Cramer’s game plan: A week defined by trade talks and employment

Trade talks and the latest data on U.S. employment will color the week ahead for the stock market, CNBC’s Jim Cramer said Friday as stocks rallied on high hopes for a U.S.-China trade deal at the weekend’s G-20 summit.

President Donald Trump is planning to meet with Chinese President Xi Jinping at the Buenos Aires, Argentina gathering on Saturday to discuss what has amounted to an ever-escalating trade war between the two nations. Next Friday, a Labor Department report on U.S. job creation will bookend what Cramer expects to be an “exciting” week for stocks.

“Between Trump’s meeting with President Xi over the weekend and the employment number on Friday, there’s a whole lot going on next week. Let’s just hope it’s not too exciting,” the “Mad Money” host said.

With Saturday’s market-defining meeting in mind, Cramer turned to his game plan for the week ahead:

Monday: Coupa Software

Spending-focused cloud player Coupa Software reports earnings on Monday. The Federal Reserve’s slight step back from its initial plans for raising interest rates created a better environment for growth stocks like Coupa’s, Cramer said.

“Speaking of the Fed, I sure wish they’d start thinking not just about the raw data interpretation, but also about outfits like Coupa, which save companies a fortune … by cutting back on people — the most expensive part of a business — and allowing them to rely on software to handle procurement,” he said.

“That means all of these cloud-based enterprise software companies are inherently deflationary,” Cramer continued. “So [Fed Chair Jerome] Powell might want to listen in on Coupa’s conference call, which, by the way, I expect to be a good one.”

Tuesday: Dollar General, Autozone, HD Supply, Toll Brothers

Dollar General: Cramer expected a strong earnings report from Dollar General, which will issue its quarterly results Tuesday morning.

“The best-performing portions of retail this week were the bargain basement operations: Ollie’s, TJX and Burlington Stores. Dollar General fits that bill,” he said. “I see an upside surprise coming.”

Autozone: Auto parts retailer Autozone will also report earnings. Cramer is a fan of the company’s share buyback program, which he said was as good a reason as any to buy Autozone’s stock after its report.

“Even if the company delivers slightly off numbers, just a little bit of slippage, it’s usually a great buying opportunity,” he said. “These days, people are keeping their cars longer and longer, which means they need more maintenance and spare parts, a real boon to all of these … auto parts companies.”

HD Supply: HD Supply’s earnings will give Cramer a sense of how small businesses are faring in this country because the company provides industrial services to roughly 500,000 smaller-scale professional customers.

“It’s all part of the pastiche that I like to put together to take the temperature of the economy in real time,” he said.

Toll Brothers: Homebuilder Toll Brothers will add to that pastiche. Cramer expected the company’s earnings report to “tell a tale of both strength and weakness.”

“Remember, I’m not saying the economy overall is weak, I’m saying it’s weaker than it’s been, and one of the reasons is the slowing housing market,” he explained. “I bet Toll confirms my view, particularly on the coasts.”

Wednesday: Lululemon Athletica, Five Below

Two Cramer-fave retailers, Lululemon and Five Below, will report earnings on Wednesday. The stocks of both companies have been struggling of late, Lululemon’s “in sync with … the rebellion against high-priced apparel” and Five Below’s on worries about trade with China, Cramer said.

“I think both sell-offs are overblown at this point,” he argued. “However, I’m mindful of how hard it is to own retailers right now, [now] that people think the economy’s shifting to a lower gear.”

Thursday: Kroger, Broadcom

Kroger: The largest U.S. supermarket chain will also issue its quarterly results. The “Mad Money” host harbored concerns about the company’s slew of formidable competitors.

“While I think, certainly, that Kroger can spin a good yarn about remodeled stores, that merely makes it an OK house in a very bad neighborhood,” he said. “I’m going to have to say no, thank you.”

Broadcom: After Wednesday’s closing bell, investors will get results from chipmaker Broadcom. Cramer said there was a lot to be learned from the company’s conference call.

“I want to know about its quizzical acquisition … of a software company called CA that works with mainframes, not to mention the exposure to China, 5G and Apple, although the latter is not to be named,” he said. “At most, you make some cryptic reference, say, [to] a major customer. Still, there’s a lot to learn from Broadcom.”

Friday: Non-farm payrolls

On Friday, Cramer will be eyeing the U.S. Labor Department’s non-farm payroll report, which measures job creation and is a key indicator for the Fed when it comes to raising interest rates.

