Föhrenbergkreis Finanzwirtschaft

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Posts Tagged ‘WSJ’

Fiscal Hole Will Test President Donald Trump’s Agenda

Posted by hkarner - 7. Februar 2017

Date: 06-02-2017
Source: The Wall Street Journal

President’s appetite for stimulus comes up against budget realities and some fellow Republicans

President Trump’s stated goal for more spending on infrastructure appears out of step with GOP elected officials.

For an economy that isn’t in recession, the U.S. is facing one of the bleakest fiscal outlooks since World War II. One question that President Donald Trump will soon have to decide: How much is he willing to embrace even wider deficits?

The answer will determine whether Mr. Trump’s domestic agenda lives up to markets’ bold expectations, and his own.

Before Mr. Trump does anything, growing budget deficits are already on a course to push federal debt to record levels as a share of gross domestic product. That will make it extremely difficult to make good on promises to cut taxes and boost spending without spilling more red ink.

Unlike past periods, deficits are swelling not because of an economic downturn or a short-term boost in discretionary spending, but because of the costs of caring for an aging population. Medicare and Social Security are the biggest projected drivers of spending. Ten years ago, some 6,700 Americans turned 65 every day. The number is now 9,800 Americans, and it will rise to 11,700 by 2026. Den Rest des Beitrags lesen »

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India Considers Fighting Poverty With a Universal Basic Income

Posted by hkarner - 2. Februar 2017

Date: 01-02-2017
Source: The Wall Street Journal

Annual economic survey looks at possibility of replacing messy welfare programs with a stipend paid to every Indian

India is looking at a radical idea for reducing poverty: free money for everyone—no strings attached.

The Ministry of Finance’s annual survey of the economy, released Tuesday, explores how the country might replace its various welfare programs with a universal basic income, or a uniform stipend paid to every adult and child, poor or rich. Guaranteeing all citizens enough income to cover their basic needs would promote social justice, the survey says, and empower the poor to make their own economic choices. It would also be easier to administer than India’s current antipoverty programs, which are plagued by waste, corruption and abuse.

But Arvind Subramanian, the ministry’s chief economic adviser and lead author of the economic survey, took pains to emphasize that concerns about how a universal income would be enacted—and how the government would pay—mean India is still quite far from putting the concept into practice. Den Rest des Beitrags lesen »

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Toyota Still Biggest Car Maker by Measures that Matter

Posted by hkarner - 1. Februar 2017

Date: 01-02-2017
Source: The Wall Street Journal

Volkswagen stole Toyota’s crown, but investors may not care

Car buffs, journalists and economists pay a lot of attention to unit-car statistics, but investors shouldn’t—just look at Volkswagen’s rise to the top of the official league table of manufacturers.

Toyota, which overtook General Motors in the International Organization of Motor Vehicle Manufacturers’ ranking in 2008 for the first time, announced Monday that it produced 10.21 million cars in 2016. Earlier in January, Volkswagen said it delivered 10.31 million vehicles to dealers in 2016. Assuming deliveries are a decent proxy for production, the German car maker has surpassed Toyota to become, for the first time, the world’s largest car maker.

China is the key reason. Volkswagen and GM dominate the Chinese market, each producing more than three times more cars than Toyota. Since the Chinese market is by far the world’s largest and grew 15% in 2016—far faster than other markets—this was a decisive advantage.

toyota-ranking-2016Still, ranking car makers by the number of vehicles they produce generates little more than bragging rights. The number of vehicles sold would be a better benchmark of commercial success than the number produced—if only the industry weren’t rife with reports of manipulated sales statistics.

Even production is a slippery concept. According to figures unearthed by blogger Bertel Schmitt, Toyota also makes hundreds of thousands of cars on behalf of other companies. Add in the 212,846 cars Toyota’s Daihatsu unit made in 2016 for Malaysia’s top brand, Perodua, and the Japanese company would still be the world’s largest car maker.

