Finding Common Political Ground On Poverty

Groups from opposite ends of the political spectrum have found common ground around the effort to raise the minimum wage. A collection of proposals have been made to give the administration a direction to take the fight against poverty. This has surprised the public that such opposing groups have been able to develop a substantial idea of how to fight poverty in the States. Despite some expected differences in how to enact a raise of the minimum wage, both parties champion an increase in the minimum wage. Differences include: the left side blames reasons out of anyone's control on creating poverty while the right places more weight on personal responsibility. The two sides are moving closer together and hopefully soon they will be close enough to combine influence to support raising the minimum wage.
Eduardo Porter, NY Times

Job Openings Surged in December

Is the labor market strengthening? Despite a slowdown in the economic growth, job openings in the United States surged. According to the article, the number of Americans voluntarily quitting work hit a nine-year high. Job openings, a measure of labor demand, increased by 261,000 in December in the monthly job openings and labor turnover survey conducted by the Labor Department. This was the second-highest reading since the series started in 2001.These numbers point to a tightening of the labor market.

This data eases the concerns of those who were worried about the health of the economy after a recent drop in small business confidence in January, and a continuing decline in wholesale inventories.

The increase in job separation lifted the jobs opening rate to 3.8% from 3.6% in November. The hiring rate remained unchanged, though, indicating that employers were struggling to hire qualified applicants for their open positions. Small businesses are being prompted to raise their wages in order to attract and retain workers. In response, the share of small businesses raising compensation increased to its highest level since 2007.

The combination of more job openings and more people quitting could result in pay increases. Wage growth was shown to increase in January significantly. Economists say that wages need to grow by around 3% in order to attain the Fed’s target of 2% inflation.

Link: http://www.nytimes.com/2016/02/10/business/economy/job-openings-surged-in-december.html?ref=economy&_r=0

Is the current cost of Super Bowl Commercials a steal?

Watching the Super Bowl on TV has increasingly become not only something that football fans have come to enjoy, but also the general population. In fact, some don’t even watch the game at all, instead they watch the commercials because of the reputation that the Super Bowl commercials have developed over the years as they have become increasingly entertaining.

So, how much does it cost for a company to have a 30 second ad for the big game? For Super Bowl 50, approximately $5 million, a price increase of $500,000 from the previous year. At first glance, this may seem like an atrocious amount of money for a company to put forth for a 30 second commercial, but as Smith, Calkins, and Rucker discusses in the attached articles, this price may actually be a deal for some.

Smith discusses several important factors behind why he argues that this price could be steal for many companies. First, we have to look at the sheer number of viewers. Super Bowl viewers have been consistently increasing on a year to year basis, with Super Bowl 48 having about 112 million live viewers. Not only does the Super Bowl yield a high number of viewers, but based on previous studies the Super Bowl also has approximately 54% higher brand recall than primetime commercials. In essence, as Smith explains, this would be the equivalent of then having about 170 million viewers. The only factor we have discussed so far is TV. In reality, after Super Bowl games there is much social media circulation of people’s favorite super bowl commercials. On average, there is approximately 19 million more views of each commercial on social media. Bringing these factors together, Smith explains that with these two factors alone advertisers have a true consumer ad value of $7.7 million. Combining other factors such as media coverage and increased brand awareness, Smith does believe that it could potentially be valued at $10 million, like NBC’s executive Seth Winter suggested.

Given all these factors, I certainly believe that a price tag of $5 million is justified, however I would say $10 million is certainly a stretch. Something that I would argue is that the $5 million is only justified for company that puts in the time, research, and resources into developing a commercial that will yield positive results. I define “positive results” in this case meaning it spreads a meaningful image/message regarding their company, and provides an entertainment factor that encourages the spread of it’s commercial on social media.

