American Economy News & Updates

[RabzonKhan]

The US economy is growing at its fastest pace since 1984

By Charles Riley, CNN Business
April 6, 2021


(CNN Business) President Joe Biden's $1.9 trillion stimulus package will boost the US economy and drive faster global growth this year, the International Monetary Fund said Tuesday, though it warned that many countries continue to suffer from the pandemic and are at risk of being left behind.

The US economy will surpass its pre-pandemic size as growth reaches 6.4% this year, the IMF said, up 1.3 percentage points from the group's forecast in January. The rebound will help the global economy expand 6% in 2021, an upgrade of 0.5 percentage points from the IMF's previous outlook. The estimates are broadly in line with Wall Street's expectations.

"At $1.9 trillion, the Biden administration's new fiscal package is expected to deliver a strong boost to growth in the United States in 2021 and provide sizable positive spillovers to trading partners," the IMF said in a report. Other governments and central banks around the world have also pumped trillions into the global economy.

The IMF said the "unprecedented policy response" to the pandemic means the "recession is likely to leave smaller scars than the 2008 global financial crisis." The group estimates global output dropped 3.3% in 2020, while the US economy shrunk 3.5%.

There are already signs the US recovery is gaining speed. American employers added 916,000 jobs in March, the biggest gain since August. The US manufacturing sector is also roaring ahead, with the ISM Manufacturing Index recently posting its best reading since 1983.

The IMF expects that the coronavirus vaccine rollout and massive government stimulus will combine this year to produce the fastest annual growth rate in the United States since 1984 under President Ronald Reagan. But many other countries will have to wait until 2022 or 2023 to recover all the output lost during the pandemic. Global output growth will slow to 4.4% next year, according to the IMF.

"Multispeed recoveries are under way in all regions and across income groups, linked to stark differences in the pace of vaccine rollout, the extent of economic policy support, and structural factors such as reliance on tourism," said Gita Gopinath, director of research at the IMF. "The divergent recovery paths are likely to create significantly wider gaps in living standards between developing countries and others."

The upgraded US forecast means the world's biggest economy is on track to grow more quickly than many other developed nations this year. The IMF expects growth of 4.4% in the 19 countries that use the euro as Europe battles another wave of coronavirus that has forced Germany, France and Italy to tighten restrictions. Output is expected to expand 3.3% in Japan.

But some nations in Asia will still outpace the United States. The IMF expects China, which was the only major economy to avoid recession last year, to grow 8.4% in 2021 — much stronger than the country's official forecast of more than 6%. Output in India will expand 12.5% in the fiscal year to March 2022.
The IMF credited continued government stimulus and vaccine rollouts for stronger growth projections. It said that consumer prices could be volatile, but it does not expect high levels of inflation to take root because of weak wage growth and unemployment.

Still, the IMF cautioned that a "high degree of uncertainty surrounds" its projections, reflecting the wide range of potential coronavirus developments. "Greater progress with vaccinations can uplift the forecast, while new virus variants that evade vaccines can lead to a sharp downgrade," the group said in its report.
While advanced economies were hit harder than developing nations by fallout from the 2008 global financial crisis, the IMF expects the opposite to be true in the pandemic. The group also said that young people, women and lower-skilled workers have been more likely to lose their jobs due to coronavirus.
"Once the health crisis is over, policy efforts can focus more on building resilient, inclusive, and greener economies, both to bolster the recovery and to raise potential output," said Gopinath.

While stimulus has helped protect the economy and financial system, it has also encouraged investors to take excessive risks and driven up asset prices, the IMF warned in a separate report. If interest rates rise sharply in response to inflation, that could lead to tighter financing conditions.
The fallout would hit developing markets and poorer countries hardest.
"There is a risk that financial conditions in emerging market economies may tighten markedly, especially if policymakers in advanced economies take steps toward policy normalization," said the IMF.

 

[Yongpeng Sun-Tastaufen]

US economy is on fire. It's going to triple just this year alone.

 

[RabzonKhan]

Two Companies Will Reach $2 Trillion Next (Tesla Isn't One)

S&P 500 companies' race to a $2 trillion market value is about to get more exciting — and lots of money is being made on the way.

Analysts are already calling for two S&P 500 companies, technology giant Microsoft (MSFT) and consumer discretionary Amazon.com (AMZN), to be the next to reach a market value of $2 trillion or more, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.

