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Indonesia’s Garuda Airlines moves to cancel order for 49 Boeing 737 Max jets

JAKARTA, Indonesia – In a blow for Boeing, Indonesia’s flagship carrier is seeking the cancellation of a multibillion-dollar order for 49 of the manufacturer’s 737 Max 8 jets, citing a loss of confidence after two crashes within five months.

It is the first announcement of a cancellation since Boeing’s new model aircraft were grounded following fatal crashes in Indonesia and Ethiopia.

PT Garuda Indonesia, which had ordered 50 Max 8 jets in 2014 and had received just one plane last year, sent a letter to Boeing last week requesting to cancel the order worth $4.9 billion, company spokesman Ikhsan Rosan said Friday. The carrier has so far paid Boeing about $26 million for the order.

Garuda joined other airlines worldwide in grounding its one Max 8 jet after the crash of an Ethiopian Airlines flight this month which killed all 157 people aboard. It came less than five months after 189 people died in the Oct. 29 crash of another Max 8, operated by Indonesian private carrier Lion Air.

“Passengers always ask what type of plane they will fly as they have lost trust and confidence in the Max 8 jet,” Rosan told the Associated Press. “This would harm our business.”

He said that Garuda plans to meet with Boeing representatives next week in Jakarta to discuss details of canceling the order.

“We don’t want to use Max jets … but maybe will consider switching it with another Boeing model of plane,” Rosan said. He said Indonesian passengers are afraid to take flights using any Max model, whether it’s the 8, 9 or 10 series.

A preliminary report from Indonesia’s National Transportation Safety Committee in December stopped short of declaring a probable cause of the Oct. 29 crash.

Officials have provided scant details since then, saying they are still analyzing data from a cockpit voice recorder that was only recovered from the sea in January.

Meanwhile, in Europe, Polish national carrier PLL LOT said it was considering asking for financial compensation from Boeing or even a delay to deliveries of purchased 737 Max 8 aircraft after the planes were grounded globally following the crash in Ethiopia.

In a statement to the AP on Friday, LOT said it would wait for communications from Boeing and flight regulators on whether to put the Max 8 planes back into service. LOT has five 737 Max 8 planes and is to receive nine more this year. Its total fleet counts over 80 aircraft.

Another Polish carrier, charter airline EnterAir, said Friday it would also seek damages. It has two Max 8 planes and has placed orders for another four.

Earlier this month, Norwegian Air Shuttles said it would seek compensation from Boeing. It had grounded its 18 Boeing 737 Max 8 aircraft.

With Boeing’s backlog of 4,600 unfilled orders for Max jets, the loss of the Garuda order figures to have little financial impact on the Chicago-based company.

The danger is that other airlines could follow, particularly if investigators fault the plane for the accidents in Indonesia and Ethiopia.

“We think other cancellations may follow as global customers remain spooked after two crashes with seemingly similar causes,” Jim Corridore, an airline analyst with CFRA Research, said in a note to clients.

Corridore said, however, that if Boeing delivers a software patch to a flight-control system suspected in the crashes, and the planes are allowed to resume flying, “most customers will be reassured.” He said investors will eventually focus on strong demand for airliners.

Boeing Co. shares were down $7.25, or 2 percent, to $365.45 in afternoon trading. Broad stock indexes were also lower. Boeing shares have dropped 13 percent since the Ethiopia Airlines crash.

Baristas beware: A robot that makes gourmet cups of coffee has arrived

In the food industry, it seems, the robot revolution is well underway, with machines mastering skilled tasks that have always been performed by people.

In Boston, robots have replaced chefs and are creating complex bowls of food for customers. In Prague, machines are displacing bartenders and servers using an app. In Denver, they’re taking orders at a fast food drive through.

Robots are even making the perfect loaf of bread these days, taking charge of an art that has remained in human hands for thousands of years.

Now comes Briggo, a company that has created a fully automated, robotic brewing machine that that can push out 100 cups of coffee in a single hour – equaling the output of three to four baristas, according to the company.