Over the past decade Super Bowl commercial prices have been increasing dramatically, so a price close to $10 million may not be too distant. Do you think that a $5 million price tag is fair? What about $10 million?

http://www.forbes.com/sites/chrissmith/2015/01/16/could-a-super-bowl-commercial-really-be-worth-10-million/#413456d67276

http://www.forbes.com/sites/onmarketing/2016/01/28/is-a-super-bowl-ad-really-worth-5-million/#28d613fc41aa

Asian Stocks Extend World Rout Amid Rising Yen While Oil Rallies

In case you have not seen the news today (February 11th), global markets took a major hit. Asia was impacted the most, and in our globalized world, the rest of the globe followed suit. The Hang Seng (China) index lost over a percent. The Topix, a Japanese exchange fell 5.5 percent today, which capped off a 20 percent slide this month. The Topix hasn't fallen this much since 2008, when the Great Recession sent global markets into a downward spiral. This shows the seriousness of the situation.

As mentioned before, this situation wasn't only a Chinese or Japanese problem. The S&P 500 was down by as much as 2.3 percent today, before eventually rallying behind a surge in oil prices to end the day down slightly over 1 percent. If oil prices had not increased, the effect of the poor performing Asian markets would have been much worse. The reason that oil rebounded was speculation that producers may actually act to bolster the market.

I firmly believe that the sheer number of these occurrences point to a high probability of an upcoming economic downturn. I'm not saying that I believe this will be a downturn equivalent to the 2008 Great Recession, but I do believe that the economy will go into a recession within the next year. To bolster my hypothesis, remember that the economy tends to operate in cycles of 7-10 years, and it has been 7 years since the last recession. Therefore another one is likely due soon. What do you think? Is this just another case of volatile markets that have plagued the globe this year, or is it a warning sign? Will the economy continue to grow, or is a downturn on the horizon?

Link: http://www.bloomberg.com/news/articles/2016-02-11/global-bear-market-to-intensify-in-asia-as-investors-hunt-havens

Valentine's Day 2016: America's $20 Billion Day of Love

        This coming Sunday is Valentine's Day 2016. As most know, Valentine's Day is one day of the year meant to spend with significant others or loved ones in general. As with any holiday, Valentine's Day is one where a substantial amount of money gets spent. Money spent on Valentine's Day typically goes to things like boxes of chocolates, movie tickets, food, and various gifts. 

        According to the National Retail Federation, spending for the holiday is projected to hit a record $19.7 billion with 54.8 percent of Americans expected to celebrate the holiday. Men are predicted to spend an average of $133.61 on gifts while women are expected to spend about half of this with $62.14. People are even expected to spend an average of $26.24 on gifts for their pets. 

        Holidays like this are beneficial for the U.S. economy because they boost sales for businesses. As consumer spending is the largest component of GDP, it is important that Americans are going out and spending money on holidays in order to drive the GDP up, growing the economy. 

http://www.forbes.com/sites/niallmccarthy/2016/02/12/valentines-day-2016-americas-20-billion-dollar-day-of-love-infographic/#2c7e8b92060b

Janet Yellen: Negative rates possible in U.S.

Janet Yellen stated recently that the Fed would consider using negative interest rates in order to stimulate the economy, but in order for this to happen the economy would have to become much worse than it currently is now. As we have been taught, a negative interest rate would decrease people's willingness to save money due to the low return, therefore people will find other ways to make money instead. When the Fed reduced the interest rates to almost 0% as they are today, the hope was that this would increase the amount of spending in the economy. However, this has not been the case and more saving occurred than the Fed expected due to the recent crisis in 2008.

If these rates are implemented, banks will have to pay fees for holding money instead of investing it. This would make it hard for banks to make any money as they are already struggling with the low interest rates today. Consequently, one of the biggest questions surrounding this topic is, would negative interest rates increase spending and decrease saving in order to stimulate the economy? The resounding answer is no one is certain. Other countries have implemented these negative interest rates, however answers are not clear as to their outcomes.

