Drop in Unemployment Claims Suggests Job Market Strength

The number of Americans filing for unemployment has reached its lowest level in months, which suggests strength in the labor market.  The Labor Department said that initial claims for state unemployment benefits declined 18,000 to a seasonally adjusted 259,000 for the week that ended March 5.  There has been a significant growth in United States consumer spending as the jobless rate fell and wage increases picked up, but the overall outlook has been overlooked this year by worries over the health of the global economy. Jobless claims are being watched for signs of labor market weakness after the recent sell-off in stocks, but so far, the labor market seems to be healthy.  The unemployment rate held at an eight-year low of just 4.9%  The unemployment rates in the United States still continue to drop, which consistently suggests job market strength is high.


http://www.nytimes.com/2016/03/11/business/economy/drop-in-unemployment-claims-suggests-job-market-strength.html?ref=economy&_r=0

Italian Coffee Firms: Not so espresso

http://www.economist.com/news/business/21693945-countrys-roasters-have-been-slow-adapt-new-coffee-era-not-so-espresso


This article focuses on the coffee market and the Italian resistance to modernize their coffee roasting process. In comparison to Canadian and Swiss companies, who create personal coffee makers. Even thought Italy reports increased reexports from 6.7 percent to 8.9 percent, they are not doing enough to be competitive in a growing industry. Italy's biggest coffee firm, Lavazza bought Douwe Egbert's Carte Noire, making it a market leader in France, Italian coffee firms are not doing enough to reach at home consumers, who are already familiar with brands and names like Nestle and Nespresso. Italian firms are focusing on quality and their "laurels" but is reputation and quality  strong enough argument, when ease and convenience comes from bigger better known firms? But if the market is shifting to apps for buying a perfect blend and technology that better monitors water, and grinding method the old fashioned Italian firms may not be able to compete.

BIS radars indicate storm

Article: 'Gathering storm' for global economy as markets lose faith

“Underlying some of the turbulence was market participants’ growing concern over the dwindling options for policy support in the face of the weakening growth outlook,” the report said. “With fiscal space tight and structural policies largely dormant, central bank measures were seen to be approaching their limits.” This is possibly one example of what this article restates again and again. This article draws attention mainly to the fact that the BIS hosts concern on whether governments around the world have any sort of fiscal policy leverage left. In addition, the BIS is afraid that even though things globally have seemed to level off, that there is worse to come and that global governments have used up all possible flexibility with fiscal policy.  The article uses Japan as an example of running out of options hinting that the negative interest rates that Japan has implemented are possibly their last ditch effort and consequentially last line of defense. Basically to sum everything up the article says this period of “tranquility” is only the calm before the storm.

http://www.theguardian.com/business/2016/mar/07/gathering-storm-for-global-economy-as-markets-lose-faith

Time Warner CEO Jeff Bewkes Says HBO Original Programming to Increase by 50%

HBO is to increase its number of global original series hours by 50% which is nearly 600 hours.  The new programs that have been added to HBO are ‘aimed at millennials' and will play well on mobile devices.  That's a $2 billion dollar budget geared at growing the millennial audience.  To capture the new audience HBO has launched a new digital service, HBO Now, which has nearly 1 million subscribers and is aimed at streaming content via mobile devices. CEO Bewkes said the company is not interested in toying with HBO Now’s $15 dollar subscription fees as a way to boost revenue.

http://variety.com/2016/film/news/time-warner-jeff-bewkes-hbo-original-programming-1201725293/

Sports Authority default ripples through industry

This article takes a look at the effect of sports authority's recent bankruptcy on the market of sporting goods. It will be interesting to see which firms will increase their market share.

Sports Authority Inc.'s bankruptcy echoed through the sporting-good industry on Tuesday, with companies saying it was creating both hardships and opportunities.Dick's Sporting Goods Inc. said it would try to pick up market share ceded by its longtime rival, which is closing stores as it makes its way through bankruptcy court.When it filed for Chapter 11 bankruptcy protection, Sports Authority indicated it planned to close or sell a third of its 463 stores. 

http://www.sltrib.com/home/3634276-155/sports-authority-default-ripples-through-industry

Entrepreneur and venture capitalist Marc Andreessen makes a thought provoking point in Tyler Cowen’s recent article; Silicon Valley Has Not Saved Us From a Productivity Slowdown. Claiming that the overall standard of life is improving more so than what is statistically being reported, he backs his argument with the advances we have seen in the Internet. We now have unlimited access to countless search engines and social media websites though this is not a component of growth in GDP or the overall standard of living. However, the author notes that the primary concern at hand as the lagging growth rate of labor productivity at a dismal 1.8 percent, in comparison with the ten year rate of 2.8 percent. So while statistics may disagree, the standard of living has increased with a lack of growth from labor and output, which seems to be an observation provoking much debate.

