Time to make Tuesday your b*tch. Now, let’s talk commerce.
Here’s what you oughta know around the water cooler tomorrow …
• “Sh*t has officially hit the fan in Venezuela.”
• “China’s Huawei just got hit with a US indictment.”
• “CAT had a day it would rather forget.”
Enjoy the next 4 minutes and 9 seconds of carefully-curated news and advice.
US markets fell, dragged down by bad news from CAT and Nvidia …
Juan Guaido is taking over Venezuelan accounts abroad
I’m the captain now
Venezuelan opposition leader Juan Guaido has had a busy week. After staging what many would call a coup, the new sheriff in town announced that he’d be taking control of government bank accounts abroad.
El (kinda) Presidente also declared that he’d be appointing new board members to Petroleos de Venezuela, and it’s more well known US refining arm, Citgo. Petroleos de Venezuela, or PDVSA to those in the biz, has long been suspected of embezzling funds from the Venezuelan people at the urging of President Nicolas Maduro.
In order to prevent the Russian supported Maduro from attempting to win back his power, the US announced sanctions barring US-based businesses from buying Venezuelan petroleum. Citgo will still be able to do business using oil from PDVSA, but any revenue must be held in an account that Maduro and the boys can’t access until a successor is officially named.
What’s that mean for us?
As one of the US’ top four oil suppliers, sanctions on Venezuela could prove to be the nail in the coffin for Maduro and could cause a spike in black gold prices. Battered oil prices briefly rose after news of the sanctions broke, but major oil benchmarks were still down 2.5%, while US crude closed down 3.2%.
Water Cooler Talking Point(s)
• “The worst part of oil volatility? That sh*t-eating grin on Elon Musk’s stupid face.” – AJ, The Water Coolest HQ
Huawei charged by US for violating Iranian Sanctions
China’s largest technology company Huawei is making it too easy. The “Apple of China” was already atop the United States’ “naughty list” for allegedly selling telecommunications equipment to the Chinese communist party to be used for spying.
Fast forward to yesterday, US persecutors filed criminal charges against the firm for conspiring to violate Iranian sanctions and stealing trade secrets from T-Mobile. Apparently, even Boost Mobile boasts more robust security measures.
It probably sounds worse than it actually is … right?
Wrong. It’s pretty damn bad. Huawei’s CFO, Meng Wanzhou, who just so happens to be the founder’s daughter, is facing extradition to the US from Canada where she was arrested in December for violating trade sanctions with Iran. She lied about Huawei’s relationship with Skycom Tech Co, which is a subsidiary that sought to sell goods to Iran while it was subject to sanctions.
It’s also been revealed that employees violated nondisclosure agreements with T-Mobile by taking photos of confidential information and even stole a piece of T-Mobile’s testing robot. You do not want to see John Legere when he’s mad, Huawei.
And the cherry on top? Employees who stole the trade secrets from competitors were rewarded with bonuses.
Water Cooler Talking Point(s)
• “Is Huawei’s HR department hiring? I’ve got a loose moral compass!” – Nick, The Water Coolest HQ
CAT had a very bad day
There’s more than one way to skin a CAT “I’m not mad, I’m disappointed.” – every Caterpillar investor yesterday
Shares of Caterpillar took their lumps on Monday, dropping more than 9% on news that the industrial manufacturer suffered its largest earnings miss in a decade. Adjusted EPS came in at $2.55 per share vs. an expected $2.99 per share. Woof.
And what’s a sh*tty earnings report without a hearty helping of blame to go around? All fingers pointed east. China, which represents approximately 5% to 10% of CAT’s worldwide revenue isn’t exactly pulling its weight: APAC sales fell 4% vs. last quarter.
China has been doing its best Venezuela impression as of late. Construction growth in the People’s Republic fell in 2018 and is expected to be roughly flat-ish for 2019. And President Xi’s tariffs aren’t exactly helping CAT’s cause.
But that’s not all that’s plaguing the company behind the preferred big boy toys of guys who clip cell phones to their Carhartts. Overestimates of recoverable assets in its financing division and an increase in material costs stemming from tariffs ate away at Caterpillar’s bottom line.
How is 2019 looking?
A lot like 2018. The company adjusted its 2019 outlook downward. Despite growth expected in the US, because manifest destiny … or something like that, the slowdown in China is expected to continue and the lingering trade war will continue to rain on CAT’s building large metal construction vehicles parade.
Water Cooler Talking Point(s)
• “Can we talk for second about how much undue pressure CAT is under? All of the talking heads can’t stop squawking about CAT being a ‘global economic barometer.’ Can we give it a break, you guys? We’re just asking for some Arthur Andersen accounting practices …” – Tyler, The Water Coolest HQ
IN OTHER NEWS
➞ Don’t worry, CAT, it could be worse, you could be Nvidia. The chipmaker warned that its Q4 earnings are going to be very, very disappointing, due mostly to macroeconomic headwinds, in China especially. Remind me again how Communism is working out for you. Shares fell almost 14% on the news.
➞ This season on ‘American Greed’ … The SEC ordered the Woodbridge Group and its CEO, Robert Shapiro, to pony up a combined $1B for their roles in a $1.2B Ponzi scheme. The firm claimed it issued loans to commercial property owners which paid upwards of 15% in interest. In reality, it was an elaborate shell company that preyed on geriatric investors.
➞ Acorns, a savings and investment app closed a $105M funding round sourced from the who’s who of the VC world, including NBCUniversal and Comcast Ventures, BlackRock, Bain Capital Ventures, TPG, DST, and MSD Capital. The round values the company at $860M and NBCUniversal will get a seat on the company’s board. CNBC and Acorns will team up to shovel Acorns ads down your throat … I mean, umm, produce financial literacy content.
➞ Just when you thought you’d never have to hear Dropbox’s startup success story again, the file-sharing company goes ahead and makes headlines with its acquisition of HelloSign for $230M. Now not only can Google Drive holdouts share documents, but they can sign them as well.
➞ “Hi, my name is …” “New data from LinkedIn found that more than a quarter (26%) of working professionals say they don’t have time to build professional relationships, and nearly half (48%) say they’d rather use their free time for family or social engagements. But experts say it’s not about making time, per se, but using bits of downtime more wisely.” (Read Five ways to expand your professional network in 2019)
➞ Read across America. “Subscription e-book and audiobook service Scribd says it’s grown to more than 1 million subscribers. It still has a long way to go before reaching the heights of Netflix (nearly 150 million subscribers) or Spotify (87 million paying subscribers), but the announcement should help put any lingering doubts to rest around whether there’s a sizable audience willing to pay an $8.99 subscription fee for books.” (Read Scribd has more than 1M paying subscribers)
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A new format for a publication have contributed to before, the Financial Times, this time a book review of Walter Laqueur’s last book (co-authored with Christopher Wall) in a title that seems appropriate for the end of the year. It is a good short primer on the topic of terrorism which is widely available and […]