Financial Firms Vulnerable to Class-Action Lawsuits

The Consumer Financial Protection Bureau has planned to adopt a rule that would prohibit financial firms from forcing Americans into arbitration in disputes over their bank and credit card accounts. This rule will affect millions of Americans, as they are no longer subject to the whims of financial firms and their exploitative measures the isolate individuals in order to make a profit.

Consumers are now able to band together in class-action lawsuits that could cost banks and other financial firms billions of dollars. The new rule, which is predicted to take effect next year should no major obstacles arise, is expected to create serious tensions. Both the Trump administration and House Republicans have pushed to restrict the consumer finance agency as part of an effort to lighten regulation on the financial industry. This rule will counteract against the aforementioned efforts, granting more power and protection to consumers at the expense of the financial industry.

The director of the consumer agency, Richard Cordray, stated that the ruling is following the spirit that a no one should escape accountability if they break the law, regardless of how large or powerful the individual in question may be. The rule has already faced opposition, as Representative Jeb Hensarling, a Texan Republican who has been trying to weaken the consumer agency, has stated that the rule should be rejected. Hensarling quotes that the “American people voted to drain the D.C. swamp of capricious, unaccountable bureaucrats who wish to control their lives,” which is ironic considering that the rule is an attempt to prevent financial firms from controlling the lives of ‘ordinary’ Americans.

Regardless of the opposition, the rule will be difficult to nullify due to populist appeal. There has been nationwide criticism of arbitration clauses that enable corporations to circumvent courts and take away the tools that fight abusive practices. Instead, the rule will dismantle a series of legal maneuvers that allow major American companies to block customers from going to court to fight potentially harmful business practices.

The consumer agency itself has fallen under strict supervision and criticism by pro-business groups, arguing from a political standpoint that the rule is a quality of life improvement for class-action lawyers, who more often than not donate Democratically. Similar opposition has been the request that the president remove Cordray as director to an overreach of regulation. However, supporters of the agency agree that arbitration being independent from corporate interests is a priority that needs to be addressed.

The consequences of this rule is that corporations will no longer be able to use fine print in their contracts to force consumers into secretive arbitration that pits borrowers against powerful companies with deep pockets. Most people would abandon their claims due to a lack of resources, leaving the companies free to bully customers. Example class-action lawsuits that have been limited due to arbitration include predatory lending, wage theft, sexual discrimination and medical malpractice. What reinforces this practice is that it is practically impossible to apply for a credit card, rent a car, or shop online without agreeing to private arbitration. The rule balances the scales, by enabling people to band together and pool resources.

While the protections do not apply to existing accounts, consumers would be able to pay off old loans and open new accounts that do fall under the protection of the new rule, which has the potential for a considerable impact on consumer finance. While this rule will not explicitly outlaw arbitration, this new practice is expected to effectively kill the process.

The point of class-action lawsuits is not to give people a big payout but rather results in a small payout to individuals who are part of a larger group. The intention is that the companies pay large fines to put an end to abusive practices, and provides individuals with a voice and a community that ensures that no party is being exploited. Should this rule go through, consumer finance and the way banks and financial firms conduct businesses will face major changes?

Snap Shares Dip Below IPO Price, Selloff Expected

Shares of Snap, Inc. were valued at $16.99 when the market closed Monday, marking the first time the stock has dipped below its $17 IPO price since the company went public in March.

The drop comes as the market anticipates a massive selloff of Snap stock when a lockup period, which prevented investors who bought Snap’s IPO from offloading their shares, expires on July 29. At that point, more than 60% of Snap’s stock will become eligible to be sold.

Snap entered the public market with a $24 billion valuation, one of the loftiest ever amongst technology companies. Investors bought in, despite Snap’s 61.7 price-to-sales ratio. Following the IPO, the stock rose 41%, opening its first trading day at $24.

But when the company’s first public earnings report, published in May, came in below analysts’ projections, the stock dropped 25% almost instantaneously.

Since then, Snap’s market capitalization has fallen more than $10 billion, from $31 billion to $20 billion. Still, the market values the stock at 20 times the company’s expected 2017 sales, according to Fortune’s Jen Wieczner. When Snap publishes last quarter’s sales report later the summer, the stock is likely to drop even further.

