The Senate Tax Bill

In the wee hours of the morning, the Senate passed their tax reform bill.  Thus meaning that it could go to conference and as such be eventually drafted into a final form and may possibly even become federal law.  The plan was passed with some crucial amendments to garner key votes.  For example, the SALT deduction wasn't eliminated but instead only reduced to $10,000 applicable to property taxes.  The business expense deductions on pass-through companies were raised to 24%.  The child tax credit is also increased from $1,000 to $2,000 in the Senate bill.  This helps to simplify the number of tax brackets and decreases the number of deductions available to the taxpayers and raises the overall standard deduction.  Most economists believe that the tax reform bill will increase the deficit due to it not being able to make up the lost revenue.  However most also agree that it will increase economic growth.         

  https://www.cbsnews.com/news/tax-bill-senate-passes-sweeping-tax-overhaul/

After Star Wars Battlefront II uproar, EA lost $3 billion in stock value

Article link

EA's Star Wars Battlefront II was perhaps one of the most anticipated games of 2017. However, after consumers quickly discovered a disgusting in-game moneymaking strategy, and a poorly designed progression system, many people voiced their opinions. The gaming community primarily went to Reddit to post their negative comments which got the attention of EA. In fact, EA replied back on Reddit to defend one of their decisions, and the post quickly received the most down-votes in Reddit history.

For a limited time, EA has disabled the in-game loot boxes in order to calm the waters, but the damage was already done. EA's stock fell 8.5% causing them a loss of $3.1 billion of shareholder value; meanwhile, its main competitors have posted positive gains during the same period. UK's first week of game sales were down 61% compared to SW Battlefront from two years ago (a much worse game in my opinion).

Consumers are not the only people who have taken notice of this game. Politicians from both the US and abroad have vowed to implement regulation to protect kids from the game's micro-transactions. The loot box system, they say, is practically a form of gambling that is directed to children who wouldn't know better.

Despite Battlefront's flaws with it's micro-transactions and it's progression system, the game itself is very fun and pleasing to play. The game has made many necessary improvements from the last version; however, that doesn't seem to be quite enough for the gaming community. EA will undoubtedly have to rethink its monetization strategy across its entire franchise which will impact profitability.

US is trying to stop China from having market economy status in the World Trade Organization

It isn’t big news that the US is opposed to China and its trade policies in the World Trade Organization (WTO). But this past week the US sent a formal message about its view that China should not be able to have official “market economy” status in the WTO. The European Union (EU) is also on the side of the US in this: they both officially argue that the Chinese government or state still plays a big role in China’s economy.

But the real and more specific reason for this opposition to China gaining market economy status in the WTO is predictable-the US is against China’s exporting low cost products into the US that make it difficult for our own companies that produce similar goods to compete with these prices. The EU has similar concerns. The US and EU member countries impose tariffs on these cheap Chinese imports to try to help their domestic businesses remain competitive and able to sell their goods domestically.

Of course, these policies may be useful to the US and EU companies who find it hard to compete with Chinese companies’ cheap goods. But it may not necessarily be a good outcome for the consumers who buy those goods in the US and the EU. Arguably the consumer should have a choice to buy the cheaper Chinese goods—even if they are made by state-owned companies subsidized by China’s government. Those subsidies don’t hurt the US and EU taxpayers, so it doesn’t seem to be a valid argument.  It just seems as thought the US is actually jealous of China’s trade surplus with the US.

Tensions over trade are being made worse with the US government beginning an investigation into whether China is dumping -- or exporting overly cheap aluminum exports—to the US. All of this is leading to speculation that the US and China could be headed to a big trade war. This is a big change from a few weeks ago when Trump signed $250 billion worth of trade deals with the Chinese leader.

https://www.reuters.com/article/us-usa-china-trade-wto/u-s-formally-opposes-china-market-economy-status-at-wto-idUSKBN1DU2VH?il=0\

http://www.scmp.com/news/china/diplomacy-defence/article/2122506/us-ramps-pressure-china-rejecting-market-economy-status

Russia Developing Global ICO Ratings Standard and Investment Restrictions

The Russian Association of Blockchain and Cryptocurrency (RACIB) has just recently announced that they intend on developing a uniform rating standard for ICOs. The director of RACIB has publically announced that Russia “will become the first in the world standard of ratings in the field of ICO,” while further noting that such procedures are applicable to other nations as well. Such an association was reportedly formed in order to combat conflated ratings originating from unknown sources regarding ICO rankings. In order to develop a sufficient global standard, RACIB has joined a coalition of thirty other organizations from what they consider the most prominent players in the cryptocurrency market.

