BMW plans to build electric Minis in China

This article on BMW basically illustrates its plan of shifting its production line of the Mini brand towards the East. China is the biggest market for BMW with a sale of 560,000 vehicles last year which was more than the sales of US and Germany combined. BMW wants to pivot production of the Mini brand to where there is more demand. The article suggests that Mini plans to move to an "all electric" concept car and is thinking of teaming up with China's Great Wall Motor because of a strong demand for electric cars in the region. On the other hand, BMW has also assured its production markets in Germany and the UK that this move will not impact them and they remain committed to investments there.

In my opinion, I think in the long run other European automobile makers will also be pushing to capture markets in China and ultimately shift their production lines to the East. The East can be seen as the rising market for such automobiles and as BMW said "production follows the market" China is the new market.

http://money.cnn.com/2018/02/23/autos/bmw-china-electric-mini/index.html

Europe’s leaders ignore the numbers ahead of ‘disgusting’ budget talks

Since we started discussing the UK and Germany in class, I chose an article that talks about the long-term budget of the EU and arguments after Brexit. The article notes that as Britain leaves, the European Union budget will be left with a hole of 12 billion euro that used to come from its yearly contributions. 

Günther Oettinger, the commissioner for the budget, proposes that the next seven year budget be increased by at least 1.1% of GNI and a group of eight central and eastern European countries support this. However, most of the wealthier countries oppose this and advocate for sweeping budget reform that would remove the need to fill the 12 billion hole and decrease spending on agriculture payments (subsidies) and cohesion funds (boosting less wealthy countries for increased equality throughout the EU). To show how conflicted the group of 27 is, the Commission President is quoted saying "We have those [countries] who do not want to pay more, and we have those who don’t want to receive less," and he also mentions that the programs that do get funded must be productive enough to show member states that the cost is worth the benefit.

This is a really interesting article that touches on the economics behind many of the social programs the EU has promoted. I think the social pillar programs are what makes the EU so worthwhile, but it's important to remember that the union was first and foremost an economic union created to prevent another major war on the European continent.


https://www.politico.eu/article/eu-summit-leaders-ignore-numbers-ahead-of-disgusting-budget-talks/

A Strong U.S. Economy Can Be Tough on Immigrants

This article highlights the negative aspects of having a strong current economy and labor market. Working class immigrant communities are those suffering now, as the market for low paid service workers is dwindling, as wages are being raised and benefits are growing at large corporations. Small scale immigrant run businesses cannot keep up with those businesses and do not have the financial capital to pay entry level workers greater than $10 a hour, now having to close their doors without employees. Additionally, this growing economy will increase land values, combined that with low housing inventories nationally and redevelopment will now be occurring in immigrant neighborhoods, causing gentrification and pushing immigrants out of their homes. Many Americans are thriving in this economy while U.S immigration is being negatively impacted because of it- what could be a possible solution to help support our entire labor market? Immigrants have been the backbone of it for so long. 

https://www.bloomberg.com/view/articles/2018-02-21/a-strong-u-s-economy-can-be-tough-on-immigrants

Why Economists Are Worried About International Trade

This article talks about the last decisions that Trump's administration is doing related to tariffs, more specifically for solar panels and also washing machines not so long ago. The article is arguing that according to most of the economists these decisions are going in the wrong direction because they should be trying to move towards free trade and not away from it. It is true that in the short run this decision is going to save some jobs in these industries because they are not going to have competitions from different countries, but in the long run, this is not going to be beneficial to the economy as a whole. There are 3 articles mentioned that show why free trade is a better option in the long run, and how most of the countries that have decided to have free trade have been growing a lot more compared to countries that have strong tariffs. In my opinion, these decision to raise tariffs is more a political move and not thinking about the economy, because this is going to affect the economy in the long run, but at this point, it might get Trump and his administration more acceptance because he is saving many jobs, but at the end he should think what would be best for the country in the long run even if people lose some jobs, because they could get training and get a job ion a different industry.

https://www.nytimes.com/2018/02/16/business/trump-economists-trade-tariffs.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business&region=rank&module=package&version=highlights&contentPlacement=13&pgtype=sectionfront

Nations reportedly eye major infrastructure project

 Australia, the United States, India, and Japan are talking about establishing a joint regional infrastructure scheme as an alternative to China’s multibillion-dollar Belt and Road Initiative in an attempt to counter Beijing’s spreading influence, the Australian Financial Review reported on Monday, citing a senior U.S. official.

