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.

x

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

Something unusual is happening to America's trucking industry, and it's bad news for anyone who depends on it

The article concluded three facts which are happening in the trucking industry: 

• Truck drivers are still in short supply even though wages, on average, are rising.
• According to UBS economists, there's a lag between higher pay and employment growth in the industry.
• The shortage could increase transport costs even more — bad news for many retailers that depend on the trucking industry.

"We expect labor shortages to persist in trucking for at least the next two years, as the economy remains strong, and as even in the best case scenario, truck driver employment tends to lag rising wages," Seth Carpenter, the chief US economist at UBS.

Trucking is relatively an unattractive job since it requires to work longer than most day jobs and drivers even have to work during the night. It requires a special commercial driver's license, and in many cases, passing a drug test. And even with wage growth, truck drivers are still earning less than people in comparable industries like construction and mining.

Overall, because of the high requirements, low wages, long working hours, people are less likely to apply trucking drivers. This would cause the rise in transportation cost and those retailers would suffer the most because they need road transport for deliveries to brick and mortar stores and to customers that order online.

http://www.businessinsider.com/truck-driver-shortage-persists-amid-salary-rise-2018-2

SEC blocks Chinese investors buying Chicago Stock Exchange

Last month, the SEC blocked the sale of the Chicago Stock Exchange to a group of Chinese investors. The SEC said the group had not met it's burden to show that Chinese government interference would not be a problem.

The deal was first announced in February 2016. Then-candidate Trump spoke out very strongly against the deal on the campaign trail, saying the Chinese were "taking our opportunities and our jobs".

This is relevant to the class because it shows how the markets deal with anti-trust legislation and prevent interference from not only domestic, but international governments.

https://www.politico.com/story/2018/02/16/china-chicago-stock-exchange-352343

Gun stocks reverse early gains after the Florida school shooting

I found this article interesting because events like the shootings in Florida this week have implications in the financial world. I first learned about this in my Modern Portfolio Theory class following the Las Vegas shootings last semester. Usually after a tragic event like this, the stock prices of gun manufacturing companies tend to rise initially. A large reason for this price increase is that people would be more willing to buy guns sooner out of fear of more regulation on guns. The increase in gun laws would lead to a rise in future gun prices.

A few other interesting facts from this article are that the stock prices of many of these companies have since dropped since the early increase on Thursday morning. In addition, gun manufacturing companies have not been performing as well under the Trump administration. It will be interesting to see if new gun laws will be implemented by the government, and if so, the effects they will have on the market for guns.




http://www.businessinsider.com/gun-stocks-after-florida-school-shooting-2018-2

America should get rid of oppressive job licensing

This article speaks to a lot of what we discussed in the last chapter about the lack of economic mobility in the United States. The main argument of this article is that many jobs require certain licenses that often have fees tied to them. This additional cost in the labor market crowds out lower income individuals from finding employment in certain fields and makes it harder for people to climb out of the poverty cycle. Obviously certain standards are in place to protect consumers but that is not always the case. Most of the time it isn't actually the consumer that benefits from licensing but rather the individuals that lobbied for that licensing. The article points out that in some states there is even licensing required to be a florist which was pretty surprising to me.

https://www.economist.com/news/leaders/21737032-too-many-states-have-let-rent-seekers-run-amok-america-should-get-rid-oppressive-job-licensing

EU joins global growth bandwagon

http://www.bbc.com/news/business-43055890

In light of all that has happened in the 2017 year, Europe is actually on the rise. It predates back to the crisis that took the world by storm in 2007 and although the European Union has been slowly bouncing back, “today's Eurostat figures show that the fourth quarter of 2017, compared with the same period in 2016, was particularly strong across most EU members as global growth momentum starts kicking in,” (BBC, Ahmed, 2.14.18). This past year, countries in the EU seem to have had a higher demand in products leading to greater business profits, shocking the global economy with sudden demand for exports as well. Of course it does also help to know the structural reforms have helped out the nations, same as low interest rates, and unions gaining in size. The entire EU seems to be growing, though not as greatly but nonetheless - even Britain after Brexit is maturing number wise, to ‘the good old days,’ from before their leave.