When Snap’s new strategy to attract advertisers to Snap hit a snag earlier this year, Stephen Ju, an analyst for Credit Suisse, lowered his projections of Snap’s revenue last quarter: Credit Suisse no longer believes Snap’s 2017 revenue will crack the $1 billion threshold.

The financial analysis group dropped its target price for Snap from $30 to $25, but still gives Snap an “outperform” rating.

“While we were hoping for Snap to exhibit a more comfortable growth path, we are reminded that nascent companies sometimes grow in fits and starts,” Ju said in explanation of the drop in the target price.

The social media sector as a whole has performed well in the stock market over the last quarter. Since April 11, Facebook stock has risen 10%. Twitter shares have risen almost 30% since the same date.

The number of daily active users of Snap increased just 5% from the final quarter of 2016 to the first quarter of 2017. In the first half of last year, Snap’s user base grew about 15% per quarter, but it has grown an average of just 5% per quarter over the last three-quarters.

Many have compared recent investment trends toward social media and other technology sectors to the dot-com boom of the 1990s. People who have never before dipped a single toe into the stock market are snapping up technology stocks as though they have been investing for years.

Robinhood, a stock trading app, reported that 43% of those who traded on Snap’s first day bought shares in the startup social media company. The median age of those Snap investors was 26.

An overwhelming majority of Snap’s users occupy the 14-35 year old demographic, so it stands to reason that a sizable portion of the company’s investors are similarly aged.

“It’s hard to believe that such rookie investors would be equipped to successfully trade a stock like Snap,” Wieczner wrote in another article.

In the midst of a tech boom which has lingered on over the past three years or so, many considered Snap to be a sure thing, the next Google or Facebook or Twitter.

But given May’s sales report and the further disappointment expected when Snap publishes its quarter two earnings later this summer, it appears Snap’s bold IPO wrote a check it could not cash.

Investors, many of whom will have their first opportunities to sell their Snap stock when the lock-up period ends on July 29, are demanding what’s left of their money back.

Vantiv Wins Bidding War, Acquires Wordplay for $10 Billion

British payment processing company Wordplay announced Tuesday that JP Morgan Chase and Vantiv had each expressed interest in acquiring it.

Wordplay made the announcement without either suitor’s consent. The New York Times did not receive comment from either prospective buyer. Negotiations were thought to be in the early stages, and many wondered whether a deal would ever be reached.

Wednesday morning, Wordplay announced that it had accepted a $10 billion buyout offer from Vantiv, an American competitor.

After the announcement Tuesday, which came amidst widespread media speculation that a takeover of Wordplay might be on the horizon, Wordplay’s stock jumped 30%. Its market capitalization soared to $10.5 million. The company’s shares fell 8.82% following the deal Wednesday.

As more and more consumers make purchases electronically, companies like Wordplay and Vantiv are carving out sizable niches for themselves in the financial technology field.

Wordplay now operates in 146 countries and processes 35.8 million transactions daily. It made 264.1 million pounds in pretax profit in 2016 and handles about 42% of transactions in Britain.

Vantiv had its hand in 25 billion transactions last year, more than any other U.S.-based merchant acquirer (a merchant acquirer processes payments for stores and businesses), and generated a net revenue of $1.9 billion.

Vantiv, based in Cincinnati, has already snatched up Moneris Solutions Corporation, a Canadian payment processing operation, and Paymetric, which sells payment technology.

Wordplay said in a statement that it hopes the merger will create a super-company “with deep payments capabilities, product and vertical expertise and strong distribution channels to serve merchants around the world in the global e-commerce market, and in-store and online in the UK and US markets.”

Payment processing companies pose an increasing threat to financial institutions. PayPal’s business model is arguably the aptest illustration of that threat. An employer can deposit an employee’s check directly into that employee’s PayPal account. The employee could theoretically spend that whole check without ever withdrawing it from his PayPal account. Most online sellers, including, accept PayPal, and the number of retailers who accept PayPal in-store is growing.

The employee, then, would never need a bank.

Wordplay started under Royal Bank of Scotland in 1989, prior to the advent of the internet. At that point, the company primarily handled electronic point of sale transactions. In 1994, it began serving the U.K.’s first online shop. It became independent in 2010.

Technology and commerce have become increasingly intertwined since 1989, and will only continue to do so. Wordplay-Vantiv will need to keep adapting.

