Millennials need to move out and get a life!

This article talked about one of the most terrifying economic indicators in America, which is that the Census Bureau stating that an increasing number of 18-34-year-old individuals are living in in their parent’s house along with their spouse(s).

It should also be noted that these millennial have a large accumulated student loan debt. The article states the US student loan debt to be $1.4 trillion today. This large accumulation of student debt can affect the economy in many ways. More specifically, student loan debt decreases spending because student loan borrowers choose to spend less as they can not afford to spend on items they would otherwise generally feel ready to purchase. Even during the holiday season when spending and consumption reaches its optimal level, those individuals who have accumulated student debt are less likely to spend even during this season.

Accumulation of student also negatively affects entrepreneurship. This in turn effects the growth of an economy. Many individuals who are victims to a high student loan debt, are unable to start their own business which in turn prevents innovation and affects economic growth negatively. Those individuals who want to start a business with a high student loan debt are unlikely to get approval to start it.

The article also mentions how “swallowing massive debt obligations still isn’t enough of a deterrent to the market. “The result is we have millions of young Americans straddled with such massive student loan debt that paying the rent or the mortgage is impossible for too many of them.” The article also mentions how even the housing market and rent has become higher.

Link: http://www.cnbc.com/2017/04/20/scariest-economic-indicator-more-millennials-living-home-commentary.html

Japanese Fast Food Chains Feel a Squeeze

Japan has always had a thriving fast food market and it has continued to grow. The Economist states, "since 2008 the market has grown from $35 billion to $45 billion". However, this market is starting to feel a squeeze in which, foreign competition and higher wages are making it harder to have these vibrant restaurants around.

In 2019 there is an expected value added tax that could hurt these restaurant chains. This tax will not apply to konbinis which are convenience stores that account for one third of the fast food market alone.

To combat this change, restaurants are focusing on the service side of restaurants. Changes in the production of food and doing made to order food in unlikely areas like train stations and outlets is giving restaurants a fighting chance to bounce back and increase the consumption of their products.

With local restaurants changing the way they produce food and changing the service of restaurants, foreign competition is making changes as well. McDonalds-Japan is adding new burgers that are more appealing to Japanese consumers and foreign firms have seen an increase in profits. However, foreign competition is still lagging behind local/domestic restaurants since local restaurants are transparent in where their food comes from and farm to plate style restaurants are keeping freshness a priority.












"Japanese Fast-food Chains Feel a Squeeze." The Economist. The Economist Newspaper, 22 Apr. 2017. Web. 24 Apr. 2017.

Retail stores are closing at an epic rate

http://money.cnn.com/2017/04/22/news/credit-suisse-retail/index.html

Ever since the creation of Amazon and similar websites, brick-and-mortar retail stores have been closing at an all time high. According to Credit Suisse, it is possible that 8600 brick-and-mortar close can close this year, more than any year before. If this prediction does come true, America will lose more than 147 million square feet of retail space.

The internet has been the worst enemy to retail stores like Sears, Macy's, and J.C. Penny, with a trend towards online shopping making it quicker and easier to compare prices side by side and have more of a personalized shopping experience. In the future I wouldn't expect this trend to stop.

France's historic presidential election results, explained

Far-right candidate Marine Le Pen and center-left candidate Emmanuel Macron have won the first round and will move on to the final round of voting on May 7. According to French polling firm IPSOS, exit polls show Macron with 23.7 percent followed by Le Pen with 21.7 percent of the vote. Far-left candidate Jean-Luc Mélenchon and conservative candidate Francois Fillon tied for third place with about 19.5 percent each.

The results also reveal a divided over the future of France and its place in Europe as a key member of the union, as the two victors in this round have polar opposite visions of the future. Quite simply: one vision is closed, one is open. One is nativist, one is worldly.

Le Pen heads the far-right National Front party, which in the past were known for characteristics such as xenophobia, anti-Semitism, and what’s called “soft-core” Holocaust denialism. Le Pen has tried hard to reform the party’s image, instead presenting a modern populist vision of France that is avowedly anti-globalization, anti-EU, and anti-immigrant.

