Category Archives: Advice

European Union Approves Dow, DuPont Merger

European Union Approves Dow, DuPont Merger

The European Union has approved the $77 billion merger between Dow Chemical Co. and DuPont Co. This approval would transform the global agrochemicals industry. There will now be only three giants in this industry. The other major deals in this industry include Bayer AG buying out Monsanto Co. and China National Chemical Corp. buying out Syngenta AG.

Regulators were initially concerned with the DuPont’s sale of its global pesticide business. Du Pont is now willing to divest a big portion of its existing pesticide business arm. This sale would include where the products such as sunflower and oilseed rape are made. In addition, Du Pont will also sell their global R&D organization.

Dow on the other hand will sell its plants that produces co-polymers. These plants are located in Spain and the U.S.

Europe was worried that the merger would lead to reduced research spending and bring prices up which would lead to the economic demise of European farmers.

Dow and DuPont said, “This regulatory milestone is a significant step toward closing the merger transaction, with the intention to subsequently spin into three independent publicly traded companies. The concessions to the EU still ensure the strategic logic and value creation potential of the transaction.”

Syngenta and ChemChina awaits an April 12 deadline for EU to decide on their merger while Bayer seeks to ask for an EU approval of its $66 billion takeover of Monsanto Co.

Environment activists continue to appeal to the EU to disapprove all three mergers as these mergers would lead to a 70% monopoly of the world’s agrochemicals and 60% of the global production of commercial seeds.

Greenpeace and Friends of the Earth Europe said, “Through dominant market share and sheer political power, they would unduly influence our agriculture and food system. These mergers risks major monopoly outcomes that might increase prices for farmers and customers.”

Once the merger is done, the combined entity must split into three independent companies. The companies will be located in Wilmington and Midland, Michigan.

Margaret Vestager, E.U. antitrust chief, said, “We need effective competition in this sector so companies are pushed to develop products that are ever safer for people and better for the environment. The bloc’s conditional approval ensures that the merger does not reduce price competition for existing pesticides or innovation for safer and better products in the future.”

Dow and DuPont said, “Longer term, the intended three-way split is expected even greater value for shareholders and customers and more opportunity for employees as each company will be a leader in attractive segments where global challenges are driving demand for their distinctive offerings.”

The Dow and DuPont merger will still have to be approved by Canada, Brazil and the United States but the victory over at EU is significant and will influence other countries looking at the deal. The expected closure of the transaction is before July.

DuPont is based in Wilmington, Delaware while the headquarters of Dow is in Midland, Michigan.

Nerds Cry Far and Wide, Game Stop Closing Down 150 Stores

Nerds Cry Far and Wide, Game Stop Closing Down 150 Stores

Game Stop has announced that because of plummeting sales and earnings in 2016, it will close down at least 150 of its stores. This represents 2 to 3 percent of its 7,500 stores globally. The main reason for the downward spiral of their sales has been digital downloads. Their customers prefer downloading straight from the game’s online store instead of buying physical copies of the game.

Last year, GameStop’s sales decreased by 14%. In the last holiday season, sales went spiraling down by 19%. The results showed that its 4th quarter profits went down 16%.
Their share prices reflected this steep drop in earnings as the shares of Game Stop went down by 12%.

The stores that were most affected were its U.S. stores, so it is very likely the 150 stores that it will close down will be from the U.S.

As a result of this trend of digital downloads of games, Game Stop will seek to expand its non-gaming businesses such as their collectible stores. It intends to boost its collectible stores by opening 35 this year. This will boost the number of their collectible stores to 121.

The outlook for their non-core business is optimistic. The collectibles division has been doing particularly well. Last year, its sales went up by 59.5% and this year, the sales for collectibles is projected to grow further by 30 to 40 percent. One of its retailer brands in this division is ThinkGeek which posted a 28% increase in sales because of strong interest in Pokemon toys and gear.

However, Game Stop is not shutting down its gaming business. It is particularly optimistic with the current consoles on the market, especially the Nintendo Switch. Game Stop’s CEO J. Paul Raines, said, “The Switch has provided a dramatic lift in traffic in stores and has real potential to be Wii-like in its ability to expand the gaming category from core to broad audiences.”

Game Stop is also very optimistic of its Technology Brands Division which has the cellphone retailer Spring Mobile which had a solid 44% sales increase in the 4th quarter of 2016.

Globally, Game Stop had a 13.6% drop in sales. Regarding hardware, sales dropped by 29% while software sales plummeted by almost 20%.

Raines said, “We encountered stiff headwinds as we completed the third year of the console cycle.”

