http://money.cnn.com/2015/10/20/investing/chipotle-third-quarter-earnings/index.html?iid=hp-stack-dom
The all familiar fast casual restaurant chain that has created a cult like following in recent years has just recorded it's worst sales growth in over two years. It seems as if Chipotle might be at its pinnacle in terms of growth, seeing as it has started to plateau in the recent quarters. Although they are still seeing tremendous sales figures that companies dream of, their investors don't seem to be happy because their stock price fell by 6% after their earnings were announced. Chipotle's CEO and co-founder Steve Ells was quoted saying "I am confident that we have the right food culture and people culture in place for us to continue our momentum," however from a market perspective, is the Chipotle hype and following starting to decrease and wear out among consumers?
In 2012 Chipotle had 1,200 locations, but now they are expected to have over 2,000 by the end of this year. That being said, could their rapid growth and expansion have caused this economic slowdown for them, because it seems to appear that way. Although it is very hard to continue successful operations like they have done in recent years, it will be interesting to see what Chipotle does to rebound in an attempt to reestablish themselves in the market place.
Tuesday, October 20, 2015
IMF forecast the Global Growth in 2015 will be at 3.1%
On October 19th, International Monetary Fund(IMF) released the world economic outlook report, the forecast of the global growth in 2015 is 3.1%, which is 0.3% lower than the growth in 2014, and 0.2% lower than the predicted value in July 2015. Prospects for major contries and regions remain uneven.
Compare to 2014, the recovery in advanced economies is expected to accelerate slightly, while the slowdown in emerging markets and developing economies is expected to remain for the fifth consecutive year.
According to the report, a growth in emerging markets and developing economies is expected in 2016. This is mainly because the countries that are in recessions or economic harship in 2015 will or partially be able to normalize their situation, the economic activities in advanced economies will be able to accelerate the spillover effects that were brough about.
Compare to 2014, the recovery in advanced economies is expected to accelerate slightly, while the slowdown in emerging markets and developing economies is expected to remain for the fifth consecutive year.
According to the report, a growth in emerging markets and developing economies is expected in 2016. This is mainly because the countries that are in recessions or economic harship in 2015 will or partially be able to normalize their situation, the economic activities in advanced economies will be able to accelerate the spillover effects that were brough about.
Speculators and US Currency Growth
http://www.economist.com/news/finance-and-economics/21674775-currency-pegs-are-still-fashion-some-are-creaking-pegs-under-pressure
Plunging commodity and natural resource prices are affecting currencies across the world. Many currencies are falling with oil prices. The Russian roubel, for example, is down 45% along with the Brazilian real which is down 40% (one of the most developed South American economies on the continent).
With that said, the US dollar has grown stronger to foreign currencies during this time which is odd because oil is mostly traded using the American dollar (and oil prices are declining). Some economists argue, according to the Economist, that the reason for this dollar strength is due to higher demand due to less exports coming out of America. This could cause a sharp decline in the future because if speculators can spot the problem, they could attack the dollar directly, lowing its value and affecting businesses who borrowed the dollar for their business,
To adjust for currency decline, countries like Saudi Arabia have made reserves capable of paying for up to 48 months of imports. Other countries are burning through their reserves and turning surpluses into deficits.
Do you think the US should plan for a currency decline if oil prices continue to fall or do you think that the US is in good shape when compared to the world economy and does not need to plan for a speculator attack?
Plunging commodity and natural resource prices are affecting currencies across the world. Many currencies are falling with oil prices. The Russian roubel, for example, is down 45% along with the Brazilian real which is down 40% (one of the most developed South American economies on the continent).
With that said, the US dollar has grown stronger to foreign currencies during this time which is odd because oil is mostly traded using the American dollar (and oil prices are declining). Some economists argue, according to the Economist, that the reason for this dollar strength is due to higher demand due to less exports coming out of America. This could cause a sharp decline in the future because if speculators can spot the problem, they could attack the dollar directly, lowing its value and affecting businesses who borrowed the dollar for their business,
To adjust for currency decline, countries like Saudi Arabia have made reserves capable of paying for up to 48 months of imports. Other countries are burning through their reserves and turning surpluses into deficits.
