Archive | April 3, 2013

Slowdown in Job Growth

Years after the financial crisis the economy is recovering, along with a job market that is also growing, but the growth of the job market is beginning to slow down. Though it may seem good enough that the job market is even growing, this trend of slowing down can really hurt the economy. There are still many people who are unemployed, and the slowing down of the job market is not helping with the high unemployment rate. Though it seems right now that job market growth is slowing down, there is still hope. Last spring the job market also saw a slow down in growth, so it is possible for growth rates to increase after the season.

It may be very difficult for the United States to pick these growth rates back up, and even if growth rates do begin to speed up it may not make a big difference to the current job market. There are still many people who are in need of jobs and many jobs that are being cut.

Written by: Jessica Ho
Source: The Wall Street Journal

http://blogs.wsj.com/economics/2013/04/03/job-growth-slowdown-likely-to-reverse/

Walmart Strains to Keep Aisles Stocked Fresh

Walmart is known for its affordable groceries. Unfortunately, this business strategy is not working because there are not enough employees to keep the food fresh. They plan to implement a new inventory system so that employees would know when food is fresh on the storefront. After the recession of 2007, Walmart has been cutting employees, but they have been expanding. This imbalance is causing multiple problems for the chain. Besides the freshness of their food, shelves are also not filling up quick enough to satisfy their customers. In a recent analysis of Walmart’s customers, reports reveal that consumers are not satisfied with Walmart’s customer support.

Walmart’s business strategy is effective when it comes down to cutting costs and attracting customers. However, they do not have enough resources to provide consumers with a full shopping experience. As a result, they may be losing customers faster than they can expand the chain.

 

Written By: Melody Mark

Source:

Clifford, Stephanie. “Walmart Strains to Keep Aisles Stocked Fresh.” New York Times. The New York Times Company, 3 Apr. 2013. Web. 3 Apr. 2013.

After Heinz and Dell, a Merger Boom Fails to Appear

Berkshire Hathaway paid out $23 billion to take over Heinz and has proposed a $24.4 billion buyout of Dell.  Analysts believe that, after a five-year drought, megamergers and buyouts may begin to materialize.  The value of global mergers in March reached only $100 billion, on pace to achieve the lowest monthly total since July 2009.  On the other hand, some on Wall Street think that this was simply a case of Warren Buffet taking advantage of an opportunity.

A lot of speculation has been amidst on Wall Street about numerous companies concerning mergers and buyouts.  Verizon Communications and Vodafone Group, for example, have been discussing a number possibilities from a full merger to a complete takeover of Vodafone.  Global corporations currently have $4 trillion in cash, with equity markets almost reaching a five-year high.  In addition, strong stock prices are an encouraging sign that mergers may pick up in the near future.

Written by: Constantine Kostikas

Source: Businessweek.com

 

 

New Vacancy Rates in New York City

Position has now switched as new technology companies are residing in places such as Manhattan where it fills up some of the vacancy gap. The vacancies level in lower Manhattan improved recently. The percent vacant has fallen to a new low since 2008. This resulted from the expanding technology sector that are settling along downtown Manhattan.

The vacancy rate has dropped from 9.2 percent to 8 percent when compared with real estate usage last year. Despite the growth for the technological sector in New York City, the financial industry has shown stagnant movement in improvement. Furthermore the total office vacancies remained the same, coming in at 9.1 percent. However, the average price per square foot demanded by landlord grew 1.2 percent to 59.60 per square foot.

Lower Manhattan are said to be due for a hard drop in the upcoming quarter, resulting in a about 12-13 percent vacancy rate since office space at Brookfield Place are set open after the departure of Merrill Lynch Company. The lease will expire on September and the office space are set to be vacant for about 6 months. Along with this new office space opening up at Brookfield, when the Freedom Tower opens more vacant spaces are expected to become available. 

Written by: Victor To

Source: http://www.bloomberg.com/news/2013-04-03/downtown-nyc-office-vacancies-fall-on-technology-demand.html

Get ‘Em While They’re Young

Considering how much the nation spends on education, around about 5.5 percent of the nation’s economic output in total one would think that students from prosperous backgrounds would not do much better in school than disadvantaged students. However, that is not the case; American students who come from prosperous backgrounds score around 110 points higher on reading assessment tests, which is comparable to how much better the United States does than Tunisia. This is a major problem that explains why compared to other nations, income inequality is passed onto later generations at a much higher rate.

