A rising interest rate environment is supposed to bad for banks. It turns out that not all rising rate environments are created equal, and rising rates of the past may not be the same today, in a post-QE world. A report from Fitch Ratings on Thursday outlines how a gradual rise in interest rates would be a net positive for U.S. banks.
Again, this is one scenario of rising rates. It is widely assumed that rapidly rising rates, which is not Fitch's scenario, would not be viewed as a positive for the banking sector.
Fitch's view is that a gradual rise in interest rates could translate into improved earnings through improved loan growth and higher pricing. Fitch's base case scenario assumes the completion of the Federal Reserve's tapering program (which is now the case), strengthening world economic growth from 2014 to 2016 and a gradual tightening of monetary policy over the next 12 months. In this scenario, earnings improvement resulting from higher interest rates would be partially offset by higher funding costs and some increased provisioning that comes from higher utilizations and ongoing seasoning of loan portfolios.
Fitch's stress case scenario involves a sharper hike of interest rates amid weakening or stagnant economic growth. This less-likely scenario could be more challenging for U.S. banks, due to higher funding costs without a meaningful pick-up in asset yields. Fitch went on to say that this would "also cause potential shocks to capital via changes in the valuations of bank securities portfolios and possible deterioration of asset quality metrics to the extent that a combination of higher rates and a weaker economy causes credit deterioration in underlying borrowers."
There is one thing to consider about the current assets held by banks. Under both rising rate scenarios, rising interest rates will cause a decline in the value of securities holdings for banks under the Basel III advanced approach.
Gerber, one of the biggest names in the baby food business, is being sued for deceptive advertising for claiming that one of its baby formula brands would prevent or reduce the risk of allergies when it had no scientific evidence to support that, the Federal Trade Commission said on Thursday.
Gerber Products Co., a division of Nestlé (NSRGY), was charged by the FTC with falsely claiming the FDA had approved it to tout the alleged allergy-related benefits of its Good Start Gentle infant formula. The FTC lawsuit seeks a court order prohibiting Gerber from making such claims.
"Parents trusted Gerber to tell the truth about the health benefits of its formula, and the company's ads failed to live up to that trust," Jessica Rich, director of the FTC's Bureau of Consumer Protection, said in a statement. "Gerber didn't have evidence to back up its claim that Good Start Gentle formula reduces the risk of babies developing their parents' allergies."
Gerber Denies the FTC's Claim
Gerber said it didn't violate the law. "We believe we have met, and will continue to meet, all legal requirements to make these product claims," Kevin Goldberg, vice president and general counsel for the New Jersey-based company, told the Associated Press. "According to the complaint, it's possible that at some point the FTC will ask the court to require that Gerber issue consumer refunds," the reported.
The FTC said Gerber started advertising Good Start in 2011 with the claim that it was designed to help babies born into families whose members are predisposed to suffer from allergies. Good Start Gentle sells for about $24 for a 23.2-ounce package of powdered formula, according to the FTC. Some examples of ad claims that the FTC has taken issue with:
"You want your baby to have your imagination ... Your smile ... Your eyes ... Not your allergies."
"First and only routine formula to reduce the risk of developing allergies."
Gerber, the FTC alleges, has no scientific evidence to support the claims. That violates federal laws regulating product claims, according to the agency. Another violation, the FTC said, is the claim Good Start Gentle is the "first and only" formula that "meets FDA qualified health claim." The FTC said the FDA approved the use of a claim regarding one infant allergy -- atopic dermatitis. And even that, the FTC said, was with the caveat that, wherever Gerber made the claim, it had to include a statement there was "little scientific evidence" to support it. Gerber has not included that qualifier on its Good Start Gentle packages.
Filling up your vehicle with gasoline won't leave your pocketbook quite as empty these days.
The price for regular gas has dropped to or below $3 a gallon at two-thirds of gas stations across the U.S., CNN Money says.
According to AAA, Monday's national average price of $3.04 a gallon for regular was the lowest it's been since December 2010. Wednesday's average was $3.02, according to the AAA Daily Fuel Gauge Report.
CNN Money added:
In fact, most drivers are actually paying less than $3, despite what the AAA numbers suggest. That's because places with high-priced gas like Hawaii, Alaska and cities like San Francisco and New York are distorting the national average.
Gas prices traditionally drop in autumn, but not by this much. And experts predict the price will fall even more. So, why the big decline in prices at the pump?
According to The Huffington Post, one reason is that "investors fear that a global economic slowdown could weaken demand." Another factor: The U.S. is contributing more crude oil to the global oil supply.
If you need to fill your tank with premium gasoline, the cost savings aren't as dramatic as you'll experience with regular unleaded. Wednesday's national average for premium was $3.41, compared with $3.63 a year ago, AAA said.
The price gap between regular and premium recently hit its biggest divide since 2008. Bloomberg said:
The gap between premium and regular swelled to 40 cents a gallon last week, according to Heathrow, Fla.-based motoring club AAA. The difference was as small as 13 cents in January 2009.
That is partly a result of drilling at U.S. shale formations. The shale oil produced is more easily converted into low-octane gas.
"Companies using new drilling technologies to reach shale oil deposits boosted U.S. production by 66 percent in the past five years, helping create a supply glut that's driven crude down 23 percent in the past four months," Bloomberg said.
I was elated when I pulled up to the gas station on Tuesday to discover that I could fill my vehicle with super unleaded for $3.35 a gallon. (Note: If your owner's manual doesn't require premium gas, you're likely wasting money by buying it. See this explanation from Edmunds.com.)
How much is gas where you live? How are you using the money you're saving? Share your comments below or on our Facebook page.
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A recall of chicken contaminated with salmonella that at first appeared to be limited to Minnesota has been expanded to 16 states, according to the U.S. Department of Agriculture.
The initial recall notice issued last week only mentioned that the products had been shipped to distribution centers and retailers in Minnesota. But a list of retailers that sold the chicken --including Albertsons and Shaw's -- includes stores in 16 states.
Aspen Foods, a division of Koch Meats in Chicago, announced the recall at the request of the USDA's Food Safety and Inspection Service after Minnesota health officials and the U.S. Centers for Disease Control and Prevention identified a cluster of salmonella cases that appeared to be connected to Antioch Farms prepackaged chicken Kiev.
In addition to Minnesota, the chicken was sold in Colorado, Idaho, Illinois, Massachusetts, Maine, Michigan, Montana, North Dakota, New Hampshire, Nevada, Rhode Island, Vermont, Utah, Wisconsin and Wyoming.
Salmonella Linked to Chicken Kiev
The recall involves 28,980 pounds of chicken products with sell-by dates of Oct. 1, 2015 and Oct. 7, 2015. Each package should have a USDA inspection mark with the facility number "P-1358" inside. The product identified by health officials as having caused the illnesses is "raw stuffed chicken breast breaded, boneless breast of chicken with rib meat a la Kiev."
The first cases of salmonella were brought to the USDA's attention earlier this month. At least six people have had confirmed cases, with one hospitalized, the USDA said. An investigation tied the illnesses back to the facility where the chicken was produced.
