North Korea could conduct its sixth nuclear test as early as Saturday

Every April 15th, on the birthday of the founder, Kim Il-sung, North Korea celebrates with parades and drills showing off military hardware. This year, remarkable for the 105th anniversary, North Korea may undertake its sixth nuclear test as kind fo provocation in response to the deployment of a U.S. aircraft carrier near Korean Peninsula. At the same time, the DPRK (Democratic People's Republic of Korea) has stated it is ready for war. What is more, China had reportedly sent 150,000 troops to North Korea's border to face the potential refugee problem. In a telephone conversation with Mr. Trump on Wednesday, China’s president, Xi Jinping, also called for restraint. But behind the scenes, officials said, Mr. Trump and Mr. Xi had reached some preliminary understandings, during their meeting at the president’s Mar-a-Lago resort a week ago, about what the Chinese might do to change the behavior of the North’s leader, Kim Jong-un. 
This news makes me feel frightened, I cannot image what will happen if there's a nuclear war in North Korea. Because North Korea has been separate from the global market for a long time, it seems hard to take some useful economic sanctions. As far as I know, several months ago, China stopped to import coal from North Korea. If there is a war, not only North Korea and U.S, but the whole East Asian area including China, South Korea, Japan and even Russia might be involved into it. 

http://www.cnbc.com/2017/04/13/north-koreas-sixth-nuclear-test.html

What is at Stake in Turkey's Referendum

Tomorrow (Sunday, April 16th) Turkish citizens will be heading to the polls for a monumental vote, between the parliamentary system the country has used for nearly a century, or a new constitution entirely.  This new constitution would concentrate all power in the hands of the president, Recep Tayyip Erdoğan.  A “yes” to the new constitution would abolish the post of the prime minister, reduce the power of parliament, and formalize a system where the president answers to no one except voters.  However, as democratic as this sounds, it would provide a system ripe for corruption.  As it is, the Turkish justice system is in shambles; there are two factions accusing eachother of corruption and fraud, and over the past nine months, the government has sacked ¼ of all national judges (and more than 2,500 are behind bars).  This new constitution would allow the president and his allies to appoint all 22 members of the country's most influential judicial body (instead of just four).  Additionally, the new constitution would also pace legislative branch at the disposal of the executive, as the President would get to choose parliamentary candidates. Erdoğan has been in power for 14 years (longer than any Turkish leader since the founder of the republic); the new constitution would allow him to serve a maximum of two five year terms (beginning with presidential elections in 2019).  However, there is a loophole involving early elections that would allow him to remain in power until as late as 2034.  This is extremely dangerous for Turkey, socially and economically.  If the constitution does get passed it will open up many new avenues for corruption.  It will be very interesting to see how the upcoming vote impacts the country.

"What Is at Stake in Turkey's Referendum." The Economist. The Economist Newspaper, 12 Apr. 2017. Web. 15 Apr. 2017.

http://www.economist.com/blogs/economist-explains/2017/04/economist-explains-15

Trends in the air-freight business

Trends in the air-freight business


Attention to commercial airline bussiness has heightened with the recent incident that occurred on United Airlines.  However,  air-freight business makes up a substantial portion of airline business. A consistent rise in this business has occurred since the 2008 financial crisis. The the past three years total revenue of all business combined has increased by a third.  In addition, there is an increase demand in fresh produce and other foods.  Airline travel allows these goods to be delivered with immediacy and this is essential for food that perishes quickly and needs to be consumed soon after production.  The article goes on to state how detrimental restrictions on doing business with China could be.  This is a concern considering much of US airfreight business is with international partners, especially China.  Check out link to article below.



http://www.economist.com/news/business-and-finance/21720901-fewer-electronics-are-being-flown-instead-planes-are-full-fresh-produce-trends

Americans have become lazy, argues economist Tyler Cowen.

This article talks about how individuals are turning “lazy” and that this is negatively impacting the economy. Specifically, economist Tyler Cowen talks about how society lacks innovation nowadays and the growth of technology has further pushed innovation back. Even parenting these days has discouraged innovation. That being said, I think if innovation is present a unique aspect can help achieve economic growth and can impact the economy positively.

Moreover, innovation would lead to an increase in entrepreneurship. An increase in entrepreneurship would increase establishing businesses and thus create more jobs for workers in the economy, and helps the economy move forward and helps contribute to reaching the goal of full employment.

Cowen argues that nowadays there are major segregations present based on race and socioeconomic class. These segregations are another reason that innovation is not present as individuals even from a young age are segregated with other individuals in their same class and race and do not interact with other individuals of different races or classes.

