Japan records first trade surplus since 2012

 Japan’s economy finally had a trade surplus as cheaper oil prices and a weaker yen boosted exports. After the earth quake in March 2011, Japan had to shut down Nuclear plants that accounted for a third of the energy production in the country. they had to resort importing alternative power resources. A fall in commodity costs has eased import levels and Japan has finally reported a surplus. Cheap petroleum prices have also helped as well as a weak yen has made exports higher. Economists predict that this surplus will not be able to last long, especially if oil prices bounce back.

http://www.bbc.com/news/business-32408371

Home Sales Jump to Highest Level in 18 Months

http://www.nytimes.com/2015/04/23/business/economy/home-sales-jump-to-highest-level-in-18-months.html

Sales of existing homes surged in March to their highest level in 18 months as more houses came on the market, a sign of strength in housing ahead of the spring selling season. Existing-home sales increased 6.1 percent to an annual rate of 5.19 million units in March, the highest level since September 2013. The percentage rise was the largest since December 2010.

"In March, the inventory of unsold homes on the market increased 5.3 percent from a month ago to two million units, the highest level since last November. However, supply was up only 2 percent from a year ago...Realtors and economists say insufficient equity and uncertainty about the economy’s strength were forcing potential sellers to stay longer in their homes. A recent survey by the Realtors association showed homeowners were staying in their homes for an average of 10 years instead of the typical seven years... At March’s sales pace, it would take 4.6 months to clear houses from the market, down from 4.7 months in February. A supply of six months is viewed as a healthy balance."

Switzerland Ranked As Happiest Country

According to the World Happiness Report, Switzerland is now ranked as the happiest country in the world.  In previous years, Denmark was ranked as the happiest country but dropped to the third spot this year.  The top five happiest countries are Switzerland, Iceland, Denmark, Norway and Canada while the least happiest countries are Togo, Burundi, Syria, Benin and Rwanda.  The United States is 15th.  Greece has declined the most in happiness over a period due to the severe recession and social unrest.  The report launched in 2012 and is developed by the Sustainable Development Solutions Network, an initiative under the United Nations.  The rankings are based on data from the Gallup World Poll and measures variables such as real GDP per capita, social capital, healthy life expectancy, corruption levels and social freedoms.  The 2015 report is the first to assess gender and age as well.  Women found their well-being to be slightly stronger than those of men.  The idea to measure contentment in the population rather than just wealth has proved popular in recent years.  Furthermore, it is important to take note of the strength of a society and the strength of economies when considering the well-being of a population. 

http://www.theguardian.com/world/2015/apr/23/swiss-reign-supreme-in-world-happiness-ranks

Africa and commodity prices

Some countries, especially those that are still very dependent on commodities, have seen bigger downgrades. But overall the situation is positive. Only two countries, Sierra Leone (a commodity-dependent economy which has also been hit by Ebola) and Equatorial Guinea (an oil-soaked kleptocracy), will see their economies contract over the next two years. Other African economies, meanwhile, have been upgraded. Lower oil prices are a boon for Kenya, which is a big importer of the fuel. And the Kenyan government is also embarking on big fuel-hungry rail and energy projects.

http://www.economist.com/blogs/freeexchange/2015/04/africa-and-commodity-prices

Marijuana Price Wars in Colorado

This article explains the economic impact that legalized marijuana use has done for the Colorado market, especially in terms of competition. Retailers are expected to increase which will only make competition tougher. This competition can create a price battle between all these competitors and high demand. The growth in this market is fascinating. A slight decrease in price, from $1,900 to $1,800 per pound could increase sales as much as 20 times more. The number of recreational stores that sell marijuana have increase by 110%, even though there are more issued for medical than recreational. Analysts say that this is creating grounds for a price war that will likely strongly bring the price down in 2015.  To compare, when the recreational market first opened in January of last year, prices were around $4,000 a pound. These price drops are basic supply and demand consequences.

http://www.ibtimes.com/marijuana-price-wars-colorado-recreational-pot-prices-expected-fall-fast-year-1895938

Putting an End to a Bad Comcast Merger

http://www.nytimes.com/2015/04/25/opinion/putting-an-end-to-a-bad-comcast-merger.html

Comcast and Time Warner Cable officially terminated their $45.2 billion merger Friday. The deal, which was announced in February 2014, was under review by U.S. federal regulators for more than a year. Starting last week, multiple reports suggested the merger of the cable industry’s two largest players was getting stiff resistance from the Federal Communications Commission and Justice Department. The decision to scrap the proposal altogether followed a meeting between FCC officials and executives from Comcast and Time Warner Cable.