Do you think the US should plan for a currency decline if oil prices continue to fall or do you think that the US is in good shape when compared to the world economy and does not need to plan for a speculator attack?
Monday, October 19, 2015
Why Google Hates Amazon Prime
What will happen to Google if no one searches for anything on it? Currently Google has fallen behind compared to Amazon's position as the primary destination for product searches that appears to be improving. A 2012 survey from Forrester Research found that Amazon was the starting point for just 30% of online shoppers. And the Amazon Prime Services has been leading to more loyalty, offering two-day shipping for a flat $99 yearly rate along with TV, movie, and music streaming, among several other benefits. So the Question is what is google doing to amp up their search engine and get more of the public involved, because the more popular Amazon gets the more Google falters.
Full article: http://www.fool.com/investing/general/2015/10/18/why-google-hates-amazon-prime.aspx
Full article: http://www.fool.com/investing/general/2015/10/18/why-google-hates-amazon-prime.aspx
Sunday, October 18, 2015
The pillars of American finance are under attack
There has already been a lot of debate for why some of the
major American firms have not taken enough security measures to protect their
company from frequent cyber-attacks. Now, a lot of the Wall Street giants are
under such attacks. Not only have the hackers been attacking the banks and the brokerage
firms, they have also been after the news-makers, distributors, and the business
reporters. Recently, a group of Russian hackers broke into the Dow Jones servers
and stole information that they used to trade on. FBI has been keenly looking
into this matter. Other cyber-attacks happened to retail brokerage Scottrade
where they announced that the hacking affected up to 4.6 million clients and
was aimed at stealing names and street addresses. Reportedly, some of the
hackers stole more than 150,000 press releases from a handful of news wires in
August which contained financial information that could be used for trading. JP
Morgan was under such an attack in 2014 where the hackers stole contact
information for more than 70 million households.
It can be said without any doubt that no one in the
financial services sector is safe in the modern world. It was surprising that
some of companies cut back on their budgets for technological improvements earlier
in the year. Finance and other major companies need to invest more on increasing their cyber-security
and shield against such frequent attacks soon, else the scenario will keep
getting worse.
Few in Venezuela Want Bolívars, but No One Can Spare a Dime
http://www.nytimes.com/2015/10/19/world/americas/few-in-venezuela-want-bolivars-but-no-one-can-spare-a-dime.html?hp&action=click&pgtype=Homepage&module=first-column-region®ion=top-news&WT.nav=top-news
Pity the bolívar, Venezuela’s currency, named after its independence hero, Simón Bolívar. Even some thieves don’t want it anymore.
A year ago, one dollar bought about 100 bolívars on the black market. These days, it often fetches more than 700 bolívars, a sign of how thoroughly domestic confidence in the economy has crashed. The minimum wage is 7,421 bolívars a month. That is either a decent $1,178 a month or a miserable $10.60.
The International Monetary Fund has predicted that inflation in Venezuela will hit 159 percent this year (though President Nicolás Maduro has said it will be half that), and that the economy will shrink 10 percent, the worst projected performance in the world (though there was no estimate for war-torn Syria).
Most economists say the problems are caused by the fall in oil prices and by the government’s policies, including strict controls on prices and foreign exchange for imports.
Pity the bolívar, Venezuela’s currency, named after its independence hero, Simón Bolívar. Even some thieves don’t want it anymore.
A year ago, one dollar bought about 100 bolívars on the black market. These days, it often fetches more than 700 bolívars, a sign of how thoroughly domestic confidence in the economy has crashed. The minimum wage is 7,421 bolívars a month. That is either a decent $1,178 a month or a miserable $10.60.
The International Monetary Fund has predicted that inflation in Venezuela will hit 159 percent this year (though President Nicolás Maduro has said it will be half that), and that the economy will shrink 10 percent, the worst projected performance in the world (though there was no estimate for war-torn Syria).
