Recently Apple has taken big hits on the stock market and many are wondering will they rebound and has it hit its peak? Apple has created many innovating products through the life of the company and with its success in smartphones and tablets some people say it can not peak again. This article explores the ways that it could rebound and reasons that it could or could not make a very strong rebound.
One of the main reasons it points out is why it will never peak as high again. This is because of Steve Job's passing in 2011. His creativeness and inspiration to find new technologies went with his passing left the company looking for someone new to do the job and so far his successor Tim Cook hasn't proven himself yet. Another area this article focuses on is the competitors and how Apple is being challenged by many rivaling companies selling the same type of devices. It also states a few of Apples ideas to recover, such as expanding its markets to India and China. To do this though they will need to lower the price of its devices in order for it to sell the required amount for it to be worth it. Lastly, they plan to break into new markets such as the ITV, but again people believe that they can't beat out other companies in many of these markets. The over all conclusion of the question " Has Apple Peaked" in my opinion is, Yes. Has Apple Peaked?
Saturday, January 26, 2013
Why We'll Still Never See a 100% Reserve Economy
Why We'll Still Never See a 100% Reserve Economy
"When Lucas casually starts a discussion by assuming a 100 percent reserve economy, then, he’s assuming a world in which banks are required to keep 100 percent of their capital on reserve." This is an article speaking on the topic of a 100% reserve economy. It is interesting to see how things would work in our society if we were to switch to this ideal. What would happen with debt? Would the purchasing power change at all? Would the consumer confidence be shaken by this change? There are a lot of interesting points that come up in the article, making one wonder if this is a possibility in the future when people realize the perks.
"When Lucas casually starts a discussion by assuming a 100 percent reserve economy, then, he’s assuming a world in which banks are required to keep 100 percent of their capital on reserve." This is an article speaking on the topic of a 100% reserve economy. It is interesting to see how things would work in our society if we were to switch to this ideal. What would happen with debt? Would the purchasing power change at all? Would the consumer confidence be shaken by this change? There are a lot of interesting points that come up in the article, making one wonder if this is a possibility in the future when people realize the perks.
Home truths
http://www.economist.com/news/finance-and-economics/21569396-our-latest-round-up-shows-many-housing-markets-are-still-dumps-home
The house-price boom preceding the financial crisis had
far-reaching effects and prices only seemed capable of climbing. However recent reports do give a brightening
outlook of hope to America while the darkening of the euro area economics
continues. All over the globe house
prices seem to be rising and falling in equal numbers (Spain prices have
dropped 9. 3% while Canada has seen an increase of 3.3%). The method to gauge a house’s value,
determining whether homes are expensive or cheap is completed using two
measures. The first gauge is
price-to-rents ratio, being analogous to price-earnings ratio used for
equities, with the rents going to property investors. The second measure, the
ratio of prices to disposable income per person, illustrates a 35%
overvaluation in France to a 36% undervaluation in Japan.
An Optimistic World Economy
Link: http://www.economist.com/news/leaders/21570724-world-economy-improving-not-much-some-investors-seem-think-semi-rational
This article opens by suggesting three reasons why we should be optimistic of the world's economy, the first one being the fact that disaster has been avoided. America resisted falling off the fiscal cliff, Europe has shown that they are trying to save the single currency, and Republicans in the U.S. House have announced that they are going to extend the debt ceiling. This should encourage more investment and consumption among firms and consumers.
The second reason offered is because of central banks participating and promising to buy government bonds.
As put in the article, "...it is no surprise that investors are piling into riskier assets. Indeed, that’s partly the point: higher share prices make investors more likely to boost consumption."
The third reason is the result of the apparent increasing growth of GDP in China. In addition to this, America's housing market is shaping up.
It then continues to, however, point out holes in the world economy that may widen. It puts forth that economic policies are still flawed and that the optimism of the housing market in America may not cancel out other things such as an increase in payroll taxes on all workers. In addition, there could be overoptimism about the involvment and pledge of central banks in bonds. Furthermore, the FED even worries of the possible costs of such an action. Then there is the question of how Europe plans to revive its economic growth.
This seems to imply that the optimism is good, but there is still much work to be done. We shouldn't get too comfortable. Problems could potentially arise from within or beside these apparent "good things," challenging an optimistic viewpoint.
This article opens by suggesting three reasons why we should be optimistic of the world's economy, the first one being the fact that disaster has been avoided. America resisted falling off the fiscal cliff, Europe has shown that they are trying to save the single currency, and Republicans in the U.S. House have announced that they are going to extend the debt ceiling. This should encourage more investment and consumption among firms and consumers.
The second reason offered is because of central banks participating and promising to buy government bonds.
As put in the article, "...it is no surprise that investors are piling into riskier assets. Indeed, that’s partly the point: higher share prices make investors more likely to boost consumption."
The third reason is the result of the apparent increasing growth of GDP in China. In addition to this, America's housing market is shaping up.
It then continues to, however, point out holes in the world economy that may widen. It puts forth that economic policies are still flawed and that the optimism of the housing market in America may not cancel out other things such as an increase in payroll taxes on all workers. In addition, there could be overoptimism about the involvment and pledge of central banks in bonds. Furthermore, the FED even worries of the possible costs of such an action. Then there is the question of how Europe plans to revive its economic growth.
This seems to imply that the optimism is good, but there is still much work to be done. We shouldn't get too comfortable. Problems could potentially arise from within or beside these apparent "good things," challenging an optimistic viewpoint.
Worry over Sales Could Lead to Cheaper IPHONES
Today IPhones are the most coveted and sought after phones on the market. But, they do not come by cheap. This is a problem Iphone sales have been facing for the past year. With mobile devices such as the much cheaper Samsung Galaxy III. Most phones these days have the same capabilities and the buyer is left with the decision of how much they want to spend. iPhone now has the decision of whether they should continue catering to the high end phone market and reap the sales of high price with fewer phones OR drop their prices and benefit from a greater amount of sales.
A recent report posted on monday revealed that the company had a reduced order of iPhone 5 screens which leads some analysts to believe that the demand for the phone could be going down. To aid the worry of Apple employees the companies shares have gone down 29 percent from the beginning of September.
