Commencement Season

We begin our eighth year of Rink Rats, thank you for reading.

Commencement address season has, well, commenced. Every spring, on every college campus across the nation, wisdom is blooming. And the cream of these graduation speeches rises to the internet for us all to glean and enjoy.

As with TED Talks, best man toasts and eulogies, there is a structure to these short addresses because the audience is well-defined by occasion. Graduates stand at one of the greatest moments of their lives (at least up to that point). They are excited, scared, purposeful or purposeless. They need a little celebratory push out of the nest.

In old school philosophy-speak, commencement addresses fall into a category Aristotle defined as epideictic oratory: the rhetoric of ceremony in which praise or even blame is laid at our feet and guidance is given on how to move forward. In most speeches the speaker cannot relate to their audience, thus a me, myself, and I theme is central to the address.

These speeches also contain inspiration, warnings, hope, calls to action, apologies for being an unworthy and/or boring speaker, inside jokes about the school or college life in general. Most addresses seize the spirit of the occasion, which is Janus-like in its need to simultaneously look forward and backward. The moment is called graduation (signaling the completion of an era) and commencement (the beginning of one), as President Ronald Reagan explained in his 1982 address to his alma mater, Eureka College in Illinois.

Graduation is a ritual of walking through a major threshold -- simultaneously leaving one room and entering another.

"Get in your car. You don't have a map, and you don't have a destination, you just flip a coin and get on the road," encouraged political operative Mary Matalin in a tandem one-two punch of inspiration delivered with her husband, James Carville, at the University of Maryland in 1999.

Screenwriter Aaron Sorkin's highly entertaining address to the Syracuse University class of 2012 urged active citizenship because "decisions are made by those who show up." It's a sentiment echoed by historian Howard Zinn, who reminded the 2005 class of Spelman College that democracy isn't handed down from the government but from "people getting together and struggling for justice."

So Commencement season is upon us, here are some of the notable speakers this season:

Arizona State University (May 8)  - Starbucks chairman Howard Schultz

University of Southern California (May 12) - Will Ferrell

Virginia Tech (May 12) - Facebook chief operating officer Sheryl Sandberg

University of Pennsylvania (May 15) - Senator Cory Booker (D-N.J.)

U.S. Coast Guard Academy (May 17)- President Donald Trump

Skidmore College (May 20) - Oprah Winfrey

Lafayette College (May 20) - Alexander Hamilton author Ron Chernow

St. Lawrence University (May 21) – Senator Susan M. Collins ’75 (R-Maine) &  Richard Guarasci (St. Lawrence Professor 1973-1992) President Wagner College

Harvard University (May 25) - Facebook founder (and Harvard dropout) Mark Zuckerberg

Wellesley College (May 26) - Former Secretary of State Hillary Clinton

University of La Verne (May 27) – Maria Contreras-Sweet

Brooklyn College (May 30) - Senator Bernie Sanders (I-Vt.)

Massachusetts Institute of Technology (June 10) - Apple CEO Tim Cook

Dartmouth College (June 11) - CNN anchor Jake Tapper

University of California, San Diego (June 17) - Dalai Lama

CASH - So much cash is raining on some U.S.-based corporations that they are at a loss on what to do with all the money.

With the $250 billion sitting in its bank account, Apple could comfortably go out and buy Chevron, the second-largest U.S. oil company, at today’s market price without borrowing a penny. The technology giant would still have $50 billion left to buy more than 700,000 Tesla model S electric cars or about four Gerald R. Ford class aircraft carriers.

Then there’s Microsoft. The Seattle-based software maker has the second-largest stash, at $126 billion, enough to buy a $100,000 home for 1.2 million Americans.

And the blizzards of green are not limited to the tech sector.

Legendary investor Warren Buffett will preside over his annual Berkshire Hathaway shareholder meeting this weekend in Omaha — known as “Woodstock for Capitalists” — while his company sits on $86 billion in cash. That’s enough to pay for New York City’s government operations for a year.

The cash hoards are coming to the forefront as earnings season is heating up. U.S. companies are reporting mostly robust profits, and the stock market, especially technology shares, are ballooning. Some investors have cautioned that equities are frothy in light of the geopolitical risks such as North Korea and the political divide in the country.

