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

​                                                                                                                                                                                                     Chelsea / Lower Manhattan​​

​Daniel Cullinane CPA                                   p 848-250-9587                                                                                                                                     


​Beginning next month, 82 Kohl’s Corp. (NYSE: KSS) stores in Los Angeles and Chicago will accept returns from consumers who bought the goods from Amazon.com Inc. (NASDAQ: AMZN). Kohl’s will pack and ship eligible items to Amazon return centers for free regardless of the reason for the return or whether the items are packed for shipping.

The program, called “Amazon Returns at Kohl’s,” is the second joint endeavor between the two firms. Earlier this month Kohl’s rolled out Amazon’s smart home products in 10 stores in Los Angeles and Chicago. These 10 stores will be among those included in the returns program.

Richard Shepp, chief administrative officer at Kohl’s, said:

We are thrilled to launch this unprecedented and innovative concept, allowing customers to bring in their unpackaged Amazon returns to Kohl’s and we will pack them, ship them, and return them to Amazon for free. This is a great example of how Kohl’s and Amazon are leveraging each other’s strengths – the power of Kohl’s store portfolio and omnichannel capabilities combined with the power of Amazon’s reach and loyal customer base.

The announcement did not spell out how refunds would be handled, but it makes sense (to us, at least) that refunds would be made in accordance with Amazon’s refund policy at the time the item is left with Kohl’s to be returned.

It’s pretty easy to see why Kohl’s likes this deal. The company hopes to generate more store traffic by providing a service for Amazon that the online-only retailer can’t provide for itself. Kohl’s now has to convert that traffic into sales.

Analyst Chuck Grom at Gordon Haskett told Investor’s Business Daily:

Kohl’s has historically seen a roughly 25%-30% uptick in baskets from BOPUS (buy online pickup in store) transactions, so it’s plausible that the company will see some benefit.

For Amazon, returns are at best a point of inconvenience for customers and at worst a point of potential conflict. If the program with Kohl’s relieves some of the pain, Amazon would have to count it a success and even consider expanding it to other brick-and-mortar stores.


​Microsoft Corp. (NASDAQ: MSFT) has done rather well under the leadership changes that have been made by CEO Satya Nadella. The company confirmed on Tuesday that it was increasing its quarterly dividend for shareholders. Some tweaks were made on the board of directors as well, and this change looks like an important one when considering who is leaving.

Microsoft’s new common stock quarter dividend will rise to $0.42 per share. This is up over 7% from the prior $0.39 per share payout, reflecting a three-cent or increase over the previous quarter’s dividend, and the annualized payout of $1.68 is almost in line with the $1.70 annualized payout that Thomson Reuters has projected.

What matters here is that Microsoft’s dividend yield is will be over 2.2%, based on the $75.44 closing price. That would rank Microsoft’s dividend as being in 21st place of the 30 Dow Jones Industrial Average stocks, and the median Dow dividend is 2.47%.

Investors might think that Microsoft’s dividend yield lags its peers, and while that looks accurate on the surface, its stock is up over 21% so far in 2017 and that gain has lowered its yield to new investors. If your cost basis was closer to $62 as the stock was at the start of 2016, then your new yield would actually be closer to 2.7%.

As far as how the $1.68 annualized dividend payout per share compares to earnings expectations, Thomson Reuters has a consensus estimate of $3.17 per share for the coming fiscal year ended June 2018.

Microsoft said that the higher dividend is payable on December 14, 2017, to shareholders of record on November 16, 2017. Its ex-dividend date will be November 15, 2017.

As for the changes to the Microsoft board, Hugh Johnston will join the board and the audit committee. Johnston, who is 56 years old, is currently the vice chairman and chief financial officer of PepsiCo — and he has been its CFO since 2010.

What matters here is that G. Mason Morfit is not seeking reelection to the Microsoft board. He is the president and chief investment officer of ValueAct Capital. Does this mean that the activist view would declare “Mission Accomplished!” when it comes to Microsoft?24/7 Wall St.
12 Companies Laying Off the Most Workers in 2017

Dividend hikes are big deals, particularly among the top Dow stocks and top dividend payers. The actual dividend hike announcements have started to generate limited buzz as shareholders in so many companies have become used to such routine announcements.

Microsoft shares were indicated down fractionally at $75.18 Wednesday morning, in a 52-week trading range of $56.32 to $75.97.

