Archive by Author | ewc88

First World Problems

The topic of retiring has become a difficult subject.  There is a lot of talk about a retirement crisis.  Many people have become worried about their future.

Mathew Greenwald, the president of the firm which conducted the research for the annual Retirement Confidence Survey, thinks that there are ways to avoid being part of the crisis.

One of these ways is to save an amount worth 20 times your salary.  This amount, plus the Social Security benefits would almost guarantee a safe retirement.  The problem with this is that if a person never receives a large inheritance of family money, it is very unlikely that he will be able to save that much from just his salary.  If he makes good investments then his savings will grow, but still 20 times the salary is quite a large sum of cash.

Greenwald also suggests that employers begin to use auto enrollment into retirement funds automatically.  When workers are enrolled automatically they are more likely to stick with the plan than they are to enroll by themselves.

Written by: Evan Chang

Source: http://www.marketwatch.com/story/3-ways-to-solve-the-retirement-crisis-in-the-us-2013-03-22

LinkedIn’s Shares Decrease 8.6%

LinkedIn Corp is a professional social network which has a total of 218 million members. The stock has increased 76% so far this year as memberships and premium subscriptions have surged. The company’s projected revenue has increased from $1.43 billion to $1.46 billion for this year; however second-quarter estimates are $2 million lower than previously forecasted. LinkedIn has added a number of features to users’ profiles and news feeds to keep up with rivals. The company’s “talent solutions” segment which is the largest part of the business grew 80% in the latest quarter; ad sales grew 56% and premium subscriptions rose 73%.

LinkedIn’s figures have been great yet its shares dropped 8.6% to $184.25 after market hours today as the company issued poor projections for the second quarter. As the job market becomes more and more competitive, having a LinkedIn profile is becoming the norm. Even my roommate who is a pre-med student has one… just for the sake of having one.

Evan Chang

Source: The Wall Street Journal

Labor Shortage In China: Industrial Sector

Companies that offshore or outsource typically look toward China or Mexico to minimize costs; China has a population of over a billion people and no set minimum wage for the entire country. Years ago when factories opened in China, people from the surrounding regions would line up to find work, something which no longer happens. The service sector in China has become more attractive to workers since the quality of life in such jobs is much better. The service sector created 37 million new jobs in the past five years as opposed to the industrial sector, with just 29 million.

The labor shortage for the industrial sector in China is not a cyclic matter; the hours may be longer and the wages lower in service jobs but the jobs are more appealing. Success is very important in Chinese culture and telling “your parents that you’re working at reception, [just] sounds nicer.”

Evan Chang

Source: The Wall Street Journal

A Rocky Rollout

President Barack Obama’s health care law is already showing signs of a “rocky rollout” as officials are rushing to prepare for it’s implementation. The main goal of this bill is to provide health care to uninsured Americans, a noble intention but one that has been vividly opposed by many republicans due to its associated costs. The main funding for this health care system has been federal grants which help states run their own insurance exchanges although this has created several issues. New York spends $27 million for its own exchange while Ohio does not run its own program; Ohio is set to receive $2.2 million in federal funding, a figure which will unlikely be sufficient to cover the state’s 1.5 million uninsured.

Republicans view Obamacare as “a politcal tsunami” and called it a “political nightmare for Democrats in the 2010 election.” There have been hiccups in its implementation which are not serious enough to derail it but has caused concerns of “a huge train wreck” if federal officials do not step up their preparations.

Evan Chang

Source:

The Wall Street Journal

Increasing The Stimulus Package

All recent discussion of the Fed’s $85 billion per-month stimulus package has been geared towards diminishing the amount, but now other factors have come into play that will potentially influence the Federal Reserve to increase it. The Fed has been using the consumer price index and the unemployment rate as indicators for its program; tapering would begin if unemployment hit 6.5% or inflation rose above 2%. Neither has happened yet and inflation has actually been well below the central bank’s target in the past 5 months, causing some Fed officials to consider supporting an increase in bond purchases if this trend continues.

