings level would lower total contributions to the nest egg to $230,400 from $307,200.  And that person would have only about $28,400 for living expenses compared with $30,800, Szapiro found.

Szapiro notes that young workers could ultimately benefit from the Roth treatment if their pay takes a big jump during their careers and they end up with a lot more income when they are retired than when they were young.

But he thinks most people miss an important point: The tax breaks people receive on 401(k) savings in the current system give them the financial leeway to save more early in life.

“If you take that away, people are going to say: why should I bother to contribute?’” says Szapiro. “It will be hard to get people to act, and that would be very bad for people in retirement.”

Editing by Steve Orlofsky

 

Published at Wed, 04 Oct 2017 21:20:30 +0000

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Wells Fargo wrongly hit homebuyers with fees

Wells Fargo draws bipartisan anger from Congress

Wells Fargo draws bipartisan anger from Congress

 Wells Fargo wrongly hit homebuyers with fees

Wells Fargo is in trouble once again — this time for fees charged to customers trying to nail down a mortgage.

The scandal-ridden bank said on Wednesday that some mortgage borrowers were inappropriately charged for missing a deadline to lock in promised interest rates, even though the delays were Wells Fargo’s fault.

Wells Fargo(WFC) said it will reach out to all 110,000 customers who were charged “mortgage rate lock extension fees” between September 2013 and this February. The bank promised to refund customers “who believe they shouldn’t have paid those fees.”

Here’s what happened: Interest rates offered on Wells Fargo mortgages typically carry expiration dates. Sometimes, those rates expire before the loan closes. The delay can be the bank’s fault or the borrower’s. If it’s the borrower’s fault, customers can pay a fee to extend the rate.

However, four former Wells Fargo employees told Congress in a letter last year that the bank blamed customers for mortgage paperwork delays even when it was the bank’s fault. The letter was first reported by ProPublica in January.

The federal Consumer Financial Protection Bureau is investigating the matter, according to Wells Fargo regulatoryfilings.

Now Wells Fargo says an internal review by the bank supports these claims.

Wells Fargo said on Wednesday that the review determined that the mortgage rate lock policy “was, at times, not consistently applied.” In some cases, borrowers were charged fees even though Wells Fargo was “primarily responsible for the delays,” the bank said.

It’s not clearhow many customers were wronged. A total of about $98 million in rate lock extension fees wascharged to 110,000 borrowers. Wells Fargo said it believes a “substantial number” of the charges were appropriate.

The bank said it plans to reach out to all of those customers later this year. “It’s not going to be a complicated process,” a Wells Fargo spokesman said.

CEO Tim Sloan said in a statement that the bank is paying the refunds “as part of our ongoing efforts to rebuild trust” with customers.

The mortgage mess is the latest black eye for Wells Fargo in a year of scandal. The bank has fired 5,300 employees for the creation of many as 3.5 million fake accounts. Thousands of customers were charged fees for accounts they didn’t open. The bank has blamed an out-of-control sales culture.

Wells Fargo has also said it charged up to 570,000 borrowers for car insurance they didn’t need. About 20,000 of themmay have had their vehicles repossessed as a result.

And Wells Fargo has been accused in a lawsuit of ripping off mom-and-pop businesses by overcharging them for processing credit card transactions.

Patricia McCoy, a former CFPB mortgage official, said the disclosure about the mortgage rate fees fits a pattern.

“Wells Fargo had a business model, until all of this came to light, that emphasized generating fees charged to consumers under duplicitous circumstances simply for the sake of padding revenue,” said McCoy, who is now a professor at Boston College Law School.

Testifying before the Senate on Tuesday, Wells Fargo’s CEO insisted that the bank has made fundamental changes to fix its broken culture.

“The past year has been humbling and challenging,” Sloan said. “We are resolving past problems even as we make changes to ensure nothing like this happens again at Wells Fargo.”

 

Published at Wed, 04 Oct 2017 15:48:58 +0000

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Disney Mulled Twitter Buy, Bought BAMTech Instead

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Disney Mulled Twitter Buy, Bought BAMTech Instead

By Donna Fuscaldo | October 4, 2017 — 10:24 AM EDT

Walt Disney Co. (DIS) Chief Executive Bob Iger confirmed rumors swirling last year that it considered buying Twitter Inc. (TWTR) the embattled microblogging website operator.

Speaking during Vanity Fair’s New Establishment Summit this week, Iger said the company mulled an acquisition when it was exploring ways to provide and sell content directly to consumers. It opted instead to acquire a majority stake in BAMTech, the sports streaming service it already had an investment in.

“We thought Twitter had global reach, a pretty interesting user interface, and a compelling way that we might be able to present and sell the content our company makes to the consumer,” said Iger at the summit, according to CNBC. “But we decided, ultimately, not to go in that direction. And we ended up—took us months to do it—buying a platform called BAMTech.” The executive noted that the social media aspect of Twitter is “interesting,” but the company was focused on distribution. Disney will use BAMTech as the backing for its streaming services. (See more: Why Disney Stock Looks Cheap Given Growth Outlook.)

Chatter Over Twitter Deal

Last fall, Bloomberg, citing people familiar with the matter, reported Disney was interested in buying the social media company. That sparked all sorts of speculation as to what a combined company could look like. It also prompted some Wall Street watchers to express optimism for a deal. BTIG Research laid out in May a five-point plan to reposition the entertainment giant that included buying Twitter. According to analyst Richard Greenfield, management at the company should be using its strong balance sheet and free cash flow to “strategically reposition” it for future growth. In order to do that, he said he thought the company should stop repurchasing shares and instead use the money for acquisitions. He said at the time that Twitter would be an ideal way to reinvigorate ESPN. (See also: Disney Should Buy Twitter or Spotify: BTIG.)

While Disney chose BAMTech over Twitter that doesn’t mean the entertainment juggernaut isn’t done on the M&A front. In September, during a Bank of America media and communications conference, Iger told investors and analysts that its recent M&A activity will continue as the company aims to enhance its digital presence and take on the competition. Those comments sparked speculation with some investors betting one of the targets will be Snap Inc. (SNAP), the maker of the disappearing-message app Snapchat. That may not be too much of stretch since Disney’s newfound competitors—Alphabet Inc.’s (GOOG) Google and Facebook Inc. (FB)—expressed interest in acquiring the social media company. Google reportedly bid at least $30 billion in 2016. The offer, which was rejected by Snap, remained on the table after it went public. It’s not clear if Google is still interested in acquiring. Facebook also made an offer for Snap a few years ago, and that, too, was rejected.