Using a blend of Latin American beans, the machine – known as a “coffee haus” – creates customized cups of gourmet coffee that can be ordered via an app, giving customers control over ingredients, espresso shots, flavorings and temperature without any human interaction. The company says no other business in the world has applied as much technology to “specialty coffee.”

Removing the human element from ordering a cup of coffee is one of the company’s primary selling points.

“No more lines, no more counter confusion, no more misspelled names,” Briggo’s website says, flicking at human failings.

Briggo said all eight of its machines are owned by the company, but they’ve recently begun offering a licensed business model to prospective operators. The company didn’t reveal how much that business model costs, but noted that rent and revenue-sharing arrangements are typical when a machine is placed in a public location, such as an airport.

Kevin Nater, Briggo’s president and chief executive, said the machine would thrive in locations in which convenience is highly valued, like airports and office buildings, where several of the 10-foot by 4-foot machines currently operate.

“Imagine you’re coming into the security line at the airport, your flight is coming up, and you know that if you want a coffee you’re gong to stand in a long line,” said Nater. “From the security line, you can simply order your cup of coffee and pick it up at the coffee haus and make it to your flight on time.”

“I’ve never found anyone who wants to stand in line a long time,” he added. “We’ve just changed the game.”

It seems others agree. This year, Fast Company named the Austin, Texas-based company one of the 10 Most Innovative companies in the world. Assuming both companies grow, Briggo may someday compete with Cafe X, an automated coffee bar from San Francisco that uses assembly line-style machines that promise your cup of joe will be engineered with “robotic precision.”

The machines arrive at a time when ready-to-drink coffee, such as bottled drinks found in supermarkets and convenience stores, continues to explode in popularity, according to CNBC.

Nater said he has no doubt his machine makes cups of coffee as well, if not better, than a human barista. Referring to the robot as a “high speed, totally controlled food factory,” he said that unlike human workers a machine doesn’t get flustered when business gets busy. By looking at analytics, he said, he can ensure that the robot is hitting “all of its quality marks.”

But Oliver Geib, a 24-year-old barista at Ceremony Coffee Roasters in Annapolis, Maryland, remained skeptical. As coffee is being made by a barista, he said, subtly gauging the ratio of water to grind as flavor develops through refined taste tests, is a crucial part of the process.

“All the numbers and data in the world can’t actually tell you how the coffee tastes,” Geib said. “A big part of what a human brings is being able to taste the coffee during the process of dialing in the flavor.”

Fast-food restaurants like Starbucks, Wendy’s, Panera and McDonald’s encourage customers to order using self-service kiosks or a mobile app.

Asked how Briggo would impact employment, Nater said food service companies have a hard time retaining workers and are often short on staff, especially in airports where turnover is high.

“We don’t think we’re replacing people,” he said. “We are creating a high tech retail and marketing business and developing jobs in the process. We just hired two people in the Bay Area, where we are opening a new location in the spring.”

But automation critics claim that machines ultimately harm more workers than they help. Last month, Erikka Knuti – communications director for the United Food and Commercial Workers Union – said too many businesses treat customer service as a line-item cost instead of an investment. In addition to eliminating jobs, she said, removing people from transactions degrades the product that businesses are selling.

“Retailers and businesses underestimate the importance of the customer service interaction — that point when a customer hands over their money and they get a warm smile in return that tells them they’re valued,” she said.

Asked whether he was worried about losing his job to a robot, Geib said, “absolutely not.” Though he sees the value of robots making coffee at particular locations when customers are short on time, he said there’s a loyal group of people who will always seek out the slower, interactive experiences at coffee shops.

“A lot of customers really appreciate watching a barista carefully pouring water or steaming the milk or adding a little flourish to their drink,” he said. “The social aspect, the atmosphere and the interaction with the barista, is a big part of the experience of drinking coffee.”

Stocks, bond yields fall sharply as growth worries spread

Wall Street was roiled Friday by new signs that global economic growth is slowing. The jitters triggered a sell-off in stocks and sent bond yields sharply lower, flashing a possible recession warning.

The wave of selling knocked 460 points off the Dow Jones Industrial Average and gave the benchmark S&P 500 index its worst day since Jan. 3. The Russell 2000 index of smaller company stocks fell more than the rest of the market as traders offloaded riskier assets.

