This might be the 'silver lining' for Japan

According to the article, Japanese Prime Minister Shinzo Abe are encouraging women entering workforce. The latest data available from the OECD has the female participation rate at 66.0% in 2014, which is the highest rate in the past 15 years. In 2011, however, there is 63.0%. Meanwhile, the unemployment for women dropped from 4.4% in 2011 to 3.5% in 2014.

The purpose of encouraging women entering workforce is increasing the potential output and improving women's income so that they can consume more in goods markets. This would finally has positive impact on Japanese economic growth.

http://www.businessinsider.com/japanese-women-entering-workforce-2016-4

Buying a Home: Cash Vs. Mortgage

Link: http://www.investopedia.com/articles/personal-finance/111214/buying-home-cash-vs-mortgage.asp

This article talks about when to consider purchasing a home with cash versus getting finance such as a mortgage.

Paying for cash is a big plus. It eliminates the need to pay interest on a loan and helps with many closing costs. There are no mortgage origination fees, appraisal fees or other fees charged by lenders to assess buyers. It can make the purchase of the house look better to the sellers. Peter Grabel, managing director of MLO Luxury Mortgage Corp in Stamford, Conn., says "In a competitive market, a seller is likely to take a cash offer over other offers because they don't have to worry about a buyer backing out due to financing being denied." A cash home purchase also can close faster if desired, than one with financing, which could also be a plus to the seller.

Even though there are many advantages about buying a home with cash, there are also some good things that come with mortgages. "Even if the buyer has the ability to pay cash for a home, it might make sense to not tie up a lot of cash to purchase real estate." says Grabel. "Cash buyers need to be sure to leave themselves plenty of liquidity." If you used cash to buy the house and need some major repairs down the road, it might be hard to get a home equity mortgage in the future because you will not know what your credit score will look like in the future. Also, selling a house bought with cash could cause problems if the owners worked a lot financially to buy it because they might not have enough cash reserved to put down a deposit on a new home.

Bottom line is that when considering using cash or mortgages, think of what option makes the most sense and what will provide the greater return on your investment.

Wells Fargo to pay $1.2 billion for hiding bad loans before housing crash

The bank admitted it certified that thousands of faulty home mortgage loans were eligible for Federal Housing Administration insurance.

When the market crashed in 2008, American taxpayers ended up on the hook for the bad loans.

"Wells Fargo enjoyed huge profits from its FHA loan business, the government was left holding the bag when the bad loans went bust," Manhattan U.S. Attorney Preet Bharara said in a statement. "Today, Wells Fargo, one of the biggest mortgage lenders in the world, has been held responsible for years of reckless underwriting."

http://money.cnn.com/2016/04/08/news/companies/wells-fargo-bad-loans-settlement/index.html?iid=hp-toplead-dom

Goldman Sachs just revealed a fascinating stat about the people they recruit

For many young professionals in finance, Goldman Sachs (GS) is the most-desired place to work on Wall Street.

1. 
   

And as you can imagine, many people apply for jobs there and many are rejected.

"In 2015, we extended offers to 4% of applicants for open positions," wrote CEO Lloyd Blankfein and COO Gary Cohn in the firm's annual letter to shareholders.

What's fascinating, however, is that not all of those 4% will accept Goldman's offer.

"[M]ore than 80% of those offered roles chose to join the firm," Blankfein and Cohn added.

To put it another way, around 20% of applicants who are offered jobs at Goldman Sachs turn Goldman Sachs down. That's pretty stunning, especially to those who desperately want to have Goldman Sachs on their CV.

• 
  

Obviously, people aren't always applying for jobs at just one place. Many of Goldman's applicants are probably applying for jobs at hedge funds, big tech companies, or other places they deem more desirable than Goldman.

"As we compete for talent not only with other financial firms, but also across other industries, particularly in technology, we strive to remain a place where top talent aspires to work," Blankfein and Cohn said.

India's Population Explosion will Make or Break its Economy

"India's demographics are mind-boggling: By 2020, it will have 900 million people of working age, and the average age of its citizens will fall to 29. Two years later, it should pass China to become the world's most populous country." This article explains that this immense increase in population could potentially be a good thing, finally unlocking India's vast potential, but only if the students start being better educated and trained. According to the article, currently, only 2% of India's workers have received formal skills training. That compares with 68% in the U.K., 75% in Germany and 96% in South Korea. The Prime Minister, Narendra Modi is doing his best to gather sources to provide better training, however, I don't think they will be able to implement a plan that will rapidly change their growth from 2% to where it would be beneficial. In class, we have also modeled that higher population usually leads to a lower standard of living. I am very interested in seeing what ends up happening to the economy in India as they have a dramatic increase in population.

