Connect with us

Business

World Economy In Limbo

Published

on

World Economy In Limbo

The global market remains in a rut, with no significant recovery in sight. 

Larry Summers, the runner-up for the position of Federal Reserve Chair, wants to know what we are going to do about it.

Definitive Global Recovery Is Simply Not Happening

Deflation is no longer just for the Japanese, and interest rates remain low in many countries.

GDP Growth For The January-March Quarter:

  • In the U.S.: 0.5 percent
  • In the euro zone: 2.2 percent
  • In Japan: -1.1 percent

The reintroduction of the term “secular stagnation.”

Larry Summers brings it up and elaborates on it in print, in live speeches, and through online outlets.

The term comes from the Great Depression by way of Alvin Hansen—a Harvard economist—and refers to false, short-lived economic recoveries which cannot meaningfully lower unemployment.

Larry Summers believes that the world’s current economic state may, in fact, be the feared secular stagnation first conceived of during the Great Depression. 

He points out that after seven years the world is nowhere near real recovery

He suggests that interest rates as low as zero are currently too high for demand, and the world is in a kind of bipolar state made up of “bubble” highs followed by recessive lows.

He believes this condition—un-remedied—may last for many years more.

What Larry Summers Believes Is Fundamentally Wrong

Capitalism works when people pay for goods and services and money circulates.  There has been in recent years, however, a tendency for people to save rather than spend.

tradingeconomics.com

source: tradingeconomics.com

The situation is exacerbated by the wealth gap—much of the world’s money is in the hands of those who have so much that they literally could not spend it all if they tried. 

Instead, they hoard it, and it does nothing to fuel the economy. 

Their investment opportunities are dampened because popular business models like that of Uber require so little actual investment to start up and run.

He points out that large companies like Apple and Google are pushed into distributing their money to shareholders rather than investing in development.

Loans see less demand because people are saving instead.  Furthermore, consumers are simply more cautious about taking on debt in the current economic environment.  Both these factors contribute to very low interest rates, which Summers feels are a huge part of the economy’s failure to truly recover.

Furthermore, when people do invest, it is usually by way of taking on debt they cannot possibly pay back, leading to “bubbles” in the market.

What Larry Summers believes must be done about it

First, he is a big proponent of fiscal policy taking up its share of the responsibility. 

He supports large projects that force the U.S. Government to invest in infrastructure. 

Among his suggestions are government-funded improvements to roads and bridges, education, and programs to combat global warming.

He also wants to adjust the tax system so that lower and middle-class Americans get to keep—and then presumably spend—more of their money.

Lastly, he appeals to banks, who he feels worry too much about their independent problems and not enough about getting together to fix the big picture in America.

Larry Summers on his reception by the Federal Government

Summers does not believe that the Federal Government cares about the economy growing again and job numbers improving

He does believe that they are too conservative in their ways of thought. 

He feels that policy makers are making decisions that contribute to the continuation of secular stagnation.

He also treats the idea of the Federal Government raising interest rates without the demand to support them with mild disbelief, as though they are treating a symptom rather than the underlying disease.

Summers vs. Federal Reserve Chair Janet Yellen

Yellen prefers the patient approach of waiting it out and letting the economy heal itself while the Federal Reserve slowly raises interest rates. 

It has been suggested that she cannot afford to theorize the way Summers can while she has to maintain the mechanics of the Federal Open Market Committee without alienating politicians on either side of the aisle. 

She also has to worry about potentially spooking the stock market into a death spiral.

She is not calling for stimulus from Congress and has spoken about the idea of secular stagnation without lending it credence.

If Summers is right, we will have to change the way everyone views the economy and its recovery

At the heart of Summers’ argument is the idea that wealth is simply not circulating at the moment, and that this is slowly killing the world’s economy.  It’s true that the average citizen cannot force Congress to pass tax laws that favor the middle to lower classes. 

Nor can he or she effect a massive redistribution of wealth. 

But we can research the candidates we vote for, and we can spend an extra dollar here and there to get cash flow happening again.

Every little bit helps.

