275  7TH Ave  7th floor New York , NY 10001                                                                                                                dcullinanecpa@yahoo.com

​                                                                                                                                                                                                     Chelsea / Lower Manhattan​​

​Daniel Cullinane CPA                                   p 848-250-9587                                                                                                                                     


The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decrease of 2.6% in the group’s seasonally adjusted composite index for the week ending October 27. During the week, mortgage loan rates rose on all five loan types that the MBA tracks with four rising to multimonth highs.On an unadjusted basis, the composite index decreased by 3% week over week. The seasonally adjusted purchase index decreased by 1% compared with the week ended October 20. The unadjusted purchase index decreased by 2% for the week and is now 10% higher year over year.

The MBA’s refinance index decreased by 5% week over week, and the percentage of all new applications that were seeking refinancing fell from 49.5% to 48.7%.Adjustable rate mortgage loans accounted for 6.8% of all applications, up 0.4 percentage points from the prior week.Mortgage loan rates rose to their highest level since July on 30-year fixed, 15-year fixed and FHA loans last week. Rates for adjustable-rate loans rose to their highest level since March. Bond markets are waiting for an announcement from the president on his choice to be the next chairperson of the Federal Reserve. Jerome Powell, who is viewed as the more accommodative choice, is the bond market’s favorite. John Taylor, a long-time interest-rate hawk, is the other front-runner for Janet Yellen’s job.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage rose from 4.18% to 4.22%. The rate for a jumbo 30-year fixed-rate mortgage rose from 4.11% to 4.16%. The average interest rate for a 15-year fixed-rate mortgage increased from 3.48% to 3.52%.

The contract interest rate for a 5/1 adjustable rate mortgage loan increased from 3.29% to 3.33%. Rates on a 30-year FHA-backed fixed rate loan rose from 4.04% to 4.07%.

As Christmas Day approaches, struggling retailers hold out hope that people who have not done holiday shopping earlier in the season will stream through their doors to improve their fortunes at the last moment. New research shows that will not happen. Retailers who need a last boost of sales won’t get one.

A study by research firm NPD shows:

The Holiday 2017 shopping season will be the first when more U.S. consumers will start shopping in the middle of the season (Thanksgiving weekend through Cyber Monday) than will start late in the season (i.e. early December), reports The NPD Group, a leading global information company. According to NPD’s 2017 Holiday Purchase Intentions Survey, getting a late start to the holiday shopping season has become less prevalent over the last 10 years.

The culprit is that retailers have stolen their own late holiday sales as they have pushed discounts and promotions forward to Thanksgiving and Black Friday.To compound the problem, both early and late shoppers will crowd the internet as they shop without leaving their homes or offices. E-commerce shoppers can buy on Thanksgiving or on December 23, if they are willing to pay for overnight shipping to get their packages by the 24th.

There will be no late holiday surprise for retailers this year​



​Last week’s unexpected 3.0% gain in gross domestic product (GDP) gave some serious support to the notion that the U.S. economy can keep growing at or above 3.0%. That report was strong even considering the negative impact of two hurricanes, and it is still widely expected by economists that there will be a snapback of lost business activity from the third quarter that carries over into the fourth quarter of 2017. What economists know is that for U.S. GDP to be strong it almost cannot occur with gains in consumer spending — close to 70% of U.S. GDP is tied to how much consumers are spending.

The U.S. Department of Commerce has released its September report for consumer spending, and it showed a seasonally adjusted 1.0% gain from the prior month. This was the largest monthly gain in over eight years, and it was stronger than the Wall Street Journal and Reuters consensus estimates of 0.8%.

We had already seen a strong report on durable goods spending for the month, and the stronger GDP report should have set the stage for a higher report on spending. Still, the report was higher than expectations.

Personal income also posted a 0.4% gain from the prior month. That report merely met expectations. Some of the gains in spending have come at the expense of savings. The personal savings rate dropped to 3.1% from 3.6% in August.

A few more tidbits should put some of the September gains in context:

Personal income increased $66.9 billion in September.
Disposable personal income (DPI) increased $53.0 billion.
Personal consumption expenditures (PCE) increased $136.0 billion.
Real DPI decreased less than 0.1% in September and Real PCE increased 0.65.
The PCE price index increased 0.4%, and the reading excluding food and energy was up just 0.1%.

The Bureau of Economic Analysis (BEA) report also noted the largest parts of the gains were autos in goods and household utilities in services. The report said:

The $76.0 billion increase in real PCE in September reflected an increase of $59.1 billion in spending for goods and a $21.6 billion increase in spending for services. Within goods, new motor vehicles was the leading contributor to the increase. Within services, the largest contributor to the increase was spending for household utilities.

Investors, economists, workers and business owners will want to consider that the BEA does note that hurricanes Harvey and Irma had an impact, but the level was not quantified. The BEA report said:

The August and September estimates of personal income and outlays reflect the effects of Hurricanes Harvey and Irma. BEA cannot separately quantify the total impact of the storms on personal income and outlays because most of the source data used to estimate the components of personal income and outlays do not separately identify storm impacts. BEA made adjustments to estimates where source data were not yet available or did not fully reflect the effects of the storms

​It appears, based on media reports, that a marriage between number four U.S. wireless carrier Sprint Corp. (NYSE: S) and number three carrier T-Mobile US Inc. (NASDAQ: TMUS) is off. Sprint needed the deal to remain viable.

Rumors are that Sprint’s major shareholder Softbank was unhappy with the agreement proposed by T-Mobile majority shareholder Deutsche Telekom. T-Mobile would have been the controlling party in any marriage

Sprint will have to settle with the smallest market share in a cutthroat sector that is no longer growing in the United States. There are more cellphones than people. The upgrade cycle of phones, which includes the launch of the new iPhone 8 and iPhone X, is another rotation in an endlessly changing inventory. The four large carriers rely on price cuts and an ever-changing set of broadband service price wars. The entire industry will soon make the immensely expensive transition from 4G to 5G service.