The race to $2 trillion got all the more real Monday. Shares of Microsoft leapt nearly 3% t0 249.07 a share. That's a new all-time high for the stock, taking out the previous high of 246.10 and topping even its value at the height of the 2000s dot-com boom. It also lifts the company's value to $1.88 trillion.

Following a 12% rally this year, Microsoft is now the S&P 500's second-most valuable member. Next up? Two trillion.

S&P 500's Race To $2 Trillion

The fact two S&P 500 companies are sprinting to a $2 trillion valuation speaks volumes of how technology is driving the market again. And the stakes are huge as the market value of mega technology firms determines the composition of the world's most popular index: The S&P 500.

Apple (AAPL) reached the $2 trillion market value threshold first, less than a year ago, on Aug. 26, 2020, says S&P Global data. That means it took about two years for Apple to hit $2 trillion in market value after reaching a $1 trillion value on Aug. 3, 2018. It took Apple roughly 40 years to reach a trillion in market value.

And now it's Microsoft's turn. Analysts think shares of the company behind Microsoft 365 productivity software like Word, and cloud computing, will worth 275.97 in 12 months. If they're right, that implies a market value of $2.08 trillion in a year's time or less. It's also an implied gain of 10.8% from here.

It's not just wild speculation, either. Analysts think Microsoft will earn $7.37 a share in fiscal 2021 ended in June. That's nearly 28% higher than in the same period in 2020. Do you know what to look at before you buy Microsoft stock?

Amazon: Close On Microsoft's Heels To $2 Trillion

Hot on Microsoft's heels, though, on the way to $2 trillion is Amazon. It's only a matter of time for it, too, analysts say.

S&P 500 analysts are calling for Amazon stock to surge more than 25% in the next 12 months to 4,043.50 a share. It closed Monday up 2% to 3,226.73. If analysts are right, that would put Amazon's value at $2.04 trillion in less than a year.

And that would be a welcome change for Amazon investors. Shares have lagged so far this year, tumbling 1% even as the S&P 500 rose 8.6%. That's serious underperformance for a stock that's been a leader for so long. Even so, Amazon's stock is outperforming Apple's, which is still down more than 5% this year so far.

Analysts are still much more cautious on shares of electric-car maker Tesla (TSLA), despite strong shipment data. The stock, now trading at 691 a share, is expected to fall more than 10% until sinking to analysts' 12-month price target of 617.50. And at that price, Tesla would only be worth $592.7 billion. Tesla stock is down 2% this year so far.

In fact, Tesla is expected to only be the seventh most valuable in the S&P 500 in 12 months. Alphabet (GOOGL), Facebook (FB) and Berkshire Hathaway (BRKB) are all seen having higher market values than Tesla by then.

But the race to $2 trillion is likely to hold plenty of surprises.

S&P 500 On Race To $2 Trillion
Market valuation now, and based on analysts' 12-month price targets

Company	Symbol	Market Value Now ($ Trillions)	Analysts' Market Value Target ($ Trillions)	Stock YTD % Ch.	Sector	Composite Rating
Apple	(AAPL)	$2.1	$2.5	-5.1%	Information Technology	67
Microsoft	(MSFT)	$1.88	$2.1	12.0%	Information Technology	82
Amazon.com	(AMZN)	$1.62	$2.0	-0.9%	Consumer Discretionary	75
Alphabet	(GOOGL)	$1.5	$1.6	26.6%	Communication Services	96
Facebook	(FB)	$0.88	$0.96	13.1%	Communication Services	94
Berkshire Hathaway	(BRKA)	$0.61	$0.66	13.7%	Financials	57
Tesla	(TSLA)	$0.66	$0.59	-2.1%	Consumer Discretionary	94
Visa	(V)	$0.47	$0.52	0.1%	Information Technology	44
JPMorgan Chase	(JPM)	$0.47	$0.48	20.9%	Financials	79
Johnson & Johnson	(JNJ)	$0.43	$0.48	3.8%	Health Care	40

 

[RabzonKhan]

'Total nightmare.' Fast food struggles to hire as demand soars, U.S. economy roars

By Hilary Russ Reuters
20 hrs ago

NEW YORK — Taco Bell restaurants, struggling to hire enough workers to keep up with a surge in sales as the U.S. economy recovers, is pitching a huge April job fair to hire at least 5,000 employees in one day. And it’s adding benefits for some general managers to sweeten the pot.

