China Reconsidering Ban on Cryptocurrencies

     In light of the recent ban on China’s nationwide ban of cryptocurrency exchanges, the country is now reconsidering allowing such transactions with the added catch of requiring record-keeping, licensing, AML processes, and limits on large transactions. Directly after the ban, the price of bitcoin itself fell in the $3000 range. As a result, the trading that would have originally been done in China was directed to Japanese and South Korean markets instead. Within the same month of the ban, Japan was also in the process of authorizing eleven new cryptocurrency exchanges. The value of bitcoin has since stabilized  and returned to above the $4000 line.

    Given that the ban wholly takes the issue of cryptocurrencies out of their jurisdiction, the Chinese government is considering adopting licensing programs similar to Japan’s. They will be adopting a ‘zero-tolerance’ policy towards crimes committed with bitcoin and will be instituting various infrastructures that will allow the government to oversee transactions and also view the identities of cryptocurrency users. Such news heavily implies that the ban is a temporary pause on the Chinese cryptocurrency market and it will resume in due time once said infrastructures are developed and implemented.

https://www.cryptocoinsnews.com/china-will-likely-resume-cryptocurrency-trading-by-licensing-bitcoin-exchanges/

Septmeber Jobs Report

The Bureau of Labor Statistics released its monthly report where it reported that 33,000 jobs were lost in the economy.  This is the first drop in monthly job growth for the first time in seven years.  Economists in a Reuters survey were originally projecting a net gain of approximately 90,000 jobs however this did not materialize.  Most economists are not worried though as the losses are attributable to the damage done from Hurricane Harvey and Irma.  Most economists still believe that the economy is fundamentally strong.  An indication of that is the Unemployment rate is down 4.2% and wage growth was up to 2.9% from this time last year. 

  https://www.nytimes.com/2017/10/06/business/economy/jobs-report-unemployment.html

           https://www.cnbc.com/2017/10/06/us-lost-33000-jobs-in-sept-vs-90000-jobs-increase-expected.html

The Fed should be looking to increase rates

According to William Dudley, President of Federal Reserve Bank of New York, stated Friday October 6 that he was surprised with low inflation. These comments by Dudley showed that leaders in the Fed are keeping a close eye on inflation because although inflation is low this year it is believed that it will increase. In order to control for this inflation we will more than likely see another interest rate increase in December.

In addition, the Fed has been trying to figure out why the tightening labor market hasn't resulted in an increase in wage and consumer price inflation. With all of the recent events such as hurricanes the U.S. lost 33,000 workers from its payrolls in the past month alone. However, unemployment fell to 4.2 percent. Furthermore, when we look at consumer price inflation it fell from 1.9 percent in January to 1.3 percent in the 12 months through August.

Although all of these factors seem to be calling for increased interest rates the Fed will be analyzing the economy closely and keep an open-mind. As long as we continue to make smart decisions we should be fine, but with the current administration I worry about who will be appointed to the Fed.

https://www.bloomberg.com/news/articles/2017-10-06/dudley-says-job-gains-should-lift-inflation-fed-should-tighten

Netflix is raising its prices

Netflix is raising its prices for the first time in a year on both standard and premium subscriptions. The standard service which allows for two screens to be watching at once is going up a dollar from $9.99 to $10.99 and the premium subscription is going up to $13.99 from $11.99. The basic service that allows one screen and does not have HD will stay at the same price of $7.99. Users start getting notified of the increased prices on October 19th and will have 30 days before the change takes effect. Netflix is doing this in hopes to get more exclusive TV shows and introduce new features to the product. This is after the company has spent billions on new streaming deals and original programming.

I think this a smart move from Netflix as people would likely pay a lot more for their Netflix subscriptions. Raising the prices by a dollar or two won't cause too many people to abandon their subscriptions and keeping the basic service the same price will make sure they don't lose some of their low income users. The market reacted well to the announcement as their stock price rose by 5.39% today which I think is a sign of good things to come.

http://money.cnn.com/2017/10/05/technology/business/netflix-price-increases/index.html

Is slower growth going to last in India?

India is going through its own tax reform process and economists think this may be one factor behind the economy's slower GDP growth. This has been an ambitious plan to unify the country's nearly 30 states for tax paying purposes. The president wanted to reform the tax system to make it easier including by  implementing a goods and services tax on a nation-wide basis. But there is a real fear that lack of understanding by business people of how the new taxes work will cause investment uncertainty and a general slowdown in business.

