Equifax CEO – Stock Price $141 – $110 (Loses nearly 30%)

In 2017 the greatest threat to American society is not an act of violent terror but instead cyber terror.  Credit Fraud and manipulation are some of the quickest ways to cause mass hysteria to society.  And other medical records, your credit records poses the greatest opportunity for embarrassment and delayed advancement to society.  And the one few companies solely responsible for judging and keeping sensitive information private, failed, egregiously.

The biggest data breach in modern history should not simply go swept under the rug.  Equifax should not get a pass.  Our most private and sensitive information can at any moment be exposed.

“I can’t think of a clearer definition of gross negligence anywhere,” Sen. Gary Peters, a Michigan Democrat, said of the Equifax attack. “A company that has been entrusted with the most sensitive data and customers didn’t have a choice for you to hold it …. you’re holding that and you don’t take precautions.”

“Under current law, even some of the most egregious examples of lax security can be met only with apologies and promises to do better next time. Not fines, or other penalties — or real deterrents,” said Connecticut Sen. Richard Blumenthal. “The real deterrent will come when those penalties are imposed on executives like the ones before us today.”

Equifax said it spends about four times more on cybersecurity today than it did before the attack.  All the companies agreed that personal identifiers, like Social Security Numbers, were a dated form of ID that should be replaced with something more complex and safe.  (WSJ Sourcing)

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Tax bills Makes it Difficult to Refinance Debt

The Republican tax plan in congress would eliminate a tax exemption on some types of bonds issued by state and local governments to refinance their old debt.  The GOP proposal targets the exemption for so-called advanced refunding bonds, which allow governments to refinance old bonds earlier to take advantage of low interest rates and, occasionally, to postpone upcoming debt payments.

The nonpartisan Joint Committee on Taxation estimates that ending advance refunding’s would mean an additional $17.3 billion in revenue to the federal government over the next decade.  Advance refunding’s make the most sense for borrowers when short-term rates are high relative to long-term rates. In that scenario, the income produced by the shorter-term securities bought with the proceeds of the advance refunding bonds will approach the borrowing costs on those bonds.

Both sets of bonds remain outstanding until the first set can be refinanced, and both provide investors with interest exempt from federal taxes.  (WSJ Sourcing)

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Presidents effect on Zimbabwe

Reintroducing Mugabe and Zimbabwe.

An ousted president has a lot deeper effect than one could consider.  Let us remember Gadhafi of Libya.  The countries GDP stands at $16.29 billion ranking 114 out of the approximately 190 counties recognized by the United Nation.  The Population is estimated to be around 16 million people, similar to the size of LA and NYC Combined. The GDP per capita is about $2,276.  Meaning a minimum wage worker in the US. Will only have to work 6 weeks in order to have the cash required to maintain a whole year in Zimbabwe.  (Imagine if you worked 8 weeks)

Robert Mugabe effect on Zimbabwe.  Originally democratically elected in 1980, he will always remain a hero who brought independence and an end to white-minority rule.  Zimbabwe still has one of the highest literacy rates in Africa, at 89% of the population.

The similarities to Gaddafi and Libya are actually slim.  Both reign for a significant amount of years 42 years, and Mugabe 37.  The point of the conversation is the current state of Libya with some are calling modern slave market.  Be careful when reverting from stable power to chaos.

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Can The American Classic Be An Electric Innovator?

The Ford F150 Model sold 733,287 units in 2016 according to Car and Driver.  The closest car came in over half under that value to a total 355,204 Toyota Camry units.  With such a strong hold on the market, a person would expect value to be reflected.   The companies sells the most of any car model of the Elite 6 car manufacturers, yet it currently hovers at a current stock price of $12.10. It is the lowest priced of the 6 major car manufactures.  (GM 44.46, TSLA 315.55, HMC 33.13, TM 126.05).