The economy only grew 2.5% last quarter, falling short of the 3.2% projection by economists. Consumer spending increased 0.2% last march which is potentially a poor sign of coming months. The bond buying program of the Fed is meant to stimulate the economy by maintaining prices and keep interest rates low, its effectiveness has been offset by the recent sequester cuts which began March 1.

Evan Chang

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887324743704578447301885433588.html

An Immoral World?

The conflict in Syria has been raging since 2011, leaving the death toll at approximately 120,000 and displacing over 1.2 million people. Over these two years of the Syrian conflict, there has been pressure for the US to intervene although many Democrats and Republicans in Washington are wary of entering another engagement. Sen. John McCain however has been critical of President Obama’s policy on Syria, voicing his opinion that the U.S. should “support a no-fly zone with unmanned aircraft to protect civilians and rebels.” Officials believe that any intervention would indubitably result in the loss of American personnel, especially after Russia assistance in the development of Syria’s air-defense system.

The lack of intervention by any nation in the Syrian conflict is a sad reflection of our world. U.S. officials believe that involvement in the conflict will lead to revocation of Russian air-space use, which would make it harder for the U.S. to access to Afghanistan. President Obama said that the use of chemical weapons by President Assad’s regime could “trigger” U.S involvement but there is already evidence this has already happened. No nation is willing to spend the money to intervene because there is nothing to gain; the world will sit by as it did during the Rwandan Genocide as the death toll continues to rise.

Evan Chang

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887323798104578450863284390292.html?mod=WSJ_MIDDLENexttoWhatsNewsSecond

A New Meaning Of Risk

The term entrepreneur describes a person who “organizes and operates a business or businesses, taking on financial risk to do so” (Wikipedia); Michael Stock, a 36 year old American real estate developer and private security contractor is pushing this definition to its limits. His company Bancroft Global Development, trains soldiers in a wide range of skills while its sister company, Bancroft Global Investments operates by financing projects in war zones. Bancroft has built luxury rentals in Afghanistan and is now shifting its focus to Somalia; operating on the belief that all “hot spots” cool down eventually.

Every now and then I come across a story that is truly incredible and this one definitely fits the bill. Bancroft’s performance in the real estate development of volatile areas should be fascinating to observe and I will definitely be staying tuned. This company is making extraordinary, albeit precarious investments… the insurance costs must be astronomical.

Evan Chang

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887323820304578410573747048086.html?mod=WSJ_hpp_LEFTTopStories

GDP Grows 2.5%

Actual growth of the U.S. economy was .7% lower than projections by economists; expansion was reported at a 2.5% rate between January and March. This change reflects the decline in investments by businesses after a strong finish to last year; companies have cut overall spending on new buildings for the first time in two years and lowered inventory levels. “It is likely that the contraction in federal; defense and nondefense spending, reflects the onset of sequestration” said Alan B. Krueger, chairman of the White House’s Council of Economic Advisers. Consumer spending is the primary factor in growth but the increase in payroll taxes has resulted in most expenditures being focused on necessary commodities.  

The economy has grown for 15 consecutive quarters at an average of 2% annually; this is considered weak by historical standards. The 2.5% rate of expansion in the first quarter is raising concerns of slow growth this year.

Evan Chan g

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887323789704578446513668963282.html?mod=WSJ_hps_LEFTTopStories

Your Move

If anyone has watched “The Minority Report”, they probably remember the motion controlled computers that Tom Cruise used.  Now, that may no longer be restricted to the realm of fiction. The world’s largest PC maker, HP, has tried to embrace motion sensing technology and its impact may be akin to the same way that Apple Inc made touch-screen technology mainstream with the 2007 launch of the iPhone. Leap Motion, a three-year-old firm with less than 100 employees in San Francisco, manufactures motion sensors the size of a pack of gum and claims the ability to track the individual movements of 10 fingers with 1/100th of a millimeter precision. This unit can be plugged into any computer to enable the usage of applications and software designed to be used with motion control sensors.

Under a deal with HP, Leap Motion’s products will be sent out with HP products and then in the future, the technology would be directly embedded into HP products. According to Ron Coughlin, a senior vice president of HP, “Consumers want to go to the next level when creating and interacting with digital content,” and  “Leap Motion’s groundbreaking 3-D motion control combined with HP technology and amazing developer apps will create incredible user experiences.”