Macron, a political neophyte who will be gunning to hold office for the first time, represents En Marche!, a brand-new center-left party. His vision for the future is of a more open, more tolerant, and more inclusive France at the center of a strong European Union.

In her victory speech Sunday evening, Le Pen called herself the “candidate of the people.” “You have allowed me to take part in the second round of the presidential campaign and it is an honor for me. And I accept it with humility and appreciation,” Le Pen said.

Macron, in his victory speech, said “I will gather people together...to reconcile our France.”

He promised to be a “president of all the French people, the president of patriots faced with the threat of nationalists. A president who will protect and transform and build. A president who will allow those who want to create, innovate, enterprise and work to do so more easily and more speedily. a president who helps those who have less.”

Now that were are in the final round we might get a more detailed dossier from both candidates on issues such as France’s future in the EU, immigration, etc.  

Asia Trades as if North Korea Wasn't a Problem

“Asia Trades as if North Korea Wasn’t a Problem’: How Top Bankers Think About the Hermit Kingdom” by Elena Holodny outlines the tumultuous nature of North Korea and possible impacts to the global economy.  North Korea isn’t a country that investors generally look at, but given its recent actions on the geopolitical stage, an assessment of the North Korean economy is extremely interesting.  One major question, is how do markets assess risks of countries like North Korea without overreacting in the short term or refusing to invest completely?  Any turbulence in North Korea would inevitably spill over into emerging and developed markets like China and South Korea.  Especially now that North Korea has nuclear weapons, investors are trying to model and predict the likelihood and potential impacts of a shock event, like a military conflict.  This type of event has not occurred for a long time, and would have catastrophic consequences for the global economy.  The article argues that there is no real way to predict what exactly would happen should North Korea be involved in a military conflict.  The nation is not directly connected to global markets, but reverberations would be felt in many other markets. It is also to take into account the overall macro situation, but also the institutions of markets.  The article mentions governance, an independent judiciary, freedom of press, and problems of corruption as institutions to take into account specifically when analyzing North Korea.  For many investors, the fact that the country and the economy are controlled by a single person results in a risk premium so high they simply won’t risk getting involved.  Unfortunately, this can translate a complete lack of acknowledgment of North Korea as a threat to the global economy. Regardless, the future of North Korea is tenuous; bankers and politicians alike should prepare for the worst and hope for the best.

Holodny, Elena. "'Asia Trades as If North Korea Wasn't a Problem': How Top Bankers Think about the Hermit Kingdom." Business Insider. Business Insider, 15 Apr. 2017. Web. 23 Apr. 2017. <http://www.businessinsider.com/how-top-bankers-asses-risk-of-north-korea-hermit-kingdom-2017-4>.

FED Looking to Reduce its Balance Sheet

As the Trump administration continues to inspire growth in the equity markets around the expectation of deregulation and fiscal infrastructure increases, the FED's outlook has changed from hesitantly waiting to raise rates (as was the case during the Obama administration) to bringing rates up quickly to prevent the economy from "overheating." As the FED looks to raise rates, they also want to do something about their $4.5 trillion balance-sheet that they accumulated during several rounds of quantitative easing that took place in an attempt to stimulate the U.S. economy in light of the great recession.

As the FED looks to unload their balance sheet, the first step is not selling. They will likely move to adjust their re-investment policy. Currently, profits from the bonds on their balance sheet are re-invested into more bonds which serves to increase their holdings. Investors will keep sharp eye on the FED especially in the MBS market, as the offloading and lack of re-investment will have a large impact on both the primary and secondary mortgage markets.

Original Article - http://www.cnbc.com/2017/04/18/fed-official-backs-bond-pairing-this-year.html

Consumer Loans: Payday Lending is Declining

This economist article discussed how payday loans have been declining recently due to regulators. One example that was discussed was a woman making $12 an hour taking out a loan that would cost her $1,620 in interest, which was an annual rate of 838%. The woman fell behind on her payments, and ended up filing a lawsuit. The Delaware judge determined that the interest rate on the loan was not only illegal, but "unconscionable."