 

Published at Wed, 04 Oct 2017 14:24:00 +0000

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Can Oracle Win in the Cloud Space Against Amazon?

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Can Oracle Win in the Cloud Space Against Amazon?

By Shoshanna Delventhal | October 3, 2017 — 7:06 PM EDT

At Oracle Corp.’s (ORCL) annual OpenWorld conference, Chairman Larry Ellison focused his keynote speech on the tech giant’s new database, Oracle 18c, while spending a significant amount of time bashing Amazon.com Inc.’s (AMZN) rival product.

Amazon fired back at the Oracle co-founder with a representative of the e-commerce and cloud computing giant indicating that Ellison has “no facts, wild claims, and lots of bluster.” Yet some analysts on the Street are intrigued by Oracle’s new intelligent database service, which the chairman says he guarantees will cost half the price as Amazon’s Amazon Web Services (AWS). The 18c service will launch for data warehousing in December, with online transaction processing planned to be available next June. (See more: Oracle’s 10% Jump Is Just the Beginning: UBS)

Shares Could Surge 60%

Ellison and Oracle’s co-CEOs will only receive their stock awards—the bulk of their compensation packages—if they meet certain goals by 2020, including a boost in cloud revenues and the stock reaching $80 a share. For this to occur, ORCL would have to skyrocket more than 64% from its Tuesday closing price of $48.69.

Drexel Hamilton analyst Brian White is bullish on Oracle’s new cloud push, indicating that the tech titan will finally reap the benefits of its cloud investment, after the move has dragged down earnings-per-share (EPS) and sales. “During the keynote, Larry Ellison went through the results from six demos that clearly demonstrated that the Oracle 18c Autonomous Database was not only cheaper to use than Amazon but also much faster and more automated (thus saving labor costs),” wrote White.

Raymond James’ Michael Turits and Bank of America Merrill Lynch’s Kash Rangan also applauded the new service. Turits, who rates ORCL at outperform, called the announcement “an aggressive initiative to keep Oracle DB differentiated and price competitive in an increasingly fragmented database environment.” The BofA analyst, who maintains an $80 price target on ORCL, says EPS can reach $4 to $5 in fiscal 2020 if the company meets its target of $20 billion in cloud revenue. (See also: Oracle Hiring 1,000 Sales Reps in Cloud Push.)

 

Published at Tue, 03 Oct 2017 23:06:00 +0000

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Q&A: Maker’s Mark helped Bill Samuels Jr. make his mark

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Q&A: Maker’s Mark helped Bill Samuels Jr. make his mark

NEW YORK(Reuters) – Bourbon is a multi-billion-dollar business, but it began with just a few pioneering Kentucky families from Bardstown who all lived down the road from each other.

One of those iconic families started around 1790 and is still in the business. Bill Samuels Jr., son of the founder of Maker’s Mark, is chairman emeritus of the brand after 35 years as president and CEO. His son Rob currently runs the company – part of the Beam Suntory brand family since 2014 – but Bill Samuels is still a workhorse, giving speeches and running distillery tours.

For the latest in Reuters’ “Life Lessons” series, we talked to Samuels about how he helped his family transform a homespun hobby into a global phenomenon.

Q: Your dad created Maker’s Mark. What lessons did you learn from him?

A: It was really a hobby for him. He just wanted to focus on creating a bourbon that actually tasted good, because back in the ‘50s bourbon wasn’t really known for that. Of course his idea turned out to be a stroke of genius. But at first it didn’t seem like genius, because for a long time there wasn’t much of a business.

Q: What did you take away from your relationship with Jim Beam, who was your neighbor and godfather?

A: He was the best guy who ever lived. He had the greatest natural sales personality I have ever been around, and was always able to put people at ease. He was also a natural at harassing people, and my father and grandfather were his two favorite targets. From him I learned a lot of details about my family that they didn’t want shared.

Q: You even knew KFC’s Colonel Sanders?

A: At the time he had a little restaurant in Kentucky that we would go to, and he and my dad were gin rummy partners. That’s how it started. He was a real intense, restless man, and he had to find something to do, so instead of retiring he started his chicken business.

When I got my driver’s permit in 1955, he asked me if I wanted to help him, so I drove him around the state as he sold his chicken recipe. There weren’t any franchises then, it was just a menu item in family restaurants.

Q: When you joined your dad’s company and helped him grow it to what it is today, what did you learn about entrepreneurship?

A: When I came back from my career in the aerospace industry, he set me up in a little 10×12 office out by the airport. We had to figure out how to commercialize the business. So he pulled out his briefcase and gave me a sheet of paper with my three-word job description on it: “Go find customers.” And then he told me, by the way, don’t screw up the whisky.

Q: When things became a big success, how did you handle that wealth?

A: For a long time we didn’t have any money, growing up on a farm in Kentucky. But by the 1980s, when I decided I was a big success in the bourbon business, I thought it would be a good time to shift resources and become a thoroughbred racehorse owner. That was a total disaster. I haven’t forgotten it to this day.

Q: Were there ever times when you thought the business wasn’t going to make it?

A: Oh my God, yes. We started in 1953, and didn’t make a profit until 1968, when we made $2,000. And that profit was only because my dad wasn’t taking a salary. Now it’s worth several billion dollars, but a lot of that value can be traced back to the discipline of the early days. He did all the heavy lifting before I even grew up.

Q: Your son runs the business now, so what advice have you given him?

A: I have gone out of my way to not tell my son what to do. I wanted to bring him into the process and then get out of the way, which turned out to be exactly the right thing to do. Of the three of us, he is the true entrepreneur. My dad was the perfect craftsman, and I‘m somewhere in between. My son has been nice enough to allow me to keep my little office, and lets me take all the bourbon I can steal for drinking purposes.

Editing by Beth Pinsker and Dan Grebler

Our Standards:The Thomson Reuters Trust Principles.

 

Published at Mon, 02 Oct 2017 18:40:31 +0000

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Tax Reform Should Bode Well for Charles Schwab

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Tax Reform Should Bode Well for Charles Schwab

By Donna Fuscaldo | September 28, 2017 — 1:09 PM EDT

Charles Schwab Corp. (SCHW), the discount brokerage firm, has been bouncing along near its 52-week high so far this week, but that doesn’t mean it won’t go higher, particularly if President Donald Trump gets tax reform pushed through.

That’s according to Seeking Alpha, which laid out a bevy of reasons why investors may want to buy shares of Charles Schwab, one of the leaders in the online brokerage world. Even at $44.01, close to its 52-week high of $44.35, shares could start to gain more, particularly in the first quarter of next year.

