It is expected that Volkswagen is offering cash to the owner of diesel Volkswagen cars in the United States soon. The are doing such extreme moves because they are trying to recover their brand after the huge fiasco in September. This upcoming Monday, Volkswagen maybe be offering diesel owner up to $1,250 if they spend at a Volkswagen dealer and if not they would get $500 cash card. Volkswagen is still facing many lawsuits. In response to the lawsuits Volkswagen has promised to make changes to the cars that were cheating on the emissions testing. The specific cars that have been affected was the Golf, Jetta, Beetle, and Passat molds solid since the 2009 model year. Volkswagen has been trying to minimize the damage to sales by offering cash incentive to exist owner if they have bought or lease a new car, as well as big discount for all buys.
http://www.nytimes.com/2015/11/08/business/international/volkswagen-may-offer-cash-to-ease-owners-ire.html?hp&action=click&pgtype=Homepage&module=first-column-region®ion=top-news&WT.nav=top-news&_r=0
Saturday, November 7, 2015
Heroin Addiction: to beat the scourge of heroin, governments should deal the drug themselves
Ireland announced its plans to permit some consumption of heroin. This plan would establish "medically supervised injecting facilities," or shooting galleries, where heroin addicts would be able to take their drugs using clean equipment and under doctor supervision. These facilities would reduce the harm caused by heroin, including high crime rates and addiction.
Seven countries in Europe, Australia and Canada all already run shooting galleries and have all seen a reduction in health risks to those who are hooked on heroin. At these facilities, authorities are given the opportunity to encourage addicts into treatment. Contrary to popular worry, these galleries have not encouraged more people to use heroin. The only downside is that drug-takers using the galleries must bring their own heroin, so the drugs consumed are illegal and still pose a risk as they may be impure or unusually strong. Additionally, many addicts rob, burgle, and sell their bodies to pay for their habit.
The heroin market is worth more than $50 billion a year worldwide and remains in the hands of criminals. The article suggests that the state should take over the market itself. This would mean rationed, state-sanctioned prescriptions of heroin and the undermining dealers of illegal drugs. The most difficult task would be convincing voters to finance such a system.
http://www.economist.com/news/leaders/21677641-beat-scourge-heroin-governments-should-deal-drug-themselves-how-smack-it-down?fsrc=scn%2Ftw%2Fte%2Fpe%2Fed%2Fhowtosmackitdown
Seven countries in Europe, Australia and Canada all already run shooting galleries and have all seen a reduction in health risks to those who are hooked on heroin. At these facilities, authorities are given the opportunity to encourage addicts into treatment. Contrary to popular worry, these galleries have not encouraged more people to use heroin. The only downside is that drug-takers using the galleries must bring their own heroin, so the drugs consumed are illegal and still pose a risk as they may be impure or unusually strong. Additionally, many addicts rob, burgle, and sell their bodies to pay for their habit.
The heroin market is worth more than $50 billion a year worldwide and remains in the hands of criminals. The article suggests that the state should take over the market itself. This would mean rationed, state-sanctioned prescriptions of heroin and the undermining dealers of illegal drugs. The most difficult task would be convincing voters to finance such a system.
http://www.economist.com/news/leaders/21677641-beat-scourge-heroin-governments-should-deal-drug-themselves-how-smack-it-down?fsrc=scn%2Ftw%2Fte%2Fpe%2Fed%2Fhowtosmackitdown
U.S. Consumer Credit Jumps, Signaling More Confidence in Economy
Outstanding consumer credit rose by a 10%annual rate in September, which is the largest rate increase since April of 2014. This is due to low gas prices and a strong US dollar. The dollar increase was the largest since 1941, not including inflation. Revolving credit rose by an annual rate of 8.7% in September in comparison to 5.3 % in August. On Friday, the Labor Department said employers added 271,000 jobs in October. This could help support more borrowing and spending. During the third quarter of this year, Business investment fell, which puts more pressure on consumer spending to help increase productivity. This news can also affect the interest rate decision. Because consumers are spending and borrowing more, we might see inflation numbers that the Federal Reserve would like to see to raise the interest rate. I am interested to see the Fed's decision based on this information. What do you guys think?
http://www.wsj.com/articles/u-s-consumer-credit-rises-by-28-9-billion-in-september-1446840373
Friday, November 6, 2015
Germany got some terrible economic news
Current economic conditions are not so good for the economic powerhouse of Europe - Germany. Industrial production figures fell 1.1% month-on-month in September, against analysts' expectations of a 0.5% rise. Germany's exports also fell significantly following the slowdown in China and other developing markets this year, and their manufacturing orders dropped by 1.7% in the third consecutive month.