Consumption of food contaminated with salmonella can cause salmonellosis, the USDA says. The most common symptoms are diarrhea, abdominal cramps and fever within 12 to 72 hours after eating the contaminated product. The illness usually lasts four to seven days, and most people recover without treatment. Older adults, infants and people with weakened immune systems are more likely to develop a severe illness.
Shares of Glu Mobile (GLUU) opened sharply lower on Thursday after it reported disappointing quarterly results. The mobile gaming company that raced into market fancy this summer as its "Kim Kardashian: Hollywood" game raced up the mobile apps charts is now going the other way.
It seems like a monster quarter at first glance. Adjusted revenue soared 270 percent to $83.6 million when pitted against last year's third quarter, fueled largely by the success of the Kardashian celebrity simulator, in which players create a character that rubs elbows with the rich and famous as they plot their way to stardom in an interactive adventure. Glu's adjusted profit clocked in at 17 cents a share, well ahead of the 11 cents a share that analysts were targeting. Glu had posted a quarterly loss a year earlier. Glu also boosted its guidance higher for all of 2014 in Wednesday night's report.
This is often the recipe for a surging stock, but Glu took a hit because analysts were holding out for more than a 270 percent pop on the top line. Wall Street was banking on $85.2 million in revenue. As for that improved outlook for this year -- with Glu now eyeing between $225.5 million and $230.5 million in revenue in 2014 -- analysts were modeling $232.6 million on the top line.
Glu may be in a better place than it was three months ago, but the market overshot on the potential of a single hot franchise.
Rubber Meets Glu
Glu Mobile has been one of this year's most volatile stocks. It began the year at $3.88, rarely mentioned in the same circles as casual-gaming leaders King Digital (KING) and Zynga (ZNGA). However, the stock had doubled by this summer when Kardashian's game took the mobile gaming market by storm. In a stunning run this summer, Glu shares posted four consecutive weeks of double-digit percentage gains, soaring with weekly pops of 19 percent, 13 percent, 14 percent and 13 percent.
It's been all downhill after that. As soon as Kardashian's game began to slip from the top of the charts, investors began to head for the exits. They had seen this before. Zynga tumbled after bookings peaked in 2012. King Digital slumped after "Candy Crush Saga" began declining in popularity earlier this year.
Why did investors think it would be any different this time? Glu is trying. It offered its first substantial update to the Kardashian game a few weeks ago. It also locked up Kardashian with a three-year contract, just in case it's still a relevant franchise in this very fickle market.
The game is at No. 17 among the top-grossing apps on Google (GOOG) Play. The problem is that ranking that low is practically a death sentence in the cutthroat world of mobile. After all, King Digital has five of the 11 highest-grossing apps on Google Play, and its stock has shed half of its value since peaking in July.
Mrs. West Goes South
Glu is hoping that it can land another hit in case Kardashian's popularity has peaked. Its games don't all fade right away. "Deer Hunter" is still among the 100 highest-grossing games even though it's been out for more than a year. This year's release of "Dino Hunter: Deadly Shores" was greeted to 1.5 million downloads in a single day -- a Glu record.
It's not giving up on Kardashian, of course. The game continues to account for the lion's share of Glu's revenue at the moment. However, if King or Zynga taught us anything, it's that staying on top isn't easy, especially when you have a lot riding on a single hit title.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days.To read about our favorite high-yielding dividend stocks for any investor, check outour free report.
NEW YORK -- Solid quarterly results from a range of big companies helped send the stock market slightly higher Thursday. The standout was Visa, whose 10 percent jump helped tug the Dow Jones industrial average up nearly 200 points.
Visa (V), the world's largest payment-processing company, turned in quarterly earnings late Wednesday that topped Wall Street's forecasts, and announced plans to spend as much as $5 billion on buying its own shares. Visa's stock gained $21.99 to $236.65.
For investors, there was plenty of encouraging news. Before the market opened, the government said that the U.S. economy grew at an annual rate of 3.5 percent in the three months ending in September, powered by more business investment, sales abroad and the biggest jump in military spending in five years.
"It's another report that indicates the economy can stand on its own two feet," said Peter Cardillo, chief market economist at Rockwell Global Capital Management, referring to the government's estimate of economic growth.
The Standard & Poor's 500 index (^GPSC) gained 12.35 points, or 0.6 percent, to close at 1,994.65. The Nasdaq composite (^IXIC) rose 16.91 points, or 0.4 percent, to 4,566.14.
The Dow Jones industrial average (^DJI) surged 221.11 points, or 1.3 percent, to 17,195.42. Unlike other market measures, the Dow weights its roster of 30 large corporations by their stock prices rather than by their market size. That means companies with the most expensive stocks, such as Visa and Goldman Sachs (GS), have more power to drive the average up or down.
The world's second-largest card-payment company, MasterCard (MA), said its third-quarter profit surged as Americans appeared less hesitant to use their debit and credit cards. The results beat Wall Street's expectations, propelling MasterCard's stock up $7.14, or 9 percent, to $83.13.
Sam Stovall, chief equity strategist at S&P Capital IQ, saw a number of optimistic signs for the market. Reports that Visa and MasterCard are handling more transactions could mean that Americans will be more likely to open their wallets during the holiday shopping season. What's more, the market is approaching a stretch that nearly always rewards investors.
"We're entering the best six months of the year, November through April," Stovall said. Since World War II, the market has climbed 94 percent of the time, for an average gain of 15 percent.
Rising corporate earnings have helped turn the market higher in recent weeks. More than half of the S&P 500's members have released their third-quarter results, and roughly seven out of 10 have beaten Wall Street's targets, according to S&P Capital IQ. Third-quarter earnings are now on track to increase nearly 7 percent, with health-care companies reporting the largest profit gains.
BorgWarner (BWA), a maker of car parts, said a slide in the value of foreign currencies against the dollar will hamper its results this year. The company, which operates in 19 countries, cut its forecast for full-year profits and sales. BorgWarner slumped $2.49, or 4 percent, to $54.37.
In Europe, France's CAC 40 gained 0.7 percent and Germany's DAX edged up 0.4 percent. Britain's FTSE 100 rose 0.1 percent.
Back in the U.S., the price of the 10-year Treasury note edged up, and its yield, which moves in the opposite direction, slipped to 2.31 percent from 2.32 percent late Wednesday.
Gold lost $26.30 to settle at $1,198.60 an ounce, silver fell 84 cents to $16.42 an ounce and copper fell four cents to $3.06 a pound.
In other commodity trading, the price of oil fell as the dollar strengthened, making oil priced in dollars less attractive to overseas buyers. Benchmark U.S. crude fell $1.08 to close at $81.12 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 88 cents to close at $86.24 on the ICE Futures exchange in London.
In other energy futures trading on the NYMEX:
Wholesale gasoline fell 2.5 cents to close at $2.196 a gallon.
Heating oil fell 2.2 cents to close at $2.513 a gallon.
Natural gas rose 3.9 cents to close at $3.827 per 1,000 cubic feet.
