Tesla added to the S&P 500

Tesla has recently been added to the S&P 500 which is huge for them! For those of you who don't know, the S&P 500 is an index that contains the top 500 publicly traded companies in the stock market. After Tesla was officially added, their stock price has been pumped up to all time highs ($500 per share). Tesla is one of my personal favorite companies because I believe like many others that they are in their infancy. The electric vehicle market demand has the potential to 10x over the next 5-10 years. One reason this will happen is the increasing threat of climate change. Everyday, climate change is getting worse and we are seeing more  civil unrest. Electric vehicles are scientifically proven to be safer on the environment and this will give all electric vehicles a competitive advantage over gas powered vehicles. On top of this, Tesla is also involved in the energy industry which I believe is being slept on by investors. The CEO of Tesla, Elon Musk has said himself that he believes their energy business will grow to be larger than their electric vehicle business by 2030. There energy business is also extremely beneficial for the environment because they are using renewable energy. Tesla is a company that I not only want to succeed because I will make a profit on my investment, I want them to succeed because they will help the entire world and in turn help our economy thrive. What do you think about Tesla?

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"Amazon Opens Online Pharmacy, Shaking up Another Industry"

 https://www.usnews.com/news/us/articles/2020-11-17/amazon-opens-online-pharmacy-shaking-up-another-industry

We all know the simplicity and convenience that is Amazon.  No matter what you need, you know you can find it on amazon and it will be on your doorstep before you can say United States Postal Service.  Amazon has often been called a monopoly although it is not. Amazon may seem as though it dominates the market, it only holds a significant amount of power in the e-commerce world. However, with the impact of COVID-19 and the general convenience of online shopping, brick and mortar stores, and companies are going out of business. We all saw the tragic closing of Toys R Us which many millennials and older Gen Z hold near and dear to our hearts, but stores of all kinds are closing quietly.  

Amazon started as an online book store but has grown to an e-commerce mega-site. Although not entirely due to Amazon, brick, and mortar stores of all kinds are struggling to keep up with e-commerce. However, who would have thought that Amazon would ever carry prescription medication.  Amazon will now carry insulin, inhalers, and other common medications.  This is a whole new world of competition for large and small pharmacies.  Amazon can choose to offer these medications using various forms of discounts such as offering percentage discounts to prime members, lower prices for people without insurance, and cheaper shipping than other online pharmacies.  COVID-19 has put many pharmacies, big and small, under a lot of stress, and adding a strong, new competitor is the last thing they need.

Is there potential that Amazon will run small and large corporations out of business? Although it is unlikely they will completely dominate the pharmaceutical market, there is a chance they could become a leader.  As Amazon begins to enter more markets, how will it impact the economy? Stock in Amazon skyrocketed during COVID-19. Do you think consumption will increase, decrease, or stay the same as Amazon begins to dominate beyond e-commerce?

Fed Chair: The New Economy and its Growing Pains

 On Thursday, November 12, Jerome Powell, The Chair of the US's Central Bank, said in a conference with other central bank chairs that the economy that we are going recovering from is no more. In this recovery, we will transition into a new economy that is even more technology heavy. While in the long run this is good, as technology will raise our Total Factor Productivity, leading to a higher standard of living. In the short run, this transition has some growing pains; this transition causes disruption. This disruption is mostly felt among people with lower paying jobs, minorities, and women. These groups typically filled roles that are more face-to-face, and in the wake of a pandemic, these groups are being left behind, and will have to adapt to this more technology heavy economy in the long run. In the short run, these groups are unemployed and will need some assistance until they are able to pick up a new job. The Federal Reserve has pretty much done everything they can do, so now the US government needs to step up to help mitigate these pains.

https://www.cnn.com/2020/11/12/economy/economy-after-covid-powell/index.html

The Effects of a Fully Functional Vaccine on the Economy

As we have seen in the past few days about the vaccine is that there is a 90% chance that the vaccine will be fully functional against covid-19. This has caused the stocks of that specific pharmaceutical company to substantially rise upwards. This means people will start buying these stocks fast, helping that company to grow in comparison to others that have also been trying to conjure up a vaccine. This will help this very company to expand their operations and make vaccines available to even more people around the world. It is true that whichever company is able to make a vaccine, will in fact become the highest gross earning and valued company during the pandemic and maybe even beyond it. A vaccine will not only help the people who made it, but also every single person who will be given it in order to avoid getting covid-19. This will help businesses to start running and companies to resume work. This will also cause workers to stop working at home and be more productive at offices with the capital present. This will also cause students to resume their studies hence producing more labor for companies to hire and hence this will cause an increased output rate that was decreased due to the pandemic resulting in the continuation of the economy. Labor has been the most affected in these times since not only many people became jobless, but many others died causing a substantial decrease in productivity hence markets were forced to close down. The vaccine will also help restart trading for the US with other countries as the US would know that it would be able to increase its GDP during this time because they would be immune to covid-19. By restarting trading, the vaccine would be exported and for the time being, imports would still remain as it is to make sure all people first get the vaccine before making death tolls rise once again. Therefore, this will cause net exports to rise since net exports = Exports - Imports, causing an increase in overall GDP.