Meanwhile, the Spanish economy is recovering strongly from its housing crash and debt crisis. The country's industrial output beat expectations, rising 3.8% year-on-year in September instead of the predicted 2.8%.
http://www.businessinsider.com/german-industrial-production-falls-in-september-2015-11
Meanwhile, the Spanish economy is recovering strongly from its housing crash and debt crisis. The country's industrial output beat expectations, rising 3.8% year-on-year in September instead of the predicted 2.8%.
http://www.businessinsider.com/german-industrial-production-falls-in-september-2015-11
Labor Market Measures
The Fed has been waiting for both inflation to increase and the unemployment rate to decrease before raising interest rates, and now one of those is in line. The October jobs report showed that the U-3 unemployment rate, the major jobless indicator for economists, has fallen to 5%. This is the lowest that that indicator has been since April of 2008. Similarly, the U-6 rate, which measures the jobless people in addition to those who are marginally attached to the workforce or employed part time, has decreased 0.2% to 9.8%. Like the U-3 unemployment rate, this is the first time this rate has resembled a single digit number since 2008. Because of these changes, the gap between the jobless rate (U-3), and the broadest measure of unemployment (U-6), is now the smallest it has been since 2008. This is a great sign because it shows that the slack of the labor market if finally starting to be reduced, something the Fed has been waiting for. Since there is less slack this will allow us to better interpret the U-3 unemployment rate as the unemployment rate for the whole economy. Along with this is the 313,000 increase in the labor force reported last month. In the past Yellen has been concerned about those who are working in part-time position, but would prefer full time positions. In the past year, this "slack" has also decreased. This decline marks the biggest shrink shrink in this indicator since 1994. All in all, these macro indicators are great signs of economic recovery and will further persuade Yellen and the rest of the Fed to raise rates.
Source: http://www.bloomberg.com/news/articles/2015-11-06/one-of-yellen-s-most-important-labor-market-measures-now-looks-a-lot-better
Oil slides as dollar jumps; down 4 percent on the week
http://finance.yahoo.com/news/crude-oil-prices-edge-oversupply-015359400.html
Since US dollars is the
main currency used in the global oil market. The exchange rates between US
dollar and the currency of oil import countries affect the oil price a lot. If
Federal Reserve increase the interest rate which will make US dollar stronger,
it will force lots of oil export countries such as Russia increasing interest
rate too. All those interest rate changes will influence the global market like
the number of trades or difficulty of importing and exporting.
US Hiring Surges as Eyes turn to the Fed
Unemployment has fallen down to 5.0% in October and jobs increased by 268,000. This is a strong sign for the U.S. economy. Also the average hourly wage rose by 9 cents up to $25.20. The FOMC is looking for the economy to move towards full employment and inflation to be at 2% before they decide to raise interest rates. Interest rates haven't been risen since 2006. With continued strong job growth for the U.S. economy by December, Janet Yellen has signaled that the Fed may finally raise interest rates. The President of the Fed in Chicago stated that his two most important criteria for increasing the interest rates are strong wage growth and inflation moving to 2%. The meeting that will decide if interest rates will increase is in mid-December. So wage growth, inflation, and job growth from November will also be taken into account for the big decision. If they keep increasing like they did in October, we might finally see a increase in interest rates.
http://www.wsj.com/articles/u-s-employers-add-271-000-jobs-1446816737
http://www.wsj.com/articles/u-s-employers-add-271-000-jobs-1446816737
World-Wide
Economic Decline in Trade
The top 20 most developed
nations have slowed slowdowns in economic growth recently. This is mainly from
high tariffs and trade barriers. Roberto Azevedo, a director-general from the
World Trade Organization stated, “The number of trade-restrictive measures that
have been introduced remains a cause for concern.” Free trade is a concept far
from reality as trade restrictions have continued to tighten throughout the
globe. It is essential that all
developed nations come together to discuss these affairs. In 2015 some of the
most powerful nations will all come together in Turkey at a summit called the
G20. The G20 includes countries that
control much of the world trade such as the United States, Germany, United Kingdom,
Russia, China, and Brazil. The summit aims its focus on how to eliminate trade
barriers throughout the world.
