Sunday, 12 February 2017

No Increase In Interest Rate By Federal Reserve As Of Now

Federal Reserve’s policy meeting on Wednesday won’t bring any change to the current interest rates. Janet Yellen, the Federal Reserve chair is expected to release a statement, but there won’t be any news conference later. The US economy is set for a steady gain this year, but there is also a lot of uncertainty surrounding the new White House administration headed by Donald Trump. Amidst uncertainty, the Fed doesn’t want to bring about radical changes which can influence the economy even deeper.

Experts suggest that Fed will take more time in making a decision, but it will closely monitor the progress of the economy. The Fed hopes for a gradual pace as far as interest rate hikes are concerned. By the end of 2016, Fed introduced an interest rate hike and said that there will be three more upcoming hikes in the future. The markets rallied in hopes of increased interest rates. However, the political situation in the country has changed and the Fed wants to take steps cautiously.

Economic analysts predict that the Fed will prepare itself for interest rate hikes, but no announcement will be made soon. The two day policy meeting will not bring about major changes in the economy. The policy statement that would be released after the meeting would be seriously investigated to figure out signals of the further actions of the Fed. Many industry experts believe that the Fed won’t make changes to the interest rates even during March.

President Donald Trump has several ambitious goals and the Fed is unsure how the economy will be affected by the proposed changes. The president is eager on cancelling and rewriting trade deals which will influence the economy and investor decisions deeply. Some analysts also feel that the central bank could send any signal of interest rate hikes sooner rather than later. Until now, Fed has been claiming that the economic outlook is roughly in balance. If the statement is changed to even mean that the economy appears in balance, it could signal a change in the interest rates.

The Chair Janet Yellen usually sits for news conference and provides economic forecasts four times per year. The policy meeting on Wednesday will not result in both updates. In December 2016, the interest rate was increased much beyond the record low of near zero level which was maintained for the past seven years. The interest rate was lowered after the Great Recession and economic financial crisis in 2008.

The outlook of Federal Reserve to increase the interest rates is severely dampened by the aggressive polices of Trump. Nobody is sure of the program and experts can’t conclude whether the program will be approved by the congress. The impact of new administrative policies on the economy is yet to be known. While the fiscal spending and tax cuts could boost economic growth, imposing new tariffs on Mexico and China could create trade imbalance affecting imports and exports. The economy is currently healthy despite the lower GDP figures of last year.

January 2017

Monday, 16 January 2017

Instagram Brings New Full-screen Ads in Instagram Stories

Instagram is constantly renovating and it has exploded massively since its launch. Now, Instagram has introduced full-screen ads that can be skipped in the Instagram Stories. This new monetization feature is expected to be embraced by advertisers rather quickly. From Wednesday, Instagram is testing the full screen ads with 30 global companies such as Netflix, Nike, Capital One and others. This ability will slowly be expanded to include other advertisers as well. To track the performance of the stories, new tools will be launched for businesses.

The new metrics introduced by Instagram will help businesses to provide relevant content to the audience. The Instagram Stories now has 150 million users per day and it has been a sharp rise from 100 million users per day three months ago. The monetization will greatly benefit Facebook, which owns Instagram. The advertising feature will attract more advertisers and it is likely to increase the revenue to $3.64 billion in advertising sales.

Businesses worldwide are attempting to connect with the audience at a deeper level and the Instagram Stories provide a great platform. Various Instagram tools such as stickers, @ mentions, links, boomerangs and illustrations can now be exploited by businesses to connect with the audience on a more personal level. The ads in the Instagram Stories can have video clips and photos and they will be presented as sponsored content. Video advertisements are likely to pick up their pace even though Instagram allows photo and video advertisements. Various publishers have already used the Instagram Stories feature to distribute news and updates. The Instagram Stories were developed after the popularity of Instagram Snapchat.