What Happened to China's Baby Bump?

https://www.bloomberg.com/news/articles/2018-02-13/what-happened-to-china-s-baby-bump

China got rid of the one child policy in 2015, and saw an expected hike in newborns in 2016, but now there has been a large decrease in new borns.  Families have indicated that they are no longer having a second child because of the financial burden. Now there is concern about a baby crisis in China, which could in turn effect future policies.  The article explains that the implication of this baby crisis could lead future underemployment due to a demographic time bomb. Consequences of this demographic time bomb could lead to less innovation and entrepreneurism. Policymakers have considered lowering taxes for larger families.  However, I am not sure that solution will fix the problem.  I am curious to see what other strategies China might implement to increase reproduction and I also wonder what other consequences might come from this demographic time bomb. 

As Trump gambles with more economic stimulus, the Fed is poised to counter inflation

This article assesses the actuality that the proposed budget by the Trump administration will result in long-term growth before inflation and higher interest rates unfold.  With all that being said, the Federal Reserve stated they are poised to counter inflation if any signs of it taking off become present.

Trump's budget includes $200 billion for infrastructure over the next 10 years, $18 billion for his wall along the Mexican border, $13 billion to fight the opioid crisis, and $716 billion for military programs and maintaining a nuclear arsenal.

Douglas Holtz-Eakin, a former chief economist under George W. Bush, stated that he believes the best chance at long-term growth is cutting taxes for American businesses, but the household tax cuts were not necessary due to a rather strong labor market that continues to hit record-low unemployments.

If higher interest rates were to occur, then all of the stimulus created by the Trump administration will become irrelevant.  Knowing the Federal Reserve has such a keen eye on signs of inflation and expected interest rates is assuring to citizens in that, if anything unexpected were to happen, the Federal Reserve will have implemented a policy before the estimated price hikes and interest rate increases were to occur.


https://www.reuters.com/article/us-usa-budget-economy-analysis/as-trump-gambles-with-more-economic-stimulus-the-fed-is-poised-to-counter-inflation-idUSKBN1FW2C8

President Trump's Budget Cuts Amtrak Funding in Half Despite a String of Deadly Crashes

President Trump has recently revealed his budget for the fiscal year 2019, which includes a very extensive infrastructure plan. One notable aspect of this infrastructural reform is his plan to cut federal grants to Amtrak by over half. However, he has also stated he intends to increase railroad safety. His infrastructure plan is completely detrimental, as slashing the budget of the passenger railroad service will only decrease the level of safety. This comes in the wake of three fatal crashes since December. Experts agree that one of these crashes could have been prevented had a positive train control system been instituted, which shows how President Trump's plan is completely unhelpful.

Source:
http://time.com/5144561/trump-budget-cuts-amtrak-half/

The Era of Fiscal Austerity Is Over. Here’s What Big Deficits Mean for the Economy.

With the recent tax cuts and the infrastructure initiative proposed by the Trump administration, many economists worry about the economic effects heading into the future. In the immediate short run, these initiatives are bound to increase economic activity and raise growth by an additional 0.7%. This comes at the cost of adding $500 billion dollars to the budget deficit bringing it from about $700 billion to $1.2 Trillion. As the article states somewhat facetiously, "it would be very hard for the government to pump an extra half-trillion dollars into the economy in a single year without getting some extra economic activity out of it." 

The questions come into the picture when trying to forecast into the future. In the short run, it is hard to estimate this impact because of the uncertainty of the current job market in the US. We still do not know what the impacts of the tax cuts will be. If the effect is that employers will begin to invest more heavily into their capital structures that will increase productivity per worker and draw some eligible workers back into the job market, these initiatives will have a substantial positive effect on the economy. However, if the fed increases interest rates more than it currently plans to the affect of the tax cuts will be short lived and the job market may stay at a relatively low level of unemployment as we have now. This would result not in economic growth but rather in a spike in inflation.