Salesforce CEO Promises Equal Pay to Women

Marc Benioff, CEO of Salesforce, initiated a project called Women’s Surge within the company as an effort to eliminate the gender salary gap and also hire more women.  The review is still under progress to determine what the salary gap is, but currently 71% out of the 16,000 employees are male. When the program is complete, he promises there will be no more wage gap and his goal is to have 30% of employees that are included in any meeting throughout the company to be female. 

I assume that Salesforce will be getting a lot of positive publicity for their efforts. Will other companies follow?

http://money.cnn.com/2015/04/24/technology/salesforce-equal-pay/index.html?iid=SF_BN_River

Venezuela's Hyperinflation

http://www.bloomberg.com/news/articles/2015-04-24/these-u-s-companies-are-hurting-from-venezuela-s-hyperinflation

Venezuela has been burdened with hyperinflation.  They have continually introduced weaker exchange rates, and this has been at the detriment of many US corporations.  Adopting these lower rates leads to lower earnings and additional charges.  It was noted that 46 S&P 500 companies listed Venezuelan exchange rate exposure as a risk last year.  Venezuela utilizes three exchange rates that are controlled by the government. For example, DirecTV could take a hit of $452 million if they adopt to the new weaker exchange rate.  This type of free fall could hamper firms' ability to conduct business in Venezuela.  The currency has been devalued by at least 36% already this year.

We just finished discussing inclusive and extractive institutions.  How can Venezuela fix the problems that are permeating their economy?

Google launches Project Fi mobile phone network

http://www.bbc.com/news/technology-32422193

This article describes Google launching a mobile phone network through carriers Sprint and T-Mobile, two of the cheaper operators in the United States. It notes that Google's entry into this market will start as a limited pilot to Nexus 6 owners, and will be reliant on competitors' network bandwidth rentals, which may limit its viability as an independent service. The network will also provide Wi-Fi data sharing to limit data usage throughout a Google "wireless network".

Overall, this development is not exactly an unexpected route for Google to take, though much speculation has been placed on Apple's possible entry into this market. This is similar to its Google Fiber venture that has been widely credited for forcing large consumer internet service providers like Comcast to reduce their price per megabyte per second provided, serving largely as a market disruptor to a heavily concentrated market. This will likely have similar impact, forcing mobile carriers to drop relative prices, if they take the same strategy. While it's doubtful that Google will be a serious threat to the Big Four wireless carriers, their market disruption may shock enough of the market to produce positive gains for consumers overall.

Oil prices 'will hit optimum level' as demand grows

http://www.bbc.com/news/business-32396127

Experts at the World Economic Forum on East Asia predict that gas prices will rise even higher soon. They're currently at their highest for the year, up 40% from the low of $45 a barrel in January. Prices halved last fall and winter, but that is not an abnormality for the oil market. Prices have dropped by more than 50% five times in the last thirty years. Some businesses have been delaying projects because of the drop over the last year, but many experts say this is unwise because demand will pick up dramatically in the next 2-3 years. Asia is expected to become a net importer of oil soon as the last Southeast Asian member of OPEC (Indonesia) recently lost its status when it became a net importer of oil.

Tesco: Very Little Helps

http://www.economist.com/news/business-and-finance/21649426-britains-biggest-retailer-announces-worst-results-sector-has-ever-seen-very-little

This article discusses how Tesco, on April 22nd, made their announcement, informing everyone of their bad news and how poorly they preformed in the past year.  The article states, "Tesco made the largest pre-tax loss, of £6.4 billion ($10.4 billion), in British retail history, eight times as much as the previous record, set by Morrisons last year. This was also the sixth-largest loss in the country’s corporate history".  The article goes on to talk about how most of the loss was due to the fall in property value of Tesco's British stores.  This shows how many consumers are more interested in making purchases online, rather than going into the actual bricks and mortar stores.  Later, the article talks about how the CEO of Tesco, David Lewis hopes that now that the company has hit rock bottom, they will finally be able to grow as a company and start making money again.  Although Mr. Lewis' talk discussed many of the issues and down-turns the company is experiencing, he did mention some positive things.  First, the Tesco Bank is still performing very well.  And secondly, although profits of Tesco in Britain dropped dramatically, they did not drop as much over Europle, showing that the global expansion of Tesco was a good idea.  

