U.S. Housing Prices Out of Touch with Reality

U.S. home resales have been unable to match expected projections in June as prices reach record highs, keeping first-time buyers hesitant on the peripheral. The record high housing prices are a result of a small property supply being pursued by a large customer demand, meaning that the value of each property increases as the supply dwindles.

The housing market has been facing a severe shortage of homes available for sale for about two years, all the while new individuals are entering the housing market searching for accommodation. As the labor market releases more jobs while builders simultaneously struggle to secure land, building materials, and skilled labor, the situation is set to worsen.

On one hand, the high demand for housing signifies a positive and encouraging economic health that enables laborers to have the means and intent for housing, but when it comes to the housing markets, buyers tend to be less enthusiastic. While this climate impacts current and future homeowners, those especially impacted are first-time buyers who are now in a difficult position when trying to find entry-level homes for sale.

The shortage of properties has led to customer bidding-wars, as the demand ensures real estate the ability and flexibility to ask a higher sales price on the basis that there are customers willing to pay more. This has quickly resulted in house price increases outpacing wage gains, making it but nigh impossible for lower salary wage earners to afford housing.

The National Association of Realtors has reported that existing home sales have dropped 1.8 percent to a seasonally adjusted annual rate of 5.52 million units last month. Economists including Svenja Gudell, chief economist at Zillow, predict that sales will fall a further 1.0 percent to a 5.58 million unit-rate, despite sales being up 0.7 percent from June 2016.

There were 1.96 million houses on the market last month, which was done 7.1 percent from a year ago, however, this is not the first dip in a trend. In fact, housing inventory has dropped for 25 months on a year-to-year basis. As the supply diminishes, prices rise, and considering the increasing demand for housing, the prices greatly rise. The median house price has increased 6.5 percent from a year ago to a record high of $263,800 in June, as part of the unbroken 64-month chain of year-on-year price increases.

Despite the constant price increase as well as the persistent housing shortage, the NAR believes that the price surge does not suggest another housing market bubble is building. This is based on the fact that the inflation-adjusted median price was below its peak in 2016.

Houses are typically staying on the market for 28 days last month, lower than the 34 days’ average that was present a year ago. Demand is being driven by a tight labor market, which currently holds a 4.4 percent unemployment rate that is boosting employment opportunities for young workers. But the tight labor market has not stimulated a faster wage growth, with an annual wage growth struggling to break above 2.5 percent, creating a distinct and increasing gap between the two.

First-time buyers are accounting for a smaller share of home sale transactions at 32 percent, which is well below the ideal 40 percent share that is needed for a robust and thriving housing market. This is not something that is simply corrected by reducing housing prices or increase wage growth but requires a combination on the two alongside other qualities including a maintained housing demand.

Property economists expect the housing demand to continue, which does encourage future sales growth. However, the issue is that expectation that the inventory shortage will improve this year, suggesting continued price increases. While it may not be solved this year, the sooner labor and effort is invested in building and providing new homes, the sooner the housing sales growth will adjust to better match the wage growth.

Euro Reaches Two-Year Dollar High

Last Friday the euro strengthened to a two-year high against the dollar, raising 1.8 percent over the week and has gained 11 percent year to date. The euro was valued at $1.1680 on Friday as the highest settlement since Jan. 15, 2105. This raise comes a day after European Central Bank president Mario Draghi to press down comments in late June.

During a news conference on Thursday Draghi said that the central bank would continue its $60 billion a month asset-buying program until December as planned. Draghi also reported that policy makers would the discuss quantitative-easing program this autumn. This flux in value occurred as a response to his statements, which come after the European Central Bank president’s comment that the central bank may scale back its accommodative policies despite projected increases in the European economy.

While the increase does have an impact on priorities, the European Central Bank retains its emphasis on its stubbornly low inflation concerns. Trader’s response to Draghi’s impact on the euro was one of almost indifference, because no matter what the president said the European Central Bank would gradually lessen those higher euro purchases later in 2018, resulting in an eventual wind down.

In order to clarify this attitude, Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, speculated that the increased euro value was more a representative of the dollar’s weaknesses as opposed to the euro’s strength. This circumstance arose due to the pressure the dollar faces around latest political headlines suggesting the continued intensity of the turmoil within the U.S. administration.

While the euro has increased, it is not as high as it used to be, being well below its long term average against the U.S. dollar of $1.21. This coupled with the fact that the euro is even further below its average in trade-weighted terms, the euro’s current strength does not warrant a large reaction from Draghi. Considering that the central bank is keen to taper its QE program, not only due to the reduced pool of assets for potential purchase, analysts suspect that it would take a further rise to $1.20 or more before the end of the year for the bank to abandon or significantly address its plans.