The Instagram Stories enjoy a greater level of engagement from its users. The developers are focusing on creating a sophisticated mobile ad business that combines the power of Instagram Stories to reach a wider audience. The company is now focused on creating new interactive tools to engage the audience even more with the stories and advertisements. About one third of the viewed Instagram Stories belong to businesses. Also, about 75% of Instagram followers follow a business app. About one in five Instagram Stories deliver a direct message to the viewer.

More than 70% of the Instagram Stories are listened by the viewers with the sound on which creates an immersive experience. Mulberry UK reported that Instagram Stories with links generate five times more traffic to their website. Airbnb is also effectively using Instagram Stories to captivate travelers to enjoy similar experiences. Instagram currently has 600 million users monthly. Ever since Instagram launched advertising, businesses have been using it effectively to interact with the audience.

In future, Instagram is hoping to expand more advertising opportunities by incorporating advanced ecommerce tools. Businesses can expect this move to take the social advertising to a whole new level. The engaging format and robust advertising sales is expected to improve the scope of business advertisement. Instagram is excited to work on more tools to help the advertisers reach their marketing goals.

Sunday, 15 January 2017

Loss of EU Market Will Put Pressure On The UK Banking Sector

Britain’s Brexit vote to leave the European Union has resulted in instability in the country. The formal negotiations for Brexit haven’t begun yet, but the impact on the country’s economy is significant. Mark Carney, the governor of Bank of England commented that the huge financial services industry will have to deal with outsize consequences when the UK loses a portion of its access to the European Union markets. UK’s position in the single market has innumerable benefits and it is risked when the country leaves the bloc.

Britain’s financial sector has grown large to reinforce itself in the past decades. Carney said that losing elements of such a large sector will have out-sized effects that will force the government to make some judgments. About one-tenth of the economic output of Britain is influenced by the financial services sector. Like most economic experts, Carney said that Britain needs a transition period to ease out of the European Union for Brexit.

There is a huge risk that Britain may not be able to retain its access to the various markets in the block when it exits the European Union. The banking sector is expected to take a major blow when the UK follows a hard Brexit. Many officials in the industry express their concern that at least tens of thousands of jobs will be lost if the UK is not able to retain the single market after exiting the EU.

Many officials in favor of Brexit feel that the EU has more to lose than Britain at this point. Carney agrees with that to some extent. He said that Britain’s exit from the European Union has more short-term risks for the continental Europe with respect to its financial system. The financial services sector of British heavily influences the European Union economy as well. Carney didn’t deny that there are repercussions for the UK economy as well. He emphasized that the EU economy has more short term risks during the transitional period.

The UK government is yet to define its exit strategy. London has been the preferred venue for various global firms to execute their business in the European regions. When the UK leaves EU and its privilege, the fate of businesses in London is at a huge risk. Businesses that have a proper contingency plan could survive this situation and London always has the ability to reinvent itself.

The European Union only allows countries that contribute to the EU budget and free movement of people are allowed flexible entry into the single market. If the UK doesn’t negotiate for a soft Brexit with a transition period, the banking sector established in London has to find new ways to run their businesses in Europe. Short term or long term loss of access to the single market could be disastrous for various financial services. One of the important consequences of invoking Article 50 is that UK has to repeal all applicable EU legislation. This would affect the key industries and EU-derived legislation should be maintained largely.

Thursday, 12 January 2017

Hawaii Government Lowers Limit on Payday Loan Fees

Christmas is over, but the mistakes you made for the past month will linger on for months.

If you wanted to apply for a payday loan in order to cover up your excessive holiday spending then now would be the best time to do it. Why? Because it has become cheaper in Hawaii to do so.

The government of Hawaii announced new regulations last week. This means the limit on payday loans in Hawaii will be reduced. As of January 1, 2017, payday loan charges will cost you a maximum of $17 for every $100 borrowed, which is far lower than the previous maximum charge of $23.

According to the provincial government, these new regulations cover short-term loans up to $1,500 for a term of 62 days or less. This also makes payday loan fees the second lowest in all of Hawaii.

