Over half of Americans have $0 in stocks

http://money.cnn.com/2015/04/10/investing/investing-52-percent-americans-have-no-money-in-stocks/index.html?iid=Lead

According to the article more American adults drink coffee daily than have money invested in the stock market. Less than half, or 48%, of American adults have money in stocks. Compared to that, about 61% of adults have at least a cup of coffee daily. The low number is an alarming trend for America's financial future. Stock ownership peaked in 2007 just before the worst financial crisis and Great Recession. "Despite the market hitting record highs, real investors have dramatically increased their allocation to cash," says Suzanne Duncan, global head of research at State Street's Center for Applied Research. The stock market is only making the rich richer. The biggest problem is that people don't have enough money to invest. Median household income is much high than it was in 1995, but people do not feel comfortable investing their money because they are unsure of the market. Only over a quarter of adults under 30 reported having money in stocks or funds that invested in stocks. Also, people do not feel educated enough about the stock market to invest and they think it's to risky. So what does this say about the future of the stock market? How can we encourage more people to invest? 

The Limits of Outsmarting a Strong Dollar

The dollar rose 9 percent against a standard basket of currencies in the four quarters through March, making it a 12-year high. They talk about managing your portfolio and how to deal with changing currencies. Due to this increase it has caused investors to buy ETF's. International stock has increased by 26 percent because of this. Basically, this article is all about investing in ETF's according to how the dollar value is changing. 

http://www.nytimes.com/2015/04/12/business/mutfund/bracing-for-currency-fluctuations.html?ref=economy

Over half of Americans don't own stock

http://money.cnn.com/2015/04/10/investing/investing-52-percent-americans-have-no-money-in-stocks/index.html

This is a very troubling article showing that less than half of Americans are investing in the stock market whatsoever. Especially considering the rise of stocks, most people are missing out on excellent returns on their money, which could help their financial situations. Instead, they are increasingly turning to cash and lower return investments, which hurts the GDP as well as increasing the wealth inequality problem (wealthier people are more likely to have stocks, and those are increasing while the return on cash remains slim to none).

Euro zone officials shocked by Greece's stance: Germany's FAS paper

http://www.reuters.com/article/2015/04/11/us-eurozone-greece-germany-idUSKBN0N20JA20150411

At talks in Brussels, Greece failed to outline its plans for structural reform to help move itself back into the global economy.  In fact, to the Germans especially it seems like they are doing nothing to help get themselves out of their economic crisis. After Greece's demand for war reparations, which they recently put a number on (€279 billion!; see http://www.bbc.com/news/world-europe-32202768), this is just causing the world to take them even less seriously. (The amount they are asking for is, incidentally, greater than the IMF-EU bailout they received last year even.) All in all, as has been said many times, Greece is in need of some serious reform.

FED Takes Back Seat as Markets Shift Focus on Earnings

        The potential for the FED to cut its stimulus will come in to question next week as new numbers become available. Due out is past data from the holiday season that will be used to analyze the economy and market strength. This data will help to highlight the strength of the market and its correlation with the record highs by the S&P 500 or this could show some areas to be cautious of. This data will ultimately be used to help the FED make a decision about cutting back bond purchases.

http://finance.yahoo.com/news/wall-street-week-ahead-fed-224128416.html

Post-Grads maybe Finance isn't the route

With everyone seeking post graduate employment these days the question appears: what job will I take? Many students who look to begin their young ambitious careers look for where the money is and how promising their career can be and some look no further than finance. Finance offers excellent opportunity to build a career upon and has a name for making people extremely wealthy so naturally post-grads gravitate towards the industry.

Today many of the best students throughout the country are not going to research cancer or solve america's educational problems but rather take up jobs as traders and brokers in financial firms. Is this the best route for a student of this magnitude As an economist, the author, Sendhill Mellainathan says "As an economist, I look at it this way: Every profession produces both private returns — the fruits of labor that a person enjoys — and social returns — those that society enjoys." Sendhill argues that people from finance are not creating wealth but rather transferring wealth from one person's pockets to their own. A rent seeking individual betters themselves rather than society. I understand that these are vast conclusions but this is also where we find ourselves today. With our brightest minds taking the best paying jobs which typically benefit the individual more than society one can argue that Finance shouldn't be the route. But I strongly believe that taking a job is an extremely personal choice. Most people will be rent seekers.

