- Rick Newman at The Exchange18 hrs ago
You can be excused for thinking economists are crazy. With food prices rising, how can they be worried inflation is too low?
The latest data confirm what many consumers already know: Certain types of food are getting considerably more expensive, with beef prices up 7.4% during the past year and eggs up 9.9%. The household pain doesn’t end there: Electricity costs rose 5.3% during the past 12 months and natural gas soared by 16.4%. The typical paycheck, meanwhile, has risen by just 2% or so.
Economists aren’t particularly worried about rising prices, however. Food and energy prices are notoriously volatile, and they’ve risen largely because of temporary factors. A bigger concern: Prices that are barely rising or falling, which can signal pernicious stagnation or worse.
- Chris Nichols at The Exchange18 hrs ago
For McDonald's (MCD), 2014 may well end up as one of the most pivotal in its nearly 60-year history: Either it succeeds in powering past its recent setbacks, or it becomes further viewed as a faltering giant in retreat.
McDonald's, to be clear, isn't going anywhere anytime soon. It's too large and entrenched, with $89 billion in system-wide sales and 35,000 locations globally, to suffer serious damage quickly. In the U.S. alone, its 14,000-plus units, the majority of them franchises, had sales in excess of $35 billion last year. Should its demise ever come, it will be in a far distant future.
But cracks in the structure are there. McDonald's has mended them before, as with ongoing restaurant remodels meant to improve the perception of stores by offering fresh looks and cleanliness. Its menu additions, both the permanent and limited-time offers, regularly nod to changing consumer interests. Even after the "Super Size Me" era, it thrived.
- Rick Newman at The Exchange1 day ago
Taxes get no respect. Everybody hates paying them, and Americans think roughly half their tax money gets wasted. No wonder the Internal Revenue Service is less popular than poison ivy.
As Americans finalize their 2013 income tax returns, however, there’s some upbeat news about taxes. Government tax receipts have soared during the past 18 months, putting Washington on sounder financial footing and easing strains in many state capitals. Higher tax rates have a bit to do with that, but a bigger factor is the improving economy and the 2.9 million people who have gone back to work since the end of 2012.
Federal revenue from individual income taxes in fiscal year 2013 (which ended last September) rose by 16%, to $1.3 trillion. For the first half of fiscal 2014, tax receipts are up another 6% or so, according to the Congressional Budget Office. The agency estimates such revenue will rise by about 5% for all of 2014, and by nearly 12% in 2015.
- Aaron Pressman at The Exchange1 day ago
T-Mobile (TMUS) announced Monday it was ending monthly overage fees, with outspoken chief executive John Legere forcefully pounding the message that the fourth-largest U.S. carrier will continue making war on its larger rivals for the rest of 2014.
“We need to reassert our position that we will never stop,” Legere said in a phone interview. “It’s almost endless.”
On Monday T-Mobile said it would eliminate overage fees, those surprise charges that pop up on monthly bills after a customer uses more minutes, texts or data than their plan allowed. Instead, T-Mobile said it would allow unlimited voice and text on most plans and shift customers to slower downloads when they used up their data allotments. Customers can also go to T-Mobile’s website and purchase additional high-speed data at $10 per 2 gigabytes. The change takes effect in May for bills arriving in June.
- Aaron Pressman at The Exchange4 days ago
On first hearing, it sounds almost insane – every year, Amazon (AMZN) offers workers in its distribution warehouses up to $5,000 to quit. Why would a company ask employees to quit and why in the world would it pay them to do so?
But like many of the unusual practices adopted under Amazon CEO Jeff Bezos, the pay-to-quit policy is grounded in data. The goal of the offer is to encourage unmotivated and disaffected employees to leave on their own, while making employees who reject the offer feel more dedicated to the job.
Delivered with the headline “Please Don’t Take This Offer,” the pay-to-quit offers start at $2,000 for an employee’s first year and rise by $1,000 a year up to a maximum of $5,000.