Do you think if the US economy were to further decline negative interest rates would work to increase spending and stimulate the economy or do you think people would continue to save as they have after the crisis in 2008?


http://money.cnn.com/2016/02/11/news/economy/negative-interest-rates-janet-yellen/index.html

California Gas Prices

http://money.cnn.com/2016/02/09/news/economy/california-gas-prices/index.html?iid=SF_LN

Currently, the United States of America are experiencing extremely low oil prices. With that being said, there is a state that is not enjoying cheap fuel, that state is California. In some places in the country gas prices have fallen below $1, but in California, the current average price for fuel is $2.50 per gallon. This is a result of California having one of the highest gas tax rates at $0.40 per gallon. California is trying to be a very environmental friendly state and due to the state’s strict gas standards, their fuel is known as one of the cleanest burning in the world. California’s firm control on emissions sent into their atmosphere is not a cheap service. 

California fuel costs much more to refine and is a special oxygenated blend compared to other state’s gasoline. This fuel burns so clean that most Refineries do not have the resources to produce it. When one of the few refineries that makes California fuel goes down, the state suffers. The Exxon Mobil refinery in Torrance California experienced an explosion and this crippled the supply of gas to the State of California. This major supplier to California is on schedule to be operating again toward the middle of the year. "Right now, California is a bit like Pluto revolving around the sun of crude oil, but it's going to move closer to the national average when that refinery reopens’ said Tom Kloza of the Oil Price Information Service. 

The Apple TV Is About To Get Much Better

Apple's flagship device to takeover your living room entrainment has up until this point hasn't quite delivered on that thought. The reality is that people who buy Apple TV see it at a extension of easily projecting popular streaming services such as Netflix and Hulu. Most consumers enjoy their subscriptions to various television companies like Time Warner, DirectTV etc. Apple TV is built upon using a version of Apple's block app idea from iOS and uses that idea to display an array of streaming applications on your screen. Options that cable simple cannot offer.

The reason I believe why Apple TV hasn't quite taken off is because most people like having their cable and Apple TV as an extension to more viewing option. Apple wants to aim to replace cable boxes and to do so, a revamp is required.

Now the company has released the third beta of tvOS 9.2, the next update to the Apple TV, and it looks like it will address many of the shortcomings users had complained about in the software, notes MacRumors. For starters, tvOS 9.2 will add Siri dictation support to the Apple TV. Many have been frustrated that while you could ask Siri queries or tell Siri to perform actions like opening certain apps, a basic function of Siri on iOS–-the ability to dictate words and have them typed on screen for you–-had been left out of tvOS. As of tvOS 9.2, that feature has now been added, and it will make entering service login names, passwords, and other text much easier on the device, especially considering that not many are fans of its horizontal on-screen keyboard.

Another major feature that tvOS 9.2 will introduce is Siri App Store search. Currently you can ask Siri to find TV shows and movies, but not apps. With tvOS 9.2 you’ll be able to use Siri to search for apps or app categories by voice.

Now if Apple delivers upon these improvements along with many more, their flagship TV device will perhaps penetrate the cable viewing market harder than it has before. 

link: http://www.fastcompany.com/3056504/fast-feed/the-apple-tv-is-about-to-get-much-better

Chipotle Starting Program to Help Farmers Ensure Safety of Food

An article released by Bloomberg announced how Chipotle is continuing to restore its brand name and ensure consumers that their products will be safe. Co-Chief Executive Officer Steve Ells announced during a meeting with his employees on Monday Feb. 8 that they will be spending as much as $10 million to start a program that is aimed to their suppliers to maintain and improve their food-safety standards. The money will be used to help local farmers offset their costs of new tests and food-safety protocols. 

Chipotle took a huge hit from this E. coli that has drastically affected their sales and the value of their stock which dropped 36% in January. The article noted that their new changes will make the restaurant chain an industry leader in food safety. 