What to Watch Friday:
The Labor Department reports personal income and spending for September at 8:30 a.m. Eastern time.
The University of Michigan releases its final assessment of consumer sentiment for October at 9:55 a.m.
These major companies are scheduled to release quarterly financial results:'
Are you ready for all the expenses that come with the holidays? Let's make it a little less stressful by looking at eight ways to save in the next eight weeks.
1. Trim Your Budget
The quickest way to having more cash is to go through your budget and cut down on anything that's unnecessary. Can you give up eating out for a month or two? What about going without getting your hair done? In the spirit of giving to others, try to temporarily cut down spending on yourself.
By simply asking your service providers for less expensive options, you may secure a discount or a reduced rate. I just did this with my phone bill. I had an unlimited data plan, and I switched to 3 gigs of data and cut my bill by 40 percent. The worst that can happen is that the company representative says no -- but the best is you could save money on monthly bills just by asking.
2. Make Your Gifts
Have a Pinterest-surfing session and get on the hunt for handmade gift ideas. Do you have any artistic abilities, like painting, drawing or knitting? Put those skills to use.
If handmade gifts aren't your thing, consider making your own greeting cards. Plus, your card recipients will feel extra special after receiving such a thoughtful item in the mail or at a holiday gathering.
3. Change Your Tax Withholding
If you normally receive a tax refund, try adjusting your tax withholding at your job so that your next few paychecks are a little bigger. That will mean more money in your pocket around the holidays, but a smaller refund. That's not necessarily a bad thing. Getting money back via a tax refund means the government got an interest-free loan from you. Turn that around and enjoy that interest-free loan for yourself.
4. Strategically Plan Your Shopping
Plan when it comes to both everyday shopping and shopping for holiday gifts. Consolidate your shopping to a day or two during the week and shop at a cluster of stores if possible. That reduces both mileage, which saves gas, and time (which may save your sanity).
5. Redeem Reward Points from Credit Cards
Do you have any unused points waiting to be redeemed from your credit cards? You can redeem most points for cash back or gift cards than can be used for loved ones. Next year, don't use any of your credit card rewards until the holidays so you'll already have money saved for your holiday shopping. This is a strategy I've used for years.
6. Look for Coupons and Discounts
Search for coupons and deals on websites like RetailMeNot. Browse for discounted gifts on deal sites like Groupon or ScoutMob. Make sure you're armed with a list of gifts you want to buy first. This savings strategy can backfire if you buy things just because they're on sale, so use discipline to avoid overspending. Also, ask for price matches at stores.
7. Shop Online
We all know about Black Friday, but you can often get some of the best online deals shopping the Monday after Thanksgiving. I got a great deal on my laptop bag by buying it on Cyber Monday.
Besides saving you gas, online prices can be cheaper -- and some online retailers don't charge sales tax. Shopping on a site like Amazon (AMZN) can save you time and help you avoid the holiday rush around department stores and malls. And even traditionally brick-and-mortar businesses, like Target (TGT) and Walmart (WMT), offer exclusive online deals that you can't get in the store. For instance, Walmart is testing matching online prices.
8. No-Spend Challenge
If you're really serious about saving in these last weeks before the holidays, establish a no-spend challenge for part of the time, say weekends, every other week or all of November.
A no-spend challenge is what it sounds like: a period that you choose to not spend any (extra) money. Yes, you'll still need spend on rent, utilities, gas and groceries. The no-spend idea is for discretionary expenses, like dining out, going to an event or shopping for yourself. For an added challenge, see how many $0 days you can achieve in a row. One writer I know used this technique to help pay off her debt.
If you have a no-spend weekend, for example, cook and eat all your meals at home, plan on a family game night or take yourself on a walking tour of some part of your community. Plan on free activities or use resources you already have. Then, put the surplus your no-spend time created toward holiday expenses.
Sophia Bera is a virtual financial planner for millennials and the founder of Gen Y Planning. She is location-independent but calls Minneapolis home. She offers a free Gen Y Planning newsletter.
Back in August, the USDA released its annual report on the cost of raising a child. This year's big, scary number? $245,000.
Well, now we have an even bigger, scarier number: $279,000.
That, according to a new tool produced by Credit.com, is how much you can expect to pay in interest on all the loans you take over the course of your life -- more than a quarter of a million dollars lost in the name of auto loans, credit cards and a mortgage.
That number is based on a host of assumptions. It assumes you'll take out a single 30-year mortgage on an average-priced home, with 20 percent down; that you'll own nine cars in your lifetime and take out auto loans for all of them; and that you'll carry a little over $2,000 in revolving credit card debt. With a fair credit score, the credit card balance will cost you over $13,000 in interest payments, the cars will cost you about $40,000, and the mortgage will run you in the neighborhood of $226,000 in interest.
Naturally, many of those assumptions may not apply to you.
No Car Yet, but a More Expensive House Is Likely
For instance, I live in New York, so I'm not buying a car anytime soon; my best guess is that I'll only wind up buying four new cars over my lifetime. I also studiously avoid carrying a balance on my credit cards, so at least for the moment I don't need to worry about those interest payments. Finally, my credit score is somewhere between good and excellent, so I'll be getting better rates on the loans I do take out.
On the other hand, if I buy a home in New York I'll likely be paying much more than the national average, and much more interest overall, especially if I'm not able to muster much in the way of a down payment.
Since everyone's financial situation is different, the site's "Lifetime Cost of Debt" tool allows you to adjust those assumptions to fit your own reality. If you fill in your credit score range and then adjust variables like the down payment on your home and your average credit card balance, the tool will spit out your own approximate lifetime interest cost. (For what it's worth, my own lifetime estimated cost of debt wound up being above the national average, underlining the outsized role a mortgage plays in the calculation.)
What About Student Loans?
The tool is slickly designed and fairly intuitive, though it does have one notable shortcoming: It doesn't account for student loans. With an average student loan debt load of more than $29,000, that's an extra $11,000 in interest payments to consider (assuming a 10-year repayment and a 6.8 percent interest rate).
Even with that omission, the tool does a great job of putting into perspective something that few Americans have perspective on.
"We tend to think of credit in terms of monthly payments, whether they're affordable," says Credit.com's Gerri Detweiler. "But over a lifetime those costs add up. "
A Poor Score Will Cost You -- a Lot
It also provides some good perspective on the importance of your credit score. A slider lets you see how the lifetime cost of debt changes as you bounce between credit score ranges, and the difference is striking. At a fair credit score, a New Jersey resident will pay about $384,000 for her mortgage, credit card debt and auto loans. But adjust it upwards to "excellent," and the cost drops to $302,000. It's even more striking in the other direction: Move it down to "poor," and the lifetime cost of debt shoots up $486,000. Just going to from fair to poor costs you a cool hundred grand.
If anything, then, using the tool really drives home the importance of understanding how credit scores work. There are a lot of misconceptions about credit scoring out there, from the persistent myth that you need to carry a balance to establish credit to the notion that it takes a financial disaster like bankruptcy to hurt your score. These misunderstandings can cost you thousands.
