Inflation still not completely down

According to the Consumer Price Index (CPI) data for November 2023, headline inflation is moderate and has increased by 0.1% on a seasonally adjusted basis. Notably, core inflation—which does not include volatile food and energy prices—remains persistently high at 4% per year. A 6% decrease in gas prices was countered by rises in used vehicle and hotel costs. A little increase in food costs contributed to the ongoing core inflation. According to the survey, housing expenses have increased by 0.5%, while used vehicles and trucks have increased by 1.6%. According to the November Survey of Consumer predictions, there will be a little decrease in inflation predictions to 3.4% after a year. Analysts point out that a Fed rate decrease in March 2024 looks less probable despite the deceleration, highlighting the difficulty of striking a balance between inflation control. 

Source: https://www.jpmorgan.com/insights/outlook/economic-outlook/cpi-report-november-2023#:~:text=While%20Wall%20Street%20tends%20to,same%20period%2C”%20Snyder%20observed.

Dow closes at new record highs

 The Dow Jones Industrial Average closed above 37,000 for the first time as Federal Reserve Chairman Jerome Powell suggested a halt in interest rate hikes and potential cuts. Powell mentioned being at or near the peak rate for the current cycle, with projections indicating the possibility of three rate cuts. The Dow gained 1.4%, marking its first record close since January 2022. Analysts, including Wharton University's Jeremy Siegel, see this as positive for the equity market and the U.S. economy, predicting a potential rate cut in March. Notably, UnitedHealth Group contributed the most points to the Dow, while Apple reached a $3 trillion market cap. Inflation, though easing, remains a concern for policymakers.

Source: https://www.foxbusiness.com/markets/dow-closes-above-37000-first-time-ever-powell-hints-rate-cuts 

Increase of minimum wage 2023

Four states have boosted their minimum wages this summer: Connecticut, Nevada, Oregon, and Washington, D.C. This change resulted in 765,000 workers getting paid more. It is projected that this rise in wages will total more than $615 million. Since the summer, fifteen cities and counties were scheduled to raise their minimum wage, offering some needed financial relief to low-paid workers who are struggling with the effects of rising costs. 

Those who are living off a lower wage in these states should benefit from a positive wage increase as a result of these increments. Based on the analysis of all workers impacted—both those who will directly benefit from the increased minimum wage and those who will be indirectly impacted when employers modify their pay structures—it is projected that the average hourly wage change in Nevada, Oregon, Connecticut, and Washington, D.C. will be $0.40, $0.42, $0.57, and $0.74, respectively. These adjustments should result in a $675 increase for the average full-time minimum wage worker in Oregon and a $1,354 increase in Washington, D.C.

Bitcoin Has More Than Doubled This Year In Resurgence

 https://www.bloomberg.com/news/articles/2023-10-25/bitcoin-has-more-than-doubled-this-year-in-unforeseen-resurgence

Goldman Sachs says India will overtake the U.S. to become the world’s second-largest economy by 2075

India is poised to become the world’s second-largest economy by 2075, leapfrogging not just Japan and Germany, but the U.S., too, says Goldman Sachs.

Currently, India is the world’s fifth-largest economy, behind Germany, Japan, China and the U.S.

On top of a burgeoning population, driving the forecast is the country’s progress in innovation and technology, higher capital investment, and rising worker productivity, the investment bank wrote in a recent report.

“Over the next two decades, the dependency ratio of India will be one of the lowest among regional economies,” said Goldman Sachs Research’s India economist, Santanu Sengupta.

https://www.cnbc.com/2023/07/10/india-to-become-worlds-second-largest-economy-by-2075-goldman-sachs.html

International Students Contributed Over $40 Billion to US Economy in 2022/23

 

More than one million international students studying in the United States during the 2022/23 academic year contributed $40.1 billion to the American economy, according to NAFSA: Association of International Educators. 

Although it remains below the pre-pandemic record of $40.5 billion in 2018/19, this figure is an increase of $6.3 billion or 19 percent compared to 2021/22, Erudera.com reports.

The NAFSA’s report published on November 13 highlights that the number of international students at US universities and colleges has now recovered from the decline reported during the pandemic era. 

Data showed that international students have supported a total of 368,333 jobs, both within their educational institutions and in their communities. This is a significant increase of almost 10 percent compared to a year earlier and a 20 percent rise compared to the year when the COVID-19 pandemic forced the closure of America's borders.

California benefited the most from international students, with 138,393 students contributing a total of $6 billion to the state's economy and supporting over 55,000 jobs.

https://erudera.com/news/international-students-contributed-over-40-billion-to-us-economy-in-202223/

Macy's mulling $5.8 billion buyout offer

Macy's is facing a $5.8 billion buyout offer valuing it at $21 a share and sees a 32.4% premium to its recent stock price. Shareholders must be feeling hopeful about this potential buyout offer, as it could mean a significant shift in Macy's trajectory. It'll be interesting to see how the company's board responds and whether this offer aligns with their strategic goals. However, it seems like Macy's is at a crossroads with this buyout offer since they have declined to comment on the matter and the offer was extended over a week ago without a confirmed deal taking place. 

Additionally, the potential disruption of a buyout amidst the ongoing holiday season and an impending CEO transition adds complexity to the situation (Tony Spring is set to take over as CEO in 2024). Balancing the offer's financial benefit against the company's standalone potential and the impact on operations during this crucial period presents a challenging decision for Macy's stakeholders. The board, led by seasoned retail veterans, grapples with this offer considering Macy's historic high stock price of $70.99 in 2015 and its substantial real estate assets valued between $6 billion to $8 billion, notably the iconic Herald Square location in NYC worth $3 billion to $4 billion alone.

 Do you feel that Macy's will take the buyout offer considering the value of their assets and track record of success?

https://finance.yahoo.com/news/macys-mulling-58-billion-buyout-offer-source-230606275.html

 Fed Rate-Cut Exuberance Ebbs After Jobs Data, Boosting US Yields

The enthusiasm for a Federal Reserve rate cut diminished after a stronger-than-expected jobs report, causing a surge in Treasury yields. Two-year yields, linked closely to the central bank's policy outlook, rose significantly. Swaps traders reduced expectations of aggressive rate cuts next year, adjusting from over 120 basis points to about 110 basis points. The employment report showed better-than-expected nonfarm payrolls and a lower-than-anticipated unemployment rate, leading analysts to believe that the Fed may not rush into rate cuts in the early part of the next year. 

This repricing countered earlier market expectations of rate cuts starting as soon as March. The shift in sentiment affected both U.S. and European markets, with traders scaling back bets on interest-rate cuts. Despite this setback, some investors remain optimistic about buying bonds, anticipating a more moderate pace of rate cuts in the future. The upcoming Fed meeting and inflation readings for November will be crucial in shaping market expectations.

https://finance.yahoo.com/news/fed-rate-cut-exuberance-ebbs-162809736.html

Nasdaq Leads Market Rally Ahead of Crucial Jobs Data

 

On Thursday, tech stocks played a pivotal role in driving the stock market averages upward, indicating that investors are now monitoring developments lents related to interest rates. The DOW saw a marginal increase of 0.2% in contrast to the S&P 500 seeing a gain of 0.8%. Out of all the major indexes, the NASDAQ posted the largest gain of 1.4%. Investors are paying attention to labor market data due to the insights it provides on the Fed's monetary decisions. Positive signs from the labor market data suggest the Fed's efforts against inflation through interest rate hikes are achieving their intended goals. 

