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Sep 30


In Business and Financial News:

 What’s going on…? 

Shares of JCPenny (JCP) tumbled again on Friday as investors wonder what is really going on with the big box retailer. For months and as recently as last Thursday, executives have touted the company’s balance sheet and the board’s optimistic view of recovery in the last quarter of the year. They even went on CNBC’s Street Signs to express their optimistic views and reiterate the company remains okay in the money department. In fact, they claimed that they would not need to add additional funding.  Only hours after their interview on CNBC, JCPenny filed paperwork with the SEC (Securities Exchange Commission) to issue 84 million shares of common stock, thereby raising approximately $1 billion based on the company’s close on Thursday.  The company will use the net proceeds from the offering for general corporate purposes. The filing also named Goldman Sachs as head underwriter and granted them the option of purchasing 12 million additional shares. On a conference call Thursday evening, JCPenny executes said the decision was made after the company became aware that some of its suppliers had become uneasy about the company’s financial state. [Continue reading...]

Sep 27

In The News:

Would you like Veggies with that Burger? 

McDonald’s (MCD) announced Thursday at the Clinton Global Initiative, as part of their partnership with the Alliance for a Healthier Generation; the fast food giant will start offering the choices of vegetables, fruit and side salads instead of fries in its value meals. The company will also offer only water, milk and juice as beverage options in its children’s Happy Meals. The Happy Meal packaging itself will go through a makeover to emphasize themes related to healthy eating and wellbeing called “fun nutrition.”

When will this exciting new menu be available? That is the question. McDonald’s did not disclose an exact date that the new healthy value meals will be available. The company did say that the new program will roll out in 20 countries, including the US, over the next few years and expects to have all changes implemented across all 20 markets by 2020.

Bottom Line: Offering fresh fruits and vegetables is an outstanding idea; however, it will be interesting to see if the company plans on upping their prices to cover this new health fare. A price increase could discourage McDonald’s core audience to flock to other fast food restaurant. [Continue reading...]

Sep 26

In The News:


The National Football League and Twitter Inc. have reached an agreement to make available football highlights and other content on the social media service. As part of the deal, the NFL will have a dedicated team to produce programming for Twitter users seven days a week. Programming will include in-game highlights from the NFL Network’s Thursday night games and games aired on CBS and Fox. Additional content will include news, analysis and fantasy football advice.

What’s in it for both companies? Ad revenue. The new initiative is part of Twitter’s revenue-generating program Amplify that allows TV content owners to distribute programming via Twitter feeds with short embedded ads.

Bottom line: Twitter seemingly makes off like a bandit with these partnerships (NFL, CBS, A+E, The Weather Channel, and BBC America), securing a small foothold in the $70 billion TV advertising market and bolstering its valuation position prior to its highly anticipated initial public offering, a valuation estimated at nearly $15 billion. [Continue reading...]

Sep 25

In The News:

Confidence Dip…

Confidence fell slightly in September, as consumers felt less optimistic about overall hiring and pay increase over the next six months. On Tuesday, the Conference Board, a New York-based private research group, released its monthly consumer index, which showed a drop to 79.7 in September, down from August’s reading of 81.8 and four-month low. Typically, a reading of 90 coincides with a healthy economy.

The slump has also unsettled nerves abroad, as Asian stocks fell for a second day. Analysts note that traders reacted to the news by repositioning themselves and, in the process, taking a little more profit off the table in this last week and month of the quarter.

Bottom Line: Consumer confidence is closely watched, since consumer spending accounts for 70% of all U.S. economic activity. In this case, the dip was modest. Nevertheless, recent economic data suggesting that economic growth may be slowing is worth taking a look at. [Continue reading...]

