US adds 266k jobs in November

CNBC Article

The US economy added 266,000 jobs last month, exceeding expectations by over 70k. Unemployment also dropped from 3.6% back down to 3.5%, which is the lowest in 2019 and since 1969. This is helped by the end of the GM strike which added 41,300 jobs on its own. This is really great news contradicting so far some opinions that we might head into a recession, and more good news like this might help stem that looming possibility even longer. Bad news on some other economic news of late, but this is reassuring.

Global Economy Will Recover

https://www.cnbc.com/2019/12/05/global-economy-will-recover-in-the-second-half-of-2020-says-ubs.html

Global growth will recover in the second half of 2020 as the trade war between Washington and Beijing eases and central banks’ monetary policies come into effect said Adrian Zuercher, APAC head of asset allocation at UBS Global Wealth Management’s Chief Investment Office. Tensions are already smoothing with the first phase of the trade deal having taken place in October. The second phase is set to take place on December 15. Do you think these trade deal will continue to succeed and do you think we will avoid entering a recession in 2020?

Saudi Aramco Raises $25.6 Billion in the World's Largest IPO

Saudia Arabia's giant state-owned oil monopoly, Saudi Aramco raised $25.6 billion dollars at IPO. The deal raised more than Alibaba's in 2014, and is valued at half a trillion dollars higher than Apple. While it does look like a can't miss opportunity, I believe there will be some uncertainty in the future due its connection with climate change. Not only has the threat of climate change been an issue for the company already, but it most will loom larger in the future.

https://www.cnn.com/2019/12/05/investing/saudi-aramco-ipo-price/index.html

OPEC meeting ends with market expecting deep production cut

OPEC members are getting closer to a deal with cutting oil production. Official numbers will be released Friday, but estimates seem to be higher than expected, around a 500,000 barrels per day cut. This would bring daily production down to  1.7 million barrels per day which is a 23% decrease. With the US drilling more and more oil markets are flooded with American oil decreasing prices further. A cut was expected, but it is not clear what magnitude of an effect this will have on prices as many OPEC countries are already under-producing.

With the trade war having no end in sight do you think we should expect more cuts to oil production in order to support prices with the slowing global trade?





https://www.cnbc.com/2019/12/05/opec-december-meeting-opec-production-cuts-in-question.html

Can Christmas Save the US Economy?

Due to the recent rise of uncertainty within the Us economy coming from factors such as the trade war, impending impeachment hearings, as well as the question of who will be in office in little over a year from now. With the holiday shopping season now here, many are relying on consumer spending to be the life ring of the US economy. However, many experts believe that relying on consumer spending as an underlying indicator of growth is not sustainable and can only carry the economy so far. What do you for-see happening in the coming months with the US economy? After the holiday season will consumption still be so strong?

This startup pays crypto holders interest on bitcoin

There is a new company named BlockFi that is rolling out a new trading platform that allows users to trade, borrow, and earn interest on their crypto currencies. I found this article interesting due to the fact that most of buzz surrounding crypto currencies has died down for the most.  After reading this article, Im curious of two things. Will this become a popular platform, and it this really the future of finance/economics. If this new platform proves that there is some serious money to be made through lending crypto, how long will it take until major banks offer loans in these types of currencies.

The US-China trade and its impact on a potential recession

"According to a recent survey by the National Association for Business Economics, seven out of 10 economists expect a recession by the end of 2021."

We are nearing the end of 2019 and there has been little resolution to our trade war with China. Trump has actually renewed trade tensions recently. He has even stated there is "no deadline" for the trade war and claims that he wants to wait till after the 2020 election to fix this problem. This may be in response to some economists beliefs that Trump is waiting ease tensions with China right up until the election. 

However, our domestic and global economies will not go on pause until he is ready to end this war. As we learned in class, imposing tariffs raises interest rates and lowers the amount of overall trade. If action is not taken soon, business investment may drop further due to trade uncertainty. And since investment is very volatile, GDP can decrease significantly, potentially contributing to a recession

https://www.washingtonpost.com/news/powerpost/paloma/the-finance-202/2019/12/04/the-finance-202-trump-could-spark-a-global-recession-if-he-imposes-more-china-tariffs-economists-predict/5de6e17688e0fa652bbbdbac/

Why US Garlic Farmers are fans of Trump

Garlic farmers in the USA seem grateful to Donald Trump for sanctions on China which has reduced imports of garlic into the USA. This has brought joy to farmers and is boosting the sales of locally grown garlic and is allowing their garlic to thrive especially in the large USA market.

The 25% tax put on garlic imports from China seems to be doing a whole lot of good for local USA farmers.

https://www.bbc.com/news/av/business-50493488/why-us-garlic-farmers-are-fans-of-trump-s-tariffs?intlink_from_url=https%3A%2F%2Fwww.bbc.com%2Fnews%2Ftopics%2Fc1038wnxypvt%2Fus-economy&link_location=live-reporting-map

Ford's Global Job Cut by end of August

About 7000 jobs are set to be cut in the global workforce of American automotive giant Ford. The carmaker will reduce its US workforce by 2,300 as it seeks to save $600m (£470m) per year. Most of these jobs are in management positions according to Ford. some of these job losses will be as a result of voluntary redundancies and compulsory redundancies. Chief executive, Jim Hackett said, “To succeed in our competitive industry, and position Ford to win in a fast-changing future, we must reduce bureaucracy, empower managers, speed decision-making and focus on the most valuable work, and cost cuts,” 

https://www.independent.co.uk/news/business/news/ford-job-cuts-global-us-car-industry-a8922301.html

Mid-sized American companies are already moving away from China

         As the Chinese-American trade war continues, American corporations and mid-sized firms face an increasingly uncertain economic future in China. Mid-sized firms, fearing the prolonged impact of these trade tensions, have realized the need to diversify away from China to protect their interests. Mid-sized firms have pursued the diversification of their corporations by shifting “their supply chains to other parts of Asia and by selling more to other countries to make up what they can’t sell to China.” To make up for some of their economic losses, the article notes that mid-sized firms in America have specifically sought new markets in Europe, other parts of Asia, and Latin America. The article also notes that the increasing cost of domestic labor in China has also played an essential role in the diversification of mid-sized firms.

https://www.cnn.com/2019/12/04/investing/midsized-companies-china-survey/index.html

US service sector slows more than expected in November

Trade tensions and worker shortages has caused the U.S. services sector to slow more than expected for November. Manufacturing activity contracted for the fourth straight month since 2012 according to the ISM. The non-manufacturing activity index decreased to 53.9 in November compared to 54.7 in October. These manufacturing slumps have also countered growth expectations for the fourth quarter, which had been increased by a "rush of upbeat reports on the trade deficit, housing and business investment. Do you think the service sector will keep slowing because of this trade war with China?
https://www.cnbc.com/2019/12/04/november-ism-non-manufacturing-index-comes-in-at-53point9-vs-54point5-estimate.html

U.S. Private Sector Added 67,000 Jobs in November

The U.S. nonfarm private sector added 67,000 jobs in November, missing economists’ expectations by a wide margin. It was expected that the ADP National Employment Report to show an addition of 150,000 jobs. Mark Zandi, chief economist at Moody’s Analytics, said "“The job market is losing its shine... Job openings are declining and if job growth slows any further unemployment will increase". There were a lot of job gains in the service-providing sector, which added 85,000 jobs. The education and health sector added 39,000 jobs, the most added in a category on the services side. The worst industry performer in the services group was trade, transportation and utilities, which lost 15,000 jobs.

Referring back to the economic outlook conference, Mark Schweitzer talked about how even though job openings have slowly been declining, job hires have still been increasing. Do you believe this still holds true? Are we closer to large unemployment than we really think?

