Is Marijuana Stock Cronos Group a Buy? – Motley Fool

Cronos Group (NASDAQ:CRON) reported fourth-quarter financial results this week that failed to impress. Despite revenue jumping over 50% from the prior quarter, investors sold shares because of mounting losses. Does Cronos Group’s recent tumble make it a pot stock worth buying?

A major market opportunity

Excitement over marijuana stocks stems from the opportunity for cannabis companies to tap into what Constellation Brands has said could be a global market worth $200 billion in 15 years. That’s a jaw-dropping outlook for pot stocks given revenue at most of these companies, including Cronos Group, is tracking at less than $100 million per year.

An origami paper finger game with the words buy, sell, and hold written on it.

IMAGE SOURCE: GETTY IMAGES.

The worldwide sales opportunity is based upon the fact that about $150 billion is spent on marijuana today, according to the United Nations, and spending could climb as more countries legalize marijuana and consumers embrace new products made from cannabis or chemical cannabinoids extracted from it, such as beverages.

Tapping the recreational market

Reaching the $200 billion long-term market target is going to require a lot more countries legalizing marijuana. Today, Canada is the only member of the G7 nations that’s passed laws allowing for recreational adult-use, and Canada’s market is tiny compared with Europe and the United States.

Canadians spend about 6 billion Canadian dollars per year on marijuana, but the lion’s share of that spending happens in the black market, not in licensed medical or recreational dispensaries. In Q4 2018, Canada’s spending on pot totaled CA$1.48 billion and only CA$155 million and CA$152 million were spent in licensed medical or recreational retailers, respectively.

That’s far shy of what forecasters expected in the quarter. In September 2018, Statistics Canada, the Canadian government’s official number cruncher, forecast legal spending of between CA$816 million and CA$1.02 billion because of its recreational marketplace opening on Oct. 17, 2018.

Nevertheless, the shifting of sales out of the shadows to regulated retailers is still a boon to Canada’s top cannabis companies, including Cronos Group. In the quarter, it reported net sales rose 248% year over year to CA$5.6 million, bringing its full-year net sales to CA$15.7 million, up 285% from 2017.

Escalating expenses

With year-over-year growth skyrocketing, it might surprise you that Cronos Group’s shares tumbled following its earnings release. However, it’s less shocking when you start digging into the company’s income statement and discover that Cronos’ expenses are growing much faster than its sales.

Its fourth-quarter gross profit was CA$2.5 million excluding fair value adjustments to the value of marijuana in inventory, which translates into a gross margin of 44%. However, operating expenses, including selling, general and administrative, research, stock compensation, etc., were $12.4 million in Q4, up 328% from the same quarter in 2017. As a result, the company’s fourth-quarter net loss was CA$11.8 million, or more than double its revenue. For the full year, its net loss was CA$19.2 million, an increase of over 1,100%.

How bad is it?

Since we’re talking about a CA$6 billion market in Canada and a global opportunity worth $150 billion now, investors shouldn’t blame Cronos Group or its peers for investing significantly to establish a foothold.

The company’s also flush with cash, so it can afford to ramp up spending without running the risk of bankruptcy. It recently closed an investment from tobacco giant Altria (NYSE:MO) that boosted its balance sheet by CA$2.4 billion. Altria now owns 45% of Cronos and an option that, if exercised, allows it to pay CA$1.4 billion more to increase its stake to 55%.

Altria’s expertise in branding — it’s the maker of Marlboro cigarettes — and its deep pockets suggest Cronos has ample financial wiggle room to capitalize on opportunities, both in Canada and, possibly, in the U.S., where momentum to legalize marijuana federally is growing. So far, 10 states have passed adult-use laws, and according to Gallup, about two-thirds of Americans favor making recreational use legal nationwide.

A man staring at a blackboard covered by drawings of money bags and question marks.

IMAGE SOURCE: GETTY IMAGES.

Is Cronos worth buying?

Cronos Group’s relationship with Altria makes it less risky than peers without big-name backers, but its revenue trails most of the best-known players in the space and its market cap is higher than others with more revenue, suggesting Cronos Group isn’t the best bargain among marijuana stocks. Nevertheless, it has plenty of opportunity to win market share, grow sales, and, eventually, reward investors, so long-term investors looking to diversify across many marijuana stocks ought to consider this drop an opportunity to pick up some shares.