 

The Company CEO aims to divert a portion of profits from truck sales to development of electric cars and driverless vehicles.  But how is that possible?  Ford profited a total $2.5 Billion in Q2 17. Ford recently disclosed more than $1.3 billion worth of charges stemming from 2.4 million vehicle recalls with door latches that could allow doors to open while vehicles are driving.   Ford also distributed $297 million back to shareholders, about 10% (TSLA continues to distribute 0).  But the bigger question is does Ford have a chance in the Electric Sedan Race?

 

In Essence with a price to buy, your determination depends on your confidence in management‘s ability to execute.  With over 60% of Q2 profits completely exiting the company, is there room for to compete in an innovation race.  War cost money.

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The Russian Sanctions:

The Russian Sanctions:

Ironically, the only bi-partisan thing that can be agreed upon, is the fact that Russia did in fact interfere with the 2016 elections.  However this part of the story is not getting its deserved attentions.

News Correspondent Angela Rye refers to president Trump as “45”.  She refuses to address him as president.  Her reason being, “He did not earn the right to become President”.  Upon first glance of the details she may be right.  Now the question that you must ask yourselves, and use to participate in good ole fashion American Debate, is, “How do you promote democracy, accept elections, if the process was hijacked”.  Americans are essentially be forces to live with the results of a rigged elections, and the worst part is that both the house and senate agree!

On Wednesday, July 12, the senate overwhelming agreed on an amendment that would limit Trumps ability to lift sanctions off of Russia.  This vote passed 98-2!  I repeat this vote passed 98-2!  One more time, the vote passed 98-2!  Now it is safe to say after the passing of this new limitation we can expect actual sanctions to follow.

Overall, here is the bottom line!  Democracy cannot function without the appropriate representation of the state’s values.  Appropriate representation was hijacked by a foreign power. (Note to self: You are not really a sovereign nation if your leaders is chose by foreign power and not by the people who live, and work daily in your country.) Angela Rye may very well be correct 45 is just the #45.

-Shadow Man

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The German Autocars

Source: Finimize

What’s Going On Here?

The three biggest German automakers – Daimler, Volkswagen and BMW – all published their earnings on Thursday. And while Daimler-owned Mercedes might keep on zooming past BMW, all three companies beat investors’ expectations!

What Does This Mean?

Mercedes has kept its spot at the top of luxury car sales among Germany’s biggest automakers, with sales growth three times that of BMW. But there were perhaps more similarities than differences in the results of the big three. All are spending heavily on new technology that’ll (hopefully) win them a place at the top of the industry as electric and self-driving cars go mainstream.

Why Should I Care?

For markets: German automakers are making big, expensive bets on the success of electric cars.

While BMW reported a drop in profitability versus last year, investors have chalked up those lower margins to the company’s investments in its electric car business. Daimler is also looking to make headway into that market: it’s investing €11 billion in electric cars over the next ten years, mostly for its Mercedes brand. Volkswagen is also making a huge push into electric cars as part of its “Strategy 2025”. The downside? The big increase in expenditures is hurting the profitability of all these companies in the near term.

The bigger picture: China remains a source of strength for German automakers.

China has been a nice place for German automakers to do business in the past few years – auto sales grew there by over 15% last year and German cars accounted for 19% of all car sales. Last year’s sales figures were pushed up by a temporary tax break on car purchases, which left some wondering if the demand for cars would stick around – however, strong quarterly sales from German automakers in that market suggested those alarm bells might have been premature.

More on China’s Resilient Debt

Source: Finimize

What’s Going On Here?

Moody’s, a major credit ratings agency, put China’s economy in the spotlight for investors on Wednesday after it said that rising debt levels in the country made it a riskier place to invest.

The bigger picture: China is a complicated beast.

It can be difficult even for seasoned investors to figure out quite what is going on in China. Right now, the government is trying to restrict certain types of lending within the economy, and these new policies are a significant concern for many investors globally. But China’s economy performed reasonably well last year and, from a longer term perspective, it is trying to make its economy more reliant on industries that likely have greater potential for growth (like digital technologies rather than steel smelting).

What Does This Mean?

Just like we all have our own personal credit ratings, governments have their creditworthiness rated, indicating how likely it is that their lenders will be paid back. Late on Tuesday, Moody’s announced that it was downgrading its rating for the Chinese government.

