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

Bitcoin Hits 2018 Low as Concerns Mount on Regulation, Viability

The currency, Bitcoin, reached a record high back in December at
$19,511, but it now has spiraled down and lost half its value, hitting their all time
low for the year this week. This is due to a variety of factors, such as increased
regulations and questions regarding its viability. Government oversight is
expected to increase and there are fears that the price can be easily manipulated
due to hacking. Facebook even banned advertisements for cryptocurrency this
week. India and Japan have already cracked down on cryptocurrencies through
their own national regulations. Bitcoin grew by 1,400 percent last year, becoming
a 200 billion dollar market, yet its recent fall is a big red flag for its future in our
country, as growing skepticism and law enforcement could put a permanent halt
to its growth. My suggestion is if you are a current investor in Bitcoin it might be
time to sell.

https://www.bloomberg.com/news/articles/2018-02-01/bitcoin-extends-record-january-slide-as-concerns-increase

India Wants to Give Half a Billion People Free Health Care

A recent article published by the New York Times reported on a massive overhaul to public health care in India. While the country does have free health clinics, these government-run hospitals suffer from very poor quality, corruption, and long wait times. Indian Prime Minister Narendra Modi has focused much of his policy on addressing the concerns of  the poorer members of Indian society. The new health care proposal would offer 100 million families up to 500,000 rupees (about $7,860) of coverage per year. This amount is enough to cover the equivalent of five heart surgeries within India. According to India's finance minister, this plan would be the largest government-funded health care program in the world, in terms of number of people covered. In a country of about 1.3 billion people, this new health plan could cover a little under half of the population. In 2014, India spent 1.4% of its GDP on health care, compared to China's 3.1% and the U.S.'s 8.3%. 

The new plan does have some critics, however. Several public health care experts have pointed out that it does little to prevent the underlying causes of disease in the first place, such as water and air pollution, malnutrition, poor sanitation, and lack of proper housing. The increased amount of pollution is due in part to the government's strong pro-business policies. It is still unclear how exactly the government plans to pay for the new program, but they are also planning on enacting a tax on capital gains due to India's rising stock market.

https://www.nytimes.com/2018/02/01/business/india-modi-health-care.html?rref=collection%2Fsectioncollection%2Fworld

Columbus, Ohio shortlisted for Amazon HQ2

Amazon has decided to build their second headquarters and Columbus, Ohio has been shortlisted in the top 20 out of a list of 238 cities. The winning city will have an addition of 50,000 jobs and 5 billion dollars in investment. Last year, Columbus was listed in USA's top 45 fastest growing cities so this could really be the boost it needs to become a more popular metropolitan city and stimulate the local economy further.

On the flip side of the coin we can also expect living in the city to become more expensive. The influx of labor may also make the city more congested and commuting times longer. The host city will also give tax benefits to Amazon, but there's a trade off right there- the city may have to cut spending in other services or raise taxes elsewhere.

However, looking at Seattle's example it's safe to say that this will be beneficial to the economy. 

https://www.nytimes.com/2018/01/18/technology/amazon-finalists-headquarters.html

http://money.cnn.com/2017/10/27/technology/amazon-hq2-housing-costs-seattle/index.html

America's Opioid Epidemic

This article combats the assumption that most drug issues in the United States stem from poor economic conditions. Opioid deaths make up 20-50% of all drug related deaths in the US and are accredited as being a large reason our life expectancy numbers have been falling. It was interesting to learn that the opioid crisis functions differently from other drug and alcohol problems. This epidemic, like the title of the article explains, is driven by supply. The country's opioid problem stretches across more demographics because opioid addiction commonly arises from overuse and abuse of prescriptions rather than exposure to poor economic conditions.

https://www.economist.com/blogs/democracyinamerica/2018/01/another-prescription

SEC Weighs a Big Gift to Companies: Blocking Investor Lawsuits

I have seen a lot of articles talking about the U.S economy is back on track, along with the big tax cut for corporations, SEC made a further step for companies that want to go IPOs.
The decision will provide a bonus to promote the economic expansion.

https://www.bloomberg.com/news/articles/2018-01-26/trump-s-sec-mulls-big-gift-to-companies-blocking-investor-suits

Keurig Green Mountain Plans to Buy Dr Pepper Snapple

Keurig Green Mountain, the maker of coffee pod machines, planned to buy the Dr. Pepper Snapple Group in an $18.7 billion deal. Keurig would merge with Dr. Pepper Snapple and create a new firm called Keurig Dr. Pepper. Also, shareholders of Dr. Pepper Snapple would get a cash dividend of $103.75 per share, which is about 8% higher than Dr. Pepper Snapple’s closing share price on Friday. The transaction would be finished by June 30. 

