America's Youth Unemployment Rate Is One Of The Worst Of Wealthy, Large Economies
With graduation looming around the corner for many college students, this article seems important. Our economy seems to be back on track after the 2008 recession and everything seems to be improving, except in the area of youth unemployment. After the recession, college graduates had to compete with recently laid off workers who had more job experience than them, making it much more difficult to find jobs. The job market for college graduates has gotten better, but it is still lower than many other nations of equivalent wealth. The article doesn't go into detail which countries, but I would assume they would be European nations. Even when they do become employed, it is many times in jobs where they are underemployed, which does not bode well for them because as it says in the article, 1 in 5 households is stuck with college debt. There are other factors that might not be taken into account though in this scenario, like graduates getting degrees in fields where there might not be many jobs. Those job markets could already be saturated. Even if this is partly the case, the economy does need to create around 4 million jobs to get the unemployment down for the youth back down to normal.
Monday, May 6, 2013
Euro Can Grow to 25 States in Next Few Years in Finnish Scenario
http://www.bloomberg.com/news/2013-05-05/euro-can-grow-to-25-states-in-next-few-years-in-finnish-scenario.html
According to Finland's Europe Minister Alexander Stubb, EU and the euro have a bright future. He envisions the euro growing to 24-25 members in next few years. In respect to the crisis in Europe, Stubb believes that European authorities did all they could and now it is time for governments to follow on their budget promises, a task that is much easier said than done.
Finland has done something no other nations in EU were able to during the crisis. They kept a stable AAA credit according to three main ratings companies and the country was able to keep its budget within European Union's 3 percent deficit limit. While Finland stands as an example for the rest of the region, there are handful of countries that rely on international bailouts to pay their bills. Therefore, the challenge still stands and it will have to take more than one stable economy to restore confidence in the region.
According to Finland's Europe Minister Alexander Stubb, EU and the euro have a bright future. He envisions the euro growing to 24-25 members in next few years. In respect to the crisis in Europe, Stubb believes that European authorities did all they could and now it is time for governments to follow on their budget promises, a task that is much easier said than done.
Finland has done something no other nations in EU were able to during the crisis. They kept a stable AAA credit according to three main ratings companies and the country was able to keep its budget within European Union's 3 percent deficit limit. While Finland stands as an example for the rest of the region, there are handful of countries that rely on international bailouts to pay their bills. Therefore, the challenge still stands and it will have to take more than one stable economy to restore confidence in the region.
Slowed economic growth in the US
The
article discusses that usually economic growth was gaining speed at an annual
rate of 2.5% for the first quarter of every year. The department of commerce
released a statement saying that GDP had grown 2.5% in the first quarter after
growth almost stalled at 0.4% in the fourth quarter of the preceding year. However
even with the surge in GDP between quarters it still did not meet economists
expectations which were set at 3%. Much of this growth is attributed to the
increase in consumer spending, which accounts for more than two thirds of US
economic activity. Consumer spending increased at a 3.2% pace, the fastest
growth since the later part of 2010. This was a welcome increase seeing as how
the previous quarter saw only a 1.8% in growth. Also attributing to the
economic growth was a surge in people purchasing vehicles as well as more money
from utilities due to a longer and colder winter than average.
Even
though economic growth did not meet the expectations I believe that this is
little more than a slight bump in the road. Yes, we did not meet the
expectations of 3%, but it was still a significant increase from the 0.4% we
had the quarter before. Our economy is still recovering from the recession and
will take time to do so, I’m sure that we will see this happen again, but we
will make progress and we will recover.
Sunday, May 5, 2013
Unemployment due to lack of Confidence
http://www.washingtonpost.com/opinions/employers-lack-confidence-not-skilled-labor/2013/05/05/757340c8-b411-11e2-9a98-4be1688d7d84_story.html
This article begins by discussing the possibility that the current unemployment problem is caused by a lack of skilled workers to fill positions. It then explains why this view is not necessarily tenable in the current environment and proposes that the unemployment problem is caused by a lack of confidence among employers.
A lack of confidence on the part of both businesses and consumers have been large contributors to the relatively slow pace of the current recovery. It would be a significant boost to the economy if it were possible to raise confidence, which can certainly be helped by both monetary and fiscal policy. A boost in business confidence could lower the unemployment rate further and help the economy recover faster.
This article begins by discussing the possibility that the current unemployment problem is caused by a lack of skilled workers to fill positions. It then explains why this view is not necessarily tenable in the current environment and proposes that the unemployment problem is caused by a lack of confidence among employers.
A lack of confidence on the part of both businesses and consumers have been large contributors to the relatively slow pace of the current recovery. It would be a significant boost to the economy if it were possible to raise confidence, which can certainly be helped by both monetary and fiscal policy. A boost in business confidence could lower the unemployment rate further and help the economy recover faster.
Jobs Data Ease Fears of Economic Slowdown in U.S.
The
recent government cuts had many Americans in fear as they were scared the jobs
lost in the public sector might slow down the economy again. They feared that
these jobs were too important to our fragile economy and might cause the already
high unemployment to increase even more. However, these fears are slowly
leaving the heads of most Americans as the private sector continues to increase
employment. Last month alone private employers filled 176,000 workers with new
jobs, which greatly outdoes the public sector layoff of only 11,000. The good
news of the employment situation has even rubbed off onto the stock market.