Hit hard by the trade war, China’s economic outlook is uncertain – except for one thing: growth is sure to decline

This article talks about China's side of the trade war. It's main focus is on how the Chinese economy, which is based on the amount of trade they have, has slowed drastically in the past year, from 6.8% to 6%. While that may not sound like a large number, when you put into perspective with how large the China economy is, the entire global economy has been slowing down as a result. The article also talks about when their economy does get below that 6% number, this will impact consumer confidence so it will likely slow down at an even harsher rate if nothing is done to fix it. What could the Chinese do in order to prevent this from happening? Or if it does happen, what will they have to do in order to get back on track?

US consumer confidence falls for fourth consecutive month

According to this article, consumer confidence decreased for the fourth straight month. The Conference Board shows that the consumer confidence index dipped to 125.5 in November. It was expected to rise- economists polled by Dow Jones expected the index to rise to 126.6 from 126.1 in October.
The article also states that the situation index also fell from 173.5 to 166.9. These numbers suggest that economic growth in the final quarter of 2019 will remain weak. One of the last things the article states is that expectations for the holiday shopping season are strong. The National Retail Federation expects sales to grow by about 4% from last year.
If this is the case, my question is, how much does a drop in CPI impact holiday spending? Could CPI be very low and holiday spending still be very high?

US Consumer Confidence Falls

Consumer confidence has been hurting as a result of economic pressures around the world. It has dipped for the fourth straight month contrary to expectations. The Conference Board expected the index to rise to 126.6 yet it fell to 125.5. Recent data is pointing at slower growth and a weaker economy as the years end approaches. Lynn Franco, senior director of economic indicators of The Conference Board still suggests, Overall, confidence levels are still high and should support solid spending during this holiday season.” Expectations for spending in the holiday season are strong and projected to help sales grow 4% in this coming period. Hopefully the upcoming holiday season will help curtail this fall in consumer confidence as we approach the new decade. 

December could be a good month for the stock market, but there’s one big risk

In previous years December has been one of the best months for stocks performance wise. The S&P, which is up more than 25% on the year, can grow more in December. Historically, stocks have rose 1.6% in the final month of  the year. In the coming weeks, investors focus will be on the trade war, and depending on the trade war news will have a big impact on how the month of December is for stocks. December is also the least volatile month but could see some bumps due to the trade war. Will the stock market do as well as it has previously in the month of December or will the trade war slow it down?

https://www.cnbc.com/2019/11/29/december-could-be-good-for-the-stock-market-but-theres-one-big-risk.html

Consumer Confidence Decline

Recently, the Conference Board did a consumer confidence index and saw a decline in confidence for the month of November. This would mark the third month in a row in which we have seen this decline. The reason for this decline is coming from fear from a global shutdown and a continued trade war. If these trade wars are not solved in the near future and we continue a decline of consumer confidence, how detrimental do you think this will be in the grand scheme of our economy?

https://www.wsj.com/articles/u-s-consumer-confidence-declined-in-november-11574782427

Two months on, tax rate hike leaves patchy impact on Japanese economy

The Japanese government has released some new economic indicators since the new tax hikes have decreased overall consumption in the Japanese GDP.  In order to stimulate the Japanese economy, aimed at increasing overall consumption, Aeon Retail Co. had a four-day sale similar to that of the U.S "Black Friday".  Overall retail has declined significantly since the Tax rate hike and as a result of this, the Japanese government will also enact fiscal policy to battle this, A new budget for 15 months to help support the economy starting in early December and will end in Late 2020.








https://www.sfchronicle.com/news/article/Two-months-on-tax-rate-hike-leaves-patchy-impact-14872802.php

German car industry reels as Daimler cuts 10,000 jobs

Mercedes-Benz owner Daimler announces that it will cut up to 10,000 jobs in the next 2 years. This is a reflection of the losses across the German car industry sector, with Audi also announcing job cuts close to 9500 by 2025. Primary reason cited for doing so is due to the cost of investing in electric vehicles. The EU has imposed strict carbon emission targets in order to climate change, which although much needed, pose these negative consequences. However, as an alternative, Daimler is willing to offer current employees reduced hours and voluntary redundancy packages for those nearing retirement. I think climate change is such an important issue today, however, this article raises a valid issue in combating climate change and shows the flip side of the coin. The government needs to bridge this gap and allow firms to cut back personnel costs so they can shift gears as well as making sure making sure those job cuts don't significantly affect the economy, perhaps creating jobs in another way. What do you think is a good solution?

https://www.ft.com/content/e2e7ddaa-129a-11ea-a225-db2f231cfeae

Consumer confidence dipped for a fourth straight month in November as economic conditions weaken towards the end of 2019. The Conference Board shows that confidence index dipped to 125.2 this month. That's down from 126.1 in October, which was expected to rise to 126.6. The present situation index also fell to 166.9 from 173.5 in November, which suggests that economic growth in the final quarter of 2019 will remain weak. Will the strong expections of the holiday season be able to maintain the economic growth and bring the last quarter to be strong in terms of consumer confidence?



https://www.cnbc.com/2019/11/26/us-consumer-confidence-for-november-comes-in-at-125point5-vs-126point6-estimate.html

Fed Officials cut rates

Once again the Fed cut interest rates this previous month marking the third time they have done this since July. The reason for the cut is their worries of weakness in manufacturing, trade, and business investment could threaten economic expansion. This seems to be quite a bit amount of cuts in such a short period of time, are their worries justified or do you think this will lead to a larger economic problem with all of these interest rate cuts?

https://www.wsj.com/articles/fed-officials-cut-rates-amid-worries-on-trade-global-growth-11574276730

US Housing Starts Rebound

Building permits are at their highest level that we have seen in over 12 years. This is very big news because even though the mortgage rates are still low, this points to strength in the housing market. There has been an increase in home completion and also, and increase in the stock of homes under construction. This is thanks to the feds monetary policy stances, we have seen as decrease in the mortgage rate. This is so important because the housing industry is one that relies heavily on interest rates. Residential investment has rebounded for six straight quarters which is the longest stretch since the recession. Do you think that this trend will continue along the path that it is going down?


https://www.cnbc.com/2019/11/19/us-housing-starts-total-1point314m-in-october-vs-1point320m-expected.html

US GDP rose a better-than-expected 1.9% in the third quarter as consumers continued to spend

US GDP was expected to slow down significantly in the third quarter. In the second quarter, the growth rate was at 2%, and for the third quarter it grew at an annualized rate of 1.9%. Many economists predicted that the growth rate was going to drop at a much larger rate than what it did. They expected third quarter growth to come down to about 1.6%. Economists are stating that the "better-than-expected" data was as a result of continued consumer spending as well as government expenditures. Many economists predict a recession and a dramatic slow down of the economy, the economy has continued to show the opposite. What are your opinions on the recession? Do you think it is bound to happen? Do you think it will be in the near future?

Tesla Gigafactory in China

https://www.cnn.com/2019/10/24/tech/tesla-gigafactory-china-europe/index.html

Tesla has put a gigafactory in China. The company claims that if all goes well, the company will triple its output. In addition,  Tesla is able to produce cars in China 65% cheaper than the US. In our conference last week we learned that cars are one of the biggest markets between US and China. But Ian mentioned that Tesla would likely only be able to sell cars to some wealthy people. How do you think tesla will perform?