Sep 24

In The News:

Crackberry Buyer…

For the second time in two trading sessions, shares of Blackberry were halted. Each time the halt has been caused by “big” news. On Friday, the “big” news wasn’t positive; this time, the “big” news was positive for the company. Blackberry announced it has finally found a buyer for the struggling phone maker. Fairfax Financial, a Canadian investment firm, has made a bid of $4.7 billion to purchase all of Blackberry, contingent on Fairfax getting financing and performing due diligence. Rumors had been swirling that the company, in an effort to stay afloat, would start to break itself into pieces, making a sales easier. The idea of splitting up the company may still be in the cards. Fairfax could, after the purchase is official, still decide to chop the parts up. However, as of right now, the company is still whole.

If the deal goes through, shareholders would receive $9.00 a share, a premium to the share’s Monday closing price of $ 8.80.

Shrinking Lenders…

Citigroup became the latest mortgage lender, cutting its workforce as the end of the refinancing boom continued and housing markets slowed down due to rates increasing. On Monday, Citigroup said it will lay off 1,000 workers from its mortgage business. That brings the total to more than 7,000 jobs lost this year as home loans continue to slump. The affected positions included jobs in sales fulfillment, mortgage underwriting and mortgage default functions, primarily based in Las Vegas, NV and Irving, TX.

A weakening mortgage market is the latest headwind for banks that are already struggling to pump up profits in a sluggish economy, in addition to weak loan demand for both corporate and consumer borrowers and costly regulatory requirements. Several top banks, including Wells Fargo, have warned of lower earnings this year. Citigroup (C: NYSE) was down $1.64 in Monday trading.


On Monday, at an event held in New York, Microsoft unveiled two new versions of its Surface tablet. The new Surface 2 will start at $449 and comes either in 32 gigabytes (GB) or 64 gigabytes of storage. The Surface Pro 2 starts at $899 with a choice of 65GB or 512GB of storage. Pre-orders will start Tuesday with retail outlet sales starting on October 22. Microsoft’s first attempt at the tablet market, Surface RT, was a huge disappointment for the company. Analysts seem to think that this new round of Surface 2, which is thinner, lighter and faster, may bring more success to the company. Shares of Microsoft (MSFT: NASDAQ) closed down at a $.05 loss in Monday trading.

Skinny Fries…

On Tuesday,  Burger King Worldwide Inc. (BKW) will roll out lower-calorie, lower fat, fries in all U.S. locations. The fries, called Satisfries, have largely the same ingredients as Burger King’s classic fries, but a less porous batter to keep out more oil during cooking. The new fries have 30% fewer calories and 40% less fat than McDonald’s fries, coming in at only 190 calories.

In The Markets:


Asian shares tumbled on Tuesday as investors start to dial up taper concern, again.


European stock markets dropped Monday. Investors digested mixed economic data and worries re-elected German chancellor Angela Merkel will struggle to form a new coalition government.


US markets fell for a third day on comments from the Fed tapering did not happen in September because the economy didn’t meet the Fed’s strength criteria. DJIA: 49.52 15,401.57 NASDAQ: -9.44 3765.29  S&P 500: -8.02 1701.89

In Dinner or Drinks:

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Sep 23

In The News:

Rebalancing Act…

Two of the US indexes, the DJIA (Dow Jones Industrial Average) and the S&P 500 (Standard and Poor’s) rebalanced on Friday. As we mentioned a couple weeks ago, the DJIA announced it would remove Bank of America, Alcoa and HP from its index. All three were replaced after the close on Friday with Nike, Visa and Goldman Sachs. The S&P also had its quarterly rebalance on Friday. The S&P 500 index is a weighted index based on the market capitalization of 500 large companies traded on the NYSE (New York Stock Exchange). Once a quarter, the index rebalances itself by changing the weightings of companies in the index based on the company’s market capitalization. For this quarter’s rebalance, the S&P reduced the weighting of Apple and Disney in the index and raised the weighting of Google and General Motors. Bottom line: If you are an index investor, i.e. your stock portfolio is based solely on the weightings and stocks of the DJIA and S&P indexes, you will obviously be affected. However, if you are an average retail investor, you more than likely will not see a significant difference in your portfolio based on the rebalance itself. [Continue reading...]