http://money.cnn.com/2016/04/08/news/economy/india-population-skills-gap-education/index.html?iid=hp-stack-dom

Wal-Mart pledges to sell only cage-free eggs by 2025

Wal-Mart, the nation’s largest grocer in the United states, recently made a pledge to sell only carefree eggs by 2025.  The new requirement states that egg suppliers need to adopt an industry standard for treatment of hens by 2025 and have their compliance monitored by a third party.  In addition, suppliers need to adhere to the ‘five principles’ of animal welfare, a set of guidelines that includes ensuring animals are not starved, have sufficient space to move, and do not suffer mental distress.  The guidelines will apply to over 5,000 stores in the U.S. including Wal-Mart’s Sam’s Club warehouse chain.  According to the Humane Society, a mere 6% of chickens today are kept in cagefree facilities. That being said, 94% of chickens are being raised in hen cages that typically have a base measurement no larger than a standard piece of copy paper.  These cramp cages are said to have very bad quality standards and cause the animals with mental distress. 

http://www.cnbc.com/2016/04/06/wal-mart-aims-to-switch-to-cage-free-egg-supply-chain-by-2025.html

California's economy expected to outpace that of U.S. this year

Other than the fact that California is my favorite place in America, California also seems to have a faster growing economy than that of the Nation. Unemployment will drop to 5% in early 2017, according to a new report by the UCLA Anderson Forecast.
Wages and salaries in the state, not adjusting for inflation, will grow about 5.7% this year, according to the projections. Which means that Californians will learn $60 billion more in wages than in 2015.










http://www.latimes.com/business/la-fi-ucla-economic-forecast-20160406-story.htm

Effect of changes in minimum wage on productivity and unemployment

The article does not give a single concluding answer to the question: Correlation between changes in minimum wage and unemployment and productivity.

It does bring about an interesting fact; minimum wage effects only about 12.7% people from poor households. Most people earning minimum wage are young adults from middle income families who do part time jobs as a side activity.

It is also interesting that U.K. calls minimum wage "living wage." I also wanted to read about the general price index and inflation and see if those factor in deciding minimum wage.

Here is the link: http://www.economist.com/blogs/buttonwood/2016/04/minimum-wages

America is still extremely wealthy—and these numbers prove it

This article seems to be an attack towards Donald Trump's campaign. The article includes a bunch of statistics that show how great the US economy is, meanwhile Trump claims that the US is a very poor country. There were some interesting facts that stood out to me. First, the US government has a negative net work of -$12.3 trillion, and this is largely due to the high national debt. Another interesting fact is that households, businesses and non-profit organizations combine for a net worth of $98 trillion, and America's net worth as a whole is $99 trillion, which includes that $19.3 trillion of national debt. Also, the US disposable income per household is higher than any country in the world. However, the article does explain that the distribution of wealth is very uneven in the US. Overall, this article brings up some very interesting facts. However, it is very biased against Donald Trump, which can cause some of these number to be misleading.




http://finance.yahoo.com/news/america-is-rich-extremely-wealthy-not-poor-201627319.html

Alaska Airlines’ purchase of Virgin America could start a new wave of consolidation

"Alaska Airlines is paying $2.6 billion to buy 100% of the equity of the airline, after a high-altitude bidding war with JetBlue, a rival. It is also taking on the airline’s debt and leases, bringing the total pricetag to $4 billion. The new carrier will become America’s fifth-largest.
Alaska is betting that Virgin America, with bases in Los Angeles and San Francisco, will complement its strongholds in Seattle, Portland and Anchorage, solidifying its presence on the west coast. It will also gain Virgin America’s east coast slots, in New York and Washington, DC, where Alaska has struggled to gain access. Still, the price is steep, says Loizos Heracleous of Warwick Business School in Britain. Alaska will pay $57 for each of Virgin’s shares. They have been trading between $26 and $38 over the past year. Brad Tilden, Alaska’s boss, says that the tie-up could result in $225m of annual cost savings and revenue benefits. Acquisitions are often accompanied by bold claims about synergies, says Mr Heracleous. So far the market seems sceptical: Alaska's shares tumbled as investors got wind of the deal."
http://www.economist.com/news/business-and-finance/21696326-new-carrier-will-become-americas-fifth-largest-alaska-airlines-purchase-virgin

Private companies added 200K jobs in March, matching estimates: ADP

http://www.cnbc.com/2016/03/30/private-companies-added-200k-jobs-in-march-matching-estimates-adp.html