Hikes in the cost of petrol are fuelling unrest in Iran

As the cost of gas is rising in Iran, the government has cracked down on citizen protests for stability.  Irans oil prices are heavily subsidized by the government and the recent 50% increase in price has been caused by a reduction in subsidized.  This has resulted in dramatic instability for its citizens as they cope to deal with cost increases.  Will the government cave to its citizens protests over keeping oil prices artificially low or will prices continue to rise for the Iranian citizens?



https://www.economist.com/middle-east-and-africa/2019/11/17/hikes-in-the-cost-of-petrol-are-fuelling-unrest-in-iran

Global Debt Increasing

Global debt has hit an all time high at $250 trillion in the first half of 2019. It is projected to reach $255 trillion by the end of the year. The first half of 2019 has generated $7.5 trillion. This increase in global debt is due to the borrowing in the U.S and China. In the article "Global Debt surged to a record $250 trillion in the first half of 2019, led by the US and China" by Spriha Srivastava said "China and the U.S. accounted for over 60% of the increase." With the global's debt increasing, it raises concern with investors. The increase in the global's debt might be detrimental to the stock market. 

https://www.cnbc.com/2019/11/15/global-debt-surged-to-a-record-250-trillion-in-the-first-half-of-2019-led-by-the-us-and-china.html

China Diversifying Reserves

In a response to trade tensions with the US, China has began to diversify it's investments of their currency. This move reduces their risk of being hurt by a financial decoupling, which would result in a decrease of investment return. China's decision to move investments to other countries shows that they are less reliant on the US economy, in hopes of gaining leverage on trade negotiations. Aside from this economic factor, I believe it is wise for China to move some of its investments elsewhere, as when investing it is smart to have diversification among investments.

https://www.cnbc.com/2019/11/18/china-diversifying-fx-reserves-assets-to-counter-us-dollar-exposure.html

Weekly Jobless Claims Fall More Than Expected

      The amount of people that are filling applications for unemployment claims have fell which is a very good thing for the workforce. This shows that the workforce is stronger and is growing more than analysts expected or forecasted it to be. The number dropped by a very large 8,000 applications that were filled out. It dropped by more than half of what was forecasted, this can also be due to the strong job market conditions. They also cut interest rates for a third time so that this strong growth in the economy would be supported. My question is, do you expect this number to keep on decreasing?


https://www.cnbc.com/2019/11/07/weekly-jobless-claims.html

Morgan Stanley says global growth should recover in 2020 as trade tensions

and monetary policy ease

Trade tensions and monetary policy are easing for the first time in seven quarters, but the US will experience slower growth as new emerging markets are driving much of the recovery from these tensions. Morgan Stanley claims that real GDP growth will slow from 2.3% in 2019 to 1.8% in 2020. Easing trade tensions will reduce business uncertainty and will ultimately make policy stimulus more effective. But this solely depends on the outcome of the trade war with China, also if Trump ends up implementing the next round of tariffs on December 15th then global growth in the final quarter of this year will slow to 2.8% and a recovery will be delayed until the third quarter of 2020. In 2020 the economy will also grow more slowly as the "bulk of the positive lift from lower interest rates will have been absorbed and households balance higher income with higher prices from tariffshttps://www.cnbc.com/2019/11/18/morgan-stanley-says-global-growth-should-recover-in-2020.html

China is building up its ‘shadow reserves’ to counter its reliance on the US dollar

China has been heavily invested in the US dollar but with the trade war no closer to a conclusion China is being forced to diversify. Until June of this year, China was the largest holder of US treasury's in the world but has recently been decreasing its holdings. Additionally, China is beginning to build up currency reserves in currencies other than the dollar and decreasing its exposure to the dollar. Over this same time period, China has also been buying more gold for its reserves.

China's "shadow reserves" refers to China building up its portfolio of alternative investments to further diversify risk. This includes investing in equities or other projects globally such as their belt road projects.

https://www.cnbc.com/2019/11/18/china-diversifying-fx-reserves-assets-to-counter-us-dollar-exposure.html

The US Economy May Not Grow At All in the 4th Quarter

Despite all-time stock market highs, GDP forecasting models are projecting 4th quarter growth levels between .3% and .4%. This is sobering and conflicting news to Trump stating that the economy is booming. The stock market high is an inflated number, as investors are emptying their pockets after recent news of trade agreements between the U.S and China. To me this is rather alarming considering that there will not likely be a trade agreement in the near future.

https://www.cnn.com/2019/11/15/economy/economy-gdp-fourth-quarter/index.html

Powell Confident In Future of US Economy

In his hearing in front of the Joint Economic Committee, Jerome Powell stated his confidence in our economy. He said that our economy is strong, pointing to our growth, consumption and the level of inflation. He went on to say that the negative interest rates that President Trump continues to push for are necessary for countries with low growth and high inflation, and that is not the case in the States. Overall, Powell was confident that despite many analysts are predicting a recession, the Fed's outlook expects the economy to continue to grow.

Weekly mortgage applications jump to highest level in over a month, as borrowers worry that lower rates may be over

Mortgage rates are increasing again due to an increase in mortgage application volume. This often happens when borrowers realize rates have hit bottom and rush to get in before they move higher. Total mortgage application rose 9.6% last week. Refinance demand, which is sensitive to small rate moves, increased 13% from the previous week and is 188% higher than a year ago. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 4.03% from 3.98%. With rates still in the 4% range refinance activity is expected to see moderate growth until the end of 2020.

https://www.cnbc.com/2019/11/13/weekly-mortgage-applications-jump-to-highest-level-in-over-a-month.html

CHINA-U.S TRADE WAR EFFECTS ON JAPAN

 After the Economic Outlook Conference, I asked a question about how much of an impact the U.S- China trade war especially relating to Japan. Japan's economy has been struggling especially in the 3rd quarter and the U.S-China trade war, its lowest all year. the U.S-China trade war has also affected Japan's imports and exports knocking .20 points of their GDP, also external markets that Japan has its investment and business in having increased in uncertainty due to the high tariffs and unfriendly U.S-China Relations continue to be put on edge. This is nothing too major but at the same time, its something to look at and how this trade war is affecting other large countries' economies.
https://www.japantimes.co.jp/news/2019/11/14/business/economy-business/japans-gdp-growth-one-year-low-u-s-china-trade-war-bites/

The Yield Curve is no longer inverted

A topic we discussed since the beginning of class, is the U.S. yield curve and its inversion. An inverted yield curve means we expect interest rates to fall in the future, and the yield on short-term(3 month) bonds gain more yield than long term(10-year) bonds. This causes businesses to park their assets in longer term investments, and reduces short term liquidity, As we know, Investment is more volatile than GDP, meaning its changes more rapidly.

An inverted yield curve can also be a sign of a looming recession, so its presence worried many economists and consumers for the future. However, now that the yield curve is no longer inverted, this can be good news for our economy and can indicate that we will continue our great economic expansion following the 2008 recession.

https://www.forbes.com/sites/bradmcmillan/2019/11/13/the-yield-curve-has-un-inverted-now-what/#2d363a8b3866

Japan grows at its slowest pace in a year

The third quarter of the year marks the slowest growth in Japan all year of a mere 0.2%, way below the expected growth of 0.8%. Although total growth was calculated to be 1.8%, 1.2% was subtracted after accounting for inventories. One of the major factors for this decline is due to a consumption tax implemented by the government in October, however, this slowdown is expected to affect the last quarter's growth too. During the Economic Outlook Conference, a student raised a question about the effect of US-China trade war on Japan, hurting the Japanese electronics, automobile and chemical industry. Paired with the consumption tax, the political background is only decreasing consumer and investor confidence in the economy resulting in even more of a slowdown. However, the Tokyo Olympics are just around the corner which is sure to give the economy a little boost.