When investigating the long term impacts of these spending plans and tax cuts, the main issue for US taxpayers will be the astronomical debt-service cost the US government will have incurred. The CBO estimates that our proportion of debt to GDP will increase by 14% over the next ten years, leaving us with a ratio of 91% in 2027. Even before the tax cuts announced this year, US taxpayers are forecasted to pay roughly $800 Billion in debt service costs in 2027. With this increased need for debt by the US government, there will also be a crowding out of the private market for debt increasing the price of money for consumers in the economy. 

The picture is certainly hazy moving into the future. What do you think will happen?

Link to Article

Insider trading has been rife on Wall Street, academics conclude (The Economist- February 10th, 2018)

Paramount pictures initially released the film "The Wolf of Wall Street" on December 17, 2013. At that time, a lot of the seniors in this class were making the choice on what college to attend and what kind of academic programs to consider. The controversially, sexy, and dangerous allure of the finance/brokerage industry portrayed through the protagonist (Jordan Belfort) might say something  about the status quo of "the real" industry at play.  This article in the Saturday edition of The Economist cites three different academic studies that attempt to describe the potential pervasiveness of insider trading. The article references one study that studied nearly 500 financial institutions activity from 2005-2011. The other two studies at play were from 1999 to 2014 and followed the trades of 300 brokers. Through the dissection of these studies, it is clear some level of sleaziness still persists across market.

If you clicked on this post and are bored by now, read this final excerpt from the article:

"Large institutions can be both beneficiaries and victims of this sort of information leakage. But in general they are net gainers. The real losers, the papers conclude, are retail customers and smaller asset managers. Common to all the papers is the recognition that the public markets are, as conspiracy theorists have long argued, not truly public at all. Changing the law to fix that may not even be feasible. But at least, in large-scale data-crunching, a new type of corporate sleuth is on the case."

Interesting insight... If you are entering the financial world, how will YOU behave?

https://www.economist.com/news/finance-and-economics/21736561-one-study-suggests-insiders-profited-even-global-financial-crisis-another?fsrc=scn/tw/te/bl/ed/insidertradinghasbeenrifeonwallstreetacademicsconcludeintheknow

How American Inequality in the Gilded Age Compares to Today

Income inequality is a result of capitalism that is regularly criticized and debated on. The main point of this article was to examine if the amount of income inequality was increased or decreased from the time of the Gilded age (1865-1900). What was found was that there has been major cycles of income inequality throughout the history of the US. Times such as the gilded age and today are fairly similar in the amount of income inequality, but there are also times with lower income inequality including the progressive era (1920's) and the great depression (1929-1933). A historian, Nell Painter, says, “We’re in these cycles in which we learn and forget and learn and forget.” The difference found between the Gilded Age and now is that people today don't like to allow other people to know their social class; conversely, during the Gilded Age, wealthy people flaunted their money.

http://time.com/5122375/american-inequality-gilded-age/

Making a Crypto Utopia in Puerto Rico

 This article talks about a group of Californians who have invested heavily and become rich in the Bitcoin boom, who are moving to Puerto Rico to, firstly avoid paying mainland USA taxes on their fortunes, and secondly, to build a "crypto utopia," or a city based on crypto currency. They've begun to purchase property and they're close to the local government letting them create the very first crypto currency bank.

These investors see Puerto Rico as an optimal location for their social experiment because of it's experience with Hurricane Maria and subsequent economic downturn. These people call themselves "benevolent capitalists," though Puerto Rican opinions are mixed. Some believe that having the rich in the area will stimulate the local, government-backed-currency economy. Others argue that Puerto Rico has become the "playground for the rich," where foreigners can get business permits to try experimental practices that may fail and hurt the locals more than the business owners. Another question being raised is if the slowly moving hurricane recovery can support the electrical power to support all the internet-based currency trading.