Credit scoring is complicated, and it's not hard to miss a single payment or get tripped up by some obscure rule. Maybe if more people knew just how much money was on the line, they'd be a little more conscientious about it.
You know you need homeowners insurance, but what you may not know is how many different types of discounts that your carrier offers. According to Bankrate.com, there are at least 11 types -- and chances are, most will be a surprise to you.
That's because, unless you seem like you're about to jump ship and hand your money over to someone else, an insurance agent has no incentive to tell you about them. Agents typically are paid commissions on policies, so the more you pay, the more they make.
"They don't really want to give that information out," Crissinda Ponder, Bankrate.com insurance analyst, told DailyFinance. "They don't have to, either. Some homeowners might not know they need to be asking these questions. It's up to consumers to take the initiative."
There are two main principles at work. One is that the less risk you seem to be, the less the insurer can afford to charge you. The other is once the insurance company has signed you up, they know there's a statistically good chance you'll be paying them for a long time, and they want that business.
11 Ways to Qualify for Discounts
You have more than one type of insurance with the carrier, and it wants to encourage you to keep all of your business.
An alarm service or sometimes even smoke detectors will qualify for protective services discounts.
You avoid claims for a certain period, maybe two or three years, depending on the insurer, and you're demonstrably a lower risk.
A newly built or renovated home might be more durable and is certainly earlier in its realistic lifespan.
Your house has disaster-resistant roofing.
Senior citizens, sometimes as soon as they turn 50, get a break.
You've just purchased your home, and the insurer want to lock you down as a new customer.
After some number of years, you might qualify for a loyalty discount.
You have a work or organizational affiliation that the insurer rewards with lower rates.
You're a nonsmoker.
You shop for insurance well ahead of when a policy comes up for renewal.
There were more unusual discounts, as well, such as having had an interior inspection of the home done recently, being a married or widowed owner, insuring for up to 100 percent of a home's replacement value and having a LEED-certified green home.
This list came from looking at the websites of the ten largest insurance companies that operate nationwide. Sometimes the discounts were fairly easy to find on dedicated pages. Other times, turning up the opportunities required some digging.
Not all insurers offered the full range of discounts; only two -- multiple policies and protective items -- were offered by all the companies. There's also no guarantee that all the discounts appear on a company's website. The only option is to be aggressive with the insurer and ask about all the types of discounts that might apply.
But be wary of getting too attracted by a discount. "It doesn't mean it's the best deal for you, so it is important to shop around," Ponder said.
NEW YORK -- Walmart is doing whatever it takes to rope in holiday shoppers however they want to buy.
For the first time, Walmart Stores Inc. (WMT) is offering free shipping on what it considers the season's top 100 hottest gifts, from board games to items related to Disney's hit film "Frozen," starting Saturday. The move comes as rival Target (TGT) began offering free shipping on all items, a program that started late October and will last through Dec. 20.
Walmart is also planning to offer discounts, or what it refers to as "rollbacks," on more than 20,000 items on a broad range of products, from groceries to TVs, starting Saturday. The timing is similar to last year, but the discounter said the assortment is broader. It's also pulling forward by nearly a month 15 24-hour online deals originally reserved for the Thanksgiving weekend and so-called Cyber Monday, about double from last year. For the first time, Walmart will allow shoppers to pick up those 24-hour online specials at the store. They include 40-inch Element TVs for $199, down from $298, and Crayola Paint Makers for $12, down from $18.88. Customers will be able to purchase the deals online starting shortly after midnight Monday.
The online deals are in addition to several hundred online holiday specials that start Saturday.
"We're trying to offer the best deals when they want them," said Steve Bratspies, Walmart's executive vice president and general merchandise manager for Walmart's U.S. division.
Walmart unveiled some of the details of its holiday strategy as it considers matching online prices from competitors such as Amazon.com (AMZN), a move that could help grab more customers but could also hurt profit margins. The Bentonville, Arkansas-based discounter has matched prices of local store competitors but hasn't followed other retailers including Best Buy (BBY) and Target in matching prices of online rivals. But last month, Walmart started to test the strategy in five markets: Atlanta; Charlotte, North Carolina; Dallas; Phoenix; and northwest Arkansas.
Walmart is trying to rev up sluggish sales in the U.S. as it battles competition from online retailers, dollar stores and drugstores. At the same time, it's also dealing with a slowly recovering economy that hasn't benefited its low-income shoppers. As a result, Walmart's U.S. namesake stores, which account for 60 percent of its total business, haven't reported growth in a key sales measure in six straight quarters.
Rising Online Sales
Walmart's move underscores how stores are being forced to step up their game for the holiday shopping season, which accounts for about 20 percent of retail industry's annual sales. The National Retail Federation, the nation's largest retail trade group, forecasts a 4.1 percent sales increase to $616.9 billion for November and December from last year. But online sales, which are included in the forecast, are expected to increase anywhere from 8 percent to 11 percent.
Walmart declined to say whether it was considering changing its price match policy for just the holidays or permanently. Deisha Barnett, a Walmart spokeswoman, says many store managers have matched online prices for customers on a case-by-case basis.
"Taking care of the customers who shop our stores is what we always aim to do," she added.
As for its free shipping holiday program, Walmart said that it had store executives pick the 100 items and that products are guaranteed to arrive before Christmas. Walmart's current policy is that online shoppers have to spend at least $50.
NEW YORK -- After reporting disappointing quarterly sales Thursday, Starbucks said it will offer a delivery option on its mobile app in select areas of the U.S starting next year.
The Seattle-based company declined to provide more details, but has been pushing to get people to use its app as a way to build customer loyalty. It also previously said it plans to let customers across the country place orders ahead of time on their smartphone by next year, an option intended to get people in and out of stores quicker.
"We are playing offense," CEO Howard Schultz said in explaining the various steps the company is taking to adapt to changing customer habits, including their move toward online shopping and away from brick-and-mortar stores.
The delivery plans for the second half of 2015 were announced by Schultz during a conference call Thursday discussing the company's fiscal fourth quarter results. For the period ended Sept. 28, Starbucks reported sales that rose but fell short of Wall Street expectations. Global sales at established locations rose 5 percent, including in the Americas and Asia.
Starbucks (SBUX) is pushing aggressively into different areas as it faces more competition from fast-food chains serving specialty coffees. To boost sales of food in the afternoon, for instance, it has been revamping its sandwiches and adding new offerings like a grilled cheese sandwich that's warmed up in an oven.
This summer, Starbucks also introduced its Fizzio soda drinks in the Sunbelt. But Wells Fargo (WFC) analysts said in a note this week that their checks at a dozen stores in six states suggested the drinks aren't performing up to expectations so far.
In a phone interview, Chief Operating Officer Troy Alstead said the soda drinks are doing "exactly what we expected it to do," but that a national launch isn't planned for 2015. In a previous interview, Alstead had said he expected the drinks to be in much of the U.S. by the upcoming summer.