Although the iPhone is still a top seller in American markets it has struggled globally. Most global consumers buy phones without subsidies given by a wireless carrier. This means that phones go for top dollar and for apple this isn't a great thing. In countries such as Spain, Germany and an iphone 5 can go upwards of 650 dollars. This means that many consumers are buying cheaper phones thus affecting iPhones shares in global markets and weakening their overall shares. iPhone does have cheaper alternatives such as the 4 and 4s but these are still more expensive than the cheapest Android phones. Tero Kuittenin an independent mobile phone analyst says that most people today buying smart phones are lower income households. These people cannot afford to pay a whopping 650 dollars for an iPhone.
Apple has created a brand that evokes a certain symbol of status. Most people buy iPhones just to have the Apple symbol on the back of there phone. It is rarely due to its specifications or superior abilities. Kuittenin says that if Apple was to become a real contender in the global market it needs to come out with a much cheaper option. Kuittenin stated that Iphones real strategy would be similar to what it did with the Ipad mini. The phone will be siginificantly cheaper than the new 5 but more expensive than the cheapest android phones.
Overall, it will be very interesting what move Apple decides to take. Will we see a cheaper iPhone in the future or will Apple swallow its losses? Only time will tell.
Link:
http://www.nytimes.com/2013/01/15/technology/worry-over-sales-spurs-talk-of-cheaper-iphones.html?_r=0
A recent report posted on monday revealed that the company had a reduced order of iPhone 5 screens which leads some analysts to believe that the demand for the phone could be going down. To aid the worry of Apple employees the companies shares have gone down 29 percent from the beginning of September.
Although the iPhone is still a top seller in American markets it has struggled globally. Most global consumers buy phones without subsidies given by a wireless carrier. This means that phones go for top dollar and for apple this isn't a great thing. In countries such as Spain, Germany and an iphone 5 can go upwards of 650 dollars. This means that many consumers are buying cheaper phones thus affecting iPhones shares in global markets and weakening their overall shares. iPhone does have cheaper alternatives such as the 4 and 4s but these are still more expensive than the cheapest Android phones. Tero Kuittenin an independent mobile phone analyst says that most people today buying smart phones are lower income households. These people cannot afford to pay a whopping 650 dollars for an iPhone.
Apple has created a brand that evokes a certain symbol of status. Most people buy iPhones just to have the Apple symbol on the back of there phone. It is rarely due to its specifications or superior abilities. Kuittenin says that if Apple was to become a real contender in the global market it needs to come out with a much cheaper option. Kuittenin stated that Iphones real strategy would be similar to what it did with the Ipad mini. The phone will be siginificantly cheaper than the new 5 but more expensive than the cheapest android phones.
Overall, it will be very interesting what move Apple decides to take. Will we see a cheaper iPhone in the future or will Apple swallow its losses? Only time will tell.
Link:
http://www.nytimes.com/2013/01/15/technology/worry-over-sales-spurs-talk-of-cheaper-iphones.html?_r=0
Stamp Prices Rising
http://money.cnn.com/2013/01/24/news/economy/postal-service-stamp/index.html?iid=HP_LN
The U.S. Postal Service announced back in October that they would be hiking the prices on stamps. The price for sending first class mail has risen by one cent to forty-six cents and postcard postage stamps have also risen one cent to thirty-three cents. The article states, "Overall, prices for mailing and shipping services increase 4% on average, while priority mail prices rising 6.3%".
The increase in prices have been a result from the United States Postal Service borrowing billions of dollars from taxpayers to make up for there shortfalls in 2006, due to the new congressional mandate, under which it has to help fund healthcare for future retirees. With the widely growing technological advances today, many companies are using paperless bills, meaning the consumers can pay bills online. Bills being paid online leads to a reduction of mail being cycled through the postal system. Most postal services have cut their office hours to nearly two hours a day and have laid off thousands of employees. Could this be the last of the the United States Postal Service? Has technology such as e-mails taken over for postcards?
The U.S. Postal Service announced back in October that they would be hiking the prices on stamps. The price for sending first class mail has risen by one cent to forty-six cents and postcard postage stamps have also risen one cent to thirty-three cents. The article states, "Overall, prices for mailing and shipping services increase 4% on average, while priority mail prices rising 6.3%".
The increase in prices have been a result from the United States Postal Service borrowing billions of dollars from taxpayers to make up for there shortfalls in 2006, due to the new congressional mandate, under which it has to help fund healthcare for future retirees. With the widely growing technological advances today, many companies are using paperless bills, meaning the consumers can pay bills online. Bills being paid online leads to a reduction of mail being cycled through the postal system. Most postal services have cut their office hours to nearly two hours a day and have laid off thousands of employees. Could this be the last of the the United States Postal Service? Has technology such as e-mails taken over for postcards?
New Era for American Banking
http://money.cnn.com/2013/01/25/pf/banks-online-mobile-banking/index.html
United States banks have closed more branches in 2012 than in any year since banks have started measuring closures. Bank of America lead the way last year with 256 closures, accounting for a staggering 23% of the total closures. A total of 1,118 branches closed nationwide in 2012 with even more expected in the upcoming year. These numbers are the outcome of many U.S. banks urging their customers to use online banking, and with more technology-savy generations on the way, this may not seem like such a bad idea. Banks are using incentives to attract their customers to online banking, including lower fees for opening up an online checking account. In addition, with the interest rate as low as it is, it has become almost impossible to make any money in low growth areas of the nation. Fortunately for some, community bank branches are not expected to ever vanish entirely. U.S. banks will always keep branches in big cities with large amounts of money. Branches will also stay open in areas where the banks want to establish a presence and stay concentrated in more urban areas of the nation.
United States banks have closed more branches in 2012 than in any year since banks have started measuring closures. Bank of America lead the way last year with 256 closures, accounting for a staggering 23% of the total closures. A total of 1,118 branches closed nationwide in 2012 with even more expected in the upcoming year. These numbers are the outcome of many U.S. banks urging their customers to use online banking, and with more technology-savy generations on the way, this may not seem like such a bad idea. Banks are using incentives to attract their customers to online banking, including lower fees for opening up an online checking account. In addition, with the interest rate as low as it is, it has become almost impossible to make any money in low growth areas of the nation. Fortunately for some, community bank branches are not expected to ever vanish entirely. U.S. banks will always keep branches in big cities with large amounts of money. Branches will also stay open in areas where the banks want to establish a presence and stay concentrated in more urban areas of the nation.