 

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Poland Spring accused of defrauding consumers by peddling water from ‘phony’ springs – NBC News

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By Corky Siemaszko

It’s springtime for the lawyers who contend Poland Spring water doesn’t come from an actual spring.

A federal judge in Connecticut on Thursday gave the green light to a class-action lawsuit claiming the bottled water company’s owner, Nestlé SA, defrauded customers by filling their bottles with ordinary groundwater — not “100% Natural Spring Water” as the company claims.

“Not one drop” of Poland Spring water is spring-fed, claims the 325-page lawsuit on behalf of consumers from Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island.

The lawsuit filed in U.S. District Court in Connecticut seeks unspecified damages and a permanent injunction that would bar Nestlé Waters from claiming the water comes from a spring.

“Nothing in the Court’s recent decision undermines our confidence in our overall legal position,” a Nestlé Waters spokesperson said in a statement. “We will continue to defend our Poland Spring® Brand vigorously against this meritless lawsuit.

But the company has insisted in the past that Poland Spring complies with federal Food and Drug Administration’s standards for what can be described as spring water.

On its website, Poland Spring describes how in 1797 Hiram Ricker “discovered the fresh taste of the spring water at the original source” on his property in Poland, Maine, and over a half-century later it was being sold for 5 cents a gallon.

The suit contends that the spring ran dry nearly 50 years ago and that the company now relies on “phony, man-made ‘springs’” that are really wells, some of which are located near former landfills — not the in the virgin forests depicted on the bottles.

In 2007, Poland Spring racked up about $400 million in sales in the U.S. and has earned between $300 million and $900 million annually for each of the past 11 years, the class-action lawsuit contends. At least 13 million consumers nationwide buy Poland Spring water, it says.

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Tesla Model 3 hack shows new cars can snitch on owners after a wreck – The Verge

Two security researchers and self-described “white hat hackers” found a trove of unencrypted location, camera, and other data on a wrecked Tesla Model 3, according to a new report from CNBC. And while it’s not a problem unique to Tesla, the example serves as a stark reminder that newer cars can become a security risk for former owners, regardless of whether they’re sold or wrecked.

The two researchers say they bought a totaled Model 3 in late 2018. When they accessed the car’s computer, they found unencrypted data from “at least 17 different devices,” according to the report. (The car had been owned by a construction company and presumably used by multiple employees.) That included 11 driver or passenger phonebooks, with numbers, email addresses, and calendar entries intact. The researchers also gained access to the last 73 locations that had been plugged into the car’s navigation system.

In addition, the car’s computer still contained footage from one of the Model 3’s seven cameras. This included the forward-facing view of the wreck that totaled the car, as well as a clip of a previous crash that was less serious.

One of the researchers told CNBC that he found similar data from other Tesla vehicles, too, including a Tesla Model S, Model X, and two other Model 3s. “Given how technically sophisticated Teslas are, I’m really surprised to learn that they would handle data so carelessly,” Ashkan Soltani, a security researcher and former chief technologist for the FTC, said in an email to The Verge.

In a statement, Tesla said it offers customers the option to delete personal data by performing a factory reset on the vehicle. The company says it’s “always committed to finding and improving upon the right balance between technical vehicle needs and the privacy of our customers.”

Newer vehicles are able to store a ton of both personal and vehicle data. Tesla’s cars tend to collect and store more vehicle data because they’re outfitted with more sensors, but the issue of data retention is widespread. Last May, a former Volkswagen owner told The Verge about how she could still access the location of the Jetta she sold months after the transaction, for example.

As CNBC points out, personal data retention is a problem more readily associated with rental cars. The Federal Trade Commission has repeatedly reminded consumers to be careful with their information when renting. But as cars are outfitted with ever more sensors and computers, those that have been sold or crashed now contain far more granular data about an owner than what’s generated over a few days in a rental.

The problem with all this “data waste” is that some manufacturers shift the burden for privacy to consumers. The Jetta owner, for example, didn’t know Volkswagen puts the onus on the customer to wipe their data before selling their car — even if it’s being sold back to a dealership. So new car buyers should start treating vehicles like they would a smartphone and be sure to wipe any data before selling it to anyone.

“I do think automakers should be taking steps to make sure that information isn’t available to unauthorized access (secondary owners or used car dealerships, for example),” Soltani writes. “Location and contacts are incredibly personal and sensitive, [and] I think it’s problematic to leave that information laying around. Specially given that unlike mobile phones, cars typically stay in circulation for decades.”