Investors have seen this growth as a good thing, causing the stock market
climb. It is great to seen good healthy signs of economic recovery and it seems as though things are going to continue this way.
Saturday, May 4, 2013
Housing prices hitting peaks
Home prices in 24 of the nation's top 200 housing markets have hit new peaks or are very close to their previous peak. According to projections and continued increases, economists say many of these cities are likely to hit new peaks this year. While dozens of housing markets are still far below their peak or where they stood prior to the housing bust in 2006, this is a good sign for the economy. This is the beginning of a long process, but a positive beginning stage and secure place for the market to be headed in the future.
http://www.usatoday.com/story/money/business/2013/05/04/house-price-gain-lifts-markets/2130811/
http://www.usatoday.com/story/money/business/2013/05/04/house-price-gain-lifts-markets/2130811/
Friday, May 3, 2013
US spending up
http://www.bbc.co.uk/news/business-22339995
US consumer spending in March exceeded the forecasts unexpectedly. It rose by 0.2% according the commerce department. However, its the slowest increase in a while and marks a 'slowdown' but still was unexpected. Most of the increased spending was on utilities which was due to the extended winter. Consumer spending has helped the US economy absolve a 2.5% annualized rate of growth in the first quarter. There are fears that the spending that had occurred due to weather will be reversed as it gets warmer.
Thursday, May 2, 2013
Development in Africa
http://www.economist.com/blogs/baobab/2013/05/development-africa
This article tells of how Aftrica is one of the fastest developing
nations. Some of Africa’s countries
have been strolling with growth in income per person of more than 5% per year
since 2007. However, one of these countries, Zambia, seems to have been left in
the dust even though the economic growth is present.
A true statement
mentioned in the article is that GDP is not the perfect measurement of living standards.
Things like jobs, governance, health, and inequality are other worthy factors. Once
you look at these indicators, it becomes more apparent that the “well-being in
much of sub-Saharan Africa is lower than it ought to be, given rising average
incomes per person,” as stated in the article.
The article also
said, “Levels of well-being in South Africa are out of whack with its GDP per
head. Kenya and Ghana do a much better job of reaping the benefits of a growing
economy.”
Along with Kenya
and Ghana, many other countries are in Africa that have improved their
well-being the most, but the key to their success is being able to “translate”
their growth into benefiting economic well-being. Zambia was not the best at
doing that. The article doesn’t really specify how the most well off countries
go about doing that, but I am assuming it has mostly to do with the government,
how it acts with its policies, as well as how the public complies and keeps the
economy and its markets going.
Bank of Canada Names New Govenor
http://www.bbc.co.uk/news/business-22392524
The Bank of Canada which is the equivalent to the United States US Federal Reserve has named a new governor Stephen Poloz. Poloz wasn't the expected choice most thought who would replace Mark Carney who is going to go run the Bank of England. Many thought that his senior deputy Tiff Macklem would be chosen, but Stephen Poloz is smart choice having for 25 years in Canadian public service and was the chief executive for Canada's export credit agency. Poloz and six other members make up the committee that decides on the monetary policy of the Bank of Canada. They use a method of general consensus rather than the Fed and Bank of England who vote and present reasons as to why certain measures should be taken. It will be interesting to see if this will have any effect on the Canadian economy, but I believe they will still get by just fine.
The Bank of Canada which is the equivalent to the United States US Federal Reserve has named a new governor Stephen Poloz. Poloz wasn't the expected choice most thought who would replace Mark Carney who is going to go run the Bank of England. Many thought that his senior deputy Tiff Macklem would be chosen, but Stephen Poloz is smart choice having for 25 years in Canadian public service and was the chief executive for Canada's export credit agency. Poloz and six other members make up the committee that decides on the monetary policy of the Bank of Canada. They use a method of general consensus rather than the Fed and Bank of England who vote and present reasons as to why certain measures should be taken. It will be interesting to see if this will have any effect on the Canadian economy, but I believe they will still get by just fine.
For Retailers, Getting Out of Bangladesh isn't so Easy
Link: http://www.businessweek.com/articles/2013-05-02/for-retailers-getting-out-of-bangladesh-isnt-so-easy#r=hp-ls
Bangladesh has carved itself out as a smaller China; a cheap place to send your business's labor. However, this comes with its own set of issues such as incredibly lax regulation. There have been incidents including but not limited to a factory collapse that occurred on April 30th of this year. Some companies like Disney have stated that they want to pull out of Bangladesh, but finding an equally cheap source of labor has proven to be difficult. Other areas with cheap labor like Bangladesh have similarly lax regulations. On Bangladeshi side, textile exports make up around 10% of their GNP, so a full pullout would result in heavy losses which leads to this problem being much more complex than just pulling out.
Bangladesh has carved itself out as a smaller China; a cheap place to send your business's labor. However, this comes with its own set of issues such as incredibly lax regulation. There have been incidents including but not limited to a factory collapse that occurred on April 30th of this year. Some companies like Disney have stated that they want to pull out of Bangladesh, but finding an equally cheap source of labor has proven to be difficult. Other areas with cheap labor like Bangladesh have similarly lax regulations. On Bangladeshi side, textile exports make up around 10% of their GNP, so a full pullout would result in heavy losses which leads to this problem being much more complex than just pulling out.