Microsoft’s consensus analyst target price is up at $80.70 in September, but investors should at least consider that it had a consensus target price of only $65.36 at the start of 2017.



​The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decrease of 9.7% in the group’s seasonally adjusted composite index for the week ending September 15. During the week, mortgage loan rates rose on four of five loan types that the MBA tracks.

On an unadjusted basis, the composite index increased by 12% week over week. The seasonally adjusted purchase index decreased by 11% compared with the week ended September 8. The unadjusted purchase index increased by 10% for the week and is now 2% higher year over year.

The MBA’s refinance index decreased by 9% week over week, and the percentage of all new applications that were seeking refinancing rose from 51% to 52.1%.

Adjustable rate mortgage loans accounted for 6.8% of all applications, up 0.1 percentage point from the prior week.
Wednesday’s announcement following the meeting of the Federal Open Market Committee (FOMC) will shape the mortgage market for the next few weeks. Most analysts expect the Federal Reserve to leave interest rates alone but to announce a winding down of the balance sheet. Fed Chair Yellen’s comments will be parsed carefully for hints about future Fed interest rate moves.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage ticked higher from 4.03% to 4.04%. The rate for a jumbo 30-year fixed-rate mortgage ticked lower from 4.00% to 3.99%. The average interest rate for a 15-year fixed-rate mortgage rose from 3.30% to 3.35%.

The contract interest rate for a 5/1 adjustable rate mortgage loan increased from 3.17% to 3.30%. Rates on a 30-year FHA-backed fixed-rate loan rose from 3.94% to 3.97%.


​Standard & Poor’s Global ratings announced Thursday morning that it has lowered its long-term rating on China’s sovereign debt from AA− to A+ with a stable long-term rating. The ratings agency also lowered its transfer and convertibility risk assessment from AA− to A+.

S&P also cut its ratings on several of China’s banks, including the world’s third-largest bank, the Agricultural Development Bank of China (ADBC).

Strong credit growth in the country has increased China’s economic and financial risks. Credit growth has driven the country’s strong GDP growth but, S&P says, “[W]e believe that it has also diminished financial stability to some extent.”

Behind that diminishment has been the government’s unwillingness to let unsuccessful businesses fail, especially state-owned enterprises (SOEs). S&P notes that the government recently has changed its stance and appears more willing to allow SOEs leave the market either through mergers, closures or defaults.

S&P also said it expects Chinese economic growth of 5.8% or more annually through 2020. The agency said it also expects credit growth to rise faster than nominal GDP “over much of this period.”

The lowered rating on China’s sovereign debt also hit several of the country’s financial institutions. In addition to ADBC, two other state policy banks, China Development Bank and the Export-Import Bank of China, have their ratings tied to the sovereign and all three received the same downgrade as the sovereign.

Three other China-based banks — DBS Bank, Hang Seng Bank and HSBC Bank — were also downgraded because “these banks … are unlikely to withstand the stress associated with China’s sovereign default, and therefore unlikely to be rated above the sovereign.”

S&P offered its rationale:

The ratings on China reflect our view of the government’s reform agenda, growth prospects, and strong external metrics. On the other hand, we weigh these strengths against certain credit factors that are weaker than what is typical for similarly rated peers. For example, China has lower average income, less transparency, and a more restricted flow of information.

S&P expects per capita GDP to rise from $8,300 currently to $10,000 by 2020 and believes the government is making progress in its efforts to boost economic and fiscal resilience:

We view the government’s anti-corruption campaign as a significant move to improve governance at state agencies, local governments, and state-owned enterprises (SOEs). Over time, this could translate into greater confidence in the rule of law, improvements in the private-sector business environment, more efficient resource allocation, and a stronger social contract. The government continues to make significant reforms to its budgetary framework and the financial sector. These changes could yield long-term benefits for China’s economic development.

​The U.S. Census Bureau and the Department of Housing and Urban Development reported Tuesday morning that new housing starts in August fell to a seasonally adjusted annual rate of 1.18 million, a decrease of 0.8% from the upwardly revised June rate of 1.19 million and an increase of 1.4% compared with the August 2016 rate of 1.164 million. The consensus estimate from a survey of economists expected a rate of around 1.173 million.

The revision to the July rate added 35,000 new housing starts from the previously reported total. The seasonally adjusted rate of new building permits rose to 1.3 million, up 5.7% from the upwardly revised July rate of 1.223 million and up 8.3% from the August 2016 rate of 1.2 million. The consensus estimate called for 1.22 million new building permits.