World trade is shrinking
as volumes of imports fell -1.6% in the first quarter of 2015. This was largely
due to the slowdown in growth and output of China and other emerging markets.
The volume of world trade increased in 2010 by 13% but forecasted growth rates show
a slowdown in growth to as little as 2.8%. The main reason behind this lag in
growth of world trade is due to a Eurozone that continues to show weak output
and growth. Tension between Russia and Ukraine and what some will call the “Greece
Crisis” strike as other important playing factors when it comes overall decline
in world trade. China, being one of the largest economies in the world, had a
slowdown in industrial output. It seems that multiple underlying problems are
resulting in the overall decline in world-wide trade. Until there is a common
ground between developed and emerging nations world trade will continue to
shrink.
Thursday, November 5, 2015
When a 127-Year-Old U.S. Industry Collapses Under China's Weight
The New York based company, Alcoa Inc. has been churning out the lightweight metal used in everything from beverage cans to airplanes for the past 127 years and was a symbol of U.S. industrial might. Alcoa’s decision to eliminate 503,000 metric tons of smelting capacity accounts for about 31 percent of the U.S. total for primary aluminum, but less than one percent of the global total. A global glut has driven prices down by 27 percent in the past year, rendering American operations unprofitable and accelerating the pace of the industry’s demise. Aluminum is down 19 percent this year to $1,501 a ton on the London Metal Exchange. Plants overseas usually have the advantage of lower labor costs, cheaper energy expenses and weaker domestic currencies that favor exports to the U.S.. China probably will account for 55 percent of global aluminum production this year, up from 24 percent in 2005, according to Harbor research. The U.S. has gone in the opposite direction: from 2.5 million tons in 2005 to 1.6 million in 2015, it said.
The decision made by Alcoa Inc is based on the increase in production of aluminum by China. They are able to supply for aluminum because of the cheap, available labor. The weaker Chinese currency means these products are favored exports for countries, such as the U.S., with more buying power to purchase the goods as exports.
http://www.bloomberg.com/news/articles/2015-11-03/when-a-127-year-old-u-s-industry-collapses-under-china-s-weight
The decision made by Alcoa Inc is based on the increase in production of aluminum by China. They are able to supply for aluminum because of the cheap, available labor. The weaker Chinese currency means these products are favored exports for countries, such as the U.S., with more buying power to purchase the goods as exports.
http://www.bloomberg.com/news/articles/2015-11-03/when-a-127-year-old-u-s-industry-collapses-under-china-s-weight
Yellen: Rate hike next month is 'live possibility'
The Federal Reserve may be closer than ever to hiking interest rates for the first time in nearly a decade after Fed Chair Janet Yellen told Congress Wednesday that a move at its meeting next month is "a live possibility."
Yellen's remarks came a day after leading Republican presidential candidate Donald Trump asserted that the Fed has kept rates low as a political favor to President Obama, a charge White House officials dismissed. With another GOP debate scheduled next Tuesday, the question of whether the Fed boosts rates at its final meeting before the 2016 election year could continue to serve as a political football despite the Fed's status as an independent agency.
The Dow Jones industrial average extended losses after Yellen began her testimony, falling as much as 80 points, before partly recovering later in the day.
Although economic and job growth has slowed recently, Yellen told the House Financial Services committee the economy is performing well. But a decision on whether to hoist rates at the Fed's Dec. 15-16 meeting will depend on economic reports in coming weeks, she said. Her comments put outsize significance on the government's employment report Friday. Payroll gains of around 200,000 could go a long way toward solidifying expectations for a rate increase while a total significantly below that would mark the third straight month of weak advances and could make the move unlikely.
