Social Media Punished as Results Fall Short

Stocks of some of the biggest social media companies pummeled significantly worrying some about the decrease of social media. Twitter, LinkedIn, and Yelp all suffered losses in Wall Street. LinkedIn shares were down by 25 percent, Twitter's by 25 percent and Yelp by 23 percent as well. These results indicate that some investors are beginning to think that investing in social media right now might be too big of a risk and this should make other social media sites to worry as well and they should start looking for ways to increase the confidence of their investors.

http://www.nytimes.com/2015/05/01/technology/social-media-punished-as-results-fall-short.html?hpw&rref=business&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well

China's big plunge in Pakistan

      The Chinese President Xi Jinping was visiting Pakistan last week and announced an investment of $46 billion dollars in Pakistan aimed at building an economic corridor linking China to Europe,Central Asia and the Middle East through Pakistan. This corridor will significantly reduce the time it takes for China to import energy as it bypasses the Straits of Malacca which could have been blocked in times of war. Pakistan will also significantly benefit from this deal as it is huge investment in improving the infrastructure of the country and it will help create jobs. However, both countries will have to deal with rampant corruption in Pakistan, militancy and separatist groups in Baluchistan, which is the province where most of the investment is occurring. If both these countries are successful in protecting their investments then the future does indeed looks bright for both these countries.  

http://www.nytimes.com/2015/04/23/opinion/chinas-big-plunge-in-pakistan.html

With Patent Litigation Surging, Creators Turn to Washington for Help

Patent law is becoming a high profile topic in congress. There has been a lot of related lawsuits in the past few years. A Senate bill was put forth to address companies that are "patent trolls", this bill makes it harder for them to sue because of patents, it also makes it much more costly as well. Companies that are "patent trolls" use techniques like filing letters with firms in the hotel, retailer and restaurant industry that are obviously nontech. The letter then poses allegations on these companies that they have violated a patent, usually related to their software, creating a lawsuit. Some people view "patent trolls" in a positive light and they call them "patent monetization entities".









http://www.nytimes.com/2015/04/30/technology/with-patent-litigation-surging-creators-turn-to-washington-for-help.html?ref=business

Fed Expects Moderate Growth, Blaming Weather for Slowdown

The Federal Reserve announced that they expect economic growth to increase from last quarter, and that implies the interest rate benchmark will also increase. This year the economy has reportedly expanded by .2% the reason for the low expansion is decreased improvement in the labor markets and lower than desirable inflation rate. The Fed also blamed the winter weather for this low rate.











http://www.nytimes.com/2015/04/30/business/economy/federal-reserve-meeting-interest-rates.html?ref=business

How to Make Sense of Weak Economic Growth

GDP did not grow as anticipated, but do not worry it was just because of winter so says NY Times. Our 1 percent growth anticipation was severely let down when numbers came to prove we only grew .2 percent. It has been two years in a row that bad weather in certain areas of the country have impacted the first quarters growth, but the real question is whether or not we will play catch-up like we did last year? Is other data sending mixed signals?

http://www.nytimes.com/2015/04/30/upshot/how-to-make-sense-of-weak-economic-growth-in-2015.html?ref=economy&abt=0002&abg=0

U.S jobless claims rise

U.S weekly jobless claim has risen for the third straight week.  These week to week claims can slightly not accurate with what is actually occurring in the economy because of certain timely factors, like easter  and weather.  Overall the article states that the four-week moving average of claims is considered a better measure of labor market trends as it irons out week-to-week volatility.  This number has  increased 1,750 last week to 284,500. Claims below 300,000 are associated with a strengthening labor market.  An interesting factor is that this does not consider what jobs are actually being occupied.  Jobs have different pay and different mobility.  This could be fueled by a series of low paying jobs.  

http://www.cnbc.com/id/102613381

GDP stall in Q1

The economy did not grow as it was expected to do so in the first quarter of this year.  GDP only expanded 0.2, which way down from last quarters 2.2.  Experts did not expect as high a growth as last quarter but did expect to see around a 1.0% increase.  The reason for the drop can be related to many factors currently effecting the economy.  A strong U.S dollar is one of the factors slowing growth for this past quarter.  One of the major causes of this slow growth is due to the cold weather that we experienced this past winter.  This causes consumption to slow as consumers stray away from purchasing.  The outcome of this might be a delay in expected rising interest rates this summer.  They might hold off raising these interest rates till this fall.

http://www.cnbc.com/id/102630190

  

Tax Deductions Economists Hate

http://fivethirtyeight.com/features/the-tax-deductions-economists-hate/

I think its obvious here that these deductions favor those who have wealth or distort incentives for those with little expendable income.

Deflation? Oil's 45 percent rebound could be markets' next headache

The price of oil has made a remarkable comeback from the six-year low in January.  Since then, crude prices have risen 45%.  The worry now is that if this level of growth is sustained, than inflation may occur.  Over the past couple of months over 27 central banks have loosened their regulations to fight against deflation or slowed growth, however they might have been helping inflation creep up.  These efforts against deflation range from interest cuts to Quantitative Easing (bond buying).  An economist from Merrill Lynch stated that "A positive oil shock has a detrimental effect on growth and activity, and could generate some volatility." 

