http://finance.yahoo.com/news/vw-freeze-promotions-due-emissions-104248653.html
Now all the plans of Volkswagen are about how to cut cost including re-use as many parts as possible in the next generation of its popular Golf model and cut the investment plan at its VW division in order to recover from the scandal as soon as possible. However, when VW's response for if they would have to cut jobs is "We are driving in thick fog at the moment." I think VW would not cut jobs. At least they did not cut jobs in China. I think one reason is that recent China cut the purchase tax from 10% to 5% for sub-1.6 liter cars. This announce boosted the sales of VW in China, and let VW feel the hope. Although VW is still in trouble, but I believe they will come back.
Saturday, October 24, 2015
How AB InBev Won over SABMiller
http://www.wsj.com/articles/
This article deals with these two major beer companies and how Anheuser- Busch InBev paid 104.2 billion dollars to takeover SABMiller. This takeover will make AB InBev a powerhouse in the world beer market. There was a lot of behind the scenes talks and deals made in order for this deal to be approved by both sides. It began with AB InBev’s offer of 44 euros a share and a 3 billion dollar breakup fee if any problems happened with the deal. After this, there was a tiny mishap that happened with public shares by AB InBev. They made a public share proposal of 42.15 euros per share, which they thought they were backed up by investors, but they were not. This resulted in heated talks and a quick rejection of the share proposal. The chairman of SABMiller, Jan du Plessis, was an important piece that kept the deal intact and he helped achieve a better price for the company. The board of directors for SABMiller had many arguments and talks questioning whether to keep the 42.15 a share, because some of the big investors wanted to keep that price. But, Jan kept the board together and convinced them that he could get a better deal for everyone. Then, both sides decided it would be best if the meetings were more private, and this is where SABMiller negotiated the deal up to 43.50 euros a share. This increase in the share proposal made negotiations more serious and the big investors were backing up the deal. An example of this is how the Santo Domingo family, a major share holder of SABMiller, agreed to terms because of the increase in the cash component of the partial share plan. The terms were agreed upon, and the next step was facing antitrust scrutiny and officially closing the deal. It was estimated that the deal could take as long as a year to close. AB InBev will have to work with China and the U.S to get regulatory approval but once that is done, they will be a dominant power in the beer market.
This article deals with these two major beer companies and how Anheuser- Busch InBev paid 104.2 billion dollars to takeover SABMiller. This takeover will make AB InBev a powerhouse in the world beer market. There was a lot of behind the scenes talks and deals made in order for this deal to be approved by both sides. It began with AB InBev’s offer of 44 euros a share and a 3 billion dollar breakup fee if any problems happened with the deal. After this, there was a tiny mishap that happened with public shares by AB InBev. They made a public share proposal of 42.15 euros per share, which they thought they were backed up by investors, but they were not. This resulted in heated talks and a quick rejection of the share proposal. The chairman of SABMiller, Jan du Plessis, was an important piece that kept the deal intact and he helped achieve a better price for the company. The board of directors for SABMiller had many arguments and talks questioning whether to keep the 42.15 a share, because some of the big investors wanted to keep that price. But, Jan kept the board together and convinced them that he could get a better deal for everyone. Then, both sides decided it would be best if the meetings were more private, and this is where SABMiller negotiated the deal up to 43.50 euros a share. This increase in the share proposal made negotiations more serious and the big investors were backing up the deal. An example of this is how the Santo Domingo family, a major share holder of SABMiller, agreed to terms because of the increase in the cash component of the partial share plan. The terms were agreed upon, and the next step was facing antitrust scrutiny and officially closing the deal. It was estimated that the deal could take as long as a year to close. AB InBev will have to work with China and the U.S to get regulatory approval but once that is done, they will be a dominant power in the beer market.