As augmented reality and virtual reality become fixtures in the daily life of the average consumer, Wordplay plans to begin processing transactions in virtual games and stores. With smartphones continuing to gain popularity as methods of payment, Wordplay-Vantiv could expand itself further into the mobile payment processing arena. Wordplay already processes a substantial number of payments made via mobile devices, but competition with companies like Stripe, Square, and Ayden, which specialize in mobile transactions, is stiff.

PayPal is also a leader in processing mobile transactions. In 2013, PayPal acquired Braintree, a company similar to Stripe or Square. Now, Braintree serves Uber and other, similar companies. Wordplay-Vantiv may move to take over a company like Braintree.

Wordplay-Vantiv may also look to make inroads into the peer-to-peer wing of the financial technology industry. Peer-to-peer platforms such as Venmo are currently small players in the sector, but companies such as JP Morgan, which recently created a peer-to-peer payment service called Zelle, see possibilities in the niche.

There is untold potential in the financial technology market, and the recent merger of Wordplay, the most prominent payment processing company in Europe, and Vantiv, the most prominent such enterprise in the States, may put Vantiv-Wordplay in an unprecedented position to capitalize.

Uber Announces a Loss of $2.8 Billion for 2016

Uber announced a gross of $20 billion for the year of 2016, which is double what the company made just the year before. After its drivers took their share, the company’s net revenue was an estimated $6.5 billion for the entire year. However, that rapid growth did not come without a price.

In fact, the company says that in the year of 2016 it lost over $2.8 billion. That money does not include its business in China that it sold in the middle of the year. Before Uber sold its China business to Didi Chuxing in the summer, it has already stated that it was losing over a billion in China.

While this loss is big by any company’s standards, Uber still managed to grow its sales in the second half of the year. It did this all while keeping is losses constant.

Uber is a privately-owned company and therefore it does not have to publicly report its finances. This moment of financial disclosure could be the company’s attempt to boost morale for the employees as well as those who have invested in the company. It would also help boost consumer’s confidence in Uber.

It was just recently that the company faced a lawsuit from Alphabet Waymo who insists that Uber’s self-driving technology was pilfered by a few Google employees. Just over a week ago, Uber finally released a statement against Waymo’s accusations. Basically, Uber says that Waymo is wrong.

Uber claims that all the self-driving technology it uses has been acquired legally through other sources. However, Waymo has taken its case to judge saying that Uber’s current executive stole over 14,000 documents before leaving Google to join Uber. Uber continues to investigate the matter by searching computers and other devices of its employees.

This announcement of the company’s high numbers could also be a great way to assure consumers that Uber is doing well despite the minor hiccups the company has had in the courtroom and on the road. Not long ago, an Uber autonomous vehicle was in an accident with another car.

The accident, though proved not to be the self-driving vehicles fault but that of the driver that failed to yield to the Uber vehicle, caused Uber to halt all its testing. The company stopped the test of its self-driving vehicles while the accident was further investigated. Once it was proved to have been the other driver’s error, Uber was quick to start their engines once more.

There is also a further investigation in response to an Uber employee who claims that when they worked for the company they experienced not only harassment but sexism. Yet despite all the negative things that have been happening for the company, it’s still pushing through and is continuing its race towards a fully autonomous vehicle.

A spokesperson for Uber, Rachel Holt who is also the regional manager for U.S. and Canada, said, “We’re fortunate to have a healthy and growing business, giving us the room to make the changes we know are needed on management and accountability, our culture and organization, and our relationship with drivers.”

J.C. Penney Fall in Sales Causes 140 Store Closures

J.C. Penney can be added to the list of retailers closing some of its stores. Many consumers have shifted their focus to online shopping which has lowered the number of sales in many brick and mortar stores.

Recently, however, the 114-year-old retail veteran company says that about 140 of its 1,000 stores will be closing sometime around June. On Friday, a J.C. Penney executive said that in order to focus more on the stronger stores that bring in better profit, the company would cut weaker locations. The company also will offer a buyout to the nearly 6,000 employees of those 140 stores.

J.C. Penney adds its name to the bottom of a long list of long time retailers who have recently closed a great number of stores. Some of them even closing all stores for good. Sears and Kmart not only took out a rather large loan to keep themselves afloat but announced the closing of 108 Kmart stores and 42 Sears locations.