Returning to the relationship between the euro and the dollar, due to the focus of the dollar weakening being the cause for the euro’s strengthening, the key factor preventing a further euro rise will be a tighter U.S. policy. There are also expectations that the Federal Reserve will raise interest rates in December, and a further scale of four times in 2018 to compensate for the decreased dollar strength.

Looking at this from another angle, the ICE U.S. Dollar Index which compares the dollar against other currencies fell 0.5 percent to 93.85, its lowest level in more than a year, which is 8.2 percent lower than the start of the year. The British pound remained below the $1.30 level, but increasing slightly over the past week from $1.2973 to $1.2999.

Finally, the Canadian Dollar has also strengthened against the dollar as Canadian retail sales and inflation data came back stronger than anticipated. However, in the case of the Canadian dollar, its strength could face a threat in the housing market that would then bring it back down again.

While the euro is indeed strengthening, sentiment towards the euro has become very negative as of late, resulting in many clients attempting to short the euro/dollar relationship. This might result in a shift with the dollar becoming stronger in the future, as while better sentiments towards the Eurozone helps the euro, any uncertainty will be funneled back into the U.S. dollar and treasury bonds. As such, these relationships are always in flux, and therefore subject to change.

Featured Image via Flickr/Images Money

Verizon Not Delivering to Customer Expectations

Customers of Verizon have noticed a decrease in their mobile data speeds especially being limited whenever they streamed or accessed videos on Netflix and YouTube. This has sparked a response in Verizon to optimize video applications on its mobile network in order to satisfy Verizon Wireless subscribers.

The speed cap by Verizon was noticed by both users of Reddit and the mobile-focused Howard Forums. Verizon users in both threads reported slower speeds than what they had been left to believe by Verizon advertisements and services whenever streaming Netflix and YouTube. A majority reported the speed maximums around 10 megabytes per second (Mbps) whenever using these services on their mobile data network.

To counter suppositions that the entire network was performing slower than usual, the same users also reported that they were receiving the normal, faster download speeds Verizon offers and advertises when connecting to other apps and websites. This suggests that this was not just a bug or mobile traffic issue, but rather a tampering or direct influence over Netflix’s and YouTube’s streaming services.

Specifically, in Netflix’s case, a majority of those who noticed the change are largely using internet speed test tool called Fast.com. Fast.com connects to and is directly powered by Netflix’s servers, serving as a barometer for overall Netflix speeds. A similar internet service tool is Ookla’s Speedtest.net, which measures overall internet speeds. When comparing the results of both tools, it was found that the speeds reported by Fast.com were significantly slower that the overall internet speeds.

In order to continue testing and ensure the problem was at Verizon’s end, users also tried using a VPN to access both Netflix and YouTube. VPNs circumvent a direct connection to Verizon’s mobile data networks, which removes any impact Verizon may have on internet streaming speeds. Results show that with a VPN both Netflix and YouTube had much faster streaming speeds.

Netflix has in the past tampered with both AT&T and Verizon users streaming speeds in order to still provide users with an acceptable video quality without pushing users over their monthly data caps and having to pay larger fees. Despite their good intentions, Netflix faced some backlash, and have since last year stopped this practice, and therefore has nothing to do with the lower speeds Verizon users are reporting. Netflix has also reported that Fast.com is not having any technical difficulties.

On the other hand, Verizon have acknowledged that it has been doing network testing in recent days, but cited the video experience issues reported by users as something that should not have been affected. Despite substantial evidence arguing that user’s video experience had been altered, Verizon state that customer experience was not affected by the network testing. Verizon have not clarified what the network testing consisted of, and have given no reports regarding speed capping for Netflix, YouTube or other streaming services.

There is tension between mobile network providers and streaming services as the Republican-led Federal Communications Commission is on the verge of overturning its existing net-neutrality rules. These rules are designed to prevent mobile network providers like Verizon from blocking, restricting or limiting certain websites indiscriminately or creating fast lanes that allow services to be delivered faster in exchange for financial payment.

It should be noted that 10 Mbps is a sufficient internet streaming speed for even HD video streaming, with only 4K video experiences suffering. Considering that only a few mobile phones are capable of streaming 4K resolution videos, the overall impact does not completely restrict user access to video streaming. However, the main issue is not the quality of the video streaming, but that paying Verizon customers are not receiving the appropriate services that they pay for.

Featured Image via Flickr/Mike Mozart

Bank of America Prepares Dublin as Brexit Backup Plan

Bank of America has decided to pick Dublin as its new base for its European Union operations amidst Britain’s Brexit preparations to leave the union. This is the first Wall street lender to pick Dublin, which is a prime location for a smaller location shift while still remaining within an E.U. sphere.