This acquisition would cause a huge impact on the soft drink market. Since Keurig Green Mountain is the maker of coffee pod machines, it would raise the chance that the new company would launch the new pods which could eventually allow customers make soft drinks at home just like how people make coffee by coffee pod. We will see if this would really happen and if the acquisition is worth.

https://www.nytimes.com/2018/01/29/business/dealbook/keurig-dr-pepper-snapple.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business&region=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=sectionfront

U.S. economic growth slows as imports increase at fastest rate in 7 years

In the article it talks about how economic growth has slowed in the fourth quarter of 2017.  With the rapid rise in imports it is safe to say our net exports has decreased.  With net exports decreasing that means that the dollar strength or the international value of the dollar has increased.  If the value of the dollar increases less people will want to invest in the United States from foreign countries because it has become relatively more expensive.  However, a strong dollar allows U.S. investor money in other countries stronger.  While this may not have a positive effect on GDP, GNP may increase because these companies operated not in the U.S. are owned by U.S. residents.

https://www.nbcnews.com/business/economy/u-s-economic-growth-slows-imports-increase-fastest-rate-7-n841316

Promising Billions to Amazon: Is It a Good Deal for Cities?

Amazon's current search and selection for a second global headquarters is garnering serious attention and critical analysis from economists on how tax breaks end up ultimately impacting the communities bidding for a "jackpot employer" like Amazon. The debate mentioned in the article shows overwhelming support among economists behind the belief that massive tax incentives end up minimizing the potential benefits associated with bringing a global commerce giant to a community. The use of tax incentive programs as a tool to bring businesses to communities rose rapidly in the 1990s as a practice to allure businesses and valuable jobs. With that said, in recent years the practice has slowed down due to communities recognizing the weakening return of proposing such deals. Economists do see value in offering incentives but believe that the use of publicly funded transportation upgrades, job-training programs, or tax credits aimed at revitalizing areas in need of development would be more efficient incentives to benefit the communities proposing deals. Many communities are rolling out large tax breaks for Amazon in hopes of attracting them, but recognizing the needs of their individual communities might play a more key role if they hope for Amazon to ultimately impact their community positively economically.

https://www.nytimes.com/2018/01/26/business/economy/amazon-finalists-incentives.html?rref=collection%2Fsectioncollection%2Fbusiness-economy&action=click&contentCollection=economy&region=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=sectionfront

Oil Boom Gives the U.S. a New Edge in Energy and Diplomacy

The US has recovered their power in the oil industry in the last year, the main reason for this to happen is that the new president is trying to invest in this type of industries, and this has led to companies making more innovative drilling technologies that reduce their costs and can help them maximize their outputs. The US is getting even more powerful than countries like Saudi Arabia and Russia that have been the biggest players in this industry in the last years. This not only gives the US and economic advantage in the world but also gives them political power because now they are not depending on other producers in order to provide oil, they can put sanctions and can break relations with countries like Saudi Arabia if needed, or have sanctions on Venezuela for the current situation of the country and not need to depend on their oil.

There is also another issue that this has created, and it's about the environment. Since the oil companies are creating new drilling places and are starting to extract more oil in the ones that they already have, they are looking on how much this is going to impact the environment and how much pollution can cause. Also, the government is responsible for this because they have been changing the regulations and the laws, to make it easier for companies to extract more oil and at lower costs. This also brings out the question how involved should be the government be in this? and if they should influence what happens in the market.

https://www.nytimes.com/2018/01/28/business/energy-environment/oil-boom.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region&region=top-news&WT.nav=top-news

How the Finance Industry Is Trying to Cash In on #MeToo

In the wake of the many sexual misconduct allegations that have recently surfaced, many settlement advance companies have been looking to cash in. Settlement advance companies are similar to payday loan providers and have been met with similar allegations of predatory lending. These companies are always trying to ride the wave of the news cycle to acquire as many customers as they can to take out loans. They have provided funding for ex-NFL players to pursue settlements for the brain damage they suffered during their playing careers and provide continual services for workman's comp claims and other on the job settlements. 