Taco Bell, part of Yum Brands Inc., will hold spot interviews on April 21 in parking lots at nearly 2,000 Taco Bell locations, where some candidates won’t even have to leave their cars to apply. It has also added four weeks of annual vacation, eight weeks of paid maternity leave, and four weeks of new parent and guardian “baby bonding” time for general managers at company-owned locations.

Taco Bell has used such hiring events before, but never at so many locations at once. “It is no secret that the labor market is tight,” Kelly McCulloch, Taco Bell’s chief people officer, said in a statement.

“Total nightmare” is the way FAT Brands Inc. CEO Andy Wiederhorn describes the staffing situation for franchisees of his company’s restaurants, which include Johnny Rockets and Fatburger.

“The most recent stimulus check and unemployment benefits have been a catalyst for people to stay at home” instead of looking for work, he said.

U.S. job openings in the accommodation and food service industry increased by 104,000 to reach 761,000 on the last day of February from the prior month, according to federal data released last week.


Fast-food companies and some other restaurant chains did well through the coronavirus pandemic as their customers turned to drive-thru, carry-out and delivery. But they are seeing greater sales now that the weather is warmer, many limits on dining room capacities are lifted, and more people are eating out.

A measure of U.S. services industry activity surged to a record high on Monday amid robust growth in new orders, the latest indication of a roaring economy boosted by increased vaccinations.


Hiring cannot keep pace. The U.S. restaurant industry in March was still about 1.2 million employees short from the same month in 2020, according to U.S. Bureau of Labor Statistics data.

The gap is hardly limited to hospitality. High jobless rates have not translated into a flurry of applications for open positions in manufacturing, either.

The Labor Department said 916,000 jobs were created last month, the most since last August, including 53,000 manufacturing positions. That was the highest number of new factory jobs in six months.


Hawking cars or cocktails

One McDonald’s Corp. franchisee said sales have soared as consumers spend their stimulus checks. Yet some McDonald’s dining rooms may not reopen until the second half of 2021 because of labor shortages, the franchisee said.

McDonald’s franchisees are aiming to hire 5,000 employees just in the state of Ohio, according to local media reports in late March.
Restaurants are competing not just with each other for employees but with other industries, as some hospitality workers who were laid off found other kinds of work — construction or real estate, for instance — and are not coming back, FAT Brands’ Wiederhorn said.

“That waiter or waitress can sell a car just as well as they can sell a cocktail,” Wiederhorn said.
In Las Vegas, which has about 16 Johnny Rockets and Fatburger locations, employees are working double shifts. “It’s just hard, it gets old and tiring,” Wiederhorn said. “You can only do it for so long.”

 

[RabzonKhan]

JPMorgan pledges $2.5 trillion over the next decade toward climate change

APR 15 2021
Pippa Stevens


JPMorgan Chase said Thursday it will commit more than $2.5 trillion over the next decade toward long-term solutions that tackle climate action and contribute to sustainable development.

Within the initiative, $1 trillion is earmarked for green projects, including renewable energy and clean technologies that are focused on speeding the transition to a low-carbon economy.

The $2.5 trillion target, which begins this year and runs through the end of 2030, will also finance and facilitate transactions that support socioeconomic progress in developing countries, as well as economic inclusion in developed markets.

The latter effort will focus on small business financing, home lending and affordable housing, education and health care. Included within this category is the $30 billion JPMorgan committed last October to closing the racial wealth gap in the U.S.

“Climate change and inequality are two of the critical issues of our time, and these new efforts will help create sustainable economic development that leads to a greener planet and critical investments in underserved communities,” CEO Jamie Dimon said.


“Business, government and policy leaders must work together to support long-term solutions that advance economic inclusion, bolster sustainable development and further the transition to a low-carbon economy. We are committed to doing our part,” he said.

Thursday’s announcement comes after JPMorgan said last fall it will establish emission targets for its financing portfolio. The firm said targets would be set on a sector-by-sector basis, and will first focus on the oil and gas, electric power, and automotive manufacturing sectors.

The targets, which the firm said it would begin setting in 2021, will be within the parameters outlined by the 2015 Paris Agreement.

Dimon also addressed the enormous opportunity created by the energy transition in his 2020 annual letter to shareholders.

“There’s huge opportunity in sustainable and low-carbon technologies and businesses,” he said.