The Limited closed their doors for good after years of service to dedicated customers. Macy also had a round of closings. One hundred of its locations closed, and the company says it is exploring the options for what real estate is left.

These retailers admit to losing major sales during the holiday due to online retailers like Amazon who snag consumers with their easy shopping methods and fast shipping.

Yet the news hasn’t been all bad. Company’s like TJX who owns discount retailers like TJ Maxx and Marshall’s all over the U.S. and Canada said they plan to open at least 1,400 more stores. TJX also says it has plans to go international spanning out through Europe and Australia.

J.C. Penney chief executive Marvin Ellison says that the closings will help the company “effectively compete against the growing threat of online retailers.” J.C. Penney has online ordering and in store pick up that will be used to its full extent at the remaining locations. In fact, it’s reported that 77 percent of J.C. Penney’s online orders went through a physical store for pick up in 2016.

Ellion is a former Home Depot executive who took over J.C. Penney back in 2015. Since then he has done his best to give the company a turnaround. This is shown as the company has tried to let go of its reliance on apparel sales by adding Sephora to its locations. J.C. Penney has also added more appliances throughout its stores to increase the sale of items used in the home. All these actions are to reverse the failed overhaul brought on by the former CEO Ron Johnson. Johnson’s attempt to make the company hip caused an upend in pricing.

Flickr/Jamie Robinson Faber

Yet even though retailers did see a surprisingly big number of sales in 2016, online retailers snagged most of the large numbers. Consumer spending online rose by an estimated 11 percent while department stores saw a drop in that number by 6 percent.

Many believe that these closing are a good thing for J.C. Penney. While it will hurt the number incoming customers that will turn to the store as an alternative for the closing Sears and Macy locations, most analysts believe that this was a much-needed move for the company.

However, in the market, shares of J.C. Penney fell by 9 percent to $6.25, making this a 25 percent drop for the whole year. The market capital for the company is also at $2 billion which is lower than the $12.55 billion it reported last fiscal year and only makes a $1 million gain for the company.

Despite J.C. Penney joining the closing list, its rival Kohl’s says it has no future plans to close any of its 1,150 stores. Instead, the company’s CEO Kevin Mensell plans to lower the chain’s inventory as well as remodel locations. The company will also relocate some of the weaker stores to smaller areas.

While some stores will soon be disappearing from malls all over the country, others are still holding on. While L Brands Inc. who owns company’s like Bath and Body Works and Victoria’s Secret, say it expects sales to fall by 25 percent, both companies have managed to avoid mass closings.

Even CEO of Gap Inc., Art Peck, made a statement regarding store closings saying, “If you read the headlines today, you’ll see the words dead, dying, sick. We are none of those. We are healthy and strong and have a plan and clear direction.”

Tiffany Gets Rid of Its CEO After Super Bowl

Before its Super Bowl ad could hit televisions around America, Tiffany & Co. replaced its Chief Executive Officer, Frederic Cumenal. It would seem the abrupt firing of Cumenal was due to the discouraging financial numbers possibly linking to poor holiday sales that lowered the stock.

Tiffany said that the company will be replacing Cumenal with former CEO Michael Kowalski who will only be taking over the position on an interim level. Cumenal ran the company since April 2015 and his absence in the company is preceded by the loss of the jewelry company’s top designer who left three weeks prior.

Tiffany had announced just last month that its design director Francesca Amfitheartrof was leaving the company. Not long after she departed from Tiffany, the company hired Reed Krakoff. Krakoff took over as the new artistic officer which gave him the job of overseeing jewelry and any luxury accessories.

Krakoff wasn’t the only new hire the company brought in. Tiffany hired in a replacement for chief financial officer Ralph Nicoletti, Mark Erceg. Nicoletti left the company in order to peruse the same position at Newell Brands.

During Cumenal’s time as CEO, not only were spending numbers drastically low but shares dropped by at least 6.6 percent not long after Kowalski retired back in 2015. This fall in shares is in comparison to the S&P 500s index of 12 percent.

Yet even though the low numbers proved disappointment, Cumenal’s departure of Tiffany might be an outward signal of internal problems the company might be having. Tiffany says it doesn’t expect the drop in percentage get any higher than the single digits. Tiffany also said that in the not so distant future it didn’t foresee any “significant improvement” where the economic problems are concerned.