WSJ Survey: Economists Still See Fed Rate Increase in 2015
Sixty-Four percent of the economists surveyed say that the Federal Reserve's December 15th and 16th meeting will lead to an interest rate rise. “The Federal Reserve has all-but-telegraphed a desire to begin raising rates by year’s end, and this is likely to be at their December meeting,” said Chad Moutray, the chief economist for the National Association of Manufacturers. In September, 84% of the economists said that the Federal Reserve would increase the interest rate, but global economic slowdown and the stock market tumbling were reasons not to do this. Janet Yellen stated that to achieve the United States economic goals, t he interest rate will need to be raised. On the other hand, other economists believe that there is much less of a chance that the Fed will increase the interest rate this year because of continuing low inflation. Diane Swonk, the chief economist of Mesirow Financial thinks that there is a 50-50 chance that the Fed will raise interest rates in December. The Fed is also looking at the labor market as an indicator of when to raise the interest rate. The Federal Reserve saw the weakest back to back job growth in August and September, which was also cause fort he delay in the rate rise. Sean Snaith, an economist at the University of Florida, says that data will not justify a move until March. When do you guys think the Fed will raise the interest rates?
http://www.wsj.com/articles/wsj-survey-economists-still-see-fed-rate-increase-in-2015-1444312800
http://www.wsj.com/articles/wsj-survey-economists-still-see-fed-rate-increase-in-2015-1444312800
Starbucks, Fiat, and Illegal Tax Deals
The European Commission recently charged Starbucks Corp. and Fiat Chrysler Automobiles NV with illegal tax deals in the Netherlands and Luxembourg. Starbucks is ordered with paying 20-30 million euros (a drop in their bucket) in back taxes to the Netherlands, and Fiat must pay a similar amount in Luxembourg. Both companies plan to appeal this, claiming that proper investigation was not done properly, with significant errors, and they deny any illegal activity. They are not the only multinational corporations that have moved to the EU for tax breaks and may not be complying with the rules. Apple in Ireland has also received many tax breaks and an investigation will be happening there too.
EU is attempting to crack down as much as possible on the large corporations that are taking advantage of tax loopholes. The only way they will be able to enforce the rules more and prevent this from happening is by creating more legislation defining what is allowed and by actually enforcing it. They do not want the larger companies that are more powerful to have a greater advantage than the smaller and medium sized countries that don't get the same breaks. This investigation is setting off an alarm for other similar multinational corporations looking to do business abroad.
http://www.reuters.com/article/2015/10/21/eu-taxavoidance-idUSL8N12L1ZH20151021
EU is attempting to crack down as much as possible on the large corporations that are taking advantage of tax loopholes. The only way they will be able to enforce the rules more and prevent this from happening is by creating more legislation defining what is allowed and by actually enforcing it. They do not want the larger companies that are more powerful to have a greater advantage than the smaller and medium sized countries that don't get the same breaks. This investigation is setting off an alarm for other similar multinational corporations looking to do business abroad.
http://www.reuters.com/article/2015/10/21/eu-taxavoidance-idUSL8N12L1ZH20151021
Why hasn't America taken in more Syrian refugees?
Since the start of the civil war in Syria, 12 million Syrians have been displaced from their homes. Of those 12 million, 4 million have sought asylum in other countries. Almost 2 million are in Turkey, 1 million in Lebanon, 650,000 in Jordan, and an increasing number of tens of thousands in Germany. How many has America taken in?: about 1500. Many point to America's fear of terrorism as one reason why this number is so low. The chairmen of the House Homeland Security Committee, Michael McCaul, stated, "I can't support a policy that would allow a jihadist pipeline into the United States" when introducing a bill that would reduce the number of Syrian refugees the government plans on admitting. Since 9/11 the vetting process of refugees and immigrants has grown drastically costing the US millions. The vetting process includes "multiple investigations of their biographies; biometric checks of their fingerprints and photographs; in-depth interviews by highly trained Department of Homeland Security officers; medical screenings as well as investigations by the National Counterterrorism Center and by intelligence agencies." Since 9/11, 750,000 refugees have been admitted into the US and only two have been arrested on terrorism charges. Should the US allow more Syrian refugees into the country? Is the fear of terrorism from Syrian refugees a justified and realistic reason to deny asylum seekers entry into the US?