“While many of these technologies and companies are mature, many more are just getting started—and more will need to be created in the coming decades. In addition, all companies will need capital and advice to help them innovate, evolve and become more efficient while staying competitive in a changing world,” Dimon said in the letter. Read more

 

[RabzonKhan]

Wisk Aero and Blade Urban Air Mobility partner to bring electric air taxi services to the skies
May 5, 2021

Image Credits: Wisk Aero


Once the design, manufacturing and certification of electric aircraft is complete, urban air mobility companies face a cascade of logistical issues, including building an app that can connect customers to rides and finding dedicated take-off and landing areas.

A new partnership between autonomous air taxi developer Wisk Aero and air mobility ride platform Blade Urban Air Mobility aims to provide a solution.

Under the terms of the agreement, Wisk will own and operate up to 30 aircraft on Blade’s network of dedicated air terminals along short-distance routes. Wisk will be compensated based on flight time, along anticipated minimum flight-hour guarantees, the companies said in a news release Wednesday.

It’s a smart move for both companies. Blade does not own aircraft itself, but instead brokers private air travel service through a digital platform. However, the craft they offer are conventional rotorcraft, such as helicopters and seaplanes. The partnership will help “accelerate Blade’s transition from conventional rotorcraft to safe, quiet, emission-free Electric Vertical Aircraft,” Rob Wiesenthal, CEO of Blade, said in a statement.

Wisk, born out of a joint venture between Kitty Hawk and Boeing, will be able to benefit from Blade’s experience as an air mobility service provider. Once Wisk achieves certification from the U.S. Federal Aviation Administration, it will be able to immediately ramp up via Blade’s network.

The companies say they are committed to an “open-network” approach to Urban Air Mobility, with Wisk providing aircraft to multiple customer platforms and likewise Blade using many different electric aircraft developers for its ride services. Not all electric vertical take-off and landing companies will likely take the partnership route. Joby Aviation CEO JoeBen Bevirt has stated publicly that the company intends to be vertically integrated between its vehicle development and air taxi operations.

Blade is one of a suite of air mobility companies, including Joby, that have announced its intention to go public via a merger with a special purpose acquisition company. In December 2020 Blade said it would merge with SPAC Experience Investment Corp. at a valuation of $825 million. The deal includes $400 million in gross proceeds and $125 million in private investment in public equity (PIPE).

 

[RabzonKhan]

Meet The 37-Year-Old CEO Who Turned Vimeo Into A Billion-Dollar Company | Forbes

Vimeo was always YouTube's weird, flailing, artsy cousin — until a thirty-something CEO stepped in and figured out how to make it a cash cow. CEO Anjali Sud has transformed the near-forgotten Vimeo into a $6 billion blockbuster business that lets both mom-and-pop shops and giant corporations shoot, edit and post millions of videos across the internet’s most influential sites.

Seven years ago, Vimeo had Hollywood dreams. The internet video outfit—owned by Barry Diller’s IAC—had found a niche hosting flicks for artsy filmmakers who didn’t want their works to be tossed into YouTube’s unruly, ad-driven stew. But it was a tiny, money-losing business with annual revenue under $40 million. Vimeo was pinning its hopes on the booming streaming business, betting it could leverage its relationship with creatives to build a subscription service to rival Netflix, Amazon Prime and HBO.

It hired studio execs from Paramount and Hulu and signed distribution deals with Lionsgate, CBS Interactive and Spike Lee for content to stock the new service. But Anjali Sud, then Vimeo’s 31-year-old director of marketing, had a hunch the company’s future was not in Hollywood hits but Silicon Valley plumbing. Her plan: shift its focus from entertainment to entrepreneurs. “Vimeo had long been a software company for filmmakers, but the market was too small,” says Sud, now 37. “There was another, much bigger market—businesses. What Squarespace and GoDaddy did for websites, we could do with video.” Sud was soon transforming Vimeo from a dusty web relic into the showstopper of IAC’s tech portfolio.

A one-stop shop to shoot, edit, store and distribute video, Vimeo posted sales of $84 million during the fourth quarter of 2020, a 54% jump from the same period the previous year. Last quarter, net subscribers increased by 300,000, to a total of 1.5 million—a gain of nearly 25%. Annual revenue is on track to top $300 million. IAC shut down the streaming division in 2017 and made Sud the CEO. Vimeo should be another star spin-off. In the current frothy cloud software market, Bank of America predicts Vimeo (which IAC tried to unload to Kodak for around $10 million more than a decade ago) could hit a valuation of $10 billion—about 50% of IAC’s current market cap.