These firms have always faced criticism for their practices but their aggressive marketing into sexual misconduct cases has brought this conflict back into the spotlight for the time being. Since these companies are technically not giving loans, but rather "advances", they are allowed to charge exorbitantly high interest rates. These rate vary from case to case but can reach as high as 100%. While this may seem unreasonable, they only collect payments for cases that are won. Consumer advocacy groups argue that these rates are unfair and many customers do not truly understand the terms of the advance when they take it but the companies argue that they provide funding to these plaintiffs that would otherwise have to hire much less experienced attorneys that may not be able to get ideal settlement results.

The CEOs of these companies have different views of what is morally acceptable in situations like these. For example, Legal Bay's CEO Christopher R. Janish says that his marketing campaign  "... really is more of a public awareness and branding thing" but others like T. Thomas Colwell of Trimark Legal Funding believe that companies that ride these new cycle waves are just being "opportunistic". I personally believe that when taking out a loan of any kind a borrower should fully understand the terms before they enter into an agreement and that those in need of legal funding will probably come out ahead by utilizing the funds. I believe that we need to pursue as many of these cases of misconduct as we can and if finances are getting in the way of women coming forward, I support these organizations because of the opportunities that they give to the people who may not have them otherwise.


Link to NYT Article

President Trump's remarks to Davos

President Trump visited the World Economic Forum in Davos this week to discuss his vision for America's participation in global trade in the upcoming years. He was praised for sticking to a script during his initial remarks, remarking about how the tax plan was good for the American economy and how he is (in theory) in favor of free trade agreements as long as they favor the USA. However, during the question and answer program, he veered off-message, talking about how Hillary Clinton's election would have hurt the US economy and talking strongly about the need for American goods to prevail and the need to withdraw from trade agreements.

This article is relevant to the class because it shows two of the subsets of systems within free market capitalism - free market capitalism using globalization as a means to grow vs free market capitalism determined to be idealistic.





https://www.politico.com/story/2018/01/26/trump-davos-speech-america-first-371243

Why America's economy is so healthy?

The US economy is growing at a steady rate. Consumer confidence has been met with optimism. Figures indicate that the US economy grew 2.3 percent in the year of 2017 which was higher than the growth of the previous year. The Trump administration delivered a major tax cut for corporations, business, and individuals which has incentivized the “Producers” and the “Manufacturing” sector to stimulate and optimize growth within their businesses. Also, foreign investors like “Samsung” are launching operations in the United States considering the market conditions of the US economy and producer-friendly policies. The global resurgence of the economic regions of the world such as Asia, Europe, and Latin America has in fact enhanced the US economy. Demand for US goods has overall increased and a weak dollar has aided in American exports abroad because they have now become more affordable.  There has been an increase in employment opportunities for the manufacturing sector with the manufacturing sector adding 200,000 jobs. 2017 has had a positive outlook economically for the US.  
http://money.cnn.com/2018/01/26/news/economy/us-global-economy-2017/index.html

