Big Business Sure to Benefit from Iran Nuclear Deal

The ministers of foreign affairs and other officials from the P5+1 countries, the European Union and Iran while announcing the framework of a Comprehensive agreement on the Iranian nuclear programme. Hailong Wu of China, Laurent Fabius of France, Frank-Walter Steinmeier of Germany, Federica Mogherini of the European Union, Javad Zarif of Iran, an unidentified official of Russia, Philip Hammond of the United Kingdom and John Kerry of the United States in the "Forum Rolex" auditorium of the EPFL Learning Centre, Écublens-Lausanne, Switzerland on 2 April 2015.
The ministers of foreign affairs and other officials from the P5+1 countries, the European Union and Iran while announcing the framework of a Comprehensive agreement on the Iranian nuclear programme. Hailong Wu of China, Laurent Fabius of France, Frank-Walter Steinmeier of Germany, Federica Mogherini of the European Union, Javad Zarif of Iran, an unidentified official of Russia, Philip Hammond of the United Kingdom and John Kerry of the United States in the “Forum Rolex” auditorium of the EPFL Learning Centre, Écublens-Lausanne, Switzerland on 2 April 2015.

The nuclear agreement carved out by Iran, the United States and five other world powers, if ratified, will lift an international embargo on Iran that will benefit not only the people of Iran economically, but some major corporations.

Iran has the fourth largest crude oil reserves in the world, and the second largest natural gas reserves. For the past several years this treasure has been largely unavailable due to the international embargo which was placed on Iran due to its illegal development of a nuclear weapons capability. A signed and sealed agreement will open these vast stores of resources to the world market, benefiting the corporations that do business in energy-related niches.

“Most likely European and Asian energy companies will see an increase in business—so companies like Total and Shell,” said Alireza Nader, senior international policy analyst at the Rand Corporation. “For American energy companies, it’s going to be tougher for them to go back in Iran.”

US companies are likely to avoid doing business in Iran for political reasons; companies don’t want to be associated with an extremist Islamic dictatorship, and will most likely stay away.

Tankers and oilfield services are also going to reap rewards from the opening of the Iranian economy. Chris Wetherbee, an analyst at Citi Research, said the embargo lift is a “net positive” for international tanker companies. Iran’s own aging fleet simply will not be able to compete, especially with additional energy supplies on the market. Investors agree: Scorpio Tankers and Navios Maritime Acquisition stocks both rose on Tuesday.

New Regulations Hope to Disable Mexico-US Money Laundering Schemes

New Regulations Will Help to Curtail Money Laundering
New Regulations Will Help to Curtail Money Laundering. Photo courtesy Images Money

In response to what the Financial Times reports as over $10 billion in illicit funds that are laundered each year in the US, the US government has recently placed tough new controls on banks. The move is designed to slow down, if not stop, the entrance of narcotic profits from Mexican drug cartels into the US banking system. In their efforts to comply with the regulations several large US-based banks have recently begun to shut down their branches near the US-Mexican border.

The FT article, entitled “Mexico: Clearing Out,” describes members of the US banking industry claiming that legal, legitimate businesses and above-board financial transactions are being dragged into the fray, causing damage.

“The crackdown on money laundering has not necessarily curtailed the practice, but instead may simply have pushed it further underground. The up to $10bn in illicit cash that used to flow through the system is still going to the US, the senior Mexican banker says: “It’s just no longer on the radar.””

The final straw that forced US regulators to take strong action was revealed in an article in Breitbart Texas, discussing Mexican cartel money laundering within the US banking industry.

“World banking giant, HSBC, got caught with its hand in a money laundering scheme that helped drug cartels turn nearly a billion dollars in narco-cash into gold. HSBC only faced a fine for their complicity, but members of money-laundering organizations (MLO) are now facing up to twenty years.”

Although HSBC was heavily fined, none of the banking execs went to prison for their behavior, which enabled Mexico’s intense drug war.

Fiscal Corporate Decisions: Strategy and Instinct

corporationsThere are many ways a fiscal corporate entity reaches far-reaching decisions. A lot changes with time as well. This is something one financial insurance firm – Primerica – has encountered over the last few years. For example, while in 2005 according to the company’s co-CEO John Addison everything was great, within just a year that climate had changed due to something out of its control: “a change in strategic direction by Citigroup.” Given that situation, together with co-CEO Adam Williams, Addison considered separating from Citi and joining up with another company but ultimately the status quo philosophy was more attractive.