Most economists say the problems are caused by the fall in oil prices and by the government’s policies, including strict controls on prices and foreign exchange for imports.
Saturday, October 17, 2015
Norway Is a Model for Encouraging Electric Car Sales
Norway, in an effort to wean their drivers off of fossil fuels, are offering subsidies and incentives for Norwegians to buy electric cars. The idea behind this is for Norway to reduce the amount of greenhouse gas emissions and reach its United Nations climate goals.
The current amount of electric cars in Norway is still only 2 percent, but that is quite high compared to other countries. And with a population of 5.2 million, that's still a decent amount of electric cars on the road. More than one-fifth of new car sales in Norway are electric cars. According to some predictions, there are going to be about 50,000 electric cars in Norway by 2017.
However, with the rapid increase of electric cars, the Norwegian public doesn't think the government has the proper accommodations for the cars. In Oslo, there are only 700 charging stations, though there are expected to be 1,000 by the year's end. And some city and regional governments are recording losses in profits from a decrease in the use of public transportation.
It'll be interesting to see how this program turns out. Will they be doing a program like cash for clunkers but for electric cars? Would this work in the United States? Will this program be successful?
http://www.nytimes.com/2015/10/17/business/international/norway-is-global-model-for-encouraging-sales-of-electric-cars.html?ref=business
The current amount of electric cars in Norway is still only 2 percent, but that is quite high compared to other countries. And with a population of 5.2 million, that's still a decent amount of electric cars on the road. More than one-fifth of new car sales in Norway are electric cars. According to some predictions, there are going to be about 50,000 electric cars in Norway by 2017.
However, with the rapid increase of electric cars, the Norwegian public doesn't think the government has the proper accommodations for the cars. In Oslo, there are only 700 charging stations, though there are expected to be 1,000 by the year's end. And some city and regional governments are recording losses in profits from a decrease in the use of public transportation.
It'll be interesting to see how this program turns out. Will they be doing a program like cash for clunkers but for electric cars? Would this work in the United States? Will this program be successful?
http://www.nytimes.com/2015/10/17/business/international/norway-is-global-model-for-encouraging-sales-of-electric-cars.html?ref=business
Friday, October 16, 2015
Economic Policy and politics
This post might appear very political in nature but I am trying to be objective while connecting a current situation to a recent class topic. That being said, here is my post:
While I didn't watch the full Democratic debate, I have seen some highlights and some press covering the hot points. Perhaps the most talked about is Bernie Sander's economic approach. His message has been against high income inequality and power of large corporations/high net worth individuals and a policy called democratic socialism (quoted from his response from the most recent debate).
My initial browsing for an article was aimed at finding more analysis on Sander's plan and what is similar/different compared to the nordic countries. The article I found here suggests that Sanders may need to reconsider policy objectives and wording. Firstly, the article confronts the use of "socialism" as incorrect because countries like Denmark, Sweden and Norway allow people to own the factors of production, which is capitalism. After that, the article tries to sort out the key points Sanders uses when comparing the US and the nordic nations, which may be achieved differently than discussed. Ultimately, the article is saying that the results Sanders desires to bring to the US are not achieved the way he is describing.
What do you guys think? Does his policy make sense in light of the factors we discussed in class that make the nordic system possible - i.e. culture, active labor policy, flexicurity, market solutions, etc. Also, what would you recommend as an advisor? (things to add to the policy goals, changing terms, etc.)
http://www.forbes.com/sites/timworstall/2015/10/14/bernie-sanders-wants-the-us-to-become-more-neoliberal-and-perhaps-more-unequal/
While I didn't watch the full Democratic debate, I have seen some highlights and some press covering the hot points. Perhaps the most talked about is Bernie Sander's economic approach. His message has been against high income inequality and power of large corporations/high net worth individuals and a policy called democratic socialism (quoted from his response from the most recent debate).