Sales of Nintendo’s hybrid console is on the rage, and this year, Nintendo intends to double their production of it to 16 million units.

Other competitions for Game Stop include Amazon, Walmart, and Best Buy. The plague of digital shopping and downloads have plagued other brick and mortar retailers like Sears and J.C. Penney as they have also announced the closure of many of their branches.

Larry Perkins, CEO, and founder of Sierra Constellation Partners, offers an analysis of the gaming market: “Not only are they getting hammered by the online retailers and big box that have an inherent cost advantage through no retail real estate footprint or a much larger footprint that they can leverage with other products, but the movement to mobile-based games is creeping up mightily.”

Orders for U.S. Durables Beat Forecast

Orders for U.S. Durables Beat Forecast

Last month, orders for U.S. durables goods beat the forecast. This is a good sign for the U.S. economy as it shows that companies have a more confident outlook for the economy.

Commerce Department data showed that durable goods booking rose by 1.7%. The median forecast of economists surveyed by Bloomberg was 1.4%. Durable goods are goods that can last a minimum of three years.

This gain is the 6th straight. This can boost aggregate demand and create more economic growth. The Commerce Department said that the value of last month’s orders for durable goods is $235.39 billion. Also, the data from Commerce Department showed that fixed nonresidential investment had increased slightly but consistently for the past three-quarters.

Should the Trump administration be successful in trimming down corporate taxes and lessening regulations, this statistic has the potential of increasing even more. However, it still faces its first hurdle in getting a healthcare bill passed in Congress.

Transportation equipment demand is often excluded due to its volatility, and when excluded, orders increased 0.4%. However, bookings for non-defense capital goods which excludes aircraft dropped by 0.1%. Economists had forecasted it would increase by 0.5% and in January, they revised their forecast to 0.1%.

Peter Boockvar, chief market analyst at Lindsey Group, said, “…for all the optimism seen in the business confidence figures, there was little sign of that translating into an increase in capital spending in February.”

Last month, shipments of capital goods increased by 1%. This statistic is used in the calculation of gross domestic product. Shipments of capital goods exclude aircraft and military hardware. Bookings for civilian aircraft surged 47.6% last month. Boeing Co. reported 43 orders for aircraft last month. Boeing had 26 orders in January.

Increases in orders were also noted for electrical equipment, computers and electronic products, appliances and components and fabricated metal products.

However, there was a 0.8% drop in orders for motor vehicles and parts. The reason for this is the high inventory in the automobile industry. February figures for car sales in February had little changes.

In 2015 and 2016, the U.S. industrial sector was weak because of low oil prices which hindered their domestic energy industry while the strong dollar diminished demand for U.S. exports.

Despite improving economic conditions, things are expected to have slowed down in the winter months. Fed Bank of Atlanta estimated gross domestic product to have only expanded 0.9% in the first quarter. Last quarter’s gross domestic product was 1.9%.

Macroeconomic Advisers, a forecasting company, estimated gross domestic product growth in the 1st quarter to be 1.2%.

Fed Chair Janet Yellen said, “I think it is fair to say that many of my colleagues and I note a much optimistic frame of mind among many, many businesses in recent months. However, I would say most of the businesspeople that we have talked to also have a wait-and-see attitude, and are very hopeful that they will be able to expand investment and are looking forward to doing that, but are waiting to see what will happen.”

Money Saving Tips for Young Spenders

Money Saving Tips for Young Spenders

young shopper

Young spenders who first start earning an income often spend too much on luxuries or take on too much debt. However, if you are prepared, you can also establish a game plan that will lead you toward wealth. The following tips can assist you in this type of quest.

#1 – Save One-third of What You Make

Placing $1 out of each $3 you make into the bank may sound like a lot. However, it also creates stability in your financial life. When you have a good deal in savings, you can better weather the tough times, such as a layoff. While saving this chunk of money is a sacrifice, it is a sacrifice that allows you to get that much closer to your goal of financial security.

#2 – It is Okay to Spend Money on Career-related Investments

According to financial advisors, it is okay to spend money on educational expenses that concern your career. These costs may also include your work wardrobe or a how-to book that concerns your job.

#3 – What Are Your Dreams?

According to a news report, many times, young people fail to save money as they cannot articulate their long-term goals financially. For example, ask yourself if you want to eventually quit your day job and run your own business. or perhaps you have a more ambitious pursuit. What are your dreams? When you set money aside to realize lofty goals, you have the reasons needed to work and save money and fulfill specific objectives.