U.S. warns investors over Venezuela's 'petro' cryptocurrency

On Monday, January 8th, Venezuela's socialist Madura regime announced that it would be issuing a petroleum backed cryptocurrency to solve Venezuela's hyperinflation woes. Imposition of sanctions by the United States and the bolivar's rapid decline to all-time lows relative to the dollar has made it impossible for Venezuela to refinance its debt burden. Following the advice of a cryptocurrency consulting agency, VIBE, Maduro will issue 100 million of this new cryptocurrency, the petro, backed by an equivalent number of barrels of oil, as an extension of Venezuela's credit. To circumvent U.S. sanctions which probit the purchase of newly issued Venezuelan debt, Maduro is moving to capitalize on the success of other cryptocurrencies such as bitcoin and etherium.  U.S. banks continue to grow more cautious of dealing in Venezuela as involvement with the sanctioned country exposes U.S. persons to serious legal risk. The new token will initially be offered 60% discount from the current $60.40 price of oil in private placements starting February 15th.  It will then be offered up to the public on exchanges, while the rest will be shared between the government and VIBE, leaving no more coin to be mined in the future. This will give the Venezuelan government and VIBE great power to affect the price and supply of its new token. The government will move to accept tax payments in petros while PDVSA, the state oil company, will integrate with cryptocurrencies in its dealings with foreign companies. As the rapid adoption of cryptocurrency continues, developers continue to utilize the blockchain technology in a multitude of use cases. Given block chains support of user anonymity, the petro will most likely decrease the transparency of the Venezuelan government and its creditors. Whether or not Venezuela's congress will approve the use of the petro proposed by the Maduro regime is yet to be seen. The propping tactic used by Maduro, however, is blatant and unlikely to improve relations between the U.S. and Venezuela.

https://www.reuters.com/article/us-venezuela-economy-cryptocurrency/u-s-warns-investors-over-venezuelas-petro-cryptocurrency-idUSKBN1F52AB

Super Bowl Commercial Prices

      During that past years Super Bowl commercials have been increasing year to year.  This year a 30 second ad price is worth $5 million for a spot on February 4th.  But it really is worth the price for the companies paying for the ad.  The Super Bowl is the gets roughly 114 million people and some are watching just for the commercials.  They are known to be very funny and people just love seeing what new ads companies put out for the Super Bowl.  With over 114 million people watching, the VP of Ad Sales at NBC Sports Group hoped that February 4th will set a record for single-day revenue for a single company.  That is just crazy to think about how much a sports event can do for a company who will usually make a lot more than $5 million from the 30 seconds people will see.  Everyone always looks forward to the Budweiser, Doritos, and Coca-Cola commercials so it will be interesting to see what they put up with the $5 Million for the 30 second ad.  It also will be interesting to see if this years Super Bowl will get the same viewing number with all of the kneeling issues the NFL has been dealing with so I guess we'll just have to wait and see if the $5 million was really worth it after all.

http://www.businessinsider.com/super-bowl-commercials-cost-more-than-eagles-quarterback-earns-2018-1

THIS IS THE XFLLLLLLLLLLLLLLLL

In recent news, the XFL is back. Vince McMahon, CEO of WWE, is giving the XFL a second chance. By doing this he is taking a crack at the monopoly we have come to love as the National Football League. The article stated that this comeback will be funded by McMahon himself as he sold 3.34 million shares of his WWE stock. This is worth about 100 million dollars. This time the league will be taking two years to get everything set up and promised "The new XFL is an exciting opportunity to re imagine America's favorite sport." The league is directed to take a more family oriented approach compared to its predecessor. Ultimately I think this is something that is much needed in the football world. NFL ratings have been on a decline and the NFL is very slow to innovate. 

https://www.cbssports.com/wwe/news/this-is-the-xfl-again-controversial-football-league-set-to-return-in-2020/

Walmart enlists help from Japan in fight with Amazon

In the U.S., Walmart will sell Rakuten's Kobo e-readers, which are similar to Amazon's Kindle. The Kobo platform, created by a Canadian company that Rakuten bought in 2011, currently offers readers millions of titles. Walmart is showing up late to the e-book party. Amazon has built a dominant position in the market since first launching the Kindle more than 10 years ago. A report published last year by industry monitoring group Author Earnings estimated that 80% of spending on e-books in the U.S. goes through Amazon.  Japan's online grocery market could be more lucrative for Walmart.Home to more than 75 million online shoppers, the country has the world's third biggest ecommerce market after the U.S. and China.

http://money.cnn.com/2018/01/26/technology/walmart-rakuten-ebooks-japan/index.html

Inside Amazon Go: the store of the future

Amazon open its first public automated shopping space in Seattle last week. They use cameras and sensors to detect what food the customers have taken from the shelf and will then be atomically charge to the customers card when they walk out. Customers will need an Amazon account, smartphone and the Amazon Go app. I think that Amazon has really thought about the future and I can see many people using this to avoid long lines at checkout.

http://money.cnn.com/2018/01/26/technology/amazon-go-store/index.html