http://finance.yahoo.com/news/rbc-s-jonathan-golub--positive-on-markets-121152467.html
I think we should be optimistic about the economy now. Not only because the point the news mentioned such as no inflation, no business excess but also because the low unemployment rate, the increasing number of jobs and the wage growth in US. The federal reserve forecasts that the GDP growth rate would be 3% next year which is higher than this year.
Saturday, November 21, 2015
"Draghi Keeps Options Open to Fight Low Inflation"
Mario Draghi, President of the European Central Bank, suggested that easy money policies are a strong possibility at the ECB's next meeting in December. This statement was rebutted by Jens Weidmann, the head of Germany's central bank. He said that they should give their current policies more time to work. One of the stimulus policies he is keeping open is an increase in quantitative easing. The reason for doing this is their medium-term price stability goal of 2%. With the low inflation they already have, Draghi wants to increase quantitative easing to reach their price goals. Currently in the EU, the deposit rate is at -.2%. This means that banks have to pay to hold money in the central bank. Because of this, banks are more incentivized to lend to the private sector. This could weaken the exchange rate, boost exports, and boost inflation. In addition, the ECB is currently in the middle of a bond buying program of 60 million euros per month, but they are think up increasing the amount to 80 million euros per month to help increase inflation. Do you guys think that easy money policies are a good idea for the ECB to undergo?
http://www.wsj.com/articles/draghi-vows-to-use-all-instruments-if-price-stability-goal-at-risk-1448009389
http://www.wsj.com/articles/draghi-vows-to-use-all-instruments-if-price-stability-goal-at-risk-1448009389
China finds new way of generating electricity by cremating truckloads of banknotes worth billions
A city in east China is keeping its lights on at night using the power generated through burning truckloads of damaged banknotes.
This year alone over 1,800 tonnes of money with a value of almost 180 billion yuan ($28.2 billion) has been incinerated to generate electricity in Yancheng City, Jiangsu Province, according to The People's Daily online.
The money burnt is the old 100 Yuan ($15.66) red banknotes that are now being replaced nationwide with a new design.
According to the report, one truck of burnt currency can generate 30,000 kilowatt hours.
Considering the average household in the city uses 100-kilowatt hours per month, this means the output of one truckload can supply one home with power for 25 years.
Compared to other biomass fuels like sawdust, these banknotes have a high caloric value (a weightless gas that passes in and out of pores in solids and liquids) and a low water content, which is suitable for biomass power generation.
Not only is the money turned into power, the remaining ash is made into bricks which ensures sustainable and harmless disposal.
Friday, November 20, 2015
China's middle class isn't what we thought it was
A lot of multinational companies have been anticipating the growth of the Chinese middle class for many years. With the slowdown of the Chinese economy, the growth of this middle class has been hindered. A study was done to examine the growth of the Chinese middle class by considering how much purchasing power they really have and how much access they have to the products companies want to sell.
Chinese consumers’ buying power does not compare well with that of the US consumers. Between 2010 and 2014, only 12% of the Chinese people reported a household income of more than $3200 a year. Their spending power is expected to rise from 44% of consumer spending to 60% by 2025 compared to $32000 in the US today. This spectacular growth, however, is coming from a relatively small per capita base and will arguably remain modest compared with most mature markets even by 2025. This projections mean only a very gradual movement toward consumption led-growth in China. It will be interesting to see how this group of consumers grow in the next few years owing to the economic slowdown in the country. http://www.businessinsider.com/demand-report-on-chinas-middle-class-2015-11
Qualcomm’s China Struggles Continue as It Fails to Reach Patent Deals.
http://www.wsj.com/articles/qualcomms-china-struggles-continue-1446852072
The article discusses the problems with holding onto a Patent. Qualcomm Inc. is trying to make deals with two companies, and the large drop in shares shows the struggles that they are having. The company has shown large decreases in revenue and this is due to a decrease in sales and manufactures stopped making royalty payments due to the cease in the patent. The loss of the patent has caused significant losses for Qualcomm Inc. To try and make a comeback, Qualcomm made a large payment of 975 million dollars for antitrust problems, but it did not help due to the fact they weren’t able to collect licensing revenues. The company is now beginning to enforce stricter agreements in order to obtain their correct amount of royalty payments, as well as having better negotiations. They need to do this because the majority of their income comes from royalties, which exceeds over 6 billion dollars. The two manufactures that Qualcomm is having issues with are Lenovo and Xiaomi. If the patents were still in place, the royalty money these companies both owe are very large. Once an agreement is done by Qualcomm to fix the patents, the companies holding out will have to pay them.