 Personally, I think the idea of creating a city using only crypto currency could lead to some serious problems should the currency crash without a government or strong institution backing it. However, I do see the need for innovation to support Puerto Rico, so while a crypto currency utopia seems just that, utopic, if they can make it work, all power to then.

https://www.nytimes.com/2018/02/02/technology/cryptocurrency-puerto-rico.html?rref=collection%2Fsectioncollection%2Fbusiness-economy&action=click&contentCollection=economy&region=stream&module=stream_unit&version=latest&contentPlacement=10&pgtype=sectionfront

Villagers in Bangladesh migrate to cities to find work

Villages in Bangladesh are highly agricultural based with almost all income comes from farming. However, in the low seasons as the crop grows, unemployment is very high which leaves many families starving. An initiative by Yale University economist Mushfiq Mubarak allows the men in the family to go to the city to earn by providing a low interest loan. As these men are able to earn more by working more hours, their income rises. In the field they would earn an average of 250 Taka ($3) a day, whereas by going to the city they earn 700 Taka ($8.40) a day.

It looks like this initiative is suiting the villagers well with more migrating to urban cities every year. However, I wonder what impact it has on the cities and the labor already present, whether they have higher level of unemployment or reduced wages due to competition. I would also think that in these months the city gets more populated and there is a higher burden on accommodation as the villagers don't have permanent homes in the city. Overall it looks like this is good for the economy and a solution to the poverty trap these villagers usually face.

https://www.economist.com/news/finance-and-economics/21735597-paying-poor-rural-families-send-seasonal-workers-city-seems-work

German workers win right to 28-hour week

German workers won a fight for better work-life balance. Although Germany has the standard of 35 hours working week, the workers can choose to work for 28 hours. Labor union, IG Metall made an agreement with the representative of more than 700 companies like Daimler, the carmaker, and Bosch. This agreement is limited to the metal and electrical sector but it will probably roll out to other sectors. The flexibility of hours worked would help workers to spend more time with their children and families. Companies like Bosch will offer the same pay rate and benefits to their workers despite the reduction in hours worked. On the other hand, a lot of companies see this agreement as a burden which will make it difficult for them to survive.

Rabobank pays big for processing illicit funds

The California unit of Dutch bank Rabobank has agreed to pay $368 million after processing funds linked to drug-trafficking. The bank has been allowing untraceable transactions from Mexico adding up to hundreds of millions of dollars over a matter of months. These transactions have not been monitored or reported like they should have been giving federal regulators a hard time tracing down the suspicious activity. Assistant U.S. Attorney General John Cronan Rabobank has said, Rabobank chose to “look the other way” when it learned of transactions indicative of international drug trafficking, organized crime and money laundering. This is not the first offense by Rabobank, who has repeatedly stood in the way of the U.S. Office of the Comptroller of the Currency with investigations in 2013, 2012, 2008, and 2006. Looking into the actions of Rabobank makes one question the effectiveness of the government regulators who have, while finally catching Rabobank, let them slipped by with bad practices many times in the past. Should there be stricter regulation giving the controllers more access to confidential bank information, or would that be too invasive? 

https://www.reuters.com/article/us-rabobank-fraud-usa/rabobank-agrees-to-pay-368-million-over-processing-illicit-funds-idUSKBN1FR2U4

Chipotle Dessert Flops

Amy Peters

Chipotle Dessert Flops

            Chipotle Mexican Grill’s plan to add a dessert to their menu has now been put on hold due to poor customer reviews at their test kitchen site in New York City. The fried tortilla dessert is just one of many of the dishes coming out of their test kitchen site in the hopes of adding some new, fresh dishes to their menu. Ever since their E. coli outbreak back in 2015 the company has struggled to regain sales, with other food safety issues and hacker problems plaguing the chain recently as well. Their founder Steve Ells announced that he will be stepping down this November in the hopes that a new leader can head this turnaround. Their brand image has been incredibly tarnished from what it once was, with it starting as an innovative and popular take on fast casual dining, but as this market has become so saturated, I argue Chipotle has lost its edge. I believe launching a new menu is the wrong approach to take, as its simple menu is what made them famous initially, and they should be focusing more on food safety and employee training, but this might be Chipotle’s last cry for help.

https://www.bloomberg.com/news/articles/2018-02-02/chipotle-dessert-flops-sending-company-in-search-of-new-options