Even if they behave perfectly, car owners don’t always necessarily have control over the situation. In a crash like the one CNBC reported on, the last thing an owner is likely going to think about after slamming into a tree is that they need to factory reset their car. And depending on the severity of the crash, the car’s screen may not even work, making doing so impossible without extra hardware.

So as cars continue to collect more and more data, everyone — from the companies that make them, to the people who buy them, to the regulators overseeing the evolving market — needs to think a little harder about how to make sure that data doesn’t wind up in the wrong hands.

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A Mountain Of Debt Impairs Kraft Heinz – This Is The Damage – Seeking Alpha

A few weeks ago, I wrote an article as a direct rebuttal to an argument Warren Buffett made, essentially contesting the idea that Kraft Heinz (KHC) is a wonderful business. Towards the end of the article, I issued a fair value estimate for the enterprise of $54.6 billion, even under what I considered to be a very optimistic assessment of future business performance. When reflecting on this price target, I realized that I had over-simplified the differences between debt and equity, and I would like take a deeper dive into the capital structure of the company, and refine my fair value estimate further.

Debt Is Cheap, But Risky

As of the end of 2018, Kraft Heinz carried almost $31 billion in long term debt, an increase of $2.5 billion from the prior year, and paid about $1.3 billion in interest on it, a rate of about 4%. As of writing, the company has a market cap of about $40 billion, meaning debt is now making up almost as large a piece of the pie as equity. In my article explaining my valuation methodology, I require a minimum return of 10% on any equity I’m interested in purchasing, which makes debt at 4% quite a lot cheaper. However, this also means that repaying the debt is an expensive affair, as any cash spent in this way carries only a 4% return on investment. In contrast with retained earnings being reinvested into the core business at 71%, or even in contrast with shareholder returns, at an earnings yield of 8.6%, paying down debt offers poor returns.

Of course, even though debt is currently very cheap, and thus offers poor returns, there’s the aspect of risk that must be considered. Shareholder returns at 8.6% won’t do the shareholder a dime of good if the business goes bankrupt, or earnings otherwise degrade, such that that 8.6% shrivels up over time, before the business has paid out enough to have made a worthwhile investment. With $1.3 billion in interest against about $6 billion in operating income, interest is eating a big chunk of the pie. Of course, 42% of the capital structure is tied up in debt, and it only consumes 22% of the pie, which is a win. The risk, however, is that a small decline in operating income will have a larger impact on shareholders’ bottom line, due to the fixed interest expense.

Operating Income $6,000M $5,400M $4,800M $4,200M $3,600M

Change

0% -10% -20% -30% -40%

Interest Expense

$1,300M $1,300M $1,300M $1,300M $1,300M
Interest As % 22% 24% 27% 31% 36%

Pretax Income

$4,700M $4,100M $3,500M $2,900M $2,300M
Change in Pretax 0% -13% -26% -38% -51%

Source: Author – example only.

As this example shows, should operating income continue to dwindle, interest expenses will make up a larger portion of the whole. Of course, on the flip side, should operating income reverse the recent trend, and move upwards, the leverage will be to shareholders’ benefit, as interest will make up a smaller portion of the whole, and pretax income will rise more quickly than operating income.

The premise is pretty simple: If earnings are rising, debt, even growing debt, isn’t a problem, and can be used to the benefit of shareholders. However, if earnings are falling, debt can very quickly lead to a downward spiral, as paying off low-interest debt adds very little to the bottom line. In a perfect world, companies would have the ability to both pay down debt over time while continuing to offer their shareholders compelling returns. Then, in even the bad times, “bad” becomes a relative term, and an expedient recovery would be possible. In reality, companies tend to overestimate themselves, and put themselves into risk of a death spiral, in order to appease shareholders by at least appearing to offer compelling shareholder returns in the short term.

The Dividend Cut – What It Means

In the most recent quarter, Kraft Heinz cut the annual dividend from $2.50 to $1.60 per share, in an attempt to reduce commitments for the purpose of paying down debt. This boils down to meaning two things – equity holders will receive less, and debt holders will receive more. Over time, this will reduce risk, but also cause some pain to shareholders in the process.