My initial browsing for an article was aimed at finding more analysis on Sander's plan and what is similar/different compared to the nordic countries. The article I found here suggests that Sanders may need to reconsider policy objectives and wording. Firstly, the article confronts the use of "socialism" as incorrect because countries like Denmark, Sweden and Norway allow people to own the factors of production, which is capitalism. After that, the article tries to sort out the key points Sanders uses when comparing the US and the nordic nations, which may be achieved differently than discussed. Ultimately, the article is saying that the results Sanders desires to bring to the US are not achieved the way he is describing.
What do you guys think? Does his policy make sense in light of the factors we discussed in class that make the nordic system possible - i.e. culture, active labor policy, flexicurity, market solutions, etc. Also, what would you recommend as an advisor? (things to add to the policy goals, changing terms, etc.)
http://www.forbes.com/sites/timworstall/2015/10/14/bernie-sanders-wants-the-us-to-become-more-neoliberal-and-perhaps-more-unequal/
Thursday, October 15, 2015
Danny Meyer Restaurants to Eliminate Tipping
In American culture when people go out to eat it is a common practice that once they have finished, they pay their bill as well as leave a tip for the service their waiter or waitress has given them. But what if this is no longer the case?
Restaurant owner Danny Meyer, who owns 12 restaurants in New York City employing 1800 is trying to how restaurant staff are paid. This change would entail the elimination of tipping. He was stated in the article saying, "There will be one total, as if you were buying a sweater at Brooks Brothers." By doing so, he will increase the prices of the food on the menu to reflect the hourly wages of the staff. By this increase in price he will be able to increase the pay of the cooks from $11.75 to $15.25 which he said is a necessity to attract culinary talent due to the high cost of living. To reiterate this point he said, "The gap between what the kitchen and dining room workers make has grown by leaps and bounds,” Mr. Meyer said. During his 30 years in the business, he said, “kitchen income has gone up no more than 25 percent. Meanwhile, dining room pay has gone up 200 percent." While wait staff may not have as high of income as they have enjoyed in the past this will create a more equal income distribution among the restaurant workers.
However as Meyer states, "Tipping is a way of life in this country,” he said. “It may not be the perfect system, but it’s our system. It’s an American system." This will not be an easy adjustment for the workers or for the customers as it is ingrained in our culture and will be one that will take some time to adjust to. Will customers be willing to pay higher prices for their food and embrace the new no tipping policy? Will wait staff and other restaurant workers leave the company due to the potential decrease in pay? Is this system one that will fix the issues surrounding the business, or do you see potential flaws in this plan?
http://www.nytimes.com/2015/10/15/dining/danny-meyer-restaurants-no-tips.html?ref=business&_r=1
Restaurant owner Danny Meyer, who owns 12 restaurants in New York City employing 1800 is trying to how restaurant staff are paid. This change would entail the elimination of tipping. He was stated in the article saying, "There will be one total, as if you were buying a sweater at Brooks Brothers." By doing so, he will increase the prices of the food on the menu to reflect the hourly wages of the staff. By this increase in price he will be able to increase the pay of the cooks from $11.75 to $15.25 which he said is a necessity to attract culinary talent due to the high cost of living. To reiterate this point he said, "The gap between what the kitchen and dining room workers make has grown by leaps and bounds,” Mr. Meyer said. During his 30 years in the business, he said, “kitchen income has gone up no more than 25 percent. Meanwhile, dining room pay has gone up 200 percent." While wait staff may not have as high of income as they have enjoyed in the past this will create a more equal income distribution among the restaurant workers.