International banks are all planning to set up new subsidiaries in the E.U. to ensure a continuation of their operations to provide client services. These plans come at the behest of the possibility that their operations would stop should London lose its ability to operate across the E.U. when Britain leaves in March 2019. Amongst the possible locations for a new base of operations, both Frankfurt and Dublin have emerged as the current most appealing options for bank’s post-Brexit operations.

Bank of American leans towards Dublin on the basis of its 50 years’ operating in Ireland and engaging in the local community. However, the bank has not reported how many roles would be moved to or created in Dublin, which currently houses over 700 Bank of America staff and a fully licensed entity.

Instead, the bank has been confirmed reporting that some roles would move to other E.U. locations. This ensures Bank of America a wider spread and more flexible influence, while also diversifying its locations portfolio in case any similar issues rise again in the future in other countries of operations.

The Irish government welcomed the news, as it has been a keen to attract investment banks that could boost its economy. This transition also displays Ireland’s attractiveness as a location for investment, as well as the confidence in the government’s approach to securing Brexit-related activities.

While Bank of America is the first to declare Dublin as its new base of operations, it is not the only bank interested in establishing itself in the Irish capital. Barclays has been speaking with regulators regarding an extension of its activities in Dublin, in response to the July 14 deadline requiring details of banks’ Brexit arrangements and relevant details of their contingency plans being submitted to the Bank of England.

Other bankers such as Wall Street’s Citigroup Inc. and Morgan Stanley have both opted to move their base of operations to Frankfurt instead. Morgan Stanley is likely to follow similar intentions as Bank of America by spreading parts of their operations across the E.U., placing its asset management business in Dublin.

Regarding more specifics, Bank of America is extending its existing lease on its building in Dublin, while also beginning talks on two other office spaces in the city. These new office spaces would help Bank of America accommodate up to 1,000 employees, granting the company the ability and flexibility to add an additional 300 staff.

With the mass exodus of banks leaving Britain, it shows that the banks are leaving regardless of whether trade relations between Britain and the E.U. remain following a soft Brexit. These moves are more likely due to logistical reasoning that it is simply safer for business if the banks operate out of E.U. countries. However, these leaves Britain in a tight spot as many of its investment banking operations are abandoning its market, which gives greater importance to its national banks such as the Bank of England, as well as greater risk.

While Brexit will only occur at the earliest in just under two years, moving time excluded the banks are giving themselves a large amount of breathing space to allow themselves to fully settle and establish routine operations wherever they plan to set up. While this helps the banks ensure the continuation of the E.U. operations, new deals and locations will need to be negotiated regarding investment banking in Britain. These negotiations will likely proceed as we get closer to Brexit, when we have a much clearer image of the environment.

Featured Image via Flickr/Mike Mozart

Chinese Courier ZTO Sued Over False IPO Listing

Chinese courier ZTO Express and those involved in its New York stock market listings have been sued by a U.S. pension fund. The fund alleges that ZTO exaggerated its profit margins to lure investors into its $1.4 billion initial public offering.

Morgan Stanley and Goldman Sachs Group Inc., which was responsible for ZTO’s IPO, are also named in the class-action lawsuit. The lawsuit has been filed in an Alabama state court by the city of Birmingham’s pension fund, and claims that both firms failed to do adequate due diligence.

ZTO’s listing was the largest U.S. listing in 2016 and has been the largest Chinese company since the corporate giant Alibaba Group Golding Ltd was valued at $25 billion in 2014. Despite this, ZTO shares closed on Thursday at $15.68, which was about 20 percent below its IPO price at $19.50.

This is not the first time an IPO has been seen to underperform according to its value listings based off of private funding. Similarly, both Snap and Blue Apron Holdings Inc. were overvalued, and saw a large drop in their stock prices soon after being opening to public investors. But the Shanghai based company is not submitting to this lawsuit without a fight.

A ZTO spokeswomen reported that the claims were baseless without merit, and therefore ZTO are willing and able to defend themselves against the supposed allegation. This may be difficult, as the Birmingham Retirement and Relief System argue that ZTO has issued “untrue statements” while failing to submit or purposely omitting vital information in its registration statement for its IPO listing.

The group further argues that ZTO has inflated its profit margins by removing specific low-margin segments of its business out of its financial statements, making the reported costs lower while the reported profits higher. ZTO did this by not reporting that they use a network system of partners that handle low level pickup and delivery services while the main core is handled by ZTO itself. While an important and vital part of their business, these peripheral courier services lower the percentage profit gained from its revenue stream.