I have mixed feelings about the issue. While this interest rate is completely ridiculous, and isn't moral to charge someone this that makes $12 an hour, the woman took out the loan on her own will. While she wouldn't have done this had she made more money (which could even be an entirely different issue), it was her decision to take out the loan. It will be interesting to see if payday loans continue to decline, and if they do, what will take their place.

Article

Why America’s Federal Reserve might make money disappear

As the US economy grows, America’s Federal Reserve is trying to keep inflation in check by raising interest rates. One of the methods to achieve higher interest rate is through selling some of the assets acquired during and after the 2008 financial crisis under the policy, quantitative easing (QE). However, the effects of unwinding the effects of QE are uncertain and the Fed wants something that is predictable. An alternative is to see the bonds run off and collect the money when they are mature while reducing or halting further investment. 

http://www.economist.com/blogs/economist-explains/2017/04/economist-explains-10

Economists, in letter to Trump, say immigration can boost growth, jobs, wages

Around 1500 economists have signed a letter to President Trump and Congress, highlighting the advantages of immigrants working for the US economy. Their hope is that legislators while drafting an immigration policy will take into account the fact that "immigrants boost growth, jobs, and wages." Hotlz-Eakin, former director of the Congressional Budget Office who also served as the chief economist under President George.W Bush was the driving force behind the organization of the letter.  This letter was written in an attempt to shed some light on the situation that 11 million illegal people living in the United States face. Signatories included economic and policy experts from renowned institutes across America. They argue that immigrants help to make up the backbone of the American economy. They are not a threat to American workers but create more opportunities for jobs. Many immigrants contribute to the economy by starting companies in various sectors such as technology  (Silicon valley is full of them). It is reported that more immigrants work in the STEM field to boost economic growth. The article also discusses "immigrant-friendly environment." Give the immigrants a warm welcome, show the same level of respect you want, and its a win-win for everyone. Statistics have shown such positive impacts inherently increase wages. It is reasonable to say that labor force growth without immigrants will take a huge hit. In my opinion, innovation is the key to boosting economic growth. Immigrants bring innovation, diversity, and an increase in labor force participation to the American economy.



http://www.chicagotribune.com/business/ct-economists-immigration-letter-trump-0413-biz-20170412-story.html

China’s Economy Grows 6.9%, but Warning Signs Persist

After developing at a dramatically rapid rate for years, China slows down a little bit recent year. As the world’s second-largest economy after the United States, China announced that it grew 6.9 percent in the first quarter, which is slightly higher than the prediction that China would again report 6.8 percent growth for the first quarter. The higher growth rate was due to construction industry’s heavy use of steel, which had been expected to slow, while investment in electronics factories rose as overseas demand strengthened.

According to the article, although the economy grew at a decent rate, the Government data still reflected some warning signs. Government might manipulated the data by using policy and statistical sleight-of-hand to achieve steady results. Therefore, it is possible that the released data is not reliable.

https://www.nytimes.com/2017/04/16/business/china-economy-growth-data.html?hpw&rref=business&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well&_r=0

Spooked French Savers Send Money Out of Country

David Chazan examines the effects the upcoming presidential election \are already having on the French economy in this articles. Millions of euros have been transferred by French families to Luxembourg. Many are afraid of the consequences of the economic plans put forth by the candidates, Marine Le Pen and Jean-Luc Melenchon. Both have plans to stop using the euro and many families feel they are protecting their money from the French government by moving it to Luxembourg. The two candidates are in an extremely tight race with the outcome of the election being seen as unpredictable. I understand why the citizens of France would be worried about these economic plans. However, I think that if too many people send their money out of the country, it could cause an economic downturn.

https://uk.news.yahoo.com/spooked-french-savers-send-money-131724423.html

Ireland's Food Industries would be Worst Hit by a hard Brexit

Ireland's economy has become an important trading hub for many businesses. Multinational companies especially have an important role in Ireland as 90% of exports are shipped by multinational companies.

The Economist argues that Ireland has a dual economy where one side relies on foreign direct investment and the other is the traditional working jobs.

