According to the International Energy Agency, spare oil production capacity will be stretched to the limit as a result of sanctions on Iran and other supply disruptions in places like Venezuela and Libya. David Sheppard reports at the FT: The Paris-based agency said that while there were signs stronger oil prices may start to weigh on demand growth, for the moment the key risk was supply capacity, with moves by producers to raise output cutting into the thin buffer of reserve production. “Rising production from Middle East Gulf countries and Russia, welcome though it is, comes at the … [Read more...]
WMT ♥ NY
After years of trying to place a store in New York City, Walmart has finally found a way. Rather than opening a super-center, Walmart is opening a fulfillment center for its online store, Jet.com. Walmart is racing to build up its online sales across its portfolio of internet properties, including Walmart.com, Jet.com, Bonobos, Moosejaw, Modcloth and others. Walmart sees Jet.com as a way to reach wealthier urban customers it doesn't currently serve with its stores. Sarah Nassauer reports on the strategy at The Wall Street Journal: Since Walmart purchased the Hoboken, N.J., startup and … [Read more...]
Price Controls: Bad Economics and Fuel for Instability
Basic economics dispels the idea that price controls are useful. Nevertheless governments (including America's) regularly try to control prices. Whether via direct price caps and floors, or quota systems, or through inflation or deflation of the money supply, government attempts to control prices are distortive to markets, and eventually lead to some kind of backlash. Sometimes the response is a black market, as is thriving in Venezuela today. Other times, hoarding takes place. Other times it's more violent. Sometimes, the hardest thing about price controls is removing them. People get used … [Read more...]
The S&P 500’s Balance Problem
Six stocks, four of which don’t pay a dividend, account for 99% of the YTD gain in the S&P 500. The top ten holdings in the S&P 500 account for 23% of the market capitalization of the index. Netflix, a company projected to burn $3 billion in cash this year and Amazon, a company that trades at 83X estimated earnings, have a market value that is almost as large as the entire S&P 500 Utilities and Telecom sectors. What’s more valuable to you, Prime delivery and bingeing Netflix, or electricity and phone service? The S&P 500 has become a top heavy index dominated by stocks … [Read more...]
Electric Vehicles(EV): Investing Billions!
At RealClearEnergy.com, Constance Douris, Vice President of the Lexington Institute, tells readers of the coming wave of investment in Electric Vechicles (EVs). Automakers are all in on EVs, and there is a wave of public money behind them. Douris writes (abridged): In coming years, automakers will unveil dozens of new electric vehicle (EV) models. Ford alone recently announced that it is investing $11 billion in EV development. A glance at automakers’ EV investments worldwide is revealing: $19 billion in the United States, $21 billion in China, and $52 billion in Germany. Clearly, these … [Read more...]
Here’s a Better Fix than Elizabeth Warren’s Buyback Ban
The heavy hand of government wants to regulate common stock repurchases. Sen. Elizabeth Warren is calling for an outright ban. Her colleague from New York wants to give the SEC the authority to reject buybacks that hurt workers. An additional ban or burdensome regulation on common stock buybacks is of course misguided. Almost as misguided as the 1993 limit on the deductibility of executive compensation that helped spawn the surge in common stock buybacks in the first place. The problem with buybacks is not that they deprive companies of capital as some in the political class contend. The … [Read more...]
RAGE Gauge July: America the Satisfied?
Over the last month, Americans’ perception of risk hasn’t changed much. One factor of their perceived risk is at a very low level though, their dissatisfaction with their country. For over a decade now Gallup’s poll of American dissatisfaction with the country has been 61% or higher. Not since August of 2005 have only 60% of Americans been dissatisfied. That changed with this month’s survey results. For the first time in 13 years, dissatisfaction dropped down to 60%. Satisfaction is also the highest it has been since 2005, at 38%. Not since September of 2005 have Americans been so … [Read more...]
High Demand Drives Job Surge in Shipping
Parcel delivery companies are hiring, and they are raising the wages they're offering to employees in order to compete for labor in what has turned into a shortage of skilled applicants. Jennifer Smith reports at The Wall Street Journal: Parcel-delivery firms and trucking fleets added a total of 6,660 jobs last month, while warehouse operators added 800 positions, according to preliminary figures the Labor Department released Friday. But the overall pace of logistics hiring slowed compared with May’s hiring spree, as low unemployment and increased competition for workers complicated efforts … [Read more...]
California: Driving Away Success
Despite the allure of Silicon Valley, Hollywood and it's natural beauty, California has succeeded in driving away a "small but statistically significant percentage of high-income residents after voters approved Proposition 30." If you don't remember, Prop 30 was a ballot measure Californians approved in 2012 raising taxes on high income earners. The measure turned what had been a net-in migration of high income earners to California into what is now a net-out migration. Kathleen Pender explains in The San Francisco Chronicle: For singles, Prop. 30 raised the rate by one percentage point on … [Read more...]
A Rust Belt Revival?
President Trump is focusing a massive effort on reviving America's Rust Belt. One measure of his success could be the demand for industrial property in the capital of the region, Chicago. TheRealDeal.com, a Chicago real estate news site, reports: The Chicago industrial market remained hot in the second quarter as asking rents hit a record high of $5.58 per square foot. Vacancy rates essentially remained even, inching up from 8 percent to 8.1 percent, despite the delivery of more than 2 million square feet of speculative space, according to Newmark Knight Frank’s second quarter … [Read more...]
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