The European Markets are in the Favor of the Federal Bank

The Federal Bank of the United States has increased their interest rate to 0.25 percent on the 16th of December and the European markets have given it a green flag.

How does it affect the common man as well as the industrialists?

Now that the interest rates have been increased by the Federal Bank it is definitely going to bear a number of consequences. The quarter point increase will definitely affect the common people who have mortgages to pay, or some of loan to repay. However, people will also benefit from it on the flip side. Savers and investors will definitely benefit from the rising yields and deposit rates. Plus, industries and companies will have faced higher refinancing cost which is inevitable with the increase in the interest rates. While one may look at it as a very small percentage, by looking at the bigger picture people will realize that things are a lot more different when it comes to the repaying of loans to the bank. This will eventually lead to extra expenses disrupting the budget of most families.


Has the economy improved?

According to a number of renowned economists, it is quite a good move in the positive direction which shows that the economy is improving because of which people will be able to pay extra interest. Others however are of the opinion that it would put more burden and pressure on the common man, because the interest rate increment does not mean that every individual’s pay has increased as well.

Many believe that this will help in the improvement of the labor market and this decision is consciously well timed because the inflation will move back to approximately 2 per cent by the medium term.

How does it affect the world?

It is quite obvious that whatever happens in the U.S.A market affects the rest of the world. While the European market is in favor of this decision, the Asian market has mixed opinions about the same. The next move of Fed will be scrutinized next because it will have a number of implications on the world market. Many economies think this decision will negatively impact the world economy because there will be equal number of winners and losers in this case scenario so the advantage of such a risk will not pay off.

More on the U.S.A economy

Needless to say that the U.S.A economy happens to be one of the strongest in the world and the decision taken by their banks definitely affects the rest of the world. U.S.A devices a number of ways to make lives of its citizen much better just like The New Pension Plans which have been discussed right here.

US Brink of Lifting its Oil Export Ban

What will be the implications?

40 years ago the U.S.A put a ban on the export of oil, because the country itself had a dearth of crude oil and therefore could not suffice it’s needed if they were to export it. But the scenario has changed a lot; the country might just be on the verge of lifting that ban, because it has excess crude oil, which they can export to other countries. This change has definitely helped President Obama attain enough credibility for allowing the United States of America to have surplus oil. This way the country is in an advantageous position and the export of oil will give a further boost to the economy. It also sheds light on the effective policy of the U.S.A which has successfully led the country to have more than enough oil within a span of 40 years.

The bill is yet to be passed

Though it is quite early to say that the U.S.A will most definitely lift the ban, because the motion is yet to become official, the democrats and republicans will meet in the parliament to pass the bill and only then will it be decided, that whether the ban is going to be lifted or not.


How does it affect the common people?

Production and exploration of oil were at a halt, after the 60 per cent reduction in oil prices. Such companies were saddled with huge amounts of debt and were facing bankruptcy, but such a change will be welcome by them. This way the companies will be able to export oil and will be in an advantageous position. Such a change will help them fight back with the financial deficit going around their company and they will breathe a sigh of relief.

The opinions of the gurus

Most economists are of the opinion that exporting is not the answer. With the price of petrol being the lowest in 7 years, such a method might not materialize as expected and things might not work out for those involved in the oil trade. It is to be understood that even if the oil is exported, people across the globe will expect it to be at a lower price, since everyone is aware of the slump in oil prices. In such a case scenario the cost of exporting along with the profit shares will make the prices of petrol higher which will totally defeat the purpose. Read more about How the Dollar has Improved and has Begun to Dominate right here.

The political opinion

The opinion of a number of democrats is a number of oil refining jobs will be at a huge risk if the ban is lifted. Plus, increased drilling to match the export demands will lead to environmental damages. Lifting the ban will help a number of Oil Companies in the U.S.A to compete in the world market which was something unknown to them. It will be interesting to see whether the lifting of the ban will help the U.S.A economy or not. However, it is time that the United States lifts the ban and checks the different possibilities when it comes to exporting crude oil.

Know about US Banking Sector

The US banking is one of the biggest and the oldest businesses in America. Though none of us can think about a day without banks, we know little about banks.