Furthermore, the mentioning of a 'soft landing for the economy' suggests that investors indicate that the Fed could be successful in managing the economy that will be able to prevent sharp economic downturn while simultaneously combatting inflation. This has provokes some traders to bet on the possibility of the Fed shifting its current policy by cutting interest rates. It appears that the positive developments in the labor market are influencing investor sentiment, which has the possibility of leading to changes in the Fed regarding interest rates. This article reflects the energetic nature of financial markets and how they feed off economic data and action from the central bank.

Source: https://finance.yahoo.com/news/stock-market-news-today-nasdaq-leads-market-rally-ahead-of-crucial-jobs-data-210111253.html

Pessimistic consumers are suddenly feeling better

 There appears to be a significant shift in how consumers view inflation and the economy, as seen in recent reports from the University of Michigan and The Conference Board. These findings highlight a remarkable surge in optimism among consumers, despite worries about inflation. Consumer perceptions are pivotal in shaping economic behavior, serving as vital cues for policymakers like Jay Powell and the Federal Reserve. Changes in their views regarding inflation and price forecasts directly impact spending habits, positively influencing the economy.

The expectation of slower price rises in the upcoming year and subdued anticipation of long-term inflation suggests a potential positive shift in consumer spending. This change in sentiment could ease some concerns for the Federal Reserve, hinting at a more positive consumer outlook that may impact their economic strategies. It's intriguing how consumer sentiment carries such significance in economic decision-making, particularly in shaping monetary policy. The recent reports indicating heightened optimism could mark a crucial moment in how people perceive and anticipate economic conditions, potentially steering broader economic trends ahead.

https://finance.yahoo.com/news/chart-of-the-week-pessimistic-consumers-are-suddenly-feeling-better-110026806.html

Nike plans for 'broad restructuring' as the company quietly lays off employees.

     Nike over the past few weeks have been quietly laying off employees internationally, as they plan for a large restructuring initiative. In recent weeks, the company has laid off employees across multiple departments which include but not limited to, human resources, recruitment, source and branding, as well as digital products. 

   Nike has declined to comment on the recent lay-offs, as they are staying behind the broad restructuring initiative. Multiple employees who are still at Nike have came out to speak, with the message being we do not have any information from Nike about these layoffs. Matthew Kish of the Portland OREGONIAN has also reported that Nike has yet to tell the state of a mass layoff, which is required by law if Nike lays off 550 employees during a 90 day period. 

The large layoffs come after Nike made a statement about regaining 'lost momentum' from 2023.  The companies stock has been roughly flat this year, while the S&P 500 is up roughly 19% this year. 

In the United States there are not many new job openings

In October, there were fewer "Now Hiring" signs, and more people decided to stick with their current jobs. About 8.7 million jobs were available, with 1.3 jobs for each unemployed person. This is the lowest number of job openings since March 2021, showing that the U.S. job market is not as hot as before. The data indicates a slowdown in hiring compared to the record numbers in March 2022. Experts say employers are being more careful about hiring, and this shift is happening after a period of big job growth and lots of opportunities. The Federal Reserve is watching this because too much demand for workers can lead to higher wages and prices. In October, the U.S. added only 150,000 jobs, which is not a lot. The report also shows that people are less willing to quit their jobs voluntarily, possibly because they feel less confident about the economy. Workers seem to prefer sticking with their current jobs, maybe because they're uncertain about the future. 

source: https://www.cnn.com/2023/12/05/economy/jolts-job-openings-layoffs-october/index.html 

Navigating the Economic Crossroads: Markets React to Potential Fed Rate Cuts

     This week's economic data has fueled market expectations for a shift in Federal Reserve policy, with investors expecting aggressive interest rate cuts in the coming year. The noticeable change in consumer and wholesale inflation rates from mid-2022 peaks has triggered a surge in trader activity, reflected in the CME Group's FedWatch gauge predicting a substantial one percent point cut by the end of 2024.

    Despite the optimism, some experts remain cautious. Chief economist Lou Crandall underscores that while progress is evident, the Fed has yet to conclusively determine that the risk of inflation exceeding the target is diminished. Recent Labor Department reports indicate mixed signals, with consumer prices holding steady while wholesale prices experienced a 0.5% decline in October.

    The Federal Reserve's destination is a realm where inflation demonstrates convincing progress toward the 2% annual goal. Fed Chair Jerome Powell emphasizes the need for substantial evidence before altering policy, emphasizing the preference for core inflation measures. While traders appear confident in their predictions of multiple rate cuts, experts caution that the Fed may not be ready to signal a shift in the upcoming policy meeting on Dec 12-13. 

    Market enthusiasm is built on the belief that the Fed could initiate rate cuts soon and achieve a "soft landing" for the economy. However, this optimism may be at odds with historical trends, as aggressive easing typically accompanies economic downturns. The central bank faces a delicate balance, hesitant to prematurely abandon the fight against inflation as it navigates unpredictable global economic dynamics. The stock market rally and declining Treasury yields further complicate the Fed's goal of maintaining high-interest rates for longer. As the market eagerly awaits the Fed's next move, the road ahead appears challenging, with economic variables and global uncertainties shaping the intricate dance of monetary policy.

Source: https://www.cnbc.com/2023/11/15/the-market-thinks-rates-will-come-down-a-lot-it-could-be-let-down.html 

Canadian Unemployment rises to 5.8%

 Firms within Canada are cutting down employees, which had caused Canadian unemployment to be the highest it has been within 22 months. While beating some expectations within job gains, the Canadian markets are seeing losses due to higher competition within financial services and real estate. 

Canada may also see higher unemployment rates than the USA due to most of their industry being seasonal. Those industries being mostly within lumber and farming. There may also be a bloated rate due to a large minority of Canada's population being in more remote areas that have less jobs than cities like Ontario. The government of Canada also has more relaxed immigration policies, so there is a larger influx if immigrants than there would typically be. 

https://www.bloomberg.com/news/articles/2023-12-01/canada-unemployment-rate-rises-to-5-8-job-gains-top-forecast

https://sustainablesociety.com/236-why-unemployment-persists/#:~:text=Canada's%20unemployment%20rate%20in%20Canada,match%20up%20with%20potential%20workers

Canada Squeaks by a Recession

    Earlier today, Canada released their Quarter Three report for their GDP. In the report, it was revealed that the nation narrowly squeezed by a recession when their GDP unexpectedly shrunk by 1.1%. Initially, it was reported that Canada's GDP had seen a 0.2% decline in Quarter Two, which would have currently put them into a recession. However, that number was later revised to a 1.4% growth. It is expected that their GDP will continue to grow at a slow rate while interest rates at at a relativity high level. This is to combat the high inflation felt around the world. 

    The good news is that interest rates are expected to be at their peak, due to the excess demand for the supply of money seeming to nearly be diminished. Within Quarter Three, Canada's economy saw a decrease in exports while also seeing a slower accumulation of inventory. However, it is slightly offset by an increase in government spending and a increase in investments. Particularly the housing market. 