Written by Evan Chang

Source:

http://www.reuters.com/article/2013/04/16/us-hp-motion-control-idUSBRE93F0SU20130416

The Emergence Of Smartphones

The emergence and popularity of smartphones has eliminated the need for some products; the device gives you the ability to surf the web, play games, take pictures, and utilize countless applications on top of making regular calls and texting. “Cellphones are [now] cloaked mobile-gaming devices that you always have in your pocket” and are eating into demand for “compact point and shoot [cameras]” according to an article in the Wall Street Journal. This technological innovation has been problematic for companies like Canon and Nintendo who have found themselves on the wrong side of the shift.

Nintendo’s operating loss increased to 30.55 billion Yen last quarter; a net loss of 7.45 billion Yen compared to their profit of 5.15 billion yen last year. Canon posted a 34% decrease in quarterly profits and has seen a decline in digital camera shipments to 70 million units this year from 121.8 million in 2010. These two companies need to revamp their products to appeal to a wider audience; perhaps they should look into making smartphones.

Evan Chang

Source: The Wall Street Journal

online.wsj.com/article/SB10001424127887324474004578442290959547764.html?mod=WSJ_hp_LEFTWhatsNewsCollection

HSBC Cuts Jobs In The U.K.

HSBC Holdings PLC announced its intention today to cut approximately 1,150 jobs in the United Kingdom as it changes its business model of financial advisement to wealthy customers. The bank has been shifting its focus to specific locations and its wealth management sector. HSBC’s change has eliminated the role of commercial financial advisers; “moving financial advisers currently in the wealth division into retail” and effectively consolidating financial advisement into one department. The bank has cut 37,000 jobs from 2010 to 2012 to cut costs and remove itself from unsuccessful businesses; other banks in the United Kingdom have followed suit, Lloyds Banking Group PLC and Barclays PLC have cut hundreds of jobs since the start of this year.

Modern society has developed to an extent such that all economies are now intertwined. The private sector is cutting spending not only in the U.S. but other countries as well. This is not a promising trend and in my opinion is an indication for poor job growth in the U.S.

Evan Chang

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887324874204578440494003166264.html?mod=WSJ_hp_LEFTWhatsNewsCollection

Cutting The Budget By $85 Billion Per Month = Bad Time For Private Contractors

War is said to be good for business; it increases government contracts while simultaneously creating jobs but what goes up must come down. With the U.S. withdrawing troops from the Middle East and the recent cuts in spending, private contractors and other businesses that benefited from the conflict are bracing for the inevitable downsize. One of the Pentagon’s biggest contractors however, has begun a lobbying campaign in the hopes of protecting jobs in its York, Pennsylvania production plant.  BAE Systems PLC is attempting to convince lawmakers in Washington to divert funds so the company can continues its production of Bradley fighting vehicles which cost about $3.1 million apiece.

BAE had 3,000 workers at its York production plant at one point; a figure which has fallen to 1,250. If BAE is unsuccessful in convincing members in congress to divert funds, it will be forced to lay off an additional 250 workers. The growth of the economy is stalling and unfortunately this company is not the only one adversely affected by the sequester cuts.

Evan Chang

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887323551004578439243072042424.html?mod=WSJ_hps_LEFTTopStories

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

Less High School Graduates Going To College

When the recession hit a couple of years ago, many high school graduated turned to college instead of taking their chances in the real world; this trend seems to be changing. The college enrollment rate of high school graduates in the U.S. dropped to 66.2% in 2012 in contrast to the 70.1% during the recession. An article in the Wall Street Journal reported that this may suggest high school graduates are becoming more confident in finding work in the job market although I cannot see how this would be the case. The unemployment rate is still currently high at 7.6% and only 88,000 jobs were added last month.

The unemployment rate for people without a high school diploma (ages 16-24) is 28.8% for men; it was 19.7% a year earlier. This statistic is worsened when you factor in the dropouts of the people in that age group from the workforce.

Evan Chang

Source:

The Wall Street Journal

http://blogs.wsj.com/economics/2013/04/17/smaller-share-of-high-school-grads-going-to-college/