Friday, October 23, 2015
Directors Say Volkswagen Delayed Informing Them of Trickery
After the huge scandal that Volkswagen had, there was members on the board claiming that they didn't know anything about the company's emission cheating for two weeks after the top executives admitted the deception to American environmental officials. Since September 18, Volkswagen stock value has dropped by a third. With some of their cars emitted far higher levels of nitrogen oxide they were in trouble with the United States Environmental Protection Agency. Stephan Weil, who is a board member and the prime minister of the German state lower Saxony learned of Volkswagen deception by watching the news. Another board member, learned of this by reading about it online. Around 11 million cars have the illegal software, which were mostly in Europe and the United States. This lead to a huge amount of lawsuits against them. There are shareholder that complained that Volkswagen didn't follow German law requiring it to publicize information that could affect the stock price.
http://www.nytimes.com/2015/10/24/business/international/directors-say-volkswagen-delayed-informing-them-of-trickery.html?ref=business
Rent-A-Cop: Private Security is Hollowing Out Nigeria's Security Forces
Private security is a big business in Nigeria, a state where there are constant bombings in the north, rampant sectarian violence and in which jihadist insurgent group Boko Haram operates. Companies and firms do not want to risk their employees' lives or litigation, so they hire private guards to carry out security precautions such as scan bags or guard entrances. For example, between 2007 and 2009, Shell spent $383 million, 40% of its global security budget, in Nigeria alone. It is estimated that there are over 2,000 private security companies in Nigeria.
Because they can't legally carry weapons, armed units are required to be hired from national forces, which can in turn breed indiscipline. Corruption permeates all levels of the armed units, making it difficult for private contractors to control those they hire. Private companies pay very well, which often incentivizes commanders to hire out their men and diminishes the capacity and effectiveness of the state's police and armed forces in protecting citizens. This privatization of public security can fuel conflict as companies arm different regions with corrupt armed units accused of human rights abuses and theft of oil. The new president of Nigeria, Muhammad Buhari, is pushing to cancel some security contracts and has been encouraging police to stop serving for rich politicians and firms.
http://www.economist.com/news/middle-east-and-africa/21674811-private-security-hollowing-out-nigerias-security-forces-rent-cop?fsrc=scn/tw/te/pe/ed/rentacop
Because they can't legally carry weapons, armed units are required to be hired from national forces, which can in turn breed indiscipline. Corruption permeates all levels of the armed units, making it difficult for private contractors to control those they hire. Private companies pay very well, which often incentivizes commanders to hire out their men and diminishes the capacity and effectiveness of the state's police and armed forces in protecting citizens. This privatization of public security can fuel conflict as companies arm different regions with corrupt armed units accused of human rights abuses and theft of oil. The new president of Nigeria, Muhammad Buhari, is pushing to cancel some security contracts and has been encouraging police to stop serving for rich politicians and firms.
http://www.economist.com/news/middle-east-and-africa/21674811-private-security-hollowing-out-nigerias-security-forces-rent-cop?fsrc=scn/tw/te/pe/ed/rentacop
Thursday, October 22, 2015
A Change in Beverage Preferences
Recent studies have demonstrated the steep decrease in certain beverages high in calorie and sugar content, including sodas and fruit drinks. Many Americans are now focusing on a variety of drinks that contain diet formulations with low calorie and sugar numbers. As mentioned earlier, the calories consumed in beverage form is rapidly decreasing, with most of the change coming from soda and fruit drinks. Children are also drinking less milk, which demonstrates the fixation with calories that Americans now hold. Americans are opting for energy and sport drinks that have no calories but a long list of ingredients. These growing categories of energy and sport drinks are yielding sales, however they have not grown enough to compensate for the large decline on soda consumption. Big beverage companies are still investing in these types of beverages because they do hold future potential to yield greater profits. They are clearly a growing segment, so perhaps more time is needed for the beverages to fully compensate and take over the soda decline.
As Americans are starting to become more health conscious, I would think that they would be skeptical to not only calories, but also the list of questionable ingredients in the beverages they consume. Therefore, I do hold some doubt for the future of the sport and energy drink industry. I also think the article failed to mention new "health" drinks, such as all green drinks or coconut water. I believe that the sale of super health drinks will increase in the future due to not only a new health attitude, but also to the increase in nutritional education Americans are now receiving.
http://www.nytimes.com/2015/10/16/upshot/energy-drinks-are-popular-but-not-enough-to-replace-soda.html?ref=economy
Tuesday, October 20, 2015
Has the Burrito Boom Come to an End?
http://money.cnn.com/2015/10/20/investing/chipotle-third-quarter-earnings/index.html?iid=hp-stack-dom
The all familiar fast casual restaurant chain that has created a cult like following in recent years has just recorded it's worst sales growth in over two years. It seems as if Chipotle might be at its pinnacle in terms of growth, seeing as it has started to plateau in the recent quarters. Although they are still seeing tremendous sales figures that companies dream of, their investors don't seem to be happy because their stock price fell by 6% after their earnings were announced. Chipotle's CEO and co-founder Steve Ells was quoted saying "I am confident that we have the right food culture and people culture in place for us to continue our momentum," however from a market perspective, is the Chipotle hype and following starting to decrease and wear out among consumers?