Unemployment Claims Drop 18,000 in latest week
http://www.usatoday.com/story/money/business/2013/05/02/unemployment-claims-weekly/2128755/
According to the article, new claims for unemployment benefits fell 18,000 in the week ended April 27, to 324,000 from a revised 342,000 the week before. Claims were at their lowest level since January 2008. The 4 week moving average of claims was 342,250, down 16,000 from the previous week revised.
Drops in unemployment claims can be a positive sign that the unemployment right might continue to drop. If people are claiming less unemployment benefits, then they are finding jobs faster and new jobs may be opening up.
According to the article, new claims for unemployment benefits fell 18,000 in the week ended April 27, to 324,000 from a revised 342,000 the week before. Claims were at their lowest level since January 2008. The 4 week moving average of claims was 342,250, down 16,000 from the previous week revised.
Drops in unemployment claims can be a positive sign that the unemployment right might continue to drop. If people are claiming less unemployment benefits, then they are finding jobs faster and new jobs may be opening up.
Zimbabwe After Hyperinflation
http://www.economist.com/news/finance-and-economics/21576665-grubby-greenbacks-dear-credit-full-shops-and-empty-factories-dollars-they
This article talks about Zimbabwe's recovering economy after a period of extreme hyperinflation. During 2008, inflation had reached a point of 231,000,000% and the economy was struggling tremendously as a result. However, Zimbabwe has now begun using the U.S. dollar as their main form of currency, and is beginning to get itself back on track. However, there are still problems that must be resolved. Banks in Zimbabwe are struggling because nobody is willing to deposit money for more than 90 days. Banks do not have very much extra cash or anyone to rely on as a last-resort for funding. Therefore, liquidity is constantly an issue. As a result of all this, banks cannot lend money to people for a very long time either. This is hindering investment because firms and potential homeowners can't find loans, so they can't buy homes or make business investments.
This article talks about Zimbabwe's recovering economy after a period of extreme hyperinflation. During 2008, inflation had reached a point of 231,000,000% and the economy was struggling tremendously as a result. However, Zimbabwe has now begun using the U.S. dollar as their main form of currency, and is beginning to get itself back on track. However, there are still problems that must be resolved. Banks in Zimbabwe are struggling because nobody is willing to deposit money for more than 90 days. Banks do not have very much extra cash or anyone to rely on as a last-resort for funding. Therefore, liquidity is constantly an issue. As a result of all this, banks cannot lend money to people for a very long time either. This is hindering investment because firms and potential homeowners can't find loans, so they can't buy homes or make business investments.
Wednesday, May 1, 2013
Federal Reserve Sticks With Stimulus
http://money.cnn.com/2013/05/01/news/economy/federal-reserve-stimulus/index.html?iid=SF_E_Lead
This article tells of how the FED will continue to purchase $85 billion a month in mortgage-backed securities and Treasuries to stimulate spending in the economy and keep long-term interest rates low. They are doing this to combat the high unemployment rate and low inflation, which were suggested to be the result of cuts in government sopending.
Of course they will slow down or speed up as needed in response to economic activity, but the central bank is quite a ways away from attaining their goal of an unemployment rate of 6.5% or inflation higher than 2.5% a year. The unemployment rate was 7.6% as of late March and inflation is rising only 1% year to year.
The FED's actions have been appreciated in the stock market, stocks having recovered since the crisis, but there is some controversy that the plans will either backfire, causing vigorous rising inflation, or simply not work as Congress tries to combat debt. It was suggested by only one member of the FED that their decisions could potentially cause future economic problems/imbalances.
I think the FED is making a good decision to try and balance out the government spending cuts and to lower the unemployment rate, but is the trade-off (a possible blow to the future) more debtramental than the benefit is helpful?
This article tells of how the FED will continue to purchase $85 billion a month in mortgage-backed securities and Treasuries to stimulate spending in the economy and keep long-term interest rates low. They are doing this to combat the high unemployment rate and low inflation, which were suggested to be the result of cuts in government sopending.
Of course they will slow down or speed up as needed in response to economic activity, but the central bank is quite a ways away from attaining their goal of an unemployment rate of 6.5% or inflation higher than 2.5% a year. The unemployment rate was 7.6% as of late March and inflation is rising only 1% year to year.
The FED's actions have been appreciated in the stock market, stocks having recovered since the crisis, but there is some controversy that the plans will either backfire, causing vigorous rising inflation, or simply not work as Congress tries to combat debt. It was suggested by only one member of the FED that their decisions could potentially cause future economic problems/imbalances.
I think the FED is making a good decision to try and balance out the government spending cuts and to lower the unemployment rate, but is the trade-off (a possible blow to the future) more debtramental than the benefit is helpful?
Fed holds steady on stimulus, worried by fiscal drag
http://finance.yahoo.com/news/no-end-sight-fed-stimulus-040556215.html
"The U.S. Federal Reserve said on Wednesday it will continue buying $85 billion in bonds each month to keep interest rates low and spur growth, and added it would step up purchases if needed to protect the economy." The Fed says the economy is expanding moderately, and that inflation should stay low. While the economy is growing moderately the Fed is worried about growth in the future saying that fiscal policy is hindering growth. Obviously this is not a good sign as we all wish the economy will soon be on the up swing.