A big part of the reason behind the rich corporate caches is taxes — or unpaid taxes. Apple, Microsoft and many other U.S.-based international companies are sitting on well more than $2 trillion in cash from untaxed overseas profits, which could be brought back to the United States to be used for investment and dividends if lawmakers lower the U.S. corporate tax rate, which at 35 percent is one of the highest in the world.

“Apple is one of the best companies in the world, and a third of their value is sitting in vaults in Switzerland and Luxembourg and Dublin,” said Timothy Loughran, a finance professor at the University of Notre Dame’s Mendoza College of Business. “Isn’t that pathetic?”

The Trump administration has promised to lower the corporate tax rate significantly. Economists and politicians on both sides of the aisle have said a lower corporate tax rate or a tax holiday that repatriates money from overseas will unleash hundreds of billions of dollars, if not trillions, in dividends and business investments in the United States.

“Companies have been accumulating cash over many years,” said David Kass, a finance professor at the University of Maryland’s Smith School of Business. “The perverse disincentives of our current corporate tax system are discouraging corporations from bringing back international profits to invest in the U.S.”

Apple chief executive Tim Cook, in an interview with The Washington Post last year, said federal and state taxes on Apple’s cash reserves, the vast majority of which is overseas, is about 40 percent. Many U.S.-based companies leave their earnings overseas rather than pay the U.S. rate.

If the corporate rate is reduced or a holiday is granted, Apple, Microsoft and others could pay a special dividend, buy back shares or both. They could also make acquisitions, although Apple has preferred to grow organically by inventing new products such as the iPhone and iPad and investing in itself.

Apple earned $45.6 billion in profit in 2016 on revenue of $215 billion. It paid a handsome dividend of $2.18, although the rise in share price has cut its yield to about 1.7 percent and made the shares much less of a bargain than they once were.

If Apple chose a special dividend, its $250 billion would cover a $48 payment on each of its 5.2 billion shares. That is highly unlikely, although some lump sum dividend is possible, and it could touch nearly every American who has a retirement plan or owns taxable mutual funds.

“What is going to happen when Apple has $1 trillion in cash?” said Loughran, pointing out that the iPhone 10 is due out this year. “It won’t be that long. What are we going to do then? The way I think about it is the treasure of America sitting in a vault in Switzerland. We created $250 billion from profits and we are not using it. This is an obvious reform that is needed.”

Kass said he expects a major return by Apple to shareholders through several vehicles, including an increase in the Apple dividend, stock buybacks and a big one-time dividend. He said it is less likely that Apple would make acquisitions, given the company’s historic aversion to them. Berkshire Hathaway has little in overseas exposure because most of its profits are made in the United States. And Buffett has been reluctant for Berkshire Hathaway to pay dividends, arguing that he can make better use of the money by finding smart investments.

“His companies are sufficiently profitable, and he is very patient, that his cash has accumulated over several years,” Kass said. “But if the corporate rate is lowered from 35 percent to 15, 20, 25, it will result in additional profits for Berkshire and just about every other American-based corporation.

“If that takes place, then Warren Buffett’s pile of cash will increase much further,” he said.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to Barb Colley …famous ex-ROC administrator; Shelly LaMotte …famous hospitality manager; Tim McGraw (50) Memphis, TN.; Robb Suffredini …famous soccer Dad.

APPLE'S COMEBACK CAMPAIGN CONTINUES - Apple Inc. extended its rebound in the latest quarter with rising profit and revenue, but reported tepid iPhone demand that adds pressure on the technology giant to deliver a hit with its new 10th anniversary handset later this year.

Profit in the three months through April 1 rose 4.9 percent to $11.03 billion - Apple's first quarterly increase in earnings in more than a year. The overall performance adds evidence that the world's most valuable company has stabilized its business after a slump in its last fiscal year, during which weak sales of its core products and rising competition sent revenue and profit tumbling.

And its dividend has surpassed Exxon's major payout: There was a time when Apple investors were loath to call it a 'dividend stock.' Now it's the biggest dividend stock there is.

