Black Friday
By Alex Rosh
This past weekend many of us took time off from our busy school lives to enjoy the holiday. For some the weekend was characterized by extended family, too much turkey and just the right amount of football. For others, the holiday of importance was Black Friday. Year after year, Thanksgiving evening leads directly into a free-for-all shopping frenzy. Customers wait at the front of stores well before the doors open, and when given the opportunity, stampede into the shops, at great risk to their physical wellbeing all in the name of great deals on quality merchandise.
Considering the ordeal that Black Friday shoppers are willing to put themselves through, it is certainly interesting to note that few of them truly invest time into research before their great shopping adventures. If they had, they would perhaps be surprised to learn that the deals that they were about to chase are generally not worth the effort.
According to J.D. Levite, an employee of the popular website The Wirecutter, which rates products, only approximately 0.6 percent of Black Friday deals can be categorized as “good” deals” (NYT). This analysis is based both on the product’s quality and price relative to the rest of the year. This sort of information is now more accessible than ever with price tracking services such as Camel Camel Camel, which allows users to track prices of products of interest on Amazon. Tracking prices on such services reveals that most products have some sort of predictable price cycle. The lowest points of these cycles seldom coincide with black Friday.
If the deals on Black Friday are not all that great then what is the reason behind the hype? According to a customer psychologist Kate Nightingale, the shopping frenzy speaks to a natural human instinct of competition (BBC). She suggests that the sales capitalize on a limited supply of popular items. Consumers who have been slow to grab their desired targets in the past are willing to push even harder to ensure that they achieve their goals this year. Nightingale equates the sales-free-for-all to an eBay auction where bidders tend to pay more then if a price was set. With the competition factor mixed into the shopping experience, shoppers are willing to pay for their desired item even when the sale does not turn out to be all they had hoped for.
This past weekend many of us took time off from our busy school lives to enjoy the holiday. For some the weekend was characterized by extended family, too much turkey and just the right amount of football. For others, the holiday of importance was Black Friday. Year after year, Thanksgiving evening leads directly into a free-for-all shopping frenzy. Customers wait at the front of stores well before the doors open, and when given the opportunity, stampede into the shops, at great risk to their physical wellbeing all in the name of great deals on quality merchandise.
Considering the ordeal that Black Friday shoppers are willing to put themselves through, it is certainly interesting to note that few of them truly invest time into research before their great shopping adventures. If they had, they would perhaps be surprised to learn that the deals that they were about to chase are generally not worth the effort.
According to J.D. Levite, an employee of the popular website The Wirecutter, which rates products, only approximately 0.6 percent of Black Friday deals can be categorized as “good” deals” (NYT). This analysis is based both on the product’s quality and price relative to the rest of the year. This sort of information is now more accessible than ever with price tracking services such as Camel Camel Camel, which allows users to track prices of products of interest on Amazon. Tracking prices on such services reveals that most products have some sort of predictable price cycle. The lowest points of these cycles seldom coincide with black Friday.
If the deals on Black Friday are not all that great then what is the reason behind the hype? According to a customer psychologist Kate Nightingale, the shopping frenzy speaks to a natural human instinct of competition (BBC). She suggests that the sales capitalize on a limited supply of popular items. Consumers who have been slow to grab their desired targets in the past are willing to push even harder to ensure that they achieve their goals this year. Nightingale equates the sales-free-for-all to an eBay auction where bidders tend to pay more then if a price was set. With the competition factor mixed into the shopping experience, shoppers are willing to pay for their desired item even when the sale does not turn out to be all they had hoped for.
On Interest Rates
By Annemarcelle Ngabirano
On Nov. 4, Janet Yellen, the chairwoman of the Federal Bank, gave some signals that an increase in interest rates could come in December in her testimony before Congress. “At this point, I see the U.S. economy as performing well” and that “December would be a live possibility”, said Ms. Yellen.
Since December of 2008, the Fed has kept its benchmark interest rate at a range between zero and twenty-five percent. The move was announced during the Great Recession when in the same month of December, the government announced the United States economy shrank by 533,000 jobs in the previous month of November. It was the largest one-month loss since 1974; later revised to an even greater loss of 765,000 jobs.
Expected action will take place on Dec. 16th when the Federal Open Market Committee, the policy-making group within the Fed that sets the target interest rate, concludes its two-day meeting. Ms. Yellen is scheduled to hold a news conference following the meeting that afternoon where an announcement will be made.
An unexpectedly strong October jobs report, released in early November, has given investors a strong signal that the economy is healthy, warranting a hike in interest rates in December. The economy stands at “full employment”, or at an unemployment rate of 5 percent which is considered by many economists as the lowest rate of unemployment disregarding frictional and structural unemployment.