200,000 new positions were created in March by private companies (according to the latest count from payrolls processor ADP and Moody's Analytics). Most of these jobs are being created within the vast variety of service industries. In fact, 191,000 of the total 200,000 positions were service positions. This number of new service positions was actually lower than that of February's 204,000. With that being said, the 200,000 new jobs created in March was exactly what was estimated for the month by Wall street. Companies of 50 and fewer employees created most of the total jobs in March at 86,000 and companies of 500 and above employees only created 39,000 jobs in the same month. Services like trade, transportation, and utilities lead the job creation race with 42,000 while professional and business services trail with 28,000. Construction has even experienced high position increases with 17,000 along with 14,000 in financial activities. Small to medium business are without a doubt thriving in the job market while creating so much opportunity for more and more people. A high raise in minimum wage like that of NYC's and California's $15 wage target is something that could slow down the current job increases we are experiencing and even significantly lower it. "The job market continues on its amazing streak. The March job gain of 200,000 is consistent with average monthly job growth of the past more than four years," Mark Zandi, chief economist at Moody's, said in a statement. "All indications are that the job machine will remain in high gear." I hope this job/position increase will stay around for quite sometime and eventually level out without any decrease. 

Making a Soda Tax More Politically Palatable

The new mayor of Philadelphia, Jim Kenney, has proposed taxing soda beverages at 3 cents an ounce, which is the highest soda tax proposed anywhere in the country.  The idea of taxing soda beverages was first brought up about a decade ago by public health researchers, but has failed in multiple cities and states, including Philadelphia twice already. Public health researchers are attempting to reduce consumption of soda drinks, which they argue causes increases in obesity and diabetes in men, woman, and children around the United States.  Kenney says that his soda tax could raise more than $400 million over five years, which could fund many popular city projects.  Kenney's approach is a lot different than in years past, which lead many to believe that it might just work.  Kenney believes that this tax could raise the price of a 20-ounce bottle of soda by 60 cents, just enough to change some consumers minds. Kenney is not promoting the health benefits, but focuses on the large sum of money that the tax will bring in.  Large soda producing companies are fighting these efforts and will not give up.  This tax could provide sufficient funding for many city projects, as well as cut the consumption of sugary soda beverages, promoting healthier lifestyles.


http://www.nytimes.com/2016/04/04/upshot/making-a-soda-tax-more-politically-palatable.html?ref=economy&_r=0

India Cuts Interest Rates to Five-Year Low

India's central bank is taking action to cut its interest rates to the lowest level in five years in response to slowing inflation. The interest rate was lowered to 6.5% from 6.75%. This is the first cut that India has put in place since September. In addition, the cash-reserve ratio was raised from 90% to 95%. Recently, the Royal Bank of India has been purchasing back bonds from banks.

The decrease in inflation can be attributed to a slowdown in global food prices. Inflation is projected to remain around 5% into next year for India. The RBI would like to continue easing monetary policy even further. Also, India's factory output fell by 1.5% in January from December. Many economists agree with India's move to cut interest rates. Indonesia and China have also recently eased their monetary policy.

http://www.wsj.com/articles/indias-central-bank-cuts-main-interest-rate-1459836063

Janet Yellen Will Be Watching Corporate Earnings

Investors gearing up for a downbeat earnings season will have some company this quarter.

We now know that Federal Reserve Chairwoman Janet Yellen will be keeping an eye on results after she said during a speech last week that “foreign economic growth now seems likely to be weaker this year than previously expected, and earnings expectations have declined. By themselves, these developments would tend to restrain U.S. economic activity.” 

Though it’s not entirely clear what she’ll be watching within the reports, it’s nothing to shrug at, according to Ed Yardeni, president and chief investment strategist at Yardeni Research Inc., who pointed out the reference Tuesday.

“Just the fact that she mentioned it for the first time that I can recall I think is important,” he said.

Traditional Keynesian macroeconomics holds that monetary policy drives the business cycle, which in turn drives corporate profits. But Ms. Yellen’s reference to earnings may be a sign she’s starting to think the causality works the other way as well, Mr. Yardeni said.

Alcoa begins reporting next Monday after the closing bell, unofficially ushering in the start of corporate earnings. Earnings among S&P 500 Index companies are seen falling 8.5% in the first quarter from a year ago, according to FactSet, marking the first time earnings have fallen for four straight quarters since the financial crisis.

That means the Ms. Yellen may not like what she sees.

http://blogs.wsj.com/moneybeat/2016/04/05/janet-yellen-will-be-watching-corporate-earnings/

Greece's ongoing economic crisis

This article is centered around lack of consumer confidence in the Greek economy. After one year of slow-down, people are unwilling to trust the banking system, fearing their houses will be taken away.