Thursday, November 19, 2015
Mortgage
Lending Gaining Strength in England
Mortgage lending rates are at highest levels since before
the 2008 financial crisis. Mortgage lending rose to 21.8 billion pounds in
October, up nearly 20% from the year prior. Growth in mortgage lending is
currently at its seven-year high according to the Council of Mortgage Lenders.
It is expected that mortgage lending will beat forecasts and continue to
increases. According to the Bank of England mortgage approval ratings showed
mixed signals about the future of the housing market. House purchase approvals
fell well below 70,000 in September while in the same month remortgages rose to
41,000. The CML believes that the weak level of housing transactions in recent
months is troubling because the level of properties being offered for sale are
extremely low.
The UK economist from HIS Global Insight, Howard Archer, stated
that mortgage lending was mainly utilized by people attempting to remortgage by
locking in a low interest rate before they are expected to rise in 2017. He
believes that house prices will see a steady increase because of lack of buyers
and a shortage of properties to sell.
Adele Refuses to Stream New Album "25"
Famous pop artist Adele hasn't released an album since 2011, and a song since 2012, but she will be releasing her 3rd album "25" in a few days. A lot has changed in 4 years.
For example, Spotify and other sites have emerged in the services of streaming music. In a very complicated and controversial contract, apps like Spotify are able to stream songs, which listeners can either listen to on their computers for free (with ads), or they can pay $5 (college student) or $10 a month to get no advertisements, as well as get songs on their phone.
Essentially, this gives listeners the rights to owning songs without artists getting money for them.
Taylor Swift is an artist that has also not allowed for streaming of her songs, since she believes musicians should make money off their hard work in their music. Adele doing this comes at no surprise, since she is one of the more popular artists alongside Swift in the modern era.
With the demand of streaming exponentially increasing, less people are willing to buy songs off of iTunes and Google Play, since they can save a lot of money by just using and accessing Spotify. This, in turn, has caused companies like Apple to lose revenue in this sense, which caused them to create Apple Music, their own streaming site, to compete with Spotify and other sites like Pandora and Rhapsody.
This also comes as no surprise, seeing that iTunes made CDs pretty much extinct, and streaming might be doing the same to electronically selling music. Alternatively, concert tickets are increasing so that artists can make back the money they lost in record sales.
http://www.nytimes.com/2015/11/20/business/media/adele-music-album-25.html?ref=business&_r=0
Mac vs. PC cybersecurity
Microsoft has begun a $1 billion investment into their cybersecurity software to hopefully end some of the debate over whether Apple has better cybersecurity. Cybersecurity is only becoming increasingly more relevant as more and more high-profile attacks are occurring. Sony and J.P. Morgan Chase are two very relevant attacks that have put Microsoft in the spotlight for stepping up their cybersecurity software. They will be putting in more money to respond to threats faster and make sure customers feel as though their data is safe.
Apple has often advertised that their cybersecurity is much better, but many claim this is only because the majority of the computers in the world are PCs or run on Microsoft software. Windows 10 is the most recent operating system and their hoping that it is the most secure. One of the key features that it is had is providing cloud space for data, which is space that is much harder to get access to. Microsoft stresses that is important to work with the best technology of the industry and uses third-party companies to help with extra security.
http://www.bloomberg.com/news/articles/2015-11-17/microsoft-revamps-security-plan-as-part-of-1-billion-investment
Apple has often advertised that their cybersecurity is much better, but many claim this is only because the majority of the computers in the world are PCs or run on Microsoft software. Windows 10 is the most recent operating system and their hoping that it is the most secure. One of the key features that it is had is providing cloud space for data, which is space that is much harder to get access to. Microsoft stresses that is important to work with the best technology of the industry and uses third-party companies to help with extra security.
http://www.bloomberg.com/news/articles/2015-11-17/microsoft-revamps-security-plan-as-part-of-1-billion-investment
Tuesday, November 17, 2015
Tunisia confronts corruption, the economy and Islamic State
During the Arab spring of 2011, Tunisia was the first to oust its dictator, Zine el-Abidine Ben Ali. While other Arab counties fell into violence and renewed authoritarianism, Tunisia remained on a peaceful democratic path. In 2014 the state held free and fair general and presidential elections and adopted a relatively liberal constitution.