With 1.22 billion shares outstanding, this $0.90 per share change will result in opening up $1.1 billion per year for debt coverage. At a 4% interest rate, this will add about $44 million to the pretax income on an annual basis, adding almost 1% growth to the bottom line. This growth can be allocated in whatever manner seems best to management. Later, I’ll be tallying it up into the bottom line, and directly crediting it to the dividend growth rate, but there will also be a small impact on the rate of forward debt coverage, though too small to be very meaningful.

However, if this same $0.90 had been kept in the dividend, it would be carrying a yield of about 7.6%, or 2.7% higher than currently, at current market price. While the whole company’s earnings can be grown at 1% per year by using this extra $1.1 billion to pay down debt, an individual shareholder could have grown their own portion of otherwise-stable earnings at a rate 2.7% higher, if they had received this cash themselves, and reinvested into the stock at current price. Effectively, a 2.7% dividend yield was traded for a 1% dividend growth rate. With dividends reinvested, this is a 1.7% annual impairment to shareholders’ total returns.

The reasons for the dividend cut have been made fairly clear – the debt is seen to be an issue. In recent history, the company’s free cash flow has been impaired, and so the debt has been growing simply through paying dividends, a clearly-unsustainable pursuit. However, as I assumed in my optimistic view in my prior article, with working capital returning to balance, and earnings recovering, the company would to generate about $3.6 billion per year in free cash flow. Even in this optimistic scenario, it would have left only $550 million per year to pay down debt. For $31 billion in debt, this would take the better part of a lifetime to erase entirely. So, if the debt is considered to be a problem, it makes sense to attack it more aggressively. However, the fact that it’s seen as a problem at all betrays the idea that the optimistic case is the most likely.

An Alternative – If Things Didn’t Look So Bad

If paying down debt at a rate of $550 million per year was considered too slow, but the debt itself was not considered a major issue, I believe there would have been a better way of handling it. The write-down of brands was inevitable, and likely would have impaired the stock pretty significantly. Had the stock traded lower, to about $36, without the dividend cut, the stock would have still yielded 7%. This is markedly lower than the 4% the company pays on interest. If management believed earnings were to grow, or in fact, even to remain stable, this discrepancy would have offered them an opportunity.

With a 3% difference between the dividend yield, and the interest rate paid on debt, it would offer management an opportunity to reduce their total commitments by issuing debt to buy back stock. If $550 million per year was deemed too slow a rate of debt repayment, an additional $20 billion in debt used to buy back stock could reduce total commitments by $600 million per year, reaching $1,150 million available for debt repayment per year. Against the new total of $51 billion, this would actually lead to a reduced (but still very long) repayment duration, while reducing the dividend payout ratio. Shareholders would be able to continue either collecting $2.50 per share, or reinvesting at a 7% yield (should market price not change), and the dividend could be grown into the future with the savings from both debt repayment and earnings growth.

As distressed at Kraft Heinz appears to be today, it would probably not be in the company’s best interests to be issuing debt. This is perhaps the biggest tell we have that an investment in Kraft Heinz today is a poor decision. If management was confident in not only stable earnings, but earnings growth, moving forward, an additional $20 billion in debt would be a manageable thing to pull off, even if quite questionable in the short term. The business has inherently stable earnings, so if management believed that the future looked like my optimistic case, it would offer a legitimate method to sustain long-term returns for shareholders, as well as ultimately accelerating debt repayment and reducing the dividend payout ratio.

Valuation

With the dividend cut, and the indications of putting more cash towards debt than in the past, my equity-only valuation method is imperfect, because not all free cash flow goes to shareholders. In this, it pays to follow where exactly the money goes. Assuming my optimistic case scenario, with $3.6 billion in free cash flow, about $1.95 billion is currently being allocated to shareholders through dividends, and the rest can be used to pay down debt. With 4% organic earnings growth per year moving forward, and almost 2% earnings growth per year through interest rate reductions, it would require at least a 4% dividend yield to reach my minimum 10% target returns. This actually has an optimistic fair value for the stock with some upside at $40 per share, with a little further upside in the extreme long term as more cash can be reallocated from debt coverage towards shareholder returns or even reinvested into the core business at higher rates.