However as Meyer states, "Tipping is a way of life in this country,” he said. “It may not be the perfect system, but it’s our system. It’s an American system." This will not be an easy adjustment for the workers or for the customers as it is ingrained in our culture and will be one that will take some time to adjust to. Will customers be willing to pay higher prices for their food and embrace the new no tipping policy? Will wait staff and other restaurant workers leave the company due to the potential decrease in pay? Is this system one that will fix the issues surrounding the business, or do you see potential flaws in this plan?
http://www.nytimes.com/2015/10/15/dining/danny-meyer-restaurants-no-tips.html?ref=business&_r=1
Monday, October 12, 2015
Daraprim: the drug that skyrocketed over 5,000% hasn't come down in price yet
After news hit
the market weeks ago that the common drug Daraprim would increase in price to
over 5000% of what it used to be, many became outraged by this decision. The
commonly known drug is typically used by cancer and AIDS patients to help
rebuild their immune system and has been on the market for over 60 years now.
This announcement came after a statement from CEO Martin Shkreli that “copious
amounts of money are needed to fund further research and development on new
drugs” and so a price increase has to be implemented to sustain these on-going
operations. He also stated that if needed, people can receive the drug for
little to nothing and all they must do is petition for assistance. As one can
imagine, this sudden increase in price of a very common drug did not bode
well with the general public. That being said, after much opposition from
interest groups and people alike, Shkreli stated a little over two weeks ago
that the price of the drug would fall in the coming weeks so that those who
cannot afford it because of the new price hike could once again afford it.
While many
thought this scandal was over, the affect has yet to be felt and the
spotlight has now been placed back onto Shkreli and the pharmaceutical company.
In the latest news statement released defending the hike of the price of the
commonly known drug, Shkreli said that “our price increase is a good thing for
patients because until now no one has been interested in developing a new drug
for [the infection] toxoplasmosis” that has been left unchanged for over 60
years. That being said, how do you think Shkreli and the rest of the
company will fare in this on-going price war? Is $900.00 too much for this drug
or is it fairly priced for the operations that must be sustained from its
profit? Do you think that the company will allow the price to fall back down or
will they leave it where it is at now?
Link to the article: http://money.cnn.com/2015/10/09/investing/drug-ceo-daraprim-price/index.html
Link to the article: http://money.cnn.com/2015/10/09/investing/drug-ceo-daraprim-price/index.html
Sunday, October 11, 2015
China concerns pushing back rate hike
There has been a lot of talk recently about The Fed and their impending increase in the interest rate. On Friday, Fed Vice Chairman Fischer said that China's economic slowdown and its effects are delaying the Feds decision to raise the interest rate. The question now becomes how long will they wait.
Some of the members of the Fed are advocating a more lengthy wait, pointing to the fact that what happens internationally has an effect on the US. On the other side, members are recommending that the increase happen as soon as the US reaches 2% inflation.
In my opinion I think the Fed should wait a little longer to see how the China slowdown effects the US. As soon as the effects have been gauged then an increase could potentially happen.
Some of the members of the Fed are advocating a more lengthy wait, pointing to the fact that what happens internationally has an effect on the US. On the other side, members are recommending that the increase happen as soon as the US reaches 2% inflation.
In my opinion I think the Fed should wait a little longer to see how the China slowdown effects the US. As soon as the effects have been gauged then an increase could potentially happen.
Coffee fanatics are now even more wired
The coffee industry is probably one of the largest industries in the world, and many people feel very strongly about their coffee. A recent acquisition by Peet's Coffee & Tea of Stumptown Coffee Roasters is causing a lot of unease going forward for faithful Stumptown goers. They worry that the original and unique taste of the much smaller chain is going to be compromised by Peet's. Peet's is claiming that it has no interest in changing the style of Stumptown coffee because its reputation is what attracts customers. They simply plan on providing Stumptown with more cash in order to produce more coffee, specifically the bottled iced coffee that it is known for. Coffee connoisseurs are not convinced, and worry that the taste will change with mass production. To be determined if this acquisition will actually increase sales for both Peet's and Stumptown. Mostly likely the increase in production will result in an increase in sales, and Stumptown will go from a more local chain to a nationwide name.
Oil Prices Rise up - Again
If You got your car filled up with Gas this week, You have probably noticed that oil prices went up around 35-40 cents a gallon on average. This is no coincidence and the reasons for this rise in prices can be summarized in the following 5 points. Keep in mind that the Oil market is highly susceptible to various shocks and this does not mean that these 5 reasons are the only ones affecting the aforementioned market.