Charles Schwab (SCHW) Upsides and Downsides

Take tax reform for starters. While all eyes have been on technology stocks that have a lot of cash overseas and are hoping for a reduced tax rate to bring it back to the U.S., Charles Schwab is the opposite, with little business outside the U.S. That means that if tax reform does get passed and the corporate tax rate is reduced, Schwab stands to benefit the most. On top of that, because it doesn’t have big exposure overseas, it won’t suffer as much as rivals from a weakening U.S. dollar. If the U.S. dollar stays weak next year it could increase interest in stocks like Schwab.

Use Investopedia’s broker reviews to find a broker to match your investing goals.

But it’s not just tax reform that could draw more interest to the San Francisco-based discount broker. On the sector front, with ongoing consolidation, Schwab could become an attractive takeover target for a big financial firm that is betting the financial markets will be huge during the next 10 years. While Schwab has been a player in the consolidation, it could become a target, which should send the stock higher.

Back in 2011, the company spent $1 billion to acquire OptionsXpress as way to get in on the options trading market. Rival E*Trade has also been on a buying spree in recent years, spending $725 million last July for OptionsHouse. If Charles Schwab doesn’t get bought out, its not a bad thing either for the stock. That’s because consolidation in a sector may not bode well for consumers, but it does mean less competition, which in turn could result in higher commissions for the likes of Schwab. That would be a welcome reversal from the years of declines.

 

Published at Thu, 28 Sep 2017 17:09:00 +0000

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Exclusive: Macquarie leapfrogs Goldman to join top tier of commodity banks

 

Exclusive: Macquarie leapfrogs Goldman to join top tier of commodity banks

LONDON (Reuters) – Australia’s Macquarie Group Ltd has overtaken Goldman Sachs to break into the top three banks for commodities business, having significantly expanded its U.S. energy operations in recent years while rivals cut back.

The rise of Macquarie marks a huge shake-up in commodity banking, typically dominated by elite U.S. and European institutions until tough regulations forced withdrawals after the global financial crisis.

Macquarie, not burdened by the stiff regulations as an Australian bank, ranked in the top three in terms of revenue from commodities trading and related businesses for the first six months of the year, industry sources said.

This is the first time a bank outside the United States or Europe has broken into the top tier in commodities, or any other capital market sector.

Macquarie ranked behind Morgan Stanley and Citigroup for the first six months of 2017, but ahead of JP Morgan and Goldman, with the top three averaging $250-$300 million each in commodities revenues, down sharply from the first half of 2016, one source said.

Macquarie declined to comment ahead of its half-year results on Sept. 30.

The bank reported net trading income in commodities of A$1.16 billion ($921 million) for the financial year to the end of March this year, marking a 66 percent increase in four years.

Comparable financial numbers were not available for rivals because most banks do not make public their revenue from commodities, incorporating the sector into a broader category of fixed income, currencies and commodities (FICC).

Analysts estimate Goldman usually averages around $500 million in commodities revenues for the half year, but that this had slid to $150 million in the first six months of 2017.

“As people have dropped by the wayside, such as Barclays, Deutsche Bank and so on, Macquarie have been able to mop up some of that business,” said Seb Walker, partner at banking consultancy Tricumen.“Macquarie is the first ‘Asian’ bank to make the top three in any capital markets product.”

Deutsche Bank and Barclays, hit with tough capital requirements during a downturn in commodities, sharply pulled back from the sector in 2013-14, while in the United States the Dodd-Frank law banned proprietary trading by banks, prompting them to curb physical commodity business.

MACQUARIE EXPANDS IN U.S. ENERGY

“We should expect more growth from Macquarie,” Walker said, noting the bank agreed in June to acquire Cargill’s North American power and gas business.

That deal came only months after Macquarie agreed to buy Cargill’s global petroleum business and marked the latest expansion by the bank of its energy franchise.

While other banks cut back, Macquarie has boosted its operations to become the largest non-producer marketer of physical gas in North America.

Trader Nick O‘Kane built up the bank’s U.S. energy business, starting off with the takeover of Los Angeles-based Cook Inlet Energy Supply in 2005.

Cook’s owner had 1/16th Inupiat Eskimo heritage and got guaranteed sales to California utilities which had to purchase 5 percent of natural gas from minorities.

In the aftermath of the global financial crisis in 2009, Macquarie acquired Constellation Energy’s downstream natural gas trading platform, a good example of the bank’s long-term commodity strategy, said a former Macquarie executive.

“That investment was at the bottom of a 10-year view from someone who plans to be there for another 10 years where as for some of the European banks it’s a year-to-year proposition.”

A banking source in Europe said Macquarie was also canny in taking advantage of its position as a non-U.S. bank.

“They use a different funding model to the U.S. banks constrained by regulations, using short-term paper so they can price more aggressively,” he said.

CHALLENGER BANKS

A wave of banks from Australia, Canada and China are grabbing market share in commodities after many big U.S. and European rivals withdrew or trimmed back, said Amrit Shahani, research director at financial industry analytics firm Coalition.

So-called “challenger” banks have boosted their market share in commodities to 28 percent last year from 19 percent in 2014, taking business away from the top 12 global investment banks, he added, declining to discuss individual banks.

The Coalition index of top investment banks does not include many of the banks such as Macquarie that are gathering steam in the commodities sector.

While Macquarie has been building up its commodities business, usual top dog Goldman Sachs faltered in the second quarter, reporting the weakest commodities results in its history as a public company.

Commodities trading among banks had been traditionally dominated by Goldman and Morgan Stanley, joined by JP Morgan and Citigroup and European banks during the commodities boom.

At its height, banks’ commodity revenue totaled about $15 billion, but has steadily slid to just over a third of that, totaling around $5.5-$6 billion last year, Shahani said.

In the first half of 2017, commodities revenues at the 12 biggest investment banks tumbled 41 percent year-on-year to its lowest since at least 2006, Coalition said this month.

“It’s been a very difficult year for the large banks. The question this year is whether the challenger banks can step into their shoes and displace them or will the global banks pop back in the second half,” Shahani said.

Additional reporting by Paulina Duran in Sydney; Melanie Burton in Melbourne; Anjuli Davies, Dmitry Zhdannikov and Fanny Potkin in London; Editing by Veronica Brown and Mark Potter

 

Published at Thu, 21 Sep 2017 15:54:48 +0000

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Top 7 Non-Financial Skills Required in Finance

 

Top 7 Non-Financial Skills Required in Finance

By Amy Fontinelle | Updated September 22, 2017 — 5:36 PM EDT

Did you know that having top-notch mathematical skills and financial knowledge is only the tip of the iceberg when it comes to excelling as a financial professional?