The topic of the article reminds me what we talked in class about the importance of infrastructure in production.



https://www.reuters.com/article/us-china-beltandroad-quad/australia-u-s-india-and-japan-in-talks-to-establish-belt-and-road-alternative-report-idUSKCN1G20WG

Tackling China’s demographic challenges

Currently, China not only faces demographic challenges of low fertility, but an overpopulation of elders as well.  People aged 65 and over are predicted to increase in population from 131 million to 371 million, and those aged 80 and over will increase from 22 million to 121 million by the year 2050.  Thus, putting a lot of constraint on China's socioeconomic progress and growth. As a solution to this problem, the Chinese government has proposed increasing the retirement age and also considered  "a family-based old-age care system" supplemented and supported by old-age care facilities provided by the community and the government themselves.  Only time will tell whether or not these new proposals will prove to be successful, but China is undoubtedly urbanizing at a pace faster than the older generations can afford keep up with. Literally because I think it's a lot of money to take care of old people.

Painkiller that once cost $138 is now $2,979

The sticker shock for Horizon Pharma's Vimovo drug is magnified by the fact that the painkiller's two main ingredients can be purchased separately -- for just $36. Although patients typically pay just a fraction of the price for Vimovo, the dramatic price increase underlines what critics describe as a murky and wasteful system that ultimately leads to higher health care costs for all Americans. A spokesman for Dublin-based Horizon said that the $2,979 wholesale price does not reflect "the cost to patients or the cost to the system." The company said it has programs to ensure that commercially-insured patients have access "at an affordable price" -- even if the patient's insurance refuses to cover the cost. Horizon estimates that 98% of all insured Vimovo patients pay $10 or less out of pocket. President Trump has repeatedly vowed to bring drug prices down. Just last month, Trump promised in during his State of the Union Address that his administration will work to fix the "injustice of high drug prices." Pricing in the pharmaceutical supply chain is notoriously-murky, despite the enormous consequences on the nation's bloated health care costs.


http://money.cnn.com/2018/02/15/investing/drug-prices-vimovo-horizon-painkiller/index.html?iid=SF_River

Bitcoin took an L but tonight it bounced back

After running into the highs of around $20,000 a few months ago bitcoin has seen a massive drop in value. In fact it fell as far as $7,000 in the last couple of weeks. However, by the time Friday's markets closed bitcoin was back over $10,000. This could be a potential bottom and could be a great entry point for investors since it has passed a psychological barrier o$10,000 before and when it did it skyrocketed several thousand more dollars before it slowed down. This could be another sign of a big run if it can hold support above the crucial $10,000 line. The reason I believe it will is because of how volatile bitcoin is right now. Falling from $20,000 to $7,000 shows the potential for big swings. Partnering this with passing a major psychological barrier and you could have yourself a run. In addition, stocks are also on the rise again which again calls for bullish signals in the market. I would like to see a double bottom formation before purchasing, but if bitcoin consolidates the next few days or continues to show strength I would recommend getting in.

https://www.thestreet.com/story/14492307/1/bitcoin-prices-will-double-in-2018.html

SpaceX set to launch demo satellites for its High-speed internet project

Elon Musk’s company SpaceX has set out with the goal of providing high-speed internet. They have received the okay from the Federal Communications Commission to send up test satellites.  

SpaceX is setting out to "deliver broadband services directly to [people] anywhere in the United States or around the world" at speeds similar to some of the quickest ground-based internet connections. Many college students take internet access for granted as we complain about slow school wifi, however, billions of people in the world still lack internet access. SpaceX projected the satellite-internet business would have over 40 million subscribers and bring in more than $30 billion in revenue by 2025.

http://money.cnn.com/2018/02/18/technology/future/spacex-launch-paz-demo-starlink/index.html

Inflation and Stocks Are Both Up, And That's Stirring Some Worries

It's long been believed that inflation and higher interest rates are bad for stock prices.  Now, it's unclear how the markets will react. Consumer prices rose more than expected in January, and interest rates jumped.  Nearly all mainstream economists agree that at some point, higher interest rated and inflation hurt stock prices.  Investors are right to be concerned.  If this is in fact that last stage of the long-running bull market, and interest rates continue to rise, some spectators typically preform better than others.  During the last year of the bull market, the best preforming sectors have been energy, health care, and technology.  No one knows for sure when the bull market will end, of course, or weather it already has.  Clearly, investors are one edge because of this.

https://www.nytimes.com/2018/02/15/business/inflation-stocks-interest-rates.html?rref=collection%2Ftimestopic%2FEconomics&action=click&contentCollection=timestopics&region=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=collection

Gun Makers Are Reeling Even as Threat of Regulation Recedes

Historically, gun sales spike following mass shootings as fear of increased gun regulation drives consumers to buy guns before anticipated increases in regulation. This was a common trend under the Obama administration as Dems pushed to increase regulations following an increase in shootings in the United States. After the recent shooting in Parkland, FL, one would expect to see an increase in the sales of fire arms, but this trend has not held true. A Trump administration known to be a huge ally of gun owners and the second amendment will certainly not push for increased regulation following the shooting and fire arms companies are suffering because of it. Sales continue to fall, and major gun companies such as Remington continue to refinance debt inorder to run from impending bankruptcy. Many are still hopeful for the future prospects of gun companies as the next four years are not expected to see an increase in regulations; however, the lack of impending regulation could sink major rifle companies as umbrella companies try to sell their children rifle companies and consumers feel no urgency to buy new guns.
https://www.nytimes.com/2018/02/16/business/gun-makers-are-reeling-even-as-of-regulation-recedes.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business&region=rank&module=package&version=highlights&contentPlacement=11&pgtype=sectionfront