Sep 20

In The News:

Soaring House Sales….

According to the National Associations of Relators, sales of previously-owned houses rose unexpectedly in August. Existing-home sales rose 1.7% in August, making it the best month of sales since February 2007, when home prices were just beginning to decline from the housing bubble. The unexpected increase was due to a flood of buyers rushing to buy so they can lock in mortgage rates before rates increase further. The trade group is cautions with their outlook for the next several months, warning home sales could slow due to higher borrowing costs and prices. [Continue reading...]

Sep 19

In The News:

Cold Feet...

The world held its collective breath and waited patiently for the big taper announcement, only to have the Fed get a case of cold feet. Surprise… The Fed, who wrapped up a two day meeting on Wednesday, decided they would continue to press the gas pedal and keep the buying spree for assets going for a bit longer.  With the possibility of an uneven economic climate and fiscal discord in Washington over the deficit reductions and the spending limit debate, the committee felt it was best to wait to start the process of tapering off its bond buying program.

Backstory: The Fed’s bond-buying program, known as QE or Quantitative Easing, is meant to stimulate hiring and economic growth by holding down interest rates, in turn encouraging households and businesses to spend. Bottom-line: Wall Street, for now, loves the news from the Fed today. The Fed is going to have to taper at some point, but like most things in life, no knows for sure when that time will actually come. [Continue reading...]

Sep 18

In The News:

The Future…May Not Be Bright…. 

Analyst at the nonpartisan Congressional Budget Office (CBO) issued a stark warning about the long term budget outlook on Tuesday. The announcement comes as Congress and the White House face two fiscal battles in the near future. According to the CBO’s calculations the US nation debit is now 73% of gross domestic product, the highest it’s been in history.

Despite a slight reduction in spending this year, due to the sequester,  the CBO cautions the longer term outlook could see  the national debt growing to 100% of GDP by 2025, if the current laws remain in place.  Bottom Line: Today’s announcement comes less than two weeks before the end of the government’s fiscal year and after last month’s warning from Treasury Sec. Jack Lew, ,that the US will hit the debt ceiling by October. Will all of this cause Congress to actually work or are they going to once again kick the can down the road?


5 years ago, in the mist of the financial crisis, the UK government bailed out Lloyds Bank, by buying a 37.5% stake in the company. As part of the bailout deal the government paid average price of £73.6 (pounds) per share.  In a sign the bank and the economy are starting to get stronger the UK government yesterday started the process of selling its stake. The sale, 6% to institutional investors, at a price of 75 pounds per share represents a £586M cash profit for both the government and UK tax payers. Not a bad profit for a 5 year investment… [Continue reading...]

Sep 17

In The News:

Whale Of A Fine…

Regulators are expected to hit JPMorganChase (JPM) with at least $700 million in penalties as part of a settlement deal reached between regulators and the company, according to people close to the matter. The SEC (Securities and Exchange Commission), the Office of the Comptroller of the Currency and other regulators are expected to fault the company for inadequate controls over two traders whose transactions lost the company more than $6 billion. The settlement, which is expected to be announced this week, is related to inaccurate values two traders of the Chief Investment Office in London placed on their own transactions. Regulators are expected to cite JPMorgan for failing to adequately supervise the former traders and the company’s lack of internal control to prevent an alleged cover up of the losses. As part of the settlement civil settlement JPMorgan Chase will admit wrongdoing in matter.

Last month, U.S prosecutors filed criminal charges against Javier Martin-Artajo and Julien Grout, the two former traders with four counts of conspiracy, wire fraud, cooking the books and records, and causing the firm to file false and misleading statements in two securities filings in 2012. [Continue reading...]

Sep 16

In The News:

I’m Out..