Link: http://www.nytimes.com/2015/04/12/upshot/why-a-harvard-professor-has-mixed-feelings-when-students-take-jobs-in-finance.html?smid=fb-nytimes&smtyp=cur&bicmp=AD&bicmlukp=WT.mc_id&bicmst=1409232722000&bicmet=1419773522000&abt=0002&abg=1&_r=0

G.E. to Retreat From Finance in Post-Crisis Reorganization

http://www.nytimes.com/2015/04/11/business/dealbook/general-electric-to-sell-bulk-of-its-finance-unit.html?ref=todayspaper&_r=0

   As banking has become less profitable and more riskier, G.E. has started selling of it's Capital division and will sell of most of the division in the next two years.

G.E. Capital has been one of the biggest lender with its hundreds of billions of dollars' worth of assets. G.E. began selling its finance unit by first selling $26.5 billion worth of real estate assets and has shrunk G.E. Capital from 42% to 28% of G.E.'s overall revenue since 2008. G.E. wants to focus on becoming the mightiest global industrial company.

This move by G.E. reflects how the biggest players in the financial industry face greater regulatory scrutiny and are incentivized to invest in traditional, conservative wealth management division.

G.E. wants to relieve itself from being considered as too-big-to-fail lender, a status that brings stricter regulatory requirements and downsizing is a big matter for G.E. as it does not want to be the next Lehman Brothers.

Shifting Income from Rich to Poor May Prove Less Effective than Imagined

The article suggests that taxing the wealthy could do more harm than good. Based on Pigou’s argument, it is largely believed that redistribution can spur economic growth. It rests on the fact that poor families would spend more if they had the means, and the rich would be able to smooth consumption if they suddenly lost income.

However, in a series of studies which drew from huge macroeconomic datasets, Pigou’s arguments on redistribution and economic growth doesn’t hold true entirely. According to the study, there are people who live on payslip to payslip and don’t have backup assets, and there are those that have sizeable illiquid wealth but are cash strapped. So, when tax is decreased the cash strapped rich increase spending more than the ones living on monthly payslips. Therefore, tax increase doesn't have much benefit if targeted in terms of income. Instead, the article suggests, taxes on the wealthy should be phased in slowly so they can liquidate assets rather than cut spending.

So, the article basically confirms Pigou’s hunch that rich will cut spending when taxes rise, but the cut is more than previously expected. And the poor increase spending but not to the degree required for economic growth. Therefore, taxes should be raised slowly so that the illiquid assets of the rich which is their actual wealth can be taxed, and so that they don’t cut spending. Do you think this would be an effective approach to tackle income inequality and also achieve economic growth?

Link

The World Economy in 2030

http://www.bloomberg.com/news/articles/2015-04-10/the-world-s-20-largest-economies-in-2030


The US Department of Agriculture recently released its macroeconomic forecasts that go to the year 2030.  The US is still forecasted to be at the top, but the disparity between the US and countries like China is closing.  The US is forecasted to be at $24.8 trillion while China is forecasted at $22.2 trillion.  The six largest economies in the world in 2030, according to this forecast, are the United States, China, India, Japan, Germany, and Brazil.  The article noted that Jamaica took the largest fall from 123 to 126 in the world.  Additionally, many of the high-growth countries are in Africa and the Middle East.

While this is not the most popular forecast, the USDA does look out 15 years.  The article notes that the IMF's forecast for the next two years is due soon.  With increased globalization and less disparity, the world appears to be much smaller economically.  What do you think?

'There will be another crisis'

JP Morgan & Chase's CEO Jamie Dimon recently sent out his annual letter to his shareholders in which he states that another crisis is inevitable.  In his letter he states "Some things never change - there will be another crisis, and it's impact will be felt by financial markets".  According to this letter, Dimon predicts that investors will exhibit the following behaviors once the crisis breaks out:

1. Sell assets they believe are the problem
2. Invest their money in safe havens, such as bonds and deposits in strong banks
3. Can only sell less risky assets if they need cash, because there will be no market for the riskier assets

The most eye opening part of his letter, was the notation that no investor is safe in a crisis.  Whether that be an individual, corporation, hedge-fund, etc no one in the financial market can escape unaffected.  It will be interesting to see if investors react as Dimon predicted during the next crisis.