Mitch Pisik, who has held numerous senior management positions, including CEO role of Breckwell Products and has more than 20 years of experience in business development, operations and finance, advises that, “the accounting/financial aspect of the job is the floor – not the ceiling.”

In other words, if you can’t perform the other basic functions of your job, you won’t make it. In order to stick around and get ahead in finance, you need to master these essential non-financial skills.

1. Communication Skills

Financial professionals can’t just be good at crunching numbers – they must be able to communicate their knowledge with strong speaking, writing and presentation skills.

Beverly D. Flaxington, author of “7 Steps to Effective Business Building for Financial Advisors,” says that when you are presenting to a board, an investor or a prospect, you need to know how to convey complex information in a way people can easily understand.

2. Relationship-Management Skills

The people skills you need in order to succeed as a financial professional include understanding different personality types, listening, asking the right questions, resolving conflicts, educating others and counseling clients. Ontario-based financial planner Judith Cane says that success in finance is “15% technical knowledge and 85% psychology. When people come to see me it’s because they have issues with money. They spend too much, they don’t save anything or they save everything.” What clients often need, therefore, is an unbiased advisor who can understand their needs and help them make financial decisions.

Managing relationships is an important life skill, whether you’re dealing with subordinates, co-workers, bosses or people outside your company. When people trust you, like you and feel that you respect them, they will want to help you succeed, whether it’s by speaking highly of you, promoting you or signing up to be your client.

3. Marketing and Sales Skills

Robert L. Riedl, director of wealth management for Endowment Wealth Management in Appleton, Wisconsin, says financial professionals need to be able to market their professional skills and knowledge to prospects in their niche markets. To do so, it’s imperative to have a complete understanding of both your personal strengths and your firm’s professional strengths.

He further advises that in marketing yourself to clients, you shouldn’t just communicate how much you know, but also how much you care, because “the client’s most valuable assets and their biggest daily concern is not their monetary wealth, but rather their family.”

Clients want to know that you can help them manage their money to best provide for their family’s long-term needs.

4. Project Management Ability, Organizational Skills and Attention to Detail

Any task that takes more than a few minutes is essentially a project – one that you’ll need to manage effectively in order to be profitable. You’ll need to efficiently and effectively schedule your time, manage budgets, meet deadlines and get what you need from other people in time to complete your project successfully.

Both during and after any project, staying organized and paying attention to detail are also key.

Corporate finance professional Myles Wolfe says, “For any analytical project, someone will usually have questions about the inputs and assumptions. If you can’t deliver timely backup information, even if it is 100% accurate, people will question the accuracy of the final output.”

He says that it’s critical to have both your electronic files and hard copies organized to access information quickly. You might be asked a question months after your initial analysis by a CFO who needs the information in 30 minutes for a conference call. “Especially in the financial world, sloppiness is intolerable,” he says.

5. Problem-Solving Skills

You will always encounter problems in any job, and being able to solve them rather than cracking under pressure is essential.

To get ahead, it can also be helpful to look beyond your own personal responsibilities. Pisik advises that by helping your coworkers solve their problems rather than simply reporting them to upper management, you’ll be viewed as a team player.

“People will gravitate toward you and your career will flourish,” he says.

6. Technological Savvy

No matter where you work, you will need to be proficient with computer hardware and software and able to pick up new programs related to your job quickly. The more shortcuts, keys, programs and functions you know in Excel, the better off you will be in finance. You should also get familiar with marketing and communication software tools.

7. Tenacity and Ethics

A competitive personality, passion for your work and the stamina to work long hours and go above and beyond what’s expected of you and what your co-workers and competitors are doing are all crucial to success in finance. At the same time, you can’t be so competitive that you make poor choices, or your career and reputation will suffer.

Kevin R. Keller, CAE, CEO of the Certified Financial Planner Board of Standards, says that adhering to a set of ethical standards such as those required of certified financial planners™ (CFPs) is crucial to rebuilding the trust that has been broken by financial scandals. The Certified Financial Planner Board of Standards’ Standards of Professional Conduct requires CFPs to provide professional services with integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence – people who work in finance would be wise to adhere to these principles.

Anticipation

Looking ahead to what bosses or clients will need from you in the immediate or even distant future will help you rise to the top. It’s not enough to just solve the day-to-day challenges of your job; you must be able to think long term. Consider the following:

  • What skills can you develop and what accomplishments can you put under your belt that will land you a promotion at your current company, get your foot in the door at another company or get you rehired if you are laid off or?
  • How can you make your boss’s life easier by anticipating what he or she will need from you tomorrow, next week or next month, and taking care of it ahead of time?
  • How can you develop relationships with your clients by paying close attention to their situations? For example, if you notice that the woman who has come to you for help managing an inheritance is pregnant, realizing that she could need help saving and investing for her child’s college education, updating her will and possibly creating a trust can help you create a long-term business relationship with that client.

Putting It All Together: Wisdom and Interpretation

Los Angeles-based writing consultant Elizabeth B. Danziger, founder of Worktalk Communications Consulting and author of “Get to the Point!,” says, “Clients of financial-service professionals are looking for more than knowledge and numbers: they’re looking for wisdom and interpretation.”

The Bottom Line

By combining your ability to analyze numbers with skills such as communication, project management and relationship development, you’ll emerge as a leader and position yourself to rise to the top of your field.

 

Published at Fri, 22 Sep 2017 21:36:00 +0000

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Bed Bath & Beyond shares plunge after disappointing earnings report

Bed Bath & Beyond shares plunge after disappointing earnings report

  @dwbronner

Bed Bath & Beyond shares plunged nearly 15% in early trading Wednesday following a disappointing earnings report.

The retailer said after the closing bell Tuesday that earnings for the second quarter were $94.2 million, a significant drop from the $167.3 million it reported in the same period last year. Same-store sales fell by about 2.6% from a year ago.

 The company said that while online sales grew by more than 20%, in-store sales have dipped.

The “unfavorable impacts” of restructuring costs and the damage sustained by Hurricane Harvey contributed to the results, Bed Bath & Beyond (BBBY) said in a news release.

The home goods provider is not the only traditional retailer struggling to keep up with online competitors.

Toys ‘R’ Us just filed for bankruptcy, succumbing to mountains of debt it accrued when trying to fight off Amazon (AMZNTech30) and Walmart (WMT). The news is troubling or toy makers Hasbro (HAS) and Mattel(MAT), who saw their stocks dip when the bankruptcy was just a rumor.