Read the full profile on Forbes: https://www.forbes.com/sites/stevenbe...

 

[RabzonKhan]

The Dow Jones Industrial Average Turned 125 Today. It’s Not Time to Retire It Just Yet.

By Jacob Sonenshine May 26, 2021

The Dow Jones Industrial Average is celebrating its125th birthday Wednesday. The index hasn’t been the best performer in recent years, but it’s not time to relegate it to the dustbin of history, as some have argued.

Yes, recent performance hasn’t been all that good. The Dow has underperformed the S&P 500 in recent years, with the blue-chip benchmark 10.7% annual return over the past decade lagging behind the S&P 500’s 12.1%, according to FactSet data. That isn’t a surprise, as growth stocks, which have a much larger representation on the S&P 500, have taken center stage, with the emergence of companies like Apple (AAPL), Facebook (FB), and Alphabet (GOOGL), and the Dow contains few of those.

Longer term, however, its returns aren’t so bad. Details on how the Dow has done since its founding are sketchy. Since its inception, the index has returned 5.5% annually, according to Barron’s data, but that doesn’t include dividends because the data isn’t available that far back. Since 1989, the Dow has returned 11.6% annualized including reinvested dividends, to the S&P 500’s 11.1%.

The way the Dow is constructed has also been a problem. Its share-price—not market-capitalization—weighted. Share price weighting means the stocks with a higher share price get bigger positions and, therefore, have an outsize impact on the index’s movements. These days, market-cap is the most typical weighting, and companies with large market capitalizations have more influence on the S&P 500’s movements. Apple and Microsoft (MSFT), for example, are worth $2.1 trillion and $1.9 trillion, respectively, but they have a limited impact on the Dow’s movements. Their share prices are both below $300, whereas UnitedHealth Group (UNH), with a $390 billion market cap, has the heaviest weighting on the Dow with an above $400 share price.

This distorts the way the index behaves. If the most economically sensitive stocks are largely the best performers on a given day and United Health shares pop for a business-specific reason, the Dow’s movement will over-reflect the health giant’s movement, a dynamic that makes equity managers hesitant to trust the Dow’s movement. “I personally probably wouldn’t use the Dow because it’s price-weighted and that’s perhaps why managers move away from it,” said Ian Gendler, executive director at Value Line.

But the Dow is arguably still a good proxy for value stocks. The majority of its 30 components are in the value camp and valuations of the constituents point to as much; the average earnings multiple on expected 2021 earnings per share estimates for the SPDR Dow Jones Industrial Average ETF Trust (DIA) is about 20 times, below the S&P 500’s just over 21 times. Usually, value stocks trade at discounts to growth and other stocks. Plus, the Dow’s performance looks a lot like value performance. Both the benchmark and the Vanguard S&P 500 Value ETF (VOOV) have outperformed growth names this year. The Dow and the value fund are up 12% and 17% year-to-date, respectively, both outpacing the 8% gain on the Vanguard S&P 500 Growth ETF (VOOG). “The Dow is still very relevant,” Gendler said.

Remember that the next time you hear someone say it doesn’t matter anymore.

 

[RabzonKhan]

US economy poised to grow at fastest pace since 1984, OECD says

OECD lifts US economic growth outlook on increased vaccinations, government stimulus

The U.S. economy is on track to grow at the fastest pace in nearly four decades this year thanks to unprecedented levels of government stimulus and increased vaccination rates, the Organization of Economic Cooperation and Development said Monday.

The Paris-based organization forecast that U.S. gross domestic product – the broadest measure of goods and services produced by a nation – would grow 6.9% in 2021, the biggest increase since 1984. By comparison, GDP contracted at a 3.5% annualized rate in 2020, when the economy came to a near standstill to slow the spread of COVID-19, which has infected more than 33 million Americans and killed over 594,000.

The new projections mark a more optimistic outlook from earlier this year: In March, the OECD predicted the U.S. would grow by 6.5%, an increase from its December forecast of 3.5%.

That uptick represents the faster-than-expected distribution of the vaccine – at least 50% of the population has received one dose so far – and the $1.9 trillion relief plan passed by Democrats in March. That measure, known as the American Rescue Plan, sent a $1,400 stimulus check to most adults, expanded unemployment benefits by $300 a week and allocated $350 billion to state and local governments.