Economists expect 182,000 employment gains, a total that Barclays Capital says would be enough to allay Fed concerns and raise the odds of Fed action. Economists expect the 5.1% unemployment rate to fall to 5%, which is close to full employment.
http://www.usatoday.com/story/money/business/2015/11/04/federal-reserve-janet-yellen-testimony-financial-regulation/75148442/
Yellen's remarks came a day after leading Republican presidential candidate Donald Trump asserted that the Fed has kept rates low as a political favor to President Obama, a charge White House officials dismissed. With another GOP debate scheduled next Tuesday, the question of whether the Fed boosts rates at its final meeting before the 2016 election year could continue to serve as a political football despite the Fed's status as an independent agency.
The Dow Jones industrial average extended losses after Yellen began her testimony, falling as much as 80 points, before partly recovering later in the day.
Although economic and job growth has slowed recently, Yellen told the House Financial Services committee the economy is performing well. But a decision on whether to hoist rates at the Fed's Dec. 15-16 meeting will depend on economic reports in coming weeks, she said. Her comments put outsize significance on the government's employment report Friday. Payroll gains of around 200,000 could go a long way toward solidifying expectations for a rate increase while a total significantly below that would mark the third straight month of weak advances and could make the move unlikely.
Economists expect 182,000 employment gains, a total that Barclays Capital says would be enough to allay Fed concerns and raise the odds of Fed action. Economists expect the 5.1% unemployment rate to fall to 5%, which is close to full employment.
http://www.usatoday.com/story/money/business/2015/11/04/federal-reserve-janet-yellen-testimony-financial-regulation/75148442/
10 More States Try and Legalize Marijuana
In the past couple of days there has been a big hype over legalization of marijuana in Ohio, which ultimately came down to voters opting not to legalize it. There vote wasn't because they don't want it legalized, but more so because they rejected the way the market would be regulated and operated.
Moving forward, 10 more states have now made a push for the legalization of marijuana (Nevada, California, Massachusetts, Michigan, Arizona, Vermont, Maine, Florida, Missouri and Rhode Island), all of which want to have it legalized for recreational use, except Florida who only wants it legalized for medical use. Given the reoccurring theme of this in the past couple of years, it seems as if moving forward this year will be a "watershed" for the industry and various states. In the various states there have been notable influential backers supporting the movement, such as Sean Parker co-founder of Napster, who is behind the California movement and is assisting in backing the ballot for the movement.
Overall it will be interesting to see how the voting and legislation holds up in the various states because this marijuana initiative could bring a lot of money, jobs, and industry into the American economy. The movement could help rebuild cities, such as Detroit, if Michigan were to vote yes as well as other places across the country.
http://money.cnn.com/2015/11/04/news/marijuana-legalization-2016/index.html?iid=ob_article_hotListpool&iid=obnetwork
Moving forward, 10 more states have now made a push for the legalization of marijuana (Nevada, California, Massachusetts, Michigan, Arizona, Vermont, Maine, Florida, Missouri and Rhode Island), all of which want to have it legalized for recreational use, except Florida who only wants it legalized for medical use. Given the reoccurring theme of this in the past couple of years, it seems as if moving forward this year will be a "watershed" for the industry and various states. In the various states there have been notable influential backers supporting the movement, such as Sean Parker co-founder of Napster, who is behind the California movement and is assisting in backing the ballot for the movement.
Overall it will be interesting to see how the voting and legislation holds up in the various states because this marijuana initiative could bring a lot of money, jobs, and industry into the American economy. The movement could help rebuild cities, such as Detroit, if Michigan were to vote yes as well as other places across the country.
http://money.cnn.com/2015/11/04/news/marijuana-legalization-2016/index.html?iid=ob_article_hotListpool&iid=obnetwork
U.S. Wins First Libor-Rig Case as Ex-Rabobank Traders Convicted
http://www.bloomberg.com/news/articles/2015-11-05/u-s-wins-its-first-libor-rigging-prosecution-in-n-y-jury-trial
Anthony Allen and Anthony Conti were both guilty on all counts in the charges against them regarding the Libor manipulation. Both are ex-traders for Rabobank Greop. The Libor (London interbank offered rate) is tied to more than $350 trillion in loans and securities around the world. There have been other cases around this subject. Tom Hayes was given a 14 year sentence for Libor manipulation by a London judge. The U.S. has charged 13 people involved with four pleading guilty. In England there is another case in which 6 brokers are accused of helping Hayes whihc is currently under way.