Prior to ZTO’s IPO filings to the stock exchange, ZTO has reported operating profit margins of 15.4 percent in 2014 and 25.1 percent in 2015. Furthermore, in unaudited results for the quarter that ended in March but only published in May, ZTO posted a 48 percent jump in net income from year ago while having a 34 percent spike in revenue. While the increase in profit above the increase in revenue can be addressed by reduced costs or the use of its previous year funds, the lack of its lower profit margins better explains why the IPO listing value decreased despite such a large increase in profit and revenue.

This case differs from the overestimation of Snap and Blue Apron as those companies were not in as good financial health as reported, as well as lacking future growth plans that repelled public investors. In this case, ZTO supposedly doctored and tailored its image in order to attract more investors, and while it may have future growth plans that cater to investors, the disguised financial health could result in serious consequences. These consequences would affect both the company and its investors, with a lack of faith or results on the investors behalf could see them pull out, leaving the company’s financial standing pulled out from under it.

The lawsuit extends beyond only ZTO itself, but also to its underwriters including China Renaissance Securities, Citigroup, Credit Suisse, and J.P. Morgan. They have been included to ensure that no party involved in the false listing and advertisement of a company’s strength benefits from the circumstances, and therefore ideally preventing future problems of a similar nature.

Featured Image via Flickr/GotCredit

Two Leading Black Markets Abolished by U.S. and European Authorities

The two largest online black markets, AlphaBay and Hansa Market, have been shut down and their operators have been arrested, according to reports by the U.S. and European authorities on Thursday.

AlphaBay, what is considered to be the largest dark net market, was taken down in early July while its founder, Alexandre Cazes, a 25 years old Canadian man living in Bangkok was simultaneously arrested. However, Mr Cazes has been reported to have committed suicide in his jail cell soon after being arrested.

As soon as AlphaBay went down, a majority of its users and streamers transitioned to one of its largest competitors: Hansa Market. When dark nets shut down, their users typically switch to different markets in order to avoid any risk of arrest. This makes it very difficult to pinpoint who is involved, as well as prevent new sites forming, considering the desire of the users creating a market.

Fortunately, the Dutch national police force announced they had taken control of the black market site in June, and with the massive influx of new users, were able to gather identifying details on many of the users from AlphaBay. The Dutch have been monitoring the vendors that operate on these dark nets, as well as the customers, in order to better document those involved in the 50,000 transactions taken place.

While the Dutch were monitoring Hansa Market, two of its suspected operators were arrested in Germany in June. News of these arrests coupled with the closing of AlphaBay sent the users in the community into panic based on the reported joint operation. Postings on popular forums including Reddit were made to warn users to refrain from accessing the black markets.

Both AlphaBay and Hansa Market are successors to the first and most famous dark net black market, Silk Road, which authorities were able to access and shut down in October 2013. However, despite being more famous than its successors, it was much smaller considering the frontier developments black markets were facing. AlphaBay had grown into a business with 200,000 users and 40,000 vendors, which is estimated to be about 10 times larger than Silk Road at its peak.

Black market vendors have recently come under increased scrutiny because of their involvement in the sales and distribution of synthetic opioids, such as fentanyl, which plays a significant and central role in nationwide overdose epidemics. 122 vendors have been identified in being involved with fentanyl specifically, while Hansa Market had close to 1,800 vendors selling a much larger variety of drugs.

Dark net servers are only accessible through special browsers that disguise or hide the location and identity of both the user and the server. This makes it difficult for authorities to first locate the websites, and then identify the operators to shut the websites down. However, as black markets gain larger amounts of traffic, while the operator’s identity is still difficult to ascertain, the means of accessing the site become more plausible. While Cazes was the founder of AlphaBay, he was assisted by 10 operators who administered the site and resolved any disputes.

The AlphaBay shutdown involved six countries and Europol, led by the American authorities, while Hansa Market was led by the Dutch. Both efforts were coordinated under the code name Operation Bayonet. This is not the first time that U.S. and European authorities work together against online black markets.

Considering the history of dark nets, it is not unique that the next successors will rise and then be taken down just as quickly. When AlphaBay was still operating there were still multiple large competitors. Currently a site known as Dream Market has emerged to become the dominant black market.

Featured Image via Flickr/Chris Moore

Facebook to Allow Publishers a Subscription Fee

Facebook is planning a new tool that would establish a means of adding subscriptions to news organizations that publish directly on the social media outlet. The intention behind this new tool is to help pacify the tension the social media giant and publishers, who find their audiences shifting more to what becomes available on Facebook.

The potential newly innovated tool will be included by Facebook’s Instant Article product, which allows new media companies to publish their articles directly onto Facebook, granting immediate access to the article, instead of transporting readers to the news website.