Across the board, stores are closing at an alarming rate as shoppers lose interest in brick-and-mortar locations. And as bad as things are now, Wall Street thinks things are only going to get worse.

According to analysis by Bespoke Investment Group, investors are more pessimistic about the retail industry now than they have been since September 2008.

But Bed Bath & Beyond may also be facing tougher competition from traditional rivals. Williams-Sonoma (WSM), which also owns Pottery Barn and West Elm, reported earnings last month that topped forecasts.

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Hedge funds want to kill $20 billion chemicals deal

Hedge funds want to kill $20 billion chemicals deal

  @MarkThompsonCNN

An activist investor has built up a 15% stake in Swiss chemicals group Clariant and is vowing to fight its planned $20 billion merger with Huntsman.

White Tale Holdings, an investment partnership created by hedge funds Corvex and 40 North, has written to Clariant’s (CLZNY) board, urging them to rethink the deal.

“It both significantly destroys existing Clariant shareholder value and prevents Clariant from pursuing multiple alternative and immediate opportunities to unlock value for its shareholders,” the investor wrote in a letter published on Tuesday.

“The proposed transaction has no strategic merit and is a complete reversal of your own publicly-stated strategy of becoming a pure-play specialty chemicals company.”

White Tale Holdings said it had become Clariant’s biggest shareholder with a stake over just over 50 million shares and would vote against the merger unless the company explored “all strategic alternatives” to the deal.

Clariant and U.S.-based Huntsman (HUN) unveiled plans to create a global specialty chemical company in May, saying they expected the transaction to close by the end of 2017.

They said HuntsmanClariant would deliver annual costs savings worth more than $400 million, and enjoy a stronger market position in the U.S. and China.

In a statement late Tuesday, Clariant rejected White Tale’s criticisms and described the deal as the best option for creating value for all stakeholders.

“Since announcement the vast majority of Clariant’s shareholders have expressed their support for the deal,” it said, adding that it would not deviate from the agreement with Huntsman.

The deal has been billed as a “merger of equals” but Clariant shareholders would end up owning 52% of the combined company.

“The Board plans to cede operational control of one of the industry’s most prized specialty chemicals companies for no control premium to Huntsman’s management,” White Tale Holdings wrote, adding that it believed about 75% of the targeted cost savings could be delivered by Clariant on its own.

Clariant denied that it would be ceding operational control, saying its CEO Hariolf Kottmann would become chairman, while Huntsman President and CEO Peter Huntsman would become CEO, of the new company.

— Correction: An earlier version of this article incorrectly stated that Huntsman shareholders would own most shares in the new company.

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Hack of Wall Street regulator rattles investors, lawmakers

Hack of Wall Street regulator rattles investors, lawmakers

WASHINGTON (Reuters) – Wall Street’s top regulator came under fire on Thursday over its cyber security and disclosure practices after admitting hackers had breached its database of corporate announcements in 2016 and may have used it for insider trading.

The breach involved the U.S. Securities and Exchange Commission’s EDGAR filing system, which houses market-moving information with millions of filings ranging from quarterly earnings to statements on acquisitions.

The SEC said on Wednesday evening it discovered in August that cyber criminals might have used a hack detected in 2016 to make illicit trades.

On Wednesday afternoon, SEC Chairman Jay Clayton gave members of Congress a “courtesy call” about the hack before it was announced publicly, said Representative Bill Huizenga, chairman of the U.S. House subcommittee that oversees the SEC, in a phone call.

“It’s hugely problematic and we’ve got to be serious about how we protect that information as a regulator,” Huizenga said.

The SEC disclosure came two weeks after credit-reporting company Equifax Inc (EFX.N) said a breach had exposed sensitive personal of data up to 143 million U.S. customers. This followed last year’s cyber attack on SWIFT, the global bank messaging system.

It is particularly embarrassing for the SEC and its new boss Clayton, who has made tackling cyber crime one of the top enforcement issues.

“The chairman obviously recognizes the irony of the SEC potentially serving as the unwitting tipper in an insider trading scheme,” said John Reed Stark, president of a cyber consulting firm and a former SEC staff member.

The SEC has said it was investigating the source of the hack but did not say exactly when it happened or what sort of non-public data was retrieved. The agency said the attackers had exploited a weakness in a part of the EDGAR system and it had “promptly” fixed it.

Most reports filed with the SEC “generally don’t contain super-sensitive information,” and any insider trading would have taken place soon after company filings were made but before they were released to the public, said Gary LaBranche, president of National Investor Relations Institute.

“People are shocked and disappointed,” LaBranche said. Members of the institute, who work with 1,600 publicly traded companies, will be examining their trading reports for any unusual activity that could be tied to disclosures, he said.

U.S. President Donald Trump’s administration has prioritized protection of federal agency networks after breaches during the Obama administration, including at the Office of Personnel Management, Internal Revenue Service and State Department.

Trump in May signed an executive order requiring agencies to use a specific framework to assess and manage cyber risk, and prepare a report within 90 days about how they implement it.

The SEC did not respond when asked about that review or whether it triggered the disclosure. But Clayton said in his Wednesday statement that he began reviewing the agency’s cyber risk in May.

SEC Commissioners did not learn of the breach until recently. In a statement, Republican SEC Commissioner Mike Piwowar, who for part of 2017 also served as acting chairman, said he was “recently informed for the first time that an intrusion occurred in 2016.”

Erica Elliott Richardson, a spokeswoman for the Commodity Futures Trading Commission (CFTC),the top U.S. derivatives regulator, said in an emailed statement the agency constantly reviewed and updated its cybersecurity protections to guard against the growing threat of a breach.

“Our agency has successfully thwarted hundreds of attempted breaches,” she added.

The Canadian Securities Administrators, an umbrella group representing Canada’s provincial securities regulators, said on Thursday it would conduct an additional security review.

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Ethereum Co-Founder Envisions ‘Visa-Scale’ Capacity

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Ethereum Co-Founder Envisions ‘Visa-Scale’ Capacity

By Nathan Reiff | September 19, 2017 — 6:46 PM EDT

Vitalik Buterin, the enigmatic co-founder of the ethereum network, has a penchant for quotable sound bites that rivals his abilities as a developer of cryptocurrency systems. (See also: Ethereum Founder on ICOs: ‘We Are in a Bubble, A Lot of Projects Will Fail.’) Whenever Buterin speaks, people take notice.

Oftentimes, however, it seems that his words get mistakenly twisted. And even when he doesn’t speak, he seems to be involved in news stories which are somehow misrepresented. (See also: Does Ethereum’s Price Depend On the Life of This One Person?) Buterin’s latest eyebrow-raising quote involves Visa Inc. (V), the multinational financial services juggernaut.