If you take a look at the history of American business, you can see that banks are one of the oldest businesses in the country. The Bank of New York is a perfect example, as it was founded in 1784. In 2009, the Bank of New York celebrated its 225th anniversary. Without any doubt, US banking system are one of the largest, oldest and most significant industries. When it comes to most adult Americans, they depend on Banks for their day to day financial transactions and needs. Despite all these, banking system still looks mysterious to most of us. How do banks work? What role they play in our economy? Do banks create serious financial problems for the country as in the 2007 crisis? Well, let’s take a closer look at it below for better understanding of the banking sector in the US.

1Payment System

First and foremost, let’s examine the main functions of banks in the country. The very first function is to operate a payment system. As we all know, without the presence of an efficient payment system, a modern economy might collapse. As far as our payments are concerned, we largely rely on checks, credit cards and online banking. Speaking of the stock money in the country, it is in fact the bank money. The rest of the currency is nothing but notes and coins from Federal Reserve issued by the government. We all rely on the bank money as we can use it wherever we want and it is trusted by all. Banks are meant to keep the money until we need it. USA Continues to Face Troubles when it comes to the job market and you can read more about it here.

Financial Intermediation

This is the second key function of banks. What do you mean by financial intermediation? Well, here we are referring to investing or lending money. This money can be used for several purposes, including creating enterprises, businesses, governments and households. Here we are basically talking about the business side of the banks. When we take a look at the functioning of banks, we can see that most of them are profit seeking entities. Banks work like corporations in the share market. The Banks make profit by lending money to the needy for a higher interest rate. They will provide less interest for the money they are allowed to keep with them as deposits. This intermediation function of the banks is really important, even for the overall economy. This kind of drives the overall economy. This system helped create generations of entrepreneurs in America and we have to applaud the system for doing that. Basically, these entrepreneurs helped build American economy. This system also helps the ordinary business to survive. However, one cannot forget the fact that it is an inherently risky business. There can be several red flags. For example, what if the borrowers are unable to repay the loan with interest? This can lead to the collapse of the bank itself. So, in short, American banking system is highly relevant to the overall growth of the economy. At the same time, the economy might suffer in the fall of the banking system as both are interconnected. This makes it highly risky.

Comparing of Dollar and Euro

Both dollar and the euro are top currencies. The dollar continues to dominate while the Euro is going through some troubles at the moment.

Both dollar and the euro are two of the top currencies today. Not too many can challenge the dominancy of these two currencies. So, it would be interesting to do a comparative study of these two leading currencies. There are similarities and differences.

Euro’s Creation

As we all know, the Euro was created 11 years ago. Back then it was pitted against the dollar and many felt that the Euro could end the dominance of the dollar all over the world. But did that happen? Let’s examine. When we compare USA and Eurozone we can see that both have many similarities when it comes to population and economy. Moreover, similar institutions were governed by these two currencies. The dollar is being handled by the US Federal Reserve Bank (the Fed) and Euro by European Central Bank (ECB). Notably, both share federal structures. There is a central bank and then there are numerous regional and small banks under this. So, there are so many similarities to talk about here. As we stated before, the Dollar Continues to Dominate Even with the Entry of Yuan and you can learn more about that here.


Euro Financial Crisis

The euro is going through Euro Financial Crisis at the moment. So, Eurozone can learn a lot from the functioning of the U.S. dollar. Many European leaders have already commented on this. French President was the latest one to echo a similar sentiment recently. According to him, Eurozone might be in need of a unified fiscal policy. How did Americans manage to deal with the turbulence in the market over the decades? Well, in a closer inspection, you will understand uniform fiscal policies set by the federal government have helped the dollar to remain on top despite the crisis in the market.

Future of Euro

Yes, the future of the Euro is a hot topic among commentators. Well, according to them the US history could be a good indication for Euro as well. If we closely examine the path of a dollar, you will be able to trace the future of Euro as well, say experts. US government bought the debt of 13 states in 1970 to save a dollar. The EU has done the same as they have bought the bonds of member states. However, in 1840, the US government decided not to bailout 9 states that were on the brink of bankruptcy. The same can be applied in this scenario as well when the EU is dealing with a similar scenario at the moment with troubles member countries like Portugal, Ireland, Greece and Spain.

