By Economic & Finance Report
Financial investment power house Goldman Sach (GS); is in negotiations to aquire B&B Hotels and all its subsidiary chains. They will be acquiring the chain from PAI Partners (French hospitality investment firm).
The purchase will happen in the latter part of 2019. The deal is supposed to be worth around $2.2 billion (USD). B&B Hotels has over 486 hotels (in total). The company was founded in 1990 and operates in the hospitality market in countries such as Brazil, Morrocco, and many Euro countries.
GS merchant banking division will be pursuing the close of the transaction, which is supposedly going to happen later this year (2019). -SB
1) The British business climate is expected to get worst after Brexit. A survey of chief finical officers finds that a full 80% consider Britain’s economy will slump after Brexit, especially if an unplanned exit occurs. The long term outlook for investment is poor, so with little investment, the economy will flatten.
2) Battle lines of banking are being drawn in China between virtual banks and conventional banks. A banking shakeup is in progress between hi-tech companies and traditional banks, who find it hard to quickly react to the challenges of virtual banks, much as with Amazon is to retailing or Urber is to transportation.
3) The auto maker Mercedes-Benz is being investigated for software cheating of emissions test. Germany has ordered recall of 238,000 cars using illegal software to defeat government testing for compliance of emissions standards.
4) 15 APR 19 Stock market closings:
Dow 26,384.77 down 27.53
Nasdaq 7,976.01 down 8.15
S&P 500 2,905.58 down 1.83
10 Year Yield: down at 2.55%
Oil: up at $63.57
On Monday, January 28, 2019, the United States Attorney General Department, indicted Hauwei Technologies with 13 counts of banking fraud, wire transfer fraud, and violating Iranian sanctions imposed by the United States.
Hauwei Technologies Ltd. (the biggest global telecom equipment maker and provider) have been accused of misleading authorities of its relationship with subsidiary banks that had connections with Iran, as well as stealing technology trade secrets for USA companies, such as T-Mobile. The charges were filed in the state of Washington.
US authorities have accused the CFO of Hauwei, Weng Wanzhau as being the mastermind of the schemes that have played out in the federal indictment charges.
Weng & Hauwei Technologies Ltd deny the charges put forth by the US. -SB
1) The new Congress may have profound future economic impact for America. New members of the Financial Services Committee includes members of the radical left of the democratic party, with very little experience in fiscal matters, but having a strong socialist agenda for reforms to the banking system. Fears for the impact are growing as these members expound on their desire to eliminate big banks in America.
2) Brexit is having an effect on British consumer spending. Reduce retail spending with retail sales falling 0.9% over concerns for consequence of Brexit uncertainty. Consumer spending had been strong during the summer of 2018.
3) Netflix is burning through its cash at a staggering rate to pay for their blockbuster original hits, having spent $3 billion dollars for productions in 2018. Their negative cash flow is expected to accelerate in 2019, but they are still adding new subscribers. All this to remain competitive with the other subscribers of Amazon, Hulu and Google with Apple, Disney and Warner Media also entering the market.
4) 18 JAN 19 Stock market closings: China announced spending spree of America products, bumping the markets upward.
Dow 24,706.35 up 336.25
Nasdaq 7,157.23 up 72.77
S&P 500 2,670.71 up 34.75
10 Year Yield: up at 2.78%
Oil: down at $53.76
Economic & Finance Report
By: James Lyman BSAE, BSEE, MSSM
I just got my January issue of Scientific American with a collection of articles about the future of money detailing how new technologies promises to profoundly change the monetary and banking systems and hence the economic system which millennials are already struggling for a place in. This special report of four articles is very interesting giving a glimpse of how the world of the millennials and Z-generation is changing such as stopping the concentration of wealth, increased transparency while reducing risks, but increasing risks to our digital identities. This issue is a good introduction to the ‘what and particulars’ of the new technologies of money, but leaves the reader with the question: How will the millennials fair in a new economy when they’re now struggling so much in the old one?
First, just what is cryptocurrencies such as Bitcoin and Tradecoin? Well, as the articles explains, cryptocurrencies are just as the name implies, money or currency that is data bits in computer systems instead of the traditional metal coins and paper bills we’ve come to think of money as. This allows individuals and companies to buy and sell physical assets across the internet using cryptocurrencies instead of traditional money. These cryptocurrencies are not like credit cards used to transfer money, which are in fact just another manifestation of tradition money issued by nations that we use every day. Instead they are a money or currency created by individual private companies. These use the technology of blockchaining to give a peer-to-peer digital payment system without any central authority.