Alstead said Starbucks is instead focusing on growing its tea business. He said tea accounted for a "high single digit" percentage of sales last year, and that the company expects it to reach "well into the teens" over time.
For the quarter, Starbucks earned $587.9 million, or 77 cents a share. Not including one-time item, it earned 74 cents a share, which was in line with Wall Street expectations, according to FactSet.
Revenue came in at $4.18 billion, short of the $4.24 billion analysts expected.
For the current quarter ending in December, Starbucks expects its per-share earnings to range from 79 cents to 81 cents. Analysts expected 83 cents a share. The company expects full-year earnings in the range of $3.08 to $3.13 a share.
NEW YORK -- That bowl of chocolates for ninjas and ghosts won't cost you more this Halloween. Picking the perfect sweet for your Valentine could.
The cost of ingredients in chocolate bars is rising, and the nation's biggest candy-makers have already warned of price hikes next year. And it's not just costs that are pushing up prices. A growing sweet tooth around the world means more demand for chocolate.
Here are the global trends putting pressure on the confection:
Pricier Ingredients
Hershey and Mars, which together account for about two-thirds of U.S. chocolate sales, are hiking prices. Hershey (HSY) cited the rising cost of cocoa, dairy and nuts when it announced an 8 percent increase in the average wholesale price of its candy this summer. Those higher costs weighed on the chocolate maker's most recent earnings, which fell 4 percent.
Hershey CEO, John Bilbrey, said in an interview with CNBC earlier this month that shoppers wouldn't see a price increase this year because his company negotiated prices for its holiday items well in advance. However, consumers would notice an impact next year.
Mars, a privately held company, said this summer that its prices would rise by about 7 percent because of a need to support its marketing spending and "manufacturing capabilities." The company said that it last increased prices in 2011.
Global Sweet Tooth
People in the developing economies of Asia and Latin America are acquiring a taste for chocolate. While North America and Western Europe still account for more than half of global chocolate sales, demand is growing faster in emerging markets. That's raising concerns that demand for cocoa beans, the key ingredient in chocolate bars, will outstrip supply.
Chocolate sales in Asia are forecast to grow by 23 percent over the next five years and by almost 31 percent in Latin America, according to London-based research firm Euromonitor International. That compares with growth of 8.3 percent in North America and 4.7 percent in Western Europe over the same period.
Those forecasts helped push the price of cocoa beans as high as $3,371 a ton in September, the highest level since March 2011. The price has since fallen back to $2,923 a ton, but it is still 23 percent higher than it was two years ago.
Supply Problems
West Africa is the world's biggest cocoa producing region and accounts for about two-thirds of the global crop. Unlike large, modern farms in the U.S. and other developed economies, about 80 to 90 percent of the world's cocoa crop comes from small, family-run operations, according to the World Cocoa Foundation, a trade organization.
The small-scale production makes it more challenging to introduce modern farming techniques that boost productivity from season-to-season to faster match demand. The WCF, which is backed by companies including Mars and Hershey, is sponsoring farmer training to encourage more efficient use of water resources and better soil management to improve crop yields.
West Africa is also at the center of the Ebola outbreak. But concerns that cocoa production would be hampered by the virus' spread have proven overblown, so far.
The Ivory Coast, which produces about 40 percent of the world's cocoa crop, has yet to register a single case of Ebola, despite sharing a western border with Liberia and Guinea, two of the nations at the center of the epidemic.
Food Hikes
Chocolate-covered bacon, anyone? It might be a hit to more than just your waistline. Bacon prices have climbed 7 percent this year after a fatal virus swept through the nation's pig herds. Coffee prices jumped after a drought in Brazil damaged the crop. Milk prices have also risen.
The retail price of chocolate has climbed to an average of $5.93 a pound in 2014 from $4.92 five years ago, according to estimates from the National Confectioners Association, an industry group that represents candy and chocolate makers.
In total, Americans will spend about $1.5 billion this Halloween filling bowls with chocolate, according to the NCA. That makes the last day of October the industry's most important holiday for sales -- ahead of Easter, Christmas and even Valentine's Day.
The timing of Halloween could make this week a big treat for candy companies.
"We're optimistic on Halloween because it falls on a Friday this year," said Larry Wilson, vice president for customer relations at the NCA. People "will celebrate it later into the night, and they'll celebrate it all weekend."
For consumers, that party will cost a little more next year.
Is the idea of a baby in diapers rocking a pleather miniskirt so she could be just like the Kardashians enough to rock your sensibilities? Could you even imagine such a thing being for sale at your local Babies R Us?
Well, the short, short skirt -- with attached diaper cover -- really is for sale at the chain. And so are the Leatherette Panel Leggings.
Check out this description: "Your biker babe will thrill in Kardashian Kids Girls Leatherette Panel Leggings!" The leggings are made of cotton, spandex, polyester, and polyurethane. Polyurethane. And these are not Halloween outfits.
There's also a healthy dose of leopard print outfits, bibs and pajamas. And there's faux fur and even gold metallic pants, described like this: "Who's that lady? Oh, just the goddess of glam in these Kardashian Kids Girls' Lurex Woven Pants! The shimmery gold material adds major wow factor to any outfit, so pair it with a fashion top to give her a funky-fab look in a flash!"
To be fair, it's not all trashy, but a Kansas mom found enough of it offensive that she launched a Change.org petition to try to get the Toys R Us division to stop selling the line and has already mustered the support of a couple of thousand of other moms.
Amie Logan, noting the retail giant just gave in to public pressure and pulled another ill-conceived idea for its clientele -- toys glorifying the drug-dealer show Breaking Bad -- wants Americans to join this fight, too.
Logan's petition says:
I don't want my child to grow up to be a Sex Tape star. You pulled the Breaking Bad toys because they promoted Drug use. You should pull this clothing line because it promotes bad behavior as well. The madness has to stop. If the toys are damaging so is the clothing.
More than 2,500 people have signed in the past three days with such comments as: "These women represent a family whose fame is based on a sex tape. I would never want my daughter to have to be so desperate for attention in life to do something so degrading. The fact Babies 'R' Us endorses this family is disgusting."
So far, though, Toys R Us appears to be far more defensive of its trashy clothing line than its drug dealer toys.
Toys R Us spokeswoman Kathleen Waugh told the website SFGate.com: "We have no plans to pull the collection."
Sisters Kim, Khloe and Kourtney Kardashian -- whose lives are chronicled in their own reality series -- have parlayed their fame into an adult clothing line and recently added the kids line to the mix. Kim Kardashian, before the reality show, was best known for being captured in a widely distributed sex tape with hip-hop singer Ray J.
WASHINGTON -- U.S. consumer spending fell for the first time in eight months in September, but a rise in consumer sentiment to more than a seven-year high this month indicated economic growth would remain on solid ground.
The economic picture also received a boost from other data Friday showing factory activity in the Midwest accelerated sharply in October, while wages in the third quarter recorded their largest increase in more than six years. Strong wage growth has been the missing piece of the recovery puzzle.