While the details are still in its preliminary stages, it has been theorized that Facebook may be introducing a metered pay wall product similar to those used already by the news publishers. For example, after reading a set amount of articles on Facebook by a particular news provider, a user will be sent to that news provider’s subscription page to continue reading more articles.

Before Facebooks has a large rollout, it plans to start a smaller pilot with a group of publishers using the tool in October, and should the tool prove promising, then the early initiatives will be expanded. It has not been established which publishers will be included in the pilot testing, not any details regarding the types of publishers based on size, frequency or popularity.

Tensions have increasingly risen with the advent of online platforms like Facebook and Google amassing more readers through their mass influence, allowing them to expand into the consumer digital advertising market. The constant increase of control over the online distribution of news has threatened publishers’ business model, stimulating a response by publishers to gain group bargaining rights enabling more effective negotiations with online platforms.

While nearly all publishers have adjusted their priorities to increases digital revenue, most are still seeking profitable long term solutions. Publishers recognize the importance and mainstream relevance of online platforms, as well as their role as a medium for allowing articles to be broadcasted to larger audiences.

However, these also include serious drawbacks for publishers, as they lose valuable ties to their readers, making loyal relationship building far more difficult, while also affecting subscriber data and payment connections. Publishers fear that readers are becoming more and more accustomed, which they are, to staying in Facebook to consume news, instead of visiting directly the publisher’s websites, threatening both future growth and livelihood.

Facebook on the other hand has also received criticism from publishers regarding the ability to distribute false or unverified articles that push an agenda or for the sake of trolling that readers can mistake for real. This propagating of false news has been an already reported issue that other companies such as Twitter have been developing means to filter and restrict its spread.

This is also an important issue for Facebook as other companies have been able to use the tensions between Facebook and publishers’ wariness to their advantage. Google has introduced its AMP tool that offers a way to expedite the delivery of partner’s articles in search results, while Amazon in the meantime has been paying publishers to post articles on Spark, its commerce-related social network.

This move by Facebook may offer a way of dealing not only with the tensions between the two parties, but also as a means of dealing with other issues including regulatory and antitrust scrutiny. Furthermore, a Facebook subscription offer would move the platform to closer regulating the relationship with the reader, capitalizing on a role previously filled by the news outlets themselves.

While it is not clear as to whether Facebook will benefit financially from a new subscription feature, but the feature does encourage more time spent on the social media site, and helps foster more attachment to the services provided. There are some issues regarding the number of publishers that will be allowed to post directly to Facebook, as there is a chance for this to be exploited by users by staggering the number of articles they read per month from each unique publisher. In this case, users will be able to benefit without needing to pay, which may result in some serious consequences on Facebook’s part.

Featured Image via Pixabay

Amazon Meal Kit Plans

Amazon is proceeding with its expansion plan to diversify into surrounding markets and innovate in order to establish a dominant position. In recent news, Amazon expressed its intent to redesign and push the boundaries in the prepared meal kit world that is currently dominated by Blue Apron Holdings Inc.

Amazon is throwing itself in the deep end by competing with an already established IPO by challenging to compete with its major project. However, Amazon’s research team is well-experienced and confident that they can in fact provide a competitive edge in the food industry.

This announcement comes after Amazon filed a trademark for the phrase: “We do the prep. You be the chef,” which is closely related to prepared food kits similar to what Blue Apron provides. Meal kits provide the customer with recipes and the corresponding ingredients that enable the customers to prepare fresh food while having most of the preparations already being completed. This service caters well to an audience that is more time-starved but still looking to eat more fresh food.

With their intentions revealed, Amazon has helped elaborate the reasoning behind its recent acquisition of Whole Foods, which would act as a supply base for the meal kits while also generating income through its retail locations. Amazon is trying to incorporate more incentive into being a loyal customer instead of trying to attract new customers, capitalizing on the similar consumer base of customers who are young, urban and affluent.

The focus on having loyal customers spend more instead of attracting new customers is supported by the fact that about 81 percent of customers who have visited Whole Foods on more than one occasion are already Amazon customers. Furthermore, about just over half of all Whole Foods shoppers are Amazon Prime members, customers who are willing to pay $99 for free two-day shipping amongst other member benefits.

Due to the supposed correlation between Amazon and Whole Foods customers, Amazon’s acquisition of Whole Foods is estimated to increases its customer base by 5 percent. While this does have a large enough impact on Amazon’s revenue stream, as Amazon will accrue all revenue generated by customers of both, this shows that increasing its customer base was not Amazon’s prime concern.