In fact, Tiffany isn’t the only company to see a change in management. Ralf Lauren Corp. CEO Stefan Larsson left the company after a clash of creative opinion with the company’s namesake. A similar incident occurred when Barneys Chief Operating Office, Mark Lee, was replaced with Daniella Vitale. Even Givenchy’s creative director left the company.

Tiffany has been on the lookout for ways to bring in younger customers. The company has even added Lady Gaga as the new face of its jewelry and fashion collection. This Super Bowl Sunday marked off the beginning of the company’s new campaign. The ad with Lady Gaga was shot in black and white while Gaga spoke about her creativity and her rebellious streak.

Tiffany also says that this upcoming Valentine’s day is expected to be a top selling holiday for the company which in turn might boost up sales.

Trump Calls for Lower Drug Prices

President Trump’s message to pharmaceutical executives sounded quite the same as it was for automakers. The president met with companies like Merck & Co., Johnson & Johnson and others in the oval office. He warned them that if they didn’t keep their business in the United States regulations for them would rise.

Not only was Trump adamant about keeping business in the United States, as he has been with many businesses, he stressed the importance of pharmaceutical companies lowering their prices. In the meeting, Trump acknowledged how high the drug prices have been in the United States. Along with lowering the price of pharmaceuticals, Trump supported the idea of furthering cures as well as speeding up US Food and Drug Administration approvals.

Just weeks ago Trump promised automakers that there would be a tax on any foreign-made vehicles. Many automakers, like Ford for instance, reported that instead of going ahead with plans to build plants in Mexico they would instead shift their jobs here to the United States. Even Fiat Chrysler invested a great deal of money into jobs here in Michigan.

A similar policy will be adopted for the pharmaceutical companies. Trump said, “foreign countries pay their fair share for US manufactured drugs so our drug companies have greater financial resources to accelerate development of new cures.”

The CEO of Amgen, Robert Bradway, agrees with the president’s desire to get rid of diseases. He also announced that his company was adding 1600 more jobs.

After the meeting, Rep. Elijah Cummings and Bernie Sanders who was also an advocate for lower drug prices in the United States said they hoped that the president will follow through with his plan to lower prices. According to sources, part of the plan calls for the negotiation of Medicare and drug makers for lower prices.

Stock Loses $1.4 Billion on Inauguration Day?

 The forecast that President Donald Trump would enforce the prices of the aerospace industry prompted a publication by Andrew Left. Left, of Citron Research, is the short seller that brought down Valeant Pharmaceuticals.
On the day the President was sworn in, Left made it known to bet against TransDigm Group, an airplane parts manufacturer. After the publishing of his paper, stock for TransDigm dropped as low as 13 percent. By the time the market closed that day, the TransDigm lost $1.4 billion in market capital. This made TransDigm the worst performing stock on the S&P 500 that day.
Left wrote that, “President Trump has become to aerospace what Hillary was to pharmaceuticals. He has already made lowering prices for military aircraft a pillar of his transition into office.”
Once again Trump’s Tweets called out companies. Trump wrote about the high price of Boeing Air Force One being “out of control”. Less than a week after that Trump went after Lockheed and Martin’s F-35. It would seem since the Department of Defense gave majority of its business to TransDigm, the company would receive the brunt of Trump’s influence.
An analyst from Credit Suisse, Robert Spingarn, sided with TransDigm. Spingarn agreed that TransDigm’s product prices are high, but the company also has a larger growth rate than its competition. Spingarn also commented that “lower prices from TransDigm” would be a definite red flag to investors.

Pension Change Causes $2 Billion Drop for Ford

From President Trump’s criticizing Tweets to threats of “big border tax”, the start of the year has been slightly rocky for Ford. However, despite new Presidents threats, Ford created a great deal of jobs in Michigan and managed to invest millions toward factory expansion in the state.

Yet recently Ford says that an alteration in the ways it looks at its pensions could be the cause the of a net income drop by $2 billion.

The change that Ford made goes as far back as 2015. The automaker changed the way losses and gains of pension are measured. They are to be measured the year they occur. The automaker claims its pension plan was underfunded 2016 by $8.9 billion. Much higher than the $8.2 billion from 2015.

