Split in the Fed?

The U.S. Federal Reserve was not able to pass a vote to raise interest rates last Wednesday.  This is because three members voted the opposite way.  This is the most opposition there has been for a vote in almost two years.  Many people are claiming that this shows that there is a divide within the Federal reserve, as officials usually vote within the same line as Fed Chair Janet Yellen.

Wall Street is not happy with the Fed because of these conflicting views.  Not knowing what to expect from the Fed is confusing investors.  Some would like an increase in interest rate while some oppose it.  Most of all however, investors just want to know what to expect.  Because of these disagreements in the Fed, investment strategists aren't predicting a hike in interest rates until December.

While many believe that this divide in the Fed is bad news, Yellen argues otherwise: "It's a very good thing that the Fed is not a body that suffers from group think".  Most of the statements that Yellen has made recently are to push back criticism that the Fed is receiving, but maybe it does deserve some bad press.  The Fed has been talking about raising interest rates for a very long time now, and investors are getting tired of having to guess whether that is the truth or not.  If anything, the Fed just needs to be more consistent with what it releases to the public about future policies.  

http://money.cnn.com/2016/09/22/news/economy/federal-reserve-divide/index.html?iid=SF_LN

As Our Jobs Are Automated, Some Say We'll Need A Guaranteed Basic Income

The article indicates towards a future where automation takes up a greater role in our professional lives, essentially replacing people and leaving them out of jobs. An example would be of Uber experimenting with driverless taxis and trucks; the latter vehicle is currently a form of employment for 3.5 million drivers and 5 million others who support the truck-driving industry. Criticism has been aimed at politicians for failing to take the problems of an automated future seriously.

It is a growing belief among tech workers at the Silicon Valley that this would require a solution in the form of a universal basic income to be considered soon. The suggestions include a basic income of $10,000/year or an increase in carbon emission taxes as payment. Studies have already begun about paying people money they did not earn, such as Y Combinator, a tech accelerator, funding a research project paying a hundred people enough money to ensure food and shelter without any strings attached.

The middle-class is increasingly being isolated economically and with forty percent of American jobs now being contingent, the idea of a basic income needs to start being discussed on a higher platform soon.

Article link: http://www.npr.org/2016/09/24/495186758/as-our-jobs-are-automated-some-say-well-need-a-guaranteed-basic-income

9 legal pot initiatives could add $7.8B to U.S. economy

“The cannabis industry is one of the fastest growing sectors in the economy and continues to astonish those in and out of the space,” Giadha DeCarcer, New Frontier’s CEO, said in a statement announcing the study. In November, voters in nine different states will be voting in regards to marijuana legalization that could in return, potentially increase the US economy by as much as $7.8 billion. While illegal at the federal level, twenty-five states currently permit medical marijuana use in some form, with that number seeming to only be increasing in the future. The state of California will be voting on a system that would create a tax on marijuana, and this alone could raise up to a billion dollars. Obviously there is a great deal of negative opinions when it comes to the legalization of marijuana, but regardless, legal or not, the sale of this drug has and always will be a hot commodity in the United States. Instead of this money continuing to go to drug dealers and smugglers through illegal sale, the tax could take this money and use it to greatly increase our economy. According to a report from the New Frontier Data and Arcview Market Research, this market in the states where it is currently legal could be worth as much as $20.6 billion by 2020. People need to understand that regardless of whether or not the use of marijuana is legal or not, the selling and use of it has always generated a remarkable amount of money, and will continue to do so in the future. If this tax system is passed, and the legalization process continues on to more states, the amount of money that can be raised in our economy will be billions of dollars within the first four years. Consumer spending on marijuana in states where it is legal will increase drastically, and the amount of money the state governments will be able to generate from these taxes can also have a positive impact. People need to start begging the question whether or not we should try and make the most out of this business that by no means will be going anywhere any time soon. The demand for marijuana is very high, and if we decide to take advantage of it, like California might begin to if the voting passes, billions of dollars will be generated and put into our economy, and not in the pockets of smugglers and drug traffickers. 

Millions in U.S. Climb Out of Poverty, at Long Last

After seven years since the depression ended, poverty rates finally declined because employers are creating more jobs and paying higher wages that meet minimum wage requirements. About 3.5 million Americans rose above the poverty line last year according to census data released earlier this month. This is the largest decline of the poverty rate since 1999. Set at $24,300, for a family of four in most states, 1.2% of Americans in all racial groups rose above this line.