Japan approves $224bn stimulus package
http://www.aljazeera.com/news/asia-pacific/2013/01/201311133759477326.html
Japan's newly elected government approved and finalized the 24 billion dollar package on Friday. the new approach to Japan's economic down turn is aimed at reviving the economy, reconstructing and boosting jobs in the coastal areas which were devastated after the march 2011 tsunami, and increasing its military spending in order to beef up monitoring and defense as china is seen more and more as a threat with its rise to power. The plan is seen as an aggressive move to help recover Japan's economy which is in downturn. Japan's central government has been put under pressure by te new Prime minister to do "whatever it takes to meet an inflation target of two percent to counter a persisting cycle of sinking prices and weak demand."
Japan's newly elected government approved and finalized the 24 billion dollar package on Friday. the new approach to Japan's economic down turn is aimed at reviving the economy, reconstructing and boosting jobs in the coastal areas which were devastated after the march 2011 tsunami, and increasing its military spending in order to beef up monitoring and defense as china is seen more and more as a threat with its rise to power. The plan is seen as an aggressive move to help recover Japan's economy which is in downturn. Japan's central government has been put under pressure by te new Prime minister to do "whatever it takes to meet an inflation target of two percent to counter a persisting cycle of sinking prices and weak demand."
Has the Housing Market Recovered?
http://www.reuters.com/article/2013/01/25/us-new-home-sales-idUSBRE90O0OB20130125
During 2012, Americans purchased 367,000 new single-family homes--a 19.9% increase from 2011. The success in 2012 peaked in November, when home sales reached a three-year high. Still, though, the success in the housing market in 2012 was only about 1/3 of the total home sales in 2005, when record highs were followed by a housing market downfall. Could this recent success mean an emergence by the US economy from its recession? Even though the housing market is a small park of the total economy, we've learned in the past that it plays a pivotal role in economic stability. Housing market troubles, generally, have spelled trouble for the economy. So, then, is the converse true? Does housing success spell economic success?
During 2012, Americans purchased 367,000 new single-family homes--a 19.9% increase from 2011. The success in 2012 peaked in November, when home sales reached a three-year high. Still, though, the success in the housing market in 2012 was only about 1/3 of the total home sales in 2005, when record highs were followed by a housing market downfall. Could this recent success mean an emergence by the US economy from its recession? Even though the housing market is a small park of the total economy, we've learned in the past that it plays a pivotal role in economic stability. Housing market troubles, generally, have spelled trouble for the economy. So, then, is the converse true? Does housing success spell economic success?
Outsourcing jobs take toll on economy
http://www.washingtonpost.com/business/economy/obamas-record-on-outsourcing-draws-criticism-from-the-left/2012/07/09/gJQAljJCZW_story.html
Unemployment critics have recently pointed to Obama’s tax
policies on outsourcing jobs. President Obama has mentioned changing the rule
that grants the right to avoid paying taxes for a select amount of time on
income from overseas; however the rule has yet to be changed. This subject was
discussed during the presidential campaign, but again, nothing has changed
since. American jobs are declining, and there has been a continual shift of
outsourcing to low-wage countries. Between 2008-2010, an estimated 450,000
American jobs were lost to China’s increasing exports. Though there was a
significant economic standstill during this period, critics still argue what
Obama intends to do with the outsourcing dilemma. A study done by the U.S.
Bureau of Economic Analysis in 2010 showed that large American companies barely
added any jobs, however most extended their foreign labor force by 1.5 percent.
Looking Better Indeed
According to the macroeconomic indices used within this article it seems like the economy is on the upside. With rising stock indices, lower volatility and higher predictions for growth within the year. However, what exactly do these indicators mean for the average man? Most of the benefits of the recovery accrue to the rich before affecting the poor and middle class. The US government response to this is to tackle such issues as medical care and keeping interest rates low (mainly by pumping money into the system) seems to be working. In Europe the fear of inflation keeps Germany from agreeing to such a response, and the complexities of managing a single currency for multiple sovereign countries comes to full force.
Older, but Not Yet Retired
http://economix.blogs.nytimes.com/2013/01/24/older-but-not-yet-retired/?ref=economy
According to the article, in 2010 16.1% (increased from 12.1% just two decades earlier) of the US population 65 years and older was in the labor force (either working or actively looking for a job). In fact, it is no longer uncommon for people over 65 to continue working.
The increase has been partly attributed to women joining the labor force over the years though men have showed large increased too. There are many reasons behind this trend. Some are healthy enough in their late 60s to keep working. Some can't afford to retire due to financial difficulty (this group account for about 13% of those who said they would be delaying their retirement).
There are absolutely some benefits but issues also arise. With people now delaying their retirement, many job opportunities might not be available to the younger generations as soon as they expect. But again we can't blame them as most of them clearly don't have a choice.
According to the article, in 2010 16.1% (increased from 12.1% just two decades earlier) of the US population 65 years and older was in the labor force (either working or actively looking for a job). In fact, it is no longer uncommon for people over 65 to continue working.
The increase has been partly attributed to women joining the labor force over the years though men have showed large increased too. There are many reasons behind this trend. Some are healthy enough in their late 60s to keep working. Some can't afford to retire due to financial difficulty (this group account for about 13% of those who said they would be delaying their retirement).
There are absolutely some benefits but issues also arise. With people now delaying their retirement, many job opportunities might not be available to the younger generations as soon as they expect. But again we can't blame them as most of them clearly don't have a choice.
Friday, January 25, 2013
Rupee at historic lows
http://dawn.com/2013/01/21/rupee-at-historic-lows-2/
The Pakistani Rupee (National currency of Pakistan) has been on the decline for the last few years (post 2003 predominantly). There was a point when it's downfall seemed to have been halted but as the article shows that is no more the case.
Politically instability and the lack of domestic production are the main perpetrators of this. The article mentions the failure of the current government, the increasing protests over lack of action against target killings and the recent long march. All these things go disrupt trade which does not give the Rupee a chance to fight back. However, the article fails to mention the most important factor the lack of domestic production or should i say the diminishing domestic production. The simple reason for that is the severe energy crisis; there is a severe shortage of electricity. Factories can't keep up with their costs due to expensive electricity and then the added cost of running generators and so shut down.