Continue Reading
1 Comment

1 Comment

  1. Larry B

    June 2, 2017 at 9:17 AM

    The big problem is not the economy. The wealthy 1% of the world population are tying up the world capital reserves. They think richer is better. They couldn’t be more wrong! When they tie up the capital it is no longer available for everyone else to use… I mean come on! How many billionaires are there in the world right now? 1,810 billionaires around the world with a total net worth of almost $6.5 trillion. How many millionaires are there? According to Forbes; There are 1826 billionaires as per Forbes 2015 list. They exclude the monarchs, mafia and illegally wealthy. There are almost 15 million millionaires in the world. U.S. and Canada has more than 5 million millionaires.

    THIS IS THE PROBLEM!

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

21 Stocks Everyone Should be Watching in 2020

Published

on

Best Stocks in 2019

Interested in what stocks to look out for this year? Then you’ll love this list of the best stocks in 2019.

But before we get started, remember the most important advice when it comes to investing in stocks: the wisest way to invest is to use a stock index fund.

These funds purchase multiple stocks and spread risk appropriately across the top companies. This is the advice of Warren Buffett, who once said,

“By periodically investing in an index fund, for example, the know-nothing investor can actually outperform most investment professionals.”

If you’re looking for a stock index fund, check out Vanguard’s 500 Index Fund.

With that aside, here are the most promising stocks in 2019:

1. Chipotle Mexican Grill

Chipotle is an international chain of restaurants specializing in tacos, burritos, and other Mexican style cuisines. They have establishments all over the world from the United States to Germany and France.

This beloved food joint performed very well in the first two quarters of 2019 and are expected to continue to grow.

P/E ratio as of August 2019: 87.81

2. Constellation Brands, Inc.

Constellation is an international beer and wine producer. They are the largest importer of beer in the United States and command 7.4% of the market share.

P/E ratio as of August 2019: 17.00

3. Lululemon Athletica

Lululemon Athletica creates athletic apparel such as performance shirts, shorts, and pants, as well as yoga accessories. They’ve built a brand over the years that millions recognize and love.

P/E ratio as of August 2019: 47.51

4. Coty Inc.

Coty Incorporated is a multinational company that specializes in beauty products and services such as cosmetics, fragrances, skincare, and nail care.

Coty owns over 70 brands, such as CoverGirl, Clairol, and Bourjois. In 2018, the company’s revenue was over $9.4 billion.

As of August 2019, Coty Inc. stock is valued at 10.42 USD. Their P/E ratio is not yet available.

5. Anadarko Petroleum Corporation

Anadarko is in the natural gas and petroleum industry. This entails everything from gathering resources to treating and transporting gas. The company is also in the hard mineral business.

In early 2019, Anadarko had an estimated 1.47 billion barrels of oil in reserve, making it one of the biggest players in the industry.

As of August 2019, Anadarko’s stock is valued at 73.48 USD. Their P/E ratio is not available yet.

6. Brookfield Infrastructure Partners L.P.

Brookfield Infrastructure Partners acquires and manages infrastructure assets all over the world. They specialize in utilities, energy, and transportation infrastructure.

The company invests in ports, toll roads, pipelines, and telecommunication lines. In other words, things that people will always need and use.

P/E ratio as of August 2019: 75.27

7. ONEOK Inc.

ONEOK (pronounced “one – oak”) Incorporated is in the natural gas industry and is a key leader in the gathering, storing, processing, and transporting natural gas in the United States.

P/E ratio as of August 2019: 22.62
TerraForm Power Inc.
TerraForm Power specializes in renewable energy, particularly solar and wind power. There is an ever-growing trend that demands less damage to the environment.

As the world values green innovations, companies like TerraForm are expected to be favored in the coming years.

P/E ratio as of August 2019: 227.44

8. Netflix

Netflix is a service provider and production company with their main product being a subscription-based streaming service.

Streaming TV and movies have largely replaced traditional television. With no commercials and instant access to thousands of products, Netflix is suspected to continue to grow.

P/E ratio as of August 2019: 120.23

9. iRobot

iRobot is an advanced technology company that specializes in military and domestic robots. They designed the Roomba, which is an autonomous vacuum cleaner.

The U.S. military has purchased and uses thousands of robots from iRobot and are contracted to make more.

P/E ratio as of August 2019: 22.24

10. Amazon

Amazon is a multinational company that specializes in e-commerce and cloud computing. It’s considered one of the big four technology companies along with Apple, Google (Alphabet, Inc.), and Facebook.