Apple announced after the bell Tuesday a 10.5 percent increase in its dividend to $13.22 billion annually, surpassing Exxon Mobil's $12.77 billion payout and making it the biggest-paying dividend stock in the world. ... The giant payout increase, a luxury made possible by the tech company's now $256.8 billion cash hoard, should help cushion the blow.

Shipments of its flagship product slipped 1% from a year earlier to 50.8 million iPhones, owing partly to continued weakness in China and to customers waiting for the forthcoming phone model, which is expected in the autumn. The overall performance adds evidence that the world’s most valuable company has stabilized its business after a slump in its latest fiscal year, during which weak sales of its core products and rising competition sent revenue and profit tumbling. The latest quarter’s increase in revenue was the second in a row, following three consecutive quarterly declines.

Apple's CEO, appearing on CNBC's "Mad Money" show last Wednesday, said his company will pump $1 billion - yes, with a "b" - into a fund to invest in advanced manufacturing projects here in the U.S. There's a lot to unwind with Cook's announcement and MT breaks it down for you:

While Cook didn't frame it as a concession to Trump, the new manufacturing fund is clearly aimed at the president, who's criticized companies for making products overseas and taken repeated shots at Apple in particular for producing iPhones in China. Apple joins scores of other firms, like SoftBank, that have sought to court Trump with new investments and job creation here in the U.S. (though unlike Apple, several of the firms appear to have recycled previously made plans to allow the president to take credit.)

The $1 billion for Apple's fund will have to be borrowed, Cook told "Mad Money" host Jim Cramer, because the company is up against "bizarre" tax rates that make it extraordinarily painful to bring home the considerable profits it makes overseas. Apple and other U.S. multinationals have hoarded billions of dollars abroad, so they can avoid the 35 percent top corporate tax rate if they bring that money home. Trump has proposed requiring companies to repatriate that money at a lower, one-time tax rate.

Tesla update - A few notes on Silicon Valley electric automaker Tesla, which saw a jump in revenue but posted a first quarter net loss of $330 million.

Big picture: The loss isn't what's important, it's how Tesla navigates a slew of upcoming projects, notably the launch of the Model 3 sedan later this year.

Few expect the electric car and alternative energy company to make a profit for some time. Its future now depends on the Model 3, which unlike the Tesla Model S and Model X luxury cars is aimed at a wider consumer base, with a stated entry price of $35,000.

RISKY BUSINESS - A wave of regulations aimed at cutting risk in China’s financial system is rippling through the country’s markets and sending banks and companies scrambling for funds. During the past month, Chinese shares have fallen nearly 5%, draining almost half a trillion dollars out of the country’s markets. Bond yields have shot up to their highest levels in two years, and bond defaults hover at record levels. Investors blame the volatility on a host of measures Chinese authorities have rolled out to curb runaway debt levels, from raising the cost of short-term funds to actions that are prompting banks to unwind hidden loans and securities. The market turbulence will test Beijing’s resolve to tackle China’s snowballing debt, especially if it looks like regulators’ clampdown is jeopardizing short-term growth.

FORMER POTUS FOR RENT - Rough speaking fees for former presidents who are on the circuit:

Bill Clinton: $250,000 (raised his fee to match Hillary's when hers went up after she was SecState)

George W. Bush: $200,000

Barack Obama: $400,000

Note: These are averages — it's more if speech is overseas; less if it's local.

Bonus scoop: Michelle Obama books for $200,000.

ONE NATION UNDERWOOD: "House of Cards" Season 5 trailer ...Kevin Spacey's sinister President Frank Underwood [shares] a disturbing vision for the next six terms ... with an Underwood in the award-winning drama's fictional White House. 'The American people don't know what's best for them. I do. I know exactly what they need,' says POTUS, [drawling] to Claire (Robin Wright), his running mate in the fictional 2016 election, which will continue in the upcoming season."

They're like little children, Claire. We have to hold their sticky fingers and wipe their filthy mouths. Teach them right from wrong. Tell them what to think, and how to feel and what to want. They even need help riding their wildest dreams, crafting their worst fears. Lucky for them, they have me. They have you. Underwood 2016, 2020, 2024, 2028, 2032, 2036. One nation, Underwood.