1. OPEC Secretary General Abdalla Salem el-Badri announced that Global investment in the oil market would drop by 22.4 percent which essentially means that there will be a lesser supply of oil which in turn will lead to oil prices rising.
2. There has been a decline the amount of crude oil production in the US, the Us Energy information centre has reported that it expects the amount of barrels produced per day to drop from 9.2 million to 8.9 million further increasing the pressure of supply based pricing.
3. Countries like Venezuela and Russia, two major oil producers as well as OPEC members are meeting on the 21st of October to discuss the lowering demand for oil worldwide and they could in fact cut production to simulate demand.
4. The Fed is currently undecided on whether or not it will increase interest rates. If it does then that means oil companies will have a higher times financing their investment projects and decreasing oil production.
5. Ironically enough, the Iran nuclear deal meant that there was potential for sanctions to be lifted off Iran and there being the possibility of a return for Iranian oil into the market. However tensions between Congress and the US public as well as tensions within Iranian political circles have so far delayed the lifting of sanctions which means that Iranian oil reserves might not be tapped into.
http://www.thefiscaltimes.com/2015/10/09/5-Reasons-Oil-Prices-Are-Moving-Higher
Airlines Find Travelers Accept Fees Wrapped Up in Bundles
The article I chose came from the New York Times, written by Martha White titled
“Airlines Find Travelers Accept Fees Wrapped Up in Bundles.” She explains and
discusses how airlines have been introducing bundles with add-on fees onto
their original base fares. Travelers seem to be embracing these bundles that
the airline company’s are offering, and is a win-win for both the company and
their customers. Airlines offer such bundles that are different from their
basic fares by raising the price of the tickets; however, these tickets have
more value than just the general airline ticket. They add perceived value by
naming the bundle with something that catches the customer’s attention. For
example, the author mentions the Delta Airlines bundle called a “Comfort Plus ticket”,
which provides travelers with a more enjoyable flying experience that consists
of more legroom, early boarding access, overhead bin storage access, and free
drinks. This bundle costs their customers an extra 48 dollars per ticket, but
the features of the bundle are appealing enough for some of their travelers to
upgrade and all the while making them feel like they have gotten more than a
fair deal. As far as the numbers go for the airlines, these bundles are
generating more revenue per passenger, which also in turn is generating fewer
complaints. This then translates to a more enjoyable flight experience that
leads to a loyal returning customer base. With the idea of bundling in this
industry, airline companies are saying that it is all about creating value to
the customer. Airline companies are offering different bundle options for their
customers, so they must decide which factors are more important to them. The
bundle they then chose would be a result of their own personal preferences, so
now the extra money they paid for the bundle is justified in their minds
resulting in higher satisfaction with their decision.
Bank of England economist proposed to abolish cash
According to British media reported on the 10th, the chief economist at the Bank of England hopes the abolish of cash be able to implement negative interest rates to people with using digital currency instead.
Bank of England chief economist said that the global economy is entering a third phase of a protracted crisis: Following the 2008 - after the "Anglo-Saxon" crisis and the 2011 crisis in the eurozone, and now entering into another "disaster."
Since the interest rate is restrickted, the chief economist is worried that if the banks would set a negative interest rate, then people would turn to keep the money in cash by themselves, it might help to stimulate people to spend more money. And according to him, with using digital currency, they can set negative interest rates to stimulate consumptions.
Bank of England chief economist said that the global economy is entering a third phase of a protracted crisis: Following the 2008 - after the "Anglo-Saxon" crisis and the 2011 crisis in the eurozone, and now entering into another "disaster."
Since the interest rate is restrickted, the chief economist is worried that if the banks would set a negative interest rate, then people would turn to keep the money in cash by themselves, it might help to stimulate people to spend more money. And according to him, with using digital currency, they can set negative interest rates to stimulate consumptions.
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