In 2012 Chipotle had 1,200 locations, but now they are expected to have over 2,000 by the end of this year. That being said, could their rapid growth and expansion have caused this economic slowdown for them, because it seems to appear that way. Although it is very hard to continue successful operations like they have done in recent years, it will be interesting to see what Chipotle does to rebound in an attempt to reestablish themselves in the market place.
The all familiar fast casual restaurant chain that has created a cult like following in recent years has just recorded it's worst sales growth in over two years. It seems as if Chipotle might be at its pinnacle in terms of growth, seeing as it has started to plateau in the recent quarters. Although they are still seeing tremendous sales figures that companies dream of, their investors don't seem to be happy because their stock price fell by 6% after their earnings were announced. Chipotle's CEO and co-founder Steve Ells was quoted saying "I am confident that we have the right food culture and people culture in place for us to continue our momentum," however from a market perspective, is the Chipotle hype and following starting to decrease and wear out among consumers?
In 2012 Chipotle had 1,200 locations, but now they are expected to have over 2,000 by the end of this year. That being said, could their rapid growth and expansion have caused this economic slowdown for them, because it seems to appear that way. Although it is very hard to continue successful operations like they have done in recent years, it will be interesting to see what Chipotle does to rebound in an attempt to reestablish themselves in the market place.
IMF forecast the Global Growth in 2015 will be at 3.1%
On October 19th, International Monetary Fund(IMF) released the world economic outlook report, the forecast of the global growth in 2015 is 3.1%, which is 0.3% lower than the growth in 2014, and 0.2% lower than the predicted value in July 2015. Prospects for major contries and regions remain uneven.
Compare to 2014, the recovery in advanced economies is expected to accelerate slightly, while the slowdown in emerging markets and developing economies is expected to remain for the fifth consecutive year.
According to the report, a growth in emerging markets and developing economies is expected in 2016. This is mainly because the countries that are in recessions or economic harship in 2015 will or partially be able to normalize their situation, the economic activities in advanced economies will be able to accelerate the spillover effects that were brough about.
Compare to 2014, the recovery in advanced economies is expected to accelerate slightly, while the slowdown in emerging markets and developing economies is expected to remain for the fifth consecutive year.
According to the report, a growth in emerging markets and developing economies is expected in 2016. This is mainly because the countries that are in recessions or economic harship in 2015 will or partially be able to normalize their situation, the economic activities in advanced economies will be able to accelerate the spillover effects that were brough about.
Speculators and US Currency Growth
http://www.economist.com/news/finance-and-economics/21674775-currency-pegs-are-still-fashion-some-are-creaking-pegs-under-pressure
Plunging commodity and natural resource prices are affecting currencies across the world. Many currencies are falling with oil prices. The Russian roubel, for example, is down 45% along with the Brazilian real which is down 40% (one of the most developed South American economies on the continent).
With that said, the US dollar has grown stronger to foreign currencies during this time which is odd because oil is mostly traded using the American dollar (and oil prices are declining). Some economists argue, according to the Economist, that the reason for this dollar strength is due to higher demand due to less exports coming out of America. This could cause a sharp decline in the future because if speculators can spot the problem, they could attack the dollar directly, lowing its value and affecting businesses who borrowed the dollar for their business,
To adjust for currency decline, countries like Saudi Arabia have made reserves capable of paying for up to 48 months of imports. Other countries are burning through their reserves and turning surpluses into deficits.
Do you think the US should plan for a currency decline if oil prices continue to fall or do you think that the US is in good shape when compared to the world economy and does not need to plan for a speculator attack?
Plunging commodity and natural resource prices are affecting currencies across the world. Many currencies are falling with oil prices. The Russian roubel, for example, is down 45% along with the Brazilian real which is down 40% (one of the most developed South American economies on the continent).