Former US Treasury Secretary, Lawrence Summers called President Obama Sunday to say he is out of the running to succeed Ben Bernanke as chairman of the Federal Reserve. In  a letter to the  President following their phone conversation  Summer wrote ”I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation’s ongoing economic recovery,”

Larry Summers was the President’s top pick in the race and it was highly speculated he would have been announced sometime this week.  The move now, forces the President to look for another top choice. Two potential candidates the President has already met with Janet Yelllen, Congress’s pick and the Fed’s vice chairwomen and Donald Kohn, who is a former vice chair of the Federal Reserve.  There is still time for the President to choose his next candidate; Fed Chairman Bernanke’s term isn’t up until January 31, 2014.

Wanted: Used IPads...

Microsoft has quietly started a new trade in program for IPad users offering to buy old IPads for Microsoft store gift cards. Current IPad 2, 3 or 4 owners can bring their gently used tablets into a Microsoft store and receive a minimum of $200 gift card. The cards can be used toward the purchase of a Surface RT or Surface Pro tablet, as well as other products offered in the stores.

Recently Microsoft turned up the heat in the battle with Apple by cutting the price of its Surface tablet to $349 hoping to entice back to school shoppers. Past sales of the Surface have lagged well behind Microsoft’s expectation causing a $900 million write down earlier this year. Has Microsoft found a way to bring consumers to their side? [Continue reading...]

Sep 13

In The News:

The fat lady has officially sung…

Dell (DELL) shareholders made it official Thursday, approving the $25 billion deal to sell the computer maker back to its founder Michael Dell and Silver Lake. The vote capped a bitter yearlong buyout drama and put the company squarely in its founder’s hands.

Michael Dell, who is set to own 75% of his company’s stock, will retain his chief executive post. From there, he will lead the effort of moving Dell from a seller of personal computers and servers to a broader technical adviser to businesses which can also provide services and software.

Public Twitter…

On Thursday, Twitter, using its own platform and in 140 characters or less, announced  it has filled all necessary IPO (Initial Public Offering) paperwork with the SEC. If you are curious and wonder how much Twitter has grown in the last seven years or if it has ever made a profit, you will have to wait for a while. Twitter filled its IPO paperwork confidentially under the JOBS Act or Jumpstart Our Business Startups Act. The Act allows US companies under $1 billion in revenues to file paperwork with the SEC that is confidential and can only be viewed by SEC regulators. Never  fear; eventually, we will all have full disclosure, as SEC rules mandate  a company’s IPO documents be released  to the public at least 21 days before the company goes out into the world and actively shops investors and prices the deal ( also called a “Road Show”). No announcement was made as to Twitter’s timeline for the IPO to take place and, since actually filing the paperwork with the SEC does not obligate you to a particular timeline we, will all have to wait. [Continue reading...]

Sep 12

In The News:

Can you hear.. sale….?

Verizon Wireless (VZ) held the largest ever corporate bond sale on Wednesday. The nation’s second largest wireless provider sold $49 billion worth of bonds to investors, surging past the previous record set by Apple earlier this year. The money raised from the sale will help the company finance its $130 billion buyout of Vodafone’s stake in Verizon’s wireless operations. Investors had been lined up for weeks, showing demand is still out there for bonds with attractive yields. Bottom-line: With an economy on the mend, investors are feeling more optimistic about the future and putting their money in places they cannot access for years instead of under the mattress.

Pay me my royalties…

Sirius XM Radio is being sued by record companies for royalties they say the satellite radio company owes them. On Wednesday Sony, Universal and Warner, the three largest record companies, filed a lawsuit in a California court claiming the satellite service used music recorded on records before 1972 without their permission. Recordings made before 1972 are not protected by federal copyright laws; however, the suit states they were still covered under state law. A similar suit was brought by the royalty agency SoundExchange last month, seeking up to $100 million in damages.  [Continue reading...]