Another reason economist think the growth rate has slowed was the ban last fall on most of the country's cash--a move to become a cashless economy. This created havoc as people raced to withdraw cash from banks last year in a panic.

Finally, there were two surprising bans -- on the sale of alcohol within a certain distance of roads and on the sale of cattle for religious reasons.  Even though these bans were removed in August, this may have further slowed the economy because it negatively affected consumption and exports.

Complicating matters even more, the World Bank reportedly said today that India's growth slowed due to preparations for the new tax and this is not a reason to worry because these were "temporary disruptions." The World Bank's leader believes the new tax will actually help India to grow in future. he also said more investment in human resources would help improve economic growth in India.

My own view is that slower GDP growth to 5.7% during the April-June 2017 period, down from 7.9% a year earlier is not really necessarily a terrible growth rate. The US would be very happy with 5.7% growth -- this is relative. How can it be expected that an economy will continue to grow at such a fast rate as 7% for many years? This could even be negative and cause overheating and high inflation.

https://timesofindia.indiatimes.com/india/indias-economic-slowdown-an-aberration-world-bank/articleshow/60960318.cms
http://money.cnn.com/2017/10/04/news/economy/india-economy-modi-slowdown/index.html

U.S. will not be able to pay down debt until GDP growth reaches 4 percent

Republican Luke Messer says the government needs to be able to get the economy to reach a 4 percent GDP growth to be able to start paying on the national debt. House leaders are looking to push through a 4.1 trillion dollar budget plan for the economy. Hoping to start tax reform. The congressman said they don't want to make tax cuts because in modern history it has not spurred much growth if any. Messer also stated the only time in modern history the government could start cutting down the deficit or the national debt. Messer who is also a member of the house financial committee says they would like to have this new budget passed by the end of the week, while the house waits for the senate to pass their budget. This budget would call for 5 trillion dollars in spending cuts making medicare a voucher like system for new retirees. Also this would take medicaid down by about a trillion dollars all in the next decade along with repealing Obamacare.

https://www.cnbc.com/2017/10/05/us-wont-be-able-to-pay-down-debt-until-growth-hits-4-percent-gop.html

The Evolution of Wind Turbines in Spain and Their Impact on the U.S Economy

Environmentally friendly initiatives have become increasingly popular amongst the United States government over the past decade. One of the most recent breakthroughs in this space is the use of clean, renewable energy. Wind turbines have become a common way of generating this kind of energy and now engineers in Spain are working on ways to develop a wind turbine more efficiently. They have developed a wind turbine that does not need the massive blades that are used on current models. 

This breakthrough has potential to impact the U.S economy in regards to government spending. According to the article, the new design greatly reduces the amount of material needed to produce wind turbines. If the United States can successfully translate this design into production of its own turbines it could see a huge reduction in expenses, thus decrease government spending. This would allow for more room for growth in the clean energy industry, which is already growing at a steady rate, while increased production of clean energy sources will boost production.

https://www.cnbc.com/2017/09/29/the-future-of-wind-turbines-could-be-bladeless.html?recirc=taboolainternal

GOP Tax reform

More details are coming out about the GOP's proposed tax reforms. Although officials in the Trump administration seem to be disagreeing about what actually is in the tax plan - for instance, Gary Cohn could not answer an ABC interviewer's question about whether or not the tax reforms would raise taxes for the poor - we can tell a lot by the data released.

The tax plan would reduce the number of brackets from 7 to 3. This shift to a 12%, 25%, and 35% bracket would imply a tax hike of 2% for the very poorest (who currently get taxed at a 10% marginal rate) and a tax break for the very richest at 35% (a decrease from the current 39.6% marginal rate). The plan would also double the standard deduction but get rid of many itemized deductions (such as deductions for state and local taxes already paid) and there $4,050 personal exemption for every person in the taxpayer's households. For single taxpayers, this would be beneficial; for families with more than 3 children, they would lose out on the exemption for their additional children.

This tax plan has huge implications for fiscal policy - with so much less money coming in from the very wealthy, corporations, and income made overseas, we will presumably see less government spending. The way that these two factors change in relation to each other will impact national saving, and may end up impacting the world interest rate.

http://money.cnn.com/2017/09/27/news/economy/tax-reform-framework/index.html

Ford unveils plans to help it compete

In an effort to keep up with competition, Ford's chief executive plans to makes some major changes. 