Source:

https://www.reuters.com/markets/canadas-economy-shrinks-11-q3-growth-seen-october-2023-11-30/

Dutch's Economy deteriorates further in November

According to the CBS Business Cycle Tracer, the economic climate was more negative this month as CBS reports that ten out of thirteen indicators were performing below their long-term trend. 

Confidence

Dutch consumers were less negative than in the previous month. However, confidence was still far below the long-term average over the past two decades. Producers were also less negative than in October, with confidence remaining below the twenty-year average as well.

Using September's data, the numbers and percentages seem to be linear downward sloping.

In September, the total volume of goods exports was down by 4.8% year on year. Furthermore, households spent 1.9% less year on year adjusting for price changes. This led to fewer services and fewer goods being bought. The volume of investments in tangible fixed assets was also down by 1.6% year on year. This is mainly due to lower investments in aircraft and residential property while more was invested in passenger cars. The average daily output of the Dutch manufacturing industry was 10.3% lower than in September of last year. Output also contracted year on year in the preceding months of 2023, falling by 0.9%. 

On average over the past three months, the number of unemployed remained roughly the same, ending at 361 thousand in October.

Overall, the economy seems to be falling ever more consecutively over the years. 

Article: https://www.cbs.nl/en-gb/news/2023/48/economic-outlook-deteriorates-further-in-november

Are we headed towards recession or soft landing?

 After recent performance in the market investors believe that the economy may be headed towards a "soft landing" rather than a recession as previously imagined. The Fed still indicates that there is a 56% chance of recession, but this is down from 66% in August. Another indicator that points towards a recession is that the yield curve is still inverted. Some experts believe a recession is just being delayed. While inflation has dropped significantly it still remains much higher than the Fed hopes. The continuous rise in interest rates this year (leading to the highest level in 22 years) are another indicator experts believe still points towards a recession.

Unemployment rates are current at a historically low rate (3.8%) which is a lead indicator for experts to believe we could be headed towards a soft landing. Experts believe if the market can stay between decreasing inflation and a still growing economy than we have a real chance of the soft landing. Ultimately, we will have to see how the market plays out over the next month and heading into 2024.  

Duggan, Wayne. “Recession or Soft Landing: What’s next for the U.S. Economy?” Forbes, October 17, 2023. https://www.forbes.com/advisor/investing/is-a-recession-coming/#:~:text=GDP%20grew%20at%20an%20annual,there’s%20no%20recession%20in%20sight.

The Job Market and A Possible Recession Approaching

 Link to article: Here's where the jobs are for October 2023 — in one chart

CNBC released an article titled “Here’s Where the Jobs Are for October” which showed a distribution of newly added jobs from the previous month. 

The report stated that the labor market may be cooling off with many job sectors seeing little to no growth, or even negative growth. Healthcare and social assistance saw 77,000 added jobs to their sector. Another large sector in which many jobs were added was the private education sector, given that 89,0000 jobs were added to that group. 

However, given that many students are studying economics, finance, accounting, or some business-related degree in this course, financial activity jobs decreased by 2,000. Whereas, the professional business services sector added 15000 jobs. 

One positive thing to take away from the article was that government employment has now returned to its pre-pandemic level of employment. One negative takeaway is that many trucking workers are losing jobs and looking for work but are finding it very difficult to do so. 

As we know, when recessionary times come, employers lay off workers and begin hiring workers for lower wages than previously offered. Therefore, given the low amount of added jobs, an increase in workers being laid off, and seeing job markets decreasing, this may be an indicator of a recessionary period approaching. 

• Kiley Hardyman

Good Month for Stocks and Inflation - Interest rates set to drop early-mid 2024

The past month has been great for the stock market as the S&P 500(8.9%), NASDAQ(10.9%), and Dow Jones have all had their best month this year. Even lagging industries had very good months. Inflation has also hit a low since 2021. Consumer spending expenditure (CPE) grew 3% this month slowing down from 3.4% last month. Along with CPI, CPE is a leading indicator of inflation. This has led to the likeliness of cuts in the interest rates by June next year to increase 32% from last month. Making it a 92% chance currently. These go against last years forecasts of a possible recession, showing that the predictions are not always accurate. Therefore the predictions for next year are not guaranteed. 

https://finance.yahoo.com/news/stocks-post-best-month-since-2022-as-investors-look-ahead-to-rate-cuts-211309899.html

https://finance.yahoo.com/news/inflation-hits-lowest-level-since-2021-feds-preferred-gauge-shows-133230834.html

Lithium Mines in North Carolina Revived

  In terms of the future of our world, the EV industry must develop a competitive market to create a cleaner alternative to gas powered vehicles which damage the environment. In order to do this lithium must be in possession to create the batteries for cars. Usually China dominates this market and has a majority of mines worldwide. In this article it is talked about how North Carolina has lithium mines to offer and how they had been mainly dormant since the 1980’s. It is also talked about how the demand for lithium has rocketed in the EV market and since Joe Biden has made the initiative for more of an EV market the demand is high. China is usually the main supplier of lithium and for North Carolina to have the biggest deposit in the US means the US can now supply their own lithium instead of helping to fuel China’s economy. 

In terms of what this all means is that the US can compete with China in manufacturing things with lithium as they have their own supply. This also means that the market for EV’s will increase. Another effect that this will have is that there will be more jobs available for low income workers in North Carolina which will help to fuel the economy. 

https://www.nytimes.com/2023/11/30/business/electric-vehicle-north-carolina-lithium-mining.html

Federal Reserve’s preferred inflation gauge shows price pressures continuing to cool

 The preferred inflation gauge of the Federal Reserve was steady, indicating a reduction in price pressure. Consumer prices increased by 3% in October, down from 3.4% in September. This indicates that the benchmark rate will probably remain steady at the next Fed meeting. Grocery prices have increased slightly, although overall inflation is declining and is in line with the Fed's objectives. It is anticipated that high borrowing prices will impede US economic growth, tempering the 5.2% recorded. The drop in spending, especially when it comes to credit-based goods like furniture and cars, suggests that the Federal Reserve's rate hikes are having an impact on consumer behavior and may even result in price reductions. As indicated by a prominent official, the Fed, which has raised rates eleven times since March 2022, would contemplate lowering rates by spring if inflation keeps declining. 

The post-pandemic general price level is still much higher, despite a slowdown in inflation, which has an impact on Americans' economic prospects. Because the PCE index takes inflation-related changes in consumer purchasing behavior into account, the Fed supports it. It takes into consideration the switch from pricey national brands to more reasonably priced store brands.

https://apnews.com/article/inflation-prices-federal-reserve-rates-economy-spending-7556d8c45993a0fee9dedb3765407468

Is Fed ready to stave inflation?

Two members of the Federal Reserve Board of Governor's spoke to two separate audiences about the reduction of inflation. Both governors have been known to be "hawkish" in the interest of combatting raising inflation with higher rate hikes. The target goal of 2% is definitely manageable in the near future according to both governors. How the U.S. gets to 2% is where the two diverge into separates courses of action. 