Immediately there is the obvious problem of what gives this kind of money any value? The money of a nation represents the cumulative value of a nation. The sum value of a nation’s factories, farms, mineral resources and infrastructure, coupled with the value of all the personal property such as houses and cars is what gives money its value. The sum total of all the assets of a nation! So the money from a rich nation is more valued, considered more stable, than one from a poor nation. During World War II and several decades after, the American dollar was more valued than gold. It was more sought after, more readily accepted than pure gold, because of the vast wealth that stood behind the dollar. People across the world wanted American dollars above all else.
But cryptocurrencies is the creation of money out of thin air . . . there is no physical assets to back Bitcoin and Tradecoin. (Tradecoin does used commodities to back their currency, but commodities are perishable, and so its value can be questionable.) One only has to look briefly at history, at the Weimar Republic after World War I, when the defeated Germans decided to pay reparations to the Allies by simply printing more money. Quickly inflation became ramped with a wheelbarrow of paper money needed to buy a loaf of bread. The paper used to print the money on, cost more than what the money was worth. And this opened the door for the National Socialist and Hitler to step in and gain total power. Cryptocurrencies lack hard tangible wealth for their money to represent.
Creating money is a finicky endeavor. Prior to the great depression of the thirties, the American dollar was on the gold standard, that is a dollar bill could be redeemed from the American government for a set amount of gold. It had value because it was backed by gold which most people consider to have value. The paper dollar bill was a light weight convenient way to carry gold around and exchange for goods and services. But there was a fixed amount of gold that America had, which in turn fixed how much money the government could issue. That put a limit on how big America’s economy could be, so to have room to grow further and get America out of the depression, President Roosevelt took America off the gold standard. Some people say we should return to the gold standard to return stability to the dollar and America’s economy, but there simply isn’t near enough gold for all the money now needed for our economy to operate.
Therefore, if you create too much money, then you risk inflation with its value falling away, while if you create too little, then you risk strangling the economy which can be just as bad.
That’s the real risk with cryptocurrencies, the creation of money out of thin air, without any consideration over the consequences of too much or too little money, coupled with no anchor to real material wealth. This translates into Trust, one of the most important factors of any currency. To use a currency, to accept it in exchange for some material item of value, both parties must have trust that the currency will be accepted and trust that the currency has value to warrant trading something of value for.
As with any new technology, many have plans to revolutionize banks, economies and money. Some think they can use cryptocurrencies to cut the banks and governments out of the financial world and thus make the world a better place, others that they can fix a flawed system. For instances, Venezuela is trying to cure its hyper inflation by creating a cryptocurrency. One thing is for sure, the future economies, which millennials will have to live in and with . . . are now being formed and remade. But what’s in it for them? Will the new cryptocurrencies mean more opportunities for them with a brighter future, or will there be more technology displacements of millennials?
These are a set of financial articles each millennial needs to read and ponder, since they are the ones who’s world will be changed one way or the other.
By: Economic & Finance Report
Investment, finance/banking & retail powerhouses; Berkshire Hathaway, JP Morgan Chase & Amazon, seem to be in collaboration for a new healthcare venture that is speculated to be one of a kind in the healthcare sector. The deal seems to be under wraps.
What is somewhat known is that the venture is supposed to be beneficial to their respective employee healthcare benefits. Perhaps making healthcare cheaper for all Amazon employees per se?
The wait and see game on this venture continues……-SB
The Swizz National Bank has used interventions in the past to devalue the currency against the dollar, that has helped their exports of goods and services and it has helped their currency.
The Swizz Natinonal Bank has indicated that they are not gaming or manipulating the currency but are trying to take pressure off the currency. -SB
By: Economic & Finance Report
President Elect’s Donald Trump’s Treasury Secretary nominee, Mr. Steven Mnuchin was on the HILL today, being grilled by senators, on his various role(s) in US housing forecloseres, off shore investments, and banking regulations. Mr. Mnuchin is seeking to be the new Trump’s Treasury Secretary, and such is the case for candidates for any US secretary position, Mr. Mnuchin took the mound on Capitol Hill (Capital Hill), no pun intended.
Mnuchin answered questions on his numerous roles in housing foreclosures, banking investment and regulations; and how he managed to be appropriated upon all these different type of managerial skill sets, one may add? He answered all questions by senators and gave his opinion on what his duties as Treasury Secretary; under a Trump Administration would entail. -SB
P.s. Donald J. Trump gets inaugurated as the 45th US President on January 20, 2017 at around noon 12pm est.
By: Economic & Finance Report
China has stopped and cracked down on a $65 billion dollar banking ring. Some $65 billion dollars in foreign currency had been shifted within and outside the country, along illegal transactions and wiring.
It is indicated that over 370 people have been arrested; who may have been involved with the international plot. Chinese authorities have been monitoring the network for over a year, and this past April 2015 took aggressive action to monitor and heavily investigate the underground banking network.
The Chinese government is trying to stabilize the yuan currency while monitoring and mobilizing currency that outflows and inflows inside the second biggest economy. -SB