"The fundamentals of the economy remain very strong, the conditions are in place for continued above-trend growth," said Gus Faucher, a senior economist at PNC Financial Services in Pittsburgh.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, declined 0.2 percent last month, the first drop since January, after a 0.5 percent increase in August, the Commerce Department said.
The weak end to the third quarter suggested consumer spending could slow early in the October-December period, and chip at the economy's momentum. The economy grew at a 3.5 percent annual pace in the third quarter.
But with consumer sentiment this month hitting its highest level since July 2007, wage growth starting to pick up and gasoline prices at a near four-year low, the broad-based drop in consumption is likely to be temporary.
The Thomson Reuters/University of Michigan's index on consumer sentiment rose to 86.9 in October from 84.6 last month, a separate report showed.
Another report from the Labor Department showed its Employment Cost Index, the broadest measure of labor costs, increased 0.7 percent after rising by the same margin in the second quarter.
Wages and salaries, which account for 70 percent of employment costs, rose 0.8 percent in the third quarter, the largest increase since the second quarter of 2008. They had gained 0.6 percent in the second quarter.
U.S. Treasury debt prices fell on the mixed data, while the dollar rallied to its highest level since June 2010 against a basket of currencies. U.S. stocks were trading sharply higher.
Wages Rising
Various business surveys have been hinting at an acceleration in wage growth. The third-quarter increase in wages and salaries is a welcome sign for the labor market.
"This first sign of rising wage pressure in hard data releases corroborates the Federal Reserve's more sanguine assessment of the labor market," said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.
"If sustained, which we expect, it will further strengthen the Fed's commitment to continue its policy normalization path, and to eventually raise rates."
Fed officials on Wednesday gave a fairly upbeat assessment of the labor market, dropping their characterization of labor market slack as "significant" and replacing it with "gradually diminishing."
Weak consumption is keeping a lid on inflation. A price index for consumer spending edged up 0.1 percent after slipping 0.1 percent in August. In the 12 months through September, the personal consumption expenditures, or PCE, price index rose 1.4 percent for a second straight month.
Excluding food and energy, prices rose 0.1 percent for a third consecutive month. The so-called core PCE price index increased 1.5 percent in the 12 months through September.
Both price measures continue to run below the U.S. central bank's 2 percent inflation target.
-Additional reporting by Chuck Mikolajczak in New York.
Two struggling carbonated beverage companies are coming together in a partnership that should help both. PepsiCo (PEP) and SodaStream (SODA) confirmed last week that a limited number of PepsiCo flavors will be made available for a limited time for SodaStream machines.
It's shaping up to be a very limited trial. According to industry watcher Beverage Digest, the 10-week test will feature a half-dozen flavors sold at Bed Bath & Beyond (BBBY) and Walmart (WMT) stores in select Florida cities.
Beverage Digest's source claims that the flavors will be exclusive to the SodaStream platform: Pepsi Homemade, Pepsi Homemade Vanilla, Pepsi Homemade Wild Cherry, Sierra Mist Homemade, Sierra Mist Homemade Peach and Sierra Mist Homemade Cranberry. How different Pepsi Homemade will be from Pepsi remains to be seen, but labeling all the products "homemade" is probably so PepsiCo doesn't upset its bottling and retail distribution partners.
PepsiCo and SodaStream Need Help
Neither company is at its best right now. SodaStream reported horrendous quarterly results on Wednesday morning, particularly in the U.S., where the market's showing signs of tiring of the carbonated beverage maker.
SodaStream's third-quarter revenue declined 13 percent to $125.9 million from the prior year, fueled by a 41 percent plunge in the Americas. The weakness that SodaStream began experiencing late last year has carried over into 2014, and the soda-sipper indifference is starting to accelerate.
PepsiCo is also seeing its pop sales go the wrong way. Its carbonated-soft-drink volume declined 1.5 percent in North America in its latest quarter. It had posted a somewhat similar year-over-year decline during the previous quarter. Consumers are turning away from sugary sodas, a trend that has been playing out for nine years, according to Beverage Digest.
So PepsiCo is in a bad spot, but the same can't necessarily be said about its bigger rival.
Coke Is It
Coca-Cola (KO) held up only marginally better than PepsiCo when it comes to soft drink sales in this country. Its volume declined 1 percent in its latest quarter. It was helped by the Share a Coke campaign, which featured cans personalized with first names and terms of endearment.
However, Coca-Cola has also managed to stay ahead of PepsiCo in terms of moves made this year to increase its reach into beverage categories that are holding up better than carbonated soft drinks. It made 10-figure investments for stakes in energy drink speedster Monster (MNST) and single-serve coffee leader Keurig Green Mountain (GMCR).
Its deal with Keurig Green Mountain also includes support for the upcoming Keurig Cold machine that will let consumers make carbonated beverages at home. PepsiCo has been slow to embrace the trend, settling for a deal earlier this year with Bevyz, a multidimensional maker of hot and cold beverages that has yet to be introduced in the U.S. market. With SodaStream, PepsiCo latches on to the industry leader in at-home carbonation with deep market penetration in a handful of overseas markets.
Motley Fool contributor Rick Munarriz owns shares of Keurig Green Mountain and SodaStream. The Motley Fool recommends Coca-Cola, Keurig Green Mountain, Monster Beverage, PepsiCo and SodaStream. The Motley Fool owns shares of Monster Beverage, PepsiCo, and SodaStream and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. Want a sweet deal? Check out our free report on our favorite high-yielding dividend stocks.
Health insurance is one of the most important benefits that employees get from their jobs. Yet even as the growth of U.S. health care costs starts to slow, employers are increasingly taking steps to hold their benefit costs in check. So even though you might not see your health care coverage premium go up in 2015, the quality of the coverage you receive won't necessarily be as good -- and you could find yourself on the hook for a big up-front payment before your insurance company pays a penny on your claims.
Looking Beyond the Premium
A recent report from the Kaiser Family Foundation and the Health Research & Educational Trust looked at the costs of employer-provided health insurance coverage, and the headline number seemed relatively promising. Compared to last year, average annual premiums for family coverage rose just 3 percent in 2014, continuing a string of relatively modest increases in premium costs. Moreover, workers pay only about 29 percent of the premiums charged for family coverage, shouldering $4,823 on average out of the $16,834 total cost.
But paying premiums is just half of the health care story. Workers also have to cover any copayments and deductibles on their health insurance coverage, and increasingly, they've had to pay more out of their pockets before their insurance coverage starts to make payments at all. This year, the Kaiser report found that 80 percent of workers have to pay an annual deductible before most services are covered, and on average, that deductible amount rose to $1,217. Many workers face even larger burdens, with 18 percent of all employees having a deductible of $2,000 or more.
In recent years, companies have steadily increased the amount of deductibles their workers have to pay. Just five years ago, the average deductible was only $826, making this year's amount a 47 percent increase since 2009. Nearly double the share of workers now have to pay $1,000 or more in deductibles compared to five years ago, and that trend appears to be taking hold and accelerating.