However, the matter of fact is that the Rupee is depreciating to dangerously low levels and might hit the point of no return soon. If this happens, who can guess the future of Pakistan and if Time magazines prediction of the country breaking up by 2025 will come true. I pray that is not the case but alas that praying is the only hope-for now.
To Fix Overproduction, China Wants to Supersize Industries
http://www.businessweek.com/articles/2013-01-25/to-fix-overproduction-china-wants-to-supersize-industries#r=glo-s
China has been coming across issues with overproduction and deciding on how to increase the size of their industries. In order to address the issues they believe that creating mergers, setting up reorganizations with the firms/companies that are having the same issues of overproducing and competitive pricing could be a solution in their case.
The amount of surplus that the Chinese industries and companies are left with are astonishing. China was left with over 160 million tons of surplus and more than 300 million tons of excess cement. According to recent reports, China might experience an increase of about 12 percent in their production growth. China has great expectations for their future, they predict that their "top 10 makers"will be responsible for about 60 percent of output by 2015. The article mentions how China is pushing to create these mergers so that larger firms can form across a wider variety of industries. They are hoping that this can lead to a beneficial progression to the economics of scales and reduce the excess surplus. Although this may seem like a good idea, it still has its own side effects. China's private sector my end up suffering greatly from this and there will likely a decrease in competition if the firms/companies are merging. At the moment there is still no guarantee that this will end up happening, it just all depends on what their government decides and what direction the Chinese economy is headed towards
China has been coming across issues with overproduction and deciding on how to increase the size of their industries. In order to address the issues they believe that creating mergers, setting up reorganizations with the firms/companies that are having the same issues of overproducing and competitive pricing could be a solution in their case.
The amount of surplus that the Chinese industries and companies are left with are astonishing. China was left with over 160 million tons of surplus and more than 300 million tons of excess cement. According to recent reports, China might experience an increase of about 12 percent in their production growth. China has great expectations for their future, they predict that their "top 10 makers"will be responsible for about 60 percent of output by 2015. The article mentions how China is pushing to create these mergers so that larger firms can form across a wider variety of industries. They are hoping that this can lead to a beneficial progression to the economics of scales and reduce the excess surplus. Although this may seem like a good idea, it still has its own side effects. China's private sector my end up suffering greatly from this and there will likely a decrease in competition if the firms/companies are merging. At the moment there is still no guarantee that this will end up happening, it just all depends on what their government decides and what direction the Chinese economy is headed towards
Exxon passes Apple
Exxon has recently passed Apple as the most valuable company resulting from the slipping of Apple's stock price. Apple's stock fell 2.6 percent to $438.76 in afternoon trading Friday for a market capitalization of $412 billion. That followed a 12 percent drop on Thursday, the biggest one-day percentage drop for the company since 2008. Exxon Mobil Corp. gained 10 cents Friday to $91.45 for a market capitalization of $417 billion. Back in the summer of 2011, Apple surpassed Exxon after the oil company had held the top spot since 2005, followed by the two continually trading places. Recently, Apple's stock peaked at $705.07 after the release of the iPhone 5. However, Apple warned that its rapid revenue growth was slowing down immensely compared to the steady trading of Exxon and its oil with a solid base of support from energy sources. Experts believe this change is due to the fact of lack of new products and innovation from Apple which people have become accustomed to, which may be caused by the passing of Steve Jobs. This makes me wonder if Apple can expect the same success as years passed from just releasing updated versions of old products.
Fitter yet fragile
http://www.economist.com/news/finance-and-economics/21569049-irelands-success-attracting-foreign-investment-has-its-drawbacks-fitter-yet
Ireland's economy has been struggling over the past couple of years. They have received bailouts from the EU and now a looking to fix up their economy. Europe has devised a plan to help Ireland out of the economic slump they are currently in. The plan is mainly driven by austerity and reforms and if Ireland is capable of financing itself again, then that would be considerable evidence for the rest of Europe that this plan works. The Irish GDP has only grown .4%, however compared to other countries in economic recession such as Italy and Spain that growth rate is considerably better. Due to the fact that there is a low corporate tax rate in Ireland, this has attracted a lot of foreign direct investment. Many American firms have been investing into this especially but other countries have as well. The exports for Ireland have exceeded the value of GDP due to the high foreign presence of firms. With this high presence of foreign firms Ireland can consequentially be harmed when world trade stumbles because the GNP of the nation is lesser than the GDP value. Ultimately, Ireland's economy is still being watched closely, but it has shown signs of improvement over the past couple of years and is speculated to return to the bond markets by the end of 2013. This current state of Ireland can help us by whether or not the rescue program they have implemented will work. If it does we could use it to help other countries out in a similar situation. The better the economy for other countries can help boost another countries economy much faster.
Ireland's economy has been struggling over the past couple of years. They have received bailouts from the EU and now a looking to fix up their economy. Europe has devised a plan to help Ireland out of the economic slump they are currently in. The plan is mainly driven by austerity and reforms and if Ireland is capable of financing itself again, then that would be considerable evidence for the rest of Europe that this plan works. The Irish GDP has only grown .4%, however compared to other countries in economic recession such as Italy and Spain that growth rate is considerably better. Due to the fact that there is a low corporate tax rate in Ireland, this has attracted a lot of foreign direct investment. Many American firms have been investing into this especially but other countries have as well. The exports for Ireland have exceeded the value of GDP due to the high foreign presence of firms. With this high presence of foreign firms Ireland can consequentially be harmed when world trade stumbles because the GNP of the nation is lesser than the GDP value. Ultimately, Ireland's economy is still being watched closely, but it has shown signs of improvement over the past couple of years and is speculated to return to the bond markets by the end of 2013. This current state of Ireland can help us by whether or not the rescue program they have implemented will work. If it does we could use it to help other countries out in a similar situation. The better the economy for other countries can help boost another countries economy much faster.
Jobs recovery favors highly educated workers
This article talks about how different levels of education levels help in the job recovery process. The people who are highly education and hold a masters or bachelors degree are the first to recover from this loss of jobs and come up from the recession which hit in 2008 than those who only hold a high school diploma or less.