#4 – Pay Off Your Student Loans Early

Financial advisors also recommend that young people pay off their student loans early as the financing carries a 5 or 6 percent rate of interest – much higher than what a savings account can earn. By paying off a large amount of your student loan debit, you can immediately begin saving more money.

#5 – Don’t Wait to Save Money Until You Feel You Can Afford It

Financial experts advise to start saving for retirement now. Don’t wait until you feel you can afford to save money or open up an employer-sponsored 401(k). If you start saving now, you can set enough cash aside to accumulate $1 million by the time you retire.

Study Says Overdraft Fee’s are Costlier than Payday Loans

Study Says Overdraft Fee’s are Costlier than Payday Loans

Wells Fargo Overdraft

Payday loans have gotten a bad reputation over the last several years. The short-term, high-interest loan is constantly chastised by public officials, non-profit organizations, consumer advocacy groups and anti-poverty activists. They say these financial products hurt the poor and send middle-class households into a never ending spiral of debt.

But what about overdrafts that so many banking customers use when facing pecuniary difficulties? Well, they may become the new enemy of the aforementioned entities.

According to a new study by consumer watchdog Which?, using your overdraft can be costlier than taking out a payday loan. In fact, as the survey suggests, it can be up to four times more expensive than taking out two-week payday advance loans, which is also exorbitant for borrowers – the organization cited the average APR of 1,509 percent as an example.

The consumer watchdog stated that its findings highlight the fact that regulators need to start cracking down on unauthorized overdraft charges that often cause significant harm to the most vulnerable of banking customers.

What exactly can be done? The consumer body advocates a cap on interest and fees.

“People with a shortfall in their finances can face much higher charges from some of the big high street banks than they would from payday loan companies,” said Alex Neill, director of policy and campaigns at Which?, in a statement.

“The regulator has shown it’s prepared to take tough action to stamp out unscrupulous practices in the payday loans market, and must now tackle punitive unarranged overdraft charges that cause significant harm to some of the most vulnerable customers.”

Soon after the results of this study were published, the finance industry responded.

RBS, for instance, issued a statement, averring that it encourages all of its customers to contact a branch if they feel they are going to enter into unarranged overdraft. Since the financial institution realizes this is an expensive type of borrowing, RBS helps them find an array of alternative solutions.

Meanwhile, the British Bankers’ Association (BBA) also sent out a statement, alluding to the fact that overdraft charges have “plummeted” since the global financial crisis. The BBA noted that consumers have saved nearly $1 billion over the last five years.

“Banks are helping customers compare account charges in a variety of ways, from making them easier to understand to providing useful online calculators and mobile apps,” the BBA said in a statement. They also itemize charges on bank statements and use text alerts to communicate important account information instantly. If a customer thinks they might go overdrawn, they should speak to their bank to arrange an overdraft to keep costs down.”

Now that the Financial Conduct Authority (FCA) has tackled the payday loan industry and reined in the unscrupulous lenders, the federal financial body may start to go after the banks and their expensive overdraft charges.

Financial Experts Teach Consumers How to Save for Travel

Financial Experts Teach Consumers How to Save for Travel

Dream Vacation

The following tips can assist you in adding to your travel fund and saving for a dream vacation.

Set Up a Special Savings Account

Experts recommend setting up a special savings account and having automatic deductions taken from each paycheck. They suggest choosing the highest amount of money you won’t miss – such as $20 or $50 from each paycheck.

Cut Back on Current Costs

Another way to save extra cash is to cut back on some of your regular expenses. For example, establishing a budget to see where your money is allocated is what you want to do first. Next, set up an account on an online budgeting site, such as Mint. This kind of site will divide your spending into various categories so you can see where your money is going. For instance, the $4.00 per day you are spending on vending machine food is money that could go to travel.

Save Your Loose Change

It also helps to pay with cash as it assists you in keeping closer track of your money. Doing so also allows you to save your loose change and empty it into a jar at the end of the day. You might be surprised by the amount you accumulate over several months’ time.

Sell Some Stuff

If you have some extra stuff you don’t need, use eBay or Craigslist as selling platforms to sell the items and add to your bank account. Use the money for your “dream vacation” fund.
Find a Side Gig

You can also earn extra travel money by advertising to clean or organize homes and apartments, run errands or provide tutoring.

A Popular Vacation Destination

According to research, one of the most popular places to spend a vacation today is the Caribbean. Therefore, using any of the above savings approaches will enable you to take a dream cruise or visit a tropical island, for instance, in a reasonably short amount of time. According to USA today, a cabin on a cruise ship without a view costs around $499 while a cabin with a balcony is about $999.