Understanding Deductibles
The most important aspect of understanding how a deductible affects your insurance coverage is to know which medical services are subject to it. The Affordable Care Act imposed restrictions on the ability of insurance companies to force policyholders to pay deductibles for certain types of services, with a special emphasis on preventive treatment. As a result, many immunizations, screenings and annual wellness visits are available at no charge even if you haven't fully paid your deductible yet.
Unfortunately, other rules governing deductibles and copayments aren't always uniform across different health insurance plans and providers. In some cases, you might qualify for a lower copayment on a particular type of service but be exempt from the full impact of your deductible, while other services might require you to pay your deductible in full before coverage kicks in. Contacting your insurance company can get you information about your coverage, but often, it's hard to pinpoint definitive answers to specific questions until a situation actually arises.
In comparing different coverage options with different deductibles, it's important to consider your own medical history. For someone who's relatively healthy, accepting a higher deductible could be worth it if it results in substantially lower monthly premiums. If you frequently need medical services, however, you might end up better off by paying higher monthly premiums on your insurance if it reduces your deductibles and other out-of-pocket costs.
Finally, many employers offer financial incentives of their own to encourage participation in wellness programs. According to Kaiser, 36 percent of large employers and 18 percent of small employers offer lower premiums, reduced deductibles or higher employer contributions toward health care costs if an employee participates in the company wellness program. The hope is that by encouraging preventive care, companies will save money in the long run by avoiding costlier treatments down the road.
Motley Fool contributorDan Caplingerrelies on his wife's employer for his health insurance. You can follow him on Twitter@DanCaplingeror onGoogle+. To read about our favorite high-yielding dividend stocks for any investor, check outour free report.
There were plenty of winners and losers this week, with a payment platform taking on some criticism and the country's leading online retailer announcing a new gadget that will provide cheap video streaming. Here's a rundown of the week's smartest moves and biggest blunders.
Halloween is big business, and falling on a Friday this year should result in a big spike in costume sales for next year once the trick-or-treating and parties are done. One company that blew it this year is Walmart. The world's largest retailer got busted for referring to plus-size outfits in its online store as "Fat Girl Costumes" until it was called out on Monday in a Jezebel article.
Walmart eventually took down the insulting and insensitive product category description, but it's still something likely to alienate customers.
Home improvement projects were hot during the early days of the housing market's turnaround, but arming homeowners with ways to make their digs more enjoyable has bee tougher these days. We saw that a week earlier when shares of Lumber Liquidators (LL) took a hit after the hardwood flooring discounter posted disappointing quarterly results.
Trex kicked off this week by posting better-than-expected results. Net sales soared 32 percent, and the wood-alternative decking leader's profit of 28 cents a share smoked the 24 cents a share that Wall Street was forecasting. It may seem odd that folks are spending on patio deck projects but flooring.
Apple Pay -- Loser
The market was buzzing about Apple's (AAPL) push into processing merchant transactions when it was announced a few weeks ago, but things have gotten off to a rough start since last week's debut. This week began with two major drugstore chains bowing out of the fledgling platform.
The market was curious as to why CVS (CVS) and Rite Aid (RAD) would stop accepting Apple Pay at the register just days after backing the platform. Later in the week, reports indicated that CVS and Rite Aid are part of a retailer consortium looking to launch a new merchant exchange early next year. Terms of that platform reportedly include a commitment to exclusivity.
Apple can still win. It came out on top with iTunes when record labels wanted to give their own musical distribution exchange a chance to work. There are already some calls among Apple fans to boycott the chains turning their back on Apple Pay. For now, Apple Pay is the one doing the backpedalling.
Fire TV Stick -- Winner
Amazon.com (AMZN) was labeled a loser last time out with its Fire Phone flopping. Amazon took a $170 million charge to write down excess inventory of its struggling smartphone last week. This week it bounced back with a smaller and cheaper gadget.
Amazon's Fire TV Stick is a streaming stick that plugs into a television, providing Wi-Fi streaming functionality. It's a scaled-down version of the $99 Fire TV that Amazon released earlier this year to critical praise.
The reason that the Fire TV Stick is a winner is that it's at a reasonable $39, and Amazon made it available for just $19 to its Amazon Prime customers during its first two days on the market earlier this week. That's a great way to get early adopters to buy in, and hopefully it brings back some of the sizzle to the Fire brand as Amazon tries to get its smartphone back on track.
There's unlimited and then there's AT&T's version of unlimited. The Federal Trade Commission is suing AT&T, alleging that the wireless carrier is throttling some of its bigger bandwidth hogs.
Throttling in the realm of online connectivity is the unsavory practice of slowing down a customer's Internet speed if the user exceeds a certain amount of monthly bandwidth. That flies in the face of the unlimited data plans that many were promised.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, CVS Health, Lumber Liquidators and Trex. The Motley Fool owns shares of Amazon.com, Apple, Lumber Liquidators and Trex. Try any of our Foolish newsletter services free for 30 days. Check out our free report on the Apple Watch to learn where the real money is to be made for early investors.
NEW YORK -- U.S. consumer sentiment rose in October to its highest level in more than seven years on growing optimism about the economy and more favorable personal financial expectations, a survey released Friday showed.
The Thomson Reuters/University of Michigan's final October reading on the overall index on consumer sentiment finished at 86.9, the highest level since July 2007, up from 84.6 at the end of September.
The gains in confidence over the past three months point toward improved holiday spending by consumers.
The late October reading was up slightly from its initial figure of 86.4, which was also the expected reading of economists polled by Reuters.
"The gains in confidence over the past three months point toward improved holiday spending by consumers," survey director Richard Curtin said in a statement.
"Overall, five years after the start of the recovery, consumers have finally begun to adopt the expectations and behaviors that have driven past expansions."
The survey's barometer of current economic conditions dropped to 98.3 from the 98.9 in September and was below the forecast of 98.9.
The survey's gauge of consumer expectations rose to 79.6 from the preliminary 78.4 reading and the 75.4 at the end of September, topping the expected 78.2.
The survey's one-year inflation expectation fell to 2.9 from the 3 percent view in September, but ticked up from the 2.8 percent expectation in the preliminary reading. The survey's five-to-10-year inflation outlook held steady at 2.8 percent.
Alibaba (BABA) is the new belle of the dot-com ball in China. The e-commerce juggernaut pulled off a record initial public offering in September when it raised $25 billion on the way to becoming a public company.
Analysts love Alibaba. They were able to initiate coverage on Wednesday, following the 40-day quiet period that follows an IPO's debut. Only one of its underwriters -- Goldman Sachs -- failed to tap it as a buy recommendation.
It's easy to see the appeal. Alibaba helped 231 million active buyers place 11.3 billion orders totaling $248 billion in transactions last year, and it's just getting started. However, the stock, with its nearly $250 billion market cap, isn't cheap. Let's look at some Chinese dot-coms that have been trading longer and could be more compelling bargains.
China's leading search engine posted another blowout quarter on Wednesday, just as analysts were gushing all over Alibaba. The company behind China's largest search engine saw revenue soar 52 percent over the prior year's third quarter. Earnings climbed just 27 percent, but that was twice as fast as analysts were expecting. Baidu is investing in low-margin online specialties including travel, video and mobile app storefronts, and that weighs on bottom-line growth.