According to a report by Tech Crunch, Buterin believes that the cryptocurrency he helped create will rival Visa within the span of a few years, at least by certain metrics.

Scaling Is the Issue

“There’s the average person who’s already heard of bitcoin and the average person who hasn’t,” Buterin said at Tech Crunch Disrupt SF 2017. He said the Ethereum Foundation, his project working in support of the token’s network, aims to develop additional utility in the blockchain, thus creating something that every person will want to be involved in. The idea is that if there is a benefit to everyone, then everyone will want to be involved.

“Where ethereum comes from is basically, you take the idea of crypto economics and the kinds of economic incentives that keeps things like bitcoin going to create decentralized network with memory for a whole bunch of applications,” Buterin explained. “A good blockchain application is something that needs decentralization and some kind of shared memory.”

Ethereum Needs To Be Faster

Part of the reason that ethereum has not yet been able to achieve these goals seems to be the slowness of the network, stemming from its scaling concerns. “Bitcoin is processing a bit less than 3 transactions per second,” Buterin commented. “Ethereum is doing five a second. Uber gives 12 rides a second. It will take a couple of years for the blockchain to replace Visa.”

Buterin later clarified his comment via Twitter to suggest that ethereum and its related projects will have “Visa-scale TX capacity” within a couple of years. He made the clarification after being misquoted as having said his cryptocurrency network will “replace Visa.”

The ethereum co-founder believes that many different types of applications can run on the blockchain, and that as technology continues to expand, the blockchain will be able to replace many services requiring parallelization, when programs are required to run at the same time. “Crypto is all about incentives on various levels,” he explained. “You cannot reason about the security of blockchain consensus protocols without incentives.”

 

Published at Tue, 19 Sep 2017 22:46:00 +0000

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NVIDIA Breakout Bodes Well for AMD Stock

 

NVIDIA Breakout Bodes Well for AMD Stock

By Alan Farley | September 18, 2017 — 9:29 AM EDT

Video graphics powerhouse NVIDIA Corporation (NVDA) rocketed higher on Friday, posting heavy volume during a breakout above three-month resistance at $170 and closing at an all-time high above $180. The uptick should gain traction in the coming months, lifting the high-tech market leader well above $200. It also bodes well for Advanced Micro Devices, Inc. (AMD) stock, which has attempted to mimic its larger rival’s bullish behavior in the past two years.

AMD shares rose nearly 400% in 2016, tracking a historic NVIDIA uptrend triggered by growing speculation on virtual reality gaming hardware. AMD stock topped out just above $15 in February and dropped into a long-overdue correction that has held relatively close to resistance in recent months. Its rival’s breakout could now generate fresh buying power, lifting AMD stock off a six-week test at the 200-day exponential moving average (EMA) and into an uptrend that targets the low $20s. (See also: AMD vs. NVIDIA: Who Dominates GPUs?)

AMD Long-Term Chart (1990 – 2017)

The Sunnyvale, California-based chipmaker ended a multi-year decline at $1.82 in 1990, giving way to a volatile uptrend that stalled out at $19.63 in 1995. A steep pullback into the single digits got bought in 1996, triggering a two-legged rally that topped out at an all-time high just above $48 in 2000, at the same time the dotcom bubble was bursting. It plunged with other tech stocks in the next two years, dropping to an 11-year low at $3.10 in October 2002.

The subsequent recovery wave unfolded at the same trajectory as the prior decline, lifting in a V-shaped pattern that stalled within six points of the 2000 high in 2006. That peak marked the highest high in the past 11 years, ahead of a decline that picked up steam during the 2008 economic collapse. It undercut the 1990 low in November, posting an all-time low at $1.62, while the subsequent bounce failed to attract substantial buying interest, topping out at $10.24 in 2010. (For more, see: AMD Surges on Bitcoin-Fueled Earnings.)

A bounce following a 2012 test at the 2008 low stalled in 2013, generating a year-long topping pattern followed by a decline that reached the prior decade’s low once again in 2015. Aggressive buyers emerged in the first quarter of 2016, generating a momentum-fueled uptrend that mounted the 2010 high in January 2017. The rally ended at a 10-year high less than two months later, yielding a trading range that is still under development as we near the fourth quarter.

AMD Short-Term Chart (2015 – 2017)

The 2016 rally broke the 10-year string of lower lows when it mounted the 2013 and 2014 highs in June. Momentum then accelerated, generating a series of rally waves that ran out of gas in the first quarter of 2017. Price action since that time has held support at the 200-day EMA, while a July breakout attempt triggered a major reversal. The subsequent decline settled below $12 in August, giving way to a basing pattern that could now support a trip back to range resistance. (See also: AMD Stock Could Break Out or Break Down.)

On-balance volume (OBV) hit an all-time high in June 2017, but the stock failed to break out, generating a minor distribution wave that has settled into a holding pattern, indicating that shareholders are hanging tough but failing to get paid for their efforts. A rally above $14 is needed to avoid growing frustration and support another test at range resistance above $15. Conversely, a failure to bounce strongly in the next week or two could trigger a capitulative selling event that breaks support and drops the stock into a deeper correction.

The Bottom Line

AMD has settled at the midpoint of a six-month trading range, while its larger rival has broken out to an all-time high. That wake-up call offers a golden opportunity to attract sponsorship lost during six months of corrective action and generate a trend advance that could reach the lower $20s. (For additional reading, check out: Why AMD’s Stock Is Not Worth $20.)

 

Published at Mon, 18 Sep 2017 13:29:00 +0000

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Your Money: Raising money for an emergency raises money questions

 

Your Money: Raising money for an emergency raises money questions

NEW YORK (Reuters) – When Lori Jung set up a crowdfunding campaign to help with her brother’s medical expenses for spinal cord damage, she also spoke to an accountant.

She needed advice on issues ranging from the tax implications of fundraising to managing tens of thousands of dollars in potential donations. Even after the consultation, which took place within days of her brother’s injury jumping off a pontoon boat, she was left with a list of questions.

Jung was wise to start her research early. Money matters often get shunted aside in deference to the emergency at hand when well-meaning people launch campaigns through online crowdfunding sites like GoFundMe.com or YouCaring.com.

Here are five ways to avoid big problems:

1. Pick the right beneficiary

“If I open up an account for you and raise $30,000, and give it to you, then I’ve given you a $30,000 gift,” said Morris Armstrong, an enrolled agent tax accountant and registered investment adviser in Cheshire, Connecticut.

An individual who gives a gift over $14,000 has to file a gift tax form with the IRS.