Wages grew more for the lower minimum wage income jobs, rather than in the middle, which makes a huge difference in many poorer families lives. Still, many poor people already have a restraint when searching for full-time jobs at livable wages. Many lack an educational background. This not only sets them apart from other potential employees, it also puts them with a lack of resources such as: no computer to search for jobs and no compensation for the bad impression a missing tooth can leave.  

Overall, the increase in jobs affected the poverty rate immensely, showing no increase in all 50 states.

Link to article. 

Is the U.S. election killing the economy?

2016 did not have a great start in terms of growth within the economy. The commonly held prediction or expectation was that the economy would rebound in the summer months, but it did not do so. Many think this falter is a result of the current political climate maintained by both Hilary Clinton and Donald Trump. Right now the country's comfort level and confidence in the future of the US economy is very low and this, in part, the reason for the is very low with the future of the economy. Almost 20% of the S&P 500 companies indicated the countries election process is a "red flag". The fear is that Americans will keep refrain from spending money as a result of their fears of what will become of this election. Corporations are already decreasing their spending on new research and development for the future.  The election process is crazy that Diane Swonk of DS Economics states "One would have to be foolish NOT to be uncertain. Corporate spending is very important to the economy, but it is consumer spending that makes up over 70% of the US economy.The bottom line is that the US and global economies for that matter are not in a great state and this election is only adding to the concerns for the future.












http://money.cnn.com/2016/09/21/news/economy/us-election-economy/index.html?iid=SF_River

China Lifts Ban on Beef Imports From U.S.

In 2003 China imposed a beef embargo on meats after Mad Cow Disease arrived in Europe and America, now 13 years later this ban has been lifted.  China is the second largest beef buyer in the world and the farmers in the U.S. want to take advantage of this opportunity to sell to this growing economy.  China did not say exactly when imports would resume but the U.S. must comply with some conditions, for instance, beef older than 30 months will not be accepted.  The U.S. exports over 1 million metric tons of beef per year, equivalent to $6.3 million, with Mexico being its largest buyer, followed by Japan, South Korea and Canada.  With this ban being lifted and China having a high demand for beef we can accept our exports to rise and overall GDP to rise in the coming years.  With China already being a big trade partner for us I can only assume that this will do nothing but bring more money into our economy and help us out in the long run.  This could potentially create more jobs in the agricultural market as well since there will be a higher demand for beef products to be exported.

http://money.cnn.com/2016/09/22/news/china-us-beef-imports/index.html?iid=SF_River

Officials Debate for Unemployment

While the economy inches closer to what is deemed full employment, Federal Reserve officials are debating on how much unemployment can be allowed to decrease before the risks of "runaway inflation" and major recession becomes a reality. The argument of one side of officials is that unemployment falling below its 5% level would allow more potential workers outside of the labor force to re-enter, while the other side says that letting the unemployment rate decrease any more will  likely result in an increase in interest rates by the Feds to combat the expected inflation which the Feds struggled with in the 1960s and 70s.  Janet Yellen, Fed Chairwoman, noted that the Fed may be wrong in its estimate of the unemployment rate of 4.8%, as she believes the actual rate to be even lower, which would be beneficial  in a number of factors including, returning inflation go its ideal 2% goal and creating faster wage growth.

http://www.wsj.com/articles/fed-hits-crossroads-on-inflation-policy-1474228920

How to Raise Trillions for Green Investments

                                                                         😳😳

We ain't talking about that broccoli bro. On a serious note, the world faces the problem of climate change. It does not discriminate towards one or more countries. It is an issue for all, and one that requires a collective effort amongst the world's government. It ain't cheap and it is a problem that needs to be addressed quickly. It's about creating environments of low carbon emissions. So how do governments tackle this predicament? The answer is simple— private financing. As a collective effort there is an abundance in global capital. In order to commit to this governments must create circumstances that "that encourage private investment in clean technologies and sustainable development." (1) Key tools governments can use is the selling of bonds, incentive programs, even legislation that addresses companies with high emissions of carbon. At the G20 meeting in Hangzhou, China the world governments agreed on a set of principles to address climate change. "Private firms in Mexico and India are financing private wind parks; multinational trust funds are supporting solar plants in India, South Africa and Morocco." (1) In order to amass private investments governments need to lower the price of low-carbon investments. They need to enact certain policies. "These policies include environmental regulations to stimulate clean, sustainable development; incentives and subsidies for clean energy investments; and the pricing of carbon emissions, which can be done in a variety of ways, including emissions trading and taxes." (1). China pioneers the movement as the rest of the world follows suit. What's important to note it is a feasible task, but also a task that must be achieved. When interest rates are low, investment rises which helps the government finance its green project.

