Archive | April 21, 2013

G.M. China To Raise Profits

China, the world’s largest car market since 2009, has recently begun switching from fuel saving compact cars to more “American” sized cars. As a result, China’s oil importing bill is on the rise, as well as pollution levels, which automaker’s don’t care about since their profits are growing. For S.U.V.s, their sales have jumped 49 percent compared to last year and auto sales overall in China rose by 13 percent and almost 21 million vehicles were sold in China compared to the U.S. who sold only 15 million.

General Motors China the main automaker in China next to Volkswagen, has stated it would introduce nine new S.U.V. models in China in the next five years, while building four additional factories and creating around 6,000 more jobs. Bob Socia, President of G.M. noted that his company was focusing more on luxury vehicles and S.U.V.s and that ‘Not long ago, both were considered niche segments,” he said. “Both are now mainstream and growing rapidly.” In addition, he predicted that S.U.V. sales would double by 2015 to 4 million vehicles, but still trailing behind the 5 million midsize cars; midsize cars make up the largest market segment in China, bigger than Japan’s entire auto market or the  combined auto markets of Germany and Britain for comparisons sake.

 

Written by Kevin Zhang

Source:

http://www.nytimes.com/2013/04/22/automobiles/autoshow/chinese-auto-market-shifts-toward-larger-cars.html?ref=business

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Health Care And Utilities Do Well While Large Corporations Suffer

Stock prices for Utilities and Health Care have been seeing growth as other sectors of the stock market seem to not be doing so well. Health care and Utility are typically not the categories that many investors see large growth in since they are usually what people invest in as a safety net, but while many large corporations don’t seem to be doing so well these stocks are prospering. The fact that these stocks are doing much better than others indicate that economic growth is moving at a slower pace.

This may be a bad sign to investors because they may begin to feel that there is little profit to make on other stocks, and may become less likely to invest their money, and with less investment these stocks may continue to fall downhill. Not only is this bad for these particular stocks but this is also bad for the companies themselves, because the companies will receive less funding to become more efficient at what they do. This also is having a large effect on the global economy, and the timing seems to be very bad, especially when the euro zone and the Japanese Yen seem to bringing the global economy down as well.

Written by; Jessica ho
Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887323551004578436581989611670.html?mod=WSJ_Markets_LEFTTopStories

Why Foreign Banks Are Shunning American Millionaires

As a result of the Foreign Account Tax Compliance Act, some of the world’s largest wealth management firms, including HSBC Holdings, Deutsche Bank, Bank of Singapore, and DBS Group Holdings, are turning down wealthy Americans’ business.  They stand to lose a lot if they don’t comply with U.S. laws.  Non-U.S. firms that don’t abide by American regulations are subject to 30% withholding of dividends, interest, or the sale of assets made by them or their customers.  While many foreigns banks disapprove of these terms, for obvious reasons, American lawmakers maintain that the government should be tougher on offshore tax crime.

In order to avoid the taxes that must be paid when opening foreign accounts, some Americans are going as far as to renounce their citizenship.  Also, Canada should see an increase in American clients as the Royal Bank of Canada is one of only a few wealth managers with a Securities and Exchange Commission license and U.S.-compliant investment advice in Switzerland and London.  Similar banks should see an increase in American clients as well, and those that don’t have this feature may even create whole new departments to deal with American regulations.

Written by: Constantine Kostikas

Source: Businessweek.com

GE Posts Higher Net, But Warns on Europe

General Electric Co. (GE) was able to generate a fifth of its revenue last year from Europe, but it has begun to notice a decline in orders since last quarter due to the slow growth of the European economy. The lowering in orders is also due to delays in projects in various European countries. However, overall, GE has been performing well because they are able to cut costs and restructure their system to produce at an optimal level. Their first-quarter profits rose 16%, which was above analysts’ expectations. In addition, they are also lowering their expected performance to “single to double digit growth.” The Chief Executive Jeffrey Immelt plans to construct a plan that will stimulate growth within the company. Failure to do so would lower his pay because his paycheck depends on the company’s performance. On another note, Immelt has confidence in GE’s performance in the second half of the year because he predicts that Middle East’s gas turbine orders will increase.