“The goal is to encourage folks to take a moment and think about what they really want,” CEO Bezos explained in a letter to shareholders this week. “In the long-run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.”
Creating a positive work culture
- Chris Nichols at The Exchange4 days ago
Zoe's Kitchen (ZOES) was off to a swift start on its first day of trading Friday, surging above its initial price and reaching the mid-$20s as investors bought up shares of the Mediterranean-styled fast-casual restaurant operator.
In recent trading, Plano, Texas-based Zoe's was at $25.34, some 68% higher than its offering level. The company had been planning to sell 5.8 million shares in a range of $11 to $13, but earlier this week, it increased the estimate to $13 to $15. Pricing was set at $15 late Thursday. It's achieved the first-day gains despite a somewhat dodgy market, and avoided the jitters that appear to have perturbed the hopes of other IPOs.
[Related: IPO window slamming shut on tech and biotech]
- Aaron Pressman at The Exchange5 days ago
So much for the busiest week for IPOs since 2007 … because it looks like Thursday’s market swoon has derailed much of the new issues market.
Seven companies were scheduled to go public after the close yesterday but it looks like only three actually made it: Mediterranean restaurant chain Zoe’s Kitchen (ZOES), energy infrastructure operator Enable Midstream Partners (ENBL) and livestock drug maker Phibro Animal Health (PAHC).
- Chris Nichols at The Exchange5 days ago
The largest players in the burger arena have reached the point at which any growth they manage may be less about demand than about raising prices and selling costlier menu items, as the amount of sales at the likes of McDonald's (MCD), Burger King (BKW) and Wendy's (WEN) has stagnated.
With that said, they're still sending a lot of orders out the door -- fast-food hamburger chains, including the big three, recorded $69.7 billion in U.S. sales in 2013. But even at that impressive number, sales volume increased only 0.9% for the segment, widely cited food-industry research group Technomic says. For American burger joints overall, sales exceeded $72 billion, and while that was up 1.2% from the previous year, if not for higher prices the number in fact would have declined.
- Chris Nichols at The Exchange5 days ago
Ruby Tuesday (RT) was having one of its best days in years Thursday, despite a quarterly loss and another negative reading for same-store sales at the casual-dining restaurant operator. Shares of the Maryville, Tenn., seller of burgers, salads and entrees were jumping 15.8% to $6.90, and only 90 minutes into trading, volume was nearly four times the normal total for an entire session. The last time it rose more in a single day was April 2009. The surge, which appeared largely to be a relief trade for a troubled stock, came after Ruby Tuesday said it lost 7 cents a share, before items, in the third quarter, with a same-store sales decline of 1.9% at corporate locations. That was the 11th time in the past 13 quarters it's posted a drop in comparable sales. However, both were better than analysts expected, with FactSet carrying estimates for a loss of 8 cents and a comp sales decline of 5.2%. On the bottom line, it notably broke a string of seven consecutive misses. Revenue of $295.6 million was down from $307.4 million in the same quarter last year, though that partly was driven by a net reduction of 30 company-owned stores, and it exceeded estimates by some $11 million. Ruby Tuesday does franchise, although it owns the great majority of its restaurants.
- Aaron Pressman at The Exchange5 days ago
Warning signs are flashing for the new-issues market, as almost one-third of deals priced in the past month have sunk below their IPO price amid a general rout of high-growth/no-profit stocks.
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But, in what could end up as the busiest week for IPOs in more than six years, most of the higher-profile deals are still holding up, leaving the opportunity to go public open for more action. These warning signs — at least so far — do not indicate a broken market but it's also hardly the gangbusters euphoria that characterizes a bubble.
One of the deal's struggling to stay above water is Ally Financial (ALLY), the former finance arm of General Motors (GM), which priced at $25 a share on Wednesday night and traded down almost 2% on Thursday. The deal raised $2.4 billion, the most of any IPO is 2014. But the company is hardly a typical debut, with the U.S. government involvement, the taint of the subprime melt down and other unique factors.