Federal Reserve Board of Governor's member Christopher Waller is typically known for favoring higher rates to battle inflation. However, he sees a cut in rates from the central bank as long a price increases can also keep lowering. Meaning as long as the market sees a stable increase of production and consumption then the central bank will be incentivized by lower exceeding rates. 

Federal Reserve Board of Governor's member Michelle Bowman's take on the subject infers the fed will need to further raise rates in order to reach the 2% goal. Bowman urges the dangers in inflation and also does not trust the market or the workforce to continue Waller's thought processes. 

Christopher Waller hedged his statements on reaching their two percent goal by not estimating a time of achievement. Waller explains level of uncertainty the market presents and the belief that the FMOC did enough to achieve price stability. 

https://finance.yahoo.com/news/fed-governors-bowman-waller-clash-on-direction-of-interest-rates-155221195.html

Consumer Spending Decrease

The Wall Street Journal has just put out a statement that the October consumer spending numbers are down from where they were in September. The article says that this new number is the lowest it has been since May of this year. This decrease in spending is not shocking to me. It honestly is to be expected at this time of year. People are preparing for the holiday season and student loans are starting back during this time of the year. The average consumer is spending to spend more later on. This is normal for the average American to want to save only to spend more in the future. 

Some economists speculate that this dip in consumer spending and slowing inflation will lead to the Fed finally slowing the increases in interest rates. It will be interesting since even though these numbers are decreasing the overall economy is still growing. The new GDP numbers that came out support this statement. It will be interesting to see how the Fed responds to these new numbers. 

Article:

https://www.wsj.com/economy/consumers/inflation-consumer-spending-personal-income-october-2023-6a1ecb1d?mod=economy_lead_story 

The Strategical Changes in Private Equity

 As technology and interest rates are changing through the corporate world, private equity starts to contain more advantages than public market investing when it comes to large-scale companies. The predicted time ahead of us that will have slower economic growth, and higher inflation. Because of this higher interest rates which will serve as trouble for operators and investors. Even with a higher cost of capital, private equity should be able to create attractive values for investors, but to do this they will have to change their strategical strategy. In the past, private equity uses control-oriented ownership, which allows partners to have more of say in the plans of companies. By doing this they have generated 15% of internal rates of returns over the past 20 years. 

The different ways to buyout investment vary, but the drivers of return can be distinguished into four categories. These are revenue growth, margin expansion, changes in valuation, and financial structuring and leveraging. As time goes on private equity is still predicted to succeed, however, margin expansion and revenue growth are now more than ever supposed to be the main successes while financial structuring and leveraging are becoming less important. 

Focusing on boosting revenue, private equity strategies are to prioritize organic growth, for it is believed to increase value creations. To achieve this growth, it is needed to fix broken business models, and super charge healthy but slower growing business models. 

For margin expansion the key shift is going from growth to efficiency because capital cost has risen it is needed to rely on optimizing processes, enhancing supply chains and explaining the reality of new technological impacts to companies face to face, highlighting opportunistical advantages for the future. 

With private equity flipping the value creation playbook it will continue the trend of private equity having an advantage over the public market.

Sources: How private equity strategies are changing amid higher-for-longer rates (goldmansachs.com)

Economic Technology's Impact on the US in the Past 20 Years

    Economic technology, or financial technology, has dramatically changed the financial and business scene in the United States throughout the last 20 years. The widespread use of mobile financial apps, online banking, and digital payment systems has completely changed how people and businesses handle their money.

    The rise of massive online retailers like Amazon has influenced consumer behavior and has contributed to the demise of conventional storefronts. Additionally, traditional views of money and finance have been reshaped by the rise of cryptocurrencies and other technological currencies. 

    In addition to improving productivity, these advances have created rules and regulations that have forced a look of the current financial structures. The future of the US economy will be greatly influenced by how innovation and regulation interact as the country continues to adopt economic technologies.

Sources-

https://www.weforum.org/agenda/2020/11/heres-how-technology-has-changed-and-changed-us-over-the-past-20-years/

How much have the Hawaii fires have affected the economy?

    

       Studies have showed that the fires that ravaged Hawaii in August of this year has caused between $4 billion and $6 billion in losses. Losses show up not only in the land that has been destroyed but it also has an effect on the businesses that are still there. When it comes to the land itself, it is estimated that more than 2,170 acres, or 3.4 miles have been damaged due to these fires More than 100 people have been confirmed dead as a result of the catastrophe, while more than 1,000 remain unaccounted for.

    The state's economic losses using building-level damage assessments from multiple sources, in addition to damage maps from the Maui Emergency Management Agency. The estimate of Hawaii's economic losses does not factor in the blaze's effect on the state's gross domestic product; government spending on the response to the catastrophe or the social cost of the fires, as the daily lives of families and communities are forever changed.

        With the fires comes rebuild which will is estimated to cost around 5.5 billion dollars at the moment. Insurance is expected to pay up to 75% of this cost, but funds will still be needed to raise to complete the rebuild. The businesses however that were able to avoid the fire have been seeing a decline in sales due to the effect the fire has had on tourism. With tourism down businesses will need to find a way to survive until the rebuild is complete and tourism rises again. 

Sources: Hawaii's economic toll from wildfires is up to $6 billion, Moody's estimates - CBS News

What it will take for the Fed to start slashing interest rates in 2024

 It is likely that the Fed will start cutting aggressively in 2024 against a backdrop of a slowing economy and rising unemployment, resulting in lower inflation.

It is unlikely that central bank policymakers will cut simply for the sake of cutting. The Fed will need a compelling reason to start easing, and even then, rate decreases are likely to be gradual unless something breaks, forcing it into an aggressive response.

“The market keeps trying to front-run these rate cuts, only to be disappointed,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “In a different cycle, when inflation hadn’t spiked so much, I think the Fed would have been cutting rates already. This is a very different cycle. There is going to be much more caution on their part.” 

According to the CME Group, Fed funds futures now anticipate five quarter-percentage-point rate cuts next year, one more than before the latest speeches. In anticipation of lower interest rates, stocks have rallied since then.

New AI Chip Announced by Amazon

 New AI Chip Announced by Amazon

In seeking to remain a big, if not the leading, name in the cloud service market, Amazon Web Services has revealed big news for the future. Amazon’s AWS cloud operations unit just announced brand new chips for clients to create, build, and operate AI applications on, as well as steps taken to offer customers access to various Nvidia’s latest chips. This latest Amazon Cloud will offer a variety of top-of-the-line GPUs from AI chipmaking giant Nvidia and highly sought-after products from different companies. 

Nvidia’s GPUs experienced significantly increased demand after the launch of OpenAI’s groundbreaking ChatGpt chatbot around a year ago. Following ChatGPT’s release, Nvidia started experiencing shortages due to companies seeking to implement similar generative AI technologies into their own products. Within this situation, Amazon saw an opportunity and has begun an approach that includes both allowing consumers access to Nvidia’s products and building its own chips. Amazon’s top competitor, Microsoft, similarly announced its inaugural chip, the Maia 100, and plans to give clients access to Nvidia H200 GPUs. 