Thoughts and Prayers and N.R.A Funding

In class, we discussed different incentives for actions that take place in different economic systems.  Some decisions we make are because of moral reasons, in the U.S we would never walk into our neighbors house and steal food out of their fridge because it is not socially acceptable and would most likely be considered rude.  On the other hand, however, morality is not always taken into account when people make decisions.  This short article lists the top 10 career recipients of N.R.A. funding.  Current House and and Senate members words and actions seem to contradict each other as they give thoughts and prayers to the victims of the Las Vegas shooting but refrain from changing current gun laws in any way, as they are receiving generous donations from the N.R.A.  John McCain is at the top of the list,  stating “Cindy & I are praying for the victims of the terrible #LasVegasShooting & their families.” while simultaneously having received $7,740,521 from the N.R.A.   No one can determine another persons true incentives, but this article leaves readers to ponder just where in fact the line can be drawn between moral and profitable decisions, and additionally, how these decisions can effect not only the economy but the people living within it.

Dow Jones TUMBLES: Is this the beginning of US stock market crash?

On Tuesday, Jan 30th, Dow Jones dropped nearly 400 points which creates fear that the S&P 500 could end its record streak without consecutive declines. This is the steepest decline in eight months, because of rising bond yields and sell-off in healthcare. Amazon, Berkshire Hathaway and JP Morgan mentioned that they plan to form a venture aimed at lowering healthcare costs for their employees, which led to falling shares of healthcare related companies. The stocks on Wall Street fell by around one percent.

Stocks also fell lower due to a decline in energy shares along with ongoing evidence of a rise in crude oil prices. The S&P health sector fell by 1.8%, the most among the 11 major sectors. Health insurer UnitedHealth's shares dropped by 3.2%, Express Scripts' shares fell by 6.2% which weighed the most on NASDAQ and S&P. Pfizer shares price fell by 3.3%.

Investors were negatively affected by the two day decline on Wall Street and this pushed people into the arms of the safety of US government bonds. The Federal Reserve started its two day monetary policy meeting following the crash, and there is a market expectation of a hike of 5.2% to be implemented. Investors are getting worried about inflation which has led some people to believe that the Federal Reserve might be more aggressive when raising interest rates.

In the article, it is also mentioned that the dollar exchange rate index fell following the crash. But overall, with a healthy economy of low unemployment rates and high economic growth rates, the inconsistency lies within the stock market, as said by analyst Charles Schwab.

In such a situation of declining stock prices in the health sector, this would negatively affect investors in the short run by decreasing their optimism towards investing in the future, thereby affecting firms in the health sector in the long run.

Dow Futures are Down

On Friday we witnessed the Dow plunge around 666 points which caused Dow futures to fall close to 250 points. This slight plunge comes after Janet Yellen made this statement about stock prices, "well, I don't want to say too high -- but I do want to say high." Now, this slight plunge could be a healthy pullback for the economy to correct some inflated stock pricing. However, when Monday's opening bell rings we should see some serious volatility. If stocks can remain above support levels we could see a rebound. If they break those levels they could plunge further. We will just have to wait and see.

https://www.thestreet.com/story/14474023/1/stock-futures-janet-yellen.html

ExxonMobil Benefits from Tax Cuts

ExxonMobil received a huge gain from the tax reform that has taken place under the current administration. The tax cut will save Exxon’s company six billion dollars that they can use the try and increase oil production which fell 3% in 2017. The company promised to invest 50 billion in the U.S. over the next five years and create thousands of jobs to boost the economy. ExxonMobil is also expected to shift it’s resources back to America after the company decided to focus on overseas projects instead.

http://money.cnn.com/2018/02/02/investing/exxon-earnings-tax-law-oil/index.html

Wall Street Faces Fed Stress Tests That Assume Another Meltdown

"Wall Street banks must prove they are able to weather a serious global recession as part of an annual Federal Reserve exercise meant to ensure the biggest lenders won’t collapse in a new crisis."

I found this article extremely interesting as it explains how the Fed will be using a series of stress tests to challenge 18 firms on how sturdy they are given a significant blow in the economy. It speaks to dividend payments and the ability to buy back stock on an individual firm basis. This exercise implemented by the Fed is referred to as Comprehensive Capital Analysis and has been in place since 2008's financial crisis.

https://www.bloomberg.com/news/articles/2018-02-01/wall-street-faces-fed-stress-tests-that-assume-another-meltdown