Signs of global economic instability such as the slowing Chinese economy, the slumping price of oil, and the downturns in the global stock markets gave many second thought to the decision if it will in fact be the best time for the Federal Bank to raise rates. The growth in job rates has reassured many with worries generated by the turmoil in the global economy.
Ms. Yellen delivered a message to the optimist as well. In her testimony to Congress a few weeks earlier, the chairwoman spoke with caution, “no decision has been made.”
On Nov. 4, Janet Yellen, the chairwoman of the Federal Bank, gave some signals that an increase in interest rates could come in December in her testimony before Congress. “At this point, I see the U.S. economy as performing well” and that “December would be a live possibility”, said Ms. Yellen.
Since December of 2008, the Fed has kept its benchmark interest rate at a range between zero and twenty-five percent. The move was announced during the Great Recession when in the same month of December, the government announced the United States economy shrank by 533,000 jobs in the previous month of November. It was the largest one-month loss since 1974; later revised to an even greater loss of 765,000 jobs.
Expected action will take place on Dec. 16th when the Federal Open Market Committee, the policy-making group within the Fed that sets the target interest rate, concludes its two-day meeting. Ms. Yellen is scheduled to hold a news conference following the meeting that afternoon where an announcement will be made.
An unexpectedly strong October jobs report, released in early November, has given investors a strong signal that the economy is healthy, warranting a hike in interest rates in December. The economy stands at “full employment”, or at an unemployment rate of 5 percent which is considered by many economists as the lowest rate of unemployment disregarding frictional and structural unemployment.
Signs of global economic instability such as the slowing Chinese economy, the slumping price of oil, and the downturns in the global stock markets gave many second thought to the decision if it will in fact be the best time for the Federal Bank to raise rates. The growth in job rates has reassured many with worries generated by the turmoil in the global economy.
Ms. Yellen delivered a message to the optimist as well. In her testimony to Congress a few weeks earlier, the chairwoman spoke with caution, “no decision has been made.”
A Chain of Freedom
By Ishmael Asante
In the era of technological innovation, it is difficult to have not heard of Bitcoin. Although popular publications such as the WSJ, The Economist, and Reuters have covered the topic, Bitcoin is very difficult to understand – especially its relation to the “blockchain.” I hope to dispel some of the myths of the crypto-currency and the reasons high-profile journalists, political leaders, and executives are considering this technology to innovate the future.
Bitcoin is a digital currency that is generated by solving complex encryption techniques associated with the verifying of transactions. It was created by a person under the alias of “Satoshi Nakamoto,” who constructed a code to generate a currency that was free of bureaucracy, controlled by people, and had a public history. In a way, Bitcoin is not the revolutionary technology; it is simply the financial incentive of it. The revolutionary technology is actually the blockchain as it furthers the agenda of the internet, which is to be liberating for people. The blockchain is a public database containing the entire transaction history of a particular product in use, thus making that product into a digital currency. Although it seem like a chicken-and-egg scenario, it is easiest to understand the blockchain within the concepts of trading the Bitcoin in which it creates.
Think of the blockchain as a book. When a new page is filled with transactions of Bitcoin, for example, a “block” is made. Coders will verify the transactions, called mining, and add the page to the entire book, or the “blockchain.” The blockchain will cross-check the coders work with the coding language it was founded on, almost like spell-checking, to see if the transactions were verified correctly. If so, then the page is accepted and the coders are actually compensated by equally splitting 25 Bitcoins. Bitcoin has taken a market of its own exactly as Nakamoto had dreamed. One Bitcoin is currently priced at $322.24, and is easy to liquidate into actual dollars once transactions are made, verified, and updated to the chain.
Having explained the Bitcoin-blockchain relation in generic terms (I encourage you to look deeper into the topic to gain a better understanding of its complexity to see how near impossible it is to hack), we can have a better sense of how it can be used by emerging and developed markets.
Emerging Markets: Nakamoto designed the program so if many coders pool together their software, a new block can have its transactions verified in 10 minutes. Transactions are free since the software itself generates the currency for the miners who did the work. This means the creation of same-day transaction settlements and the elimination of commission fees, as banks confirm credit and cash transactions. The result is increased speed and purchasing power of capital so emerging markets can develop faster and more transparently. In current use, The Government of Honduras has partnered with Texas-based blockchain company Factom Inc. to implement an automated land registry blockchain to combat fraudulent land title ownership and rid the real estate industry of bureaucracy.
Developed Markets: China’s slowdowns in demand of raw materials and their regulations on capital have hurt producers who are seeking to increase their global revenue. As a result, it is no coincidence that Europe looks to quantitative easing to stimulate growth in the weakened economy and Euro, while also categorizing Bitcoin as an official currency instead of commodity for tax purposes in October 2015. That is, as the currency becomes more regulated by governments it stabilizes more in value, and could become a legitimate alternative as geographical currencies like the Euro fluctuate. In addition, Santander InnoVentures commented that the blockchain could save banks 20 billion dollars by 2022 in infrastructural cost if firms continue to adapt the technology.