"Substantial additional fiscal stimulus and a rapid vaccination campaign have given a boost to the economic recovery," the OECD said in the report.

The group, which represents 38 countries, also predicted the global economy would grow 5.8% in 2021. But it warned the recovery would be uneven; in many OECD nations, living standards are expected to remain well below pre-crisis levels, even by the end of 2022.

"It is very disturbing that not enough vaccines are reaching emerging and low-income economies," Laurence Boone, chief OECD economist, said in a statement. "This is exposing these economies to a fundamental threat because they have less policy capacity to support activity than advanced economies."

The possibility of a renewed coronavirus threat could result in increases in "acute poverty" and the possibility of "sovereign funding issues," Boone said, if financial markets become concerned.

"More broadly, as long as the vast majority of the global population is not vaccinated, all of us remain vulnerable to the emergence of new variants," he wrote. "Confidence could be seriously eroded by further lockdowns, and a stop-and-go of economic activities."

 

[RabzonKhan]

Toyota North America executive on the company's new electric vehicle game plan

 

[RabzonKhan]

United Airlines will buy 15 ultrafast airplanes from start-up Boom Supersonic
JUN 3 2021
Phil LeBeau

United Airlines is planning to turn the friendly skies into the ultrafast skies with the addition of supersonic jets.

The carrier announced Thursday it’s buying 15 planes from Boom Supersonic with the option to purchase 35 more at some point.

Boom’s first commercial supersonic jet, the Overture, has not been built or certified yet. It is targeting the start of passenger service in 2029 with a plane that could fly at Mach 1.7 and cut some flight times in half. That means a flight from New York to London that typically lasts seven hours would only take 3½ hours.

“Boom’s vision for the future of commercial aviation, combined with the industry’s most robust network in the world, will give business and leisure travelers access to a stellar flight experience,” United CEO Scott Kirby said in a release announcing the deal.

While the terms of the sale were not disclosed, the companies believe the deal will generate immediate benefits.

Since it was founded in 2014, Denver-based Boom Supersonic has raised $270 million in capital and has grown to 150 employees. For founder and CEO Blake Scholl, landing a firm order with a legacy airline validates his vision of bringing back supersonic flights.

The supersonic Concorde flew commercial flights from 1976 until October 2003.

“The world’s first purchase agreement for net-zero carbon supersonic aircraft marks a significant step toward our mission to create a more accessible world,” Scholl said in a statement.

For United, ordering Boom supersonic jets fits with the strategy Kirby has outlined since becoming CEO a year ago.

Kirby is aggressively trying to develop opportunities for the airline. Earlier this year, United took a stake in eVTOL start-up Archer Aviation while partnering with Mesa Airlines to order 200 electric aircrafts being designed to fly short distances. That came after United announced a multimillion dollar investment in a carbon capture start-up and committed to be carbon-neutral by 2050.

Part of what made buying supersonic jets appealing to United is Boom’s plan to power the planes with engines that will run on sustainable aviation fuel.

Still, it remains to be seen whether Boom’s plan to bring back supersonic commercial airplanes will get off the ground.

The company plans to make its first flight later this year with a demonstrator jet called the XB-1. If it goes as planned, Boom will begin production of the Overture in 2023 and conduct its first flight in 2026. The ultimate hurdle will be winning certification by regulators, including the Federal Aviation Administration.

When that happens, United expects to target long-haul international flights between key large cities around the world, like San Francisco to Tokyo and New York to Paris.

United vice president of corporate development Mike Leskinen said the Overture could dramatically alter some of the airline’s busiest international routes. “If we can cut the time to fly from the East Coast of the U.S. to certain cities in Europe and do it with lower emissions, we think that’s very attractive,” he said.

 

[RabzonKhan]

Powell: Dollar is the world's reserve currency, nothing else is close

Federal Reserve Chairman Jerome Powell takes questions from the U.S. House of Representatives Select Subcommittee on the Coronavirus Crisis regarding the capital gains tax and the U.S. dollar.

 

[RabzonKhan]

130 nations agree to support U.S. proposal for global minimum tax on corporations

Christina Wilkie JUL 1 2021

A group of 130 nations has agreed to a global minimum tax on corporations, Treasury Secretary Janet Yellen announced Thursday, part of a broader agreement to overhaul international tax rules.