Women’s Voices Are Scarce in Economics

A recent study shows that the number of women studying Economics in American Univeristies has declined. This can be concerning because economics is related to public policies and decline in the number of women would be mean men's voices would be more dominant. The number of women getting Ph.D.'s has also decreased over time. Only 35 percent of women were economics major which is the same as 1980's. There are several reasons behind the decline of a number of women in the Economics field. Women are usually not given credit for their papers written with their male counterparts. Even in discussions of economics research, women are consigned as secondary. The gender-neutral parental leave has worsened the situation as men utilize their leaves to improve their careers while women spend their time providing child-care.  Janet Yellen, the only woman to have served as the Chair of Federal Reserved had failed to get tenure at Harvard. The lack of women in Economics can result in negative outcomes for the society. Studies show that women focus more on labor markets, education, health issues income distribution while men focus on the macroeconomics.

https://www.nytimes.com/2018/02/02/business/why-womens-voices-are-scarce-in-economics.html

Amazon to Start Its Own Delivery Service

Amazon is preparing its own delivery service and will be competing with UPS, FedEx and U.S. Postal service. “Shipping with Amazon,” as the service is called, will pick up packages from businesses, initially the company’s third-party sellers, and deliver them to customers. Deliveries are reportedly set to begin in Los Angeles in the coming weeks and expand from there” By doing this will allow amazon to speed up delivery time and convince more people to buy Prime memberships.

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http://fortune.com/2018/02/09/amazon-delivery-service/

Cisco: We're moving our $67 billion cash pile to the U.S.

I found this article extremely interesting as it speaks to the impact of our President’s new corporate tax reform on a global basis. “Another mountain of money is being brought home to American shores following the new tax law -- and much of it will end up in the pockets of investors” (Shane). Tech company, Cisco said Wednesday it plans to repatriate $67 billion in foreign profits in the coming months. The firm manufactures gear for computer networks and claims it will pass on a significant portion of that cash to its shareholders over the next two years through share buybacks and increasing dividends.

In total, Cisco investors are set for a payout of about $44 billion. It is the most recent large U.S. company to map out its plans to bring home cash that has been stashed overseas long-term.

Previously, multinational corporations have been reluctant to move their offshore cash back into the states because of the heavy taxes they would have to pay on it. But the tax bill passed by Congress and signed into law by President Trump in December offers firms a special lower tax rate on funds being repatriated to the U.S.

These new laws also mean companies can no longer avoid paying taxes on past international profits by holding their cash outside of the U.S. They now must pay tax on the money whether they bring it back to the country or not.

Supporters of the new tax reform had argued that giving companies an incentive to bring the money home could boost the U.S. economy by promoting hiring and investment. But critics said Main Street wouldn't feel the effect because many companies would opt to reward shareholders with dividends and stock buybacks. What do you think?
http://money.cnn.com/2018/02/15/technology/cisco-overseas-cash-tax-law/index.html

Surging Inflation will save the dollar as the Fed ramps up rate hikes
Source: https://www.cnbc.com/2018/02/16/surging-inflation-will-save-the-dollar-as-the-fed-ramps-up-rate-hikes.html


This was a very interesting article about inflation and its impact on currency markets and monetary policy. The Fed is already expecting three interest rate hikes in 2018 to combat the rising inflation. It is interesting to me that the Fed is worried about inflation because it is still around the 2% target mark. I don't really see any need, at least currently, to hike up rates and attempt to slow the economy down.

This has to do with policy decisions of both the Fed and the government as they have to decide what route to take the economy in 2018. Currently, with Trump in power, we are attempting to loosen regulations and decrease government involvement in the markets. It will be interesting to see what type of involvement the government has and how they react to these inflation rates.

Also, the government is currently in favor of tax cuts, which should increase consumption amongst individuals. It will be interesting to see the impact of this on investment and how it ultimately affects rates. If we see an increase in the demand of loanable funds as well as increasing inflation numbers, than we could be setting ourselves up for a large spike in interest rates.

This year should bring some changes to both monetary and fiscal policy, and it'll be interesting to see the type of involvement the government has in regards to combatting the inflation issue. Or at least what they think is becoming an issue.