Now, however, a rift in the dominant political party is threatening to destabilize the government, which was already struggling to get the economy off of the ground. Corruption, red tape, and two big terrorist attacks on tourists claimed by ISIS have made it difficult. Additionally, the Tunisian army has been fighting Islamist militants along its border with Algeria.
Nidaa Tounes, the leading political party, is made up of leftists, liberals, conservatives, trade unionists, and businessmen. They united under Nidaa Tounes and the leadership of Mr Essebsi to oppose Nahda, a moderate Islamist party that led the government from late 2011 to early 2014. There is no unifying ideology, political objectives, socioeconomic vision. There is also a power struggle between rival factions within the party, as one wing believes that Essebsi, the leader of the other wing, is trying to establish a family dynasty.
The government has done little to reform the inefficient economy, which still favors elites. The public sector is too large and continues to grow, and corruption is worse. Additionally, there is little development in the interior of the country despite promised aid from the United States. The lack of economic progress makes securing Tunisia even more difficult. It is believed that thousands of Tunisians have joined ISIS, while others are joining Islamic militants in the mountains in the western part of the country. There is fear that the security sector will attempt a power grab as the jihadist threat worsens.
http://www.economist.com/news/middle-east-and-africa/21678721-rift-ruling-party-may-be-least-tunisias-problems-tunisia-confronts
Now, however, a rift in the dominant political party is threatening to destabilize the government, which was already struggling to get the economy off of the ground. Corruption, red tape, and two big terrorist attacks on tourists claimed by ISIS have made it difficult. Additionally, the Tunisian army has been fighting Islamist militants along its border with Algeria.
Nidaa Tounes, the leading political party, is made up of leftists, liberals, conservatives, trade unionists, and businessmen. They united under Nidaa Tounes and the leadership of Mr Essebsi to oppose Nahda, a moderate Islamist party that led the government from late 2011 to early 2014. There is no unifying ideology, political objectives, socioeconomic vision. There is also a power struggle between rival factions within the party, as one wing believes that Essebsi, the leader of the other wing, is trying to establish a family dynasty.
The government has done little to reform the inefficient economy, which still favors elites. The public sector is too large and continues to grow, and corruption is worse. Additionally, there is little development in the interior of the country despite promised aid from the United States. The lack of economic progress makes securing Tunisia even more difficult. It is believed that thousands of Tunisians have joined ISIS, while others are joining Islamic militants in the mountains in the western part of the country. There is fear that the security sector will attempt a power grab as the jihadist threat worsens.
http://www.economist.com/news/middle-east-and-africa/21678721-rift-ruling-party-may-be-least-tunisias-problems-tunisia-confronts
Monday, November 16, 2015
2,000% price hike for infant seizure drug called 'absurd'
The price of drug prescribed to infants in Canada with a rare and potentially dangerous form of epilepsy has jumped by 2,000 per cent practically overnight. Infantile spasms, also called West syndrome, is a catastrophic and rare form of epilepsy. It's diagnosed in babies that encounter frequent and intermittent seizures. Half of the patients don't respond to initial treatment protocol, so doctors then turn to Synacthen Depot, a long-acting form of the drug that is injected into muscle.
"The drug is long off patent" Dr. Carter Snead, a neurologist, said"and it works 90 per cent of the time"."The price of Synacthen Depot increased by more than 2,000 per cent from $33.05 per vial to $680 per vial," said Carolyn Ziegler, a spokeswoman for Alberta Health. When asked about the sudden increase in price, Mallinckrodt, a global pharmaceutical company, responded by saying that it was told by the existing suppliers of the drug that they would cease production in early 2016. When Mallinckrodt acquired Questcor in 2014, Synacthen Depot was one of the products in the portfolio. It was losing money then and still is.
This case closely resembles Turing Pharmecuticals', along with a myriad of other pharmaceutical companies' decisions to drastically increase the price of a medication. In this case, the company increased the price of the drug because it was losing money at its original price. Although we don't know the exact price at which it would equal the marginal cost of producing the good, it could reasonably be said that the increase is equal to or greater than the cost, and therefore would not incur a loss at the price of $680. I think having the option of getting the medication at a higher price is better than the company electing to discontinue the product entirely because it is losing them money.
https://ca.news.yahoo.com/2-000-price-hike-infant-100000468.html
"The drug is long off patent" Dr. Carter Snead, a neurologist, said"and it works 90 per cent of the time"."The price of Synacthen Depot increased by more than 2,000 per cent from $33.05 per vial to $680 per vial," said Carolyn Ziegler, a spokeswoman for Alberta Health. When asked about the sudden increase in price, Mallinckrodt, a global pharmaceutical company, responded by saying that it was told by the existing suppliers of the drug that they would cease production in early 2016. When Mallinckrodt acquired Questcor in 2014, Synacthen Depot was one of the products in the portfolio. It was losing money then and still is.