Yellen did not announce the actual rate at which the GMT would be set, but the Biden administration has pushed for at least 15%.

The GMT would effectively end the practice of global corporations seeking out low-tax jurisdictions to move their headquarters.

U.S. Treasury Secretary Janet Yellen speaks during a news conference, after attending the G7 finance ministers meeting, at Winfield House in London, Britain June 5, 2021.
Justin Tallis | Reuters


WASHINGTON - Treasury Secretary Janet Yellen announced Thursday that a group of 130 nations has agreed to a global minimum tax on corporations, part of a broader agreement to overhaul international tax rules.

If widely enacted, the GMT would effectively end the practice of global corporations seeking out low-tax jurisdictions like Ireland and the British Virgin Islands to move their headquarters to, even though their customers, operations and executives are located elsewhere.

“For decades, the United States has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response. The result was a global race to the bottom: Who could lower their corporate rate further and faster? No nation has won this race,” said Yellen in a statement on the accord.

“Today’s agreement by 130 countries representing more than 90 percent of global GDP is a clear sign: the race to the bottom is one step closer to coming to an end,” Yellen said.

The deal also reportedly includes a framework to eliminate digital services taxes, which targeted the biggest American tech companies.

In their place, officials agreed to a new tax plan that would be linked to the places where multinationals are actually doing business, rather than where they are headquartered.

Much of the groundwork for adopting a GMT has already been laid by the Organization for Economic Cooperation and Development, which released a blueprint last fall outlining a two-pillar approach to international taxation.

The OECD Inclusive Framework on Base Erosion and Profit Shifting, known as BEPS, is the product of negotiations with 137 member countries and jurisdictions.

Yellen’s announcement did not include the actual rate at which the GMT would be set, but the Biden administration has pushed for at least 15%.

G-20 finance ministers and central bank governors are scheduled to meet in Venice, Italy, later this month, and the international tax plan is expected to be high on the agenda.

The GMT agreement represents a key part of what President Joe Biden has called “a foreign policy for the middle class.”

The strategy, devised in part by Biden’s national security adviser Jake Sullivan, emphasizes how foreign policy and domestic policy can be integrated into a new middle ground between the traditional conservative and liberal approaches to global affairs.

“Foreign policy for the middle class” aims to ensure that globalization, trade, human rights and military might are all harnessed for the benefit of working Americans, not solely for billionaires and multinational corporations, but not for abstract ideological reasons either.

 

[RabzonKhan]

How the U.S. became the world’s new bitcoin mining hub

JUL 17 2021
MacKenzie

Well before China decided to kick out all of its bitcoin miners, they were already leaving in droves, and new data from Cambridge University shows they were likely headed to the United States.

The U.S. has fast become the new darling of the bitcoin mining world. It is the second-biggest mining destination on the planet, accounting for nearly 17% of all the world’s bitcoin miners as of April 2021. That’s a 151% increase from September 2020.

“For the last 18 months, we’ve had a serious growth of mining infrastructure in the U.S.,” said Darin Feinstein, founder of Blockcap and Core Scientific. “We’ve noticed a massive uptick in mining operations looking to relocate to North America, mostly in the U.S.”

This dataset doesn’t include the mass mining exodus out of China, which led to half the world’s miners dropping offline, and experts tell CNBC that the U.S. share of the mining market is likely even bigger than the numbers indicate.

According to the newly-released Cambridge data, just before the Chinese mining ban began, the country accounted for 46% of the world’s total hashrate, an industry term used to describe the collective computing power of the bitcoin network. That’s a sharp decline from 75.5% in September 2019, and the percentage is likely much lower given the exodus underway now.

“500,000 formerly Chinese miner rigs are looking for homes in the U.S,” said Marathon Digital’s Fred Thiel. “If they are deployed, it would mean North America would have closer to 40% of global hashrate by the end of 2022.”

The new mining mecca
America’s rising dominance is a simple case of luck meeting preparation. The U.S. has quietly been building up its hosting capacity for years.

Before bitcoin miners actually started coming to America, companies across the country made a gamble that eventually, if adequate infrastructure were in place, they would set up shop in the U.S.
That gamble appears to be paying off.

When bitcoin crashed in late 2017 and the wider market entered a multi-year crypto winter, there wasn’t much demand for big bitcoin farms. U.S. mining operators saw their opening and jumped at the chance to deploy cheap money to build up the mining ecosystem in the States.