Baidu remains one of China's biggest winners. It went public nine years ago at a split-adjusted price of $2.70, and now it trades north of $200. Baidu fulfills roughly two-thirds of all queries, and it is rocking at a time when its profitability is still suppressed.
Matching employees to potential hires started out with old-school tech for 51job. It got its start by inserting weekly job listings in more than two dozen leading Chinese newspapers. Then the Internet came along, allowing 51job to convert its thick Rolodex and respected brand into a leading online recruiter.
It's working: 51job is growing its revenue in the low double digits. It's trading at a reasonable 22 times this year's projected earnings and less than 17 times next year's target. Despite soundly beating Wall Street income forecasts for three consecutive quarters, the stock is trading closer to its 52-week low than its high. That's an opportunity.
Daily deals and flash sales have burned investors, as Groupon (GRPN) has been a market disappointment. LivingSocial hasn't been able to go public given the lukewarm investing appetite for flash-sales websites.
It's different in China, where Vipshop has been one of its biggest success stories. Vipshop offers deals on apparel and other items that only stick around for a few days. The shares have more than doubled this year after more than quadrupling in 2013. The heady growth isn't over yet, with Wall Street pros modeling 115 percent in top-line growth this year.
Online gaming stocks have become an investing minefield in the U.S. given the fickle nature of players, but China's been kinder to its leading franchises. NetEase is the company behind "Fantasy Westward Journey," an online game that has proven magnetic for several years. When Activision Blizzard (ATVI) wanted a partner in China to introduce "World of Warcraft" to the world's most populous nation, it chose NetEase, and the successful partnership finds NetEase working on introducing more Activision Blizzard games in China, including "Diablo III."
NetEase isn't growing as quickly as it was in its prime, but it's still hitting low double-digit growth. It trades for just 15 times this year's earnings and 13 times next year's estimate. NetEase also pays out a quarterly dividend, something that's rare with Internet stocks.
It's a Small World
China is risky for investors, and Internet stocks are even riskier. The often-restrictive government is keeping a close eye on cyberspace, assessing the threats and opportunities that it brings to the country.
China's stock market also marches to its own beat. It has soared during down years for the rest of the world, and last year the Shanghai Composite took a 7 percent hit when U.S. equity markets rallied. However, there are plenty of intriguing and reasonably priced companies out there. Alibaba is a great company, and it may even wind up being a great stock. However, there are other stocks benefiting from the same trend that don't have the hype of Alibaba baked into their prices.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends 51job, Activision Blizzard, Baidu and NetEase.com. The Motley Fool owns shares of Activision Blizzard and Baidu. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.
Credit cards can be a powerful tool in the hands of debt-free consumers. For the millions of us who aren't as fortunate, the difference between a good card and a bad one could mean severe financial stress or even bankruptcy.
Think of bad cards as anchors, piling on new debt as you struggle to make ends meet. The terms and conditions paperwork for these beasts are like a nightmarish labyrinth of monthly charges, usurious minimums and loan-shark-like penalty interest rates wrapped in legalese. They'll knife your wallet and make off with the cash while you sleep.
Whereas good cards tend to lure consumers with rich perks and rewards points redeemable for gifts or points in an associated affinity program, bad cards tend to suck customers dry like bloodthirsty vampires. Here are four ways they take from their victims.
1. An Outrageous Interest Rate
According to the latest update from LowCards.com, the average advertised rate on consumer credit cards is 14.52 percent. Not exactly cheap, is it? No, but bad cards can and often do charge well over 20 percent in annual interest in hopes you'll remain in debt for years longer than you might have planned. The longer you pay, the more cash flow your lender collects.
Notable offender: The First Premier Bank Gold credit card charges a 36 percent interest rate, making it CardHub's choice as worst for consumers trying to rebuild their credit. Don't tell that to bank founder and CEO T. Denny Sanford, who once told Forbes that his bank's low-limit cards offer "a lifeline for credit-impaired people." I'll let you decide if a 36 percent interest rate sounds like a lifeline.
2. Layers of Fees
The worst cards don't just have an annual fee, they also have activation fees, monthly fees, transaction fees and more. For banks that offer these sorts of cards, fees (arguably) account for the possibility that you won't stick around long enough to pay a big chunk of interest. Whether that's a fair assumption is debatable. Either way, cards that deal in hyperbole while heaping on fees are dangerous to your wealth.
Notable offender: Take the Continental Finance Card. According to the terms and conditions, you'll pay $125 for the first year and $96 thereafter just to have a card that charges 29.99 percent interest on everything. You'll also pay a $5 monthly maintenance fee and $30 for an additional card.
3. Huge Charges That Erase the Benefits of Rewards
Getting a card that doesn't charge an annual fee is easy. Why charge a fee when lenders earn more by getting consumers to pile on debt? We're doing precisely that: Revolving consumer debt rose 3 percent to $839.1 billion in the second quarter -- no doubt aiding card issuers that are already on track to earn 9 percent more in 2014, according to data from researcher R. K. Hammer reported by LowCards.com.
Notable offender: Issuers nevertheless continue to introduce cards with hefty fees. CardHub's choice for worst rewards card is a good example. The Visa (V) Black Card from Barclays PLC (BCS) charges $495 for a handful of perks that aren't terribly distinctive. "There are a variety of cards available that offer more lucrative rewards bonuses, higher ongoing rewards earning rates and airport lounge access for hundreds of dollars less each year," CardHub writes in its review.
4. Bait-and-Switch Offers
Promises of "low introductory rates" are common among all sorts of lenders, not just card issuers. If it's easy to single out the credit card suppliers, it's because so many of them use the lure of cheap credit to hook customers in hopes they'll pile up debt on a big-ticket purchase they'll repay at much higher rates later.
Notable offender: You can tell a lot about a cheap credit offer by how long the introductory period lasts. For HSBC Holdings' (HSBC) licensed American DreamCard, it's just five months at 0 percenty. Afterward, you'll pay 14.99 percent to 21.99 percent, plus a $39 annual fee. But don't worry: Every dollar spent buys you a ticket to the so-called "American Dream" monthly lottery for cash prizes. Licensor American DreamCard claims to have paid out $1.345 million in cash prizes as of this writing. Surely you're due some of that, right?
Before You Apply for Your Next Card ...
When shopping for a good credit deal, knowledge is power. Don't settle for the first offer that comes in the mail. Check with sites whose job it is to review the fine print, such as CardHub and LowCards.com. What do others who have the card you're interested in say about it?
Also, check the terms and conditions before you apply. That's where you'll find the hidden fees and penalty interest rates the card issuer won't advertise in its mailer. And if you still have questions, call. Press for details. At least then you'll know what you're facing.
Now it's your turn to weigh in. Have you suffered from a lousy credit card? Warn your fellow readers in the comments section below.
Motley Fool contributor Tim Beyers has debts to repay and no position in any stocks mentioned. Find him on Twitter as @milehighfool. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.