The graduates and the undergraduates make up a very small portion of the economy when compared to the high school graduates who make up 36% of the us workers over age 25. More than 767,000 workers with a high school diploma or less have reported job losses than they did in 2010.The health care and the professional sector were the ones who created a lot of job opening in the past two years and to work in these sectors they require highly skilled and professional workers. If we look at the manufacturing jobs which could be previously done with a high school diploma now require a higher level of education because of advancement in technology and more technical machines coming into the picture. Another reason for this is because there has been a shift in the long run for the employment of educated professionals. So it is important to have a college degree because they are the ones who are less hurt and struggling and find better paying jobs.
.http://money.cnn.com/2013/01/24/news/economy/college-degree-jobs-recovery/index.html?iid=SF_BN_Lead
The graduates and the undergraduates make up a very small portion of the economy when compared to the high school graduates who make up 36% of the us workers over age 25. More than 767,000 workers with a high school diploma or less have reported job losses than they did in 2010.The health care and the professional sector were the ones who created a lot of job opening in the past two years and to work in these sectors they require highly skilled and professional workers. If we look at the manufacturing jobs which could be previously done with a high school diploma now require a higher level of education because of advancement in technology and more technical machines coming into the picture. Another reason for this is because there has been a shift in the long run for the employment of educated professionals. So it is important to have a college degree because they are the ones who are less hurt and struggling and find better paying jobs.
.http://money.cnn.com/2013/01/24/news/economy/college-degree-jobs-recovery/index.html?iid=SF_BN_Lead
Housing market increase to improve the economy
http://www.nytimes.com/2013/01/25/business/signs-of-a-housing-recovery-point-to-a-stronger-economy.html?ref=business&_r=0
The article shows that the housing market may be on the uprise leading to one of the stronger economies that has been seen in recent history. Many of the homes that should have never been built and or were sold to people that were unfit to handle the payments that these home require, have been marked to a price that it is much easier to sell meaning that the market is rising. Although 12 percent of homes were former forclosed homes and an additional 12 percent of home that were sold in december that were short sold, meaning the value of the house was less than the mortgage on it. But last year also there was 780 thousand homes built which was the highest amount built in the past 4 years. The newest way that we need to keep an eye on is the creation of home building jobs again to create more stimulation into the economy and make the recovery come even quicker.
The article shows that the housing market may be on the uprise leading to one of the stronger economies that has been seen in recent history. Many of the homes that should have never been built and or were sold to people that were unfit to handle the payments that these home require, have been marked to a price that it is much easier to sell meaning that the market is rising. Although 12 percent of homes were former forclosed homes and an additional 12 percent of home that were sold in december that were short sold, meaning the value of the house was less than the mortgage on it. But last year also there was 780 thousand homes built which was the highest amount built in the past 4 years. The newest way that we need to keep an eye on is the creation of home building jobs again to create more stimulation into the economy and make the recovery come even quicker.
Job Numbers in U.S. Might Not Be As Good As They Appear
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/25/the-jobs-numbers-have-been-terrific-lately-can-we-believe-them/
The number of individuals filing for unemployment benefits this week hit a five-year low at just 330,000, causing many to become hopeful of an improving job market. Their bubble might be burst when they do their research and realize this number may not be completely accurate. It is always difficult for economists to get an accurate reading of the job market in January after the holiday season. A bigger issue is the fact that California has not reported their claims for the past two weeks. When the biggest workforce in the country is not reported and estimates are made instead, the numbers are going to be inaccurate. These hopeful individuals should be get too discouraged about the future of our job market though, since the unemployment rate is currently at 7.8%. This number might seem large to some but is a steep decrease from the recent rate of 10%. Forecasts see this number falling even more in 2013, possibly down to 7.4%, a slow but sure decrease in unemployment and improvement of the economy.
The number of individuals filing for unemployment benefits this week hit a five-year low at just 330,000, causing many to become hopeful of an improving job market. Their bubble might be burst when they do their research and realize this number may not be completely accurate. It is always difficult for economists to get an accurate reading of the job market in January after the holiday season. A bigger issue is the fact that California has not reported their claims for the past two weeks. When the biggest workforce in the country is not reported and estimates are made instead, the numbers are going to be inaccurate. These hopeful individuals should be get too discouraged about the future of our job market though, since the unemployment rate is currently at 7.8%. This number might seem large to some but is a steep decrease from the recent rate of 10%. Forecasts see this number falling even more in 2013, possibly down to 7.4%, a slow but sure decrease in unemployment and improvement of the economy.
Dubai's comeback?
http://www.economist.com/news/finance-and-economics/21569036-gulf-emirate-flashy-ever-it-still-has-structural-problems
Around late 2009 'Dubai World', a large government controlled investment firm, began to fall apart due to increasing debt, and its inability to pay back put the emirate's economy in a vulnerable position. Since oil reserves were also limited, Dubai had to be bailed out by the UAE's central bank and it's neighbor Abu Dhabi. The article highlights some of the ways in which Dubai's economy has been recovering and how it may very well be as strong as its former self soon enough. With GDP figures on the rise along with trade, transport, and tourism flourishing, things seem to be moving in the right direction.
"The number of passengers at Dubai International Airport was up by nearly 14%; and occupancy rates of Dubai’s hotels reach 80%, among the world’s highest. The property market is showing signs of renewed exuberance. In September Emaar put a 63-storey tower with 542 flats on the market and sold them all on the first day."
The economy, well aware of its limited oil reserves, has also diversified to a great extent and boosted its tertiary industry significantly over the years. However, the article also focuses on the many structural problems that still remain. There is still a great amount of debt that has to be dealt with, and the emirate has had to get tough on banks to begin managing this problem. Also, the financial sector is not performing well as the proportion of non-performing loans in some of the largest banks have risen. This is troublesome as it will be hard to finance future developments and sustain the growth of its main strengths: trade, tourism, and transport.
There is a development in progress to build a city within a city, which will include the world's largest mall, the middle-East's largest entertainment center, and a park larger than London's Hyde park. Things look quite promising, but underlying problems must be addressed.
In the Wake of the Housing Bust, Fewer Young Homeowners
In the Wake of the Housing Bust, Fewer Young Homeowners
This article discusses the further growing impact of the Great Recession on the housing market. Home ownership among Americans and young people in general is down from where it was 9 years ago, about 4%. This might not seem like much, but even with the housing market making up only taking up 5% of our GDP, we have seen the affect this sector can have on the overall economy. The article suggests two reasons for this decline in young home ownership: foreclosures have forced people to become renters, and tight lending agreements mixed with weak labor markets. Robert Dietz suggests that the government needs to tread lightly in upcoming policy making decisions concerning the housing market in order to prevent long-term damage. This article is especially critical to our age group because we might soon be looking for homes and the policies regarding loaning and housing made now will affect us in the future.