It will be interesting to see how these rising oil prices will affect the world's inflation rates

http://finance.yahoo.com/news/deflation-oils-45-percent-rebound-102407219.html

ideas of reform of the fed

Paul Volcker attest to the unhappiness with the chaotic, overlapping, and unaccountable sprawl of government agencies. Often when their is an issue a new institution is created and others are not eliminated. Also, the fed may be too involved and may need to step back. Volcker suggest some reforms and although their are gaps he is focussing on improving the system as it is. 

http://www.economist.com/news/finance-and-economics/21649556-former-central-banker-turns-his-own-kind-fed-up

America's Labour Market: The Economy doesn’t Matter

The proportion of the population available to work, that is, the labor-force participation rate in America is just 62.7%, the lowest level since 1977. This has big implications for wages in America for future.

According to simple economics, if participation rate increases, wages decline, however, if participation rate decreases, wages rise. It was due to the recession that participation rate decline. But, the article warns that better economic conditions will not increase the participation rate. This is because there is plenty of capacity for those already employed to work longer hours. The number of full-time jobs are lower than before the recession hit, part-time jobs are higher, and fewer people now hold multiple jobs. This shows that Americans are not being able to work as much as they would like to increase their spending.

Link

With 'steroids' gone, fewer stock market records to celebrate

http://money.cnn.com/2015/04/26/investing/stock-market-lookahead/index.html?iid=HP_LN

This article talks about how stocks may start to decline in value, or at least not increase so consistently, because of the end of quantitative easing and the expected increase in interest rates in the coming months. I could do without the baseball metaphor, but it is an interesting article about some of the effects of the Fed's actions. The author talks about investing in stocks from other countries such as India and Japan, but says investors should still hold onto US stocks, although they should expect growth to be slower than before.

Post-Recession, Have U.S. Consumers Abandoned Their ‘Shop ‘Til You Drop’ Mentality

In the article, Post-Recession, Have U.S. Consumers Abandoned Their ‘Shop ‘Til You Drop’ Mentality, Kathleen Madigan discusses how many households are consuming less and saving more. The great recession is the reason for this change. Older Americans are choosing to spend less in order to prepare for another financial crisis. While the younger generation fears that they will never receive their social security forcing them to start saving earlier.  Madigan calls this the New Normal. The New Normal started after the recession. During this period America has experienced low consumer confidence and reduced economic growth. Experts predicted this would last for a short period of time, however, many were shocked when after six years, and these issues still remained. Though Madigan states this will be beneficial in the long run, however certain economists feel that we should take action immediately.

Economics of the Egg McMuffin

I for one am a huge proponent of the new breakfast all day option at selected McDonalds. This means that instead of breakfast getting cut off around the 10:30 am mark like it always has been breakfast will now be served all day. But is this economically feasible for the largest fast food chain in the world?

Analysts are considering this a risky move. By looking at the egg mcmuffin we get a better understanding of what the actual "costs" of having breakfast all day will mean for the food chain. The actual sandwich costs 85 cents to make and sells for $2.99 resulting in a $2.14 profit while a bigmack yields a profit of $2.94 which is much more profitable for the franchisee. Some expert analysts say that breakfast sandwiches could canabalize burger sales resulting in company wide drops in profit.

Although this new move to breakfast all day options could result in customer satisfaction it could also mean a drop in profits for a company looking for a turn around.

http://money.cnn.com/video/news/2015/04/22/economics-of-an-egg-mcmuffin.cnnmoney/index.html?iid=HP_LN

Treasury Officials Increase Efforts With Finances of Puerto Rico

This article addresses the continued financial woes of the United States Commonwealth located in the Caribbean. The largest economic problem in Puerto Rico, which has caused a number of other smaller issues to develop, is that the island’s debt continues to grow larger and larger. There is now there is a fear that they will not be able to pay back bonds they sold. Default on these bonds is becoming more of a reality. As a result numerous treasury officials have traveled to the island to meet with local government. The article touches on a few potential solutions such as allowing access to the discount window for further borrowing, the government bailing out the commonwealth which seems unlikely or the further sale of bonds to a hedge fund. 

Source: http://www.nytimes.com/2015/04/14/business/dealbook/treasury-officials-increase-involvement-with-finances-of-puerto-rico.html?_r=0

It's Expensive To Be Poor

http://money.cnn.com/2015/04/23/news/economy/poor-spending/index.html?iid=SF_E_River

The article states that low income Americans are spending far more than they earn, forcing many to dip into savings, lean on family or go into debt. Those in the bottom 30% of the income scale make and average of $14,000 a year, including the value of many government benefits like food stamps or disability payments. But they spend more than $25,000 or 182%, of their annual income mostly on basic needs like housing, food and transportation. "People are either making impossible choices or turning to high cost credit or going into debt to meet basic needs" said Melissa Boteach, vice president of the Poverty to Prosperity program. The middle class isn't doing great, either. Their annual income just barely tops $54,000 and on average they spend more than $48,000, or 89% of their earnings a year. While the rich earn $166,000, but spend only $101,000. Keeping a roof over the poor's head is the hardest challenge according to the article, but it eats up 72% of the poor's income. Even affordable housing is a challenge for the poor. Only one-in-four families receive affordable housing. Also, 28% of the poor's income go to food and most of the time food stamps do not last the month. So what can we do to help the poor? Affordable housing is one of the most underfunded federal safety net programs the United States has, what can we do to change this?  