Amazon is well known for distributing goods through technological innovation and on a massive scale. Some estimate that Amazon commands 50% of all goods sold online.

P/E ratio as of August 2019: 73.65

11. Apple Inc.

Apple is a multinational tech company that develops and sells computer software, electronics, and online services. They designed some of the world’s greatest tech products including the iPhone and Apple Watch.

Being a leader in tech devices, many analysts believe Apple is one of the most promising stocks to invest in.

P/E ratio as of August 2019: 16.61

12. Alphabet Inc.

Alphabet Inc. is a multinational conglomerate founded in 2015. It’s the parent company of Google, which is the dominating search engine on the internet.

Google performs 90% of all searches on the internet. Alphabet has additional subsidiaries such as Calico, Capital G, and Deep Mind.

These subsidiaries have their hands in industries such as autonomous cars, biotechnology, video game software, and internet tech.

P/E ratio as of August 2019: 23.87

13. Facebook Inc.

Facebook is the popular American social media site founded by Mark Zuckerberg. In 2018, Facebook had a net income of $22.11 billion and its total assets were $97.33 billion.

Facebook has subsidiaries such as Instagram and WhatsApp, which are also very popular social media outlets.

P/E ratio as of August 2019: 31.00

14. MarketAxess Holdings Inc.

MarketAxess is an international company that specializes in financial technology, also known as fintech.

They operate an electronic trading platform for various credit markets such as corporate bonds and income products.

P/E ratio as of August 2019: 70.82

15. AT&T Inc.

AT&T is a multinational conglomerate holding company and is the world’s largest company in telecommunications.

AT&T is the parent company of Warren Media, which makes it the largest entertainment company in the world in terms of revenue.

P/E ratio as of August 2019: 14.17

16. Verizon Communications Inc.

Verizon is a multinational telecommunications conglomerate. They are well known for their subsidiary Verizon Wireless, which is its mobile network.

Together with AT&T, these two companies dominate the mobile and landline market. Since our needs for communications will develop, these two stocks are poised to grow.

P/E ratio as of August 2019: 14.49

17. Axon Enterprise Inc.

Axon Enterprise Inc. is a U.S.-based company that develops weapon products and technology for civilians and law enforcement. This company developed the Taser, a line of electric shock weapons.

Since then, Axon developed other technologies including body cameras and a cloud-based management system that empowers police departments to manage and review evidence.

P/E ratio as of August 2019: 129.55

18. Intuitive Surgical Inc.

Intuitive Surgical Inc. develops and manufactures surgical equipment to make surgeries less invasive. As of 2017, they had 4,271 bases worldwide.

P/E ratio as of August 2019: 48.51

19. Ford Motor Company

Despite the localized recession in Detroit, the automotive giant is doing very well.

The market continues to demand their SUVs and commercial vehicles, not to mention their luxury vehicles, which are usually created under their Lincoln brand.

P/E ratio as of August 2019: 16.90

20. General Motors Company

General Motors is a multinational manufacturer of vehicles and own automotive brands like Buick, GMC, Cadillac, and Chevrolet. They have nearly 400 facilities on six different continents.

P/E ratio as of August 2019: 6.19

Conclusion

Let’s point out two trends from this list:

  • Tech and software companies are dominating
  • Utility-related companies are tried and true

About half of the world still doesn’t have internet access. And a large portion still doesn’t have access to common devices like cell phones and laptops. That means these industries are set up to grow significantly for years to come.

Of course, that doesn’t mean other industries will simply disappear. As you’ve seen in the list, there are still key industries that our society relies on, such as energy and infrastructure companies.

Some of the most promising stocks are in tech and software, such as Apple, Facebook, Google, and Amazon.

Nevertheless, the wisest investment is still a stock index fund, which bets on the collective market rather than individual companies.

Continue Reading

Entrepreneurship

5 Mistakes You Could Be Making In Your Small Business

Published

on

Are business owners reluctant to say they have made mistakes in their small business? If you are making these 5 mistakes you can easily not be taking advantage to save time, money and also might be holding yourself back from serious improvement.