It’s Not an Equal Comparison

Yes, though we can draw comparisons between the histories of these two currencies, it would be foolish to blindly follow the path of the dollar. First and foremost, unlike 160 years ago, global markets are much more integrated today. Any decision that you take can have a ripple effect across the board. Whatever decision you take, you can expect a quick reaction from all quarters today. These days, a stupid comment from a politician can make markets volatile. The panic can quickly spread in scenarios like that. Moreover, the European banks have debts in many other countries. Therefore, euro can’t follow the path of the dollar in a blind manner. It will have to consider several things before it does something.

Know about Pension Plans in USA

Pension plans are very important for each one of us. It is really important to opt for an insured pension plan for your own safety.

Every country has its own retirement plans for its citizens. USA is no different. Who set up these plans? Well, it is up to the insurance companies, employers, government, trade unions and other institutions come up with the appropriate pension plans for the employees. Once you hit 40 or 50, you will have to seriously think about your retirement plans. When you plan ahead, you will be able to ensure that you have a secure future. To have a comfortable retirement, you will have to plan things in advance. Let’s take a look at the retirement planner of the Social Security Administration below to learn more about it.

Important Things

Everything comes under the current law. You can find detailed information on your social security retirement benefits. You will need calculators to find the retirement needs and you can find them alone. These calculators will also tell you more about the benefits attached to each retirement plan. You will also get enough guidance on when to act for getting the benefits you have been looking for. You will find plenty of important stuff on the official website itself. Most of us Don’t Know Much about Pension Plans or Anything Related to Finance – This is a Fact Confirmed by a Recent Study.


Pension Benefits

Let’s learn more about the pension benefits below. If you have selected the traditional pension plan, you will get the pension benefits irrespective of the fate of the company. You can be assured of this fact. PBGC is the agency that guarantees that you will get your pension benefits and it is a government agency. There can be many private banks into play. In case if you have gone to these private banks, this agency will make sure that you get your monthly pension in your account no matter what. This agency is set up to make sure that you walk away with a good deal in the bargain. It will also cover all the cash-balance plans. This agency will make sure that you don’t get a raw deal in the cash-balance plans as well. However, it is not going to cover the military pensions and the government pensions. If you are looking for detailed information then you can easily find this online.

Is Your Pension Insured?

Yes, it is really important to make sure that your pension is insured. How to ensure that? Well, for that, search PBGC’s list of multi-employer and single-employer plans. To learn more about this, you will have to find answers to the frequently asked questions on this topic. This will allow us to learn more about the working of guaranteed pensions.

How Guaranteed Pension Works?

Whatever plan you choose, as long as it is insured by PBGC, it will have enough money to pay all benefits. Whatever money you are owned will be paid by PBGC. However, the legal limits are applicable here. Even in the case of your employer refusing to pay the premiums, the insured plan will make sure that you will get your pension amount no matter what. When you have time you can check the frequently asked questions on this to learn more about it. There are so many benefits with an insured pension plan and you should always go for that.

GoPro’s Poor Performance Affects Ambarella Earnings

GoPro and Ambarella have close ties as the former depends on the later for a key chip for their camera. As a result, both continue to affect each other in their poor stock market performance.

Investors compare the performance of GoPro and Ambarella as these two companies are connected. Ambarella provides key chip for the action camera giant. So, if Ambarella stocks suffer, then we can expect a similar trend in the case of GoPro as well. On Friday, both faced a not so favorable scenario in the market.

As stated before, the performance of the stocks of these companies are is interdependent. We witnessed a disappointing sales scenario for GoPro as they faced a 5% fall. Ambarella followed suite with a 1.6 % fall, indicating the unavoidable connection.



Ambarella CEO had something to say about this new development. He talked about the company’s performance in the third quarter. He added that the company witnessed strong sales in the 3rd quarter. They saw exceptional results in new markets, IP security camera, dash camera market etc. Home monitoring camera and flying camera markets also helped the company to enjoy a good performance in the 3rd quarter. He also added that the 3rd quarter sales have surpassed their forecasts.