Ford plans to record the charge of pretax for pension to be around $3 billion for the year. Loss won’t have any effect on the pretax. The automaker still has hopes of meeting $10.2 billion goal of pretax profit that it adjusted for last year.

Foreclosure Rates Reach A Low In 2016

Millions of Americans had foreclosures on their homes or properties last year. However, the rates of foreclosure have hit a 10-year low since 2009. Last year foreclosure rates dropped 14 percent. This is a 70 percent drop from 2009.

It’s reported, according to Reuters, that last year’s nearly 379,000 home and property owners lost their property due to foreclosure. On the bright side, that number dropped from the 1.05 million Americans that lost their homes and property in 2009.

In all except fifteen states, fewer home and property owners are going through the earlier stages of foreclosure. When a home or property owner misses at least four mortgages payments, the result often leads to foreclosure of the property. Some states even saw a drop in property repossession. Yet in states like Massachusetts, Alabama, New York and 21 other states property repossession rates increased.

However, not all foreclosure situations are the same. Some may result from missing payments, but others are due to other financial or economic situations. For example, last year some owners in states like New Jersey and Hawaii were in foreclosure due to banks.

Yet where there are lows there also highs. Many states saw an increase in foreclosure. States like Utah, Virginia, Arizona, and others saw a 30 percent increase in foreclosed properties. However, from last year an estimated 479,000 property owners went through the beginning stages of foreclosure, which is quite a low number next to the 2.14 million who went through the same thing back in 2009.

Sears Sells Craftsman and Gains $900 Million

From recently closing a few of its stores to borrowing money from the CEO, Sears Holdings struggles to keep its head above water. However, recently the company announced that it will sell its tool brand Craftsman to Stanley Black & Decker for $900 million.

The payment for Craftsman will split into two installments. Stanley Black & Decker pays Sears $525 million sometime this year. Sears receives the other $250 million three years from now. Stanley’s CEO, James Loree, commented in a press release that this deal is a “significant opportunity to grow the market by increasing the availability of Craftsman.”

Even though Sears benefits financially from this, the accessibility of Craftsman would pull customers away. Sears, however, is more than pleased about the transaction. In fact, the company has hopes for distributions of more of its brands like Kenmore and DieHard.

Sears will also receive a percent of the profits made by Stanley. Craftman sells a majority of its products throughout Kmart, Sears Hometown, and Sears stores. By selling to Stanley Black & Decker, Sears increases outside sales of the brand which is currently ten percent. Loree revealed that the agreement contractually protects Stanley from Sears’ ambiguous future. Stanley also says that there’s no guarantee it will become a larger supplier.

The agreement with Stanley estimates to bring Sears $100 million per year over the next ten years. This new flow of cash benefits the retailer, who was hit hard by the holiday. Sales this holiday season fell thirteen percent. More consumers chose alternative options like online shopping.

ESL Investments, who controls the hedge fund, lent the struggling company $500 million in the past few weeks. Since mortgages support the money, Sears has been selling its property to repay debts. Which is probably why the company announced recently the closure of nearly 109 Kmart stores and 41 Sears locations.

Lampert says that majority of these locations “struggled with financial performance for years”. But the decision to close their doors was the only way the company will make profit. Sears Holdings has borrowed over $1 billion since 2014.

China Reserves Fall To $3 Trillion

China’s yuan managed to reach its sharpest decline in the last twenty years. China’s foreign currency stayed above $3 trillion for December. The People’s Bank of China confirmed that reserves dropped $41 trillion to $3 trillion.

The State Administration of Foreign Exchange (SAFE) says the attempt to stabilize the yuan contributed to the fall in foreign currency. The bank provided the funds to help maintain the foreign exchange balance. This also caused the drop in exchange reserves.

To keep investor confidence and prevent further drops in the yuan, China will attempt to keep the currency above $3 trillion. Policy makers began extra requirements for citizens exchanging yuan to foreign currency. This began the start of the new year. It is possible that policy makers favor using capital control as opposed to flying through foreign currency to protect the yuan.

China’s gold reserves also fell close to the end of December. The numbers stood at $67.9 billion lower than the $69.8 billion it stood at the year before. The yuan also dropped last month by 0.9 percent, totaling 6.5 percent decline for the whole year.

Coke Hesitant Toward Deal With AB InBev?