Worried investors shifted money into bonds, which sent yields much lower. The yield on the 10-year Treasury dropped to 2.43 percent from 2.54 percent late Thursday, a big move.

The slide in bond yields hurt bank stocks which, along with technology companies, accounted for much of the broad decline in stocks. The utilities sector was the only one to eke out a gain.

“What’s really giving investors concern today is this weak global economic data here in the U.S. and in Europe,” said Jeff Kravetz, regional investment director for U.S. Bank Wealth Management.

The market’s skid runs counter to what has been a strong start to the year on Wall Street as stocks rebounded from a steep slide at the end of 2018. The bull market for U.S. stocks recently marked its 10th anniversary and is now the longest ever.

The fear that gripped investors Friday was fueled by a steadily dimming outlook for the global economy. China, the world’s second-largest economy after the United States, is weakening. And other economies that depend heavily on purchases in China have suffered as a result.

Factory production in the euro currency alliance has fallen at its steepest rate in about six years. In Germany, Europe’s largest economy, a survey of purchasing manager manufacturers posted its sharpest production drop in nearly six years. Orders to German factories have also tumbled.

In another worrying sign, the yield on the 10-year Treasury note fell Friday below the yield on the three-month Treasury bill. When that kind of “inversion” in bond yields occurs, economists fear that it can signal a recession within the coming year.

The S&P 500 index dropped 54.17 points, or 1.9 percent, to 2,800.71. The Dow gave up 460.19 points, or 1.8 percent, to 25,502.32.

The Nasdaq composite, which is heavily weighted with technology stocks, slid 196.29 points, or 2.5 percent, to 7,642.67. The Russell 2000 lost 56.49 points, or 3.6 percent, to 1,505.92.

European stocks also finished sharply lower Friday.

Despite wavering from gains to losses throughout the week, the S&P 500 index is still up more than 11 percent so far in 2019, which still counts as a blockbuster start to a year.

Key bond yields fell this week to their lowest levels in more than a year after the Federal Reserve said it was seeing slower growth in the economy and no longer expected to raise interest rates this year.

The yield on the benchmark 10-year Treasury note, which is used to set rates on mortgages and many other kinds of loans, is now sharply lower from its recent high of 3.23 percent in early October.

The prospects of slowing global economic growth has motivated investors to rebalance their holdings as they “digest the new reality,” said Marina Severinovsky, investment strategist at Schroeders. “We’re sort of coming back to Earth.”

Central banks have been positioning themselves to deal with the slowdown, she said, and that includes the Federal Reserve’s expectations for no rate increases this year.

Earlier this month the European Central Bank said it would push back the earliest date for interest rate increases. It also said it would offer ultra-cheap loans to banks, supporting their ability to keep lending.

“It’s very positive that, not just the Fed, but other policy makers have acknowledged the situation is kind of dangerous on the global slowdown and are taking action,” Severinovsky said.

The decline in bond yields threatened the profitability of banks because it forces them to charge lower interest rates on loans. Bank of America slid 4.2 percent.

Technology companies, which would stand to lose more than other sectors in a slowing economy, also took heavy losses. Western Digital gave up 6.5 percent.

Boeing dropped 2.8 percent after Indonesia’s flag carrier became the first airline to seek to cancel an order of 737 Max 8 jets, which have been involved in two fatal crashes in the past six months.

Energy futures finished mostly lower. Benchmark U.S. crude oil slid 1.6 percent to settle at $59.04 a barrel. Brent crude fell 1.2 percent to close at $67.03 a barrel.

Wholesale gasoline added 0.3 percent to $1.32 a gallon, heating oil dropped 1.1 percent to $1.97 a gallon and natural gas fell 2.4 percent to $2.75 per 1,000 cubic feet.

Gold gained 0.4 percent to $1,312.30 an ounce, silver lost 0.2 percent to $15.41 an ounce and copper gave up 2.2 percent to $2.84 a pound.

