Daily Archives

We have heard enough about tariffs, but… we are about to get a sense of when they will start to hurt profits and by how much. Last Friday, the Trump administration put 25% tariffs on $34 billion of Chinese goods and China responded in-kind. With the release of second-quarter earnings upon us, we may get a better sense of how these tariffs are impacting companies.

Cars, planes, steel and aluminum products… have been hit the worst, so far. We have already seen Harley-Davidson move some production outside of the United States to combat the tariffs. Given the knee-jerk reaction, it is clear that a company like Harley believes the taxes will impact them immediately.

We will see the impact… for most companies, sometime after second-quarter earnings are released. Businesses that are impacted will likely reflect that impact in their third-quarter guidance (i.e. lower earnings estimates). So we will see it in the guidance and investors are also going to need to know how these companies are going to prepare going forward. Brace yourself – the earnings are coming!

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By 2025… two-thirds of the world’s population may face water shortages. I know what you’re thinking – “pfft 2025, we’ll be living on Mars and traveling by jetpack by then.” However, a more likely future involves more depressing things like climate change, overpopulation, and yes, lack of water.

But don’t worry… because Weather Modification International (WMI) is here to save the day. The company uses ‘cloud seeding’ to “enhance” the precipitation process and get more moisture out of clouds. How does it work? The company’s pilots will target clouds with heavy moisture and inject a “silver iodide mixture.” The water in the clouds will condense around the mixture, become heavy, and fall to the ground.

Here are the results… Idaho Power, which serves 500,000 customers, invested more than $3 million with WMI to increase snowpack in Idaho’s highest mountains. Snowpack is packed snow that melts slowly and feeds streams and rivers as it melts. As a result, the cloud seeding program increased snowpack 8% to 15%. According to Idaho Power, that is enough to power an extra 60,000 homes and equates to $9 million worth of water. I guess you could say WMI can make it rain literally and figuratively.

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Love him or hate him… King James is taking his talents to Los Angeles and all it took to get him there was $154 million. If you are a Los Angeles resident, basketball fan or not, LeBron’s arrival should give you plenty of reason to cheer. If you are a Cleveland fan – my condolences. With LeBron heading west is Cleveland’s economy bound to go south?

Where to start… I am not sure because local hospitality, tourism, and the value of the Cavaliers franchise are likely to take a hit. During LeBron’s time with the Cavs and Heat, the total number of bars and restaurants within a mile of the stadium went up a collective 13%, and total employment rose 23.5%. Also, the total amount of recreation and entertainment saw a $100 million jump, or 10% when James returned to Cleveland in 2015.

The Land will rebound… because as popular as LeBron is there is much more to life than basketball. Cleveland still has insurance, banking, technology, and healthcare. Not only that, but people will take the money they are not spending on the Cavs and use it elsewhere. Cleveland’s economy will be fine, but their basketball team may be hard to watch. That’s okay, though – no one is beating the Warriors this year.

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Some of us avoid running like the plague… however, for those who don’t, Adidas has some good news for you. The company is working hard to allow you to buy athletic shoes tailored to your specific needs in-store. If anything screams ‘futuristic’ it is motion capture tech, data analysis software, and 3D printing collaborating to create the precise and perfect fit for you.

Is this necessary…well, yes because there is a good chance that your feet aren’t the same size and you run weird. So being able to create any custom shoe on a made-to-order basis is how Adidas will make up for that. They are not quite there yet, and speed is what they need. As you can imagine, the company makes a lot of shoes – 400 million pairs in 2017. Given such demand for shoes, time is of the essence when producing them.

Oh, and one more problem… Nike sold an athletic shoe with all the futuristic frills that Adidas has been working toward. That shoe was the Nike Zoom Vaporfly Elite Flyprint which was produced in a small quantity and retailed for $600. So until Adidas or any of its competitors can cater to their consumers’ impatience and frugality, you will be settling for shoes that ‘kinda sorta’ fit.

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Meet Rodney Williams… who went from a six-figure income to six-figures in debt. In 2012, his sheer boredom in the corporate world prompted him to co-found Lisnr, a start-up that uses proprietary software to improve the connectivity between electronic devices with a speaker or a microphone. The significant benefit to this software is that it sends data over ultrasonic sound waves rather than Wi-Fi or Bluetooth.

He was on to something… and Williams, along with co-founders Chris Ostoich and Josh Glick knew it, but the company needed more time. When the company became short on cash, Williams stepped up by paying his 12-member team with his personal savings and credit cards. It wasn’t cheap, either – costing him over $30,000 a month.

He had to believe… which was likely difficult after draining his savings, maxing out credit cards and falling behind on bills. However, in April 2014, Lisnr raised $3.5 million series A funding. He now had enough to pay himself back and to stop paying expenses out-of-pocket. His customers now include Jay-Z, the Dallas Cowboys, Sony Music and several other high-profile names. We won’t get into revenue or profitability – because the company is keeping that private, but the client list speaks for itself.

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Back to the drawing board… for Netflix, as they test a premium version of their current service called ‘Ultra’ in Europe. For about $20, users get Ultra HD streaming video and audio on up to four devices at the same time. If the service is European-approved, it could provide a nice lift to the company’s margins and revenue.

Netflix wants to know what you want… and testing services like Ultra are a way of figuring that out. They also want to see what you will pay to get what you want. The movie-streamer may even begin taking away some features in the Premium and Standard plans and adding those to the Ultra plan to up the ante.

You will pay dearly… for Netflix services, if you value your ’13 Reason Why,’ ‘Stranger Things,’ or any of their original content. These shows can’t be replaced by other services which means they can name their price, to an extent. However, if you are a particularly savvy penny pincher, consider leeching off of your significant other’s account for as long as possible.

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It’s getting more believable… because MoviePass just introduced ‘surge pricing’ on Thursday. What is surge pricing you ask? Well, surge pricing is triggered whenever demand for a given movie or showtime gets too high. At that point, MoviePass will ask you to kick in a few extra bucks ($2-$6) on top of the $10 monthly fee.

Wall Street thinks it’s too good to be true… because the monthly subscription fee is so low, the company loses money when subscribers use their pass even once. They are losing money – and fast. How fast? Try $40 million in the month of May fast. That amount is anything but chump change given that MoviePass was left with $18.5 million in cash and $30.3 million in accounts receivable that month.

It’s still a good deal… and the company is looking to add about two million more subscribers by the New Year. They also are looking to sell $1.2 billion in stock and debt securities to raise more money to keep this thing going. So stay tuned to see if the ‘thriller’ that is MoviePass can pull off a big screen worthy happy ending.

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Everyone loves bacon… and other pork products that Americans aren’t too fond of like the tongue, ears, snout, and heart. That demand is not easily replaced and is the reason why the wallets of pork producers are going to get a little less fat with the second round of retaliatory tariffs from China and Mexico.

Here are the details… Mexico will double their tax on chilled and frozen pork muscle to 20%. China is planning to collect an additional 25% import duty on American pork products. To be clear, that is in addition to previous import taxes from China, which means the tariff will exceed 70%. These two countries account for 40% of pork exports, including the stuff very few American’s find appealing.

Getting hit where it hurts… in the wallet, of course. One pork producer, Maschhoff Family Foods, is expecting to incur a $100 million loss as a result of the tariffs. That is just one company we are talking about. However, if you can find it in yourself to acquire a taste for pig tongue, the pork producers need all the help they can get.

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