The article concludes with how the Tesco brand will try to rise back into power and make more money again in the future.  They want to become more like Aldi and cut prices dramatically.  While this initially could hurt their profit, ultimately, this will attract more customers.  

Unpaid Russian workers protest against Putin

http://www.nytimes.com/2015/04/22/world/europe/russian-workers-take-aim-at-putin-as-economy-exacts-its-toll.html?ref=world

Recently, a group of construction workers started a protest against Vladimir Putin's economic policies, in St. Petersburg. It is the first organized protest against Putin in a long time. The workers have gone off work and are complaining for not getting paid for 4 months. It will be interesting how that affects the unemployment rate in Russia as Russian firms tend to not fire employees.

Empty Nest? In Slovakia, It May Begin When The Child is 35

http://www.nytimes.com/2015/04/21/world/europe/young-slovakians-find-hotel-mama-easy-to-check-into-hard-to-leave.html?hp&action=click&pgtype=Homepage&module=photo-spot-region&region=top-news&WT.nav=top-news

According to European Commission statistics, In Slovakia, 74% of adults, from the age group of 18 years to 34 years regardless of employment or marital status still live with their parents.

And among older adults, 25 to 34 years old, 57% reside with their parents. This trend is termed as  "Hotel Mama." In Bulgaria it is 51%, in Romania it is 46%, in Serbia 54%, and in Croatia it is 59%.

Social scientists and government officials do not think there is some specific reason for this trend, besides the financial crisis.It is to be noted that all these  European countries until recently were Communist.

"The lingering effects of central planning, combined with long-term shortages of housing, especially rentals, have limited the options for many young people in Central & Eastern Europe." When Communism collapsed, residents of state-owned housing in many Communist nations were given the opportunity to buy their apartments at generously low prices, a sweet deal that their children now find they cannot duplicate.

Also changing the ownership of the house is a huge hassle now and renting is also not a part of the culture.

However, the main issue is also  that even though these countries are westernizing, the housing infrastructure of these countries, the wage levels to sustain the Western life is not sustainable.

Migrant Crisis continues

http://www.bbc.com/news/world-europe-32383126

As the civil unrest in the Middle East and Northern Africa continues, more and more refugees are pouring into the European Union. They pay a thousand euros each for the ten mile crossing and some pay with their very lives. Syria, Eritrea, Libya. These are some of the countries that they flee from. Can Europe find a better way to smooth immigration into its borders? Is there a way to avoid this loss of life? This article suggests a ten point immigration plan to smooth passage into the EU. However, I don't know if this will convince all Europeans that allowing more immigrants into their countries is a good idea, especially with the current economic instability.

Venezuelan shortages

http://www.bbc.com/news/magazine-32349473

So, in keeping with the current theme of class (and bouncing off of Arjun's April 12th post), I found this article from the BBC on the product shortages in Venezuela. Currently, it is very difficult to buy products there and everything is government regulated. People wait in long lines in order to buy anything and sometimes the wait isn't even worth it in the end. I just think it is interesting because it reminds me of Soviet markets, except worse.

Would love to hear everyone's thoughts.

Item Club predicts UK economic growth of 2.8% this year

According to an EY Item Club report, UK economy should be expecting a growth of 2.8% this upcoming year. There were various factors contributing to this, including the recovering of the Eurozone's economic as well as lowering oil price due to the Ukraine crisis, high level of employment and inflation has fallen to 0%. The Item Club also predicts the UK economy to keep staying strong on it feets despite their might be negative shocks from Russia and Ukraine, as well as the Greece Crisis in the Eurozone.

Although inflation reaching 0% is a good sign (mainly due to high level of inflation during 2011-2012 period in Europe), I would be concerned with raising the level of inflation by a bit as there might be risk of deflation (which is just as hard to mitigate as high inflation), as well as a general positively low level of inflation is required for economic growth (~2%).


http://www.bbc.com/news/business-32376418