The dollar fell to 110.07 yen from 110.79 Japanese yen on Thursday. The euro weakened to $1.1294 from $1.1354.

Papa John’s scores Shaq to help revive its image

NEW YORK – Papa John’s is getting “Shaq-ified.”

The pizza chain said Friday that basketball Hall of Famer Shaquille O’Neal will be its new pitchman, appearing in TV commercials and promoting Papa John’s in other ways. The company hopes O’Neal can repair its image and revive its sales after the company’s founder and namesake, John Schnatter, made racially insensitive remarks.

Besides being a spokesman, O’Neal will also join the company’s board of directors and invest in nine of its restaurants in the Atlanta area.

“If you want to enjoy great pizza and feel loved by the people that serve the pizza, you can come back home now,” O’Neal said in an interview with the Associated Press. “ ‘The Daddy’ is here.”

The problems at Papa John’s started in 2017, when Schnatter criticized the NFL’s leadership and blamed protests by football players for falling pizza sales. Last year it was revealed that he used a racial slur during a media training session. Schnatter apologized for the slur and the company scrubbed his face from the company’s logo and pizza boxes. He remains the Louisville, Kentucky-based company’s biggest shareholder.

O’Neal said Schnatter’s comments were “not acceptable,” and said he told the company’s executives that it needed more diversity in its leadership. He says he’s the first African-American to join Papa John’s board.

“We want to create a culture to let everybody know that they’re loved, accepted and wanted,” O’Neal said.

Papa John’s International Inc. said it will pay O’Neal more than $8 million in cash and company stock for the three-year endorsement deal.

Wall Street seems to think it’s a winning partnership. Shares of Papa John’s soared more than 6 percent Friday.

Trump slams European automakers, threatens U.S. tariffs

WASHINGTON – President Donald Trump criticized European auto makers Friday, suggesting he could impose tariffs on imports from companies such as BMW and Mercedes unless they build more plants in the United States.

In an interview with Fox Business Network’s Maria Bartiromo, Trump said that he has rejected proposals from the European Union that would bring auto tariffs on both sides to zero.

“They have BMW, they have Mercedes, they have a lot of very good cars that come in,” Trump said of Germany. “I want them to make them here. … If you’re going to sell them to the Americans, make them here.”

Trump’s comments come roughly a month after the Commerce Department completed an investigation into whether auto imports threaten national security and forwarded its conclusions to the White House.

The results of the report haven’t been released. But Derek Scissors, a resident scholar at the American Enterprise Institute, said he has seen a copy and that it concludes auto imports threaten national security by worsening the trade deficit.

The president has until roughly mid-May to decide what action to take, if any, in response to the report. He could impose tariffs of up to 25 percent on all auto and auto parts imports, or just on specific items from specific countries.

The prospect of such duties has sparked strong opposition on Capitol Hill, where they have been criticized by members of Congress from both parties. Most White House officials oppose them too, analysts say.

“I don’t think there’s any official in the White House that supports” auto tariffs, said David Dollar, a senior fellow at the Brookings Institution.

The U.S. auto industry also opposes the duties, because they use imported auto parts, which would be more expensive if the tariffs were imposed.

In his interview on Fox Business Network, Trump said that eliminating tariffs on all auto trade wouldn’t necessarily help U.S. automakers.

“The problem is that the Chevrolet will never be accepted in Europe like the Mercedes is accepted here, so it’s not a good deal,” he said.

He also praised the 25 percent tariff the United States imposes pickup truck imports, a legacy of a decades-old trade fight with Germany.

“That’s our best segment by far,” he said.

Tyson recalls chicken strips due to metal fears

WASHINGTON – Arkansas-based Tyson Foods is recalling more than 69,000 pounds of frozen, ready-to-eat chicken strips because they may be contaminated with pieces of metal.

The U.S. Agriculture Department said Thursday the products were produced on Nov. 30, 2018, and have a best if used by date of Nov. 30, 2019. The products have the establishment number “P-7221” on the back of the packages.

The USDA says it received two complaints about the metal, but there are no confirmed reports of anyone being injured.

The USDA is concerned the products could still be in freezers. Consumers should throw out the packages or return them to the place of purchase.