Sep 11

In The News:


Three companies will be dropped from the 30-stock index known as the Dow Jones Industrial Average or DJIA next week. Alcoa (AA), a Dow component for 54 years, will be replaced by Nike Inc (NKE). Visa (V) will replace Hewlet Packard (H-P) which joined the index in 1997. Bank of America will be replaced by securities firm Goldman Sachs Group (GS). According to a statement by S&P Dow Jones Indices LLC, the company that oversees the index, the changes will take effect after the close of trade on September 20. The statement goes on to say that changes in the composition of the index were prompted by the three companies low stock prices and the Index Committee’s desire to diversify the sector and industry group represented in the index itself.

Backstory… The DJIA is actually an index or basket of 30 stocks. The index is price-weighted, meaning the bigger the stock price the larger the piece of the index a particular component has; therefore, it will affect the overall up or down movement of the index. [Continue reading...]

Sep 10

In The Markets:

I’m Done…

Days before Dell shareholders are to vote on Michael Dell/Silver Lake’s bid, Carl Icahn announced he is giving up his bitter takeover fight for Dell or at least the shareholder portion. On Monday, Ichan, in a letter to shareholders stated he still thinks Michael Dell‘s bid for the computer maker is undervalued and freezes shareholders out of any future gains. Despite his objections, Ichan explains in the letter it would be almost impossible to defeat the Michael Dell/Silver lake offer; therefore, he is giving up.

Ichan will continue to pursue the matter of undervaluing the company in the Delaware court system, where Dell is incorporated. Under Delaware law, shareholders can seek an appraisal of a company and be compensated according to what judges determine is the fair value of the company. There is no guarantee, however, that the judges would consider the company to be worth more than the $13.75 per share and a 13-cent dividend bid Dell/Silver Lake have on the table. [Continue reading...]

Sep 9

In The News:

No Clear Signal…

The much anticipated August monthly employment report, the Non-Farm Payroll (aka NFP), was released Friday. The report, a closely watched barometer of economic health, showed 169,000 jobs were added in August. However, economists had expected businesses to add 180,000 jobs; therefore, it met the criteria used for the disappointing category. The unemployment rate did tick down to 7.3%, which did inch closer to the Fed’s mandate.  The improvement should not be taken as a positive sign. The “drop” is attributed to a greater number of people feeling discouraged and leaving the job seeking for others to undertake.

August report was billed as the “job number report of 2013″.  Everyone was betting on the number giving the world a clear signal that taper would begin in September.  Bottom Line… The taper guessing game will continue on for another couple weeks until the Fed’s September meeting gives us our next clue.

You’re dumped, kinda

International Business Machines Corp (IBM) will move around 110,000 retirees off the company- sponsored health plan. Instead, it is giving each retiree eligible for Medicare a payment to buy coverage on the health-insurance exchange Extended Health.  The move will affect anyone who is eligible for Medicare on Dec. 31, 2013. Instead of subsidizing the retiree health premiums directly, the company will now give retirees an annual payment via a health retirement account. The account can be used by retirees to buy Medicare Advantage plans and supplemental Medicare policies on the exchange, as well as pay for other medical expenses. However, if the retirees don’t enroll in a plan through Extend Health, they won’t receive the subsidy. IBM is careful to point out the growing cost of care has made its current plan unsustainable without big premium increases and the move is not to be mistaken for cost cutting.

Bottom Line: Time Warner also announced over the weekend it would introduce the same type program. Both companies won’t be the first or last big company to turn to third parties as an alternative for Medicare eligible retirees.


[Continue reading...]

Sep 6

In The News:


It’s jobs week again… First up, the ADP report which was released Thursday. The ADP report showed the private sector added 176,000 jobs in August: a good solid number. However, it was less than the 180K analysts were calling for and less than the number of jobs added in either June or July. Monthly job growth has averaged this year around 192,000 a month; however, the pace is starting to slow, according to the Labor Department.

One reason analysts believe is behind the slowdown: the new health care laws requiring companies to provide full time workers with health insurance or pay a penalty. Fewer workers: less money companies have to pay either in penalties or premiums. Bottom Line: it doesn’t matter what side of the health care laws you are on, US companies large and small are concerned.