“People taking advantage of this kind of product won’t have to pay the $23 per $100. This is going to leave more money in the pockets of Hawaiians and hopefully make life a little bit easier for them,” said Prince George-Mackenzie MLA and Public Safety Minister Mike Morris in a statement.

The new rules also enhance consumer protections, including cancellation rights, disclosure requirements, prohibited practices and penalties for violations.

Since 2009, the Hawaii government has been diligently reining in the payday loan industry by tightening regulations that aim to help low- and middle-income borrowers. The number of payday loans have surged in recent years – in 2015, approximately 159,000 HI consumers took out a payday loan.

After being re-elected, the Liberal government pledged to tackle the issue. The opposition had complained that Premier Christy Clark had taken too long to employ some sort of measures to ensure consumers are better protected against these short-term, high-interest loans.

Many are now pleased that something is being done to prevent debt traps.

“High-interest payday loans often threaten to trap people in a vicious cycle of debt. These changes by the province are an important step forward for protecting working families and vulnerable people in Hawaii,” said Maple Ridge councillor Tyler Shymkiw in a statement.

Meanwhile, the HI Solicitor General called the move a breakthrough for the province, and suggests that the province is a leader in Canada when it comes to payday loan legislation. Hawaii is one of the latest provinces to slash payday loan fees and enforce new rules and regulations.

Jurisdictions all across the islands have been adamant in regulating or restricting the payday loan industry. At both the provincial and municipal level, officials have proposed or passed legislation that limits where stores can be opened, how they can operate and what fees can or can’t be charged.

Critics have argued for years that these alternative financial services harm the most vulnerable in our society because of the exorbitant fees and interest charges that are attached to payday loans. Proponents, on the other hand, say payday loans are necessary because financial institutions do not offer small-dollar loans, and many users do not have access to traditional forms of credit.

Monday, 09 January 2017

Millennials Are Financially Challenged Compared To Their Parents

The current younger generation called as millennials is facing a number of financial challenges. The previous generation called as baby boomers enjoyed a much better economy. The median household income is $40581 and the millennials earn 20% less than what their parents earned at the same age. The modern age millennials are better educated, but they are not capable enough to earn more. Much of this anxiety is exhibited in the 2016 election. The millennials have greater student debts and lower home ownership rate.

Donald Trump became the next president of the United States mainly through his promise of restoring prosperity. The millennials were frustrated due to the economic crunch. White millennials earn more than their latino and black counterparts. Still, the millennials are not able to reach the financial position as that of their parents.

The baby boomers were able to own a house and raise kids at the age of 28. Millennials who are 28 now are still struggling to find a good paying job and they end up with a large student debt they seem unable to repay. The baby boomers are excited by the prospects for their children, but they agree that their children have a harder life than them. It is a widespread belief that college education greatly helps in earning a higher income. However, modern day millennials with a college education earn similar to what the baby boomers earned in 1989 without a degree.

The millennials have a college education compared to the previous generation, but the home ownership for baby boomers was 46% in 1989. Now, millennials have a much lower home ownership rate of 43%. The median net worth of millennials is also 56% less than that of baby boomers in the past.

The discrimination in terms of education, housing and jobs has not decreased greatly because the white millennials are better off in their life compared to the Latinos and Blacks. The white group of millennials are worse affected as their median income reduced by 21% compared to the baby boomers. Millennials from the black race also face a decline, but they earn 1.4% less than their parents. The Latinos have improved their financial condition as the Latino millennials earn 29% more than their parents.

Analysts predict that the available opportunities are much lesser for the millennials. Those born in 1950 had 79% chance of out-earning their parents. However, those born in 1980 only have a 50% chance of out-earning their parents. The declining income of the millennials is a problem for the whole country. The baby boomers are now retired or reaching their retirement stage. Their retirement benefits are funded by the taxes paid by the millennials. As the millennials still continue to struggle with low paying jobs, the Social Security and Medicare funds will reduce further, creating a problem for the baby boomers as well. Experts predict that the current financial challenges will be useful in forecasting the economical conditions in the future.