"The U.S. Federal Reserve said on Wednesday it will continue buying $85 billion in bonds each month to keep interest rates low and spur growth, and added it would step up purchases if needed to protect the economy." The Fed says the economy is expanding moderately, and that inflation should stay low. While the economy is growing moderately the Fed is worried about growth in the future saying that fiscal policy is hindering growth. Obviously this is not a good sign as we all wish the economy will soon be on the up swing.
Time Warner earnings up
http://money.cnn.com/2013/05/01/news/companies/time-warner-earnings/index.html?iid=HP_River
Media conglomerate Time Warner reported improved quarterly earnings Wednesday. This improved quarterly income was huge after overcoming continued losses from the print unit it plans to spin off. The company whose holdings include Warner Bros. studios, HBO, Turner Broadcasting and CNN, as well as CNNMoney. The big announcement of spinning off Time Inc. unit, publisher of magazines such as Time, Sports Illustrated, and Fortune. With the spin off of Time Inc. will come a cut in employment up to 6%, which will help save money. Time Warner is also profiting a great deal from there successful movie "The Hobbit" and its original series "Game Of Thrones". Will these two successful output of products help Time Warner remain on track to set a new earnings high for the distinguished company? Could Time Warner force other companies such as Comcast or News Corp to go under with its success in the movie and television field?
Media conglomerate Time Warner reported improved quarterly earnings Wednesday. This improved quarterly income was huge after overcoming continued losses from the print unit it plans to spin off. The company whose holdings include Warner Bros. studios, HBO, Turner Broadcasting and CNN, as well as CNNMoney. The big announcement of spinning off Time Inc. unit, publisher of magazines such as Time, Sports Illustrated, and Fortune. With the spin off of Time Inc. will come a cut in employment up to 6%, which will help save money. Time Warner is also profiting a great deal from there successful movie "The Hobbit" and its original series "Game Of Thrones". Will these two successful output of products help Time Warner remain on track to set a new earnings high for the distinguished company? Could Time Warner force other companies such as Comcast or News Corp to go under with its success in the movie and television field?
Businesses hesitant to hire in April
http://money.cnn.com/2013/05/01/news/economy/adp-jobs-report/index.html?iid=SF_E_LN
Private sector companies only added 119,000 jobs in April, the lowest number since September, and this only includes the private sector. Once federal job cuts are added into the equation, the total number of jobs added is expected to drop significantly. The expected number of new hires in April was supposed to be 150,000 to keep up to speed, however we fell 31,000 jobs short as a nation. Manufacturers have cut jobs, however the construction sector has added the most jobs. Small businesses with 49 employees and lower are higher the least sue to health care reform. Starting in 2014, businesses with 50+ employees are required to provide health insurance for all employees or face tremendous fines. Health care reform, along with taxes and other government regulations, are expected to be the big three reasons for the slowing down of jobs being added. In addition, the government has cut about 80,000 jobs over the passed 6 months. Right now, the signs are pretty dismal for job additions.
Private sector companies only added 119,000 jobs in April, the lowest number since September, and this only includes the private sector. Once federal job cuts are added into the equation, the total number of jobs added is expected to drop significantly. The expected number of new hires in April was supposed to be 150,000 to keep up to speed, however we fell 31,000 jobs short as a nation. Manufacturers have cut jobs, however the construction sector has added the most jobs. Small businesses with 49 employees and lower are higher the least sue to health care reform. Starting in 2014, businesses with 50+ employees are required to provide health insurance for all employees or face tremendous fines. Health care reform, along with taxes and other government regulations, are expected to be the big three reasons for the slowing down of jobs being added. In addition, the government has cut about 80,000 jobs over the passed 6 months. Right now, the signs are pretty dismal for job additions.
5 hottest stocks markets on the planet
http://money.cnn.com/gallery/investing/2013/04/28/worlds-top-stock-markets/index.html?iid=HP_Highlight
Coming in at number 5, the Philippines earned their first investment grade credit rating at BBB-. Their stocks have been at an all time high since China, along with other investors, have been attracted to the nation, being that the Philippines in virtually resistant to the economic slowdown in China. Kuwait comes in at number 4 with a 23% increase in stock value from last year. Due to strong corporate earnings and Kuwait's plan to invest in infrastructure, stocks are at an all time high. Kuwait also boasts the world's 6th largest oil reserves. Argentina comes in at number 3, however their are still may problems with Argentina. The nation is projected to have a 25% inflation rate, and American creditors claim to still be owed a total of 1.5 billion on defaulted loans. However, the economy is doing so well because the prices became so depressed, investors saw a chance for value and have boosted the stock market. The real estate market has boosted Dubai to the number 2 spot, with investors betting on a boom following the crash of 2009. Japan takes the number 1 spot with new stimulus policies that are expected to pull Japan out of the two decades of deflation it has lived through. Massive fiscal stimulus and aggressive monetary easing have devalued the yen and increased profits. Japan seems like the place to be as the new policy makers seem to have the country headed in the right direction.