Single-family housing starts also rose in August to an annualized rate of 851,000, up 1.6% from the revised July rate of 838,000. Single-family starts rose by 17.1% year over year in August.

July single-family starts rose by nearly 11% and were up more than 17% year over year in August. Single-family homes have experienced high demand and low inventories for a long time, but as new homes are built, prices increases should moderate and more first-time buyers will be able to get into the market.

Permits for new single-family homes fell in August from a revised annual rate of 812,000 in July to a seasonally adjusted annual rate of 800,000. The rate rose 8.3% year over year.

For the months of June and July, the number of new housing starts were revised upward and the August total, though slightly below July, came in better than expected. New permits also rose in August. Overall this is a solidly encouraging report on the U.S. housing market.

An exception to the overall good news in August is that multifamily starts for buildings with five or more units decreased by 23.1% year over year in August and dropped by 5.8% compared with July. This number is more volatile than the single-family number and has been moving mostly sideways since 2013.



The U.S. Air Force plans to announce the winner of a contract to build a new training jet, dubbed the T-X, by the end of this year. However, funding for the new jet will not be available unless the continuing resolution (CR) that expires in December is replaced by a real federal budget approved by Congress and signed by the president.

The three bidders on the contract are teams comprised of the following:

Boeing Co. (NYSE: BA) and Saab
Lockheed Martin Corp. (NYSE: LMT) and Korea Aerospace Industries
Italy’s U.S. subsidiary Leonardo DRS

The estimated value of the contract is around $16 billion.

If the CR is extended and not replaced, the law prohibits initiating new programs. To deal with that possibility, the Air Force is looking at awarding the contract on a delayed start basis. That is, the winner would be announced but the contract will not be awarded.

Lt. General Arnold Bunch, the service’s head of acquisition, told Defense News:

We will look at options to see if we can award with a delayed start. There are ways, we have done it before, when you award a contract and you delay the start of the contract for a few months. But we need some budget certainty before we go do that. If we go to sequestration funding levels, we’re going to have to look at everything that we’re doing. I hate to say the acquisition answer depends, really, on what the situation is when we get to that point.

If the CR is extended, that could have ripple effects on the T-X program as a whole, Bunch continued:

Are the contractor prices still good? Have we extended out? There are a bunch of different things that we have to look at and weigh out. But our goal, because it is a critical capability to replace the T-38s, we want to go as fast as we can.

Boeing and Saab have submitted a clean-sheet design for the T-X, while the Lockheed-KAI team has submitted a variation of KAI’s T-50 training jet. Leonardo DRS has submitted a modified version of its parent company’s M-346 that it calls the T-100

​Workers at the General Motors Co. (NYSE: GM) Cami assembly plant in Ingersoll, Ontario, have voted to authorize a strike if negotiations between the union and GM Canada fail to meet union demands by the current contract expiration date of Sunday, September 17, at 11 p.m. Some 99.8% of union members voted to authorize the strike.

GM shifted production of its Terrain compact sport utility vehicle (SUV) from the Ingersoll plant to the San Luis Potosi plant in Mexico. The company in January announced the layoff of some 600 workers at the Canadian plant, and so far 424 jobs have been shaved due to buyouts, retirements and some recalls of formerly laid-off workers.

According to the union, more than 1,200 workers voted last Sunday to authorize the strike, and no one recalls ever seeing that level of participation in a strike authorization vote.

GM will continue to build its best-selling Chevy Equinox compact SUV at the Ingersoll plant. GM sold 28,245 of the vehicles in the United States last month, to garner a 10.5% share of the compact SUV market. Sales were up 20% month over month and 85% year over year. For the year to date, Equinox sales are up 17% compared with the first eight months of 2016.

Union members viewed the layoffs as an intimidation tactic. Union chairperson Mike Van Boekel said:

They want to be rewarded for the last eight years of working six days a week, of being second-to-none in quality, in being among the leanest, most efficient plants in the world. They want to be recognized. … The best word to describe the mood here now is frustration, it is very high. Workers feel there is no respect for the job they perform and how well they do it.

The union is seeking higher wages, benefit improvements, and an investment in the Ingersoll plant similar to the $421 million investment GM promised to make in three other Canadian plants earlier this year. A total of $300 million of the agreed investment will go to the company’s Oshawa, Ontario, plant, which had been tabbed for closure in 2019.

GM Canada has not commented on the strike authorization vote or the progress of the contract talks.