However, it’s important to understand how optimistic this case is. Because management had the potential tool, if they considered earnings to be at least stable, of issuing debt in order to buy back stock and reduce total commitments, but rather chose the less-risky act of cutting the dividend, I would hypothesize that management is concerned about a further long-term decline in the business, and for earnings to decay even further. With earnings stabilizing around average post-merger levels, and with the (still-optimistic, if the cash flow statement can’t be cleaned up) $1.6 billion in interest repayments per year, I think it’s a more-likely, and potentially even still too-optimistic, scenario to believe in 2% long-term earnings growth, which could be put into a dividend growth rate. For this scenario to reach a 10% total return, the stock would need to trade with a dividend yield of 8%, at $20.

In this article, I’ve more closely examined the capital structure of Kraft Heinz. In doing so, I refined and significantly upgraded my optimistic fair value estimate to $40 from $20. On the other hand, I’ve also identified a clear reason to believe that $20 still may not be cheap enough. I think that it’s fair to say, at this point, that if you are a really big believer in the company, it offers reasonable, but not exceptional, returns moving forward. However, without any incredible faith in management and the business returning to strength, KHC isn’t worth a second look until and unless it drops below $20.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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UnitedHealthcare is pulling out of Iowa’s private Medicaid management program – Des Moines Register



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UnitedHealthcare, which is dropping out of Iowa Medicaid, manages care for more than 425,000 poor or disabled Iowans, which is more than two-thirds of all Iowans on Medicaid.
Wochit, Wochit

More than 425,000 poor or disabled Iowans will soon have to switch health insurance carriers. 

UnitedHealthcare, which manages health care for more than two-thirds of Iowans on Medicaid, is leaving the market, Gov. Kim Reynolds’ office announced late Friday afternoon.

The departure, to come in the next few months, came after Iowa officials broke off contract negotiations due to what Reynolds termed “unreasonable and unsustainable” demands from UnitedHealthcare.

UnitedHealthcare was paid about $2 billion in federal and state money to manage Iowans’ health care last fiscal year. It is the second Medicaid management company to bail out of Iowa since the state’s controversial decision to privatize its Medicaid system. AmeriHealth Caritas left the state in 2017 after complaining that it had lost hundreds of millions of dollars on the project.

The governor’s office said UnitedHealthcare members could continue seeing their health care providers as usual for the time being.

“We wanted to notify the public as soon as possible; however, that means we are still working out the details, including the timeline of the transition for UnitedHealthcare members,” the governor’s news release said. “UnitedHealthcare members will be sent notices providing a choice in managed care organizations.” 

They will be able to choose Amerigroup of Iowa or Iowa Total Care for their coverage.

Under managed care, states pay private companies set amounts of money per patient to oversee health care services. If the companies can reduce the need for care, they can make profits. If not, they lose money.

Proponents of private Medicaid management, including Reynolds, have said it can provide more efficient, effective care than public management offered. But critics, including many patient advocates and care-providing agencies, say it has led to service cuts and mounds of red tape.

Department of Human Services Director Jerry Foxhoven said UnitedHealthcare’s contract runs through June, and the company is obligated to help make its current customers’ transition to a new carrier smooth. 



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Iowa Gov. Kim Reynolds talks about health care access and fixing Iowa’s Medicaid privatization initiative
William Petroski

Foxhoven said in an interview that the main sticking point in negotiations was UnitedHealthcare wanted to be released from contract terms that would have denied them part of their state payments if they didn’t meet quality goals. Among the goals could be paying bills from health care providers on time and reducing inappropriate use of expensive emergency room services, he said.

He added that UnitedHealthcare demanded those changes be made for the current fiscal year, which is three-quarters over. The company also wanted Iowa to guarantee it wouldn’t lose money beyond a certain point, which the state was unwilling to do, he said. 

Foxhoven contended the fact the state refused to meet those demands, “shows that the system works. … The fact that we’re able to say, ‘If you don’t want to be accountable, this isn’t the right state for you,’ means it’s a success. Being afraid to do that means you’re giving up the integrity of the program.” 

UnitedHealthcare confirmed in a news release that it was leaving the state’s Medicaid program, called “IA Health Link.” 

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“We are honored to have served Iowans in the IA Health Link plan for the past three years, but persistent funding and program design challenges make it impossible for us to provide the quality care and service we believe people deserve,” the company said. “Therefore, we will no longer be able to participate in the program and will work to ensure a smooth and seamless transition for all of our IA Health Link members.”