Amazon made this announcement on Tuesday in Las Vegas at the Reinvent conference. AWS said it will now offer access to Nvidia’s new h200 AI GPUs, as well as its new Trainium2 AI chip and the general-purpose Graviton4 processor. Amazon’s Trainium2 chips are designed and built for training AI models, models similar to OpenAI’s ChatGPT. Amazon-backed OpenAI competitor Anthropic and startup Databricks intend to construct models utilizing the new Trainium2 chips, which reportedly boast four times improved performance. 

The Graviton4 processors are based on Arm systems and use less energy than chips from AMD or Intel. Graviton4 ensures 30% improved performance compared to previous Graviton3 chips, allowing for what AWS says is better output for the price. As a result of increasing inflation rates, organizations that wish to remain with AWS and, at the same time, lower cloud expenses will most likely move to Graviton. This movement is seen as Amazon reported over 50,000 AWS customers have quickly moved to using Graviton chips. 

Amazon opened up early access to customers who want to test Graviton4 virtual machine instances before they become commercially accessible within the upcoming months. Amazon is a highly competitive company that is constantly developing, and this announcement is another example of that. 

Mark Cuban is selling majority stake in the Dallas Mavericks to the Adelson family

 Mark Cuban, a multi billionaire recently announced he is selling his majority share in the Dallas Mavericks, hours after speculation coming that Cuban may be leaving shark tank soon. Cuban however will still own a stake in the team, and keep control of all basketball operations. 

Cuban will be selling his majority stake to the Adelson family. The Adelson's who are worth billions, reported they are selling $2 billion of LVS stock to free up money to buy majority ownership of the Mavericks. Along with cash on hand, and the proceeds form the sale of LVS stock, they will have enough money to buy the majority stake.

Cuban will remain governor of the team, and keep control of basketball operations even though he is selling majority stake. Cuban bought the Mavericks for $285 million in 2000, and even though the finalized amount of the sale is not published the Phoenix Suns, another basketball team, were recently sold for $4 billion. 

Cuban is known as one of the most exciting owners in all of the NBA, with a passion and love for the game of basketball. Cuban was also one of the most fined owners, racking up just over $4 million in fines. As well, Cuban has led the Mavericks too two finals appearances, including a finals win in 2011 over the Miami Heat.

The Fed's Impact On Stock Prices

 With The Fed continuing to increase interest rates it has shown an effect on stock prices. These companies, especially tech companies, run off credit. When interest rates increase, it slows investment and therefore slows the growth of these companies. In addition to companies slowing down borrowing, savers (or investors in finance terms) receive a higher rate of return through bonds. Many savers would rather receive the high rate of return on the bonds instead of taking chances on the stock market. With the large hikes in the federal funds rate, savers do not know when it will stop so many would rather put their money into something with a guaranteed return like a bond. 

Looking at the stock prices as of November 27th, the S&P 500 is down .19%. NASDAQ is also down .07%. These are not huge changes although when your portfolio gets to a high amount, these drops could be considered detrimental. Although there is not a direct link to the federal funds rate and the stock prices, there is a trend, specifically a negative relationship. In times like these when the yield on a 6 month treasury bond is 5.466%, many savers are stepping away from the stock market to get these guaranteed returns. 

CNBC. (n.d.). Check out 6 month US Treasury last Price’s stock price (US6M) in Real time. CNBC. https://www.cnbc.com/quotes/US6M 

How do rising interest rates affect the stock market?. U.S. Bank. (2022, February 16). https://www.usbank.com/investing/financial-perspectives/market-news/how-do-rising-interest-rates-affect-the-stock-market.html 

Yahoo! (n.d.). Yahoo Finance - Stock Market Live, quotes, Business & Finance News. Yahoo! Finance. https://finance.yahoo.com/ 

Investors Are Hungry for Risk- and Holding Record Cash Sums

 There is currently a record setting $5.7 Trillion in money market assets from both investors and institutions combined. This, combined with a very bullish month, the Nasdaq being up 11% and the S&P 500 up 8.7% respectively, is leaving analysts confused as to what the current trajectory of the market is. 

    On one hand, there are analysts who view the current growth as unsustainable, and view the market as rapidly approaching a contraction. Part of the reason that there is so much money in money market funds is because the current yields are currently above 5% for many of them. These analysists think these rates are due to tick down and subsequently cause people to move their money to other investments. On the other hand, there are analysts who the large supply of money in the market as a bullish signal.

Firms are also trying to stay competitive in the current money market as it is easy for people to decide to move their money elsewhere due to the high rates currently being paid. For example, the brokerage webull just began offering 5% to all funds that are being held within a brokerage account. Webull claims that there was a large inflow of cash into their brokerage over the last 6 months, and much of it began to be invested this month as the stock market turned around. 

Article: https://www.wsj.com/finance/stocks/investors-are-hungry-for-riskand-holding-record-cash-sums-6fe43275? imod=hp_lead_pos1

How do elections affect the stock market?

 Every four years, the U.S. presidential election can have a substantial impact on monetary and fiscal policy. The markets are significantly affected as well so how does this affect the common shareholder?

Over the past 90 years, it has been detected that both equity and bond markets had more stagnant performance in the year leading up to the election. For example, in a typical 12-month period there is generally a 8-8.5% return on the S&P 500, but in the year leading up to a presidential election, gains are only around 6% on average. Bond markets yield around 6.5% leading up to the election whereas 7.5% in a typical 12-month period.

It is important to pay close attention to specific market sectors in election years. Government healthcare policy seems subject to change depending on the party in power as well the energy sector.

There is reason to be wary about your portfolio, but returns are made over a a full business cycle rather than a single presidential term. The biggest advice is to pay attention to how certain policies enacted may affect your portfolio in a positive or negative way. 

Funflation in Sports Events

“Funflation” is a term used by economists to explain the increase in ticket prices for live events as consumers eagerly seek the experiences they missed out on during the pandemic.

Last month, the cost of attending sports events went up by 25.1% compared to October 2022, according to the Bureau of Labor Statistics' consumer price index. This increase in admission prices for sports events marked the highest annualized inflation rate among the numerous categories included in the inflation basket (CPI only showed a 3.2% annualized increase). The surge in prices is evident across the entire leisure and hospitality sector as people are returning to activities they enjoy and are willing to pay more for these experiences.

One of the possible factors contributing to higher prices for sports events is the growing use of dynamic pricing models. Such models allow ticket-selling platforms to adjust prices based on the demand for a particular event at any given moment. Ticket prices might also be influenced by notably sporting events, like the recent Formula One race in Las Vegas and the announcement of the soccer player Lionel Messi's move to the Inter Miami team, which have contributed to heightened enthusiast spending. A substantial factor behind this surge is the contrast with the unusual low prices in 2022. Sports teams had reduced ticket prices significantly to attract back fans who got used to watching games from home on a television.

The interest in attending sports games is expected to remain relatively steady even in the face of economic challenges. This is because a significant portion of the consumer base is financially well-off enough to afford professional sports tickets and is likely more resilient in economic downturns due to their financial condition. However, a substantial shift in the economy’s situation could lead fans with less financial stability might spend less on things they don't really need, possibly affecting the demand for sports tickets. Some people with money constraints might justify spending more on sports tickets this year by telling themselves they didn't treat themselves to such things during the pandemic. The financial strain also affect the resale market for tickets, as some sports fans pointed out. Additionally, the rising costs of parking and food inside the stadium add to the overall money concerns for fans.