It’s one thing to be in the niche of technology with new headsets, and new software every time Apple or Google sneezes. But, what is really important? Productivity and giving employees the tools they need to be successful at their job. Also laying the groundwork for successful workplace, and keeping up with the times, with aspects, so you’re not a one-man show.

Today everything is so automated, from marketing automation, to CRM and Customer service automation. Right now the big trends are so popular. “The one size fits all,” when salesmen try and sell you new software, seems to lack the care, details, and differences, that small businesses face, and they seem like the most logical answer.

Small business is definitely a pre-structured environment, that owners have control of.

Here are 5 Practical Guidelines for Small Business Owners today.

INFRGRAPHICS

Continue Reading

Business

4 Mistakes No CEO Should Ever Make

Published

on

4 Mistakes a CEO Can Make

CEOs are busy and under a lot of pressure to perform well. If there’s anything wrong with the business, some of the blame will fall on the CEO.

With all that stress, it’s easy to make mistakes. This is a list of mistakes that a CEO can make.

1. Neglecting The Team

For a company to succeed, the members of that company need to be mentally and emotionally supported. In many ways, the CEO doesn’t run the company – the team does. And the CEO runs the team.

CEOs are busy and under a lot of stress, and sometimes they don’t provide the in-house care their company needs to succeed. One of the chief examples is not paying employees what they deserve.

If there’s a hard worker who isn’t getting paid well, that’s a recipe for bitterness and discouragement. That person is likely to quit, and may even go to a competitor.

Another key to taking care of employees is to consistently remove roadblocks to their work. If a CEO keeps making their workload easier, the team will grow to appreciate and trust their CEO.

2. Avoiding Feedback

This is a huge mistake CEOs fall into. Simply not asking for feedback on their performance or before making a decision.

There are a few reasons why a CEO might avoid feedback. They can neglect seeking feedback because they’re busy and just forget to do it. But if the CEO doesn’t see the importance of feedback or hates receiving it, they’re setting themselves up for failure.

Everyone, including CEOs, has blind spots and a need to learn and grow. They should routinely ask their boards for feedback and take advantage of counsel when it’s available. Good CEOs learn to ask professionals for advice, whether it’s from in-house or outsourced experts.

3. Bottlenecking Important Decisions

Bottlenecking important decisions is when a CEO insists that every important decision goes through them.

It’s understandable that a CEO wants to make all of the important decisions. There’s a lot of pressure on the CEO to keep mistakes to a minimum. Whether fair or not, a lot of fault falls onto the CEO if anything goes wrong.

It’s kind of like letting your teen drive your car for the first time.

However, there are two big reasons why this is a trap. One, this isn’t an efficient way to run a company. There are too many important decisions to make and if a CEO tries to make all of them, sooner or later they will experience mental overload.

The second reason is that CEOs are not always the best person qualified to make a decision. On many occasions, there is someone else in the organization who’s more qualified to make that decision.

For example, if the company is choosing a new country to build in, let someone who understands international law make that decision.

4. Picking A Favorite Coworker

You don’t have to be part of a company to know the damage this can cause. Ever see a parent favor a child over another? Or see a coach favor a particular player? It just demoralizes others.

Like all humans, CEOs want to connect with people and make friends. But they need to be careful they’re not playing favorites. If the CEO attends multiple conferences with the same person, the rest of the company may get the idea that they don’t matter as much.

Obviously, a CEO can’t be close friends with radically every single employee. But they should make an effort to maintain an equal relationship with the ones they’re close to.

Business Is About Adapting

CEOs will make mistakes, but the worst one is not learning from their errors. The chief lesson here is one we often come back to in the business world – keep adapting.

If a CEO is making one of the mistakes listed here, it’s time to change their ways. Like all workers, CEOs are growing, maturing, and evolving. Sometimes it takes time and sometimes it takes effort.

Continue Reading

Trending

Copyright © 2019 The Capitalist. his copyrighted material may not be republished without express permission. The information presented here is for general educational purposes only. MATERIAL CONNECTION DISCLOSURE: You should assume that this website has an affiliate relationship and/or another material connection to the persons or businesses mentioned in or linked to from this page and may receive commissions from purchases you make on subsequent web sites. You should not rely solely on information contained in this email to evaluate the product or service being endorsed. Always exercise due diligence before purchasing any product or service. This website contains advertisements.