Democrats pounce

Democrats, who have long criticized Medicaid privatization, quickly pounced on Friday’s announcement.

“It’s time for Gov. Reynolds and GOP lawmakers to finally admit that Medicaid privatization is failing and it needs to be fixed immediately,” Rep. Lisa Heddens, D-Ames, said in a news release. She is the ranking member of the House Health and Human Services Appropriations Subcommittee.

Rep. Zach Wahls, D-Coralville, tweeted: “This news confirms what hundreds of thousands of Iowans already know: Medicaid privatization has been a disaster from day one. It’s time to end this failed experiment and put Medicaid back under state control.”

Sen. Joe Bolkcom, D-Iowa City, called the situation “an absolute disaster” and said it’s time for the state to take back control of its Medicaid system. He said he was skeptical Reynolds has saved Iowa money in her negotiations with the companies managing the state’s Medicaid program, noting that the budget for the program has increased each year.

“I guess she thinks she’s negotiating a tough bargain as we’ve shoveled money into” the system, he said.

The Republican leader of the Iowa House said the Legislature will need to play a role in what happens next.

“I am incredibly disappointed that UnitedHealthcare will be leaving the Medicaid program, which may cause confusion for the thousands of Iowans that they serve,” House Speaker Linda Upmeyer, R-Clear Lake, said in a statement. “It is unfortunate that UnitedHealthcare wanted more money for less oversight and accountability, which is unacceptable. I want to thank Gov. Reynolds for standing strong in her negotiations.”

“We will monitor this situation carefully and help our constituents navigate the system during this transition,” she said.

Foxhoven said he was confident his department could reach new contracts with the other two managed care companies. Amerigroup has been helping manage care for Iowa Medicaid members since the shift started in 2016. Iowa Total Care, which is a subsidiary of the giant health care company Centene, is slated to start serving Iowans July 1.

Foxhoven said he was unsure if the state would need to seek a third management company to replace UnitedHealthcare. He said Amerigroup and Iowa Total Care have assured state officials they can take on the 425,000 Iowans now assigned to UnitedHealthcare. 

He said his department decided to announce the contract negotiation breakdown immediately, rather than wait and try to smooth out the transition as state officials did when AmeriHealth was leaving. Democrats ripped Foxhoven in 2017 for waiting until 30 days before AmeriHealth left to notify the public about the impending departure. 

Foxhoven said the transition for former AmeriHealth members went better than critics predicted. “It went smoothly last time, and will go even more smoothly this time,” he predicted. 

This time, he said, Amerigroup and Centene will be ready to take on new members. Also, he said, there will be several months to make the change, as opposed to 30 days. “We have a longer runway,” he said. 

Sen. Mariannette Miller-Meeks, R-Ottumwa and chair of the Senate Human Resources Committee, said the Legislature may take up legislation to deal with the fallout.

“I’m sure there will be conversations about it Monday,” she said.

Register reporters Barbara Rodriguez and Stephen Gruber-Miller contributed to this report.

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Wisconsin man accused in large Ponzi scheme signs plea deal – Channel3000.com – WISC-TV3

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Trump rips Fed for ‘mistakenly’ raising interest rates | TheHill – The Hill

President TrumpDonald John TrumpChinese, US negotiators fine tuning details of trade agreement: report Iran wants America out of Iraq; will it succeed? Florida bar reverses no-hat policy after objections from MAGA hat wearer MORE hammered the Federal Reserve on Friday for “mistakenly” raising interest rates, arguing that domestic and international markets would be stronger had it not done so.

“Had the Fed not mistakenly raised interest rates, especially since there is very little inflation, and had they not done the ridiculously timed quantitative tightening, the 3.0% GDP, & Stock Market, would have both been much higher & World Markets would be in a better place!” Trump tweeted.

The tweet represented Trump’s latest salvo against the Fed, with the president repeatedly hammering the central bank for hiking interest rates, which it did four times in 2018.

“No, I think the Fed is making a mistake. They’re so tight,” Trump said in October over a string of planned interest rate increase. “I think the Fed has gone crazy. So you can say that, ‘Well that’s a lot of safety actually.’ And it is a lot of safety, and it gives you a lot of margin. But I think the Fed has gone crazy.”  

“If we didn’t have somebody raising interest rates and do quantitative tightening we would have been over 4 [percent] instead of at 3.1 [percent]” in terms of economic growth, Trump told Fox Business in an interview that aired last week. “The world is slowing, but we’re not slowing.”