The customers that do consistently shop at Whole Foods while also being Amazon Prime members spend average about $306 more, looking at an average of $1,371 spent during six visits during a 12-month period. But what has the most impact is the percentage of shoppers who online as compared to other food retailers, with 10 percent of Wholes Foods customers shopping online compared to the 6 percent for Albertsons and 5 percent for Kroger.

Amazon is using the opportunity that Whole Foods shoppers provide by offering more online food delivery services, and in doing so they ensure they have the largest consumer base for their new meal kit plans. Research firm NPD Group shows that while only 5 percent of consumers have purchased a meal kit over the past 12 months, 60 percent of millennials have purchased something from Amazon over the same time frame. Amazon’s priority is discovering a way to transition its customers into using meal kits, increasing its revenue stream by creating a greater dependence on online food delivery services.

Usually the meal kits have a high entry barrier, with Blue Apron requiring about $94 to acquire a new customer. Amazon advantages comes in the form of its Prime membership fees which should act as a reliable and effective way of managing its costs. Furthermore, Amazon already has a strong supply chain that can easily adapt to ensuring that customers receive their meal kit in the timeliest and efficient manner.

Amazon’s expansion plan proves troublesome to its competitors in the food industry, as its meal kit plans narrows the opportunities for other smaller food retailers to enter the meal kit market. Amazon has considerable experience with retail, and that might translate in food, which is by far the largest category in retail. If Amazon is successful in establishing a market leader position in food, then the possibilities for its growth into other markets will be that much easier.

Featured Image via Flickr/simone.brunozzi

Beijing Blocks WhatsApp Access in Mainland China

Chinese users have reported trouble regarding the use of WhatsApp instant messaging tool on Tuesday. Many suspect that Beijing is responsible for the issues that are arising as part of its latest regulations on internet use.

The issues included involved being unable to send or receive photos using the chat app, which is owned by Facebook, without the use of a VPN. Beijing has had previous issues regarding VPNs, and they have made multiple attempts to encourage telecoms to prevent individual access to VPNs. VPNs are used to bypass Beijing’s censorship program by rerouting internet traffic elsewhere, usually to a foreign IP address.

Beijing efforts to tighten internet security is motivated by their intentions to block any websites with information that could be critical of the Communist Party including YouTube, Twitter, and foreign news sites. While the information itself is not necessarily censored, access to the information is blocked preventing the information from being seen in mainland China. In response, many proxy websites that fulfill a similar function rise in order to provide the original site’s services without broadcasting any potential criticism.

The suspicions that Beijing is involved come at the results of a test conducted by the South China Morning Post on Tuesday afternoon. Two users registered with mainland Chinese mobile numbers were unable to send neither videos nor pictures to each other via WhatsApp. One of the users then tried to send both a video and a picture to an overseas number, which resulted in a failed transmission. The overseas user then sent a video and a picture to the mainland Chinese mobile user, and while the message did go through, all the Chinese user could see was a loading thumbnail that failed to fully load and display its message.

However, there were no problems when sending text messages to one another, which included media content as well, and all functions and services provided by WhatsApp were restored upon the use of a VPN. This suggests that there was some involvement that restricted messaging, and that these restrictions applied only to WhatsApp.

WhatsApp is one of the few messaging services available in mainland China that is foreign based. While not as popular as the local app WeChat, which acts as a more readily accessible and offers less noticeably regulated services, WhatsApp still fulfills a competitive niche thanks to its end-to-end encryption.

WeChat, which is owned by the dominant tech company Tencent, has been found to be censoring messages deemed sensitive by Beijing without notifying its users. While this does occur, the app is still popular because it does not require a VPN to function properly.

Users began noticing troubles with WhatsApp early in the morning on Tuesday, but found that other apps on their mobile devices, including WeChat, were functioning without issues. A member of a non-governmental labor welfare group in Shenzen mentioned regular use of WhatsApp for work based communication due to the security and privacy it provides. Instead of switching over to WeChat to communicate with his colleagues, the man refrained from contacting his colleagues at all, as WeChat and text messaging were not viably safe options.

Neither WhatsApp nor Facebook have made any statements regarding Chinese censorship. However, Facebook’s social networking site and its photo-sharing services provided by Instagram are both blocked in China and have been for a long while now. Other foreign based chat and media sharing apps that have been blocked in mainland China include Tokyo-based Line and Berlin-based Telegram.

If businesses wishing to penetrate Chinese markets want to be successful, then they need to take major considerations regarding the government’s regulations on especially foreign based companies. If they fail to do so, then any invest into the Chinese market will come up short as the services provided are at a larger than usual risk of being shut down or restricted.

Featured Image via Pixabay

Walt Disney Entertains Renovation Plans for Epcot

The Walt Disney Co. revealed renovation plans for Epcot in order to honor the park’s 35th anniversary at Walk Disney World in Orlando, Florida. The planned renovations include featuring several film-inspired attractions that will update the park for previous visitors, while drawing in new crowds to populate the famous park.