This article discusses the further growing impact of the Great Recession on the housing market. Home ownership among Americans and young people in general is down from where it was 9 years ago, about 4%. This might not seem like much, but even with the housing market making up only taking up 5% of our GDP, we have seen the affect this sector can have on the overall economy. The article suggests two reasons for this decline in young home ownership: foreclosures have forced people to become renters, and tight lending agreements mixed with weak labor markets. Robert Dietz suggests that the government needs to tread lightly in upcoming policy making decisions concerning the housing market in order to prevent long-term damage. This article is especially critical to our age group because we might soon be looking for homes and the policies regarding loaning and housing made now will affect us in the future.
Thursday, January 24, 2013
Nokia to Omit Dividend and gain profit
http://www.bloomberg.com/news/2013-01-24/nokia-to-omit-dividend-for-first-time-in-143-years.html
The article discusses the fact that Nokia will skip a dividend for the first time in at least 143 years as the company retains cash for its comeback attempt. According to Bloomberg dividend forecast, the company was projected to forgo a payout. Nokia hoped that the payout omission will “ensure strategic flexibility”.
Once the world's largest smartphone maker, Nokia has lost more than 80 percent of its market value since then and fallen outside the top-five smartphone makers. But it started to recover its income with the rising of sales of Lumia, one of their products. Right now, the company is making progress with its cost reduction by 1 billion euro over a year. I think it is also important for them to boost sales and get consumers buy more Luminas. Also, the company needs to keep up with the technology to provide products that not only cheap but also highly functional. But the company is heading in the right direction, and their products are significantly more competitive than they used to be last couple of years.
Davos: How Jamie Dimon and JPMorgan Chase Endanger the Public Safety
This article deals with JP Morgan Chase and the new regulations is banks. My dad works at Chase so I remember the big loss they had a while ago with the poor investment made in London. Chase got a very bad rep from this and this talks about the rising regulations from the government. Jamie Dimon is a very well respected business man especially in the banking world. He talks about how the regulators are doing too much regulation and it is restricting the bank. With the facts he presents it shows that Chase is still doing well. I believe that he has enough experience to where he can bounce back from even major issues. If the regulators do too much, they will restrict the banks and hold them back from doing their normal stuff.
Retail sales lifted by car buying
http://money.cnn.com/2013/01/15/news/economy/retail-sales/index.html?iid=SF_E_Highlight
According to the article, retail sales rose in December, which is pretty common, despite weak sales at retailers such as electronics stores.Much of the gain was from a 1.8% increase in sales at auto dealers. Sales at retailers other than auto dealers only rose were up only 0.3% even though it was the holiday shopping season. Department store sales rose only 0.3%, and dropped 1.7% from December 2011 sales. This says a lot about how much the fiscal cliff and economic uncertainty has impacted the consumer spending this holiday season. After all, it has been a rather modest holiday shopping season for all of us.
According to the article, retail sales rose in December, which is pretty common, despite weak sales at retailers such as electronics stores.Much of the gain was from a 1.8% increase in sales at auto dealers. Sales at retailers other than auto dealers only rose were up only 0.3% even though it was the holiday shopping season. Department store sales rose only 0.3%, and dropped 1.7% from December 2011 sales. This says a lot about how much the fiscal cliff and economic uncertainty has impacted the consumer spending this holiday season. After all, it has been a rather modest holiday shopping season for all of us.
Apple (AAPL) Shares Close Down 12 Percent on Slowdown Worries
Apple shares fell 12% by the end of trading on Thursday. Wall Street's expectations were just too ambitious - investors expect too much from this company. Apple was hoping to sell 50 million iPhones, but they only reached 47.8 million. The "lackluster" iPhone sales is one of the primary reasons the stock fell so hard today. However, they only sold 37 million in the same quarter a year ago. According to my calculations, thats an increase of 10.8 million iPhones sold - sounds pretty good to me. I understand falling short of expected iPhone sales can be very disappointing, but investors need to look at the overall health of the company. Apple has 137 billion dollars of cash available. Their profits topped 41.7 billion, a record for any firm outside the oil industry. People keep talking about how the company desperately needs to get their Apple TV out to the market; those people need to relax. In my opinion, they are in good shape whether that happens of not.
U.S. Jobless Claims Drop to 5-Year Low
http://www.nytimes.com/aponline/2013/01/24/us/politics/ap-us-unemployment-benefits.html
The article discusses the fact that the number of Americans seeking unemployment aid fell to the lowest number in 5 years. They dropped to a seasonally adjusted 330,000 which is the lowest since 2008.
It is worth noting that weekly figures are volatile and can occasionally contain noise, so the data may be slightly uncertain. It still does present a brighter picture for the US economy, with employers cutting fewer jobs and hiring more. An increase in employment levels is a critical hurdle for the US economy to overcome soon. It also discusses improvements in the housing sector, which shows signs of recovering. While activity may have slowed in the most recent quarter, it is possible that these other indicators offer signs of a recovery that will speed up in the near future.
The article discusses the fact that the number of Americans seeking unemployment aid fell to the lowest number in 5 years. They dropped to a seasonally adjusted 330,000 which is the lowest since 2008.
It is worth noting that weekly figures are volatile and can occasionally contain noise, so the data may be slightly uncertain. It still does present a brighter picture for the US economy, with employers cutting fewer jobs and hiring more. An increase in employment levels is a critical hurdle for the US economy to overcome soon. It also discusses improvements in the housing sector, which shows signs of recovering. While activity may have slowed in the most recent quarter, it is possible that these other indicators offer signs of a recovery that will speed up in the near future.