A lot of attention has been focused on higher education opportunities, and debates arise between those who want more money for public education and those who want more standardized  tests. They are missing the importance of starting young, with infants and toddlers. James Heckman is one of the nation’s top economists studying human development and he vouches that investment in the early education of disadvantaged students has large benefits in the long run. Besides improving cognitive abilities, it also improves crucial behaviors of sociability, motivation and self-esteem. Around half of poor five year olds don’t have the math, reading or behavioral skills needed to properly start kindergarten and if kids keep starting school with these benefits, then no amount of funding or adjusting of teachers will help those kids later on in life.

 

Written by Kevin Zhang

Source:

Porter, Eduardo. “ECONOMIC SCENE; Studies Highlight Benefits of Early Education.” The New York Times. The New York Times, 03 Apr. 2013. Web. 03 Apr. 2013. <http://www.nytimes.com/2013/04/03/business/studies-highlight-benefits-of-early-education.html?ref=business&gt;.

Job Market In Question

The housing market has turned around and consumer spending has increased but the job market still remains an issue. 246,000 jobs were added in February according to the Labor Department but only 158,000 jobs (statistic by ADP) were added by the private sector last month. This mediocre job report is raising concerns because jobs are being added at a slow pace in comparison to early 2012; it is a potential indication of a longer-term slowdown while unemployment sits 1.2% above the FED’s target rate of 6.5%. Many economists are projecting that economic growth will slow later this year which would further exacerbate the conditions of the job market.

Fannie reports profits for this first time in 18 quarters, Fourth Quarter GDP was expanded, U.S. Stocks reaching highs and Treasury yields at close to all-time lows… yet the unemployment rate is not indicative enough of the strength of our economy and investors are hedging against the economy because of its inevitable downfall. Some days The Wall Street Journal predicts economic stagnation in its articles while others days prophesize growth and turnarounds. Imagine a world where everyone agrees on everything… I just did and wow… things are really boring there.

Evan Chang

Source:

The Wall Street Journal

Hong Kong Strike Clogs Shipping Traffic

Hong Kong’s economy has changed drastically with a growing gap in wealth. Costs are increasing and standards of living are increasing as well, pushing middle and lower class residents to go on strikes more often. The most recent strike that is causing an uproar is the strike involving dockworkers at cargo terminals where protesters are preventing large cargo ships from docking. If the strike continues for a long period of time, it will cause a lot of damage to Chinese retailers as well as other retailers like the United States and Europe. The flow of goods is slowing down because cargo ships cannot dock. Normal wait time for a cargo ship to dock is typically 3 hours but the strike has delayed the time to as much as 60 hours. With the upcoming holiday season in demand, the strike will have a large impact on businesses around the world.

As a majority of the goods are either shipped to china or is shipped from China the strike needs to be resolved. Not only will it affect businesses in Hong Kong but it will affect everywhere in some kind of way.  Especially since it is about to be holiday seasons, the sales of retailers will be heavily affected. If the strike drags out, the United States economy will regress from its slow recovery.

Written by: Wilson Tang

Sources: http://www.nytimes.com/2013/04/04/business/global/hong-kong-strike-clogs-shipping-traffic.html?pagewanted=1&_r=0&ref=business

Jay-Z’s Newest Client: Yankees’ Robinson Cano

Shawn Carter, also known as Jay-Z has a new partnership with sports agency Creative Artists Agency Sports (CAA). The Yankees best player, Robinson Cano is hiring him and his partners as an agent. Although many view Mr. Carter as a rapper, he is becoming more involved in business and negotiations, where he may eventually become a certified agent. Robinson Cano’s previous agent, Scott Boras is known to be baseball’s premier agent who gets his clients top dollar deals. His decision to shift in agents also allows Mr. Cano to focus on other roles on and off the field. The combination of CAA and Mr. Carter, can bring success to the agency due to his connections with celebrities. He also has a wide range of successful careers from singer to sports team owner of the Brooklyn Nets.