    In the post-pandemic world, sports have gained a new meaning. With more people working from home, the desire for in-person social spaces is higher, and those with the money are more willing to spend on these experiences. The sports world creates this sense of togetherness, which is more than ever appreciated considering the loss of such experiences during Covid-19 time.

Source: https://www.cnbc.com/2023/11/21/funflation-drives-sporting-event-ticket-prices-up-a-whopping-25percent.html

Home prices are poised to drop as the frozen housing market thaws, 2 top experts say

     Recently, after a long period of high home prices and high mortgage rates, there has been a predicted shift in the housing market. It is foreseen that there could be a substantial drop in housing prices in the future spurring a reinvigoration of the housing market, which has been on the decline since the height of covid in 2020. Mark Zandi, Moody's chief economist, had stated in interviews the direction in which the housing market would need to continue to get back to relatively normal price ranges as compared to pre covid. Zandi stated "I don't expect the housing market to come roaring back here, certainly not in 2024," he said. "Probably won't be until 2025, 2026 before we see sales levels that are more consistent with what we've enjoyed historically." However, there are a few with more optimistic views on the future of the housing market.

    Redfin CEO Glenn Kelman believes that the housing market is already reigniting. Stating that the amount of housing inventory has already begun to increase. He mentioned that more homes were being listed and those not sold are being listed again at lower prices. He ends with the observation that prices that had originally frozen the housing market are now being pried open and buying and selling will continue to increase as the year progresses.

Cited Source

https://markets.businessinsider.com/news/commodities/home-prices-housing-market-forecast-zandi-kelman-mortgage-affordability-rates-2023-11

Gary Shilling's 8 best quotes from a new interview.

American financial analysis and commentator Gary Shilling, a regular figure in publications including The Wall Street JournalI, The New York Times, and Forbes recently completed an interview and the following is a series of my takeaways from Shilling's 8 quotes from the article regarding the current stock market, the possibility of a recession, and commercial real estate (CRE) bubble. Shilling was credited with correctly forecasting economic events including the housing crash in 2008. 

Quote 1) Most forecasters on Wall Street are brought in to make bullish predictions. Even if a forecaster makes a correct bearish prediction, its has a negative impact on job security.

Quote 2) Shilling has a firm opinion that stocks will decline from 30%-40%, peak to trough. Shilling's forecast indicates a 2,900 point fall for the S&P 500.

Quote 3) The Fed's credibility problem is a strong reason why they are going to kill inflation. If the Fed fails to kill inflation then their credibility will be impaired heavily. 

Quote 4) If the Fed is going to kill inflation then a recession will be the price of that decision 

Quote 5) Shilling says that there will be a recession coming in the near future. The inverted yield curve, LEI's and the Fed's battle with inflation are all points Shilling referenced for an upcoming recession.

Quote 6) It will be well into the next year before the weak economy expresses itself and inflation is cut back. 

Quote 7) Shilling references the mid-2000s housing bubble and crash and says that the major banks had to be bailed out as well as the mortgage lenders and so on. 

Quote 8) The biggest bubble right now is CRE. It is a bubble beginning to crack and many buildings have been stifled by the remote working boom. 

Article: https://markets.businessinsider.com/news/stocks/stock-market-outlook-crash-recession-commercial-real-estate-bubble-shilling-2023-11

The Haitian-Dominican Republic Water Dispute

    Two countries riddled with contentious history have developed a new feud to add to their everlasting list. Haiti and the DR share one island in the Caribbean, but that is where the sharing ends. The two countries fought in the 1800's in which the DR was able to gain independence over the French backed Haitians. Since then, the two have developed vastly different cultures, a passionate hatred for one another, and have gone completely different paths. Haiti is a nation experiencing everything that go wrong in a country including a presidential assassination in 2021, gangs overrunning the streets, and poverty sweeping the nation. The Dominican Republic on the other hand continues to be a tourist hot spot as 16% of their total GDP comes from the tourism industry. 

    Recently in September, the Dominican Republic sealed its borders and froze Haitian visas over a dispute involving the Massacre River, a river that stretches 220 miles of the countries borders. The DR claims full use of it, however the Haitian government says they also have full right of use. The two countries met for negotiations but after 11 hours, nothing was resolved. An arising issue that comes with this closure of the border is Haitians rely greatly on trade with the DR. As the DR is Haiti's third largest trading partner, Haiti's already high starvation rate could increase. 

    The conflict stems from a 1929 agreement between the countries in which they are both granted access to the water. The problem is the Haitian government has begun an excavation of the river which Dominican officials say will severely affect their countries farmers. The Massacre River is already home to 11 canals on the Dominican side, so many wonder if this response was somewhat of an overreaction. Since then, the DR has partially opened their borders but the water dispute persists. Haitians continue to worry about their current and future food supply as the lack of water greatly hinders their agricultural industry. 

https://www.nytimes.com/2023/09/14/world/americas/dominican-republic-haiti-border-water.html

Anger Is What’s Driving the US Economy

 In this Bloomberg article, there was a discussion about the U.S. Economy's interest rates being high while consumers are continuing to purchase as if rates were along the historical average. The high rates of consumer spending, values that are surpassing pre-pandemic averages, are driving economic growth. This spending behavior could be explained by the rate of inflation dropping from 9% this time last year to about 3.7% today. "And yet that very same inflation has also boosted incomes, which have risen even after adjusting for inflation." 

However, this does not mean that American consumers are happy with the rise in prices. Despite their income increasing due to inflation, consumers are consistently posting negative spews about how items have become too expensive. The article suggests this behavior can be described as a "frequency illusion," where as more media sources cover high inflation, then more consumers are looking for examples of inflationary prices to confirm this thought. 

What do you think is creating the gap between attitude ("these prices are too high") and action (consumers spending at higher rates compared to previous years)? Will this spending continue to increase as we approach the holiday season?

https://www.bloomberg.com/opinion/articles/2023-11-13/anger-is-what-s-driving-the-us-economy#xj4y7vzkg

economic impact on individuals thoughts

     Americans are saying that the economy is horrible when people ask them questions for the polls but in reality is it terrible? Unemployment is so low, inflation is dropping, and the big kicker is that people are still spending loads of money! 

    Although Americans are saying that the economy is bad, it is not topping us from racking up credit card debt for the leisurely activities people want to do. This article specifically mentions the fact that American have spent LOADS of money on Taylor Swift tickets, but we can see this in a bunch of other purchases made by Americans. 

    In the article it mentions that young adults cannot afford a house with the high prices and mortgage rates. This all goes hand in hand together with young adults being okay to spend money on other tangible fun things to do rather than a house and to live paycheck to pay check. It is really interesting and I wonder what I am going to walk into when I graduate this upcoming Spring. 

https://www.cnn.com/2023/11/08/business/consumer-spending-us-economy-nightcap/index.html

Space Exploration and Economic Growth: New Issues and Horizons

Space can connect back to the economy in many ways. Space is a factor in the growth and development of modern economies (space economics). Over the past few decades, technology and policy development have led to an increase in commercial interest in space, with two high-income countries -United States and China- currently launching the most payloads to space.