In a sign administration officials are feeling pressure from the Oval Office to heed Trump’s demands, White House economic adviser Larry Kudlow called on the Fed to “immediately” cut interest rates by 50 basis points.

“I am echoing the president’s view — he’s not been bashful about that view — he would also like the Fed to cease shrinking its balance sheet. And I concur with that view,” Kudlow told CNBC on Friday.

“Looking at some of the indicators — I mean the economy looks fundamentally quite healthy, we just don’t want that threat,” he added. “There’s no inflation out there, so I think the Fed’s actions were probably overdone.” 

Federal Reserve Chairman Jerome Powell said last week that the bank will not raise interest rates for the second consecutive month and lowered its outlook on rate hikes to zero for the year, citing the Fed’s “positive” outlook on the U.S. economy. 

The Fed’s interest rates are currently at 2.25 percent to 2.5 percent. A 50-point basis cut could push rates below 2 percent.

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Cramer: Tim Sloan did the right thing and ‘took one for the team’ ahead of Congress hearing on banks – CNBC

Tim Sloan’s decision to step down as chief of Wells Fargo hinged in part on a looming congressional committee meeting on banks next month, CNBC’s Jim Cramer said Friday.

“Mad Money” host said.

Stumpf was chairman and CEO of Wells Fargo when the embattled bank was fined $190 million after being accused of opening fraudulent accounts without their customers’ consent. Sloan, who served more than three decades at the firm in total, succeeded him as CEO in October 2016.

Cramer said Sloan would have been too easy of a target at the hearing because he was a high-ranking official at the bank during the time of the scandal. That’s even if Sloan had no knowledge of the scheme, he added.

“One look at the make up of that committee made it obvious that Sloan was going to be a punching bag,” Cramer said, adding that Senator Elizabeth Warren, a candidate for the Democratic presidential nominee is calling for him to be put in jail.

“Politically, it’s just such a slam dunk—bankers aren’t popular to begin with and Sloan also had to live with the sins of his predecessor,” he said.

Sloan cited the scrutiny surrounding his leadership when he stepped down, calling it a “distraction” for the company’s forward progress. In January, Sloan told Cramer he would step aside if he felt his presence was hurting the turnaround. That was after Wells Fargo delivered a “very strong quarter and a very good year.”

Earlier this month, the board granted Sloan a 5 percent pay raise to $18.4 million and a $2 million performance bonus, Cramer noted.

“I’m not saying we should feel bad for the guy … He’ll be fine,” he said. “But I will say that Sloan was asked to clean up the Augean Stables and from what I can tell he’s done a good job at that Herculean task, without derailing the earnings.”

Sloan, being an executive from the Stumpf-era, made the smartest decision for both him and the bank’s shareholders, Cramer said.

In the end, Sloan did not want Wells Fargo to go through the fire that he was in, he said.

“Tim Sloan did the right thing and took one for the team, which I think is actually something worth celebrating,” he said.

The House Committee on Financial Services will hold its banks hearing titled “Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 years after the Financial Crisis” at 9 a.m. ET, on April 10.

Shares of Wells Fargo fell 1.57 percent Friday. The stock is up nearly 5 percent this year.

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WGA Jumps On Report Of Imminent Wall Street IPO By WME Parent Endeavor – Deadline

Talk about timing. WGA members are right now voting to authorize its WGA West board and WGA East council to implement a new agency code of conduct that includes banning packaging fees and severing agency ties to affiliated production entities. That vote closes Sunday morning. What a moment for a bombshell Wall Street Journal report that Endeavor, the parent company of Big Four agency WME, is preparing to file paperwork for an IPO that should hit Wall Street by year’s end. WME would not comment.

Not the WGA, which issued a statement ripping the Endeavor plan:

“Today’s announcement that Endeavor plans to become a publicly-traded company only strengthens the call for the conflicted and illegal practices of the major talent agencies to end,” the guild said. “It is impossible to reconcile the fundamental purpose of an agency—to serve the best interests of its clients—with the business of maximizing returns for Wall Street. Writers will not be leveraged by their own representatives into assets for investors.”