Coming in at number 5, the Philippines earned their first investment grade credit rating at BBB-. Their stocks have been at an all time high since China, along with other investors, have been attracted to the nation, being that the Philippines in virtually resistant to the economic slowdown in China. Kuwait comes in at number 4 with a 23% increase in stock value from last year. Due to strong corporate earnings and Kuwait's plan to invest in infrastructure, stocks are at an all time high. Kuwait also boasts the world's 6th largest oil reserves. Argentina comes in at number 3, however their are still may problems with Argentina. The nation is projected to have a 25% inflation rate, and American creditors claim to still be owed a total of 1.5 billion on defaulted loans. However, the economy is doing so well because the prices became so depressed, investors saw a chance for value and have boosted the stock market. The real estate market has boosted Dubai to the number 2 spot, with investors betting on a boom following the crash of 2009. Japan takes the number 1 spot with new stimulus policies that are expected to pull Japan out of the two decades of deflation it has lived through. Massive fiscal stimulus and aggressive monetary easing have devalued the yen and increased profits. Japan seems like the place to be as the new policy makers seem to have the country headed in the right direction.
Companies beginning to question going public
These days, companies are going waiting a couple years longer than they would normally to go public. After Facebooks' botched public debut, companies are waiting until they are, without question, financially stable. High-speed computer trading and trading glitches are being held responsible for the negative effects of companies going public. Also, last week, and errant tweet caused a "flash crash", which sent stocks plummeting for a few minutes before they regained composure. With how technical our world has become these days, risks like these almost outweigh the rewards of going public. Some investment hedge fund managers would advise against companies going public today as they are not convinced that the exchange has fixed the problems which caused Facebook to have such a terrible debut. CEOs also have to worry about activist shareholders, who basically own the company and have playing large roles in the structural changes of public companies. Many say decades ago, CEOs would do whatever they could to not listen to the shareholders and get them out of the way. These days, the companies understand they are owned by them, and have no choice but to listen to what they have to say.
http://money.cnn.com/2013/05/01/investing/companies-ipo/index.html?iid=HP_River
http://money.cnn.com/2013/05/01/investing/companies-ipo/index.html?iid=HP_River
US manufacturing grows in April at slower pace
http://finance.yahoo.com/news/us-manufacturing-grows-april-slower-141408950.html
The manufacturing aspect of our industries has been recently facing one of the slowest growths. There have been reports of manufacturing activity decreasing from 51.3 in March to 50.7 in April. This could've been a result of the hiring rates being at an all time low as well and higher social security taxes. There is visibly less momentum of factory sales. Yet the consumers still believe that positive things will come in the near future such like increased hiring rates with higher pay and even lower gas prices. The economist on the other hand believe that the growth will grow slow this quarter.
The manufacturing aspect of our industries has been recently facing one of the slowest growths. There have been reports of manufacturing activity decreasing from 51.3 in March to 50.7 in April. This could've been a result of the hiring rates being at an all time low as well and higher social security taxes. There is visibly less momentum of factory sales. Yet the consumers still believe that positive things will come in the near future such like increased hiring rates with higher pay and even lower gas prices. The economist on the other hand believe that the growth will grow slow this quarter.
Mel Watt Picked For FHFA
President Obama is set to announce the nomination of Mel Watt as the new leader of the Federal Housing Financing Agency. Watt, a congressman from North Carolina, is set to oversee government-controlled Fannie Mae and Freddie Mac which in turn may give the White house more control over housing policy. The FHFA regulates Fannie Mae and Freddie Mac, which together own of guarantee about half of all U.S. home loans with the federal government supports more than nine of ten new mortgages. Watt is the second person President Obama has nominated to replace current leader Edward DeMarco. Joseph Smith, a former nominee, was not able to win Senate confirmation after Republicans questioned his independence from the White House. Many Democrats have argues Fannie Mae and Freddie Mac should be used to advance policies that would aid the broader housing market, and by extension the economy. Republicans are opposed to using mortgage financiers as tools for economic or social policy. Many view new nominee Watt as a potential leader who will go right along with Obama administration requests and for this reason, Watt may find it hard to receive confirmation due to potential Republican opposition.
http://www.huffingtonpost.com/2013/05/01/mel-watt-fhfa-ed-demarco_n_3190105.html?utm_hp_ref=business#slide=1963642
http://www.huffingtonpost.com/2013/05/01/mel-watt-fhfa-ed-demarco_n_3190105.html?utm_hp_ref=business#slide=1963642
Tuesday, April 30, 2013
Chrysler's Poor Earnings a Blip or a Portent
This article goes over how the automobile market's current happenings after the recession. For awhile, Chrysler was posting great profits (net income was nine times higher than it was in 2011) but now there has been a 65 percent drop in earnings. This occurrence was apparently foreseeable as the number of incentives that dealers had to provide in order to curb decreasing demand have been increasing. Ultimately it might just be that automobile demand just cannot be sustained at pre-recession levels. With new outlooks on cars and how often vehicles should be used, unless there is another shift in consumer outlook, there just might not be a need to have a huge output of American cars.