It is clear that Chipotle is doing everything in its power to overcome this incident, which has defiantly influenced people's opinion on the company's food quality. It has already been reported that the outbreak is over, so there is only an upside for the company here on out. It might not be a bad time to look into investing in Chipotle.

http://www.bloomberg.com/news/articles/2016-02-08/chipotle-starting-program-to-help-farmers-ensure-safety-of-food

Ford to More Than Double Mexico Production Capacity in 2018

Ford Motor Co. announced that they would expand manufacturing capacity in Mexico over the next three years by more than double. This decision is going to cost about 1.5 billion dollars, but with the new plant, they can produce additional 500,000 new units per year in Mexico in 2018. Base on this journal, Ford is not the only automakers have build factory in Mexico in the recent year. Other companies like BMW AG, Volkswagen AG and Toyota Motor Corp. Honda Motor Co. had also build assembly lines in Mexico.

Some people think this decision is result of the recent labor agreement that pushed wages higher. But, the president of UAW claimed that there was no financial reason for U.S. automakers to switch their production to Mexico, because “they’re making profits right here in the United States.” If he is right, I think the increase in labor costs is only a part of the story. The other significant reason might be the fact that Mexico has less legal regulation, taxes, and trade restrictions, which makes it much easier to do business there.




http://www.wsj.com/articles/ford-to-more-than-double-mexico-production-capacity-in-2018-1454857923?mod=e2tw

What happens to a tiny town when Walmart disappears?

This article highlights some of the negative impacts felt by small communities after Walmart made the decision to close roughly 150 of their stores. The stores chosen to be taken down are mostly located in the southeastern section of the United States and serve mostly blue- collar workers. For instance, the article discusses the impact the closing of one of the branches in Kimball, West Virginia “ 'It’s like we’re a forgotten bunch of people,' said Matney, her long gray hair loosely clipped into a bun. 'It’s about all there was to look forward to. If we had to go any further, there ain’t no way'". The article brought up an interesting perspective to challenge the commonly held notion that Superstores like Walmart are detrimental to the local economies as it draws business away from the "ma and pa" stores

https://www.washingtonpost.com/news/wonk/wp/2016/02/05/what-happens-to-a-tiny-town-when-walmart-disappears/?tid=sm_fb

With economy improving, Obama wages war of words with GOP doomsayers

With the Presidential primaries starting to get underway, Obama seems to be more public about his opinions on a strong US economy. In recent speeches he is disregarding Republican nominees ideas of Obama's "failure" with the economy. Obama believes they are just trying to obtain votes from republican voters by pointing out all Obama's flaws. However with the stats to prove Obama’s success with a economy has added 14 million jobs over a record 71 consecutive months, a unemployment rate has dropped from a peak of 10 percent in October 2009 to less than 5 percent, and average household wages have picked up, growing 2.5 percent last year. Its hard to disagree with progress with our economy when you look at the numbers.

https://www.washingtonpost.com/business/economy/with-economy-improving-obama-wages-war-of-words-with-gop-doomsayers/2016/02/07/46873a4c-c45f-11e5-a4aa-f25866ba0dc6_story.html

What’s Behind January’s Higher Wage Growth

According to the article, as the Labor Department said, average hourly payment for American workers increased by 0.5% last month which was the best performances since the recession ended. Even though it seems a good news, however, as the author said, there's still something need to be reconsidered. First is that the leap in January, which is the beginning of a year, might reveals the increasing of cost-of-living in the year. Secondly, even though the minimum wage of many states has increased, as we mentioned in class, increasing of minimum wages actually cannot influence much people, because this doesn't mean the increase of overall income. Third, the article talked about that the increase of income might be the end-of-year bonuses. The last point mentioned in the article is the influence of decreased unemployment rate, which is similar to what we have talked about in class. With the decreasing unemployment rate, employers might raise their wages to keep the workers.

here's the link: http://blogs.wsj.com/economics/2016/02/05/management-bonuses-minimum-wage-increases-may-have-juiced-wage-numbers/