The recall comes after Tyson in January recalled some chicken nuggets because customers said they found pieces of “soft, blue rubber” inside.

Potential recession signal: A key ‘yield curve’ has inverted

NEW YORK – One of the most closely watched predictors of a potential recession just yelped even louder.

The signal lies within the bond market, where investors show how confident they are about the economy by their level of demand for U.S. government bonds.

It’s called the “yield curve,” and a significant part of it flipped Friday for the first time since before the Great Recession: A Treasury bill that matures in three months is yielding 2.45 percent – 0.02 percentage points more than the yield on a Treasury that matures in 10 years.

It seems illogical. Economists call it an “inverted” yield curve. Normally, short-term debt yields less than a long-term debt that requires investors to tie up their money for a prolonged period. When a short-term debt pays more than a long-term debt, the yield curve has inverted.

And when the yield curve is inverted, it shows that investors are losing confidence in the economy’s prospects.

Why care?

This warning signal has a fairly accurate track record. A rule of thumb is that when the 10-month Treasury yield falls below the three-month yield, a recession may hit in about a year. Such an inversion has preceded each of the last seven recessions, according to the Federal Reserve Bank of Cleveland.

The last time a three-month Treasury yielded less than a 10-year Treasury was in late 2006 and early 2007, before the Great Recession made landfall in December 2007.

Why did yield curve invert?

Longer-term Treasury yields have been falling this year, in part on worries that economic growth is slowing around the world. When investors become nervous, they often abandon stocks and other risky assets and flock to Treasurys, which are among the world’s safest investments. High demand for bonds will, in turn, send yields falling. Accordingly, the yield on the 10-year Treasury has sunk to 2.43 percent from more than 3.20 percent late last year.

Shorter-term rates, by contrast, are influenced less by investors and more by the Federal Reserve, which raised its benchmark short-term rate seven times over the past two years. Those rate hikes had been forcing up the three-month yield, to 2.45 percent from 1.71 percent a year ago. This momentum will likely slow now that the Fed foresees no rate hikes in 2019. But if longer-term Treasury yields continue to weaken, the curve could remain inverted.

Is it a perfect predictor?

No, an inverted yield curve has sent false positives before. The yield curve inverted in late 1966, for example, and a recession didn’t hit until the end of 1969.

Haven’t we heard this before?

Other parts of the yield curve inverted late last year, as when the five-year Treasury’s yield dropped below the three-year yield. Those parts of the yield curve, though, aren’t as closely watched.

And not every part of the yield curve is inverted. Many traders on Wall Street also pay close attention to the difference between two-year and 10-year Treasurys. That part of the curve is still not inverted. The 10-year yield of 2.43 percent is still above the two-year yield of 2.32 percent.

So is a recession coming or not?

It’s too soon to say. Economic growth is slowing around the world, but the U.S. job market remains relatively strong.

“This is a signal that we should take seriously,” said Frances Donald, head of macroeconomic strategy at Manulife Asset Management. “However, it’s too early to tell whether this is indeed a harbinger of a recession or a blip. For me to feel confident to say this is a predictor of recession, I would need to see it persist for at least one to two months.”

Potentially more concerning, Donald said, is how businesses and consumers react to the inverted yield curve. If they were to cut back on hiring or spending, that could trigger a self-fulfilling prophecy that leads to a recession.

“We’re so accustomed to this telling us a recession is ahead that my concern is businesses and households get so scared they effectively create one,” she said.

GM announces jobs, electric vehicle after Trump criticism

ORION TOWNSHIP, Mich. – Less than a week after a series of critical tweets from President Trump over an Ohio plant closure, General Motors is announcing plans to add 400 jobs and build a new electric vehicle at a factory north of Detroit.

The company says it will spend $300 million at its plant in Orion Township, Michigan, to manufacture a Chevrolet vehicle based on the battery-powered Bolt.

GM wouldn’t say when the new workers will start or when the new vehicle will go on sale, nor would it say if the workers will be new hires or come from a pool of laid-off workers from the planned closings of four U.S. factories by January.