 Cowen talks about how even till today in the US many students are not meeting the basic education standards. I think education is also a significant factor for economic growth and focusing on the education sector can achieve growth via a direct investment in human capital. This way human resources are given education and they achieve better jobs, which helps promote employment and achieve economic growth.

link: http://money.cnn.com/2017/04/12/news/economy/us-economy-big-problem-tyler-cowen/

Migrant workers in South Korea are often better off in prison

This post comes at an interesting time-- a time in which the US is deciding to do with the legal and illegal immigrants within our borders. South Korea, while still having only a fraction of its population of foreign origin, is taking a unique route with guest workers and illegal immigrants. A route that actually can be more enjoyable than being a guest worker.

South Korea opened a prison in 2010 for foreigners who have overstayed their visas, entered the country illegally, etc and the conditions are quite nice. South Korea hopes that those who find themselves there will leave with a positive vibe for South Korea and can be ambassadors for the nation as they return home.

The conditions are so favorable, that many consider a stay in prison to be more enjoyable than being a guest worker. With the opening of their borders, South Korea has begun to develop an underclass of guest workers, who are mostly Chinese. Hopefully the government can lead by example with this prison and raise the standard of living for guest workers.

http://www.economist.com/news/asia/21720646-poor-foreigners-are-pampered-behind-bars-scorned-elsewhere-migrant-workers-south-korea-are

France Vote Hides Other Risks

The impending French election has many wondering what it will do to the European Union and global markets. France is at the top of the list of risks that many fear will affect global markets. This election has been viewed as a risk for awhile now, but recently it has been scrutinized more closely. The risk has changed shape as Jean-Luc Melenchon, the far-left candidate has gained in the polls. The first-round vote on April 23 has taken on new meaning as a result because the second round vote could mean picking between two extreme candidates that markets are likely not to like. Both, Melenchon and La Pen want to radically change Europe.
Another risk that has the potential to greatly impact the markets is China. China's 2016 stimulus, import growth, and share of global investment all have the potential to shift the markets. Many worry this growth in China and other developing countries cannot be sustained and when growth stalls, the markets will stall as well. The article points out that, "the French elections could yet upend sentiment and risk appetite. But the longer-term risk to markets lies in whether they are right to be pumped up about global growth."

Source: Wall Street Journal, April 13, Richard Barley

Renters are staying put. Here's why

I thought that this was a very interesting article to read because most of us in class are seniors and are most likely start out by renting a place to live. The article talks about how there is a all time high of people that are renters that are content with living in a rental instead of owning there own house. Renting is a great option if you are just starting out and don't have the money to purchase a house or if your job requires you to move often because this eliminates the struggle of having to try to sell a house. The one thing that I don't really like about renting is your making a payment that is almost as much as a house payment but after 5 years you are not gaining an asset like you would by owning a house. it will be interesting to see if our generation is more favorable of renting or owning a home.  

Link: http://www.cnbc.com/2017/04/12/renters-are-staying-put-heres-why.html

United Airlines Is Not Alone

This article started with talking about the United Airlines incident took place on Sunday, April 9th, 2017. A 69-year-old doctor, David Dao was selected randomly to get off the fully-booked plane along with three other passengers right before it was supposed to take off Sunday from O'Hare International Airport for Louisville. And the reason behind this was that four United flying crew members needed to get to an assignment Monday morning. Dr. Dao was forcibly removed from his coach-class seat by three police officers after he refused to leave, claiming that he had to get to his destination to see his patients. It resulted in a bloody face of Dr. Dao's and a video of the incident which went viral the next morning.
Then the article transitioned into the topic on how the treatment of most of us as consumers is "both increasingly disrespectful and reflective of our society's growing income divide". Consumers are not deserving equal treatment unless they pay top money. Unequal treatment between different classes is on "blatant display" when we fly. The airlines keep coming up new ways to please the business travelers and give basic economy travelers only the ability to choose a seat when booking a flight.
The article then proceeded to discuss the same dynamic in politics. Government policy and actions favor corporate interests and the wealthiest Americans. Another example will be when Republicans offered a health insurance reform package which would cover fewer people than the ACA. Later Representative Jason Chaffetz basically told the general public just not be poor, then the health care would work great.
However, this is not the only thing people can learn from this United incident. "Increased militarization of American life" is another takeaway. Authorities have been dealing with common disputes in a more and more aggressive way.
I think it would be very difficult for United to recover since the United Airlines stock had dropped $1.4 billion just a couple days after the passenger-removal controversy. No matter what the justifications of United's violent action are, forcibly removing a rightful passenger is never ever the solution in any situations. One good thing is that after the CEO, Oscar Munoz being criticized for his official statement on Monday, stating that the violent removal was to "re-accommodate" the passenger, he offered a softer apology on Tuesday. He pledged to review the company's policies for handling overbooked flights and for working with airport authorities. And the review is planned to be shared by April 30th.