When developing a business investment strategy, company executives need to base their final decision on their original vision as well as that of where they want the firm to be ideally in five to ten years from now. But even with this, economic climactic fluctuations and current relations with other firms need to be considered.

And this was the case with Primerica. Staying with the status quo proved to be a costly error and in hindsight, Addison wishes he would have gone with his gut. Addison believes that instinct is just as crucial as other factors vis-à-vis corporate strategy and, had he “demanded not just suggested” the firm ditched Citi, the outcome would have been quite different.

In other words, Addison regrets not going with his gut and explains that the way you identify what that is “when you wake up at 3 a.m. with your fears and doubts…. That’s the moment when you’re most clear with yourself.” He has since resigned from his position.

So back to investment strategies. As well as gut reaction and a long-term plan, other experts suggest the following for developing a business strategy and these include: client involvement, detailed research of the market and an evaluation of options.

At the end of the day it seems that there are some great ideas for developing a business strategy. But ultimately to be able to sleep at night with one’s decision, Addison’s philosophy of going with your instinct seems to be one to be taken on board.

 

 

Paper Goods at the Office

paper-clipboardEMBraer Paper Goods has been providing paper goods to offices for many years. The reputation of the company has been that of top customer service as well as high quality goods.  According to Beth Sonnenfeld, VP of Sales at the Company, “when I first joined the ranks at EMBraer Paper Goods I was impressed by how efficiently everything was running.  Now, as VP of Sales I see it as my responsibility to look at how other offices function and take inspiration from them to even further advance our reputation.”

One of these Companies that she has been watching has been Elio Motors.  “I have seen that there has been a lot of time and effort put into how that company is run and as a result I am trying to pick up tips from them along the way,” Sonnenfeld explained.

Today, Sonnenfeld brings to EMBraer Paper Goods an array of knowledge:  that of past executive experience, what she has been inspired from Elio Motors and, as she says “what my gut tells me.”  The result is a quality company with a focus on high level customer service.

Cars: The Latest in Personalization for the Rich

Just when you thought there was nothing else left to personalize, Dany Bahar of Ares Performance started to make customized cars.  Instead of spending £2m on a Rolls-Royce or Bugatti, that a ton of other people also own, Bahar is now letting the customer design their very own set of wheels.

Up until now there has been the option for customers to engage in some level of customization with a car. Drivers can find these at car shows (one recent example was the Central Nebraska Auto Club’s Indoor Car Show Saturday at the Buffalo County Fairgrounds organized by Jerry Erikson).  In addition, Toyota will soon enable people to print 3D parts for vehicles in Japan with the Open Road Project. But what Bahar – who has held leading roles at some of the top auto-stores including Lotus, Ferrari and RedBull – is now offering, is something quite different.

Through Ares Performance, potential customers will be able to come in and choose everything in their car, from the color, to the upholstery.  In other words, they will “take everything off” and redesign a car to the client’s specific needs and desires.  Bahar said: “The client is fully involved and that is something really exciting.  [They] are wealthy people, important people but you touch them on an emotional level, where they become like children. They say, ‘I want the rear lamp, like this, not like this’.”

FTC Examining Sharing Economy

UberAs companies that are part of what is known as the “sharing economy” grow in popularity, the Federal Trade Commission is taking an interest in whether new regulation is needed to protect the public.

Internet and crowd-sourcing-based businesses like Uber, Airbnb, and others rely on peer-to-peer transactions for a variety of services including transport, ecommerce, and hospitality. The US trade watchdog, the FTC, is investigating whether consumers are at risk for either liability or the use of personal information by these businesses. They are also responding to problems they have noticed in other parts of the world.

Right now in the US the FTC has responded to this new industry positively, seeing ride-sharing apps like Uber, Lyft and Sidecar as good for competition. The FTC has contacted local and state legislatures asking them to refrain from passing laws which would put the crowd-sourcing companies at a disadvantage to the traditional taxi services.

“Essentially we want to see how we can regulate these new business models in a way that would protect consumers and not hinder innovation,” said Marina Lao the director of the planning office of the FTC.

However, there are two areas in which the agency feels further examination is in order: the practice of these businesses to accumulate lots of personal data and the practice of using rating systems. There are also legal liability issues that need to be addressed.

“We want to see to what extent sharing economy platforms should be able to monitor participants by collecting, let’s say, location data,” said Ms. Lao. “And if they do monitor, how can they do so while adequately protecting the privacy of the participants?”