With the looming threat of Brexit, there has been a significant increase in the amount of firms that want to make Ireland home. Technology firms especially have showed special interest in Ireland that has a large english speaking population and low-tax rate and access to the markets of both Britain and the EU.

However, with the increase in large technology based businesses coming due to Brexit, Ireland's domestic industries have begun to shrink. Only 13% of goods exported are going to Britain. The Economist also argues that with the growing foreign direct investment in Ireland by these large multinational firms, the food industry in Ireland is going to take such a large hit that the FDI will not make up for the shortcomings domestically. A hard Brexit would hurt exports, Irish jobs and large tariffs. This hard Brexit would hurt rural Ireland more than the cities like Dublin and would continue to cause shortfalls in the housing market that would be exacerbated by the influx of economic migrants looking for jobs.

The Economist argues that a soft Brexit would be more beneficial for both Ireland and Britain as they both benefit from each other being strong. A soft Brexit would also allow both parts of the economy to benefit off of each other and not completely hurt the system. It will be interesting to see which kind of Brexit takes place and how this could affect Ireland. There are both positives and negatives to both scenarios.





http://www.economist.com/news/finance-and-economics/21720313-tale-two-economies-irelands-food-industries-would-be-worst-hit-hard

Stunning drops in solar and wind costs turn global power market upside down

According to the UN and Bloomberg New Energy Finiance, the world build more renewables for less money than ever last year.  "In just one year, the cost of solar generation worldwide dropped on average 17 percent... onshore wind dropped 18%... while those for offshore wind fell a whopping 28%."

The world's renewable energy is becoming more and more affordable, and the world should implement new strategies in order to utilize the power of wind and solar energy.  It does look though that the world as a whole is slowly adapting to the new energies.  We can rely on innovators to come up with new ideas to help push the world along in these changing times.

https://thinkprogress.org/renewables-cheapest-new-power-globally-74910c78bbbe

Uber Wants to Rule the World. First It Must Conquer India.

I found this article interesting because it talks about how Uber is trying to expand into India and are using “UberDosts,” or recruiters, who are paid by Uber for each driver that they bring to the company.  The recruiters must deal and train people, some who have never worked before, driven before, or have never even used a smartphone before.  Uber is using an aggressive approach to take over the market in India.

The reason for this aggressive approach could be because Uber was recently forced to leave China after getting beat by a competing service, Didi Chuxing.  Uber will not let this happened again and is making sure India goes better.  Uber currently is operating in 29 Indian cities in India, but there have been some problems, including competition.  A well-funded competitor, Ola Cabs, operates in around 100 cities and offers more services that Uber.  Both companies are fighting to control the market, but agree that their efforts can transform India because travel has become much more affordable, safe, and available.  The two companies also offer jobs, which are changing the lives of hundreds of thousands of drivers.  Drivers make between 30,000 and 60,000 rupees a month, or $450 - $900, which is above the average income.  Both companies continue to face multiple problems, but believe that the long-term push and change will be worth it.  Uber feels as if there are no problems that they cannot overcome and that they will become more profitable in the future.

Link:  https://www.nytimes.com/2017/04/14/technology/uber-india.html?ref=business&_r=0

The Economist: Rescuing Myanmar's farmers from the debt trap

The Article

This article discusses a horrible cycle seen in some developing countries. Farmers borrow money to cover planting costs, but their product is a low-return crop, so to repay the bank they borrow from local moneylenders, with no way to pay back the moneylenders. This is a common story. The usurious loan terms keep farmers and agricultural workers in debt. They borrow "to cover planting costs, buy equipment or purchase land, and repay after the harvest".  Slowly opportunity is improving. with the development of microfinancing. However, there are still laws that prevent the ability for microfinancers to work with citizens. But, there is hope- cell phones. The World Bank is piloting a program that uses mobile-network data and crop-suitability mapping to arrange season loans using mobile money. One of the problems with using the local bank is high interest rates this is from a lack of competition. So, mobile money from the World Bank and microfinancing may create more competition forcing local banks to use more competitive interest rates.