Uncertainty and Unemployment
http://www.economist.com/blogs/graphicdetail/2013/01/focus-3
This article begins by pointing out that economic uncertainty has a negative impact on consumer demand as well as the unemployment rate. It goes on to explain two uncertainty indices used to measure uncertainty in the economy. The first is the economic policy uncertainty index, which is based on statements made in the media as well as the rate of disagreement between economics forecasters. The second is the hiring-uncertainty index, which relies on feedback from different employers regarding their hiring intentions. As stated in the article and illustrated on the graph, these two indices have been highly correlated with one another and with the unemployment rate until recently. This presents the question: as these two indices diverge, which one, if either, will the unemployment rate follow? If I had to choose between the two, I would say that the unemployment rate will most closely follow the hiring-uncertainty index. This is because unemployment rates are directly related to hiring patterns- as more firms hire more workers, more people are employed and the unemployment rate drops. However, because employers tend to hire less workers in times of uncertainty and more when the economy is stable, I feel that the hiring uncertainty index will rely heavily on the economic policy uncertainty index. If this is the case, I believe that the two indices should eventually fall back into a rhythm, and the unemployment rate will once again become consistent with both.
This article begins by pointing out that economic uncertainty has a negative impact on consumer demand as well as the unemployment rate. It goes on to explain two uncertainty indices used to measure uncertainty in the economy. The first is the economic policy uncertainty index, which is based on statements made in the media as well as the rate of disagreement between economics forecasters. The second is the hiring-uncertainty index, which relies on feedback from different employers regarding their hiring intentions. As stated in the article and illustrated on the graph, these two indices have been highly correlated with one another and with the unemployment rate until recently. This presents the question: as these two indices diverge, which one, if either, will the unemployment rate follow? If I had to choose between the two, I would say that the unemployment rate will most closely follow the hiring-uncertainty index. This is because unemployment rates are directly related to hiring patterns- as more firms hire more workers, more people are employed and the unemployment rate drops. However, because employers tend to hire less workers in times of uncertainty and more when the economy is stable, I feel that the hiring uncertainty index will rely heavily on the economic policy uncertainty index. If this is the case, I believe that the two indices should eventually fall back into a rhythm, and the unemployment rate will once again become consistent with both.
Young Wild & Jobless in Spain
In this recent article on bbc.co.uk it gives an overview to a rising problem of unemployment for youths from ages 16-24 years old in Spain and other European countries. The current unemployment rate in Spain is 24.3% which is even larger than the rate in Greece who is still recovering from their recent economical collapse. Of the 24.3% unemployed 51.5% of those people are under 25 years old. This being said these numbers of the youth that are unemployed cause more of a ruckus then there truly is because throughout the article it switches back and forth between the jobless rate and the unemployment rate. This being said it would be a more accurate measure to use the unemployment rate when assessing the problem with youth unemployment because the jobless rate includes college students who cannot work even if they wanted to. These numbers though do shed light on a growing problem in Eurozone where the Eurostat estimates there were 5.8 million people under 25 that were unemployed, which is around 23.7% and 3.73 million in the Eurozone (24.4%).
http://www.bbc.co.uk/news/business-21180371
Tuesday, January 22, 2013
Unemployment rate in DC increases
According to this article, along with the Labor Department data, the unemployment rate in Washing D.C. has increased in the past nine months. The mayor Vincent Gray has shared his discontent with the rate reaching 8.5 in December. Before this increase in job losses, there was a nine month period of a decrease in unemployment, and Gray attributes this to his administration job policies coming into affect. Overall, Gray is not too worried about this slight increase because they have grown so much, it should not be too much of an impact. Since one year ago, the District added 2,900 jobs and still drastically changed the unemployment rate from 10.1%. Gray is optimistic and only sees a dip in the rate after a long increasing period.
Other states have also changed in unemployment but in different ways. For 22 states, unemployment has decreased and another 16 states with an increasing unemployment rate. Leaving 12 states with an unemployment rate that has not been affected and have stayed completely the same.
http://www.washingtonpost.com/local/dc-unemployment-rate-increases-slightly-ending-9-month-streak-mayor-says-hes-disappointed/2013/01/18/f3205e14-618e-11e2-8387-f5a6926d3170_story.html
Other states have also changed in unemployment but in different ways. For 22 states, unemployment has decreased and another 16 states with an increasing unemployment rate. Leaving 12 states with an unemployment rate that has not been affected and have stayed completely the same.
http://www.washingtonpost.com/local/dc-unemployment-rate-increases-slightly-ending-9-month-streak-mayor-says-hes-disappointed/2013/01/18/f3205e14-618e-11e2-8387-f5a6926d3170_story.html
U.N. Agency Warns of Rising Unemployment
The United Nations said on Monday 197 million people worldwide are jobless, and an additional 39 million have given up looking for work. As we all know, high unemployment rates in the developed world weigh on demand and hold back economic growth. The UN blames the governments trying to balance their budgets for such high worldwide unemployment. Many governments tried to counter the financial crisis with fiscal stimulus, which resulted in a deeper recession for many countries. Today, many people in the developed nations are leaving the job market altogether. The labor force participation rates are falling dramatically and masking the true extent of the jobs crisis. Therefore, the International Monetary Fund's Director is urging governments to focus on "growth that can actually deliver jobs."
Monday, January 21, 2013
Check the weather...for Inflation.
http://www.businessweek.com/articles/2013-01-10/why-are-food-prices-rising-check-the-weather
This is a simple article in which the author reviews the devastating effects of extreme weather on agriculture production; the subsequent results come in the form of food shortages and rising prices. Furthermore, the article provides details on the local, regional and global effects of this erratic weather by explaining the loss of crops, and the significant monetary consequences as a result. For example, the severe drought in the US Central and Southern Plains of 2011 resulted in the significant fall in wheat output, costing the US an estimated $20 billion. An example such as the one above that causes global shortages tells us that nature is in fact inflationary - more demand but fewer goods available is a recipe for higher prices. This raises the question of wether there is a solution, or maybe we must simply continue to weather the storms? Is there any way of mitigating Mother Nature's force? But as for now, we must contend with the fact that crop production will fall, farmers will continue to suffer losses, you will pay more for rice (for example), prices will rise, and with all this, Economists must/will rise to the occasion.
