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               DANIEL CULLINANE CPA                                                              Phone:          732-516-1648

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​Summer is winding down, but gasoline prices are not. They are rising in 46 states, lifting the national average to $2.35 per gallon Monday, the highest level since June, according to the latest figures from GasBuddy. This as the price of oil nears $50 a barrel.
Patrick DeHaan, senior petroleum analyst for GasBuddy, said the increase in gas prices is being stoked by rising oil prices as inventories continue to tighten and concern over the Venezuelan crisis lingers. Venezuela, riven by political strife, has the largest proven oil reserves in the world. “While we’re likely to see gas prices continuing to move higher in the week ahead as they catch up to oil,” DeHaan said, “we’re unlikely to break out of the well-established rut in the national average which has kept prices between $2.12 and $2.42 for the last 15 months.”The biggest price gains took place mostly in the South. Georgia, Iowa, New Jersey and South Carolina all had price increases of seven cents a gallon, while Alabama, Arkansas, Louisiana, Nebraska, New Mexico and Virginia all had price hikes of six cents.The states with the cheapest average gas prices are: Mississippi ($2.09), South Carolina ($2.09), Alabama ($2.09), Missouri ($2.11), Arkansas ($2.11), Oklahoma ($2.12), Tennessee ($2.13), Louisiana ($2.16), Texas ($2.16) and Virginia ($2.17).Data last week from the Energy Information Administration indicated a drop of 1.5 million barrels in crude oil inventories, a smaller decline than anticipated by analysts. Even so, that drop brought total inventories to their lowest since December 2016. Inventories are continuing to slide from their peak of 536 million barrels in late March to the current level of 481 million.Oil prices finished last week with a barrel of West Texas Intermediate crude oil at $49.52. Even though the Venezuelan crisis persists, concerns have ebbed in recent days after President Trump hinted that for now sanctions would be only targeted at individuals. Should sanctions be placed on Venezuela’s oil industry, oil markets would likely climb, as Gulf Coast refiners scramble to find oil supply to replace that from Venezuela.GasBuddy predicts gasoline prices are likely to continue to rise in the near term, with prices in the volatile Great Lakes region likely to climb in a few days, which may contribute as much as a three-cent surge in the national average in the week ahead.

​AUGUST NEWSLETTER 2

​Apple Inc. (NASDAQ: AAPL) watched its short interest rise from a year-to-date low in the period ended on July 31. Meanwhile, Apple’s stock has risen 7% in the past month, hitting a new all-time high. Although the iPhone giant is building momentum toward the $1 trillion market cap, it seems to be attracting more attention from short sellers looking for a pullback.For the period ended July 31, Apple saw its short interest increase to 40.31 million from the previous level of 39.15 million. This is an increase of about 3%.There has been a great deal of discussion about how Amazon.com Inc. (NASDAQ: AMZN) or Alphabet Inc. (NASDAQ: GOOGL) might pass Apple in terms of market capitalization. Apple has held the top spot for years and sits at $815 billion.
Recently, worries about the iPhone 8 and optimism about Amazon’s share of e-commerce made it appear the Jeff Bezos–led company could catch Apple. Alphabet’s Google search dominance and the growth of divisions like YouTube might have given it a chance to make a run at Apple.Compared to Apple’s market cap of $815 billion, Amazon’s is $474 billion and Alphabet’s is $649 billion. Apple’s shares would have to plunge, or the shares of the others would have to make unprecedented surges, for either to catch the consumer electronics giant. In a sense, the short sellers would win big if this was the case.Excluding Thursday’s move, Apple is the second-best-performing Dow stock, with shares up just over 36% year to date. Over the past 52 weeks, the stock is up closer to 45%.Shares of Apple were last seen down 1.2% at $158.44 on Thursday, with a consensus analyst price target of $167.98 and a 52-week range of $102.53 to $161.83.
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​GAS PRICE INCREASING

Bulk commodity shipments can expect sloweing growth after they rebound thsi year and next from last year's downturn. Truck freight wsill grow by just 2.4% per year from 2019 through 2023, after rising by 3% this year adn 4.1% in 2018. Rail and barge traffic is in for a similar patter, perking up in the near future but then settling into a trend os slow by steady gains as the new decade nears. The business outlook is better for air and intermodal freight. High value goods that justify the cost of fast delivery will keep airfreight revenue raising at a 6% clip. Intermodal shipments which travel by rail and then truck are poised to benefit from continued strong increases in imports and exports moved via containers

SHIPPING

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​If the economy fades sharply as it did in the Great Recession, Fannie Mae and Freddie Mac may need $99 billion in bail out money, according to a study by the Federal Housing Finance Agency

In a new report, FHFA analysts wrote about the Enterprises (Fannie and Freddie):

As of December 31, 2016 the Enterprises had drawn a combined $187.5 billion from the Department of the Treasury under the terms of the Senior Preferred Stock Purchase Agreements (PSPAs), and the combined remaining funding commitment under the PSPAs was $258.1 billion. In the Severely Adverse scenario, incremental Treasury draws are projected to range between $34.8 billion and $99.6 billion depending on the treatment of deferred tax assets. The remaining funding commitment under the PSPAs after the projected draws is $223.2 billion, without establishing valuation allowances on deferred tax assets. Assuming both Enterprises establish valuation allowances on deferred tax assets, the remaining funding commitment is $158.4 billion.

How bad is Severely Adverse scenario?

In the 2017 DFAST Severely Adverse scenario, U.S. real GDP begins to decline immediately and reaches a trough in the second quarter of 2018 after a decline of 6.50 percent from the pre-recession peak. The rate of unemployment increases from 4.7 percent at the beginning of the planning horizon to a peak of 10.0 percent in the third quarter of 2018. The annualized consumer price inflation rate initially declines to about 1.25 percent by the second quarter of 2017 and then rises to approximately 1.75 percent by the middle of 2018.

America’s unemployment rate reached 10.2% in October 2009.

The government has begun a number of stress tests since the end of the last financial crisis. Most have been done on big banks  While the banks are private enterprises, Fannie Mae and Freddie Mac are quasi-government agencies.

Starbucks Hit by Fake Ad, Phone Scam

Success, they say, is its own reward. Sometimes, though, there’s a penalty to pay as well.

Over the past few days, Starbucks Corp. (NASDAQ: SBUX) has been the victim of a fake ad offering a 40% discount on any menu item for “undocumented Americans” on August 11. The ad is titled “Starbucks Dreamer Day,” a reference to the Development, Relief, and Education for Alien Minors (DREAM) Act that protects from deportation undocumented immigrants to the United States who were brought here as children and who have lived in the country for at least four years.

Starbucks’ senior vice-president of global communications has said the ad is “completely false. One hundred percent fake.”According to a report at ThinkProgress, the ad appears to have originated at a website called 4chan. The report notes:

The point of the ad, as the creator pointed out on 4chan, is to get undocumented immigrants to go to Starbucks to ask for “free stuff,” a claim that perpetuates the myth that these people are freeloaders on U.S. society. Users have also suggested calling the U.S. Immigration and Customs Enforcement (ICE) agency to target Starbucks on Friday the 11th so that immigrants can be detained and potentially deported at the shops.

In an unrelated incident at a Starbucks store in South Carolina, a Starbucks store was scammed out of more than $2,600 when a caller claiming to be a corporate representative told a store employee that the district manager had been arrested following allegations of embezzlement. The employee was told to gather up all the cash in the store, close the store early, and await further instructions. Further details are available at The State.