China plans greater yuan convertibility inside and outside FTZs

http://www.businessinsider.com/r-exclusive-china-plans-greater-yuan-convertibility-inside-and-outside-ftzs-2015-4

China is taking a major step to reducing restrictions on the convertability of the Yuan, for the moment in free trade zones but with plans to take this nationwide. This plan will allow it to be significantly easier to convert the Yuan to other currencies and is a major step towards liberalization in China. It signals a further move towards a market economy for China in addition to slow reform in its institutions. These steps are likely being undertaken with the hopes of maintaining China's stellar growth rate which has begun to stagnate slightly in the past few years.

In Battle Between Strong Dollar and Cheap Gas, the Strong Dollar Is Winning

This year, the US has experienced a decline in gasoline prices, as well as, an appreciation of the US dollar. Many companies that rely on exports are facing stronger competition, as their competitors are able to sell goods at a lower cost. American consumers are importing more and a decrease in exports is creating "a drag on job creation and overall growth in the United States."

Many expected the decrease in gasoline prices to counter the effects of the US dollar appreciating. However, consumers are unexpectedly saving more instead of spending. This has caused the Federal Reserve to rethink their future plans in regard to interest rates.

Link to Article

Obamacare Penalty May Not Be High Enough For Middle Incomes

 With the newly instituted health insurance referred to as Obamacare more and more people are starting to gain coverage. However this new form or health insurance also comes with a penalty for those who do not have insurance. The affordable care act was created to make it easy for all people, regardless of income to gain coverage.  The fee for not having this coverage has increased in 2015 to $325 or 2% of annual income. This is up from the $95 in the previous years. The idea here is to push more people to sign up for the program. However many researchers have determined that this price penalty is too inexpensive for the middle class. People still find it cheaper to not have coverage at all. These are predicted to be the people making double the poverty rate.


http://www.forbes.com/sites/brucejapsen/2015/04/25/obamacare-penalty-may-not-be-high-enough-for-middle-incomes/

Asia Index Futures Gain After U.S. Records as Dollar Holds Loss

http://www.bloomberg.com/news/articles/2015-04-26/asia-index-futures-gain-after-u-s-records-as-dollar-holds-loss

Asian equity-index futures signaled gains after U.S. stocks finished the week at all-time highs amid earnings reports and data that pushed back expectations for interest-rate increases. The dollar held near its lowest level in seven weeks.

Futures on the S&P/ASX 200 Index and Hang Seng Index climbed 0.4 percent in most recent trading. Contracts on the Nikkei 225 Stock Average as of 8:20 a.m. in Tokyo showed the gauge may open little changed after closing above 20,000 for the first time in 15 years last week. The Bloomberg Dollar Spot Index rose less than 0.1 percent after capping its fifth decline in six weeks. The euro was steady after gaining Friday even as talks on aid for Greece ended in acrimony. U.S. oil fluctuated after dropping 1 percent Friday.

The yen was 0.1 percent stronger at 118.88. Speculation that BOJ Governor Haruhiko Kuroda will seek more action has driven a rally in sovereign bonds that cut the two-year yield to minus 0.02 percent on April 24.

Economics of American Prohibition

https://thefinancialengineer.net/economics-of-american-prohibition/

This article shows the effects the prohibition in America had economically (and to a lesser extent socially). Today, this becomes relevant once again with the discussions of marijuana legalization state-to-state or federally. The National Minimum Drinking Age Act of 1984 provided an incentive for states to change their minimum drinking age to 21, but this is still a state decision; will the same thing be applied to marijuana in the future? What about other drugs? Either way, it seems the tide is slowly changing on this one. It is also interesting to see the support coming from both sides of either argument, both then and now.

Russia's Economy: Not just natural resources

http://www.forbes.com/fdc/welcome_mjx.shtml

This article talks about how Russia is far more than just its natural resources.  People often look at Russia as if its only source of wealth is its oil.  The article quotes McCain when he calls Russia "a gas station masquerading as a country."  However it disproves this fact in saying that its GDP per capita without its natural oil resources puts the country at a place comparable with other post- communist countries such as Bulgaria and Poland.  It also compares to some other adjusted resource dependent state's GDP.  The takeaway is that Russia is more than its natural resources.  Without the natural resources Russia is a larger version of Romania.

The article mentions that Russia is not comparable by world standards as far as its production.  We know that many post soviet countries suffered from a lack of a developed production system.  The output that Russia produces isn't nearly as large as some of the other oil producing countries or resource rich countries.  The country has more to it than its natural resources.