Germany's Economy
The German Economy is still doing very well in the midst of the European Financial crisis. With unemployment down to 6.9%, consumer confidence is on the rise. Germany is the second largest economy is Europe, so this is good news for the entire European Union, which is still struggling to get back on its feet. Consumer confidence is going to be essentially to re-stimulate spending across the entire European Union.
http://www.washingtonpost.com/business/german-consumer-confidence-rises-unemployment-remains-low-despite-european-financial-crisis/2013/04/30/ccfb6f00-b173-11e2-9fb1-62de9581c946_story.html
http://www.washingtonpost.com/business/german-consumer-confidence-rises-unemployment-remains-low-despite-european-financial-crisis/2013/04/30/ccfb6f00-b173-11e2-9fb1-62de9581c946_story.html
Monday, April 29, 2013
Illegal Markets
http://www.economist.com/blogs/graphicdetail/2013/04/daily-chart-19
This article shows estimated values of some of the largest illegal markets in the world. This is a short article but the graphs have some significant economic and ethical implications. The markets listed add up to an estimated $650 billion, drug trafficking being the largest at $320 billion. This results in huge losses for companies on the legitimate side of some of these markets- given that some, obviously, do not have a "legitimate side", like human trafficking for example. The market for counterfeit and pirated goods is estimated at $250 billion annually, meaning that some industries are losing a large chunk of income because of this. For example, things like designer clothing or watches are commonly counterfeited and sold at a much cheaper price than the real product. This causes demand to fall in those markets because people sometimes buy the cheaper, fake product instead of the real thing- leading to a loss in total output. In addition, the government loses tax revenue because people do not pay sales taxes in these markets for obvious reasons (nor do they usually report the income and pay income tax). Economics aside, the size and nature of some of these markets present some pretty serious ethical issues. It's shocking to see that an estimated $32 billion is made in a year from human trafficking, or that there is even a market for human organs. These illegal markets can cause anything from billions in lost profits to ruining peoples' lives, and obviously we should continue to do what we can to fight them.
This article shows estimated values of some of the largest illegal markets in the world. This is a short article but the graphs have some significant economic and ethical implications. The markets listed add up to an estimated $650 billion, drug trafficking being the largest at $320 billion. This results in huge losses for companies on the legitimate side of some of these markets- given that some, obviously, do not have a "legitimate side", like human trafficking for example. The market for counterfeit and pirated goods is estimated at $250 billion annually, meaning that some industries are losing a large chunk of income because of this. For example, things like designer clothing or watches are commonly counterfeited and sold at a much cheaper price than the real product. This causes demand to fall in those markets because people sometimes buy the cheaper, fake product instead of the real thing- leading to a loss in total output. In addition, the government loses tax revenue because people do not pay sales taxes in these markets for obvious reasons (nor do they usually report the income and pay income tax). Economics aside, the size and nature of some of these markets present some pretty serious ethical issues. It's shocking to see that an estimated $32 billion is made in a year from human trafficking, or that there is even a market for human organs. These illegal markets can cause anything from billions in lost profits to ruining peoples' lives, and obviously we should continue to do what we can to fight them.
Fed, Though Falling Short on Jobs, Seen as Unlikely to Do More
http://www.nytimes.com/2013/04/30/business/economy/fed-unlikely-to-expand-asset-purchases.html?ref=business
Although the unemployment rate is slowly declining, the American public is still unsatisfied. As of now, the unemployment rate is sitting at 7.6%. One of the Fed's main goals is to keep unemployment within its natural rate at 4-5%. The Fed has seen an impact on their recent policies however they have determined that they are "pushing the interest-sensitive sector about as far as we’re going to be able to push it at this time." It will be interesting to see in which direction the unemployment rate goes in the near future.
Although the unemployment rate is slowly declining, the American public is still unsatisfied. As of now, the unemployment rate is sitting at 7.6%. One of the Fed's main goals is to keep unemployment within its natural rate at 4-5%. The Fed has seen an impact on their recent policies however they have determined that they are "pushing the interest-sensitive sector about as far as we’re going to be able to push it at this time." It will be interesting to see in which direction the unemployment rate goes in the near future.
Pot Smoke in the Air: A Warning of Trouble?
So, as everyone knows, the marijuana business is now legal in some states but illegal in the overall country. Now banks, facing fees and regulation from the government, won't consort with the "illegal" industry of cannabis growing or any of the actual businesses. This means no credit, no financing, nothing. It is a problem that will eventually lead to the rise of the black market for the drug trade again, not to mention lost profits for the government in taxes, simply because it is federally illegal. If it is federally illegal, should the states have been allowed to vote on it in the first place? Will the government deregulate? All questions yet without answers.
Penguins on the NYSE floor?
http://dealbook.nytimes.com/2013/04/19/seaworld-c-e-o-hints-at-overseas-ambitions/
As SeaWorld made its debut at the Stock exchange on Friday there was a lot of promise. The stock closed on Friday 13 percent higher than its opening value. But the stock exchange is not the last stop for SeaWorld's expansion plan.James Atchinson, CEO and president of Seaworld, hinted at global expansion of SeaWorld. Currently there are 11 SeaWorlds that are in operation in the United States. Atchinson hinted at going global by saying "It wouldn't be that hard if we decided to bring Shamu to Dubai." In order to raise this kind of capital to build an oversea SeaWorld Atchinson talked about teaming up strategically with a real estate developer. Usually big projects such as this are undertaken with big investors.