Reference:
NY Times "Green Investments"

Marc Faber says central banks doomed to fail, as Fed, BOJ decisions come under microscope

Leslie Shaffer's article discusses Marc Faber's thoughts on the central bank trying to spur economic growth. He believes that they are bound to fail. He explained, "from the 1970s to the mid-1980s, people believed inflation was "forever," but now the same central banks that were fighting inflation were now fighting deflation". He claims that this fight was a mistake and that price rises were surpassing income gains across Asia.

He points out that system is so over-leveraged that sudden inflationary pressures will arise, and that central banks should then act but they would not be able to. He also discussed how   the low and negative interest rates globally were hurting pension funds, and how pension funds are underfunded. He also expressed that " the central bank is going to continue to print money and the Fed's balance sheet and the other central banks' balance sheets will continue to grow until the whole system collapses", and discussed that people with gold assets will be better off than people with paper assets.

However, recent central bank decisions tend to disagree with Faber as " The Federal Reserve ended its quantitative easing program in 2014", and they have been aiming to raise interest rates. Also, the outcome from the Bank of Japan's policy meeting also indicated that central bank was moving away from its quantitative easing program.

http://www.cnbc.com/2016/09/21/marc-faber-says-central-banks-doomed-to-fail-as-fed-boj-decisions-come-under-microscope.html

Hilary Clinton Vs. Donald Trump Employment and Jobs

   One of the big topics in this years election is what the candidates are going to do about employment and jobs in the United States. 

Clinton 

  One of Hilary's top concerns is the employment market, and she is looking to improve that market by investing in infrastructure, manufacturing and clean energy. She also wants to strengthen our trade agreement enforcement, so less jobs will be moved overseas. She is looking to cut taxes and remove red tape, so small businesses can grow. And lastly she wants to dedicate resources to research and innovation, which will create create new industries of the future. Hilary believes the minmum wage should be raised to $12 per hour, and she would encourage states and cities that move it to $15 per hour.  With the addition to the increased minimum wage, Hilary wants to narrow the gender pay gap, which would also be accomplished by passing the Paycheck Fairness Act. Clinton Would guarantee up to 12 weeks of paid family and medical leave. She also wants to restore full collecting bargaining rights for Unions, by protecting workers rights to join unions. Clinton wants to preserve social security in full, but she also wants to expand it, which she would do by raising Social Security's payroll tax above its current $118,500. 

Trump

  Trump has recently shared his plan, which would add 25 million jobs to the market over the next 10 years. His strategy involves: negotiating fair trade deals that will lead to more jobs on U.S soil, narrowing America's trade deficit and increasing domestic production, reducing taxes on businesses so products can be sold more easily around the world, replacing bureaucrats who "only know how to kill jobs" with job creation experts. With the minimum wage, Trump is looking to raise the federal minimum wage to $10 per hour, with rights for states and cities to increase it to higher amount if they want to. Trump has been giving mixed signals on his stance for equal pay. For paid leave Trump and his daughter Ivanka have come up with a policy that will offer 6 weeks of paid leave to new mothers following childbirth. Trump has not said anything on labor unions, but he has endorsed anti unions' "right-to-work" laws, which he thinks is better for the people". Trump wants to protect Social Security, but doesn't want to raise the payroll tax gap. 

  Clinton and Trump have some views that are surprisingly similar, and some that are entirely different. Both want to invest in creating jobs and raising the minimum wage, but is that possible, because usually as you raise the minimum wage the unemployment rate would increase, which wouldn't show jobs being created. It will be interesting to see if people look at this before they vote as this is an important matter in this years election, as people are more looking at things that don't matter in the election to make this country grow. 