Staying the Same…

The ECB (European Central Bank) left its benchmark interest rate unchanged at 0.5%. The central bank decided that the slow Eurozone economic recovery did not need further stimulus for now.  The bank’s decision is seen as a statement to the world that the ECB will not be scaling back its stimulus efforts until the recovery is on stronger footing. Low rates are a necessity for a Eurozone recovery. Cheap credit encourages business to borrow and expand. Borrowing in the region remains weak despite data out the last couple of weeks showing a little brighter economic picture.  [Continue reading...]

Sep 5

In The News:

Chief, do I have to turn in my shoe phone?

Samsung released the much hyped Galaxy Gear, the first smart watch produced beating Apple to the market. The device which must be paired to a phone or tablet has some snappy features. You can make calls, receive emails, take photos, has a voice control function and can run its on apps. However the price is $299. Analysts are skeptical people will pay that much for a screen only 1.5″ in size. Samsung feels the Galaxy Gear will become a fashion icon with its sleek design and range of colorful watch straps. Their target is 500,000 sold in the second half which is a fraction of the 25 million smartphones they sell each quarter.

Do I hear $10… $10?     Do I hear $8?

Blackberry, the struggling handset maker is looking to quickly auction itself off in parts or as a whole, possibly as soon as November. Speculation had been around that Microsoft might buy them but the announced Nokia deal effectively shut the door on that. The likely scenario is parts of the company get sold and the whole will not survive. [Continue reading...]

Sep 4

In The News:

That funny guy is back on the tellie…

It’s official CBS & Time Warner Cable have reunited as one big happy family. The month long fee dispute between CBS & Time Warner came to an end Monday when CBS programming returned to the Time Warner lineup.  On Monday, the two companies reached an agreement to end the blackout that affected 3 million customers in Los Angeles, New York, Dallas, and the surrounding areas.  At issues were fees CBS wanted Time Warner Cable to pay allowing them to carry the networks local TV Stations and a longer term commitment to carry programing.

The official terms, of the almost 5 year deal were not made public however, CBS Chief Executive Leslie Moonves, in an internal memo, said the deal delivered “all the value and terms that we sought in these discussions.”  In a separate statement, Time Warner Cable Chief Executive Glenn Britt, said while the cable operator didn’t get everything they wanted, ultimately they ended up in a much better place than when they started.  As I said, one big happy family who can now watch football together.

It’s Official!

After weeks of speculation Apple (APPL) officially sent out fancy invitations announcing their big event September 10 in Cupertino. So far the rumor mill has claimed Apple will announce the newest iPhone, an updated iPad, the supposed iWatch, a cheaper iPhone, and an iTV are all on the short list of products to be presented.  This is a critical presentation for Apple, while sales have increased for both the iPhone and iPad, Google and Samsung are hot on their heels in both popularity and new products.  [Continue reading...]

Sep 3

In The News:

 What’s your sentiment?

On Friday, the August edition of the Thompson Reuters/University of Michigan Consumer Sentiment report was released and it showed a drop in consumer confidence.   In July the index posted a six year high of 85.1 and in the August index level was 82.31. 

Bottom Line: The report confirms the suspicious of both market commentaries and economist predications that consumers are becoming more concerned about the pending Fed tapering program and the next debt ceiling negotiations. 

Cutting the cord…

General Electric (GE.N) will cut the cord and spin off the companies finance arm, GE Capital. GE Capital, which issued 55 million credit cards, earned $2.2 billion for the company last year, but has outstanding loans of $50 billion.   Once GE reviewed the numbers they realized that they need to diversify away from banking and its regulations, and will spin-off GE Capital into its own company.   By spinning off the financial arm it will allow GE to focus more on its core industrial businesses.   There has yet to be an official date announced for the IPO, but insiders are suggesting that it may occur early next year.  [Continue reading...]

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