Space technology requires a significant amount of capital investments because of their potential to combat secular stagnation; however,  government policies are enacted to govern human activity in space and prevent privatizing resources. Secular stagnation refers to a state of suffering from low private demand, requiring very low interest rates to sustain demand and achieve potential output. Even so, modern theories suggests the need to highly increase both aggregate demand and aggregate supply through capital investment, growth in productivity, or growth in population. If it were to succeed, the demand in the US would have increased in around 15. to 3.0 trillion to demand over the next two decades. 

The potential of space as a large-scale project to reinvigorate economic growth through the use of mineral resources and improve human well-being. The clean energy transition could lead to substantial increases in the demand for certain minerals. The trade-off being an increase to environmental degradation and the high cost of mining minerals in space compared to the low launch costs is something to think about. 

https://www.pnas.org/doi/10.1073/pnas.2221341120

Europe's Economic Powerhouse Tests A Shorter Working Week

     In an attempt to combat the worker shortage, many firms in Germany are adopting a 4 day work week to try and stay competitive. The organization 4 Day Week Global is spearheading this effort of workplace reform by encouraging firms to participate in this experiment. With the main goal of avoiding a loss in productivity, 50 firms will be utilizing a 4 day, 38 hour work week starting in 2024. Some of the other benefits that firms already utilizing this system claim are increased worker motivation and productivity, savings on fuel for workers with a long commute, and better social and family lives. Many firms are also offering shorter work weeks without a decrease in salary. 

    According to a study by the Hans-Boeckler foundation, about 81 percent of the German workforce, along with myself, supports a 4 day work week. And for those Germans who do not support this, they are still currently able to work for up to 48 hours. Some critics of this change argue that it will inevitably lead to a decrease in overall output. especially as the larger baby boomer generation begins to leave the work force. 

    While the 4 day work week is a far more ideal situation for many people, I think we are a long way away from being able to implement it at a large scale. As long as there is a near global workers shortage, I do not believe that it will be feasible. As the cost of living continues to rise, couples are opting to have children later and later in life, if at all, due to their financial situations. Until we can solve these issues, I do not we will see a 4 day work week in the United States. 

Source: https://www.barrons.com/news/europe-s-economic-powerhouse-tests-a-shorter-working-week-69dd83ee

The Fed's Tenacious Attempt to Rebalance; Consumers Still Not Satisfied.

 As the Fed continues to battle a never-ending rise in consumer inflation, many are predicting that there is still potential the Fed would choose to continue to raise interest rates. After last month's announcement, Fed Chair Jerome Powell stated "inflation is still too high." This made it obvious to economists that another rise in interest rates could still be a possibility as the Fed continues to try and combat soaring inflation rates.

Currently, according to CNBC, because many credit cards have a direct connection to the Fed's Benchmark Rate, average credit card rates have spiked more than 20% setting a new all-time measure. 

Matt Schulz the chief credit analyst at LendingTree reflected on the situation expressing "Credit card rates are the highest they have been in decades and will continue to get higher in the next few months." 

Average Credit Card Rate: October 2023 is 24.46% versus September at 24.45% 

I would expect borrowing costs to remain at their highest levels with many economists arguing that the rates will stay this way for a while in order to balance out. The Fed's tactics will continue to influence and affect borrowing and saving rates on a day-to-day basis. 

Source for Statistics: https://www.lendingtree.com/credit-cards/average-credit-card-interest-rate-in-america/

Article Source: https://www.cnbc.com/2023/10/27/federal-reserve-may-not-hike-interest-rates-what-that-means-for-you.html

Inflation Report Showed Prices Were Still High

 While US prices remained high in September, there is an encouraging sign in the form of a slowdown in pay growth, providing some hope for relief from rising inflation, according to the most recent set of inflation data released. According to the Bureau of Economic Analysis, the Personal Consumption Expenditures Index, which measures consumer prices, increased by 0.3% in August and September but was constant at a high 6.2% for the year. In the meantime, the US Federal Reserve's favorite inflation measure, the Core PCE, which takes fluctuating food and energy costs out of account, climbed by 5.1% yearly. This was somewhat higher than the 4.9% gain from the previous month but still slightly below consensus predictions.

The information highlights the continuous challenge the Federal Reserve faces with tackling the greatest level of inflation in the last forty years. The Fed is expected to raise interest rates one more time in an attempt to regulate inflation and reduce demand, but others believe that given the indications of an imminent slowdown in wage growth, this rate hike may be the last of its kind. The outcome of these efforts will be closely tracked as the Fed struggles to keep the economy stable in the face of inflationary pressures.

Source: https://www.cnn.com/2022/10/28/economy/us-pce-inflation-september/index.html

The affect the war in Israel has on the nation's economy.

 The war in Israel has caused many economists to believe that the Israeli economy will become slow, and that the nation's budget deficit will begin to soar as the nation spend more on its military.

Before the war Israel was had low debt, a current account surplus and high foreign exchange reserves, although growth had begun to slow amid high interest rates, rising inflation and expectations. Since the war the Israeli currency has been on a downward trend which has cause the central bank to ask for 30 billion in foreign exchange to support it. 

The Central bank then had to deal with the question of what they should do with the nations interest rate. The two options were to Reduce interest rates to help bolster the wartime economy or keep them elevated to support the war. The bank picked to keep them the same as they focus on "stabilizing the markets and reducing uncertainty.” Along with this the national debt that is also expected to rise as the increase in spending on defense. 

But as Israel continues to fight the fight against Hamas the government is trying to implement policies to help support its people. With focuses being include housing evacuees from combat zones. Banks and credit card companies, under the government’s direction, are providing repayment deferrals and other financial aid to help households and companies. It's going to be interesting to see how the nation's economy does over the next few months. 

Fed Currently Holding High Interest rates

The fed has been raising interest rates in order to fight inflation in recent times to ultimately avoid the occurrence of a recession. They currently have a tight financial condition while there are several economic indicators showing strength. Leading the fed to decide to keep the interest rates at 5.25-5%, a high of 22 years, with the potential to raise them. The goal of this is to lower the inflation to its target of 2%. Hedge fund managers are predicting that the interest rates will stay for the rest of the year and possibly hike even more early into 2024 or even for the coming years. This is largely dependent on whether the recent increase of economic activity will continue to rise or not. Consumer spending has continued to grow causing the third quarter GDP to grow at 4.9%. This is in despite of a rise of 0.3% in prices, which is the highest in months. But some believe that this growth does not accurately represent the true state of the economy. 

https://finance.yahoo.com/news/fed-expected-to-hold-rates-at-22-year-high-but-leave-hikes-on-the-table-094002863.html

AI investment forecast to approach $200 billion globally by 2025

     AI has the chance to increase global labor productivity by 1% point a year. For this to happen, major upfront investments are needed to happen through digital, physical, and human capital. These investments have the chance to reach 200 billion by 2025. In addition, it is predicted that AI investment could peak of up to 4% of GDP in the U.S. and up to 2.5% in other major AI leading countries. Even though AI investment is hard to predict, business surveys predict that through the second half of the current decade that AI will become even more impactful on investment. Even though AI investment is said to reach 100 billion in the U.S. and 200 billion globally the impact of AI investment right now is far from that. It currently accounts for little shares of GDP. The reasoning behind this is that AI investment currently is only focused on model development, but the reason such predictions of big increases in AI investment is because of the fact that AI is going to push for substantially larger hardware and software in the future. In a survey in 2021, it was reported that, only 4% of businesses use AI, and that a very few expect that AI will affect their labor needs in the next one to three years. However, a significant majority of companies do expect that they will adopt AI in the next 3-10 years. Overall, with all of this being true it can be concluded and predicted that AI adoption will have a major impact on economies, specifically the U.S., between 2025-2030. This makes the crazy statement that AI investment is forecasted to each 200 billion globally not as crazy.