The Parties Agree: The US Economy Can Be Better

Hank Paulson, former US Treasury Secretary for President George W. Bush said:

“The good news is we’re growing, we’re creating jobs, property values are rising. The bad news is we’re not growing quickly enough and there’s tremendous income disparity.”

“The greatest threat is our own political inability to deal with the sorts of things we need to deal with to strengthen and revitalize our economy,” Paulson added.

Hear what Paulson has to say about the US economy and the US relationship with China.

Saving Money in the US Depends on Where You Live

Los Angeles is the hardest city to save in the US. Photo by By Thomas Pintaric
Los Angeles is the hardest city to save in the US. Photo by By Thomas Pintaric

Everyone knows how important it is to save money. There is no question that everyone would like to save, but in some US towns, it is simply not so easy. How much people can save is not only dependent on how much income is rolling in, but how much it costs to live.

Debt.com took a look at several parameters to create a list of the easiest (and most difficult) cities in which to save. They took the price of gas from GasBuddy, home prices and rent data from Zillow, and unemployment rates from the Bureau of Labor Statistics. The last parameter was income, which was garnered from the Census Bureau. Together they came up with a general idea of how hard saving money is throughout many of the county’s cities.

The web site created an interactive map to illustrate where the best and worst cities are. Not surprisingly, East Coast and West Coast cities are the most expensive places to live, while smaller cities further away from central hubs of commerce and industry are actually easier to save.

The top five cities for saving money are:

1.    Anchorage, Alaska
2.    Portland, Oregon
3.    Boise, Idaho
4.    Madison, Wisconsin
5.    Lincoln, Nebraska

The worst five are:

1.    Los Angeles, California (100 of 100)
2.    New York, NY (99 of 100)
3.    San Francisco, California (98 of 100)
4.    Long Beach, California (97 of 100)
5.    Oakland, California (96 of 100)

Moore Capital Backing US Companies, Dropping Chinese

"Alibaba Binjiang Park" by Danielinblue - Own work. Licensed under CC BY-SA 4.0 via Wikimedia Commons
“Alibaba Binjiang Park” by Danielinblue  Licensed under CC BY-SA 4.0 via Wikimedia Commons

Moore Capital Management, Louis Bacon’s investment firm,  increased its stake in US consumer and financial industries during the fourth quarter of 2014. Moore also reduced its bet on index funds that track Chinese shares.

Bacon’s firm, which has $14.8 billion under management, invests mostly macro-economically. During the last quarter of 2014 Moore Capital bought shares of Financial Select Sector SPDR Fund to bring its stake to $98.9 million by December 31. Moore’s largest new investment was in an exchange-traded fund that tracks retail companies, to the tune of $105.1 million. Now Moore’s largest holding is in the SPDR S&P Retail ETF.

In addition, equity investments at Moore Capital decreased by 24 percent, down to $2.25 billion.  The firm sold off 3.62 million shares of iShares China Large-Cap ETF, but retained 1.2 million shares, valued at about $50 million. Bacon’s firm also lowered its bets on Alibaba Group Holding Ltd, selling off 1.38 million shares.

New Study Reveals ETF Risks Greatly Exaggerated

Leveraged ETFs, or exchange-traded funds, have been getting a bad rap from certain quarters of the finance world. Larry Fink of BlackRock Inc is quoted as saying that ETFs could “blow up the whole industry, while others say they are not appropriated for most investors. Also known as Geared ETFs, these funds are created to reward investors with some multiple, such as 2x or 3x, of the positive (and also negative) daily payoff of a referenced index. The two big hesitations many observers have about these investment vehicles are that they are not a good fit for investors who prefer to buy and hold their stocks over the long haul; and on the macro level, the effects these vehicles could have on markets have the potential of being destabilizing.

A new study investigating these issues asserts that these fears are most likely exaggerated.  Co-authored by Ivan Ivanov and Stephen Lenkey, and entitled “Are Concerns About Leveraged ETFs Overblown?” the study concludes that the money going in and out of the funds “diminish the potential for leveraged and Inverse ETFs to exacerbate volatility.”

According to the research, the extreme ETF volatility created by the compounding effects of a factor of three ( or negative three) times the day’s return of an index can indeed make the ordinary investor sweat, the overall effect on the market, the supporting stocks and underlying index, is controlled.

A leveraged exchange fund still might not be for ordinary investors. One major issuer of ETFs, Michael Sapir explained that “the understanding in the market for these products has matured significantly,” since they first came on the market. Sapir added that geared investment risk might not be for everyone. “But institutions and financial professionals can use them to enhance return and manage risk.”