However, the company faced trouble with their wearable sports camera market. What went wrong there? High inventory levels are said to be the main problem in that market. But Ambarella has other things to look forward to including drones as they have been doing really well there.

Now coming to GoPro, things are little different. Ambarella’s sales figures have definitely impacted GoPro in many ways. An important holiday season has upon both these companies and the recent events added to the concerns of GoPro.

GoPro has witnessed a sharp fall in their stock this year as they witnessed close to 70% fall. If we are talking about the market capital, then we can say that the company has lost more than $5 billion.

So much so that the company witnessed the status of their performance going from “outperform” to “neutral”. Those who were responsible for giving the rating noted that the camera sales didn’t witness a pickup at all for the company in the 3rd quarter and they were going for a target of $18.

Despite times bring desperate measures and the company resorted to immediate price reduction to deal with the crisis. This is the second price cut so far as they had done the same in September as well. Back then they went for $100 reduction and this time also they have gone for similar reduction. We have Witnessed Huge Sales on Cyber Monday and Christmas sales are just around the corner.

What lies ahead for GoPro?

Well, the company is not going down if that’s what you want to know. The company still enjoys the same position. They are still a dominant player. It holds especially true in the case of markets that are fast growing. If we take the example of the US, we can see that the company dominates 94% of the market. As you know, US is a huge and important market that witnesses fast growth. If we take the case of US we can see that it grows at the rate of 40% at the moment per year. So, the company doesn’t have to worry too much. After all, we are talking about a $630 million market! Of course they continue to face struggles like this once in a while, but they continue to be a leading force in many fast growing markets and that should energize the company to do the right thing.

Strong Jobs Result in 2% Increase in Stocks

The US stock market has witnessed a 2% gain on Friday after the positive trend in the job market considering many job sectors performed well in November.

US stocks reported a 2% gain on Friday. Much of the credit goes to the central bank policy as they have been focusing on providing a divergent policy. As we know, the stronger job scenario has worked in the favor of a Fed hike in December. Moreover, Mario Draghi, the president of the ECB, took a mild stand in his speech.

Uncertainty is Here to Stay

He stressed that the recent developments have washed away lots of uncertainty. And it’s a big relief for the market. Back in September, the Fed refused to raise the rates. The uncertainty has become more than relevant at the moment, especially after December 16th. He added that we will get to witness lots of debates on this in the coming months. On the other hand, Dollar Continues to Dominate Irrespective of Yuan’s Entry in to the Special Club.

What happened on Friday has really invigorated the market beyond one’s imagination. The week came to an end on a positive note. With a 0.08% gain this week, S&P also witnessed the positivity. Something similar happened to Dow Jones Industrial average as well. They witnessed a 0.3% gain in this week.

We can see that the index has had a positive run this week. As far as most gains concerned, Goldman Sachs is a big player as they contributed heavily.

1As far as S&P is considered, they outdid their Sept 8 performance in this week. And that helped them to end it on a positive note.

As far the job trends are concerned, we are looking at a very positive trend which is going to continue like that for a while. Draghi’s take on the job market has energized many in the market.

As far as the initial reaction was concerned, many felt that more should have been done. It’s just that things cooled off the next day.

Unlimited quantitative easing was the offer of Mario Draghi. He said they have no plans to limit the tool deployment at all. As a result, USD Index saw a 1% gain in 98.5. Speaking of Euro, it maintained a $1.09 position.

Now let’s take a look at the US Stock exchange. The market closed sharply lower. Though Draghi’s offer, the market couldn’t meet the expectations. It fell short of the predicted growth stimulus. According to Draghi, we’ll get continued support from the ECB on the bond buying program. But that hasn’t brought considerable gains. There was a growing concern among investors that there would be hiking in rates from the Fed. This was expected since economy wasn’t particularly strong.

Six-Month Performance

Thursday losses didn’t last for long, as stocks managed to bounce back on Friday. The strong job market has clearly helped the stock market to open strongly. Which sector reported maximum gains as far as the job market was concerned? Without any doubt construction witnessed maximum job gains. Moreover, we are looking at a very positive trend on the hourly earnings as well. Notably, Crude oil has crossed the $40 level and it’s not a good sign at all. This should raise alarms.