Lowering of industrial orders may be due to a decline in the number of infrastructure projects. Europe seems to be slowing down in terms of expanding and building. The conglomerate’s performance is an indicator of the economy’s performance because of the segments it focuses on.

 

Written By: Melody Mark

Source: Sechler, Bob. “GE Posts Higher Net, But Warns on Europe.” The Wall Street Journal. Dow Jones & Company, Inc., 20 Apr. 2013. Web. 21 Apr. 2013.

Jobless Claims Increase

Jobless claims in the U.S. rose by 4,000 this week; the fourth time it has risen in the past five weeks. This report is a sign that the economy is still adding jobs at an inadequate rate. Jobless claims indicate layoffs and this week’s report exceeded the projections of economists by 2,000. The four week “moving average” of claims increased 2,750 to an aggregate 361,250. This comes during a time of mounting debate for tapering the Federal Reserve’s stimulus package; with a weak job report and acceptable levels of inflation, it is likely that the Fed will continue its bond buying program for a while longer.

Eric Rosengren, Chairman of the Fed in Boston, previously voiced his belief that economic growth this quarter will be minimal but projected a 3% increase for the second half of 2013. He believes that the unemployment rate will fall to 7.2% by the years end; a level when he would be comfortable in modifying the current monetary policy of the Fed. I remain less optimistic than Mr. Rosengren in his projections although I’d be more than happy to be proven otherwise.

Evan Chang

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887323309604578430473558735676.html?mod=WSJ_economy_LeftTopHighlights

Koch Industries Eyes Tribune Papers

Billionaire brothers, Charles and David Koch of he diversified industrial conglomerate, Koch Industries are interested in buying Tribune Co.’s newspapers, which include the Los Angeles Times and the Chicago Tribune. Koch Industries currently owns a wide variety of industrial businesses that include energy to paper milling, but they have not owned a business linked to the media industry. Tribune under bankruptcy protection at the end of last year has hired Evercore Partners and JP Morgan to explore the sale of its newspapers, which will present financial information in the upcoming month. Both sides have not discussed about a deal or bid, but Koch Industries is hoping to explore the Tribune as an opportunity that will be profitable. Other famous investors as well as other entertainment industry high ranks, such as News Corp, owner of The Wall Street Journal and television stations in Los Angeles,  are also interested in the Los Angeles Times.

The bidding of a significant newspaper company, the Tribune Co., affects us because it can potentially affect what readers in Los Angeles and Chicago will read. The information about events that occur around the world are portrayed to us depending on what the media chooses to include in their publications. Since Koch Industries has had little exposure within the media business, both companies may not benefit from this deal whatsoever.

Written by: Samantha Chin

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887324874204578436943221475074.html

SeaWorld C.E.O. Hints at Overseas Ambitions

SeaWorld is one of the best known brand names, easily recognizable by people across America, but SeaWorld has remained just that, an American chain. Now, C.E.O. James D. Atchison has announced plans to change that and move the chain to an international level.

After a very successful I.P.O., SeaWorld has the assets available to reduce debt and expand aggressively, assisted by much greater confidence in the economy boosting consumer spending. This new consumer mindset is much different from that of 2008, when SeaWorld halted plans to expand. There are possible plans to build in Dubai.

SeaWorld’s confident stance is an example of how large owners in the company can make a big difference in how a business fares. Under their prior owner, Anheuser-Busch InBev, the focus of the SeaWorld brand name and entertainment chains were not the best for the company, affected by Anheuser-Busch InBev’s focus on alcoholic drinks. Now, under Blackstone, Atchison is excited to see a better utilization of the SeaWorld name.