Until Anheuser-Busch InBev can hire a new owner, Coca-Cola has purchased majority shares for $3.15 billion in their Africa bottling company. Back in October Coke said that it would purchase stake that had been owned by SABMiller who took over AB InBev.
Both Coke and AB InBev commented in a joint statement that they are both in complete agreement of the transfer of almost 54 percent stake in one of the largest soft drink bottler throughout countries like Kenya, Uganda, and Tanzania, Coca-Cola Beverages Africa (CCBA).
Coke also announced it’s future expansion to other African territories like Botswana and Zambia that aren’t part of CCBA yet. It is no surprise that Coke has taken a deeper interest in Africa due to the growth of Africa’s middle class.
It isn’t quite clear as to whether AB InBev, a beer bottler, will decide to turn to soft drinks, but if it does that could give Coke a big boost in market value. Even though AB InBev is a big bottling company for Pepsi in Latin America, it has yet to expand to Africa. Business in Africa can pose a challenge due to the countries lack of infrastructure.
Coke has stopped all its operations until it can sort things out and begin re-franchising. Muhtar Kent, Coke Chief Executive, said that the company is “continuing negotiations with a number of parties who are highly qualified and interested.”

Judy McGrath Joins Amazon’s Board of Directors

Women are moving up in the business world—or at least more so than they used to. According to Forbes, Amazon’s board is now made up of 30 percent women after the company’s recent acquisition of former MTV CEO Judy McGrath. The hire makes her the third woman out of the ten directors to sit next to Amazon’s CEO and Chairman Jeff Bezos. The company announced she will begin on Oct. 1.

McGrath joins Amazon with 30 years of experience at MTV, becoming CEO in 2004. In addition to MTV, McGrath also oversaw Nickelodeon and Comedy Central as a part of her job. She resigned from the position in 2011 and has since spent her time as president of Astronauts Wanted, a joint venture undertaken with Sony Music Entertainment.

Amazon’s acquisition of McGrath is seen as a move to help bolster the online-retail giant’s current television content. Just recently, Amazon’s Chief Financial Officer Tom Szkutak explained that Amazon expects to spend $100 million in original programming in just the third quarter of 2014.

In a phone call with Forbes, Szkutak explained, “A lot of you have probably seen a lot of the announcements that we’ve green-lighted a number of pilots. We’re going to be in heavy production in those series that have been green-lit during Q3.”

McGrath is currently listed as the 62nd most influential woman worldwide and will join Patricia Stonesifer, former CEO of Martha’s Table, and Jamie Gorelick, former U.S. Attorney General, as a part of Amazon’s growing female leadership. Businesses have come under immense pressure to promote women into prominent leadership roles in the last decade. As of recently, the tech industry in particular has come under incredible fire for the lack of female presence. Workplace equality is far from being equal, but it looks like Amazon is trying to be ahead of the curve.

Is Snapchat Worth $10 Billion? — Alibaba Thinks So

Remember when Facebook offered to buy Snapchat for $3 billion dollars? Remember when the world thought Snapchat’s founders were crazy for turning that offer down? Well, it looks like Snapchat is set to acquire more than three times that offer.

According to Bloomberg, people with inside knowledge claim that the company is in talks to raise funds from Alibaba Group Holding, Ltd. The valuation on Snapchat is rumored to be somewhere around $10 billion. If all goes to plan, it will make 24-year-old Evan Spiegel, Snapchat CEO, look like a very smart man indeed.

Snapchat wouldn’t be the only party to benefit in any future funding deals. As many as 700 million disappearing messages are sent every day, and Alibaba is looking for any chance it can to increase its holdings in the U.S. The Chinese-based company is expected to launch its first public offering in the U.S. within the next few months. Closer ties with any U.S.-based conglomerates will help bolster U.S. investment interest when the time comes.

Snapchat would not be the first U.S.-based company Alibaba has invested in. Alibaba has already contributed funds to the ride-sharing startup Lyft Inc. Other startups Alibaba has invested in include Fanatics Inc., Shoprunner Inc. and Quixey Inc. Many experts believe that these startups are just the tip of Alibaba’s investing iceberg.

Still, some are a little hesitant to level Snapchat’s value at $10 billion. Though the app is incredibly popular, it makes little to no revenue. Like Twitter, however, it is Snapchat’s enormous user base that keeps many investors interested in its potential to turn into a money-making machine.

