News

Kohls Plus Amazon Equals Stock Bump

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Kohls Plus Amazon Equals Stock Bump 1

Weird story going around in market news today that Kohl’s, the American, brick-and-mortar, clothing / household goods chain has experienced a sizable stock bump over news that it will begin accepting Amazon returns at all of it’s 1,000+ locations. Say what? Traffic Equals Sales Whether you are online, or out here in the real world, when it comes to retail, traffic equals sales. For my online web properties, I earn more income, referral fees, ad sales, or commissions from sites that have more traffic. At Kohl’s, more traffic also equals more sales, and so… As you might guess, there are plenty of people who walk into a Kohl’s store with an Amazon-ordered survival knife to return, get the return setup, and walk right back out without even turning their head to look at what Kohl’s has in stock. But, you can also imagine the guy who walks in with his zombie-killing survival knife return, and notices a well-priced pair of binoculars, a pair of cargo shorts, or even a fun new top for his daughter on the way out. These sort of “drive by” buying impulses are the goal of sales, discounts, and advertising. A customer comes in to get …

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Trump, Iran, and the Markets

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The stock markets aren’t sure what to do anymore about Donald Trump. As it turns out, many of the things the market thought would be devastating (trade war with China) weren’t as big of deal as originally thought. Add to that the fact that Trump changes his mind on a regular basis for no particular reason, and you have a stock market that just sort of guesses. Big news today is that the Trump administration is pulling the waivers for countries over the Iran oil sanctions. Say what? So, Trump decided he had some sort of goal with Iran that involved oil sanctions against Iran. Typically, this is what American Presidents do when they are upset with Iran. Rather than bombing them, you cut off their ability to sell oil The catch is that the world oil market is really one big pool of suppliers and cutting any of the supply into that pool raises oil prices. Most countries, especially America, aren’t real fond of higher oil prices, so the sanction thing is sort of a double-edged sword. Enter waivers. When the Trump administration put its sanctions on Iran, they made sure to tell everyone, because that is how you …

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Boeing Stock and the 737 MAX

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I’m not going to pretend to know how much of this article in the Seattle Times is correct, but if even most of the information ends up being true, then Boeing has cost itself millions (perhaps billions) of dollars in lawsuit settlements, adjustments, new guarantees, and reputation. The single Lion Air plane crashing due to the 737 MAX systems would have been bad enough, but with the data from that crash, and then a second crash having a similar issue, this is going to be devastating. When the Lion Air crash occurred the results of the analysis were that the pilots were fighting a new automated system put in by Boeing as part of its efforts to make the 737 MAX comparable in flight to the earlier 737. That way, it required no new pilot training and made it much cheaper for airlines purchase and integrate the planes into their fleet. That probably would have been a distressing, but ultimately not too impactful of event. Unfortunately, Boeing’s ham-handed handling of the aftermath may cost the company billions of dollars in legal fees, settlements, and new regulatory requirements. Ethiopia Airlines Crash After the Lion Air crash, Boeing essentially blamed the pilots. …

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Merrill Lynch Ending

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Merrill Lynch Ending 2

Once upon a time, the name Merrill Lynch was the most recognized, and maybe most respected Wall Street name. I even worked for the financial advisors part of Merrill Lynch out of the Denver office for a few years back in my financial planner days. Then, in 2008, when the financial markets blew up, it turned out that Merrill Lynch had been selling toxic real estate securities… to itself. That, plus a lot of other damage from the Great Recession drove Merrill Lynch into the arms of Bank of America, who scooped up the company. BoA kept the Merrill Lynch name all of these years since, no doubt hoping that eventually the brand might recapture some of its cache. But, it turns out that American memories aren’t that short, and Merrill Lynch is no longer special, just another part of Wall Street. The Bank of America name actually carries just as much value, if not more. So, BoA has announced that they’ll be ditching the Merrill brand, although it will keep some of the branded financial products (and those will continue to have the trademark bull logo.)

Happy New Year

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The kids start going back to school today, so Finance Gourmet will be in full effect. We’ll be covering a lot of stuff quickly here in the new year. Of course, we’ll be focusing on taxes. Information is coming slower than usual thanks to the Trump shutdown, but your taxes will still be due on April 15. We’ll be taking a look at the year ahead. It seems major economists are finally starting to see that this expansion is really, really weak, and that might just stop the Fed from raising rates. They’ve already cut back to just forecasting two this year. We’ll take a look at housing, and other big topics as well, so stay tuned.