I think that if SeaWorld is planning expansion internationally, an entertainment business reliant on extra disposable income, there must be a lot of confidence in a brighter economy. Although the short term may still be uncertain, by the time the arrangements are made and the park is established, I’m sure Atchison is expecting a much more favorable environment.

Source:
http://dealbook.nytimes.com/2013/04/19/seaworld-c-e-o-hints-at-overseas-ambitions/

Big Data, Trying to Build Better Workers

As time passes we see an everlasting push for innovation, this is especially true when looking at hiring, promotion and career planning. This new technology, named Work-force science, compiles large amounts of data analysis called Big Data. This data consists of e-mails, instant messages, phone calls, and even mouse clicks. All of these combined can potentially allow companies to hire more efficient workers.

Companies believe Big Data is a valuable asset, therefore many companies like I.B.M have been acquiring companies that hire and train like, Kenexa to survey and assess job applicants. Companies like Google are moving away from numbers and grades, and are implementing data-driving decision making when hiring. Google believes its most innovative workers are those who are “happiest,” which are those who have a strong sense of mission about their work.

This new push toward using Big Data can making the hiring process more scientific and a lot less subjective. This transition lowers the risk in hiring as many companies won’t be hiring on a gut feeling. This affects us directly because we are all going to go through the hiring process and maybe one day we’ll be taking multiple surveys instead of multiple interviews.

URL:http://www.nytimes.com/2013/04/21/technology/big-data-trying-to-build-better-workers.html?pagewanted=all&_r=0

-Jonathan Chan

Growth Probably Picked Up in First Quarter: U.S. Economy Preview

Based on first quarter reports, the economy seems to moving in a positive direction. There are many signs that support a gradually recovering economy such as the gross domestic product and various industries’ reports. The gross domestic product this year has shown a jump of 3.1 percent as consumer spending which accounts for 70 percent of the gross domestic product rose 2.8 percent. The automobile industry is one of the strongest industries in the economy right now as averages of 15.3 million cars are sold. The rising stock prices are stimulating the economy and putting more money into the economy increasing consumer spending which further stimulates the economy even more. There is also an increase in home purchases, both previously owned houses and new houses. Previously owned home purchases climbed 0.4 percent and new homes climbed 1.2 percent. Railroad companies are also growing, reporting earnings that beat estimates.

Although the economy is only gradually recovering, if the current rates stay consistent then the economy can continue to grow. Everything that is used to stimulate the economy is like a endless cycle of pouring more money into the economy just so it can be used up again. The rising stock prices are a good example where money is generated in households, who then spend it on goods; the goods increase in demand which also increases the amount of labor needed which leads to the creation of jobs.

Written by: Wilson Tang

Source:

http://www.bloomberg.com/news/2013-04-21/growth-probably-picked-up-in-first-quarter-u-s-economy-preview.html

Hong Kong Home Owners Start to Cut Prices

Hong Kong, one of the most famous cities in the world, infamous for shopping and site seeing for many tourists, has one of the highest and most expensive real-state prices in the world. For the past few years, Hong Kong has one of the highest selling housing market internationally, but for the past few months the rate of the houses selling as significantly dropped. This low activity on the housing market marked the lowest since the SARS pandemic back in 2003, exactly a decade ago. As the prices went higher and higher in the recent years, results in Hong Kong being one of the least affordable places in the world. As the prices go up, buyers started to hold on to their money which led to no one buying houses at all.

As a Hong Kong resident myself, this might be actually good news for my family and I, if the houses become more affordable I would have another reason to move back to Hong Kong and eventually stay there. The newly elected Chief executive in Hong Kong has created more programs to try to cool down the prices and make it more affordable for everyone. If people do not have to worry about saving all their salary just for housing, they might be more willing to spend more on the economy which will benefit the whole society at the end.

-Derby Ng

http://blogs.wsj.com/chinarealtime/2013/04/16/hong-kong-home-owners-start-to-cut-prices/