https://www.ft.com/content/f2075cf4-0672-11ea-a984-fbbacad9e7dd

The U.S. economy may not grow at all in the 4th quarter

Recently, two Federal Reserve economic models forecasted dramatic declines in American GDP and economic growth. The first model, from the New York Fed, is predicting a fourth quarter GDP growth of 0.4%, and this is down from its initial forecast of 0.7%. The second model, from the Atlanta Fed, initially predicted a fourth quarter GDP growth of 1.0%, but this figure has also fallen significantly. Currently, the Atlanta Fed is forecasting a 0.3% growth in the fourth quarter. These economic figures fluctuate frequently, though, so an economic boost in late November and December could potentially lead to a better than expected economic and GDP growth. According to the article, the low economic forecasts are predominantly based on “negative surprises in recent economic reports” and “lukewarm consumer spending numbers.”

https://www.cnn.com/2019/11/15/economy/economy-gdp-fourth-quarter/index.html

Cancellation Phase of existing trade Tariffs between the US and China

The world's two largest economies seem to be coming towards the end of their trade war. A spokesperson for China’s Commerce Ministry said that both sides had agreed to simultaneously cancel some existing tariffs on one another’s goods. One of the important things to allow this to go through is for both countries to remove the same about of tariffs at the same time. These tariffs will also be removed in phases.
White House spokeswoman Stephanie Grisham said in an interview with Fox News that the Trump administration is “very optimistic” the two sides “will reach a deal soon.”
Economists, however, are skeptical and say a more comprehensive plan is needed to solve the problems and finally end the trade war.

https://www.cnbc.com/2019/11/07/china-says-it-has-agreed-with-the-us-to-cancel-existing-tariffs-in-different-phases.html

Economic Outlook Conference

IF you attended the economic outlook conference last night you understand we may be at a turning point in the economy. Ian Sheldon, who gave his outlook on the international economy, told us that we might as well be shooting ourselves in the foot with the tariffs we imposed on China as it is doing tremendous damage to our economy. I for one do not think we should be poking the economy with a workforce of over 1.4 billion people but should instead be actively negotiating with them. These tariffs could really come around to bite us in the butt especially if we are the only ones who experience an economic pullback in the coming years. I don't believe we will be the only ones because when the US hurts everyone hurts, but I do believe that China will have a bad taste in their mouths when it comes time to begin building our economy back up and that could be a trillion-dollar problem for us in the US.

What is your prediction on the outcome of this trade war?

https://www.cnbc.com/2019/11/05/china-presses-trump-to-remove-more-tariffs-in-phase-one-trade-deal.html

As the trade war presses on, there are uncertainties in the relationship between the two largest economies in the world. It continues to intensify and there have been significant repercussions. Negotiations are approaching a "phase 1" in which China is pressing President Trump to remove roughly 15% of tariffs imposed on $125 billion worth of Chinese goods. They also seek to relief from 25% tariffs placed on $250 billion of imports from machinery and semiconductors to furniture. Chinas economy has taken quite an impact from these tariffs and are attempting to have much of them removed to provide them with some economic relief since they rely so heavily on global trade. With additional tariffs on about $156 billion worth of Chinese imports scheduled to be put in place mid-December, China may want to find ways to incentivize the President Trump not to do so. Major reasons the U.S. jumped into this trade war were to get China to curb massive subsidies of state-owned firms and to end the forced transfer of American technology to Chinese firms simply as a price of doing business with them. China has not done so over the period of the trade war, so it does not seem that the U.S. will have much reason to back off on the tariff stronghold. Though it would be beneficial for both countries if a trade deal was arranged, neither country seems to be budging.
Which economy do you think has taken more of a hit, China or the U.S.?

Big companies feel the sting of Trump's trade war. But small businesses are in agony

With the 25% Chinese tariffs on the horizon, the anticipated outlook could have a large effect on small businesses that import or manufacture much of their product from China. Larger companies will still be affected, clearly, but with a much greater portfolio size come significantly less repercussions. Many small businesses today rely solely on Chinese exports. One disadvantage for smaller businesses is that it's very difficult to shift product sourcing to another country due to their limited resources available. Another complication is if their product were to suddenly cost them 25% more eating those costs are much harder for smaller businesses than larger ones. Raising prices for many of these smaller businesses may be out of the question as well. If you have to raise your prices by 25% it may push you well out of the range for what consumers are willing to pay.

https://www.cnn.com/2019/09/04/success/small-business-china-us-trade-war/index.html

Rising Yields Quiet Bond Market’s Key Recession Alarm

The ongoing trade war with China has caused numerous economists to panic over where the global economy is going. This article addresses a rarely seen positive outlook, keying in on the yield of treasuring bonds. The past few weeks there was a prediction of a recession because in the month of May there was an inverted yield curve, which makes short term investment more profitable then long term. This has since corrected itself, finally providing a positive sign. How important do you think that this really is? Also, does this help put to rest the idea that a recession is coming?

https://thesunbest.com/rising-yields-quiet-bond-markets-key-recession-alarm/

Elizabeth Warren's New Tax Proposals

article: https://www.nytimes.com/2019/11/10/business/economy/warren-billionaires-wealth-tax.html


Elizabeth Warren's new tax proposals are probably the single largest proposed tax hike on the mega wealthy in American history, or at the least since Reagan's tax cuts in the 80s. She plans to raise taxes on America's one percent, thereby increasing government revenue from taxes by a significant margin. The hope is that this will help hold the mega wealthy accountable for their fair share of taxes, and work on the growing income inequality in the United States. Naturally, this tax plan has a lot of opponents. Many of the opponents argue that this will limit growth, however Warren argues that by making the billionaires pay out some of their savings towards taxes it will actually make money circulate through the economy more. What do you think the affect of this tax plan will have on the economy?

Why a Slowdown in Manufacturing Matters to the US

The manufacturing sector has long been the lifeblood of the US economy.
In recent times, however, that's not the case as the US is not as dependent on manufacturing as it once was. This doesn't mean it's not important. If the sector sees drops it will affect the local towns and cities where these manufacturing industries are located.
The US now has the provision of services as it's the main driver. Economists make it known that as a country becomes richer, people spend less on goods and more on services.
Manufacturing, however, is still a very important part of the US economy as it contributes about 1/3 of total GDP. Even though manufacturing is not a huge share of the U.S. economy, it "punches higher than its weight in the economic cycle because there are so many other parts of the economy that are linked to it," Williamson, with IHS Markit, said.



https://www.google.com/amp/s/www.pbs.org/newshour/amp/economy/making-sense/why-a-slowdown-in-manufacturing-matters-for-the-u-s-economy

Xerox May Takeover HP For A Possible $27 Bn

WSJ Article

In a bold move for two fading tech companies, Xerox seeks to claim the computer and printer manufacturer HP for an estimated 27 billion dollars. Xerox is approximately one third the size of HP, at around $8 bn market value. They are set to discuss matters on Tuesday. This comes as both companies are in "cost-cutting mode," with HP recently announcing that it would be cutting around 9,000 jobs by 2022. These two companies used to be much more househod names, but have failed to keep up with the new digital pace set forth by new cloud storage companies, especially hurting Xerox. I'm not sure this is a very good move for them, as they show no real sign of technological breakthroughs, and this is what as already been hurting them. We shall see how they get on.

The US Collected $7 Billion in Tariffs in September

New data released by Trade Partnership, an economic consulting firm, tariff revenues reached a record of $7 billion in September, as new tariffs were introduced to apparel, electronics and other consumer good from China. This has been putting immense pressure on American businesses that import Chinese products - and their customers. While tariff collections have increased, so have trade-war related expenses. To help mitigate the losses to U.S. agricultural exporters, who have suffered from international tariff retaliation, the Agriculture Department has authorized $28 billion in payouts to farmers.

What do you think this tariff revenue will be used for? How big of an economic impact will removing tariffs have?