Evidence against the accused includes emails, instant messages, and recorded phone calls. This evidence played a major role in convincing the jurors. Rabobank was fined over $1 billion by U.S., U.K., and Dutch authorities for their role in the Libor manipulation. 7 Rabobank traders have been charged in the U.S.
Anthony Allen and Anthony Conti were both guilty on all counts in the charges against them regarding the Libor manipulation. Both are ex-traders for Rabobank Greop. The Libor (London interbank offered rate) is tied to more than $350 trillion in loans and securities around the world. There have been other cases around this subject. Tom Hayes was given a 14 year sentence for Libor manipulation by a London judge. The U.S. has charged 13 people involved with four pleading guilty. In England there is another case in which 6 brokers are accused of helping Hayes whihc is currently under way.
Evidence against the accused includes emails, instant messages, and recorded phone calls. This evidence played a major role in convincing the jurors. Rabobank was fined over $1 billion by U.S., U.K., and Dutch authorities for their role in the Libor manipulation. 7 Rabobank traders have been charged in the U.S.
Keystone XL's strategy (not talking about the beer)
TransCanada Corp. through the Keystone XL project has been looking to create an oil pipeline in the U.S. that would bring 830,000 barrels of oil a day from Canada into Nebraska and then on to the Gulf Coast refineries, but they have been waiting on President Obama for seven years to approve the project. Recently, the company has asked Obama to hold off on making a decision. Many people speculating that they are waiting to see if a Republican will take office in 2017 and approve the project. Even if Obama does kill the project, a GOP in office will quickly reinstate and approve it. Environmentalists are calling for Obama to finally reject the project, but it seems as though that won't make a difference depending on who gets elected.
Democrats have been against the project because of environmental concerns, specifically global warning. Republicans, however, are focused on the benefits that this project would bring, such as thousands of jobs and allowing us to import oil from our own country rather than from Venezuela and the Middle East. Yesterday, TransCanada's shares were up 1.5%.
http://www.reuters.com/article/2015/11/05/us-transcanada-keystone-state-idUSKCN0ST2VX20151105#QMxK9HArrtwPMhvG.97
Democrats have been against the project because of environmental concerns, specifically global warning. Republicans, however, are focused on the benefits that this project would bring, such as thousands of jobs and allowing us to import oil from our own country rather than from Venezuela and the Middle East. Yesterday, TransCanada's shares were up 1.5%.
http://www.reuters.com/article/2015/11/05/us-transcanada-keystone-state-idUSKCN0ST2VX20151105#QMxK9HArrtwPMhvG.97
The Shifting App Market
https://hbr.org/2015/11/the-changing-economics-of-app-development
App invention has become huge in our generation and is a marketplace of over 3 million different apps. 1600 submissions are submitted everyday to Itunes by companies and people wanting to introduce their ideas to the market place. This has made the market over-saturated where successful products (apps) and developers only make it if they have expensive and well planned marketing plans.
The market, however, has shifted away from the big developers and the "middle-class" (regular everyday people) have begun to produce apps which are taking over the market. To support this claim, over 20,000 different app developers have produced revenue streams of right around $100,000 while most developers in general only make around $500 per app they produce suggesting profitability is spread out among producers and not all centralized into one large company. Also 45% of the app industry revenue has come from companies outside the top ranked apps in 2015.
What makes this market so tough, however, is the "Ghost app" phenomenon. Only 5% of apps account for 92% of the total app downloads. This means that 95% of apps are ghosts and will never be used by the market. On top of this, an average app usage goes down 85% after a 60 day period making app revenue for businesses short lived even for popular apps.
In our generation, many people have become entrepreneurs by relying on this market place. While the opportunity for profitability is definitely there, there is also the risk that your app will become one of the 95%.
How would you approach the app industry and how do you think this market is worth investing into? How do you become a big fish in the big pond of the app industry?
App invention has become huge in our generation and is a marketplace of over 3 million different apps. 1600 submissions are submitted everyday to Itunes by companies and people wanting to introduce their ideas to the market place. This has made the market over-saturated where successful products (apps) and developers only make it if they have expensive and well planned marketing plans.