This case closely resembles Turing Pharmecuticals', along with a myriad of other pharmaceutical companies' decisions to drastically increase the price of a medication. In this case, the company increased the price of the drug because it was losing money at its original price. Although we don't know the exact price at which it would equal the marginal cost of producing the good, it could reasonably be said that the increase is equal to or greater than the cost, and therefore would not incur a loss at the price of $680. I think having the option of getting the medication at a higher price is better than the company electing to discontinue the product entirely because it is losing them money.
https://ca.news.yahoo.com/2-000-price-hike-infant-100000468.html
Debt Market Distortions Go Global as Nothing Makes Sense Anymore
http://www.bloomberg.com/news/articles/2015-11-15/debt-market-distortions-go-global-as-nothing-makes-sense-anymore
Across the world, the "swap spreads" (the difference between an interest rate swap and the rate of a treasury with the same maturity) are going negative. It has happened in the US and the UK and in Australia the spreads have shrunk to the smallest on record.
It's believed that this is mainly due to investors pushing up yields on Treasuries, as the Federal Reserve continues to indicate that interest rates could rise in the very near future. The issue with the rates being inverted is that it would signal that the government rates are less credit worthy than than the other assets. US government bonds are typically looked at as the most risk-less asset.
Traditional pricing mechanisms in the bond market are not effective and this will be a time for speculators and arbitrageurs alike to take advantage of the mainsprings in the market. This distortion in the market makes many investors nervous. It will be interesting to see how the spreads move as the Fed continues forward with their plan to raise rates.
Across the world, the "swap spreads" (the difference between an interest rate swap and the rate of a treasury with the same maturity) are going negative. It has happened in the US and the UK and in Australia the spreads have shrunk to the smallest on record.
It's believed that this is mainly due to investors pushing up yields on Treasuries, as the Federal Reserve continues to indicate that interest rates could rise in the very near future. The issue with the rates being inverted is that it would signal that the government rates are less credit worthy than than the other assets. US government bonds are typically looked at as the most risk-less asset.
Traditional pricing mechanisms in the bond market are not effective and this will be a time for speculators and arbitrageurs alike to take advantage of the mainsprings in the market. This distortion in the market makes many investors nervous. It will be interesting to see how the spreads move as the Fed continues forward with their plan to raise rates.
Sunday, November 15, 2015
Paris Moving Forward
The awful attacks on Paris this past weekend not only devastated the cities morale, but it could also pose potential losses in the financial sector for the country moving forward. The events that occurred in Paris could certainly have a significant
negative impact on the confidence of consumers in the near future, primarily in France, but also elsewhere in Europe. Seeing as tourism is a major source of revenue for Paris (third most visited city in the world), the attacks could substantially affect the economy as the city suffers in the wakes of the attacks.
Despite all that happened this past weekend, the markets will open as normal at Euronext on Monday; however, at this point in time their priority is the safety of their staff, therefore there will be extra security in place in Paris on Monday. As of close on Friday, stocks trading on the Paris benchmark CAC were up 12.5%; however, it will be interesting to see where the French market heads, and how is responds to the events that took place this weekend.
http://money.cnn.com/2015/11/15/investing/paris-attacks-french-stocks/index.html?iid=hp-stack-dom
Despite all that happened this past weekend, the markets will open as normal at Euronext on Monday; however, at this point in time their priority is the safety of their staff, therefore there will be extra security in place in Paris on Monday. As of close on Friday, stocks trading on the Paris benchmark CAC were up 12.5%; however, it will be interesting to see where the French market heads, and how is responds to the events that took place this weekend.
http://money.cnn.com/2015/11/15/investing/paris-attacks-french-stocks/index.html?iid=hp-stack-dom
After the Paris Attacks: What they mean for Europe
Details are still coming out about the terrorist attacks in Paris on Friday night that claimed 129 lives as of now. The Islamic State has claimed responsibility for these attacks that occurred in several locations across Paris including a sports stadium, a concert hall, and two restaurants. Paris has experienced many terrorist threats in the recent years including one attack on a journalism office in January of this year that claimed 16 lives. The issue then was freedom of speech but after the attack on Friday, the issue for governments across Europe is migration. How do these attacks affect the issue of migration and refugees that the EU is currently discussing?