Who knows. Mr Atchinson made no imminent declaration of a foreign SeaWorld but it sounds promising. With Blackstone Group know owning SeaWorld the possibilities are endless and there has been plenty of talk about raising capital. Maybe one day this idea will be a reality but for now Shamu will continue to stay in the United States.
1st quarter earnings higher than expected
http://finance.yahoo.com/news/earnings-beating-forecasts-jurys-rest-211325797.html
First quarter earnings for various S&P 500 stocks increased by 3.9%, a significant jump from the expected rate of 1.5%. However, some analysts are concerned that the earnings growth will not continue. This is because revenue is actually expected to fall for the first quarter. Companies mainly increased earnings by cutting expenses, but some experts are skeptical about the long-term sustainability of such growth. It should be interesting to see how this plays out over the rest of the year.
First quarter earnings for various S&P 500 stocks increased by 3.9%, a significant jump from the expected rate of 1.5%. However, some analysts are concerned that the earnings growth will not continue. This is because revenue is actually expected to fall for the first quarter. Companies mainly increased earnings by cutting expenses, but some experts are skeptical about the long-term sustainability of such growth. It should be interesting to see how this plays out over the rest of the year.
Why Rent in New York is so high
As most people know New York City is one of the largest cities in the world. It is an economic epicenter and home to many businesses and corporations. Over the past couple of decades NYC has seen a huge spike in the price of homes. There are many reasons for high home prices in NY, one being that it is an extremely attractive city to live in. There are so many options and jobs that one can do while being in NYC. With falling crime rates and other amenity improvements NYC has only been increasing its attractiveness to home owners. Many people have jobs located in the city and this increases competition for homes. If there is a large demand for homes then prices will be high. Another aspect to consider is that the global rich are usually interested in NYC for what it has to offer. This only further drives up the prices of homes.
As most people know New York City is one of the largest cities in the world. It is an economic epicenter and home to many businesses and corporations. Over the past couple of decades NYC has seen a huge spike in the price of homes. There are many reasons for high home prices in NY, one being that it is an extremely attractive city to live in. There are so many options and jobs that one can do while being in NYC. With falling crime rates and other amenity improvements NYC has only been increasing its attractiveness to home owners. Many people have jobs located in the city and this increases competition for homes. If there is a large demand for homes then prices will be high. Another aspect to consider is that the global rich are usually interested in NYC for what it has to offer. This only further drives up the prices of homes.
Now made in China: Taste: 5 things big in Beijing, headed for Buffalo
http://www.marketwatch.com/story/how-chinese-tastes-are-reshaping-american-malls-2013-04-26
The article talks about the unexpected Chinese products exported to America that many people wouldn't recognize as Chinese. While the "made in China tag is prevalent all over the US, many Americans mistake other Asian companies like Sony, and Toyota as Chinese, while missing the fact that companies such as Volvo are owned by the Chinese.
“Branding was an alien concept in old China,” says Stanley Kwong,
managing director of China Business Programs at the School of Management
of University of San Francisco. “China had been making products for
companies like Wal-Mart and Apple, but has not developed many brands.”
It’s been easier for China to make a product than build a brand, experts
say.
But given China’s size and economic power, experts say it’s only a
matter of time before the country begins exporting its culture and style
as well. Chinese shopping trends have been finding their ways into American Malls, some are just more obvious than others.
Jobs data may improve but underwhelm
http://www.marketwatch.com/story/jobs-data-may-improve-but-underwhelm-2013-04-28?dist=lbeforebell
Labor market growth has been up and down as of late, and the central bank is expected to continue it's recent policies until more steady gains are made.
“Even though this is a marked improvement in the pace of job creation
relative to the meager…jobs added in March, it remains well below the
more buoyant pace earlier this year,” noted TD Securities economists.
On Wednesday, there will be a report just looking at private payrolls,
and economists forecast an April gain of 170,000, compared with 158000 in march. March’s result was far below an average monthly gain of 190,000 over the prior two years. Given jobs trends like these, and other recent negative data, Federal
Reserve officials won’t announce policy changes after meeting on Tuesday
and Wednesday.
The hottest frontier
The African economy is on the rise. Many countries within the continent are seeing a huge increase in annual growth. Countries like Nigeria and Kenya are experiencing markets that have risen more than 50% in the pat year. The sub-sahara regions are undergoing GDP growth rates of more than 5%. The economy in African is defiantly looking up compared to recent years. However, Africa is missing some of the main components for continued growth which are capital and savings. This provides a great market for foreign investors to invest into African markets. This is an opportunity for world investors to make a larger profit investing in African markets. There is a better return then investing at home for these people. African stocks are becoming more stable making for a good market for investors.
A Stiffing Headwind
http://www.economist.com/blogs/freeexchange/2013/04/americas-economy-0
This article talks about the recent economic numbers that have been released. They are actually disappointing. GDP growth rates are still not back to normal, around 2.5%, and unemployment numbers are still not improving fast enough. This means that economists expect us to be still recovering through 2013. It was also talking about how the government needs to start trying to fix the recession instead of messing with the sequester cuts. If our government does not get there act together soon it may take some time before we ever recover.
This article talks about the recent economic numbers that have been released. They are actually disappointing. GDP growth rates are still not back to normal, around 2.5%, and unemployment numbers are still not improving fast enough. This means that economists expect us to be still recovering through 2013. It was also talking about how the government needs to start trying to fix the recession instead of messing with the sequester cuts. If our government does not get there act together soon it may take some time before we ever recover.