As revolutionary as the Bitcoin-blockchain technology can be, the simple fact that many people do not understand the software makes its use for some unsafe. We understand that to protect our tangible assets, we can put them in a real-life bank account or hide them in a safe. With Bitcoin or whatever product is used to represent the crypto-currency, if we do not know the secure “bank account” or “safe” equivalent while trading on the platform, we can expose ourselves to robbery and the liquidation of our accounts before we can make a secure transaction.
Additionally, as miners verify blocks and receive non-taxable revenue via Bitcoin, governments could potentially crack down on the creators of the coin. Also, since miners can horde coins and saturate the market whenever they wish, we see in the Bitcoin-USD chart that the currency is too volatile to be an alternative to major reserve currencies. Although, as institutions like Santander and the Honduras Government continually support the blockchain technology, we may solve the problems of security and ultimately have Nakamoto’s dream of a financial sector as liberating as the internet.
Article Sources
Economist: The Trust Machine - How the Technology behind Bitcoin Could Change the World
Reuters: The EU clamps Down on Bitcoin, Anonymous Payments
Satoshi Nakamoto “Bitcoin: A Peer-to-Peer Electronic Cash System”
WSJ: Why Blockchains Could Transform How the Economy Works, EU Rules Bitcoin Is a Currency, Not a Commodity—Virtually
In the era of technological innovation, it is difficult to have not heard of Bitcoin. Although popular publications such as the WSJ, The Economist, and Reuters have covered the topic, Bitcoin is very difficult to understand – especially its relation to the “blockchain.” I hope to dispel some of the myths of the crypto-currency and the reasons high-profile journalists, political leaders, and executives are considering this technology to innovate the future.
Bitcoin is a digital currency that is generated by solving complex encryption techniques associated with the verifying of transactions. It was created by a person under the alias of “Satoshi Nakamoto,” who constructed a code to generate a currency that was free of bureaucracy, controlled by people, and had a public history. In a way, Bitcoin is not the revolutionary technology; it is simply the financial incentive of it. The revolutionary technology is actually the blockchain as it furthers the agenda of the internet, which is to be liberating for people. The blockchain is a public database containing the entire transaction history of a particular product in use, thus making that product into a digital currency. Although it seem like a chicken-and-egg scenario, it is easiest to understand the blockchain within the concepts of trading the Bitcoin in which it creates.
Think of the blockchain as a book. When a new page is filled with transactions of Bitcoin, for example, a “block” is made. Coders will verify the transactions, called mining, and add the page to the entire book, or the “blockchain.” The blockchain will cross-check the coders work with the coding language it was founded on, almost like spell-checking, to see if the transactions were verified correctly. If so, then the page is accepted and the coders are actually compensated by equally splitting 25 Bitcoins. Bitcoin has taken a market of its own exactly as Nakamoto had dreamed. One Bitcoin is currently priced at $322.24, and is easy to liquidate into actual dollars once transactions are made, verified, and updated to the chain.
Having explained the Bitcoin-blockchain relation in generic terms (I encourage you to look deeper into the topic to gain a better understanding of its complexity to see how near impossible it is to hack), we can have a better sense of how it can be used by emerging and developed markets.
Emerging Markets: Nakamoto designed the program so if many coders pool together their software, a new block can have its transactions verified in 10 minutes. Transactions are free since the software itself generates the currency for the miners who did the work. This means the creation of same-day transaction settlements and the elimination of commission fees, as banks confirm credit and cash transactions. The result is increased speed and purchasing power of capital so emerging markets can develop faster and more transparently. In current use, The Government of Honduras has partnered with Texas-based blockchain company Factom Inc. to implement an automated land registry blockchain to combat fraudulent land title ownership and rid the real estate industry of bureaucracy.
Developed Markets: China’s slowdowns in demand of raw materials and their regulations on capital have hurt producers who are seeking to increase their global revenue. As a result, it is no coincidence that Europe looks to quantitative easing to stimulate growth in the weakened economy and Euro, while also categorizing Bitcoin as an official currency instead of commodity for tax purposes in October 2015. That is, as the currency becomes more regulated by governments it stabilizes more in value, and could become a legitimate alternative as geographical currencies like the Euro fluctuate. In addition, Santander InnoVentures commented that the blockchain could save banks 20 billion dollars by 2022 in infrastructural cost if firms continue to adapt the technology.
As revolutionary as the Bitcoin-blockchain technology can be, the simple fact that many people do not understand the software makes its use for some unsafe. We understand that to protect our tangible assets, we can put them in a real-life bank account or hide them in a safe. With Bitcoin or whatever product is used to represent the crypto-currency, if we do not know the secure “bank account” or “safe” equivalent while trading on the platform, we can expose ourselves to robbery and the liquidation of our accounts before we can make a secure transaction.