Also key: do not to offer anything in return for donations, said Armstrong. Offering a t-shirt or hat to boost donations may be great marketing, but suddenly you are in the business of selling merchandise, because you are not a registered charity.

Jung’s family linked the online campaign directly to Brian’s bank account, so that the 36-year-old was the beneficiary. Any donations are considered gifts to him and will not trigger income taxes, although he will have to pay tax on the interest.

2. Set a financial target

Emergencies do not always come with a definite price tag.

Briana Garcia, a 36-year-old from Stoneham, Massachusetts, did not know what her exact costs would be when she needed a stem-cell transplant in 2014. When her insurance denied coverage of the $125,000 procedure, she decided she needed to raise money online.

Garcia set her fundraising target at $40,000 once she negotiated to have the procedure covered. The rest went toward airfare, hotels and food for a month while she was getting ready for the operation.

If Garcia needs more help down the road, she plans to launch an update and refresh her campaign.

3. Beware of fees and fine print

Most crowdfunding platforms charge 5 to 10 percent site fee on top of a processing fee. For every $25 of the $40,000 she raised, Garcia said she got about $22, using GoFundMe.com.

YouCaring.com, however, does not take a cut of each donation, and instead relies on voluntary tips. It charges a processing fee of 2.9 percent, plus 30 cents per transaction.

Some sites will not release your funds unless you meet certain targets. Others may cut you off midway for some ill-defined violation of terms, said Michael Lai, CEO of the consumer advocacy site sitejabber.com. One of the biggest complaints Lai sees is against platforms that never turn over the funds at all.

To combat this, Lai recommends only choosing a platform where funds are directly deposited. Pick from among the more well-rated platforms, which you can discern via research on sites like sitejabber.com.

4. Be transparent with your donors

Garcia posted updates to her campaign page telling people when she was flying and how things were going.

“You want them to feel like they are helping and you are not scamming them,” she said.

YouCaring.com encourages people to post messages, photos and even videos. It helps to be specific about the purpose of the funds.

“It’s valuable to see a sense of purpose, that they are not raising money in a nebulous way,” said Dan Saper, CEO of YouCaring.com.

5. Safeguard your money

Lindsay McGrath, a 36-year-old librarian from Boston, raised about $65,000 via YouCaring.com to pay for an experimental cancer treatment in London. She did the first round in August.

In the meantime, she wants to know what to do with the funds in the bank, which she is keeping in a separate account. All of her expenditures – such as airfare and childcare – are mapped on a spreadsheet.

McGrath’s next step? Solicit some free financial advice through the network she has already established through her crowdfunding campaign.

Her plan is to sock away $25,000 in an investment that is safe, but liquid. She does not want to take any chances with her lifeline.

“I need to be extra-conservative with this money,” McGrath said.

Editing by Lauren Young and Andrew Hay

Our Standards:The Thomson Reuters Trust Principles.

 

Published at Wed, 13 Sep 2017 13:01:41 +0000

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Nordstrom may reinvent itself — away from Wall Street

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America's top retailers in trouble
America’s top retailers in trouble

Nordstrom may reinvent itself — away from Wall Street

  @mattmegan5

Nordstrom has a bold new idea for how to reinvent itself: a store with personal stylists and booze, but no merchandise.

The unusual store concept, called Nordstrom Local, is already unnerving Wall Street, which tends to focus on the short-term.Nordstrom shares fell on Monday after the struggling retailer detailed the new store, slated to open next month.

Soon, Nordstrom may not have to worry about Wall Street.

The Nordstrom family is nearing a deal to team up with private-equity firm Leonard Green to bring the company private, sources told CNBC. That news allowed Nordstrom(JWN) shares to rebound on Wednesday when they climbed 6%.

Nordstrom and the family both declined to comment.

The Nordstrom family, which controls nearly one-third of the retailer, announced in June it’s exploring a go-private deal.

Going private could give Nordstrom the freedom to try more out-of-the-box ideas to reshape its business as traditional brick-and-mortar retailers like Macy’s(M) and JCPenney(JCP)continue to flounder.

Earlier this month, Gap(GPS) announced plans to close about 200 underperforming Gap and Banana Republic stores.

The industry has been slammed by the one-two punch of customers flocking to online shopping from the likes of Amazon and fast fashion from Zara, H&M and others.

It’s “likely” Nordstrom secures a buyout because the company is on “solid footing despite the difficult retail backdrop,” Oliver Chen, a retail analyst for Cowen & Co., wrote in a research report. He predicted a deal in the low $50-range is possible. Nordstrom stock hit nearly $48 on Wednesday.

Related: Billionaire warns about stock market bubble

That’s why Nordstrom is experimenting with a new store concept that would be vastly smaller than its current locations. Nordstrom Local, set to open next month in West Hollywood, California, will feature services like free personal stylists, alterations, manicures, food, wine and espressos.

But unlike traditional stores, the Nordstrom location won’t have any dedicated inventory. Instead, personal stylists will transfer merchandise for customers from other stores. Items can be hand-delivered to a customer’s car through curbside pickup.

Chen, the Cowen & Co. analyst, praised the Nordstrom Local idea as a “bold and exciting attempt” to address dramatic changes in shopping.

“The future is about recreating a store experience that back-solves for what customers want and need,” Chen wrote.

Other retailers have experimented with stores without inventory, including men’s clothing company Bonobos, which was acquired this year by Walmart(WMT).

Of course, going private is hardly a guarantee of success, especially because it would involve saddling a struggling company with extra debt. Payless ShoeSource and Gymboree filed for bankruptcy this year after private-equity firms failed to resurrect their businesses.

James Coulter, founding partner at private-equity firm TPG, believes retailers need to adapt very quickly to a landscape profoundly altered by e-commerce and fast fashion.

“Retail isn’t going away,” Coulter said on Tuesday from the CNBC Institutional Investor Delivering Alpha Conference.

Coulter, whose firm took J. Crew private in 2010, compared it with how traditional airlines had to adapt to discount airlines.

“Everyone thought it was the death of the airline business when Southwest showed up,” Coulter said.

 

Published at Wed, 13 Sep 2017 16:11:00 +0000

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Nordstrom buyout; Apple aftermath; Toshiba’s sale

 

Nordstrom buyout; Apple aftermath; Toshiba’s sale

  @AlannaPetroff

premarket stocks trading futures
Click chart for in-depth premarket data.

1. Nordstrom sale: Shares in Nordstrom(JWN) were surging by about 10% premarket following reports that the company could soon be taken private.