Iran to Inject Uranium gas into 1044 Centrifuges in Defiance of the 2015 Nuclear Deal

AP Article

 In a fortified mountain facility, Iran will begin injecting Uranium gas into its Fordo site, Iran's State Department also declared that it would renew a waiver to allow Rosatom, a Russian state-run nuclear company, to continue conversion work at this facility. This will increase pressure on European nations that remain in this accord to let Iran sell crude oil abroad. If not, President Hassan Rouhani announced that Iran will pull out of the deal further in early January 2020. This mostly comes in response to France's failure to make good on its proposed $15 billion line of credit trade mechanism, but Rouhani said that Iran's breaches of the agreement could be reversed if Europe allows Iran to avoid U.S. sanctions on crude oil sales abroad. Seems fair to me! What do you think?

US services companies growth rebounds in October

This past Tuesday, the Institute of Supply Management reported that its service index reached  54.7% over this past month,  higher then September's 52.6%.  They also reported that measure of sales, new orders and employment all rebounded from last month.  Being that service sector,  more then 2/3 of the U.S economy, grew this past month, it makes October the 117 month of straight growth. That being said, many employers are claiming that they are having difficulty finding workers due to the low unemployment rate of 3.6%. Im curious if we will  continue to see growth in the service sector  in the near future even though the trade war has created friction for both economies.

Apple Commits $2.5 Billion to Ease California Housing Crunch

Monday, Apple announced a $2.5 Billion plan to address the housing crisis in California. They are the latest big tech company to devote money to a problem the economist and lawmakers believe it helped to create. Apple plans to invest $1 Billion affordable housing and plans another $1 Billion to buy mortgages. Apple also intends to make a 40-acre, $300 million dollar property in San Jose available for new affordable housing. Apple's housing plan is a response to the increasing pressure Silicon Valley's tech giants are under to play a more active role in the region's housing crisis. Local tech companies big and small have boomed, they have flooded the region with hundreds of thousands of highly paid employees, but the supply of housing has failed to keep pace.

Amazon is responsible for most Big Tech job growth since 2000

https://www.cnbc.com/2019/11/04/how-many-jobs-have-amazon-google-and-apple-created-since-2000.html


The five largest tech firms, Apple, Microsoft, Amazon, Alphabet, and Facebook have given jobs to over 1 million people since 2000. Alphabet, who is Google's parent company has grown the most out of the five firms,  with an employee number in 2018 that was 347 times what it was in 2001. Out of the firms, Amazon has created the most jobs but they are also the only company that counts its part time employees into their head count. Although these companies have created over a million jobs they have also displaced entire industries and contributed to job losses as well. With the growing tech industry I'm interested to see how these companies will continue to affect job growth in the U.S.

Here's What the Federal Reserve Really Thinks About the Economy

https://www.politico.com/news/2019/10/30/federal-reserve-powell-economy-062539

The Fed recently ct interest rates again and say they have no intentions of doing it again. Trump has called for interest rates to go to zero so that the economy will experience a boost going into reelection. Powell claimed that a new trade deal with China will certainly help the economy speed back up, which would be good for Trump. But for the moment it appears as if the rates will be in a pause until some more information comes out on future expectations.  Do you think we should push interest rates to zero? I think that it would be a wildly aggressive move and it would only force a recession sooner rather than later.

HSBC faces challenges, Europe stocks slump

As Europe's largest lender, HSBC plays a crucial role in financial markets. Recently, their profits fell by 12%, key targets were missed, and stocks plummeted. A fair share of the turmoil and revenue problems come from the Asian markets, especially in light of the political protests in Hong Kong. Most of their money is made in the Greater China region and they are exposed to the problems in the region, which are currently centered around the protests. Hong Kong in particular is a key driver in revenue. Their shares were down by 2.1%. Some of the measures being considered are exit stock trading in some of the Western markets, selling their french retail bank. The political situation is projected to worsen in Hong Kong and HSBC needs to take steps to to protect their profits and credit having such deep ties economically to the financial markets there.

In the United States there has been a lot of push to raise minimum wage within the country. The latest case is the airport and hotel industry as they have pushed to increase their minimum wage to $20. With all of these industries pushing for an increase in wage, will we get to the point where prices for goods will just raise and we will be back in the same place we are now?

https://www.nytimes.com/2019/11/03/business/economy/minimum-wage.html

The Fed Cutting The Interest Rates

 With a potential recession on it's way the Federal Reserve decided to cut interest rates, in an effort to sustain a record-long economic expansion. This would not the first time the Fed have cut interest rates this year. In fact the Fed have lowered interest rates three times this year, which is absurd and frighting. This can cause inflation to increase, and decrease the interest rate of CD's. The economy might be continue to thrive after this decision, but for how long and at what cost?

https://www.reuters.com/article/us-usa-fed/fed-cuts-interest-rates-signals-holding-pattern-for-now-idUSKBN1W32H7
 

U.S. Economy Third Quarter Growth

During the third quarter of 2019, the U.S. economy grew at its lowest rate this year. This is likely attributed to the major trade uncertainty with China and lack of global growth. Consumer growth stayed relatively stable, and there was also arise in residential investment. Still, there has been a major decline in business investment, which is the most volatile part of GDP. Further, spending on factories and offices decreased by 15.3 percent. There was a strike at General Motor  for six weeks during the third quarter which halted production. Even so, the Fed expects the now lower interest rates to help encourage business investment in the fourth quarter.

https://www.nytimes.com/2019/10/30/business/economy/us-gdp-growth.html

Student Loan a small boost to the economy

Student debt has ballooned to about $1.5 trillion when it stood at $363 billion in 2005. This has lead to a number of politicians looking at ways to reduce this debt and if possible, cancel all the debt. But it's not an easy solution. It won't be fair to everyone since someone might have studied a different program if they knew their debt would be waived off. There are questions to be answered like who deserves to have their debt waived? What percentage of debt should be waived for people from high-income homes? Should the debts be waived?

If these debts are waived, it is estimated to bring in about $86 billion -$108 billion over a 10 year period. 

The benefits of the waiver could help families spend these monies elsewhere in things they would most need. It could also be capital to start a new business which would employ people in future, further growing the GDP

https://www.cnbc.com/2019/11/01/wiping-out-student-debt-would-be-small-boost-to-economy-moodys-says.html

Once Again the Fed is Cutting Rates

Late last week Jerome Powell and his colleagues on the FOMC Board of Governors decided to continue down the path of cutting interest rates as external factors continue to threaten the strength of the US economy. The ongoing trade war with China, as well as the overall weakening of the global economy are at the forefront again as the Fed decided to lower the benchmark FFR rate from 1.75% to 1.5%. This decision also follows the latest data that shows US economic growth slowed to an annual rate of 1.9%. Powell stated that, pending any sharp downturn in the economy, he doesn't expect to cut rates any lower.

Do you think this was a wise decision by the Federal Reserve?

CEO of biggest US mall owner says retail industry is ‘reaching the bottom’ of bankruptcies

CEO of Simon Property Group says they are nearing the bottom of a wave of bankruptcies. They were in a similar situation in 2017 so they feel confident they know what they need to do to get back on track. Shares were down 3.5% as of Wednesday falling about 12% this year. So far in 2019 U.S. retailers have announced 8,993 store closings and only 3,780 store openings and are estimating a record of about 12,000 closings by the end of the year. The CEO also announced recent investment in online shopping site Rue La La which will help Simon run a website for its outlet centers. Simon also reported that sales per square foot were up 4.5% from a year ago and total occupancy 94.7% was down from 95.5% a year ago.

https://www.cnbc.com/2019/10/30/simon-property-ceo-says-reaching-the-bottom-of-retail-bankruptcies.html

Consumption Continues to Rise

Consumers have continued to help prop up economic growth as US household spending increased going into the 4th quarter. This is helping to offset the decline in manufacturing and business investment, however, they are spending at a lesser pace than what they were a year ago. It is thought that consumption, muted inflation, and modest labor costs are the reasons that point to a slowing but still expanding economy.