Since Friday many politicians across Europe have already spoken about this. Horst Seehofer, the chairman of the CSU, the Bavarian sister party of Germany's governing Christian Democrat, has stated the attacks show there is a need for “stronger control of Europe's external borders, but also of national borders.” The prime minister of Slovakia, Robert Fico, noted that he had warned other European leaders of “enormous security risks linked to migration. Hopefully, some people will open their eyes now.” In a condolence message to the French President, Vladimir Putin called for international collaboration; “Fighting this evil requires the real unity of the forces of the whole international community.” Will stricter immigration policies prevent future terrorist attacks? Will a united EU help with security or will tighter national borders help?
The High Price of Delivery App Convenience
There are apps out there for basically anything these days. This article took a closer look at the apps that deliver goods to consumers on demand. More specifically, how their pricing systems work, and what it's really going to cost you to have your groceries delivered instead of getting them yourself.
The services compared were InstaCart, Postmates, UberEats, and Amazon Prime Now. With InstaCart, which basically is just instant groceries, if the items you purchase are more expensive in their store than the actual store, you get charged the more expensive price, plus a standard delivery fee of $4 and tip to the courier, Postmatess will pick up and deliver just about anything, from groceries, to burritos, to paint. Their delivery fees are not standard. They are based on a algorithm that takes into account the distance the courier traveled and multiple other factors, not to mention you still tip them. They provide a tip percentage calculator that calculates a tip for you to give, but this isn't a tip on just what your goods cost, it take into account the cost of the goods, delivery fee, service fee, and tax. In some cases, a consumer may end up paying a markup of over 100%!! With UberEats, the consumer is about to pick from a select variety of foods that they want delivered to their residence. The upside to this service app is that there is basically no service or delivery fee, but the quality of product isn't very good since the foods are all pre-made earlier in the day and the drivers just haul the food around until someone orders it. Amazon Prime Now already shrinks their market audience by only allowing those with an Amazon Prime account to use the service (which is $99 a year) and going through this app, you will usually face almost a 50% markup on price, including the $8 delivery fee.
With all these extra charges, not to mention the human error factor, I just have to wonder if it really is worth the price you will pay to not leave your home to go get these things for yourself? However, seeing as how the population is rapidly moving in this direction, maybe more will enter this delivery service market, forcing the existing companies to lower their fees in order to stay competitive.
Link: http://www.nytimes.com/2015/11/05/technology/personaltech/the-high-price-of-delivery-app-convenience.html?ref=technology&_r=0
The services compared were InstaCart, Postmates, UberEats, and Amazon Prime Now. With InstaCart, which basically is just instant groceries, if the items you purchase are more expensive in their store than the actual store, you get charged the more expensive price, plus a standard delivery fee of $4 and tip to the courier, Postmatess will pick up and deliver just about anything, from groceries, to burritos, to paint. Their delivery fees are not standard. They are based on a algorithm that takes into account the distance the courier traveled and multiple other factors, not to mention you still tip them. They provide a tip percentage calculator that calculates a tip for you to give, but this isn't a tip on just what your goods cost, it take into account the cost of the goods, delivery fee, service fee, and tax. In some cases, a consumer may end up paying a markup of over 100%!! With UberEats, the consumer is about to pick from a select variety of foods that they want delivered to their residence. The upside to this service app is that there is basically no service or delivery fee, but the quality of product isn't very good since the foods are all pre-made earlier in the day and the drivers just haul the food around until someone orders it. Amazon Prime Now already shrinks their market audience by only allowing those with an Amazon Prime account to use the service (which is $99 a year) and going through this app, you will usually face almost a 50% markup on price, including the $8 delivery fee.
With all these extra charges, not to mention the human error factor, I just have to wonder if it really is worth the price you will pay to not leave your home to go get these things for yourself? However, seeing as how the population is rapidly moving in this direction, maybe more will enter this delivery service market, forcing the existing companies to lower their fees in order to stay competitive.
Link: http://www.nytimes.com/2015/11/05/technology/personaltech/the-high-price-of-delivery-app-convenience.html?ref=technology&_r=0
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