Additionally, Vladimir Putin’s advisor on Internet development, Herman Klimenko, commented that NACIB is considering placing restrictions on ICO investments within the central bank. This would most likely be done in the form of initial investment ceilings, and further yearly quotas. It should be noted that the state will not legalize superfluous crowdsourcing of money, but may consider to let small to medium size businesses raise funds in this manner. It will be interesting to see how the cryptocurrency market further fluctuates with the heightened international discussion of government regulation.

https://news.bitcoin.com/russia-global-ico-ratings-standard-30-countries/

American Airlines doesn't have enough pilots scheduled for holiday travel

American Airlines is in a a bit of a pickle heading into December. A scheduling glitch has left the country's largest airline without enough pilots and staff ahead of the busy holiday season. The Allied Pilots Association (APA) said that they were notified by American Airlines that "a failure within the pilot schedule bidding system. As a result, thousands of flights currently do not have pilots assigned to fly them during the upcoming critical holiday period." American has come out an said that they are working very hard to solve this issue and avoid any cancellations. They are having reserve pilots pick up some of the shifts as well as paying pilots overtime or 150% of their hourly rate if they take certain open trips. The problem within all of this is that the APA is urging all of its pilots not take these trips because they might violate the union contract. "While the overtime is legal, the way they're doling out is not in compliance with our contract," said Capt. Dennis Tajer, spokesman for the APA in an interview with CNN. This could become a huge issue for American Airlines if they are not able to come to an agreement.

It is amazing that this all is because of a computer glitch that gave pilots the opportunity to withdraw from flights in December. From what the article is saying, I think American Airlines has been working to make up for the mistake by compensating the pilots with overtime that they may not have gotten before but the pilots union won't take it because of their contract. I really don't know how big of a deal that is but I think the pilots are the ones possibly benefiting from this glitch because of the higher pay that American Airlines is willing to give. The question then becomes will American Airlines push that extra cost onto consumers with higher ticket prices?

http://money.cnn.com/2017/11/29/news/companies/american-airlines-pilot-snafu/index.html?iid=EL

"Dow rockets to 24,000, building on incredible post-election surge"

Among the criticism of Donald Trump lies an impressive feat:"The Dow has spiked nearly 6,000 points since President Trump's election last year, notching 79 daily record highs since then." Our markets have been incredible since his election, including the S&P and Nasdaq. "The S&P 500 and Nasdaq are also near all-time highs. The latter is up a whopping 30% since the election." "Keep in mind the S&P 500 is in the midst of its longest rally ever without a 3% slump, according to Bespoke Investment Group." With people wanting to invest, our economy is in a good state. Consumer confidence is high and people are putting money back into the economy. It is great to see our markets doing well and hopefully President Trump can continue to provide opportunities for our country in the near future. I am interested in seeing how long these upward trends will last and how much the decrease will be in the markets I mentioned (if any).

-NB

http://money.cnn.com/2017/11/30/investing/dow-24000-stocks-wall-street-trump/index.html?iid=Lead

Skype Disappears from App Stores, Including Apple's

For about a month, Skype, an internet phone call and messaging service, has been unavailable on a number of sites where apps are downloaded in China, including Apple’s App store.  An Apple spokeswoman made a statement saying that a number of voice over internet protocol apps do not comply with the local law.  The removal has led to many complaints from Chinese users on internet message boards that were no longer able to pay for Skype’s services through Apple.

In recent months, sensitive political meetings and a new cybersecurity law has led to a sharp crackdown on internet freedoms in China.  Foreign TV shows were taken down, companies restricted the same amount of time that children could spend playing video games, and software that helps evade China’s internet filters was targeted with heavy disruptions.  A key Chinese Communist Party meeting had already ended when Skype disappeared from the app stores—and indication that the cybersecurity law was the reason, and the law, which began to take effect in June, is likely to have a deep and long-lasting impact on how the internet works in China.