“The large, publicly traded miners were able to raise capital to go make big purchases,” said Mike Colyer, CEO of digital currency company Foundry, which helped bring over $300 million of mining equipment into North America.

Companies like North American crypto mining operator Core Scientific kept building out hosting space all through the crypto winter, so that they had the capacity to plug in new gear, according to Colyer.

“A majority of the new equipment manufactured from May 2020 through December 2020 was shipped to the U.S. and Canada,” he said.

Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced miners, points out that maturing capital markets and financial instruments around the mining industry also played a big role in the industry’s quick ascent in the U.S. Brammer says that many of these American operators were able to start rapidly expanding once they secured financing by leveraging a multi-year track record of profitability and existing capital as collateral.
Covid also played a role.

Though the global pandemic shut down large swaths of the economy, the ensuing stimulus payments that proved a boon for U.S. mining companies.
“All the money printing during the pandemic meant that more capital needed to be deployed,” explained bitcoin mining engineer Brandon Arvanaghi.
“People were looking for places to park their cash. The appetite for large-scale investments had never been bigger. A lot of that likely found its way into bitcoin mining operations in places outside of China,” continued Arvanaghi.

Making it in America
The seeds of the U.S. migration started back in early 2020, according to Colyer. Prior to Beijing’s sudden crackdown, China’s mining dominance had already begun to slip.

Part of the appeal is that the U.S. ticks a lot of the boxes for these migrant miners.

“If you’re looking to relocate hundreds of millions of dollars of miners out of China, you want to make sure you have geographic, political, and jurisdictional stability. You also want to make sure there are private property right protections for the assets that you are relocating,” said Feinstein.

It also helps that the U.S. is also home to some of the cheapest sources of energy on the planet, many of which tend to be renewable. Because miners at scale compete in a low-margin industry, where their only variable cost is typically energy, they are incentivized to migrate to the world’s cheapest sources of power.

Thiel expects most new miners relocating to North America to be powered by renewables, or gas that is offset by renewable energy credits.

While Castle Island Ventures founding partner, Nic Carter, points out that U.S. mining isn’t wholly renewable, he does say that miners here are much better about selecting renewables and buying offsets.

“The migration is definitely a net positive overall,” he said. “Hashrate moving to the U.S., Canada, and Russia will mean much lower carbon intensity.”

 

[RabzonKhan]

U.S. Boasts 38% of the World’s Population of Centi-Millionaires​

By Fang Block
Jan. 25, 2023

The world’s centi-millionaire population—those with at least US$100 million in investable assets—more than doubled over the last two decades to reach 25,490 in 2022, the latest data show.

The U.S. claimed the largest number of centi-millionaires, accounting for 38% of the world’s total, or 9,730 individuals, according to a report released Wednesday from Henley & Partners, a London-based investment migration consultancy, in collaboration with New World Wealth, a global wealth intelligence firm based in South Africa

China and India, the two biggest emerging economies, ranked second and third with 2,021 and 1,132 centi-millionaires, respectively.

Most emerging markets have relatively large numbers of centi-millionaires but few billionaires. For example, Kenya has no billionaires, but 14 centi-millionaires, according to Henley & Partners.

At the metro level, New York had the most centi-millionaires with 737, followed by the San Francisco Bay Area with 623, and London with 406, according to Henley & Partners.

The top 10 holiday destinations for centi-millionaires included: The Hamptons, N.Y.; the Rocky Mountains, especially Aspen and Vail, Colo., and Jackson Hole, Wyo.; Florida, especially Palm Beach and Miami Beach; the Algarve of Portugal, especially the Golden Triangle; the French Riviera; Lake Como of Italy; Ski towns in Switzerland; the Italian Riviera; African wildlife safaris, especially in Botswana, Kenya, South Africa, Tanzania, and Uganda; and Tuscany, Italy.

Golf, art collecting, and cycling and mountain biking ranked the top three pursuits of the world’s centi-millionaires, according to the report.

However, classic car collecting, which ranked seventh, is on the rise. Globally, classic car prices have risen 84% over the past decade (2012 to 2022) in the U.S.-dollar terms, according to New World Wealth’s indices.

The most popular classic car models at auctions include the Ferrari 250 GTO from the 1960s, the McLaren F1 from the 1990s, and the Aston Martin DB4 GT from the 1950s, according to the report.