China’s RMB May Replace U.S. Dollar in Global Trade

The U.S. dollar is not all that it once was. Though it is still the most frequently traded currency around the globe, a recent study by HSBC has hinted that the Chinese Renminbi may take its place in the not-too-distant future. According to Forbes, the survey suggests that more U.S. businesses are accepting the RMB in trades and sales. HSBC took polls in 11 different countries and 102 businesses in the U.S. alone.

HSBC Executive Vice President and Head of Large Corporate Commercial Banking Martin Brown explained, “There’s a continued expectation in the U.S. and countries such as the U.K. and France that business with China is going to continue to grow. As China’s 1.3 billion people move up, from an economic point of view, they are going to consume more goods. We hope some of the goods are going to come from the U.S.”

The survey’s data seems to allude that Brown’s explanation is true. Up to 17 percent of all U.S. businesses have used the RMB this year, as opposed to only 9 percent of businesses last year. In addition, 22 percent of U.S. businesses that have not traded with the RMB but plan to do so in the next six months to five years. Internationally, Germany and France have led the field with the most RMB adaptation with 23 percent and 26 percent, respectively.

Though many business owners are hesitant to accept RMB, bankers are trying to reassure U.S. customers that the process is really quite easy. Conversion from RMB to the U.S. dollar or vise versa is relatively simple, and if one uses foreign subsidiaries, the money can be kept in RMB or other currencies.

“It’s become quite straightforward,” Brown said.

Unemployment Claims Drop to Eight-Year Low

According to a report from Bloomberg, over the past month, the number of Americans filing for unemployment benefits has declined, reaching an all-time low in eight years. This trend may indicate that the job market is picking up speed as demand is increasing. This could in turn increase wages and catalyze consumer spending.

A report from Bloomberg states, “The four-week average jobless claims (INJCJC), considered a less volatile measure than the weekly figure, dropped to 297,250, the lowest since April 2006, from 300,750 the prior week.”

“Employment growth remains healthy,” and the reading is “consistent with a strong labor market,” said David Sloan, senior economist at 4Cast Inc., according to Bloomberg.

Some point to the auto industry as contributing to these results as automobile manufactures usually close production during July to revamp for newer models and cars, but this year there were fewer closings due to the growing demand for cars.

“Claims are often volatile in the summer because of the timing of shutdowns at auto plants for retooling, but even so the downward trend in claims is evident and very positive for the labor market and the overall economy,” said Stuart Hoffman, chief economist at PNC Financial Services Group, according to The Wall Street Journal. “The current level of claims is consistent with monthly job growth of above 200,000, and the July employment report should be another strong one.”

It remains to be seen if the economy will have a steady improvement or if this decrease in unemployment benefit applications simply reflects of the seasonal factors that create natural, expected fluxes.

Ways to Pay Back Your Student Loans Faster

Understand Your Loans – Understand how repayment works. The repayment calculator and exit counselling (usually required upon graduation) are also extremely useful tools to help understand your loans.See if you qualify for income-based repayment, and understand the terms of your loans and what kind they are (federal, private, etc), to know your rights.

Pay Attention to Details in Paperwork – Understand fixed interest rates, terms of deferment and forbearance (your last resort), and learn how to budget your money. Find out how to deal with potential future problems in repayment.

Consolidate Your Loans – While daunting at first glance, consolidating your loans can help you lump everything into one giant ball and keep track of everything because it is all under one servicer. This can also extend your payback period and avoid overwhelming money confusion.

Emergency Fund – Always keep yourself afloat by saving money to keep you afloat for the next 3-6 months, just incase of an emergency. You never know if you’ll need it, and it’s better to be safe than sorry!

Make Payments While Still in School – Since the interest is already piling onto your loans while you’re in school, begin to pay off your debt while still in school to help lessen interest capitalization to help you save money.

Pay More Than Required Each Month – This is one of the best ways to pay your debt down as fast as possible. Additionally, if you’ve paid more back than you’ve needed, don’t pass for the next month. Keep paying back more than you need to, and continue to stay ahead of the game.

Tax Deductions – If you earn under $60,000 a year, you may be able to deduct up to $2,500 of loan interest from your taxes that you’ve paid in the past year! That can be a huge help! Learn more about the process in these deductions and consider using your tax return money to go towards your loans as well!