Colorado State Taxes and Finances

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Hey, guess what I found? It’s an economic document focused on Colorado! Whoop! Whoop! Finance Nerd Alert! The Colorado Legislature’s December 2018 Economic Forecast is out. There’s always plenty of good stuff in there for a finance geek to look at and see both how the Colorado economy is doing, and how the Colorado Legislature is managing it. I’ll dig in here in the next day or two, but here are some interesting tidbits so far. Marijuana Taxes Aren’t Everything Despite what the uninformed and misinformed might think, tax collections on marijuana just aren’t that big of a thing compared to the overall budget. If you thought pot taxes would solve all of the governments budgetary needs you were duped, or sorely mistaken. While December isn’t finished yet, it looks like Colorado’s pot tax revenue will come in at about $250 million. That is real money, but it isn’t difference making making. Colorado’s state budget is $29.9 BILLION. That means the $250 million from marijuana taxes doesn’t even make the budget figure unless you carry out more decimals. $250 million is just 0.08% of the State of Colorado’s overall budget. In other words, it’s a blip on the radar. It …

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Home Builder Stocks Head Down

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It shouldn’t be any surprise that home builder stocks are heading toward the basement. After several months of economic data showing that home sales are slowing, and that home inventories are building, the proof is indisputable, that the Fed’s obsession with raising rates because they want to have higher rates, has begun to hit the economy. The first victims are home builders who are directly impacted by potential home buyers finding out they can afford less, and less home, with each interest rate increase. While most mortgages actually follow the 10-year Treasury yield, the Fed’s steady push on the short end of the curve has provided some rise in that benchmark. The Federal Housing Finance Agency showed a national average adjustable rate mortgage of just 4.08% at the beginning of the year. The latest data, for October shows 4.75%. That might not sound like a lot, but for a mortgage that makes a big payment difference. A $400,000 mortgage for 30-years at 4.08% has a $1,921 payment. The same mortgage at 4.75% rocks a $2,087 payment. For a home buyer reaching for a dream home, $160 a month might be the difference between buying a cheaper home, or even worse …

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Neutral Interest Rates

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Fed Chairman Jerome Powell made some very interesting remarks where he said he thought that interest rates were “just below” neutral. This is bizarre on many levels. First and foremost, neutral interest rates are perfect interest rates unless your economy is in a recession in which case you want stimulating interest rates, or if you are trying to control inflation in which case you want interest rates that have a constricting effect on the economy to stop price increases. So, if interest rates were close to neutral, and inflation was not increasing, then wouldn’t you want to keep interest rates at neutral? Check out my notes about Ebates and holiday shopping. But, Powell and the rest of the Fed have been telegraphing a December rate increase as loudly as possible. In other words, event though interest rates are “just below” neutral, Powell and company want to raise them. Why? Economy is Teetering The other weird bit is that everyone can see the economy is slowing down, and quickly. Housing starts are way down. Housing sales are decreasing. Both are very much affected by higher rates. The stock market is falling, having erased the whole year’s gains. Also, in very large …

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Oil Price Fun (11/2018)

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I’ve been swamped so I haven’t been able to update on here as often as I would have liked these past couple weeks, which is a shame because there is tons of interesting stuff going on out there, plus end of year stuff coming, and so on. I’m on it. Don’t worry. In the meantime, my favorite story of the past few weeks is oil prices. Since this time late year, oil prices have been trending higher (with the usual ups and downs). Since June of this year, oil was basically stuck between $65 per barrel and $70 per barrel. That price range might be considered the “real” oil price, or the non-panicked oil price based upon an established equilibrium of supply and demand. Then, Trump started talking about sanctions on Iran, and prices started climbing, topping out at over $76 per barrel. This is because taking Iran’s oil supply off of the world market would decrease supply with no corresponding decrease in demand. But, what Trump shouts and what he actually does don’t always match up, and the administration basically granted sanction waivers for all of Iran’s biggest customers including China. That means that the supply is not decreasing, …

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Market Falls, But… No Panic… yet?

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So, interesting phenomenon happening in the stock market these last few days with the S&P 500 dropping over 5% (around 1,400 points) and even dipping below its 200-day moving average. In the right circumstances, this might be the trigger of a full-on rout in the stock markets. Here is what is missing though: panic. Markets Down – Does Anyone Care? I’ve been subtly (and not so subtly) hinting for about a year now that I think the Federal Reserve is too set in stone on its course to raise interest rates in the face of little to no inflationary pressure. To me, this recovery, as long as it is, doesn’t seem that strong. As such, one rate hike too many, could spell disaster. With this week’s market reacting poorly to rising interest rates in the bond markets, I was dusting off my “I Told You So,” posts. But, it looks like I’ll have to wait a bit longer. My Digit reviews. Despite the fairly big numbers in the Wall Street sell off as late, there isn’t much fear associated with it. When it comes to the economy, nothing matters more than how people FEEL about it. That’s why they try …

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