It warned that debt levels just keep going up in China, in part because the Chinese government has stimulated economic growth by making it easier to borrow money. Moody’s fear is that the government will continue to encourage more borrowing in order to maintain China’s relatively high economic growth. Partly because so many big companies in China are state-owned, doing so would increase the government’s debt burden (and thus hurt its creditworthiness).

Why Should I Care?

For markets: Investors are already well aware that China has a lot of debt.

Moody’s point of view isn’t particularly original: various economists and investors have warned about China’s high debt levels in recent years (and some think it’s far more of a risk than Moody’s does). So the downgrade isn’t such a big deal for investors, but it is a reminder that investing in China has almost certainly gotten riskier in recent years.

#4BillionDollar Soft Purchase…AI anyone?

Source: Finimize.com

What’s Going On Here?

Softbank, the Japanese telecom and tech conglomerate, has quietly bought a $4 billion stake in US chipmaker Nvidia (almost 5% of the company) (tweet this), according to Bloomberg – and the move has something to do with its massive new tech investment fund!

What Does This Mean?

Nvidia makes computer chips that are used to process graphics (think: computer games), but its chips have also become integral components for artificial intelligence (AI) software. SoftBank is both a major player in Japan’s telecom market (running things like traditional phone lines) and has a strong track record of investing in burgeoning tech companies – it was an early investor in Alibaba and Supercell, for example. With the backing of Saudi Arabia, Apple and others, SoftBank has recently launched a $93 billion fund that will invest in tech companies (called the SoftBank Vision Fund). That new fund, which will be separate from SoftBank itself, will have the right to buy at least part of SoftBank’s stake in Nvidia.

Why Should I Care?

The bigger picture: This is largely about AI and the Internet Of Things (IoT).

Last year, SoftBank spent £24 billion to acquire UK chipmaker Arm Holdings with the aim of using Arm’s technology in chips for IoT products (think: smart heating systems). Nvidia is a somewhat similar type of investment. Not all of SoftBank’s Vision Fund’s investments will be in these areas, but it’s clearly making a big bet on them.

 

For markets: SoftBank is using debt to fund its acquisitions – which increases the risk for its shareholders.

SoftBank will almost certainly keep a portion of the investments it’s made for itself. If the investments perform well, its shareholders will benefit. However, SoftBank has a lot of debt. If SoftBank’s investments aren’t as savvy as they have been previously, all that debt will work against SoftBank’s shareholders (as debt investors have the right to be paid back before any profits get paid out to shareholders).

Weaker US Bucks

Source: Finimize.com

What’s Going On Here?

The US dollar slumped to a seven-month low versus other major currencies last week as enthusiasm about the US economy continued to cool.

What Does This Mean?

President Trump’s election in November set off a wave of optimism from investors: his pro-growth policies, like tax cuts and spending on infrastructure, were supposedly going to lead to a significant pickup in US economic growth.

However, they have yet to materialize, and investors seem to have either delayed or watered down their expectations for significant reforms from Washington. Meanwhile, economic data is pointing to a moderate slowdown in the momentum of the US economy.

Why Should I Care?

For markets: A weaker currency supports stock prices in the home country.

US stocks are trading near an all-time high and the weaker dollar is likely part of the story. As the dollar slides in value, it’s more attractive for foreign investors to buy American stocks because they are now cheaper for them. On top of that, US companies that operate abroad will start earning more from overseas sales, since they can convert their foreign currency earnings into comparatively more US dollars. This pushes up profits for multinational companies based in the US (like McDonald’s, Facebook and many others).

The bigger picture: The rest of the world is looking rosier.

The euro hit a six-month high versus the US dollar on Tuesday, partly because investors think that the risks from anti-establishment politicians in the eurozone have receded significantly for the time being (e.g. the French election). The upcoming election in the UK is expected to make a “soft” Brexit more likely (i.e. a deal that supports the economic status quo between the UK and Europe). In short, the US dollar is falling versus other currencies partly because other countries’ economies are looking relatively more attractive (especially compared to earlier this year).

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