Additionally, as miners verify blocks and receive non-taxable revenue via Bitcoin, governments could potentially crack down on the creators of the coin. Also, since miners can horde coins and saturate the market whenever they wish, we see in the Bitcoin-USD chart that the currency is too volatile to be an alternative to major reserve currencies. Although, as institutions like Santander and the Honduras Government continually support the blockchain technology, we may solve the problems of security and ultimately have Nakamoto’s dream of a financial sector as liberating as the internet.
Article Sources
Economist: The Trust Machine - How the Technology behind Bitcoin Could Change the World
Reuters: The EU clamps Down on Bitcoin, Anonymous Payments
Satoshi Nakamoto “Bitcoin: A Peer-to-Peer Electronic Cash System”
WSJ: Why Blockchains Could Transform How the Economy Works, EU Rules Bitcoin Is a Currency, Not a Commodity—Virtually
The Globalization of Chinese A-shares
By Sujia (Mike) Zhao
In May, FTSE Russell announced the start of its transition to include China A-shares in its widely followed global benchmarks, with the launch of the new FTSE China A Inclusion Indexes. The initial weight of A-shares was 5% with the potential of up to 32% when more international investors come in. At the end of October, Vanguard announced that its Emerging Markets Stock Index Fund would start to track the FTSE Emerging Markets All Cap China A Inclusion Index and increase the investment flood into A-shares.
What’s more, the increasing investment inflow is not the only pattern of the Chinese A-share’s globalization. On November 2, MSCI began to add overseas-listed Chinese shares to its emerging market indexes this month. Thus, Alibaba (BABA) is estimated to become the sixth largest-weighted share in MSCI China Index and 1.6 billion dollars would flow into the company. This movement would eventually lead to mainland-listed stocks to find their way into global equity portfolios. Specifically, the inclusion of ADR stocks will give foreign investors greater exposure to the growth of Chinese consumption-sector companies. In the mean time, they could adjust their portfolios to avoid the intervention of A-shares from Chinese government with passive investment.
To some degree, FTSE and MSCI’s movement of including A-Shares in their ETFs has conflicting interest. On one hand, foreign investors could enjoy the convenience of indirect investment in Chinese mainland stocks, with a better portfolio structure of ADR stocks like BABA, BIDU and JMEI. On the other hand, the inclusion of A-shares will increase the volatility of certain emerging market and Asian indexes and give asset managers more complex asset allocation decisions.
This year, with lower-than-expected GDP growth and weak manufacturing data, China has been questioned repeatedly about their economic situation and stock valuation. Under this circumstance, A-shares need to gain more liquidity and get rid of 'national control'. For China, the globalization of A-shares is a strong incentive and aims to attract more funding inflow. Nevertheless, when we consider the larger issue about whether or not RMB can be included into the SDR basket, we know China still has a long way to go.
In May, FTSE Russell announced the start of its transition to include China A-shares in its widely followed global benchmarks, with the launch of the new FTSE China A Inclusion Indexes. The initial weight of A-shares was 5% with the potential of up to 32% when more international investors come in. At the end of October, Vanguard announced that its Emerging Markets Stock Index Fund would start to track the FTSE Emerging Markets All Cap China A Inclusion Index and increase the investment flood into A-shares.
What’s more, the increasing investment inflow is not the only pattern of the Chinese A-share’s globalization. On November 2, MSCI began to add overseas-listed Chinese shares to its emerging market indexes this month. Thus, Alibaba (BABA) is estimated to become the sixth largest-weighted share in MSCI China Index and 1.6 billion dollars would flow into the company. This movement would eventually lead to mainland-listed stocks to find their way into global equity portfolios. Specifically, the inclusion of ADR stocks will give foreign investors greater exposure to the growth of Chinese consumption-sector companies. In the mean time, they could adjust their portfolios to avoid the intervention of A-shares from Chinese government with passive investment.
To some degree, FTSE and MSCI’s movement of including A-Shares in their ETFs has conflicting interest. On one hand, foreign investors could enjoy the convenience of indirect investment in Chinese mainland stocks, with a better portfolio structure of ADR stocks like BABA, BIDU and JMEI. On the other hand, the inclusion of A-shares will increase the volatility of certain emerging market and Asian indexes and give asset managers more complex asset allocation decisions.
This year, with lower-than-expected GDP growth and weak manufacturing data, China has been questioned repeatedly about their economic situation and stock valuation. Under this circumstance, A-shares need to gain more liquidity and get rid of 'national control'. For China, the globalization of A-shares is a strong incentive and aims to attract more funding inflow. Nevertheless, when we consider the larger issue about whether or not RMB can be included into the SDR basket, we know China still has a long way to go.
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