The company also announced plans Friday to spend about another $1.4 billion at U.S. factories with 300 more jobs but did not release a time frame or details.

The moves come after last weekend’s string of venomous tweets by Trump condemning GM for shutting its small-car factory in Lordstown, Ohio, east of Cleveland. During the weekend, Trump demanded that GM reopen the plant or sell it, criticized the local union leader and expressed frustration with CEO Mary Barra.

GM spokesman Dan Flores said the investment has been in the works for weeks. Indeed, GM has said it planned to build more vehicles off the underpinnings of the Bolt, which can go an estimated 238 miles on a single electric charge. The company has promised to introduce 20 new all-electric vehicles globally by 2023.

In November, GM announced plans to shut the four U.S. factories and one in Canada. About 3,300 workers in the U.S. would lose their jobs, as well as 2,600 in Canada. Another 8,000 white-collar workers were targeted for layoff. The company said the moves are necessary to stay financially healthy as GM faces large capital expenditures to shift to electric and autonomous vehicles.

Plants slated for closure include Lordstown; Detroit-Hamtramck, Michigan; Warren, Michigan; White Marsh, Maryland, near Baltimore and Oshawa, Ontario near Toronto. The factories largely make cars or components for them, and cars aren’t selling well these days with a dramatic consumer shift to trucks and SUVs. With the closures, GM is canceling multiple car models due to slumping sales, including the Chevrolet Volt plug-in gas-electric hybrid.

GM has said it can place about 2,700 of the laid-off U.S. workers at other factories, but it’s unclear how many will uproot and take those positions. More than 1,100 have already transferred, and others are retiring.

“Right now, we’re focused on the people of Lordstown, making sure they have opportunities because we do have jobs,” Barra told reporters following Friday’s announcement. “We want every single person in Lordstown to stay within the GM family, and that’s what we’re working on.”

The United Auto Workers has sued GM over the closings, which still must be negotiated with the union.

“I will not spoil a great occasion here today. But there is hardship amongst four of our locations. And we’ve made it clear that we disagree with that,” UAW Vice President Terry Dittes said.

Trump’s latest GM tweet on Monday said GM should: “Close a plant in China or Mexico, where you invested so heavily pre-Trump,” and “Bring jobs home!”

“I understand a lot of the angst that people are feeling, and I feel it, too,” Michigan Gov. Gretchen Whitmer said Friday. “And I want to make sure that GM knows that their investment here in Michigan is encouraged and welcomed and appreciated. And we’re going to keep doing that.”

Ohio and the area around the Lordstown plant are important to Trump’s 2020 re-election bid. The state helped push him to victory in 2016, and Trump has focused on Lordstown, seldom mentioning the other U.S. factories that GM is slated to close.

“General Motors is committed to supporting U.S. manufacturing, including the great states of Ohio and Michigan,” said Barra, who maintains that she sees no further layoffs or plant closures through the end of 2020.

U.S. existing-home sales jumped 11.8 percent in February

WASHINGTON – U.S. home sales soared 11.8 percent in February, aided by accelerating wages and falling mortgage rates that are improving affordability.

The National Association of Realtors said Friday that existing homes sold at a seasonally adjusted annual rate of 5.51 million last month, a decisively sharp rebound from a pace of 4.94 million in January.

The burst in sales points to the housing market regaining the momentum that it lost in the middle of 2018, after a spike in rates for home loans caused sales to slow. The February sales figures point toward growth in sales of homes priced between $250,000 and $500,000, a range that is generally affordable to middle-class families.

“This was fueled principally by an improvement in affordability resulting from a combination of slower house price gains, lower mortgage rates and more rapid wage growth,” said David Berson, chief economist at Nationwide Mutual Insurance.

Still, existing-home sales are down 1.8 percent from a year ago because of the severity of last year’s slowdown. But 30-year mortgage rates have since tumbled after peaking in early November at roughly 5 percent, helping sales to recover as that average has fallen to 4.28 percent this week, according to mortgage buyer Freddie Mac.