Steve Wynn steps down as CEO

       After allegations of sexual misconduct were brought on Steve Wynn he officially stepped down as CEO of Wynn Resorts.  After the allegations started popping up in the news the stock price of Wynn tumbled down about 18% once the news broke of the reports.  It showed concern from the investors and showed the significance of news like this has on the stock price of the company.  It is a huge loss to lose Wynn as CEO of the gambling empire he built himself and will be interesting to see how the future plays out with both the stock price and the company as a whole.  It is even affecting the foreign gambling market because the Chinese territory was the main contributor to the revenue and profit of Wynn Resorts.  But it wasn't just a huge loss for Wynn but for the entire gambling side of the market because he was such a key person in all of it and to lose such a gambling frontier could show trouble possibly to other Casinos and resorts possibly.  I am going to continue to look at the stock price and note the change as they keep searching for the new CEO and see what happens in the long run of the stock price and Wynn as a whole.

http://money.cnn.com/2018/02/06/news/companies/steve-wynn-stepping-down-ceo-wynn-resorts/index.html

A Crisis Is Coming

      In the article A Crisis Is Coming  by Desmond Lachman he makes the prediction that a major economic event will occur in a relatively short time period. He says that by this time next year there will be a situation similar to the 2008-2009 financial crisis. He beliefs this because of rising interest rates which could trigger price bubbles. Also he believes the mistakes taken by the Federal Reserve and the U.S. government are going to contribute to this future crisis. He goes on to talk about the mispricing of credit risk in certain countries and the very high level of debt. Also there is the highest levels of expansion in the past 40 years because of the very low interest rates. Personally I think Lachman brings up some very interesting points but he makes a recession seem like a new concept. He does not mention business cycle fluctuations and that periods of boom in the economy are followed by recessions. Overall it was a pretty interesting article as he gave specific reasons for his prediction.


https://www.usnews.com/opinion/economic-intelligence/articles/2018-02-14/us-economy-is-in-danger-of-overheating-and-exploding-into-financial-crisis

https://www.usnews.com/opinion/economic-intelligence/articles/2018-02-14/us-economy-is-in-danger-of-overheating-and-exploding-into-financial-crisis 

How would a government shutdown affect the U.S. economy?

This article discusses how a government shutdown could affect the US economy in the long run. A short term closure could erase at least $24 billion in economic activity and lead to a decrease in economic growth by 0.4%. From an employment standpoint, eight hundred thousand federal employees would be affected without pay until the government shutdown crisis is resolved. Without receiving a consistent salary, their expenditure and overall spending would also decrease thereby lowering aggregate demand.

A capital Economist mentioned in a research note that "If a shutdown were to begin now and goes on for longer than 10 days, it would also prevent the processing of tax refunds by the IRS, which would otherwise be filed beginning in late January, with payments scheduled to go out from mid-February onwards”. This would greatly affect taxpayers in the longer run. Also, federal infrastructure like parks would be shuttered since there would be no source of revenue from these operations. Also, shutting down operations is time consuming and costly.

Federal agencies like the Federal Aviation Administration and the Centers for disease control would have to lay off workers to cut down costs, causing temporary unemployment. As for the Federal Aviation Administration, personnel necessary for security background investigations, financial operations and budget functions, inspections and the development of safety standards would be adversely affected.

A shutdown would further destabilize the US budget policymaking, or brinkmanship over the federal debt limit. In the article, it is stated that even if the congress lowers the budget for another month with a controversial short-term extension, the expectation in the eyes of the world indicates that it could get worse in the long run. With low consumer confidence, this could have a negative impact on the economy in terms of growth and marginal propensity to consume. It is also stated that stock prices have tumbled slightly following the government shut down. In the long run, there is a risk the treasury will default on its debts or fail to make a social security payment.

Therefore, as clearly stated in the article, a government shutdown could adversely affect the economy in the long run, leading to federal unemployment, lowering aggregate demand and GDP, along with a fall in the stock market in the long run.

https://www.cbsnews.com/news/how-would-a-government-shutdown-affect-the-u-s-economy/

Tax cut scoreboard: Workers $6 billion; Shareholders $171 billion

This article basically talks about the Trump administration's tax cuts that have resulted in a net surplus of 141 billion dollars to shareholders of major companies in comparison to just 6 billion dollars for workers wages and benefits. The main argument is of course that corporate tax cuts by President Trump has resulted in massive stock buybacks on Wall Street and it is the shareholders, not the workers that are the bigger winners of this policy change. Some of the major companies that have been part of this buyback campaign are Cisco, Wells Fargo, Pepsi, Amgen, Alphabet, and Visa. It also mentions that these companies have actually brought back offshore investment into the country that was valued roughly around 2 Trillion Dollars. The positive side of this policy is that workers can benefit in the long run when companies invest their tax cut earnings for new jobs and positions but at this point, the clear winners are the shareholders and not the workers.

http://money.cnn.com/2018/02/16/investing/stock-buybacks-tax-law-bonuses/index.html