A big part of WGA saber rattling has focused on how much packaging — with writers providing the ground floor intellectual property — means to the financial value of the percenteries. WME owner Endeavor last year financed, sold and developed more than 100 film, TV and nonfiction projects, including Killing Eve and Book Club, and has been part of The Front Runner, Suspiria, Mid90s, Old Man and the Gun, Won’t You Be My Neighbor, and Monsters and Men. On the TV side, the deals include WGA East president Beau Willimon’s The First on Hulu, Damien Chazelle’s upcoming The Eddy, and Apple’s See and Truth Be Told (formerly known as Are You Sleeping),  the latter through its joint scripted television venture with Peter Chernin.

WME has its affiliated production relationship with Endeavor Content, CAA has its with Wipp, and UTA has its with Civic Center Media. The guild has been attempting to negotiate a new franchise agreement with the Association of Talent Agents, but no progress has been made on the key issues, with the April 6 deadline for a deal fast approaching.

A year ago, Endeavor was valued at around $4 billion. While it remains a heavyweight in talent representation, it has also expanded through its acquisition (with partners) of the UFC and also sports, fashion and events specialist IMG, making it potentially less vulnerable to the guild disputes.

Going public will mean greater access to capital via the markets, but also a higher degree of responsibility to shareholders. Ari Emanuel has been in corporate-CEO mode for a while now, speaking last fall at a Goldman Sachs conference in New York. He has been making the case for Endeavor as a larger business than the commission-based shop founded in 1995 by Emanuel and two of his ex-ICM colleagues.

More than anything inside Endeavor or the entertainment business, the go-go climate for IPOs cannot be discounted as a factor in the decision to go public.

Lyft’s shares closed at $78.29 today, their first day of trading, which represented a healthy premium over the public offering price of $72 a share. The ride-hailing firm’s market value of $26.4 billion made it one of the most valuable U.S. companies to go public in years. Uber could fly even higher, Wall Street analysts say, with Pinterest, Slack and delivery service Postmates also preparing for their own debuts.

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Theranos founder Elizabeth Holmes is reportedly engaged to a 27-year-old hotel heir. Here’s what we know about their relationship. – Business Insider

Theranos founder Elizabeth Holmes is engaged, Vanity Fair’s Nick Bilton reported.

Her fiancé is William “Billy” Evans, a 27-year-old hotel heir, according to the Daily Mail. Evans has also worked for driverless-car startup Luminar Technologies.

“She wears his M.I.T. signet ring on a necklace and the couple regularly post stories on Instagram professing their love for each other,” Bilton wrote in a February Vanity Fair article. “She reliably looks ‘chirpy’ and ‘chipper.'”

Holmes and Evans have reportedly been living in a luxury apartment building in San Francisco while Holmes awaits trial. Holmes, 35, was once a Silicon Valley superstar and the youngest female self-made billionaire after founding the blood-testing startup Theranos. But when the flaws and inaccuracies of the company’s technology were revealed, Theranos and Holmes were charged with “massive fraud.”

Read more: The rise and fall of Elizabeth Holmes, who started Theranos when she was 19 and became the world’s youngest female billionaire before it all came crashing down

Holmes and Evans reportedly share a Siberian husky named Balto, according to Brides magazine.

The pair has not publicly confirmed their relationship, but they were seen partying at Burning Man in 2018, according to the Daily Mail.

Holmes arrives at court in California in January 2019.
Justin Sullivan/Getty Images

In 2014, Holmes told The New Yorker that she “doesn’t date.”

But in 2019, it came out that the Theranos founder was previously in a relationship with the former president of Theranos, Sunny Balwani, Business Insider’s Lydia Ramsey previously reported. The two kept their relationship a secret at the time, but both later confirmed it in deposition tapes reported by ABC News in January 2019. Holmes said in the tapes that the two were together “for a long period of time” but that they didn’t disclose their relationship to investors.

Holmes was previously in a relationship with the former president of Theranos.
REUTERS/Mike Blake

Their relationship was of interest to John Carreyrou, an investigative reporter for The Wall Street Journal and the author of “Bad Blood.”

Read more: The mysterious story of former Theranos president Sunny Balwani, who was in a relationship with Elizabeth Holmes and now faces criminal charges

“It instantly became clear to me that she was lying to her board about this romantic relationship that she was having with the number two of the company, who by the way, was also about 20 years older,” Carreyrou previously told Business Insider.

Business Insider reached out to Evans for confirmation but did not immediately hear back.

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