Really, the industry ought to ignore unit figures altogether. This might reduce the incentive to fiddle with them, but mainly it would put more emphasis on profitability. Not all sales are equal: premium brands typically make several thousands of dollars for each vehicle; more basic brands only a few hundred, trucks, which are counted in most statistics, sometimes upward of $10,000.

Volkswagen’s historic hunger for volumes led it to sacrifice the margins of its namesake brand, which were just 1.6% outside of China for the first nine months of 2016. Chasing unit sales may have also created the corporate atmosphere that led to the 2015 emissions scandal, which is likely to cost the company more than $20 billion.

What matters more for investors is that Toyota’s stock-market value is more than twice that of Volkswagen’s. Never mind official industry statistics, Toyota is still by far the world’s largest car maker.

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The Markets Don’t Believe in Trump for the Long Term

Posted by hkarner - 1. Februar 2017

Date: 31-01-2017
Source: The Wall Street Journal

The yield curve tells a story of Trumpflation, a boost to both growth and inflation lasting a few years, with little long-term impact on the real economy

Investing is about two things: deciding what is likely to happen, and comparing it to what’s priced in to markets. The discussion about what’s likely to happen under President Donald Trump has dominated all media since his election, and every investor has their own view. What’s important, then, is to compare it to what’s priced in.

One chart cuts through all the chatter. The yield curve in the all-important Treasury market tells a story of Trumpflation, a boost to both growth and inflation lasting a few years, with little long-term impact on the real economy.

“People have pushed up their expectations about growth, but it’s more of a cyclical view than a structural view,” said Jan Hatzius, chief economist at Goldman Sachs. Den Rest des Beitrags lesen »

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Italy Tries to Skirt a Populist Revolt

Posted by hkarner - 31. Januar 2017

Date: 30-01-2017
Source: The Wall Street Journal By SIMON NIXON

Country has taken steps to insulate itself, but long-term risks remain

grillo-ccBeppe Grillo, leader of 5-Star Movement

Never underestimate Italy’s capacity to muddle through.

Following Prime Minister Matteo Renzi’s defeat in last December’s constitutional reform referendum, the country didn’t collapse into turmoil, as many had feared. There was no political crisis leading to a snap election that might have brought the anti-euro 5 Star Movement to power; nor did the fragile banking system implode.

Instead, a new prime minister was swiftly installed at the head of a largely unchanged government, which acted promptly to stabilize the banks.

Now, the Italian establishment has taken further steps to insulate itself against the risk of a future populist government: A constitutional court ruling last week struck down a proposed change to the country’s electoral law, which would have created a two-stage process for electing the lower house of parliament, with the second-round winner automatically receiving bonus seats to give it an absolute majority. Den Rest des Beitrags lesen »

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Google Criticizes Impact on Staff of Trump Immigration Order

Posted by hkarner - 29. Januar 2017

Date: 28-01-2017
Source: The Wall Street Journal

Google Chief Executive Sundar Pichai tells staff ‘it’s painful to see the personal cost’ on colleagues

Google CEO Sundar Pichai spoke in New Delhi, India, on Jan. 4, 2017.

Google Chief Executive Sundar Pichai criticized President Donald Trump’s immigration order in an email to staff late Friday, saying the U.S. ban on foreign nationals from seven countries affects at least 187 Google employees.

“We’re upset about the impact of this order and any proposals that could impose restrictions on Googlers and their families, or that could create barriers to bringing great talent to the US,” Mr. Pichai said in the email, according to a copy reviewed by The Wall Street Journal. “It’s painful to see the personal cost of this executive order on our colleagues.”

Mr. Trump on Friday signed an executive order that, for at least 90 days, bans people from seven Muslim-majority nations—Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen—from entering the U.S. The order also indefinitely bans Syrian refugees from the U.S. and suspends the broader refugee program. Mr. Trump said the order was to keep out “radical Islamic terrorists.” Den Rest des Beitrags lesen »

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Trump Warns Auto Executives on Moving Business Overseas

Posted by hkarner - 25. Januar 2017

Date: 24-01-2017
Source: The Wall Street Journal

In meeting with car industry, U.S. president says he will speed up process of environmental permitting

U.S. President Donald Trump speaks with General Motors CEO Mary Barra during a meeting with auto-industry executives in the Roosevelt Room of the White House.