US stock index witnessed a very positive outcome after 8.30 am. It has clearly helped the stock market with the news of job creation. Increase in wages was also reported. We saw more jobs being created in September and October.

Fed shouldn’t Think about a Hike Now

November has witnessed a good growth in job creation. This indicates that the Fed will increase the rates post Dec. 16. But is it a good idea?

November has brought cheer to everybody as we witnessed impressive growth in the jobs sector. What does that mean for Fed? Well, it has given them one more reason to increase the rates. However, is it a good idea yet? No, despite the growth in the job sector, we shouldn’t forget the fact that certain sections continue to remain weak. So Fed should sit on their plan to increase the rates. Are they going to do that? It’s highly unlikely. Nonetheless, let’s take a closer look at the facts below.

November Brings Cheer

Yes, as far as the job market is considered, November brought cheer. In the month of November, we witnessed 211,000 jobs. Did that affect the unemployment rate? No, the unemployment rate is still 5%. However, wage growth had a positive story to tell. We witnessed a 0.2% growth as expected. The revised figures of October jobs stand at 298,000.

As we all know, Fed is all set to increase the rates in December. Many strategists believe that Fed should wait for a little longer before they do that. When can we know more about the hike rate? Well, we will have to wait till Dec. 16 as they are meeting on the same day to discuss the same. They will be coming up with interest rate forecasts after this meeting. We’ll have a clear picture after December 16th.


Average Gain

What about the average gain in the past 12 months? Well, the average job gain in the past 12 months stands at 220,000. Fed has to go ahead and do what they are supposed to do and nobody can stop them from doing that. Of course the things are little different compared to the scenario back in September. The market is no longer shallow. And that is going to be a deciding factor.

What is Fed’s forecast for the Fed fund rate in 2016? Well, as of now it stands at 1.4%. The Fed still has to adopt a slow and steady approach. When it comes to most people, they expect a 3 in the 2016 Europe Continues to Face Financial Troubles while US improve the scenario in the job market and it’s a good indication for US economy.

Stock Market

What about the stock market? Well, the positive news from the job market has definitely energized the stock market as we witnessed a growth. Treasury yields also witnessed a positive trend. However, oil prices witnessed a sharp fall considering they didn’t change their pricing policy. This has had a temporary effect on the stock market. As a result, the dollar also faced a small fall. As for the Euro, it continued with the positive trend. Speaking of the late morning trades, one witnessed 1% growth in the stock market.

The general conception was that the Fed is going to hike the rates on Dec 16. So markets have been following a 75% pricing. It is interesting to note that Fed has no reason to not hike the rates. There is nothing that stands in the way of the Fed and they would be more than willing to increase the rates. However, Fed will most likely adopt a slow and steady approach considering the general market scenario.

Dollar Continues to Dominate

Recently International Monetary Fund invited China’s currency Yuan to join the elite club of currencies. But that hasn’t diminished the power of Dollar at all.

As we all know, Dollar has been dominating the markets for a very long time. In many ways, it wasn’t great news for many markets out there, but nobody could do anything about it. But the world is changing and so are market scenarios. The IMF recently invited Yuan to join the club of elite currencies considering the growing power of Yuan in the world market. But did that diminish the power enjoyed by Dollar? No, that’s not the case at all. Let’s take a look below.

End of Unhealthy Dominance of US Dollar

Ever since Chinese Yuan welcomed this recognition from IMF, Chinese market witnessed a surge of investment flow. This can be far reaching consequences in the global financial system. This can affect several economies, both in good ways and bad ways.

One should mention the fact that we have just witnessed the end of unhealthy dominance of the US dollar. US dollar has been a big failure in the world economy in controlling the dramatic changes in the world economy. This is an indication of West losing control of global markets. West used to rule global markets and they were successful in controlling the economic rulebook for several decades. Though that doesn’t mean that US dollar is going to face a big crisis, we can see that we are looking at far reaching consequences.