Apple faced heavy criticism this year after it said it had decided to take down software from its app store in China that helps circumvent the government’s internet filters, called the Great Firewall.  I am interested to see if Apple will lose some business in China and if that will be enough to impact the company as a whole.  In addition, I wonder if China will begin to see a decrease in businesses emerging because of the cybersecurity law and the internet protocol apps since many businesses use Skype in order to communicate.

https://www.nytimes.com/2017/11/21/business/skype-app-china.html?rref=collection%2Ftimestopic%2FApple%20Inc.&action=click&contentCollection=business&region=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=collection

Range of economists think the euro economies are moving into "golden period"

According to a recent Bloomberg survey of international economists across a range of companies and organizations, the European economies that have a single currency together (the euro) are heading into a "golden period" where they show have good GDP growth rates and low inflation. This is a big difference for this region compared with several years ago when the economic growth rate was slow and some economies actually shrunk because of high unemployment (for example Greece, Spain).

The reason why these surveyed economists are so optimistic about these economies in western Europe is because companies in this region are making good profits and investors have high confidence in the region's economic outlook. But the article concludes that average GDP growth of the euro economies will still likely be slower than in the US, although faster than the United Kingdom, which is trying to leave the European Union -- a move that has hurt investors confidence.

In fact, the International Monetary Fund economists think the good economic growth in the euro economies should have a positive effect on other economies in the world that trade with them. Basically, people in the euro economies may import more goods from other economies of the world -- which would result in a an increase in exports for those other economies, which could increase GDP.

Of course, these nineteen economies are actually very different so each economy may have very different economic growth than some or more of the others.The Bloomberg article doesn't really go into this. The article does however point out that different groups in these economies may have very different economic outcomes. So millennials for example still have high unemployment rates in some of these European economies--as high as more then 10% in some economies such as Spain and Greece. And a Reuters article recently reported that Spain's total unemployment rate is 6.38%, although this is much lower than it was in the past few years. Spain also has very different unemployment and growth rates by region--Catalonia for example which is trying to leave Spain has experienced a situation where 2000 companies with their headquarters located there have moved those offices outside of that region. This has caused job losses and lower investor confidence of course.

https://www.bloomberg.com/news/articles/2017-11-13/from-lost-decade-to-golden-years-euro-economy-picks-up-the-pace
https://www.reuters.com/article/us-spain-economy/catalonia-unemployment-jumps-as-political-crisis-drags-on-idUSKBN1D30T4

Myths of the 1% and why their share of income is increasing

https://www.nytimes.com/2017/11/17/upshot/income-inequality-united-states.html?rref=collection%2Fsectioncollection%2Fbusiness-economy&action=click&contentCollection=economy&region=stream&module=stream_unit&version=latest&contentPlacement=5&pgtype=sectionfront

I found this article on the NY times website. It explains why the 1% has an increasing total income share in the U.S and in other countries. They go through some of the misconceptions such as the relation to information technology, unions and immigration. All of which have little negative effect on the 1%. 

Most top earners in the United States are neither executives nor even managers. People in those occupations make up just over one-third of all top earners in the United States. This share has been falling, particularly for corporate executives — and is lower than in many other advanced countries. In Denmark, Canada and Finland, close to half of top earners are in managerial occupations, according to my analysis of data from the Luxembourg Income Study.

Almost all of the growth in top American earners has come from just three economic sectors: professional services, finance and insurance, and health care, groups that tend to benefit from regulatory barriers that shelter them from competition. The groups that have contributed the most people to the 1 percent since 1980 are: physicians; executives, managers, sales supervisors, and analysts working in the financial sectors; and professional and legal service industry executives, managers, lawyers, consultants and sales representatives. Without changes in these largely domestic services industries — finance, health care, the law — the United States would look like Canada or Germany in terms of its top income shares. The United States also stands out in terms of how much money its elite professionals earn relative to the median worker. Workers at the 90th percentile of the income distribution for professionals make 3.5 times the earnings of the typical (median) worker in all occupations in the United States. Only Mexico and Israel, which have very high inequality, compensate professionals so disproportionately. In Switzerland, the Netherlands, Finland and Denmark, the ratio is about 2 to 1.

Fight for the CFPB

The Consumer Financial Protections Bureau was created as part of the 2010 Dodd-Frank Act, which was passed as a stabilizer for the economy after the 2008-9 recession. This act was meant to regulate commercial financial institutions, in large part because of the role that the reckless behavior of banks played in creating the crisis.