The market, however, has shifted away from the big developers and the "middle-class" (regular everyday people) have begun to produce apps which are taking over the market. To support this claim, over 20,000 different app developers have produced revenue streams of right around $100,000 while most developers in general only make around $500 per app they produce suggesting profitability is spread out among producers and not all centralized into one large company. Also 45% of the app industry revenue has come from companies outside the top ranked apps in 2015.
What makes this market so tough, however, is the "Ghost app" phenomenon. Only 5% of apps account for 92% of the total app downloads. This means that 95% of apps are ghosts and will never be used by the market. On top of this, an average app usage goes down 85% after a 60 day period making app revenue for businesses short lived even for popular apps.
In our generation, many people have become entrepreneurs by relying on this market place. While the opportunity for profitability is definitely there, there is also the risk that your app will become one of the 95%.
How would you approach the app industry and how do you think this market is worth investing into? How do you become a big fish in the big pond of the app industry?
Tuesday, November 3, 2015
The Savings Controversy
In recent years, there has been the constant question of whether we should be saving or spending in regards to helping ourselves and the economy. Furthermore, with interest rates so low, economists are urging people to borrow money instead of saving. Saving may be decreasing aggregate demand since there is less money going into the overall flow, and thus the economy would be contracting. Some extremists may even argue that by saving your money you're depriving other of employment because you're contracting the economy. This whole notion is know as the "paradox of thrift"
On the other hand, savings is constantly being encouraged by the government, with incentives such as tax breaks on pensions. Also, saving is absolutely necessary for expenses such as college and later retirement. Additionally, it is commonly know that savings are imperative in leading to investment which helps stimulate the economy and further growth.
Evidently, it is a difficult concept to juggle in terms of what is the right thing to do. Usually, when one sector is running a deficit, the other must be experiencing a surplus and vice versa. This is true within an economy, as well as globally with economically related countries. The article discusses how causality is the main issue in producing this effect. When the economy is good, tax receipts increase and unemployment benefits decrease. When the economy is in a slump, the opposite effects happens. Furthermore, it is important for economic analysts to be able to differentiate between the cyclical stages in order for the economy to know how to respond in terms of policies, etc.
Overall, the important takeaway is that we are constantly debating between what we want. We don't want too little and we don't want too much. We want our savings to be spread out instead of lumped into the same couple of areas. In terms, of consumer spending, it is imperative that individuals save! The overall economy should be more concerned with what mode to be in rather than the individual consumer.
http://www.economist.com/blogs/buttonwood/2015/10/economics
Monday, November 2, 2015
Chinese Manager of Highflying Funds Is Arrested in Insider Trading Case
http://www.nytimes.com/2015/11/03/business/international/xu-xiang-zexi-insider-trading-arrest-china.html?ref=international&_r=0
The billionaire owner of one of the country’s most successful investment firms has become the latest victim of China’s crackdown on corruption in the financial industry, arrested on charges of insider trading.
The arrest on Sunday of the fund manager, Xu Xiang, nicknamed Big Xu, followed what could easily have been an American story line. Mr. Xu and his relatives have a combined fortune of $2.2 billion, according to the Shanghai-based Hurun Report, which tracks the wealth of China’s richest people.
Separately, the police in Shanghai arrested three people in relation to an investigation into a high-frequency trading firm suspected of manipulating futures trades to make a profit of more than 2 billion renminbi, or $316 million, according to a Xinhua report.
The billionaire owner of one of the country’s most successful investment firms has become the latest victim of China’s crackdown on corruption in the financial industry, arrested on charges of insider trading.
The arrest on Sunday of the fund manager, Xu Xiang, nicknamed Big Xu, followed what could easily have been an American story line. Mr. Xu and his relatives have a combined fortune of $2.2 billion, according to the Shanghai-based Hurun Report, which tracks the wealth of China’s richest people.
Separately, the police in Shanghai arrested three people in relation to an investigation into a high-frequency trading firm suspected of manipulating futures trades to make a profit of more than 2 billion renminbi, or $316 million, according to a Xinhua report.
Subscribe to:
Posts (Atom)