“I think it will give us our last strong set of employment numbers — because I think it’s tailing off — giving the Fed [the] justification … that it needs for one more tightening, December tightening, before it waits to see how its rate hikes have impacted the economy,” Cramer said. “Now that Powell has chosen prudence over dogma, there’s a good chance this once red-hot economy can get the soft landing that it so sorely deserves.”


Why Finance And Innovation Are Perfect Business Partners

The importance of innovation is oft-discussed – in media, books and, perhaps most importantly, in the boardroom. What’s little discussed, however, is how to execute on that innovation and who to partner with to get it done. At Blue Shield of California (BSC), a symbiotic relationship has formed between the finance and innovation teams, highlighting the benefits of working closely together for business efficiency. This month I spoke with BSC CFO, Sandra Clarke, to learn more about her perspective on innovation, how she works with the chief innovation officer and why finance and innovation ultimately go hand in hand.

Jeffrey Thomson: You recently assumed the role of CFO at Blue Shield of California (BSC), previously serving as CFO at Daiichi Sankyo’s U.S. subsidiary, a global pharmaceutical company. What do you like about working in the healthcare industry? What unique challenges does the finance and accounting function face in this competitive, highly regulated industry?

Sandra Clarke: I really like being able to contribute to the health and well-being of our society and the opportunity to innovate in an industry that touches every person in our country. Our mission at Blue Shield is to provide access to high quality healthcare that is worthy of our family and friends, and that is sustainably affordable. We have a lot of work to do to achieve that goal. But I like a challenge, and I’m energized by what lies ahead.

Being part of a nonprofit healthcare organization also really resonated with me. We are driven by the needs of our members, not the returns for shareholders. We voluntarily cap our net income at two percent of revenue, returning anything above that to our customers and the community. From a finance perspective, this somewhat limits our access to capital for the investments we need to make to change the way care is delivered, but there are also benefits. Because we are focused on the satisfaction of our members and not on the satisfaction of investors, we can make long-term investments that will improve the member experience, healthcare quality and affordability without having to worry as much about their initial impact on quarterly earnings.


Lionsgate’s ‘Wonder’ Tops DVD, Blu-ray Disc Sales and Rental Charts

AUGGIE (Jacob Tremblay) and JACK WILL (Noah Jupe) in WONDER. Photo courtesy of Lionsgate Entertainment.

Lionsgate topped the national home video sales charts the week ended Feb. 17 with “Wonder,” the acclaimed drama about a child with Treacher Collins syndrome – a genetic disorder characterized by deformities of the ears, eyes, cheekbones, and chin – who is trying desperately to fit in.

The film debuted at No. 1 on NPD VideoScan overall disc sales chart, which tracks combined DVD and Blu-ray Disc unit sales, and the dedicated Blu-ray Disc sales chart. Nominated for an Academy Award for Best Makeup and Hairstyling, the film earned more than $131 million in U.S. theaters (and $290 million worldwide) on a budget of $20 million.

Universal Pictures’ “A Bad Moms Christmas” slipped to No. 2 on both charts its second week in stores, after having bowed at No. 1 the prior week.

The Sony Pictures’ firefighter drama “Only the Brave” slipped to No. 3 on the overall chart and No. 6 on the Blu-ray Disc sales chart after debuting in second and third place, respectively, the previous week.

Top 10 Home Media Magazine rental chart for the week ended 2/18/18:

1. Wonder (new)
2. A Bad Moms Christmas
3. Roman J. Israel, Esq. (new)
4. Only the Brave
5. Geostorm
6. Blade Runner 2049
7. Boo 2! A Madea Halloween
8. It (2017)
9. American Made
10. Jigsaw

For complete sales and rental charts, visit


Marketing and IT Departments Need to Get In Sync to Best Capitalize on Mobile Technology

IT decision-makers report a much higher importance of mobile apps than their marketing counterparts.
Getty Images

While the decade between 2007 and 2017 marked the genesis and maturation of the mobile industry, technologies like augmented reality (AR), virtual reality (VR) and artificial intelligence (AI) are poised to accelerate this evolution even faster in the decade to come, according to Adobe—and it found marketers may not be as prepared for the coming changes as their counterparts in IT.

That’s according to Adobe’s latest report, The Next Mobile Decade, which includes a survey of nearly 500 marketing and IT professionals’ priorities and investments in mobile.

Adobe said most respondents have a centralized mobile leadership team, which means mobile strategy is no longer an afterthought. That being said, there’s still potential misalignment between marketers and that must be reconciled if brands want to capitalize on mobile technology and derive maximum benefit for their customers.