The battle over regulation of financial institutions is long and complex, but at the heart of it it seems like we just have not learned from our mistakes. In Monetary and Fiscal Policy, we learned a lot about regulation and banking history, and it seems that regulation and de-regulation typically follow the patterns of a business cycle - at the end of a recession, we regulate the financial sector to make sure the recession doesn't happen again, and as the economy recovers, we de-regulate because financial institutions don't need guidelines again, which causes or contributes to another recession.

The CFPB plays a significant role in this regulation environment in making sure it stands for customer's best interests. Although this seems like petty political squabbling, I admire Leandra English for standing up for her predecessor's wishes and the way she believes the CFPB should be run.

https://www.politico.com/story/2017/11/27/consumer-financial-protection-bureau-fight-mulvaney-english-190862

Britain falls out of the worlds 5th largest economy spot

http://money.cnn.com/2017/11/22/news/economy/uk-france-biggest-economies-in-the-world/index.html?iid=SF_River

Britian, once the worlds 5th largest economy is not the 6th largest economy.

GDP forecasts by the International Monetary Fund in October back up this statement. According to those same numbers, France is the country who will replace them in the 5th spot. Using projections for 2018, France will widen the gap even more in the coming year. According to professionals, Britain leaving the EU can explain a good amount of this slip up, consumer spending has slowed and prices have hiked, hate to see it.

In the ensuing 3 years, Britain's expected growth is 1.5%, 1.4% and then 1.3%. The fact that Britain was replaced by an EU country in France does not look good for political leaders who said that Britain would be stronger apart from the EU.

This could be a direct effect of the EU exit, but could also be a mix of many things. Many countries who have the slightest thought of leaving the EU may rethink after seeing Britains growth slow year after year.

Here are the world's top seven economies, according to the 2017 IMF forecast:

1. U.S. - $19.4 trillion
2. China - $11.9 trillion
3. Japan - $4.9 trillion
4. Germany - $3.7 trillion
5. France - $2.575 trillion
6. U.K. - $2.565 trillion
7. India - $2.4 trillion

Maybe American Students Are Bad at Standardized Tests Because They Don’t Try Very Hard

Economists from the United States and China ran an experiment to see whether American students would perform better on tests with cash incentives, compared to Chinese students. The reason for conducting this experiment was because the economists were wondering whether the American students are not as smart as the rest of the world, or if they do not put forth the necessary effort to score well.

First, a group of 10th grade American students from Massachusetts were selected to take a math test. The exam was made up of 25 math problems. At the beginning of the exams, half of the students were given envelopes with 25 $1 bills in them, and they were told they would lose a dollar for every incorrect answer. The other half of students were not given a money inventive at the start of the exam. The students that were given the envelope at the start left less answers blank and answered more questions correctly. The researches estimated that if all U.S. students were given the money incentive the U.S. would be ranked 19th instead of 36th on math standardized test scores. Next, the same experiment was conducted by the same economists with students in Shanghai. The Shanghai students with the money envelopes did not score any better than the students who did have the money incentive.

So, what does this say about the U.S. culture compared to the culture in China? Obviously in America, the students' results showed that they are extrinsically motivated to succeed in the classroom. Meaning, the only way they are motivated, is if they receive something in return (a good grade/money). However, Chinese students' results showed they are intrinsically motivated. So, they are motivated because they want to gain knowledge.

https://blogs.wsj.com/economics/2017/11/27/maybe-american-students-are-bad-at-standardized-tests-because-they-dont-try-very-hard/

Fastest growing jobs in the U.S.

As most economists predict employment will be on the rise for years to come.  According to the Bureau of Labor statistics the U.S. is expected to see an increase of 11.5 million jobs from 2016 to 2026.  This rise is the largest predicted in quite some time.  Analysts say majority of these jobs (around 10.5 million) will be service provider based.  The rest fall under a variety of different industries.  Here is the list produced by the Bureau of Labor Statistics in their most recent Occupational Outlook Handbook.  Do you think this list is accurate?  Do you think jobs will increase at the rate predicted by the BLS?