Saudia Arabia Announces IPO of World's Most Profitable Company.

As of today, Saudi Aramco, the largest oil producer in Saudi Arabia, announced that they plan on releasing an IPO by early December. Due to their profitability and sheer size, this is a very impactful event for investing. Analysts have the value of Aramco between 1.5 and 2 trillion dollars. For a little perspective, selling even 1% of Aramco stock could be worth up to 15 billion dollars. The main issue they are having, however, is that they are finding it hard to get listed in New York or London because of heavy environmental concern. Do you think Aramco should be publicly traded, or no because we should be investing our money in cleaner energy?

https://www.cnn.com/2019/11/03/investing/saudi-aramco-ipo/index.html

U.S. Consumer Confidence Dips in October, Misses Expectations

    In October U.S. consumer confidence saw a slight dip compared to months previous. This caught a lot of people off guard because the Dow Jones expected approximately a 2% increase in consumer confidence but saw a half percent decrease to 125.9. This is the lowest that consumer confidence has been since June when it was 124.3. It was said that the consumers are worried about the future job prospects and future business conditions but weren't necessarily worried about the current state of business conditions. This decrease hasn't seemed to cause any distress because consumer confidence is still at a very high level. What do you think that this shows for the future levels of consumer confidence?


https://www.cnbc.com/2019/10/29/us-consumer-confidence-for-october-comes-in-at-125point9-vs-128-expected.html

It’s getting to be the best time of year for stocks, and the Dow could soon set a new high

The S&P 500 & Nasdaq both traded at record highs this past week because of better economic news, a better-than-expected earnings season, and hopes that trade talks will soon resolve the trade war with China. Many analysts are saying that stocks could keep setting record highs because of these trade talks with China. November is usually a good month for stocks, but December is the number one month. 76% of companies also beat expected earnings, which was definitely a main catalyst for the performance of the stock market. What is your take on this? Do you think these analysts are correct?https://www.cnbc.com/2019/11/01/the-dow-could-soon-join-other-benchmarks-at-a-record-as-strong-november-seasonality-kicks-in.html

Protest's effect on Honk Kong GDP

The protests in Hong Kong have have now cause 2 consecutive quarters of GDP growth with the 3rd quarter dropping 3.2% alone.  This is a dramatic shift for the Hong Kong economy and the local government has described the recessions effect on the city as devastating.  The slow down in growth has mainly been attributed to the on going protests for democratic freedoms that has been raging in the city for months.  City leaders fear that the recession will only worsen as protests continue. Vacancy rates in hotels in the city are above 60% and the tourist industry, a huge economic driver for the city, has been crushed.




https://www.bbc.com/news/business-50204696

The Push to Raise Minimum Wage

The fight for increased wage rates has been brought to employers by labor unions and community groups. After a successful effort, the minimum wage for affected workers have seen change. In Oakland, the minimum payment for hotel workers has been increased to $20, an effect from the strategies of these groups. The fight for increased wages was to keep up with rising prices in housing costs, in an effort to prevent workers from being evicted from their homes. Though union participation in the workforce has been decreasing, their impact is still significant in the job market. Will this rise in wage for this particular group cause relayed effects in other departments? Will we see a significant rise in participation within labor unions?

Push to Raise Minimum Wage Goes Local, at Airports and Hotels

The economy is in good shape, but two big clouds hang over it.

The U.S. economy is in good shape. Is this in favor of the middle, working classes and the poor? According to this article, the two big clouds hanging over the U.S. economic future are wealth and income inequality and raising the economy’s potential for growth through accelerating productivity.  Even though the unemployment rate is very low, but many of those counted as "employed" are "employed" in jobs that pay relatively little with few or no benefits,  little or no job security for fewer than the customary number of weekly hours.

5 million children to get face masks as New Delhi battles heavy pollution

New Delhi is suffering from such severe smog that the government is considering extreme measures such as shutting down schools, stopping construction work, banning trucks from the city, and imposing a rule whereby cars with odd and even number plates can only drive on alternate days. Anything above a 100 on the Air Quality Index is considered unhealthy, New Delhi's AQI is a sky rocketing high of 336. With Delhi as the capital of India, this has huge economic repercussions. A 2006 study reported that cars contributed to 72% of New Delhi's air pollution, so the government's plan to limit car usage may be effective, the question is if its practical? It could decrease output of businesses, and may cause a burden on a public transport system that is already stretched out thin. Moreover, just today, 37 flights were cancelled due to low visibility which causes further inefficiencies. This problem is not unique to New Delhi, Lahore, a city in Pakistan faces the same issue. Are the solutions posed by the government practical? 

https://edition.cnn.com/2019/11/01/asia/delhi-pollution-schools-intl-hnk/

US-CHINA TRADE WAR SEEMS TO HAVE NO END

Over the past couple of months, China and the U.S have been involved in an ongoing trade war between the two countries, Politics and Culture between these two countries have made negotiating even more difficult. "As far as substantial trade breakthroughs, on thorny issues like intellectual property and opening up the Chinese financial system to US banks - I don't think that will happen, in what's left of Trump's first term or in a second term if he wins one.,” “Without an election to win in 2024, I doubt that the president would even care to make it a priority of his administration.” 
This may never happen as it requires the intellectual property to be a public good and therefore tradable and exchangeable in banking systems. Opening banks in the U.S would solve this issue of trade but would put China at risk of a banking crisis similar to What their East Asian neighbor Japan experienced in the 1990s. Overall discussion may lead to a final conclusion if both markets have serious problems making the this possible in times of desperate impossibility of balancing the markets and recovering massive crashes in stocks and increases in trade deficits, only then in times of desperation will they settle on a deal to end the trade war.

https://www.forbes.com/sites/panosmourdoukoutas/2019/11/03/us-china-trade-war-will-never-end/#448c63ee6f58

The Fed is still cutting rates

It seems like we have become a broken record on this blog now as this is the third time the Fed has decided to cut rates since we started this class. So I am still a strong believer that we are using our safety net WAY before we actually need it and Trump is at fault for part of this. The reason the Fed is not associated with the government is that there shouldn't be any political pressure for decisions. Trump has done nothing but tells Powell and companions what a terrible job they are doing for not cutting rates harder and not cutting them earlier when realistically, cutting rates this early is using up one of our safety nets before we actually need it. This could all blow up right before the election next year or it is going to become a massive problem for Trump after he uses the strong economy to get re-elected (implying that he does get re-elected). If Trump and his staff are able to continue such growth then this will truly go down as the best economic presidency in the history of this country.

https://www.cnbc.com/2019/10/31/trump-rails-against-powell-day-after-fed-cuts-rates-for-a-third-time-this-year.html

Third-quarter economic growth is expected to be a tepid 1.6%, but markets could look past it

The article states that third quarter growth is expected to slow down to 1.6%. One of the biggest hits is coming from a slow down in business investment. We have discussed in class how a slight dip in investment can drive the economy into a recession. I have voiced my belief that economists who are insistent that there is a recession coming are a large problem. If the people who we see as experts are insisting that there is a recession coming, then consumers and investors are not going to invest. This will cause a huge decrease in the investment section of GDP, which could also be a large reason as to why our growth rate is expected to decrease.
Even thought the growth rate is decreasing, this does not mean that the US is in a recession currently or there is going to be a recession. The growth rate can slow down and then stay constant as well. I hope the markets are able to "look past the weak report" as the article says.