U.S. Economy Gained 126,000 Jobs in March, an Abrupt Slowdown in Hiring

In March, 12600 new jobs were added but now the hiring has slowed down. According the article, the economy seems to be slowing down as well. Hourly wages have risen but hours worked have declined. Some say this is only temporary and expect the economy to pick back up later in the year. Due to the slowdown the Federal Reserve wants to raise the interest rates soon.

Link to Article

Federal Reserve officials split over interest rate rise

http://www.bbc.com/news/business-32226855

It has been sometime since the fed declared that they will be raining interest rates as the economy has started to show signs of recovery, however the question is when to. Since 2008, interest rtes have been near 0% and it’s finally okay to raise them. The Fed however has ‘competing priorities’, keeping an eye on inflation and maximizing employment in the economy. The main variable is the labor market and the fed has vowed to increase inflation rates after there’s “further improvement.” Wage growth has been slow which is the primary concern. My prediction is early 2016. What do you think? 

It’s Hard to Lift Wages if the Fed Doesn’t Make It a Priority

The Federal Reserve’s main goals are to have full employment and stable prices. People feel that the problem is that the Reserve does not focus on a huge factor that effect their two goals and that is wages. Ms. Yellen of the Federal Reserve said the main reason why wages are not a bench mark is because it’s not reliable. Many factors can change wages like productivity, global competition and technological changes and these factors change the skill demand and the wages offered to the people.

http://www.nytimes.com/2015/04/08/upshot/its-hard-to-lift-wages-if-the-fed-doesnt-make-it-a-priority.html?ref=economy&_r=0&abt=0002&abg=0

Blue Cross (BCBS-BCN Michigan) incentives save $50M in health care costs

This article describes initiatives undertaken by Blue Cross Blue Shield of Michigan producing lowered healthcare costs for its subscribers since the phased implementation of the PPACA in the US. It describes how providers are moving away from fee-for-service payment models to fee-for-value, rewarding preventative care. Stipulations of the PPACA have made this transition a requirement for service providers, and new contracts are driving down insurance premiums.

These developments are important in the evolution of the U.S. healthcare markets. Insurance companies and the government are placing extensive pressure on providers to supply preventative care at affordable rates; insurers are now required to some extent to cover preventative care and to assume universal insurer of last resort capacity. Overall, these industry changes will likely increase the long-term health of the U.S. population and lower medical expenses on catastrophic procedures and hospitalizations, which will stabilize much of the healthcare situation with at-risks and previously-uninsured parties. However, the effects on premiums for comparable plans and on corporate provision of health services and hiring has yet to be determined, and will likely form a significant component of the political battleground in 2016.

http://www.detroitnews.com/story/business/2015/04/06/blue-cross-incentives/25392361/

When oil will hit bottom

http://www.cnbc.com/id/102554626




Analysts predicts that the price for crude oil might hit bottom sometime this quarter.

"There's 20 million barrels in floating storage at the moment off the coast of Iran ... which could hit the market pretty quickly," said Dominic Haywood, crude and product analyst at Energy Aspects. Haywood said it will take some time for Iran to make a full release of its oil. Sanctions have cut Iranian exports to about half the 2.5 million barrels it was exporting in 2012.




The big three oil producer -Saudi Arabia, Russia and the U.S - show no significant decrease in production. "This crude phenomena is going to continue for a few weeks. We don't have the refinery utilization over 90 percent. That has to get to 90-91 to stop this incessant building of crude inventories," said John Kilduff of Again Capital. Refineries are currently running at about 89 percent.