55% plus Greeks signalled pessimism in the economy, which I am guessing will cause a fall in consumer expenditure. Unemployment is rising and disposable income has fallen rapidly in the past year.

Should the government pump in more money to boost the economy? If so, why has it not done so already?

http://www.theguardian.com/business/2016/jan/04/greeces-economic-crisis-goes-on-odyssey-without-end 

Poor economics

“From April 1st Britain’s minimum wage is to be rebranded as the “national living wage” (NLW) and made more generous. The legal wage floor for those aged 25 or older rises from £6.70 ($9.60) an hour to £7.20; by 2020 it will be worth roughly £9 an hour. Touted as a measure to help the lowest paid, whom globalisation has not treated kindly, Britain’s new NLW is being watched closely by other countries.” The article from the Economist talks heavily on how an increase in the minimum wage is not as a nation is not all that beneficial. Though, roughly 1.8 million people will be paid a higher wage, economists argue that the assumption that companies will bare this extra cost burden is illogical. This gross-assumption does not anticipate the amount of people who will lose jobs to cut company costs. Furthermore as argued in the article “…whereas many poor Britons do not work at all. According to the Resolution Foundation, a think-tank, a household in the seventh income decile (ie, nearer the richest) will benefit three times as much as someone in the bottom decile.” This basically says this policy will help the upper-middle class (slightly above actually) far more than it will help the lower classes. Sounds mildly counter-intuitive to what Britain’s try to prevent? That’s because it is. Furthermore, The Economist argues that many car facilities will go bust if there minimum wage is raise to what it predicted at the chart above. Does this raising of minimum wage fit into the voodoo economics? 

P.S: unable to place chart into blog, but if you look at the article online it will help with making sense of what I have written. 

http://www.economist.com/news/britain/21695959-who-benefits-introduction-national-living-wage-poor-economics

New York Increases Minimum Wage

     New York Governor Andrew Cuomo recently signed into legislation a law that will increase the minimum wage in the state. The bill will make minimum wage in New York City $15 per hour and there will be a lower minimum wage in less costly areas. The current minimum wage in New York is $9 an hour while the federal minimum wage is $7.25, which it has been since 2009. The minimum wage law will be in effect by the end of 2018. After the new minimum wage is in affect, state budget officials will monitor the effects of the wage on regional economies and determine if the changes should continue to be in effect. 

     The governor of California also recently signed a bill that will raise the minimum wage in the state from $10 to $15 by the year 2025. 

    I have concerns for these minimum wage hikes. While these are places with high costs of living, I don't know that this is the right solution for the issue of low wages. Because the wage increases have to come from somewhere, companies will have to raise the prices of their goods and services in order to be profitable. A solution that I see as viable is to provide better educational programs so that people can learn the skills that they need to advance into higher paying jobs. 

http://www.businessinsider.com/new-york-increases-minimum-wage-2016-4

Revealed: the $2bn offshore trail that leads to Vladimir Putin

It was recently discovered in a massive leak of documentation that loans worth as much as 2 billion dollars were hidden by the Russian president, Vladimir Putin. He did this by giving his friend, Sergei Roldugin, a renowned cellist in Russia, millions of dollars. Then using a bank and the 4th biggest offshore law firm, Mossack Fonseca, to make the money disappear to benefit Putin and others involving. Even Katerina, his youngest daughter, used this money to rent out a private ski resort for her 2013 wedding. 

Corruption is a serious issues when doing international business in our increasingly globalized world. When companies consider doing business overseas, corruption is something that is seriously considered because it can increase the cost of doing business within that foreign market. The recent news of Putin's unlawful actions goes to show that corruption may be a serious problem within the country of Russia. Therefore, it is possible that this might deter multinational companies from doing business with Russia, which could have negative implications for the economy of Russia as well. 

URL: http://www.theguardian.com/news/2016/apr/03/panama-papers-money-hidden-offshore

California has enacted the nation's highest statewide minimum wage of $15 an hour to take effect by 2022

On Monday, April 4, 2016, Governor Jerry Brown signed a bill into law that will increase the state of California's minimum wage to $15 per hour by 2022. California will have the highest statewide minimum wage by 2022.

Republicans and business groups warn that this move could reduce thousands of jobs. This wage increase could have a strong impact on small businesses in California. Currently, California's minimum wage stands at $10 per hour and will increase by a minimum of 50 cents next year and to $11 in 2018. Hourly wages will then increase annually by $1 every January until 2022. However, this is subject to change if the governor imposes a delay during an economic recession.