The media and entertainment company’s goal is evolving itself and adapting to younger audiences by including “more timeless, more relevant, more family and more Disney” while maintaining its belief in celebrating human excellence. The idea is to add to its repertoire through several newly revealed offerings to counter being outdated while also refraining from morphing its original purpose.

These plans were revealed during the D23 Expo, a convention for Disney fans, with the intention of completing most of its upcoming projects in time to celebrate the 50th anniversary of Disney World in 2021. Walt Disney’s large investment into its parks help certify their importance to the company’s future, as compensation for the slowing growth in its media networks. In 2016, Disney parks accrued $17 billion in revenue, signifying a 5 percent increase on its previous year.

Disney’s media networks make up the largest portion of its business, however this has reduced due to advertising sales lag and the fact that consumers are cutting cable for other entertainment service providers such as Netflix. Instead of betting on one market, Disney is diversifying itself in order to reduce potential risks while also increasing or strengthening the variety of its services as the support for its future.

Epcot opened in 1982 and is two times the size of Disney World’s main park, Magic Kingdom, yet despite its size it attracted 8.7 million fewer guests in 2015. Urging for more traffic to offset the costs of a huge park, while also trying to balance its budget, Disney has been introducing more characters to the park. A successful venture on this front was the inclusion of a Frozen themed boat ride last year that attracted visitors due to its affiliation to the hit movie.

While Disney is pressing the perseverance of its original mission to highlight human excellence, adjustments need to be made for its renovation, resulting in the closing of certain rides that follow Disney’s mission in favor of newer more exciting but less informative rides. Ellen’s Energy Adventure, a 1996 ride that discusses the history of energy by talk show host Ellen DeGeneres and television presenter Bill Nye the Science Guy, will be replaced by a new ride around the theme of Guardians of the Galaxy, a marvel superhero franchise in outer space, exemplifying the changes being made.

However, it is important that the services provided match the needs of the customers, otherwise the business will fail. And so these changes may be necessary, even if they signify a shift away from the company’s original mission. Walt Disney originally imagine Epcot as a nexus of futuristic innovation, but after his death the company decided to make it an amusement park instead. The park is ambitioned to combine a representation of cutting edge technology while also showcasing international cultures.

While the introduction of new rides will be invaluable in attracting and inviting visitors both new and old, Disney’s focus should not reside solely on these new projects. Disney will need to ensure that they maintain a steady stream of new innovations and rides into the future, as they will otherwise face similar issues again in the future for failing to continue reinvigorating their parks.

Furthermore, the park requires more investment in maintenance in its infrastructure as unused ride parts are still visible to visitors, tiles being taped together in an unprofessional manner, and even parts of the monorail falling off. No plans have been announced regarding infrastructure, but adding one new attraction amongst other failing ones is not a way of ensuring your visitors revisit.

Netflix Subscribers Surpass Target

Netflix Inc. has surpassed the expectations of Wall Street for its second quarter by adding 5.2 million new streaming customers. Netflix predicts further continued growth due to the momentum generated by foreign subscriptions, which overcame U.S. subscribers. As a result of its customer base growth, Netflix shares have increased by 10.4 percent on Monday.

Regarding shares more specifically, the streaming television innovator’s stocks rose $16.82 to $178.55 per share in after-hours trading. This is a new record for intraday trading that beats the previous record of $166.87 which was reached on June 8.

Netflix is anticipating that due to the influx of foreign subscribers the company will accomplish its first full-year profits for overseas markets. This is supported by the fact that the end of June was the first time that Netflix had more recorded subscribers from abroad than in the U.S., with 52.03 million foreign subscribers versus 51.92 million U.S. subscribers.

The second quarter is typically the slowest quarter of the year, however the introduction of the popular show “13 Reasons Why” and the latest season of “House of Cards” brought in a higher number of subscribers than what Netflix initially predicted.

According to Wall Street, Netflix was predicted to bring in 3.2 million new customers worldwide, which broken down was based on an estimate of 2.59 foreign subscribers and 631,000 U.S. subscribers. Instead, Netflix bested both estimates by accruing 4.14 million monthly foreign market subscribers , and a further 1.07 million subscribers domestically.

Netflix is hedging their bets that this growth will continue on for its third quarter, considering it usually is more successful than its second quarter, however Netflix has been known to make far too optimistic forecasts at times.

It is important to remember the expenses that Netflix pays to attract new customers: spending $6 billion a year on content in order to become the world’s top movie and TV streaming service despite facing a decrease in the rate of its U.S. customer growth. What helps is that a good portion of the costs go to customizing content for different countries and adding shows in various languages.