Sprint usually finishes last or close to last in surveys of wireless service, which makes its ability to claw back market share more difficult. Its revenue in the third quarter was $6.0 billion, down from $6.4 billion in the same quarter a year ago, At least Sprint’s net loss got better. It shrank from $142 million to $48 million. The company has $32.4 billion in long-term debt, financing and capital lease obligations.

Aside from T-Mobile, which has aggressively marketed its services and added millions of new subscribers in the past three years, Sprint is up against industry juggernauts AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). Both companies are huge, based on revenue and subscriber count, and have added content ownership to their inventories of unique services. Sprint has neither the balance sheet nor the market cap to match those moves.

Sprint’s share price has dropped 28% this year to $6.34. The figure would have been worse if not for the T-Mobile M&A discussions. Its share price almost certainly will languish without a partner, and its options to expand its business have already eroded





BP PLC (NYSE: BP) reported third-quarter 2017 results before markets opened Tuesday. The oil and gas supermajor posted adjusted diluted earnings per American depositary share (ADS) of $0.53 on revenues of $60.81 billion. In the same period a year ago, the company reported earnings per ADS of $0.51 on revenues of $48.04 billion. Analysts estimated earnings per ADS of $0.48 on revenues of $49.21 billion. One ADS is equal to six ordinary shares.

BP’s adjusted replacement cost profit (essentially the company’s adjusted net income/loss) in the third quarter totaled $1.87 billion, compared with $933 million in the year-ago quarter. Unadjusted the replacement cost profit totaled $1.38 billion, or $0.42 per ADS, compared with a profit of $1.66 billion and a net profit per ADS of $0.53 in the third quarter of 2016.The company also said it would restart its share buyback program in the fourth quarter in an attempt to “offset the ongoing dilutive effect of scrip dividends over time.” BP said it does not expect the program necessarily to match the dilution.

CEO Bob Dudley said:

We are steadily building a track record of delivering on our plans and growing across our businesses. This quarter, three new Upstream projects and the highest Downstream earnings in five years, underpinned by reliable operations and disciplined spending, have generated healthy earnings and cash flow. There is still room for further improvement and we will keep striving to increase sustainable free cash flow and distributions to shareholders.

Daily average hydrocarbons production totaled 2.43 million barrels of oil equivalent, up by 10% year over year. Sequentially, production was flat.BP’s price realizations for liquids rose from $46.277 a barrel in the second quarter of 2017 to $47.45. In the year-ago quarter, the price realization was $40.99 a barrel. Natural gas averaged $2.89 per thousand cubic feet in the third quarter, down from $3.19 in the 2017 second quarter and up from $2.77 in the third quarter of 2016.

Downstream (refining) adjusted pretax profits jumped from $1.43 billion a year ago to $2.34 billion. The company attributed the improvement to higher refining and fuels marketing results along with an improved contribution from supply and trading. In its outlook statement, BP said fourth-quarter results would continue to reflect solid refining margins, but normal seasonal turnaround and variation would weigh on results. BP’s refining marker margin was $16.30 a barrel in the third quarter, up from $13.80 in the second quarter and %11.60 a year-ago.

To date BP has paid out $63.42 billion in pretax charges related to the disaster that claimed the lives of 11 workers and dumped millions of barrels of crude oil into the Gulf of Mexico in April 2010. In the third quarter the company paid out $84 million in claims and took a charge of $122 million related to financing costs. BP now expects total payouts of $5.5 billion for the year, up from a range of $4.5 billion to $5.5 billion from its estimate at the end of the prior quarter.BP’s organic capital spending totaled $4 billion in the third quarter and totals $11.9 billion for the first nine months of the year. Divestment proceeds in the second quarter totaled $1 billion for the first three-quarters of 2017.

The company also announced its regular quarterly dividend of $0.60 per ADS, a dividend yield o

Shares of Axalta Coating Systems Ltd. (NYSE: AXTA) were up almost 17% at $33.15 on Friday, with the driving force being merger talks with Akzo Nobel. Now at least part of those merger discussions have been confirmed, and it seems the two companies are looking at a merger of equals While a merger of equals does not usually imply major premiums, this would create a multibillion-dollar leader in the industry of coatings and paints. After Friday’s gain, Axalta is an $8 billion company by market cap.

Axalta shares were up almost 17% at $33.15 on Friday, with a 52-week high of $33.47 being put in on the preliminary reports. Axalta shares were up only 1.1% at $32.76 Monday morning.Analysts in the Thomson Reuters universe had a consensus analyst price target of $31.88 for Axalta prior to merger reports.Shares of Akzo Nobel are traded in Europe, and the company has its headquarters in Amsterdam, Netherlands. Its market cap is about ¢20 billion.Axalta and Akzo Nobel have both issued statements in confirming the market reports.

The Axalta statement said:

Axalta today confirmed that it is engaged in discussions with AkzoNobel regarding a potential merger of equals transaction between Axalta and Akzo’s Paints & Coatings business. Axalta will pursue such a transaction only if its Board of Directors determines that it is in the best interest of Axalta to do so. There can be no assurances that a definitive agreement between the parties will be reached or on what terms.

The Akzo Nobel statement said:

In response to market speculation, AkzoNobel confirms today it is currently in constructive discussions regarding a merger of the AkzoNobel Paints & Coatings business with Axalta. This will create a leading global paints & coatings company through a merger of equals… AkzoNobel confirms that its separation of Specialty Chemicals, including the return of the vast majority of net proceeds to shareholders, remains on track for April 2018 and is unaffected by these discussions