"The firm says it will shift resources from traditional cars to SUVs and trucks, while investing in electric power and tech services.The firm will also automate its manufacturing processes more to help to cut costs by $14bn (£10.5bn)."

Ford has decided to make these changes because of the increase of demand for electric cars in China and the increase of demand for light trucks/SUV's in U.S. markets. In order to keep up with their competition, the chief executive wanted to expand the industry and renovate it. Although the company has a stable history/foundation, they are falling a bit behind.

These changes come in a transitional phase for Ford. This is the third year with the new chief executive; he has lead the firm to " two of the most profitable years in its history, but the share price drifted lower." I am interested to see how the loyal Ford consumers react to the changes and how the investment in electric cars will do. Ford's stock may initially take a hit, however, I expect them to be successful in the long run (because Ford has great brand loyalty and consumers will be interested in their new models).





http://www.bbc.com/news/business-41493412

Gun stocks up after Las Vegas shooting

Article Link: http://money.cnn.com/2017/10/02/investing/las-vegas-shooting-gun-stocks-sturm-ruger-american-outdoor-brands/

While the shooting in Las Vegas is no doubt a tragedy, it did help the stocks of some gun manufacturers to rise. This is a trend that can unfortunately be seen after mass-shootings have taken place. This is because gun enthusiasts worry the government is going to impose tighter and tougher restrictions on gun ownership after a mass-shooting. With these fears in mind, consumers rush to purchase firearms before they can no longer legally do so.

Mass-shootings are not the only thing that has boosted gun sales and gun manufacturers stocks in the past. During the previous administration and during this past election, gun sales were up and looking good. While Obama was in office, many people worried that they soon wouldn't be able to exercise their second amendment right due to new regulations. This caused people to purchase firearms in droves. Furthermore, since most people assumed that Hillary was going to win the election (you know what they say about assuming), people again ran to their local gun stores because they were fearful of a president who would greatly restrict their right to bear arms. After Trump won the election, gun sales drastically dropped off since people didn't have to worry about tighter regulations with a NRA-backed candidate in office.

"China is trying to juice its economy with even more debt" By Daniel Shane

China's economy is taking a big risk. By cutting the amount of cash they have to keep in reserve in banks. China is trying to improves its economy with even more debt. despite the already growing concern with its massive debt. An associate professor at the HSBC School of Business at Peking University in Shenzhen, Christopher Balding, believes this cut could lead to another $100 billion in lending. He said the cut "is clearly signifying additional concern about the sustainability of economic growth in China absent credit injections." A credit rating agency has warned many that strong credit growth was increasing economic and financial risks. The government has created an incentive to banks to lend money, specifically to small business and farmers, to become eligible to lower their reserves by the maximum amount. Many economic analyists fear that the conditions are unlikely to make much of a different in reality in terms of their overall economy.






http://money.cnn.com/2017/10/02/news/economy/china-economy-debt-central-bank/index.html

The Bank of England Publishes Latest “Purple Book”

The “Purple Book” sets out how English banks should prepare for a crisis.  The book brings together its thinking on regulation, including what sums banks must set aside and in what form it must be structured.  It also aims to protect taxpayers from the cost of a big bank collapse.  The new rules are set to come into place in 2022 and are designed to make sure that even the biggest banks (those who say they are “too big to fail”) can be dealt with without taxpayers having to bear the burden of protecting the rest of the system. 

                The new Minimum Requirements for Own Funds and Eligible Requirements (MREL) mean giant foreign banks must create special internal debt that would mean creditors being “bailed in” rather than governments needing to bail them out.  A bail-in means creditors of a bank will take on some of the burden by having part of the debt they are owed written off.  The UK’s own banks have a shortfall of the amount they need to have put by of £116bn, and they have until 2022 to raise these funds.

                Sir John Cunliffe, deputy governor for financial stability at the Bank, said, “Faced with potentially disastrous consequences governments, the UK’s included, felt they had no choice but to bail the banks out.  Resolution aims to change this.  It ensures banks can be allowed to fail in an orderly way.  Just like when any other business fails, losses arising from bank failure would be imposed on shareholders and investors.”


http://www.bbc.com/news/business-41467614

China Tries to Steer Loans to Small Businesses

This past weekend China announced that they would be be reducing their reserve ratio, in an effort to supply Chinese small businesses with loans, while supplying small business with cash. The reduction is predicted to have a limited impact on China's debt, which has become a growing issue. China has supplied an increased supply of credit to state-owned businesses, in fact more than half of lending is associated with these consistent money losers. With this move small business, who often struggle to recieve sources of cash, are now the focus for spurring economic growth.