Part of a Special Club

Before Yuan’s entry, there were only 4 currencies in the basket of the IMF with “Special Drawing Rights (SDR)”. Those 4 currencies are the US dollar, the Euro, Japanese Yen and Sterling. So, Yuan is the 5th currency in this special and celebrated club.

What does this gesture from IMF mean? It simply means that the Yuan will be freely usable. But there are other challenges before Yuan. China is known for its tight capital controls. Moreover, the recent crash in Shanghai stock market indicates the vulnerabilities they have to address. In general, Chinese Economy is Facing Few Issues and You can Read More about it Here. So, can we call this as a political move by the IMF? Yes, it is indeed a political move. It was meant to invite China into the global governance space.

Where does China Go from Here?

There are several notable things in this development. First and foremost, China was the first developing country to be included in this group. What does this mean for the global power balance? Well, it clearly indicates a shift and we are about to witness a huge shift.

We can see that US couldn’t do anything to stop China’s victory march to the top of the table. In fact, US ended up inviting China into the mix. That clearly says that China is a big player in the global market and nobody can do anything about it.

However, China will have to aim for a reform drive if they are seeking an active role in the global finance sector. China is fighting its own internal battles as of now as they have to deal with the vested interests within the Communist Party. They are planning to implement free-market policies despite resistance from certain quarters in the Communist Party. So, China is going through several problems despite the latest movement by the IMF. So, US dollar is here to continue its dominance for now.

Cyber Monday Sales Witness Huge Jump in US

This year, Cyber Monday has turned out to be extra profitable for retailers in US as we’ve witnessed a huge jump. This also led to website outages.

Cyber Monday sales have witnessed a huge jump this year. As a result, so many websites crashed during the peak hours. This is definitely a positive sign for the market. Latest reports suggest that this year we have recorded a 14% growth. This is in fact a record. As far as many websites crashing, only the small ones faced this problem. The big websites were well prepared in advance to deal with the rush. High customer traffic was seen across all the websites this year compared to last year. This indicates that consumers have been in a good mood this year as far making a purchase is concerned.

Much Awaited Shopping Season

It is one of the biggest festive seasons in US as we are in celebratory mood starting from Thanksgiving Thursday to Cyber Monday for 5 days. It’s also one of the biggest shopping seasons in US. As a result, many websites faced trouble during this 5 day period. Online payment giant PayPal Inc. also reported trouble during this period. Several department store chains like Wal-Mart Stores, Neiman Marcus, Victoria Secret etc. reported troubles with the traffic on their websites.

Usually Cyber Monday is the busiest day for online shopping every year. Reports suggest that there is a 14% increase in sales this year compared to the previous year. From midnight to 10 am ET, we have witnessed sales worth $490, says Adobe Digital Index. Subsidiary of Adobe, the Adobe Digital Index provides media solutions and digital marketing for merchants. In recent news, we have learned that Global Factories have been Struggling Despite Incentives. But none of these things seem to have affected the shopping season.


Record Sales – $3bn

Adobe has collected extensive data of all online transactions. According to them, they had data on most of the online transactions. They covered the 100 top US retailers. According to them, sales have witnessed a huge jump this year and we are heading to a $3 billion mark by the end of the day. If that happens then it’s going to be a record. What did we learn from this data? It indicates that more and more people are spending their money online for shopping. It indicates that more people trust online transactions. Going with this trend, we are going to witness even bigger jump in coming years.

Fierce Competition

When it comes to the big online retailers like Target, Wal-Mart and Best Buy, they have been competing with each other and the giant To deal with the competition, they offered best online deals for the festive season. Usually they reserve such deals for Cyber Monday, but this time they made these deals live much in advance. In fact, these attractive deals were in place several weeks in advance.

As a result, the sales on Thanksgiving and Black Friday reported a hit. Many websites reported a dip in traffic on these two days.

When it comes to the 5-day shopping festival, Cyber Monday is highly hyped. Social buzz is extremely high for Cyber Monday every year and this year wasn’t different. We have witnessed that Cyber Monday has more buzz than Black Friday. But what went wrong is that many customers had to deal with highest out of stock rates as a result.

According to the data released by Adobe, 15 out of 100 products experienced out-of-stock message on Monday morning. This is 2.5 times more the normal rates.