Job Gains Help Extend U.S. Economic Growth

The U.S. economy has cooled but continues to expand with employers hiring, consumers spending and growth stabilizing. Employment grew by a seasonally adjusted 128,000 jobs in October, the Labor Department reported Friday, a solid performance considering a strike at GM plants and a decline in the federal workforce temporarily reduced payrolls by more than 50,000. The unemployment rate increased up from a 50-year low to 3.6% in October as hundreds of thousands of Americans joined the labor force. Wage growth remained steady, up 3% from a year earlier. Job growth remains strong in areas of the economy that serve U.S. consumers and are generally protected from global trends and trade disputes. Health care and social services added 34,200 jobs in October, business services added 22,000, and hospitality, including restaurants, added 61,000. The number of Americans working or searching for work has also increased and rose last month to the highest level since August 2013.

https://www.wsj.com/articles/u-s-payrolls-grew-by-128-000-in-october-despite-the-gm-strike-11572611632

Climate change will break the housing market, says David Burt, who predicted the 2008 financial crisis

David Burt claims that the changing climate will have significant adverse effects on the housing market in a similar manner to 2008 but much worse. Between 60 and 100 billion dollars worth of mortgages are issued every year for coastal homes. Much of the real estate in these coastal areas are mispriced as the risks are not fully realized. Within the next three decades, the Union of Concerned Scientists estimates that at least 311,000 homes will be at risk for flooding or total destruction due to rising sea levels. Additionally, since 2006 flood insurance policies have been decreasing.

David Burt states that "There’s a lot of parallels, it’s a big real estate mispricing issue. At its core that presents a lot of the same risks. A lot of real estate is massively overpriced and there’s a lot of risk associated with that and the big risk is another foreclosure crisis. Now, it’s a very different dynamic that’s creating the mispricing, but actually magnitude-wise it looks pretty similar, maybe even bigger."

What other sectors of the US economy may be faced with issues resulting from climate change?


https://www.marketwatch.com/story/climate-change-will-break-the-housing-market-says-david-burt-who-predicted-the-2008-financial-crisis-2019-11-01?mod=home-page

US Adds 128k Jobs in October

CNBC Article

Payrolls rose by 128k this October exceeding the expected 75k predicted by economists. Previous months also saw re-estimation that brought up their numbers. The unemployment rate did increase by 0.1%, from 3.5% to 3.6%. Hourly wage also rose by 0.1% to a 3% gain year-over-year. This comes in contrast with the 42k jobs lost in the automobile industry due to the GM strike that has since been settled. The losses here are also less than what economists expected, which was 50k. The unemployment rate still is at around the lowest in 50 years. These figures imply that the US economy is holding strong and steady and is set to reassure some of those with doubts on future economic growth, understandable in the face of the US-China trade war still looming. Also, those new estimates for previous months increased jobs gained by 96k. This information all supports Fed officials assessments that the US economy is yet to head to recession.

The GOP Tax Cut Didn’t Work

The tax cuts instituted by the Trump administration in 2017 were designed with the ultimate goal of growing the economy by up to 6% and stimulating business investment. However, these economic policies have failed to achieve their goal of sustained economic growth. These failed economic policies can be seen in the American economy today. The primary goal of these policies was to create sustained economic growth by encouraging business investment. However, business investment has declined for two straight quarters, and this has led to an average GDP growth of two percent. Also, according to the article, the ISM index, a key measure for the health of the U.S. manufacturing sector, “registered its lowest number in ten years.” 

https://www.theatlantic.com/ideas/archive/2019/10/why-donald-trumps-economic-dream-crumbled/601153/ 

U.S. Consumer Confidence

US Consumer Confidence Consumer confidence in America continues to fall short of expectations. It has fallen for the third straight month as the trade war continues between the U.S. and China. Lynn Franco, director of economic indicators of the Conference Board, claims that consumers feel good about present economic conditions but have "expressed some concerns about business conditions and job prospects" with expectations about the future. Though consumer confidence has lowered, especially in October, experts still believe that the upcoming holiday spending will not be curtailed. If this holds true, what kind of impacts could high consumer spending in the near months do for the economy?

Apple is laying the groundwork for an iPhone subscription

This past week Tim Cook, the CEO of Apple, was asked questions about the idea of a prime subscription. He answered that question by stating that they are aware that there are a lot of users out there who have wanted this type of payment system. He also stated that Apple views this transition as a major growth area. If Apple switched to a subscription payment method, consumers would then have to pay for their iPhones and other technology on a monthly basis. Im curious to see if we will see any other news about this in the near future.

Fiat-Chrysler and Peugeot set to merge in $50 bn total value deal

BBC Article

Though discussions are still in the early stages and there are still no guarantees of a deal, such a merge of the two groups would create the fourth largest manufacturer in the automobile industry. As car makers are looking to have to make huge investments to edge into the electrical market, especially as emission reduction regulations tighten, merging to increase economies of scale seems to be quite a viable and sound decision for these companies.This merger proposal comes only months after Fiat-Chrysler withdraws its bid for Renault. It will be interesting to see if the deal goes through, and if so, the ramifications on the auto industry, especially for technological innovation.

Trade War Cutting Global Growth?

Recently the IMF stated that they believe that the United States and China trade war will cut the global growth to its slowest pace since 2008. It does seem that if this trade war remains unresolved, the global growth could get even worse. The United States and China are the two largest economies in the world, do we owe it to the rest of the world to resolve this mess? Also, how would we go about resolving this to where it is beneficial for both us and China. Lastly, do you believe that the United States and China will ever be able to go back to the way it was before this?

https://www.cnbc.com/2019/10/15/imf-says-trade-war-will-cut-global-growth-to-lowest-since-financial-crisis-a-decade-ago.html

Reduction in Unemployment

Donald Trump has claimed the USA economy is the greatest it's ever been l, saying it's "perhaps the greatest economy we've had in the history of our country".

Now while this is a bold claim, he is not too far from the truth. The economy is doing well. However, there have been multiple times throughout the history of the country where statistics show otherwise. 

The tensions between the second-largest economy in China have forced the Federal Reserve to lower interest rates which in turn leading to more investments 

One of Trump's biggest achievements is the reduction of the unemployment percentage. This rate is at its lowest for half a century; since 1969, which is 3.7%.

Wages on average has also gone up slightly. It reached 3.4% in February and has marginally come down to 3.23%.

However, it is important to note that when taking inflation into account, between the period of August 2018- August 2019, wages stand at 1.5%

https://www.google.com/amp/s/www.bbc.com/news/amp/world-45827430

Ohio Opioid Settlements Amount to Roughly $260 Million

NPR Article

Four drug companies settled with Summit and Cuyahoga counties to avoid a landmark case for liabilities in the opioid crisis, what would have been the first of federal court cases for thousands of similar opioid cases across the country. Distributors Amerisource Bergen, Cardinal Health, and McKesson pledged $215 million; manufacturer Teva pharmaceuticals will pay $20 million in cash and another $25 million in addiction and overdose treatment medication. This accountability for the medical and pharma sectors will have wide reaching implications over the entire US health field, and we shall see how similar cases will play out in the future.

More store closings coming: An estimated 12,000 shops could close by the end of 2019

This article keeps a list of the number of locations that retail stores have closed this year alone. The article attributes the numbers to the high tariffs that have been imposed by the US and Chinese governments. The author also talks about how there is also a need to consider that many stores are closing because of the e-commerce boom that has been happening and that will continue to happen for the foreseeable future. Where are all of these jobs going to go? Along with that what will happen to all of the empty stores that were previously occupied?