With that said, the US dollar has grown stronger to foreign currencies during this time which is odd because oil is mostly traded using the American dollar (and oil prices are declining). Some economists argue, according to the Economist, that the reason for this dollar strength is due to higher demand due to less exports coming out of America. This could cause a sharp decline in the future because if speculators can spot the problem, they could attack the dollar directly, lowing its value and affecting businesses who borrowed the dollar for their business,
To adjust for currency decline, countries like Saudi Arabia have made reserves capable of paying for up to 48 months of imports. Other countries are burning through their reserves and turning surpluses into deficits.
Do you think the US should plan for a currency decline if oil prices continue to fall or do you think that the US is in good shape when compared to the world economy and does not need to plan for a speculator attack?
Monday, October 19, 2015
Why Google Hates Amazon Prime
What will happen to Google if no one searches for anything on it? Currently Google has fallen behind compared to Amazon's position as the primary destination for product searches that appears to be improving. A 2012 survey from Forrester Research found that Amazon was the starting point for just 30% of online shoppers. And the Amazon Prime Services has been leading to more loyalty, offering two-day shipping for a flat $99 yearly rate along with TV, movie, and music streaming, among several other benefits. So the Question is what is google doing to amp up their search engine and get more of the public involved, because the more popular Amazon gets the more Google falters.
Full article: http://www.fool.com/investing/general/2015/10/18/why-google-hates-amazon-prime.aspx
Full article: http://www.fool.com/investing/general/2015/10/18/why-google-hates-amazon-prime.aspx
Sunday, October 18, 2015
The pillars of American finance are under attack
There has already been a lot of debate for why some of the
major American firms have not taken enough security measures to protect their
company from frequent cyber-attacks. Now, a lot of the Wall Street giants are
under such attacks. Not only have the hackers been attacking the banks and the brokerage
firms, they have also been after the news-makers, distributors, and the business
reporters. Recently, a group of Russian hackers broke into the Dow Jones servers
and stole information that they used to trade on. FBI has been keenly looking
into this matter. Other cyber-attacks happened to retail brokerage Scottrade
where they announced that the hacking affected up to 4.6 million clients and
was aimed at stealing names and street addresses. Reportedly, some of the
hackers stole more than 150,000 press releases from a handful of news wires in
August which contained financial information that could be used for trading. JP
Morgan was under such an attack in 2014 where the hackers stole contact
information for more than 70 million households.
It can be said without any doubt that no one in the
financial services sector is safe in the modern world. It was surprising that
some of companies cut back on their budgets for technological improvements earlier
in the year. Finance and other major companies need to invest more on increasing their cyber-security
and shield against such frequent attacks soon, else the scenario will keep
getting worse.
Few in Venezuela Want Bolívars, but No One Can Spare a Dime
http://www.nytimes.com/2015/10/19/world/americas/few-in-venezuela-want-bolivars-but-no-one-can-spare-a-dime.html?hp&action=click&pgtype=Homepage&module=first-column-region®ion=top-news&WT.nav=top-news
Pity the bolívar, Venezuela’s currency, named after its independence hero, Simón Bolívar. Even some thieves don’t want it anymore.
A year ago, one dollar bought about 100 bolívars on the black market. These days, it often fetches more than 700 bolívars, a sign of how thoroughly domestic confidence in the economy has crashed. The minimum wage is 7,421 bolívars a month. That is either a decent $1,178 a month or a miserable $10.60.
The International Monetary Fund has predicted that inflation in Venezuela will hit 159 percent this year (though President Nicolás Maduro has said it will be half that), and that the economy will shrink 10 percent, the worst projected performance in the world (though there was no estimate for war-torn Syria).
Most economists say the problems are caused by the fall in oil prices and by the government’s policies, including strict controls on prices and foreign exchange for imports.
Pity the bolívar, Venezuela’s currency, named after its independence hero, Simón Bolívar. Even some thieves don’t want it anymore.
A year ago, one dollar bought about 100 bolívars on the black market. These days, it often fetches more than 700 bolívars, a sign of how thoroughly domestic confidence in the economy has crashed. The minimum wage is 7,421 bolívars a month. That is either a decent $1,178 a month or a miserable $10.60.
The International Monetary Fund has predicted that inflation in Venezuela will hit 159 percent this year (though President Nicolás Maduro has said it will be half that), and that the economy will shrink 10 percent, the worst projected performance in the world (though there was no estimate for war-torn Syria).
Most economists say the problems are caused by the fall in oil prices and by the government’s policies, including strict controls on prices and foreign exchange for imports.
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