Reducing the reserve ratio in hopes of economic growth is nothing new for China, however there is a new twist to this regulation which will be effective at the beginning of the new year. The central bank is only cutting the reserve ratio for banks that meet minimums for lending to small businesses. These loans to small business, farmers, students, and small family companies, will provide less than $5 million yuan, which is about $750,000 U.S. dollars.

This move by China's central bank is expected to ease credit for small scale-borrowers while avoiding wasteful lending. There are many incentives offered to banks that are willing to make loans in inclusive finance, as close to zero banks currently lend more than 10% of their bonds to inclusive financing. The central bank has given banks approximately 2 months to adjust and adapt to these changes. This move also was announced before the Chinese Communist Party's congress on October 18th, which is probably because the Communist party is focused on keeping the financial sector stable before the political meeting.

https://www.nytimes.com/2017/09/30/business/china-tries-to-steer-loans-to-small-businesses.html?rref=collection%2Fsectioncollection%2Fbusiness-economy&action=click&contentCollection=economy&region=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=sectionfront

Puerto Rican migration could impact Orlando jobs, economy

http://www.orlandosentinel.com/business/brinkmann-on-business/os-puerto-rico-jobs-economy-20171001-story.html

Puerto Rican migration could impact Orlando jobs, economy


Everybody is aware of the fact that Texas and Florida suffered significant damage due to the chain of natural disasters this summer. Puerto Rico, actually, has been desecrated as much as the two states of the United States. The Puerto Ricans are crossing over to Orlando to escape their abysmal situation. Thousands of them will be entering the USA, and, luckily, preparations were taking place to accept them.

Puerto Rico was suffering with its stagnating economy, hence the citizens were leaving to the United States. The influx of Puerto Ricans is not abnormal in America. However, hurricane Maria has defaced their lands. The Puerto Ricans could not have safe, filtered water nor electricity. The US government's efforts were not very sincere in aiding Puerto Rico. They took too long to acknowledge the impact of hurricane Maria to Puerto Rico.

Local agencies of Orlando, such as CareerSource is devising a contingency plan to assimilate the Puerto Ricans into the society. In the past, economy of the city lagged initially, but reverted back to normal after some time. The inflow of a large number of Puerto Ricans will increase the supply of labor, which may help with the shortage of workers after the disaster. The state has been educating the immigrants to be able to use English more fluently, in order to do well in jobs.

I think the assistances coming from Orlando towards the Puerto Ricans who are entering the city may actually be helping out the state in general, and thus the economy of it. If there were no plans in receiving the Puerto Ricans, the aftereffect of the hurricane would have affected the states even more drastically. The circumstances would have been chaotic instead of helpful after the natural disaster hit the states.

An economy in a storm of trouble

Cuba’s economy already was not doing well when Hurricane Irma hit recently. With a high government budget deficit, the government has a shortage of money to pay for the damage. The economy will lose tourism and other revenues including because of power outages from the hurricane, which will reduce growth of GDP and may even cause GDP to shrink.

What makes it even worse for people living there is that the socialist economy of Cuba makes it difficult for business people to obtain the supplies and other inputs they need from overseas by importing them. Yet the economy has to import 80% of its food.  Cuba’s transport—roads, railroads, etc.—don’t work well and are in a bad state, so it’s hard to ship the food that is grown in Cuba around the country. And the government has decided to crack down even further on capitalism. 

It’s hard to attract foreign investment to try get the economy to grow because of the bureaucracy from socialism and the slowness foreign investors face in getting their business projects approved and started. In the past few years, Cuba has only been able to attract one-fourth of the investment it needs from foreigners, according to The Economist.

This magazine article believes the Cuban currency is very overvalued and it recommends a devaluation of Cuba’s currency to help make exporters prices more competitive. This growth in exports that could result would help increase GDP. But a devaluation could also increase inflation and make it much more expensive for Cuba’s businesses that rely on imports. Making all of this uncertainty even worse is the fact that the Cubans will have to choose a new leader early next year when President Castro leaves office. These are difficult times for many Americans in Texas and Florida affected by hurricanes, but it is even more difficult for the hurricane-hit Cubans.

https://www.economist.com/news/americas/21729803-communist-regime-can-no-longer-rely-generosity-its-allies-it-has-no-idea-what