Link to article: https://www.usatoday.com/story/money/2019/07/03/2019-store-closings-list-these-retailers-shuttering-locations/1597997001/

Unexpected Decreases in Retail Sales

Retail sales decreasing is a sign on what to expect in the U.S economy. Consumption is a Huge piece of U.S GDP. If consumption begins to decrease, the chances of a recession is happening is high. Economist expected retail sales to increase by 0.2% in the month of September, but instead retail sales dropped 0.3%. In the article it mentioned auto sales and service stations dropping in September. They said "Auto sales fell 0.9% in September, the most in eight months, while receipts at service stations fell 0.7% in what likely reflects cheaper gasoline.." This shows if auto sales are effected, will also affect service stations. September is the first month in seven, where retail sales have dropped. Be attentive, because there looks like a recession is coming soon than later.  

US Housing starts fall from 12-year high

U.S. home building dropped from more than a 12-year high in September but single family home construction rose for a 4th straight month. This suggests that the housing market remains supported by lower mortgage rates as the economy is slowing. Housing starts declined to 9.4% to a annual rate of 1.256 million units last month. Now economist have forecast housing starts to decrease at a pace of 1.320 million units in September. Though housing did rise by 1.6% on a year-on-year basis in September. The housing market has perked up in recent months due to the Federal Reserve's monetary policy easing, which has pushed down mortgage rates from multi-year highs.

Homebuilder confidence surges to highest level in nearly two years, thanks to lower mortgage rates

Builder construction confidence in the single family market is up 3 points to 70 according to the National Association of The Home Builders/Wells Fargo Housing Market Index. The Index is composed of three parts current sales conditions, sales expectations, and buyer traffic. Current sales conditions is up 3 to 78, sales expectations is up 6 to 76, and buyer traffic is up 4 to 54 in the month of October. Anything around or above 50 is considered positive sentiment. The incline that began in the spring was supported by low mortgage rates and job growth but concerns about the economy slowing and the housing supply levels being low keep single family construction confidence from growing too rapidly.

https://www.cnbc.com/2019/10/16/homebuilder-confidence-surges-to-highest-in-nearly-two-years.html

2019 Nobel Prize in Economics

This past week, the Nobel prize in Economics was given to Abhijit Banerejee, Esther Duflo, and Michael Kremer. This honored was bestowed onto them due to their work attempting to explain poverty in other countries. They did this by stepping away from the big picture, and instead asked littles ones. They split the reasons for poverty into smaller sections and really tried to understand the root cause of this so they could make a bigger change. Their experiments reveal that the gap in productivity between the most and least efficient producers is much wider in developing economies than in advanced ones. While they have made significant progress, global poverty still remains. 

Now I ask, what do you think are some of the main causes of poverty and why are countries still struggling in 2019? And more importantly, can we ever erase poverty completely or are some always doomed to be "poor"?

https://www.economist.com/finance-and-economics/2019/10/17/a-nobel-economics-prize-goes-to-pioneers-in-understanding-poverty

EU Leaders Endorse Most Recent Brexit Deal

BBC Article

The latest Brexit deal headed to the UK House of Commons in a special session has received a unanimous endorsement from EU leaders, a rather surprising (to me) development. On the contrary, the session held on Saturday was much more divided, with DUP leaders promising to "vote (Boris) Johnson down", encouraging Conservatives to follow suit. Britain was set to leave on the 31st of this month, but another request for postponement came from Britain, which is in hopefully rejected, from my point of view.

Ceasefire in Northern Syria Due to Heavy Economic Sanctions on Turkey

Reuters Article

After five hours of negotiations with President Erdogan of Turkey on Friday, Turkish forces have stalled, allowing the Kurdish fighters time to retreat. This response by Turkey can be mostly credited to the very strong economic sanctions that President Trump warned Turkey of after pulling troops out of Syria earlier this month (a heavily scrutinized move). A classic example of using trade to force another country's hand.

Here’s where the jobs are — in one chart

In September of this year the winner for most jobs added is the education and health industry with 40,000 new jobs. The big loser was the retail industry with a loss of 11,400. Since reaching a peak in January 2017, retail trade has lost 197,000 jobs. This is unsurprising considering how market places such as Amazon have put a huge dent in the traditional retail industry. Wages increased on a slower pace than August. Unemployment fell to a new 50 year low of 3.5% showing that even with a possible recession upcoming the market is still going strong.

https://www.cnbc.com/2019/10/04/heres-where-the-jobs-are-for-september-2019-in-one-chart.html

"US in one bad recession away from zero rates"

A long term White House economic advisory has predicted little change in fed rates unless major policy changes are enacted.  He warns that if a recession comes in the near future the US will follow the European central banks and Japan into negative interest rates.   While the Fed has stated it wont consider negative rates in the near future president Trump has been outspoken in wanting negative interest rates in the US.  How do you think negative interest rates would effect the economy?  Should they even be considered?





https://www.cnbc.com/2019/10/14/larry-summers-economy-one-bad-recession-away-from-zero-rates.html

Fed Votes to Lighten Regulations for All but the Largest Banks

Federal Reserve Board members voted on Thursday to adjust key bank regulations put in place after the financial crisis, enacting a series of changed that one board governor, Lael Brainard, warned could weaken "core safeguards". 

Regulators are trying rules more closely to bank size, reducing the necessary level of cash and government bond stockpiles at all but the largest and most complex institutions. Affected banks will also be allowed to submit "living wills"- documents detailing how a bank would wind itself down in the event of failure, less frequently. 

Banks with $250 billion to $700 in total assets, including firms like Capital One and PNC Financial, will now have to submit a resolution plan every three years, alternating between full and partial filings. They are currently required to submit a full report annually, though in practice they have usually received extensions because the process is so complex. Foreign banks with operations in the United States, including Deutsche Bank, Barclays and HSBC, will be allowed to file less often. 

Requirements for the largest and most globally important banks went mostly unchanged in the rules the board approved on Thursday, though the package does formalize a longer cycle for living wills for such banks. They are now required to submit every two years, alternating between partial and full plans, bringing actual regulation in line with current practice. 

Will these changes together amount to a substantial weakening of post-crisis regulations, and lead to the system being vulnerable to future shocks?  


https://www.nytimes.com/2019/10/10/business/economy/federal-reserve-bank-regulations.html

Recession to occur if US and Europe begin Trade War

The World Trade Organization voted to allow the United States to begin heavily taxing European products shipped to the US in response to findings of illegal government subsidies which Europe has been granting their governments for years. The US plans to implement $7.5 billion worth of tariffs on European goods beginning October 18th, and Europe has threatened to tax $20 billion of US goods in response. Europe has attempted to settle this dispute without bringing additional tariffs upon goods, but that has been unsuccessful thus far. With the US engaging in large scale trade wars now with both China and the European Union, a recession which appears to be looming is only being encouraged to arrive sooner than expected. Not that the EU should be let off for breaking the trade guidelines, but a trade war would appear to  not be the best way to address this situation.

https://www.cnbc.com/2019/10/16/useu-trade-war-puts-world-straight-into-a-recession-itc-chief-says.html

The NBA-China Crisis Shows that the Business of American Business is Busines

Early this month a National Basketball Association (NBA) Franchise General Manager, Daryl Morey, sent out a tweet siding with and displaying his support for the Hon Kong protestors, those who are demanding several civil rights protections from their own communist government. The Chinese government obviously did not take kindly to this, and immediately Chinese companies were quick to suspend any partnerships and agreements with the NBA, even barring games from appearing on television in the country, putting the multi-billion dollar relationship in jeopardy. The NBA's progressive civil-right issue reputation was then tarnished as stars, such as LeBron James, and executives condemned Morey's tweet and clearly sided with China in hopes to salvage their financial relationship.

It clearly seems that the NBA and other American businesses progressive human rights stances mean nothing when millions of dollars and licensing agreements are on the line.

Do you think it is ethical for American business to put financial gain over their own values when it comes to doing business with China?

https://www.theatlantic.com/ideas/archive/2019/10/nba-china-disaster-stress-test-capitalism/599947/