The article mentions that about 2.2 million Californians currently earn the minimum wage, but with this new wage increase that number could drop between five to ten percent.

California and Massachusetts currently have the  highest statewide minimum wage at $10. There are many cities planning to raise their minimum wage over the next couple of years such as Los Angeles, Seattle and New York.

Do you think this is going to influence other states minimum wage rates over the next couple years?

http://www.usnews.com/news/business/articles/2016-04-04/california-governor-set-to-approve-highest-minimum-wage

Oil Markets Muddied by Corruption

Link for the curious: http://www.bloomberg.com/news/articles/2016-04-04/world-leaders-hid-wealth-via-shell-companies-report-alleges

A possible worldwide oil corruption scandal could be revealed in the near future by what are being called the "Panama Papers". A panama-based law firm held files that were leaked and which show involvement in a number of shell corporations by world politicians, criminals, and celebrities. Vladimir Putin has already been tied to a number of the upwards of 200,000 offshore shell companies.

The leaked files were uncovered by the International Consortium of Investigative Journalists, who say they have obtained more than 11.5 million records of these shell companies. It has already been reported that 12 current or former world leaders as well as 128 politicians and celebrities have been linked to the leak.

Since the financial crisis, the United States has put greater emphasis on offshore banking practices, as they are often found in conjunction with corruption and tax/trading fraud. There is a prediction that this latest scandal will draw together nations in order to put an end to this dark and often illegal practice.

In an already heavily-watched market, this latest scandal may spell trouble for the oil market, as well as markets as a whole. Dropping prices have made oil a highly-publicized market, and this news is sure to cause some sort of disruption.

US durable goods orders fall as dollar strength lingers

        This February, the manufactured goods sector continued to struggle, ultimately causing new orders for long-lasting manufactured goods in the U.S. to fall. This decrease in new orders was mostly the due to the lower oil prices and a strong dollar. Surprisingly durable goods orders (ranging from aircrafts to toasters) declined 2.8 percent in February, while they actually increased 4.2 percent in January. The biggest drop in durable goods last month was led by a 27 percent decrease in civilian aircraft orders (68 orders in January and just 2 in February). However, in several recent reports this past March, factory activity has shown a pick-up in production. Because of this, there is more optimism that the broader manufacturing sector will expand for the first time since last September.
         This article interested me because it examined the recent the drop in oil prices earlier in 2016 to the effects it had on the manufacturing sector of the United States. In addition, the article mentioned how the strong US dollar played a key contribution to the struggling manufacturing sector. It will be interesting to see if the manufacturing sector fulfill's its expectations to expand in the next months ahead.

Full article at: http://www.cnbc.com/2016/03/24/us-durable-goods-orders-fall-as-dollar-strength-lingers.html

New evidence on what drives central banks to decide to change rates

CENTRAL banks are supposed to target inflation and in some cases, economic growth or full employment. As the “lender of last resort”, they also have responsibility for safeguarding the financial system. But do they in fact target asset prices as well?

That has been the suspicion from the late 1980s onwards, when the Federal Reserve began cutting interest rates when equity markets wobbled. This approach became known as the “Greenspan put” (Alan Greenspan was the chairman of the Fed from 1987 to 2006, and the put option is a form of insurance against falling prices). The implicit guarantee from central banks became a bit more explicit in the era of quantitative easing (QE)—the creation of new money to buy assets. Central banks hoped that QE would have a “portfolio rebalancing effect”, with investors being forced out of low-yielding government bonds and into corporate debt and equities.

However, the relationship between market movements and central banks may have an even longer history. That is the implication of new research by Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School for the latest Global Investment Returns Yearbook, published by Credit Suisse. They looked at the historical relationship between movements in interest rates and in financial markets, with particular reference to America and Britain.

Unsurprisingly, they found that markets performed much better when rates were falling than when they were rising. Since 1913 (when the Fed was founded) American equities have returned an average of 9.3% a year in real terms during easing cycles, defined as the period between the first cut and the first increase. In contast, real returns during tightening cycles were just 2.3% a year. Government bonds returned 3.6% during easing cycles and 0.3% in tightening ones.

This rule applied in most of the 21 countries covered by the trio’s data, going back to 1900. On average, equities earned 8.4 percentage points more in real terms in the year after a rate cut than in one following an increase. Alternative assets such as houses, art and gold also did better when rates were falling.

Link:  http://www.economist.com/news/finance-and-economics/21692927-new-evidence-what-drives-central-banks-decide-change-rates-slaves?zid=295&ah=0bca374e65f2354d553956ea65f756e0