This is a simple article in which the author reviews the devastating effects of extreme weather on agriculture production; the subsequent results come in the form of food shortages and rising prices. Furthermore, the article provides details on the local, regional and global effects of this erratic weather by explaining the loss of crops, and the significant monetary consequences as a result. For example, the severe drought in the US Central and Southern Plains of 2011 resulted in the significant fall in wheat output, costing the US an estimated $20 billion. An example such as the one above that causes global shortages tells us that nature is in fact inflationary - more demand but fewer goods available is a recipe for higher prices. This raises the question of wether there is a solution, or maybe we must simply continue to weather the storms? Is there any way of mitigating Mother Nature's force? But as for now, we must contend with the fact that crop production will fall, farmers will continue to suffer losses, you will pay more for rice (for example), prices will rise, and with all this, Economists must/will rise to the occasion.
Dr. Doom was wrong
http://business.financialpost.com/2013/01/21/how-roubini-got-it-wrong-on-a-greece-eurozone-exit/
In this article, the author shows that the man famous for predicting economic crisis 'got it wrong' on Greece's situation in the Eurozone. Economist Nouriel Roubini was labeled a skeptic and 'Doctor Doom' when he correctly predicted that the housing market collapse would create a global recession. This time however he had predicted that Greece would exit the Eurozone by now.
Since this has not happened, and the fact that Europe is again stabilizing financially, we can conclude that Roubini was wrong. The reason for this, as explained by the author, was that Roubini could not have seen the support of the European community and the Greeks' ability to sacrifice short-term gains for long-term, bigger gains.
In this article, the author shows that the man famous for predicting economic crisis 'got it wrong' on Greece's situation in the Eurozone. Economist Nouriel Roubini was labeled a skeptic and 'Doctor Doom' when he correctly predicted that the housing market collapse would create a global recession. This time however he had predicted that Greece would exit the Eurozone by now.
Since this has not happened, and the fact that Europe is again stabilizing financially, we can conclude that Roubini was wrong. The reason for this, as explained by the author, was that Roubini could not have seen the support of the European community and the Greeks' ability to sacrifice short-term gains for long-term, bigger gains.
Sunday, January 20, 2013
Chinese Economy
The Chinese economy is the second largest in the world; second to the United States of America. China has taken on an important role in manufacturing, producing many of the goods sold in the United States and Europe. In an article written by Damian Grammaticas, China correspondent for BBC, the decline and rebound of the Chinese economy is discussed. Grammaticas highlights that China suffered its slowest period of economic growth in 13 years, witness in the third quarter of 2012, an increase in Gross Domestic Product (GDP) of 7.4%. GDP increased by 7.8% in the fourth quarter of 2012. This shows signs that the economy is back on track. Grammaticas also highlighted that while China did see a decline in growth, their growth rate is still very high compared to other countries, about 2% in the United States. China is a "transition economy", the population is shifting from low-income earners to middle-income earners. This points to future growth showing similar patterns as the economy works out its "growing pains". All in all, the future is bright for the Chinese economy, which is closely tied to the health and stability of the economies of the rest of the world.
http://www.bbc.co.uk/news/business-21071546
http://www.bbc.co.uk/news/business-21071546
The Fed Drives Best at Higher Speeds
http://www.nytimes.com/2013/01/20/business/fed-monetary-policy-drives-best-at-higher-speeds.html?ref=business
This article discusses the recent monetary policies Bernanke has implemented in order to help the economy continue to recover. They are currently using expansionary monetary policy in the form of open market operations through buying bonds. This approach includes the risk of creating inflation; but in her article Romer states that Bernanke and the Fed may argue that a strong dollar isn't necessarily desirable in a weak economy. This article also suggests that the current open market operations could be accelerated in order to bring back a strong economy faster. A pressing concern that is mentioned is the Fed's commitment to their new policies. According to Romer, it is important that they do not appear shaky on the policies that they implement and that a fast and aggressive approach is needed in order to bring back a strong economy as quickly as possible.
This article discusses the recent monetary policies Bernanke has implemented in order to help the economy continue to recover. They are currently using expansionary monetary policy in the form of open market operations through buying bonds. This approach includes the risk of creating inflation; but in her article Romer states that Bernanke and the Fed may argue that a strong dollar isn't necessarily desirable in a weak economy. This article also suggests that the current open market operations could be accelerated in order to bring back a strong economy faster. A pressing concern that is mentioned is the Fed's commitment to their new policies. According to Romer, it is important that they do not appear shaky on the policies that they implement and that a fast and aggressive approach is needed in order to bring back a strong economy as quickly as possible.
New Model Army- something to think about!
This is an article from The Economist which discusses the validity of macroeconomic models. It focuses on the fact that not all economic agents are included in these theoretical models that have been used over the years, such as banks. This is worth taking into consideration because , like the macroeconomic indicators used to measure the performance of the national economy, each economic model has its strengths & weaknesses and if banks & other financial institutions are to be included in the model, it's highly likely for the accuracy and validity of these models to increase as more economic 'agents/participants' are encompassed into the theories being analyzed, giving more details about the bigger picture.
http://www.economist.com/news/finance-and-economics/21569752-efforts-are-under-way-improve-macroeconomic-models-new-model-army?zid=307&ah=5e80419d1bc9821ebe173f4f0f060a07
How Economists do their jobs
http://www.economist.com/news/21567079-meet-economists-who-are-making-markets-work-better-micro-stars-macro-effects
Using some good examples, this article shows how economists around the world are using their knowledge, experience and thinkings everyday to helps their firms, or in a broader sense, the economy as a whole. The examples are varied, ranging from how Mr. McAfee used his experience at his previous company Yahoo to solve the same bandwidth problem his current company Microsoftwas was facing; to how Susan Athey of Microsoft utilized her economic knowledge to make both internet advertisers and users better off in a seemingly unavoidable trade-off between the two.
These examples are convincing not because they were all from well-known companies and individuals, they were also rationalized well. This article really helps me understand the role of an Economist better, and how economy theories can be applied to great effects.
Using some good examples, this article shows how economists around the world are using their knowledge, experience and thinkings everyday to helps their firms, or in a broader sense, the economy as a whole. The examples are varied, ranging from how Mr. McAfee used his experience at his previous company Yahoo to solve the same bandwidth problem his current company Microsoftwas was facing; to how Susan Athey of Microsoft utilized her economic knowledge to make both internet advertisers and users better off in a seemingly unavoidable trade-off between the two.
These examples are convincing not because they were all from well-known companies and individuals, they were also rationalized well. This article really helps me understand the role of an Economist better, and how economy theories can be applied to great effects.
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