President Donald Trump said businesses have to wait too long to obtain permits and vowed to create a friendlier climate for companies that want to invest in the U.S., stepping up a push to curb the flow of jobs overseas.

In a meeting at the White House Tuesday with auto industry executives, Mr. Trump said he would streamline and shorten the process by which applicants win approval to do business in the U.S.

He said environmental regulations, in particular, have become unnecessarily burdensome.

“We’re going to make the process much more simple for the oil companies and everybody else that wants to do business in the United States,” Mr. Trump said at the start of a meeting with executives from General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV. Den Rest des Beitrags lesen »

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The ‘fourth industrial revolution’ will cause income inequality. Tech can also solve it

Posted by hkarner - 23. Januar 2017

Date: 23-01-2017
Source: The Wall Street Journal
Subject: Technology vs. the Middle Class

Nadella CCMicrosoft CEO Satya Nadella discussed tech innovation at Davos last week.

There is a reason we live in a golden age of dystopian science fiction: Increasingly, it feels like it is coming true. From “The Hunger Games” to “Elysium,” stories depict a world in which the trend of growing wealth and income inequality continues to its logical conclusion.

This narrative seems inevitable because it has occurred throughout history. The Luddites who attacked the automated looms that displaced them aren’t so different from the millions of truck drivers who could be displaced by self-driving vehicles.

What we’re going through now is called the fourth industrial revolution, marked by rapid innovation in automation, artificial intelligence, biotechnology, nanotechnology and other areas.

Last week, it was the talk of Davos, where Microsoft Chief Executive Satya Nadella worried it could lead to social unrest or excessive regulation. “If we don’t get it right we are going to have a vicious cycle,” Mr. Nadella said at a panel on AI. Den Rest des Beitrags lesen »

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Boosted by Trump, Europe’s Antiestablishment Unites

Posted by hkarner - 23. Januar 2017

Date: 22-01-2017
Source: The Wall Street Journal

Alternative for Germany leader Frauke Petry, French National Front leader Marine Le Pen, Italian Matteo Salvini of the Northern League, Netherlands‘ Party for Freedom leader Geert Wilders, Harald Vilimsky of Austria’s Freedom Party and Marcus Pretzell, ENF group member of the European Parliament, pose on stage in Koblenz, Germany, on Saturday.

KOBLENZ, Germany—Europe’s leading anti-immigrant and antiestablishment politicians rallied in the Rhineland on Saturday to launch an election year they hope will topple the European Union, displaying a new level of ambition and organization and casting U.S. President Donald Trump as their inspiration.

It was the first time that Marine Le Pen, the French nationalist leader vying for the presidency, campaigned alongside Frauke Petry, the most prominent of Germany’s anti-immigrant politicians. Leaders from Austria, the Netherlands and Italy joined them in ridiculing German Chancellor Angela Merkel and congratulating Mr. Trump—echoing or even directly quoting from his inaugural address.

“My friends, this year will be the year of the people—the year in which the voice of the people is finally heard,” said Geert Wilders, who is seeking to become the prime minister of the Netherlands in March elections, despite having been found guilty by a Dutch court in December of inciting discrimination. Den Rest des Beitrags lesen »

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Technology Will Help—And Hurt—Bank Results, Studies Say

Posted by hkarner - 20. Januar 2017

Date: 19-01-2017
Source: The Wall Street Journal

Fees, consumer banking and lending could drop by more than 10% in the U.S. by 2020, but new tech is also a way to avoid future profit collapses

One new study argues that up to $45 billion of bank profits could be wiped out by 2020 thanks to encroaching automation.

Some banks may be turning big profits this quarter. But they will have to spend a lot of money in a gamble to stay profitable as technology encroaches, according to new set of studies.

McKinsey & Co., in a report this week, argues that up to $45 billion of bank profits could be wiped out by 2020 thanks to encroaching automation, ranging from electronic trading to mobile banking. Den Rest des Beitrags lesen »

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