I believe that this is a good partnership being made between Carter and Cano because both can benefit greatly from working together. Mr. Carter has always shown his pride in his roots of New York, as well as having a successful career and connections with other celebrities, not just himself. Cano’s decision to also shift his roles on and off the field is a respectable decision because he is already knows what he can accomplish by working with Roc Nation Sports and CAA Sports. It is important that when an athlete signs with an agent, both parties have both of their interests in mind.

Written by: Samantha Chin

Source: The Wall Street Journal

Barbarisi, D. (2013, April 2). Jay-Z’s Newest Client: Yankees’ Robinson Cano. Retrieved April 3, 2013, from The Wall Street Journal: http://online.wsj.com/article/SB10001424127887323611604578398493379910504.html?mod=business_newsreel

BOJ’s Kuroda Faces One-Year Window on Ending Deflation

Everybody is aware of Japan’s plan to end their long history of deflation. Bank of Japan Governor Haruhiko Kuroda is one of the many members leading the introduction of “Abenomics,” and he devised a monetary plan that would span over two years to save Japan. However, there seems to be issues concerning the credibility of “Abenomics.” The markets are not willing to wait and want more action at an accelerated pace. If Japan’s government can not reach one percent inflation within the year, doubt will be cast over the economy and the effectiveness of Shinzo Abe’s plans to boost the economy. As usual, bond buying is the primary tool to induce inflation, but although Abe is increasing purchases, he has stated that he will not relentlessly pursue economic growth. He feels that a shift in global factors may create an environment that will prevent Japan from reaching its goal. If Abe can not push for proof of inflation by the end of the year, investors may flee in doubt of his ability to spur growth.

The talk about the Japanese yen weakening has been occurring for several months, yet the talk is always filled with doubt. Try as he might, Abe may be unable to fight culture norms of the country he is trying to lead into a spending spree. According to Bloomberg, many Japanese households keep their assets in cash, much more so relative to the United States and the European Union. Of course, the households are not spending the cash, but even worse, they are not investing their money into the economy. This conservative approach towards personal finance may prove tougher to overcome than Abe had expected.

Source:

http://www.bloomberg.com/news/2013-04-02/boj-s-kuroda-faces-one-year-window-on-ending-japan-deflation.html

Apple to Begin iPhone Production This Quarter

Just a few weeks after the debut of Samsung Galaxy S4, Apple has made a decision to shake things up this coming summer. Reported rumors of Apple planning to have a summer launch of their newest version of their iPhone. Apple’s iPhones always made their launch in the fall time but with so many new phones coming out and smartphones are starting to be considered as commodities, Apple is going to change their usual routine with the hopes of increasing their dominance in the United States.

With the spread of new phones releasing, the profit margin of phones aren’t what they used to be and Apple is trying to adapt to this scenario by possibly making a cheaper iPhone to appeal to even more audience. It is going to be a huge risk for Apple but it might work out in the long run if things go their way. 

I am not an iPhone owner myself but I like the sound of a cheaper smartphone, with most cell phone companies requiring 2 year contract it makes it extremely difficult to get a new phone every year at a discounted price. Their decision to lessen the price of their phones might make me an iPhone owner in the near future. 

Derby Ng

http://online.wsj.com/article/SB10001424127887323611604578398663619783622.html?mod=WSJ_hp_mostpop_read

Corporate News: Retailer Counters Talk of China Woes

Wal-Mart Stores Inc. is the number two retailer in China in market share. They trail right behind the China based retailer, Sun Art Retail Group Ltd. Despite recent reports by local media, Wal-Mart plans to invest roughly $80.5 million dollars to upgrade Chinese outlets and to fund openings of new stores. Unfortunately for Wal-Mart there have been reports on recent store closures due to higher rent and increased labor costs. This could suggest that Wal-Mart is curbing the potential growth in one of its most strategic markets.

Contrary to those reports, Wal-Mart stands by its past announcement to open a hundred new stores in China over a three year span. “Our aim is to strengthen our business foundation to enable our long-term development in China.” said Greg Foran, chief executive of Wal-Mart’s China Division. Wal-Mart plans on adding 18,000 jobs to its payroll in China. They also plan to invest in better distribution networks and warehouses, which will increase food safety and reduce costs.

URL: http://online.wsj.com/article/SB10001424127887324883604578396090449466504.html?KEYWORDS=wal-mart

-Jonathan Chan