1.Solar photovoltaic installers
2. Wind turbine service technicians
3. Home health aides
4.Personal care aides
5.Physician assistants
6.Nurse Practicioners
7.Statiscians
8.Physical therapy assistants
9.Software developers
10.Mathmeticians



  https://www.cnbc.com/2017/11/21/these-are-the-10-fastest-growing-jobs-in-the-u-s.html

Meredith to acquire Time Inc. in $2.8B deal

Meredith Corporation (MDP) announced Sunday evening that it will acquire Time Inc. (TIME), the U.S. publisher of Sports Illustrated, Fortune and Time magazines, in a deal valued at $2.8 billion.

“We are adding the rich content-creation capabilities of some of the media industry's strongest national brands to a powerful local television business that is generating record earnings, offering advertisers and marketers unparalleled reach to American adults,” Meredith Corporation Chairman and CEO Stephen M. Lacy said in a statement. “We are also creating a powerful digital media business with 170 million monthly unique visitors in the U.S. and over 10 billion annual video views, enhancing Meredith's leadership position in reaching Millennials.”

Under the agreement, Meredith, which publishes Better Homes & Gardens, Family Circle and owns Allrecipies.com, will acquire all outstanding shares of Time for $18.50 a share. The company said the deal is expected to close during the first quarter of calendar 2018. Meredith said it expects to generate cost synergies of $400-$500 million in the first two full years of operation.

Meredith’s bid to buy the publisher is backed by billionaires Charles and David Koch, who provided $650 million in preferred equity through a unit of Koch Industries called Koch Equity Development (KED). However, Meredith said KED will not have a seat on its board, nor will it have influence on its editorial or managerial operations.

I am very excited to see the growth that comes from this acquisition. Time is such an influential part of our culture; it will be interesting seeing where new ownership takes it and how the platform changes, improves or alters. I see this as a highly profitable move on Meredith’s part and I m excited to see the public react.

http://www.foxbusiness.com/markets/2017/11/26/meredith-to-acquire-time-inc-in-2-8b-deal.html

GOP Tax Plan will Eventually Raise Taxes on 50% of Americans

According to NBC news, the new tax plan that in being implemented by the senate will ultimately raise the taxes on 50% of Americans by the year 2027. This is a result of a tax cut that is being presented by President Trump. This tax cut was supposed to be put in place by Christmas but with the increase that Americans will see with their taxes in the future, this policy could backfire.

As stated above, Americans that will see an increase in their taxes that will lead to about 50% of taxpayers paying more by the end of 2027, but 9% of taxpayers will also see an increase in taxes by the end of 2019. One of the biggest reasons that the population is paying higher tax at the end of 2027 is because the tax cuts will eventually expire by the end of 2026, which will result in the taxes of Americans to ultimately increase. This tax cut will help those who are not making as much income, though, as well as those who are making a lot of income. In 2019, the Senate stated that those who are making about $25,000 will get a reduction of about 0.3%, which in reality, is not a very big reduction. The senate also stated that the middle-income earners would receive a reduction of about $850, and those who are at the top will reduce taxes by about 2.2%. As seen from the numbers, the tax cut favors those who are at the top.

Although there are some pros and cons to this tax cut that is being implemented by the government, overall economic growth is also projected to increase in the upcoming years. It is said that the economic growth would ultimately be around 169 billion over a decade. This number is also short of the estimated growth, which is about 1.5 trillion. There is still a lot of controversy over what this tax cut will do and if it is a good idea to implement such a risky policy. What will ultimately be the result of the tax cut? Is it a good idea for the government to implement such a policy?

https://www.cnbc.com/2017/11/20/senate-gop-tax-plan-to-ultimately-raise-taxes-for-half-of-us-tax-policy-center.html

Consumer sentiment hits 98.5 in November vs. 98 estimate

With consumer sentiment staying very steady the last year and a half it looks as though people are confident in the economy.  With consumer sentiment being the consumer opinion on the economy, it shows people are confident in the economy.  This is extremely important due to the fact that the economy can be a self-fulfilling prophecy.  If this number continues to grow, growth could improve better than previously forecasted.  If consumers demand more businesses would produce more, eventually moving long run aggregate supply or in other words, moving the steady state.  Although there are other factors that go into the economy this is  major piece and could push the economy even further forward.

https://www.cnbc.com/2017/11/22/november-us-consumer-sentiment-index.html