Macroeconomic effects of Biden’s immigration policy

 This article discussed the effects that Biden's potential immigration policies could have on the country in the future. Some of the policies that were listed were a transition to legal status for illegal immigrants and restoring immigration rates back to pre-trump levels. He would accomplish this through a 10-year transitional period to grant citizenship to current illegal immigrants and granting a lot more work permits. Some of the initial impacts would be an increase in population leading to an increase in GDP. However, since most of the immigrants bring little to no savings the capital stock relative to labor would increase by a smaller amount. With labor at a higher amount than capital, wages would initially be lower. The lower capital would also increase foreign investment and domestic saving. By 2050 they expect GDP and capital stock to increase by 1.7 relative to the baseline. They also project the debt held by the public to decrease by 1.6%. What I think is interesting is they project it out to 2050 but there will be a lot of presidents and changes between now and then. The end goal is good but will the initial impact be worth it for the possibility of the future returns. I think it will also be interesting to see what other policies and plans he has for immigration.

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Lockdown Part 2

 With the rising number of COVID cases, many states and business have a lot to consider. The state of Washington is establishing some new rules in an attempt to limit the number of virus cases. The are reducing the amount of people allowed in indoor facilities to 25% of their normal capacity. The less people there are in one place, the lower the chances are of getting the virus. Washington is also prohibiting the gathering of multiple households, unless every member quarantines for 14 days and has a negative test result. Although this can not be enforced, it is being highly recommended for the safety of others. This may seem like a hassle, but it is necessary if we want things to return to a more "normal" state again anytime soon. At one point, Washington experienced a 72% increase in the number of cases from one week to the next, so the state officials feel as if these guidelines are their best line of action.

https://www.usnews.com/news/best-states/washington/articles/2020-11-15/new-covid-19-restrictions-on-dining-gyms-in-washington

Vaccine Distribution Will Favor the Richest Countries

 Even as the world is optimistic about the news from Pfizer that their vaccine looks to be more than 90% effective, there are already concerns about how the vaccine will be distributed in a world where almost no region has been spared.  According to an article published this weekend by Salon, more than 80% of Pfizer's available vaccine doses have already been bought by the world's richest countries.  Pfizer claims it can produce 1.35 billion doses over the next year.  The US has already purchased 100 million doses with an option to buy 500 million more.  Even with two doses required, this is enough to vaccine everyone in the country. 

After the US and other European countries claim what they need, only 14% of the world's population will have a sufficient supply of the vaccine leaving the rest of the world vulnerable.  Pfizer is expected to donate vaccines to developing nations through the World Health Organization but the gap between rich and poor nations is stark.

https://www.salon.com/2020/11/14/more-than-80-of-pfizers-vaccine-doses-have-already-been-bought-by-worlds-richest_partner/

China-Led Trade Pact Is Signed, in Challenge to U.S.

China and 14 other nations that make up ASEAN, Japan, South Korea, New Zealand and Australia have formally signed one of the world's largest regional free trade agreements, the Regional Comprehensive Economic Partnership (RCEP). Negotiations have been underway for 8 years and the new trade agreement covers 2.2 billion people within the region. The pact is most likely to formalize business between the countries rather than remake. 

The RCEP would eliminate tariffs for goods that already qualify for duty-free treatment under existing free trade agreements. That means that countries are able to keep tariffs on imports in sectors regarded as important or sensitive. The so-called rules of origin will set common standards for how much a product must be produced within the region for the final product to qualify for duty-free treatment making it simpler for companies to set supply chains within several countries.

The pact does not go deeper into legal work, accounting or intellectual property protections. Nor does it address sensitive issues such as protecting independent labor unions, the environment or limiting government subsidies to SOEs (state-owned enterprises). 

This pact is seen as a challenge to the United States former hegemonic influence in the Asian region by China. Due to the U.S. withdrawing from the TPP (Trans-Pacific Partnership), an Obama administration's response to China's growing influence in the region. It is unclear how the U.S. will respond to the new trade pact considering fraught tensions with China and the unpopularity of the TPP amongst politicians, Democrat or Republican. Either way, this new trade agreement can be seen as the rest of the world no longer waiting around for the U.S. and instead are moving forward as the U.S. tries to reset itself.

https://www.nytimes.com/2020/11/15/business/china-trade-rcep.html