Spending cuts: Reality of furloughs hits home
http://money.cnn.com/2013/04/25/news/economy/spending-cuts-furloughs/index.html?iid=SF_E_River
We need to stay on this rode for a awhile that's because defense and domestic spending will be subject to even lower spending caps than they are this year and if help lowering our biggest cost in government spending that it will help save a lot. The sequester that went into effect on March 1 for 2013 required agencies for the most part to make across-the-board cuts without discretion, in essence cutting funding for the best and most essential functions by the same amount as everything else. Helping the work force not get laid off and have different plans for the companies that need help so that everyone is not at a dead end.
We need to stay on this rode for a awhile that's because defense and domestic spending will be subject to even lower spending caps than they are this year and if help lowering our biggest cost in government spending that it will help save a lot. The sequester that went into effect on March 1 for 2013 required agencies for the most part to make across-the-board cuts without discretion, in essence cutting funding for the best and most essential functions by the same amount as everything else. Helping the work force not get laid off and have different plans for the companies that need help so that everyone is not at a dead end.
Sunday, April 28, 2013
Warren Buffett checks in on his Coke investment
This is an article from The USA Today - interesting read on Buffet and his love for Coca-Cola. Seeing the volatility of so many of today's tech stocks, Buffet reminds investors at the annual shareholders meeting why coke makes sense (In fact, Berkshire's stake in Coke is second only to Buffett's position in Wells Fargo (WFC) stock. And the investment has been profitable for Buffett and other investors. Shares of the company have jumped 16.8% year-to-date, and more than 57% the past three years). He explains how it is important to invest in a company that you know will be there in the future. As a matter of fact, staple companies such as Coca-Cola, P & G, and GE have always experienced great financial support from Buffet.
Additionally, Buffet seems to give his best shot of injecting some consumer confidence into our economy. "In my life time, since 1930, real GDP per capita in the United States has gone up 6-to-1. We have not lost the secret sauce. (And) that's the kind of future I see ahead ... (it's why) you want to own businesses that are going to participate in that future."
Austerity in Greece causes increasing divisions among MPs
Greek Parliament has seek to cut 15,000
government jobs by the end of next year, as a condition for a new trench of
loans worth 8.8 bn euros. European leaders will be meeting on Monday to discuss
the release of 2.8bn euros (the remaining 6bn will be paid by the 13th
of May). The bill passed by 168 votes to 123, displaying an increasingly
divided parliament. As the bill was being discussed, demonstrations took place
outside the government building calling for an end to austerity measures and
condemning the overturning of a law that guaranteed government servants a job
for life. Austerity in Greece has been reaching its limits, causing now nothing
but increasing unemployment, civil unrest and divisions among government
representative, which could potentially destroy the political integrity of
Greece and plunge its society into chaos and anarchism in the case of a fall of
the democratic regime by divisive forces within then leadership strata.
China launches coordinated Cyber attacks
http://www.theatlantic.com/china/archive/2013/04/is-the-specter-of-a-cyber-cold-war-real/275352/
The recent article from the Atlantic discusses the cyber attacks that originate from China. The article gives the cyber attacks the monomer of a cyber Cold War. The economic implication of these attacks are particularly interesting. The companies targeted are from industries that the Chinese have highlighted in their five year plans. This is also revealing of why state sponsored companies are the giants of industry in China and why the US and other foreign countries can be skeptical about doing business with these companies. An example of such transactions was when Canada oil company NEXEN was sold to a Chinese state sponsored company. This deal gave China access to the oil sand facilities and Alberta. While this moved helped sure up China's energy needs which should help reduce tensions in Asia, it was also met with huge amounts of skepticism by the Canadian government.
The recent article from the Atlantic discusses the cyber attacks that originate from China. The article gives the cyber attacks the monomer of a cyber Cold War. The economic implication of these attacks are particularly interesting. The companies targeted are from industries that the Chinese have highlighted in their five year plans. This is also revealing of why state sponsored companies are the giants of industry in China and why the US and other foreign countries can be skeptical about doing business with these companies. An example of such transactions was when Canada oil company NEXEN was sold to a Chinese state sponsored company. This deal gave China access to the oil sand facilities and Alberta. While this moved helped sure up China's energy needs which should help reduce tensions in Asia, it was also met with huge amounts of skepticism by the Canadian government.
UK´s economic recovering at very slow pace
Fitch credit rating agency has downgraded the UK from
AAA to AA+ after noticing trends of a weakening economy and fiscal outlook. Opposition
states that “This is another humiliating blow to a prime minister and
chancellor who said keeping our AAA rating was the number one test of their
economic and political credibility” (Ed Balls, Labour’s shadow chancellor and previous
(IMF) January forecast of 1% growth was slashed to 0.7% projected growth in
2013. This fall in economic outlook, however, is disputed by some who say that
they are signs of a slowly recovering economy. With the current plan, Britain
has demonstrated flexibility and increased its credibility in the international
setting, allowing it to borrow at a very low interest rate, which should
increase investment and heal the economy. SO far, it is too early to tell is
the current recovery plan is working, but time to consider a different approach
for faster economic growth might be needed in the near future.
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