Marketers at least seem to view mobile websites as slightly more important than apps: Sixty-nine percent of marketers and 84 percent of IT professionals said apps are extremely or very important, whereas 81 percent of marketers and 83 percent of IT professionals said mobile websites are extremely or very important.

“IT decision-makers report a much higher importance of mobile apps than their marketing counterparts,” Adobe said. “This year we saw a year-over-year decline in the importance of mobile apps and mobile websites for marketers, with more ranking them as ‘very’ important versus ‘extremely.’ This might suggest that marketers are beginning to see mobile as a central component of an integrated strategy and no longer the hot new thing.”

Both groups said they’re somewhat more likely to focus their mobile efforts on apps over the mobile web with the top reason being broader reach and customer preference.

“At least two-thirds of marketers and IT decision-makers report apps being an extension of their web strategy,” Adobe said. “The primary functions and use cases for apps vary, but customer loyalty is still key to both audiences.”

Both IT pros and marketers said roughly one-third of their technology spend goes to apps or mobile sites—and retail companies report the highest overall tech spend for apps and mobile websites, with 42 percent of their budgets going toward apps and 45 percent toward mobile websites.

More than half of marketers said at least a quarter of their digital marketing budget is allocated to mobile acquisition, with an average of 34 percent. Adobe said a balanced approach to
 media—including paid, earned and owned—works best. But, for apps,
 paid media is chosen most often to drive
 customer acquisition, whereas owned media is preferred
 for mobile websites.

Adobe found IT professionals are more likely than marketers to
 measure app engagement and usage over time and said marketers “seem to be missing an important opportunity to learn more about their customers and their marketing efforts.”

Adobe also found IT professionals are more concerned than marketers about leveraging AI and other emerging technologies.

When asked how important leveraging AI will be to improve the mobile experience in the next three years, IT professionals said they are more concerned (53 percent) than marketers (34 percent).

Adobe found a similar split when it came to AR and VR experiences and the Internet of Things (IoT) and also that IT professionals are more likely to have a defined strategy for deployment or limited releases and tests in location-based marketing, IoT, AI, near-field communication (NFC) for content/offer delivery, personal assistants, chatbots, mixed reality, AR and VR.

“What has happened is that marketing—becoming increasingly digital—deals more with analytics and the need for real-time automation,” an Adobe rep said in an email. “The net effect is that marketing now becomes an important stakeholder when it comes to IT tech purchasing. It requires that the two teams work together, to implement and manage the tech stack that every company has. The two teams have to work together to drive having a clear/comprehensive view of the customer and be able to deliver a consistent experience on every touch point.”


‘Multiple and intertwined risks’ cloud outlook for the Middle East and its neighbors, IMF says

Dubai, U.A.E.

Major oil producing countries in the Middle East and its neighbors might benefit from higher crude prices in 2019, according to the latest outlook from International Monetary Fund (IMF), but there are numerous uncertainties in the region.

The Fund’s latest regional economic outlook for the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region, published Tuesday, warns that “multiple and intertwined risks cloud the outlook of the MENAP region.”

“These include a faster-than-anticipated tightening of global financial conditions, escalating trade tensions that could affect global growth and hurt key MENAP trading partners, geopolitical strains, and spillovers from regional conflicts,” the report stated.

These risks could trigger a deterioration in financial market sentiment and greater financial market volatility, the Fund said, “aggravating the financing challenges for countries with high levels of debt or large refinancing needs.”

Oil producing countries in the Middle East have traditionally relied on oil exports as their source of government revenue. Volatility in oil markets amid imbalances in supply and demand have prompted a number of countries, particularly in the Gulf, to look to diversify their economies away from oil and to create more jobs in other sectors of the economy. In its latest summary on the MENAP region’s outlook, it encouraged countries to commit to further reforms.

“The outlook and the rising risks underscore the need to intensify efforts to raise growth to levels that generate enough jobs for the benefit of all,” the IMF said. “In this context, countries should expand access to finance, strengthen governance, improve education outcomes, and enhance labor market flexibility, particularly in the Gulf Cooperation Council (GCC).”

To ensure that future fiscal adjustment is as growth-friendly and equitable as possible, the Fund said countries need to both prioritize expenditure on “growth-enhancing and high-quality investment in human capital and physical infrastructure, while sustaining well-targeted social spending.” It also advocated a move to a more progressive tax structure to diversify the governments’ revenue bases.