Is Chipotle a riskier place to eat? Hard to know

After having sickened more than 500 people across the nation, Chipotle is resorting to drastic measures this Monday as they plan to close all 1900 U.S. restaurants in order to meet with employees about the recent E. coli outbreaks. While it is not often that they deal with local matters, the Federal Public Health Investigators are getting involved since there have been multi-state outbreaks. As a result of these outbreaks occurring in early july, it was recorded that Chipotle's sales have decreased by about 36%.  The stock as a whole is also down about 2.3%. The previous practice from the health department was to not release the names of the restaurant to the public after an outbreak unless it is a common occurrence or danger to the public.  It has however since changed to outbreaks being reported with the name of the restaurant being included every time. Chipotle's outbreaks were not the reason for this change, but it has definitely effected their reputation more than it would have.  Overall, Chipotle has some rebuilding to do with there safety precautions and steps towards regaining the trust of the public.

http://finance.yahoo.com/news/chipotle-riskier-place-eat-hard-120001777.html

Feeding the vultures

Argentina, a country who defaulted on $900 million worth of bonds, believes that after 14 years they are finally able to pay off the debt. Creditors are currently seeking $2.5 billion in outstanding interest payments and Argentina is seeking an 85% write down of the current debt. This "pre-agreement", which would cover around 15% of the holdouts from 2005 and 2010, still has to be approved by Congress. Argentina had a $82 billion sovereign default in 2001, which was the highest in the countries history. Also in 2001, around 93% of bond holders agreed to exchange the defaulted loans for other securities, but at a 65% mark down. Among the investors was Elliot Management, a hedge fund located out of New York, which led to another restructuring of bonds in 2014. This was due to an attempt to avoid payments to bondholders outside of Argentina. Argentina who has continuously defaulted on payments, have been unable to access international credit, and are currently unable to aid their failing economy. The country has been seeking alternatives and ways to make deals with the "holdout creditors", but any deal that can be passed, has to be approved by congress. Many Argentineans also do not like the idea of "rewarding the holdouts for their obstinacy", so it is interesting to see what will happen.

http://www.economist.com/news/finance-and-economics/21690109-government-has-struck-one-deal-holdout-creditors-others-will-be

China's Currency reserves plunged

The article talks of how despite being the largest foreign currency holder in the world, the declining rate of its domestic currency is causing worry for China.

To stabilize the situation, the article reads, China is selling Dollars to buy more Yuan (its own currency), which seems very odd to me.

I am guessing the decline in foreign currency reserves is also probably because of general slow growth of China's economy in the past financial year.

http://www.bbc.com/news/business-35516054

Finland's Economic Winter: Permafrost

The European Union's only Nordic member is struggling to improve its poorly performing economy. Finland's economy was doing well before and after it joined the euro in 1999, but has ran into trouble in recent years. After the financial crisis in 2009 output plunged by nearly 9 percent. Short term data also suggests that 2016 will not be a good year either.

A number of things have caused Finland's economy to suffer. One of the biggest reasons has been the decline of Nokia. Nokia's rise propelled Finland's economy. Now its decline is hurting Finland's economy. Another major problem is that despite Finland's lagging economy wages have continued to rise at a rate faster than those of their trading partners. Meanwhile the workforce is shrinking yearly due to baby boomers retiring. Russia is also a heavy buyer of Finnish goods so the decline of the Russian economy has also affected Finland.

The good news is that Finland is able to find new sources of growth due to the innovative ideology among the youth. Finland has supported this ideology through  a $1.8 billion initiative to promote growth. However, soon Finland will have to experience spending cuts which will cause harm to their GDP due to the fact that government expenditure is 58% of GDP. The biggest change Finland is trying to make is to reform their labor market, so that wages are in better correlation to the economy. It also should be noted that is constrained from doing much through monetary policy due to the fact they are part of the Euro. Leaving the Euro would have hazardous results for the economy and is not a safe thing to do. I think the initiative for innovation will help diversify the economy and possibly help improve. No matter what Finland tries it is clear that they must do something in order to try and improve their floundering economy.