CNBC, citing unnamed sources, said that private equity firm Leonard Green & Partners could partner with the Nordstrom family on a buyout.

The Nordstrom family owns more than 30% of the retailer’s shares. Leonard Green & Partners would reportedly provide roughly $1 billion in equity to help finance the deal.

This comes as the retailer experiments with smaller stores and specialized customer services in an effort to compete with online outlets, including Amazon(AMZN, Tech30).

2. Apple aftermath: Investors will continue to focus on Apple(AAPL, Tech30) after the company unveiled its new iPhone X, iPhone 8 and iPhone 8 Plus on Tuesday.

Shares dipped a tad following the announcement. Futures suggested the stock could drop further when trading starts Wednesday.

The big question: Will consumers pay nearly $1,000 for a phone?

3. Toshiba deals with Bain: Beleaguered tech giant Toshiba(TOSYY) has signed a memorandum of understanding to negotiate a deal to sell its business unit — Toshiba Memory Corporation — to Bain Capital.

Bain Capital is working with a larger consortium on the deal.

Toshiba is trying to recover from billions of dollars in losses stemming from the collapse of Westinghouse Electric, its now bankrupt U.S. nuclear unit.

Before the Bell newsletter: Key market news. In your inbox. Subscribe now!

4. Global market overview: Global stock markets are looking soft following two days of strong gains.

U.S. stock futures were dipping a bit, alongside many European markets.

Asian markets ended the day with mixed results.

The Dow Jones industrial average, S&P 500 and Nasdaq all gained 0.3% on Tuesday.

5. Earnings and economics:Cracker Barrel(CBRL) will announce earnings before the open on Wednesday.

New data shows the U.K. unemployment rate dropped to 4.3% in the second quarter, its lowest level in more than 40 years.

It’s not all good news: Prices are rising at a faster rate than British wages, meaning workers are feeling poorer.

Download CNN MoneyStream for up-to-the-minute market data and news

6. Coming this week:

Thursday — Bank of England rate decision
Friday — Samsung(SSNLF) releases Galaxy Note 8

 

Published at Wed, 13 Sep 2017 09:25:12 +0000

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Sell GE, Earnings Won’t Matter: Deutsche Bank

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Sell GE, Earnings Won’t Matter: Deutsche Bank

By Shoshanna Delventhal | September 12, 2017 — 10:09 PM EDT

As Boston-based multinational industrial conglomerate General Electric Co. (GE) struggles to revamp its business, instating a new CEO after facing pressure from activist investors who lost patience with its turnaround, one team of analysts on the Street has joined the growing number of bears now doubting whether the company can even manage to maintain its praised dividend payout. (See also: The Future of General Electric: The Red or Blue Pill?)

Analysts at Deutsche Bank issued a downbeat research note on GE this week, cutting their price target from $26 to a “Street low” of $21, well ahead of the company’s earnings, slated for October. Deutsche Bank’s John Inch wrote to clients that “2017 results would no longer appear to matter as much.” Given the new CEO’s pending review, including the “assumed earnings reset lower coupled with an updated strategic playbook,” the analyst expects the next two quarters to have less share price significance, given that the expected results of the upcoming review are “likely to dominate investor sentiment.”

Diminished Dividends?

As the review is scheduled after the upcoming earnings report in November, Deutsche Bank anticipates “substantial subsequent charges and potential portfolio re-classifications” that will overshadow fourth-quarter results and make them difficult to compare and analyze. As a result, although it may seem that many are focused on anticipating the absolute level of the 2018 EPS reset, the investment bank expects the outlook, and “investor conviction” to be the main drivers of GE’s future share price.

“For a variety of reasons, including GE’s large size and complexity hurdles, a scenario of rapid growth in the foreseeable future seems off the table,” concluded Inch, who also doubts that GE’s dividend will remain intact. “Cash pressures, challenged business outlooks and substantial pension underfunding could still result in a dividend cut,” wrote the analyst. “While GE could continue to sell off businesses and other assets to raise capital, eventually this source of funding should run out.”

Trading up 0.2% on Tuesday afternoon at $23.76, GE stock reflects an approximate 25% decline year-to-date (YTD), versus the SP 500’s 11.4% gain over the same period. (See also: GE Tanks, Fundamentals ‘Worse Than We Think’: JPM.)

 

Published at Wed, 13 Sep 2017 02:09:00 +0000

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Whole Foods Foot Traffic Up 25% After Amazon Deal

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Whole Foods Foot Traffic Up 25% After Amazon Deal

By Donna Fuscaldo | September 11, 2017 — 7:13 PM EDT

Amazon.com Inc.’s (AMZN) acquisition of Whole Foods Market has already resulted in an increase in foot traffic to the tune of a 25% rise since closing the deal on Aug. 24.

Foursquare Labs, the location intelligence technology company, complied location data during the first two days after Amazon became the owner of the organic food supermarket chain and found that price cuts lured more shoppers to the stores. The data, which is analyzed anonymously, was compared to the same time frame a week earlier, reported Bloomberg. The 25% uptick is good news for the e-commerce giant, which is trying to transform how we shop in physical stores. While a portion of that increased foot traffic could be more about curiosity than eating healthier, the lower prices are also likely helping. (See also: How Amazon Benefits From Lower Prices at Whole Foods.)

Price and Value

When the Seattle-based online retailing giant announced the closing of the deal, it revealed plans to slash prices for popular products at Whole Foods. It is also planning to expand its Amazon Prime rewards program to Whole Foods customers and is establishing lockers for e-commerce deliveries at the retail chain. Prices for popular Whole Foods products, such as organic salmon, baby kale and bananas, were lowered on day one and expectations are high that more of the same is coming. According to Bloomberg, price cuts were as high as 43% on a range of items on the first day under Amazon.

“We are determined to make healthy and organic food affordable for everyone,” said Jeff Wilkes, CEO of worldwide consumer at Amazon, in statement at the time. A strategy consultant who worked at Amazon earlier said that prices for popular products could go down by as much as 25%. (See also: Amazon Announces Lower Prices for Whole Foods Products.)

An uptick in foot traffic this early on is seen as a confirmation that Amazon can successfully operate physical stores. Foursquare found foot traffic was up 35% in Chicago, reported Bloomberg. What remains to be seen, however, is if shoppers will continue to purchase organic food from the chain. “A lot of people went to see what they could see,” said Jennifer Bartashus, an analyst at Bloomberg Intelligence, in the report. “The question is if they think the prices are low enough to change their shopping behavior—it takes a very long time to change a consumer’s perception of prices and value.”

 

Published at Mon, 11 Sep 2017 23:13:00 +0000

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