Link to article: https://www.nytimes.com/2017/04/11/opinion/united-airlines-is-not-alone.html?ref=business

Tesla breaks even more barriers

Tesla just broke into the top six auto makers in the world after pass General Motors.  Tesla now valued at close to 50 billion is just shy of passing Honda valued at more than 52 billion dollars.

Tesla has been on the rise over the past few years growing to be one of the most recognizable electric car companies in the world.  This on top of the release of its new solar roof and battery packs have pushed up investor confidence allowing Tesla to break records.  Once the new Gigafactory is complete and fully operational Tesla's cost to products it batteries will begin to drop significantly and this will provide more profit for the company and allow to close its loss gap which will be about 900 million for the year.

The one major issue Tesla faces is the new administration.  The promise of cutting regulation on fossil fuels and cutting funding to renewable energy has caused the shift to green energy to slow.  But Musk's plan is to provide a low cost alternative to gas powered cars and with the new Tesla 3 going for about $35,000 and have a range of about 220 miles the car is in a good position to compete with its gas powered counter part.



https://www.bloomberg.com/news/articles/2017-04-10/tesla-passes-gm-as-musk-s-carmaker-becomes-america-s-top-valued

Tomahawk maker's stock up after U.S. launch on Syria

Last week Donald Trump ordered an attack on the Al Shayrat Airfield near the major Syrian city of Homs. This was an airfield that the Assad government has used to conduct airstrikes in the past. This was in response to the chemical weapons attack conducted by the Assad regime in Idlib province. This action is in stark contrast to President Trump's rhetoric on the campaign trail when he stated multiple times that the removal of the Syrian regime would not be a priority for the Trump Administration. Rex Tillerson, the Secretary of State for the Trump Administration, stated however that the initial objective in Syria would be to remove ISIS and cleanse the rebel forces in the country of extremist ideologies before the Assad regime could be handled diplomatically. Regardless of the details, an interesting phenomenon took place last week in the stock market.

The tomahawk cruise missiles used agains Al Shayrat airfield, which cost roughly $1-2 million each, are made by the company Raytheon. Right after the attack Raytheon saw its stock prices clime. However, Raytheon, and other firms which conduct defense contracting, have seen their stocks rising gradually ever since the election results in November. Weapons manufacturing stock oftentimes rises before war and armed conflict occur rather than after. This is not a new phenomenon. Before the Iraq and Afghan war we saw stocks from weapons manufacturers rise in the same way.

One other interesting piece of information is the possibility that Donald Trump might have profited from this rise in Raytheon stock. In 2015 the Federal Election Committee (FEC) released a document that disclosed Trump's holdings and one of his smaller investments was in this defense contracting firm. While some current articles have alleged that Trump still owns these stocks, no major news agency has been able to independently verify this.

At the time of writing, Raytheon's stocks have remained higher than they were before the cruise missile strike, but have settled down after markets opened on Monday. 

Link: http://money.cnn.com/2017/04/07/investing/syria-raytheon-tomahawk-missiles/index.html

Primed for Success

           This article discussed the rise of Amazon over the last two decades, outlining some of the reasons for its success as well as the challenges it faces moving forward. As the world's 5th largest company by value, Amazon has experienced tremendous growth since first going public 20 years ago. This is evident in the fact that it is the largest online retailer in America accounting for over half of all new spending with its cloud-computing business, Amazon Web Services (AWS), being larger in terms of basic computing services than the three closest rival cloud offerings combined. Notably, despite its share price having risen 173% since 2015, seven times the growth of the preceding two years, Amazon's boss Jeff Bezos continues to emphasize the importance of long-term growth as a primary objective. As a result, Amazon frequently reports higher profits, but lower revenues than might be expected as it pursues campaigns into new markets and attempts to expand its e-commerce services.This willingness to take risks has inevitably produced some failures like the Fire Phone, however, it has also led to breakthroughs like Amazon Prime Subscription which is now one of its most well-known features.