Mortgage rates will likely fall further. The Federal Reserve indicated this week that it foresees no further interest rate increases this year – a message that has sent the yield on the 10-year Treasury note plunging. Rates on long-term mortgages closely track the 10-year yield.

The median sales price in January was $247,500, a slight increase of 3.6 percent from last year. Home price growth has been converging with average hourly wage gains in recent months.

However, February’s sales bust caused the months’ supply of homes on the market to tumble to 3.5 months from 4.4 months in September.

Sales climbed in the Midwest, South and West in February but were unchanged in the Northeast.

Motley Fool: All the right moves

Investment banking giant Goldman Sachs (NYSE: GS) has a reputation for finding ways to make money in any market environment, no matter how challenging. In the fourth quarter of 2018 – a period when financial markets were experiencing volatility to a degree investors hadn’t seen in a decade – Goldman managed to bring in half a billion dollars more in revenue than most had expected, and profits topped the consensus forecast by more than a third.

One of the catalysts fueling Goldman’s strong performance has been its young but rapidly expanding consumer-banking division, which includes the highly successful Marcus platform for personal loans and high-yield savings accounts. In fact, Goldman’s revenue from debt securities and loans grew by 43 percent year over year in 2018, and the Marcus growth was a big reason.

Goldman plans to expand its consumer offerings. A wealth-management product for everyday Americans was announced in late 2018, and it could leverage Goldman’s brand power to capture a market it has historically not served. Furthermore, Goldman is reportedly partnering with Apple on a co-branded credit card product. If that’s successful, it could take Goldman’s credit card business from zero to billions in a relatively short time.

Between consistent excellence in the investment banking division and newfound promise in consumer banking, the Wall Street giant should appeal to long-term investors.

Ask the Fool

Q: If I’m drawn to a young and growing company, what should I look into before investing in it? – T.S., Bradenton, Florida

A: First, make sure the company has competitive advantages. These might include a strong brand, a solid reputation, valuable patents or economies of scale.

Check out the financial statements it has filed with the Securities and Exchange Commission ( Its income statement should feature growing sales (sometimes called revenue) and income. On its balance sheet, figures for inventory or accounts receivable should not be growing faster than sales. Heavy or quickly growing debt are additional red flags.

Look at the company’s statement of cash flows to see how it’s generating cash. Ideally, most cash should come from ongoing operations – the making and selling of products or services – and not from issuing debt or stock or selling property.

Examine the company’s profit margins (gross, operating and net). Higher margins suggest that it has a strong brand or special technology it can charge more for. Ideally, profit margins should be growing over time – or at least not shrinking.

Finally, assess how attractive the price is; while a company may be terrific and promising, you don’t want to overpay for its shares. Comparing its price-to-earnings (P/E) ratio or price-to-sales ratio to its five-year average – which you can find at – will give you a sense of how its valuation has been changing over time. (Enter the company’s ticker symbol and then click on the “Valuation” tab.)

You can learn much more about how to evaluate companies at

Q: How can I access my credit report? – F.R., Riverside, California

A: Visit, where you can get free copies annually.

My dumbest investment

In 1966, just out of college, I bought 15 shares of a stock at $9.75 apiece (total investment: $146.25, less the trading commission). About three years later, I sold them at $127 per share for almost $2,000! When the stock fell back to $10 and was paying a $1 dividend, I remembered my positive experience and bought 1,000 shares. Soon thereafter, though, the company suspended its dividend and promptly fell to around $4, erasing much more than the phenomenal gain I’d made in my first three years of owning it.

Lesson learned: If you sell it, you sell it for a reason. If it falls a lot, it does so for a reason. Don’t get so enthralled with a stock that you don’t do your research and fail to be objective. – J.M., Tampa, Florida

The Fool responds: That’s a terrific initial gain, though clearly, buying into the stock again was a mistake.

You’re right that you needed to do your homework. One might assume that a stock that soared will keep soaring, but it doesn’t work that way.

A stock that has surged more than 1,000 percent in three years may well be overvalued and likely to pull back at least a little for a while.

It’s important to have a good grasp of a company’s health, performance and risks – and to keep up with its progress – if you’re going to invest your hard-earned dollars in it.