The drop in oil prices is burning major producers but OPEC shows no signs of blinking, and analysts say it is the shale producers that are cutting back first. The U.S. Energy Information Administration said on Wednesday that OPEC members, excluding Iran, earned $730 billion in net oil export revenues in 2014, an 11 percent decline from the year earlier. That was the lowest for the OPEC since 2010

Air Skirmish in War over Ex-Im Bank

The Exports-Imports Bank of the United States is a government agency that looks to extend credit to foreign corporations in order to allow for these foreign firms to purchase goods or services from American Firms. Currently there is a battle between Delta Airlines, Boeing and the Ex-Im bank. Delta states that it is suffering because foreign airlines are using the Ex-Im bank in order to reduce their borrowing and therefore lowering the price of tickets on routes that compete with Delta. On the other side of the story, Boeing relies on the Ex-Im bank to receive payment on numerous aircraft from foreign airliners. As a result both have engaged in serious lobbying which has raised many questions surrounding the Ex-Im bank. Delta recently had a lawsuit shot down on the subject.

With all of this commotion many have seen the Ex-Im bank as a form of crony capitalism as it seems many are favoring Boeing over Delta due to Boeing's exuberant spending on lobbying in comparison to Delta's. Congressmen Paul Ryan is calling for the bank to be allowed to expire on July 1st without a renewal as he also believes it is a form of crony capitalism which the United States should not engage in.

Source: http://www.nytimes.com/2015/04/07/business/boeing-delta-air-lines-export-import-bank.html

Kansas Cracks Down on Available Purchases With Welfare

The Governor of Kansas is expected to sign a bill that affects how recipients of the Temporary Assistance for Needy Families program can spend their publicly provided funds.  Although most of the recipients abide by the boundaries of expected purchases, such as for rent, food, and gas, there are some recipients who purchase things such as tattoos, gambling and psychic services among many examples.  A republican senator introduced the bill with the goal of making sure taxpayer money is being spent productively and for the purpose which it was meant.  There are also people who are frauds and find ways to receive TANF money even though they are not in financial trouble.  In 2013, Kansas estimated losing $7 million due to fraud.  The bill imposes a host of restrictions and requirements of how state benefits can be used.  A long list of banned products can be found with the link to the article.  I personally agree with the bill.  In my opinion, taxpaying families shouldn’t have to give up their income for someone who claims to need the money in order to survive but then turns around and buys tattoos or a vacation on a cruise ship.  Also, the bill will not affect or hurt the people who actually spend their funds on necessities. 

http://money.cnn.com/2015/04/07/news/kansas-welfare-limits/index.html?iid=HP_LN         

Economy's gasoline bonus finally being put to use

In just a three month span consumers are shifting their attitudes due to the cheaper gas prices. In December 61%  of the respondents said they were doing nothing with the saving compared to the 42% in March. A consistent three months of low gas prices, consumers are noticing the extra savings in their pockets and spending it quicker. The recent survey by CNBC All-America Economic conducted  March 26-29 showed 56% surveyed were aware of the savings and using them to pay off debt or spending on other things. Economists referring to the consumer shift as the "gasoline bonus" say it should continue through the end of the year. Analyst and founder at Oil Price Information Service, Tom Kloza, commented on the issue and stated, "I do think we'll trend a little bit higher, but personally I think the range of prices for the rest of the year is probably $2.70 on the high side and $1.90 on the lower side, and we're right ton the average." He also mentioned that this "translates to about $140 billion in more disposable income for this year, versus last year."


http://www.cnbc.com/id/102566097 

Ukraine agrees cheaper short-term gas deal with Russia

Despite Russian's threat to cutoff Ukraine energy supplies, Naftogaz - Ukraine's state gas company, did secure a short term deal with Gazprom - a Russian gas company. In this agreement, Ukraine will pay $248 thousands per thousand cubic metres for the next three month, which is a lot cheaper than the previous price at $329 thousands per thousand cubic metres that they paid for the first quarter of 2015. Long-term solution has still not been reached and Ukraine is still required to prepay the due to Russia.

Amidst the Ukraine crisis ongoing, this might be one of a small yet needed positive news that both countries want, especially Ukraine. However if anything it's not any indication of improvement over the overall situation in Ukraine, let alone the economics situation in both countries.


http://www.bbc.com/news/business-32157899