THE LEGEND OF THE OCTOPUS - we often think about some of the history, some of the superstitions and some of the lucky charms in hockey. One such item, particular to the NHL, is the throwing of an octopus onto the ice in Detroit. A strange sports custom if ever there was one.

For the true origins of throwing octopus onto the ice we must hearken back to the age of poodle skirts and The King of Rock and Roll himself, Elvis Presley.

Back in 1952 the NHL boasted a total of six teams, and because of the league’s diminutive stature it only took a total of eight wins (two best-of-seven series) to clinch the Stanley Cup. That’s a far cry from today’s NHL, where 16 wins secures a date with Lord Stanley, but I’m sure you can imagine what those guys would have looked like — what with the primitive protection and all — if today’s grueling playoff schedule was in place back then. It would have been a massacre, and instead of being awarded a trophy teams would instead be treated to free room and board at Detroit Receiving Hospital. It give me chills just thinking about it.

But I’m getting off the subject. It took eight games to win the Cup, so when Detroit swept the Toronto Maple Leafs and the Montreal Canadiens en route to their 1952 championship two Detroit area store owners — Pete and Jerry Cusimano they were — threw the eight-tentacled beast onto the ice and the Legend of Detroit’s Lucky Octopus was born.

Of course other fans around the league have put their own spin on the octopus toss, but none ever caught on like the one born right here in Michigan. In the ’95 series between Boston and New Jersey a fan of the Bruins threw a lobster onto the ice, and in ’96 fans of the Florida Panthers took to throwing thousands of toy rats whenever the Panthers scored. Unfortunately for Panthers fans that practice was short-lived due to both the lengthy cleanup time involved as well as the Panthers eventual implosion in the Stanley Cup Finals that year. There was also supposedly a guy who smuggled a 4-foot leopard shark into the HP Pavilion during the Detroit/San Jose series in 2007, but one has to question whether or not that was an inside job. Security can’t be that lax, right?

THE SWAMI’S WEEK TOP PICKS –

NHL STANLEY CUP PLAYOFFS CONFERENCE FINALS:

NSH 4 ANA 3

PIT 4 OTT 3

MLB Game of the Week (May 20) – Colorado Rockies (24-15) at Cincinnati Reds (19-18), two 2017 surprising teams, Rockies win this one 6 – 3.

NBA PLAYOFFS CONFERENCE FINALS:

GS 4 SA 2

CLE 4 BOS 0

Season to Date (36 - 16)

MARKET WEEK – Big Tech" is "Our Favorite Security Blanket" for stocks: Investors are flocking to tech stocks on worries that the economy may be rolling over. And all are waiting for the new iPhone.

At times like this, investors cling to what they fear could soon become scarce — robust growth.

We think Amazon [now $961] ... could reach $1,000 by summer and $1,100 within a year, for a gain of close to 20%, which, along the way, could make Amazon founder Jeff Bezos the world's wealthiest person.

By the end of the decade, Amazon's profits will balloon ... as revenues overwhelm costs and investments. That's the tricky part for long-term investors. ... The next downturn for Amazon stock might not come when profits disappoint, but when they become too obvious.

DRIVING THE WEEK - Trump meets with Crown Prince Muhammad bin Zayid Al Nuhayyan of Abu Dhabi on Monday ... Turkish President Recep Tayyip Erdogan visits on Tuesday and Colombian President Juan Manuel Santos on Thursday. Trump departs for his first foreign trip on Friday.

Can the president, famous for his homebody ways, pull off a grueling foreign trip without any major blow-ups? (And no, this is not like jetting around to friendly mega-rallies like the campaign) ...

Treasury Secretary Steven Mnuchin testifies before Senate Banking on Thursday at 10:00 a.m. to offer a "domestic and international policy update" ... House Ways and Means Committee has a hearing Thursday at 10:00 a.m. on tax reform ... Ways and Means Committee Chair Kevin Brady will sit down for an interview with M.M. Wednesday evening in DC ... Industrial production at 9:15 a.m. Tuesday expected to rise 0.4 percent.

Next Blog: Jack Ass of the Month, Words of the Month, Dear Rink Rats.

Until next time, Adios

Claremont, California

May 15, 2017

#VIII-1-343

CARTOON OF THE WEEK –The New Yorker Cover