http://www.nytimes.com/2016/03/06/upshot/silicon-valley-has-not-saved-us-from-a-productivity-slowdown.html?ref=economy&_r=0

Shocking gas prices from around the world reveal just how bad things are for the oil industries

 The price of oil per barrel is currently approaching all times lows across the globe. Oil is sold at a fixed price across the international markets. Taxes and subsidies have been a large factor in this as fluctuations range from $0.20 to $5.64 per gallon. This article compares oil prices from different parts of the world (adjusted with exchange rates in US dollars) to show how the oil industry is currently struggling. Llanteg, Wales has the highest price of oil at 103.9 pence per liter, which equates to $5.64 per gallon. On the other hand, Minsk, Belarus has the lowest price of oil at 11.10 rubles per liter or $0.20 per gallon. It's interesting to see how the price of gasoline changes depending on location, even within the same country. The price in New York City is currently $3.29, but on campus (at UDF) the price is $1.81 per gallon. Its very interesting to see what causes this variety of prices for the same product throughout all economies.

http://www.businessinsider.com/shocking-gas-prices-around-the-world-2016-3

Job Creation

According to Irwin from the New York Times, the American work force, according to the Labor Department’s survey of households, rose by a whopping 555,000 people in February. Over the last three months, that number totals 1.52 million, the highest it has been in 16 years. The article states that this is a good sign, since a lot of people had become detached from the labor force in 2008. Many were unsure what it would take to get these individuals to reattach but it seems like it is happening. However the author says that it seems unlikely the job market will continue to grow at this pace, and is unsure if this change will be undone by rising interest rates and a volatile global market. However, due to the combo of this increase and flat wage growth, the fed can be more patient about raising interest rates. In conclusion, Irwin says that the thing to do is to celebrate the Americans able to take advantage of this job creation and see what is to come.

http://mobile.nytimes.com/2016/03/05/upshot/americans-are-joining-the-work-force-at-the-fastest-rate-in-16-years.html?_r=0

US Immune to Global Volatility?

Link for the curious: http://www.bloomberg.com/news/articles/2016-03-07/brainard-urges-patience-at-fed-as-fischer-sees-inflation-signs

Upon noticing economic volatility abroad, US investors and policy-makers were quick to begin worrying about possible effects domestically. As the US economy continues to expand, Federal Reserve Governor Lael Brainard urges for "careful adjustments to the policy rate to preserve the expansion."

Brainard still believes that employment will continue to strengthen as well as inflation, however he reminds us to be cautious due to the decelerating demand from large foreign nations, such as China. The Fed does meet in a little over one week, but it is not expected for them to raise interest rates at that time. Consumer spending is rising and the hope is that the economic growth in this country will take hold and start to return to normal pre-recession numbers. There is a possible downside risk of course, to which Brainard said, "“We should not take the strength in the U.S. labor market and consumption for granted, sources of robust demand around the globe are few, and sources of weakness relatively greater.”

Do you think we should be worried about foreign volatility? Are we close to a "breaking point" where we explode economically? What types of policies should the Fed be looking at for such a strange time?

Now is a good time to book that European vacation

Now is the time to make travel plans.  According to this article,  "American travelers are set to save big money on trips across the pond following a sharp slide in European currencies."  Two years ago it cost $1.40 to buy one euro and today it is traded at $1.09 and is expected it might drop further in the next few weeks.  Similarly, the pound has fallen 8% against the dollar over just last year and is also predicted to continue declining.  Other destinations such as Norway and Poland have also become cheaper for Americans; the Norwegian Crown has fallen 10% and Poland's zloty has fallen 6% against the dollar in the past 12 months.  These drops are significant and now would definitely be the time to get a great bargain and start planning some journeys.

http://money.cnn.com/2016/03/04/pf/europe-currency-vacation-pound-euro/index.html?iid=SF_River

List of top 10 most expensive currencies in the world

In this article, we can see how exchange rates work and what factors determine the most valuable currencies in the world. The largest factor that determines the value of these currencies is oil, but other factors include commodities, naval bases, etc. It's interesting to see that some extremely small countries, countries some of us have never heard of before, are nearing the top of this list, in large part due to their access to oil. I like that this article puts into perspective the amount of one form of currency can pay for a U.S. dollar. 

http://www.profitconfidential.com/u-s-dollar/the-10-most-expensive-currency/