Jihad Azour, director of the Middle East and Central Asia at the IMF, told CNBC on Tuesday that the MENAP report comes amid an uncertain global growth outlook.

“Global conditions are changing in terms of the risk metrics,” Azour told CNBC’s Dan Murphy. “Although we’re still enjoying a high level of growth, that growth is plateauing,” he added.

Oil prices

Despite the warnings from the IMF, growth prospects for both oil exporters and oil importers in the MENAP region appear resilient, albeit dented slightly by the recent re-imposition of U.S. sanctions on major oil producer Iran.

“Overall, despite a significantly weaker outlook for Iran given the re-imposition of sanctions, oil-exporting countries are projected to grow at 1.4 percent in 2018 and 2 percent in 2019,” the Fund said.

Meanwhile, among GCC countries — namely, Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman — growth is expected to recover to 2.4 percent in 2018 and 3 percent in 2019. “This is underpinned by a recovery in non-oil activity, supported by a slower pace of fiscal consolidation, and stronger oil production,” the Fund said.

Problematically, if oil prices continued to increase, as predicted by the Fund, that could weaken the resolve of oil exporters to continue reforms, while exacerbating pressures on oil importers.

That said, oil-importing countries in the MENAP region (which include Egypt, Lebanon, Morocco, Pakistan, Syria and Tunisia, among others) are expected to continue at a modest pace of 4.5 percent in 2018, before dropping back to 4 percent in 2019.

“However, growth is uneven, with about three-quarters of oil-importing countries expected to grow at less than 5 percent over the medium term, too low to address the region’s employment challenges and developmental needs,” the IMF said. “Higher oil prices are also offsetting some of the underlying improvements in external and fiscal balances.”


California’s new ban on small cages for chickens, pigs, and calves could force the entire egg industry to go cage-free

California chickens will soon all be getting more space. One square foot of it, to be exact.

On Tuesday, voters in California overwhelmingly approved Proposition 12, which will enact stricter rules on how much space farmers must give to egg-laying hens, veal calves, and breeding pigs. The idea is that all of those animals should have enough room to stretch out their wings, claws, and paws.

The measure has major ramifications for the rest of the country, because it also means that grocers in California won’t be able to sell any meat or eggs that come from out of state and don’t adhere to the new regulations. That means farms across the US that want to sell their wares in the nation’s most populous state will be forced to comply with California’s new rule.


California already had a law on the books about cruelty-free eggs: it says egg-laying hens, breeding pigs, and calves raised for veal must be given enough space “to turn around freely, lie down, stand up, and fully extend their limbs.” But that still allowed for some variations based on interpretation.

Now, under the new regulation, farmers have until the start of 2020 to provide each egg-laying hen at least one square foot of floor space. By 2022, all the state’s hens need to have completely cage-free housing.

Animal rights activists like the Humane Society of the US, which sponsored Proposition 12, cheered the change.

“California voters have sent a loud and clear message that they reject cruel cage confinement in the meat and egg industries,” Kitty Block, acting president and CEO of the Humane Society said in a statement. “Millions of veal calves, mother pigs and egg-laying hens will never know the misery of being locked in a tiny cage for the duration of their lives.”

Egg producers around the country had already rallied in opposition to California’s current hen-housing requirements. In April, 13 states took the battle to the Supreme Court. Iowa, the country’s largest egg producer, even enacted a new law to protect farmers there who keep hens caged.

But big egg retailers like McDonalds, Costco, and Burger King had already started to respond to consumers’ cage-free demands – McDonald’s and Burger King have both pledged to source only cage-free eggs by 2025.

The battle over how we house farm animals comes as the US’ egg appetite soars – American egg production rose 3% in 2017, with a total of 106 billion eggs produced last year. (The vitamin-rich yolks are no longer thought to raise cholesterol levels the way many people previously thought.)

Read More: ‘Cage-free’ and ‘free range’ eggs aren’t necessarily cruelty-free

Converting to cage-free doesn’t come free, though: it costs farmers about $40 per bird, according to Pew Stateline. Farmers say raising cage-free chickens can also be messier and require more work.

Cage-free eggs also cost more in stores. A study published in the American Journal of Agricultural Economics in 2017 estimated that California’s current law cut egg production in that state by more than a third. For consumers, egg prices were found to be between 9% and 33% more expensive than they would have been without the rule.

“I think it should be an issue of the person votes when they buy the eggs,” Dennis Bowden, who converted his own chicken farm in Maine to a cage-free facility, told Pew Stateline. “Poor people can’t afford to buy eggs if they’re all cage-free.”