August 1, 2023. Goldman Sachs .AI investment forecast to approach $200 billion globally by 2025. AI investment forecast to approach $200 billion globally by 2025 (goldmansachs.com).

U.A.W Strike Comes to an agreement but may cause other issues

 During the past 6 weeks, the U.A.W. has dealt with workers on strike, demanding a better pay agreement. The U.A.W.'s president, Shawn Fain, has proposed a contract to end the Ford Motor strike and invited other labor unions to align their contract expirations with UAW's. The recent strike was the first to target all three Detroit automakers and aimed to secure substantial wage and benefit increases while reversing concessions made during the companies' downturn. The U.A.W.'s agreement may have some far-reaching implications beyond the auto industry, potentially making other labor unions consider going on strike as a reasonable strategy. With the recent agreement, the U.A.W. gains more influence over decision-making processes and the reopening of closed plants, setting a standard for employee involvement in management decisions. It will be interesting to see how other labor unions will potentially change due to these new U.A.W agreements and how that will play a role in our economy within our given state. 

Zillow Plunges After Verdict on Real Estate Brokerage Commissions

 ZillowGroup and other real estate stocks took a hard hit today following a lawsuit filed against the National Association of Realtors. This lawsuit cost the NAR $1.8 billion USD after claims were made against how real estate agents are paid. Scrutiny is falling upon the commission-sharing system that dictates a 5-6% cut of a home's final sales price, to be split between the owner's agent and the buyer's representative. This lawsuit can potentially reshape the way real estate deals have been done for decades, with the federal government considering banning the commission-sharing system as a whole.

This is big news as the real estate industry has been struggling recently due to mortgage rates nearing 8% and home sales reaching lows comparable to the 2008 Foreclosure Crisis. In addition to this, notable real estate group such as ZillowGroup, Redfin, Opendoor, and others are all suffering major stock price losses. This may be a potential success for regular-joe stock traders looking to buy while the market is cold and prices are cheap. In terms of the macro trends, this lawsuit will solely affect the United States as countries like Australia and the UK have a far less expensive commission system in place.  

https://finance.yahoo.com/news/zillow-plunges-verdict-real-estate-183108068.html

Economic Repercussions of the War in Israel

 The war between Israel and Gaza has been an extremely tragic event going on. The fighting we have seen is terrible, but this is not the only bad thing taking place. At the start of the fighting the first thing to be affected was oil prices, also the most short-run issue. Oil barrels have already increased about $5 a barrel and this increase in pricing is expected to continue. If prices continue to rise it is estimated that the increased oil prices could weigh down global growth by 0.15 percentage point. Oil importers such as Pakistan are already facing economic struggles. There has also been a halt to gas production which has caused gas prices to go up. European gas prices are being affected the most at the moment, and if their gas supply continues to get cut thinner than prices will have to keep rising. Domestically, long-term interest rates have increased which suggests concerns that the higher energy prices will result in inflation, tightening monetary policy. 

Israel's economy has been impacted heavily due to the war. Government spending has increased due to the increased military efforts and paying for securities for their citizens, the labor force has dropped, tourism has dropped, and investment has dropped. Additionally, the shekel has dropped 5% since early October. This caused the bank of Israel to try to stabilize the market, where they chose to sell up to 30 billion USD in foreign exchange reserves. Clearly, this war has had a negative affect on Israel as a country but economically they are really feeling the affects as well. They are losing a substantial amount of money and their economy is getting hammered from the reduction in workers in the workforce which is causing less spending. Hopefully this war ends soon because war and death are just bad and we do not want to see anyone suffering. However, this war also needs to end so that all of this economic in balance can become a thing of the past and markets can get back to a more stable place. 

Polish national bank lowers interest rates as inflation slows

Poland's central bank, the National Bank of Poland, has lowered its key interest rate to 5.75%, citing a decrease in inflation despite it remaining high at 8.2% last month. This move, the second rate cut since September, has raised concerns about political motivations. Analysts had anticipated the cut after a drop in annual inflation from 10.1% in August. The decision contrasts with other central banks worldwide, which are either increasing borrowing costs or maintaining high rates to address inflation resulting from the global economic rebound and increased costs due to events like Russia's invasion of Ukraine.

Press, Associated. “Polish National Bank Slashes Interest Rates as Inflation Slows.” Fox News, FOX News Network, 4 Oct. 2023, www.foxnews.com/world/polish-national-bank-slashes-interest-rates-inflation-slows.

Occupied West Bank paralysed as economy stalls

 The economic crisis in the occupied West Bank has been exacerbated by Israeli-ordered shutdowns, intensified military actions, and settler attacks. These developments have collectively created a grim economic landscape for Palestinians residing in the region. These challenges have reached every corner of daily life, resulting in many hardships. 

  

The closure of major checkpoints has severely hampered mobility and the flow of goods, disrupting the transportation of produce, a key element of the local economy. Sales have dwindled significantly, with many businesses experiencing a 50% reduction in revenue. The disruptions in transportation have not only made it more expensive to conduct business, due to rising fuel costs and longer delivery times, but have also left many shelves empty, causing supplies of essential items like vegetable oil, rice, flour, and sugar to run low. 

  

The West Bank's economic challenges are not new, as it has endured a 56-year-long occupation and persistent restrictions on movement. The United Nations has estimated that the Israeli occupation cost the Palestinian economy a staggering $47.7 billion in fiscal revenues between 2000 and 2017. These longstanding issues were already impacting the economy before the recent events, and they have been further intensified by the current crisis. 

  

In addition, the recent turmoil has led to joblessness for the majority of the 200,000 Palestinian laborers who work in Israel and illegal Israeli settlements in the West Bank. This has led to a significant drop in revenues, as the laborers are unable to contribute to the local economy as they did before. 

  

The Palestinian Authority is particularly concerned about the scarcity of basic items, further exacerbating the economic crisis. The situation is expected to have long-term negative effects on the Palestinian economy, with the repercussions expected to linger, including rising prices for essential goods. 

  

However, amidst these economic hardships, many Palestinians in the West Bank acknowledge that their situation, while dire, is relatively better than that of their counterparts in the besieged Gaza Strip. Despite the challenges they face, they still have access to food and water, and their children are safe and playing around them. This perspective underscores the resilience of the Palestinian people in the face of adversity, as they strive to cope with and overcome the economic challenges they confront in the occupied West Bank. 

Source: https://www.aljazeera.com/features/2023/10/29/there-is-zero-work-occupied-west-bank-paralysed-as-economy-stalls