Why Falling Employee Tenure Could Be Good News About the U.S. Economy

In January, the Labor Department announced the first decline in the median employee tenure since 2000. Median employee tenure is the average time a worker has been with his or her current employer. The number dropped from 4.6 years in January 2014 to 4.2 this year across all age groups and for both genders in most industries. Some believe the US labor market is in good health due to the fact that people are accumulating less seniority in their jobs and many are voluntarily quitting their positions to look for new and better ones. However, the Labor Department stated that the drop is not something to get too excited about yet because the figure may significantly increase or decrease depending on the strength of the economy. This decline is partnered with the two strongest years of job creation, 2014 and 2015, since 1998 and 1999. The future of the median employee tenure is unknown, but all are curious what the next figure will be.









http://blogs.wsj.com/economics/2016/09/22/why-falling-employee-tenure-could-be-good-news-about-the-u-s-economy/

Past is prologue? Why one trader sees a post-election recession on the horizon

Past trends show that the economy faces a decline when any new president gets elected. Sven Henrich of the NorthmanTrader and the analysts at Lombard Street Research have showed concern about the downturn of economy due to the change in president and the FED's equivocal decision about the interest rates.




The graph shows the decline that market experiences at the beginning of the first session of a new president. Sven Henrich thinks the trend could have to do with consumers' uncertainty during transitions between presidents but he also thinks the coming election is different from the rest of elections in the past as this time there is a lack of support for both of the candidates i.e. no one seems to have the majority support of the population.
He says, "I have no idea how this is reflected in consumer confidence, but it doesn't seem to suggest that consumers will be very confident with their new president."

A concern has been raised about how the S&P and Nasdaq have touched new heights but the overall market performance has shown no improvement. 

http://www.cnbc.com/2016/09/23/past-is-prologue-why-one-trader-sees-a-post-election-recession-on-the-horizon.html

Census reports we're all getting richer

The Census recently published its most recent data about how Americans live, claiming that middle class incomes have risen approximately 5% and that poverty has seen its greatest decrease in over 50 years. This is phenomenal, but unfortunately not as accurate as the report makes it seem.
Days after the Census report was published, additional supplementary reports also needed to be publicized after it was noted that this increase was unevenly split between those living in urban and rural areas, and that in fact incomes have not risen as dramatically as proposed.
This mistake was found to be due to a change in the definition of a rural versus metropolitan areas, and has caused a discrepancy the Census has denied speaking about.
The media did not take issue with this inconsistency deeming it not statistically significant, however this lends to how the job market has been evolving over the past 50 years and the movement of the population from rural to urban cities does have an effect on ability of workers to invest.
It turns out the sharp differences in income growth, are ultimately in the people's favor, yet because inflation has not grown in proportion to the rise in incomes, this means the purchasing power of Americans has increased giving us more purchasing power internationally as well.
With greater purchasing power comes greater responsibilty as we hold a greater influence on the supply and demand of money and loanable funds internationally, effecting even the smallest economies due to their minimal economies of scale and position as price takers in the much larger global market.

Link: http://www.nytimes.com/2016/09/17/upshot/actually-income-in-rural-america-is-growing-too.html?ref=economy&_r=0

Fed, With 3 Officials in Dissent, Stands Firm on Interest Rates While Noting Improving Economy

On the meeting that finished on September 21 the Fed decided not to increase the interest rate. Some of the reason they gave for this was that the economy was not growing as much as they wanted it to increase before increasing the interest rate. But it looks like this is going to change very soon, because 14 of the 17 Fed officials surveyed anticipated at least one rate increase this year. This change is expected to happen in December, because even if the Fed have a meeting in November it finishes 6 days before the presidential elections and the Fed thinks that making a change in the interest rate that close to the election is not a good idea because they will both have big economic impacts. 

When Jannet L. Yellen was asked for the reasons for this decisions, the main reason for not increasing the interest rate was that the economy was not growing as fast as they were expecting to raise the rates. She said that they noticed that consumer spending was increasing very rapidly, but business investment was relatively weak, which is why the Fed was seeing that there is more room for improvement before they rise the rates. In the other hand one of the 3 officials from the Fed that didn't agree with did decision argued that; if the Fed waits longer to increase the rates they will need to move more sharply, which mean to change the rates faster, and that this decision will end up causing a recession.

Look at the article here: http://www.nytimes.com/2016/09/22/business/economy/fed-interest-rates-yellen.html

Why doesn't 4.9% unemployment feel great?