Plus, cage-free doesn’t always mean that the birds get to roam freely; some cage-free egg-layers still don’t spend a single moment of their lives outside.

In addition to passing Proposition 12, Californians also voted in favor of nixing Daylight Saving Time and decided that the state should be able to spend mental-health funding to house homeless people with mental illnesses.


Outsourcing helps Indian firms survive and thrive, shows study

From banking queries to ordering pizza—customer call centres in a wide range of industries work similarly. Wonder why? Because most firms delegate or “outsource” specific functions, like customer service, to other companies that specialise in it. This decision helps these firms save considerable costs and focus on their core competence. In a recent study, researchers from the Centre for Studies in Social Sciences Calcutta, Kolkata, and the Indian Institute of Technology Patna, have examined this practice in the Indian context and have found that the outsourcing model helps companies remain viable, particularly during economic crises.

India has many such service-based companies that handle outsourced services. In 2017 the outsourcing industry in India employed over a million workers and generated a revenue of USD 28 billion. Apart from services, some manufacturing firms also outsource the production of specific components, such as automobile parts. In this study, published in Arthaniti-Journal of Economic Theory and Practice, the researchers have examined the link between outsourcing and productivity in the Indian context.

The study used financial and production data of a panel of manufacturing firms from the Centre for Monitoring Indian Economy (CMIE) database for the years 2010 to 2014. This period was chosen because the global economy was in crisis at the time and India’s GDP took a turn southwards. The researchers further classified the firms into subcategories like food and beverages, textiles, chemicals, metals and metal products, machinery, among others. They found that approximately 70% of these firms were outsourcing. The researchers then constructed an analytical model to understand how outsourcing impacted their productivity and revenues.

The model found that outsourcing unambiguously increased the productivity of the companies. Although wages of workers in smaller firms are generally lower than their counterparts in larger firms, outsourcing might lower this inequality since wages tend to rise more for smaller firms. The researchers also observed that Indian firms that outsourced locally raised the average productivity of all workers. Although a firm’s profit after tax (PAT) is a function of the business environment, Prof. Kar explains that “the model suggests that outsourcing raises productivity after controlling for PAT that varies across firms”.

One approach to improving productivity in firms is to reduce manual labour using technology; like robots which can replace humans. The other is to outsource the production of intermediate, labour-intensive inputs. This approach provides flexibility to companies, mainly to hire workers. The researchers noted that in general, firms in the Indian organised sector hesitated to expand employment because it is difficult to lay off workers due to stringent labour regulations. Hence, they focus on the redeployment of labour from the organised sector to the unorganised sector consisting of individual businesses with fewer than ten employees. This ability to outsource and the resultant productivity gains, the researchers say, might help larger firms remain viable during economic downturns.

On the other hand, the outsourcing–productivity link has important implications for the Micro, Small and Medium Enterprise (MSME) sector. The researchers note that the lack or loss of jobs in the larger firms, whether due to reluctance to hire or by retrenchment, may be partly offset by the employment generation in smaller firms due to outsourcing. The study concludes that MSMEs can gain enormously from the transfer of resources and technology from larger firms to the extent they are recipients of outsourcing, as they enhance their capital base and invest in manufacturing assets. A productive SME sector can, therefore, compete in the global outsourcing marketplace as well as cater to the demands of large local firms.

Productivity is vital for India’s growth and competitiveness since a robust industrial ecosystem with large and small corporations result in employment generation and economic activity. In the future, the authors of the paper expect to examine the impact of the Goods and Service Tax (GST) on outsourcing to the erstwhile unorganised sector. Further research in the outsourcing-productivity link can aid policy planners in creating a conducive environment for SMEs with access to capital, infrastructure and transparent labour laws.


Morales & Besa Advises Ingevec on Bonds Issuance and Registration

Morales & Besa has advised Ingevec S.A, a publicly held corporation, in the issuance and registration of a $53m line of bonds due to 2028, and in the placement of series B bonds, issued pursuant to such line of bonds for the same amount.

Founded in 1983, Ingevec S.A., a Santiago-based company, specializes in engineering and construction of public and private infrastructure in the country.

The funds obtained in the placement of the serie B bonds are going to be used, in part, to finance the prepayment of the outstanding serie A bonds of the company, improving its long term debt structure.

Partner José Miguel Carvajal, assisted by senior associate Andrea Díaz and associate Mariana Schnettler, acted as legal counsel to Ingevec.