           Part of the reason for Amazon's successes comes from its ability to "spend money in ways that bring increasing returns." This can be seen in the fact that Amazon Web Services and the e-commerce business are both platforms that take advantage of "network effects" in that the more customers buy from and, generally speaking, use them the better they become. For instance, as more companies use AWS more developers also become familiar with how to best utilize its features. This virtuous cycle results in Amazon being given greater data for further optimization of services thus attracting a greater number of shoppers and "third party sellers", increasing the variety of goods that can be offered, and, ultimately, attracting even more shoppers. In a similar way, Amazon's financial success can also be traced to its decision to allow others to "use the company's e-commerce platform, warehouses, and other services" since "fees from sellers around the who use Amazon reached $23 billion in 2016." In fact, the scale of this is fairly substantial as "there are more than 70,000 companies earning more than $100,000 a year" who sell through Amazon's site.

            Looking ahead, it seems likely that Amazon will continue to reach into new realms (this can already be seen in the expansion of Amazon Prime Video to more than 200 countries) while also seeking to improve existing services. The question, therefore, is how well other tech giants such as Netflix, Apple, and Google will be able to adapt and remain competitive with Amazon. Fortunately, even if such companies are unable to sell a product that customers want and Amazon lacks, this article argues that they can still benefit from being compelled to improve their overall brand and management as, for example, Walmart has. What direction do you see Amazon headed in the months and years ahead?

http://www.economist.com/news/briefing/21719461-they-think-amazon-going-grow-faster-longer-and-bigger-almost-any-firm-history-are

U.S. Unemployment at 4.5%

http://money.cnn.com/2017/04/07/news/economy/march-jobs-report/index.html?iid=SF_LN

The article weighs in on the unemployment rate reaching levels that have not been reached since pre-recession in May 2007.  The explanation behind this could be the great deal of jobs that Trump has created, however, the second full month in office did not do favorable numbers.  Trump is keeping his promise and creating manufacturing jobs, but as these numbers get better, the wage gap gets worse.  The article also explains how income distribution is  getting worse.  There are plenty of wages that are increasing, but primarily for the bosses and supervisors.  The economy shows signs of full recovery since the Great Recession, however, I believe there are still some components to consider to be the strongest and most successful nation we can be.  I will be interested to see how the changes will effect everyone as the Trump Administration moves forward regarding some of these issues.

A brief guide to Kevin Hassett, Trump's new chief economist

President Trump has officially named the American Enterprise Institute’s Kevin Hassett as the chair of his Council of Economic Advisers. The CEA chair serves as the White House’s chief economist.

And unlike Peter Navarro, Hassett is a fairly mainstream free market conservative. He was a senior adviser on Mitt Romney’s 2012 campaign and has been a mainstay in Republican economic policy circles for two decades now. Tellingly, a number of liberal economists, including Obama CEA chairs Jason Furman and Austan Goolsbee, cheered his appointment when it was first rumored— not because they agree with him, but because he’s a fundamentally serious thinker who could bring some rigor to the Trump White House:

Perhaps Hassett’s most surprising stance, if you know him only for his work with Romney and advocacy of lower taxes and entitlement reform, is his sympathy for government efforts to directly hire people. "Look at the stimulus and the number of jobs we've actually created, and it comes out to a couple million bucks per job created," Hassett told the Atlantic's Derek Thompson in 2010. "My idea is simpler. Find the unemployed and hire them."

But Hassett’s openness to government employment coincides nicely with the Trump administration’s stated interest in spending big on infrastructure projects and its aggressive focus on job creation. You could imagine Hassett moving Trump’s agenda in a direction that emphasized putting the long-term unemployed, or labor force dropouts, to work again.

Hassett has been particularly vocal in promoting the benefits of trade to low-income developing countries. "The benefits for developing countries are even great — on a proportional basis — than for the United States," Hassett and Glassman continued. "If trade stops or even slows down, developing countries would be devastated."

Like any self-respecting conservative economist, Hassett is passionate about cutting the corporate income tax. But his arguments on this score are slightly different from the typical concerns that the US’s rate is too high relative to other countries, or that it’s out of step with international practice by trying to tax profits made overseas, or even just that corporate taxes discourage investment.

There’s an active dispute among economists about who actually pays the corporate tax. Money that corporations earn goes, roughly speaking, to two groups of people: the people who own the company (capital) and the people who work for the company (labor). So the tax can be paid either by taking money from capital owners, or by reducing wages. This has huge implications for how progressive the tax is. The more it’s paid by capital, the more progressive it is and the less harmful it is to the middle class; the more it’s paid by labor, the worse a deal it is for workers.