The US unemployment rate fell below 5% in February, the first time this has happened since 2008. Good news? Not exactly. Here are three reasons why everyone isn't celebrating:

1. Fewer adults are working
With only 62.7% of adults working, the Labor Force Participation Rate is as low as it has been since the 1970s. The Baby Boomers are retiring, more people are going to college and graduate school and most alarmingly, many people have just given up on finding a job.


2. Long-term unemployment is still high
A lot of people who have been searching for jobs for a long time simply can not find them. Around 2.1 million Americans have not been able to find work for more than 6 months. The government calls these people 'long-term unemployed.'

3. Wage growth is anemic 
 The median income, once adjusted for inflation, has been the same for the past 20 years. What does this mean? It means that middle class families have seen stagnation rather than growth- they are staying afloat instead of swimming ahead.

http://money.cnn.com/2016/02/06/news/economy/obama-us-jobs/ 

Small businesses surviving month to month

According to the JPMorgan Chase Institute, small businesses have been having unexpected shutdowns in recent months and says it can be catastrophic to their survival. The Bureau of Labor Statistics estimated small businesses with 50 employees or less held about 35 percent of the country's net jobs in 2015. This was important for jump starting the job growth after the great depression. About 1 in 4 businesses wouldn't be able keep their business going if the business went 13 days with out income. Diana Farrell states " it is well known that small businesses are a critical driver of economic growth, but the consistency of their growth is in question if they're living month to month," The median of american small businesses sees and average daily cash flow of 374$ with an inflow of 381$ there is only a 7$ difference on any given day of receiving and spending. Reporters say policy makers should be aware that new educational programs and diversified credit offerings can help small business owners with their knowledge and how to manage their liquidity.


LINK:
http://www.usnews.com/news/articles/2016-09-21/small-businesses-surviving-month-to-month-says-jpmorgan-chase-institute

Outrageous EpiPen prices lead some people to make their own

The epinephrine medicine and delivery system (an epinephrine pump) are currently at the center of a debate about pharmaceutical pricing. Mylan, which virtually owns the market with its FDA-approved EpiPen, is facing scrutiny from the U.S. government for charging upwards of $600 for a two-pack set of EpiPens. It cost just $94 in 2007. It's the device, not epinephrine itself, that's so expensive.

There is a YouTube video created by Michael Laufer , a PhD mathematician, demonstrated how to inexpensively make one's own drugs or medical devices. The components can be purchased over the counter -- aside from the epinephrine, which doctors prescribe. The EpiPencil is bulky and not easy to carry, but the demo video shows it adequately injects liquid.

The FDA can't do anything about DIY devices like the EpiPencil as long as you have a prescription for epinephrine, since the components are legal. However, DIY your own pharmaceutical devices are highly risky. Apparently making your own EpiPen is not encouraged. 

Full article: http://money.cnn.com/2016/09/24/technology/diy-epipen-affordable-alternatives/index.html?iid=SF_LN

Bank Heist Scandal in Bangledesh

In February there was an attempted robbery of nearly $1 billion from accounts in the Bangladesh Bank. The government tried to keep it quiet and the finance minister decided not to publicize it. The finance minister has now made it public that $81 million dollars is missing. Many of the thieves managed to end up in the Philippines. On September 19th a regional court in the Philippines order the country's central bank, who received a portion of the stolen money, to return the $15 million. The rest of the money which mostly flowed through the casinos has yet to be retrieved but the Bangladeshi government and Philippines president are working hand and hand to resolve this issue.
There are two different theories of how this could of happen. The first is that there was a possible hack of the SWIFT systems at the Bangladesh Bank and issue transfer orders without the physical presence of a person inside of the central bank. This could be possible and this is how it would work SWIFT covers half of all big cross-border transfers. To issue transfer orders via SWIFT, tight security protocols must be followed including possession of a physical key and long passwords and biometric access control. So with this theory there would have to be people working from the inside to get access to this things. 
The second theory which is not liked by the finance ministry or the central bank is that this was at least partly an inside job; a collaboration of hackers and central-bank employees or other individuals who had access to the central bank terminals did the job. 
The Bangladesh police Criminal Investigation Department (CID) is reckons suspect employees of SWIFT staff and consultants to try to find out what could of happened. They have also tried to speak with Indian and Sri Lankan nationals but that hasn't been successful. The hunt for the robbers continues. 
http://www.economist.com/news/finance-economics/21707719-government-claims-publishing-report-would-undermine-efforts-retrieve