By tailoring to different regions, you adapt and serve the needs of the customer, instead of projecting what you believe the customer needs. However, by making new content accessible to different audiences, you are reaping more profits out of the same content, which requires less labor to offer in a different language than the show’s original production cost.

Based on the amount invested to deliver a large variety of content, Netflix has estimated negative free cash flow in the coming years as it continues to buy more content. The heavy costs help assert its place in the market amongst stiff competition from streaming video providers such as Amazon Inc.’s Prime Video and Alphabet Inc.’s YouTube. This shows that despite possibly overestimated customer growth, Netflix is maintaining a strict assessment of its financials to ensure that it can continue to provide its services.

Revenue rose by 32.3 percent to $2.79 billion in the second quarter, with the net income rising to $65.6 million, or 15 cents a share, from $40.8 million, or 9 cents a share, from a year earlier. While this falls just short of the anticipated 16 cents a share, this is still a monumental growth.

Investors are willing to tolerate the exuberant spending as long as it is compensated by such a booming customer growth, as the trade-off did results in 2 million subscriber surplus. This goes to show that if companies have well-established future plans and a good financial health, then investors are willing to hurt a little now for better profits in the future. This is something that Snap Inc. and Blue Apron Holdings Inc. can learn as an example to ensure stocks are not overpriced.

Amazon Sparks Antitrust Concerns

Amazon Inc. has recently agreed to buy Whole Foods Market Inc. for $13.7 billion as part of their expansion plans. Amazon’s sustained major growth is raising concerns with Wall Street and Washington regarding antitrust policy. Lawmakers are cautious but wish to investigate the potential ramifications this business deal will have on customers.

One U.S. lawmaker, in particular, has called for a hearing on the proposed hearing on the subjects of monopolies and their effects on the consumer base. Amazon’s shares have increased by 34 percent this year, rising to $1,003.21 per share on Friday. Despite the huge growth, market analysts have dismissed concerns regarding Amazon as a trust on the grounds that the company does not have large market concentrations in any one product category, making it unrealistic that a monopoly is established. Furthermore, Amazon has a history of helping to keep prices low and very competitive for customers.

The major concern is not that Amazon has grown too large that it can now dominate the market from a price point of view. The issue is regarding as to whether Amazon has grown to the point where competitors are discouraged and unmotivated to innovate. Competitors risk funding research and development for new services for customers because they might either be bought by Amazon, or inspire Amazon to create or improve on that innovation.

Hedge-fund managers like Doug Kass are betting against Amazon by arguing that the value for the fast-growing online retailer will be eroded by antitrust concerns. Goldman Sachs raised questions concerning the track records of tech company stocks, specifically determining whether stocks were overpriced and investors were overlooking the risks associated with government regulation policy.

Despite the political buzzing regarding Amazon’s growth, it is more than likely that the Whole Foods acquisition will go through. Only now Amazon and similar companies are being placed under scrutiny regarding competition policy, judging how the transaction affects the future of retail grocery stores, and the possible innovation repercussions that may arise. From a more political standpoint, this situation will cast a review of the antitrust laws to ensure they are working effectively to ensure economic opportunity, choice and low prices.

While many investors are now trying to short Amazon based on the value erosion capabilities of government regulation, many analysts are not worried about the Whole Foods deal greatly impacting antitrust policy. Their reasoning is that Whole Foods has just 1.6 percent of the U.S. grocery market, being overshadowed by other competitors such as Wal-Mart Stores Inc. at 26 percent of the market, and Kroger Co. at 10 percent. Shifts and enforcing of antitrust policy usually occur when a retailer controls 30 percent or more of a particular market.

For Amazon, the purchasing of Whole Foods indicates a shift in its business model from only selling products online to establishing a physical store location that is intent on attracting customers. This expansion could remain a one-time opportunity to penetrate an important market and establishing a strong position, but it will also likely lead to a collaboration between the online and physical stores, either providing a storefront for online purchases, or a capitalizing on the online selling of groceries. There is speculation that Amazon might use Whole Foods’ retail locations to launch a pharmacy business.

Monopolies are dangerous because they allow companies the ability to influence the market to maximize their profits at the expense of customers, competition and government. By being the dominant force in a market, monopolies are able to set the price that no other competitor can match, limiting choice for the customer as well as competitor innovation.

Monopolies are also able to influence government through the support of certain legislation beneficial to them, which might affect the outcomes of law that are not beneficial to society. This is why the government is so concerned with antitrust laws, and are eager to ensure they are working.

While this is the biggest acquisition of Amazon’s expansion plan, it is doubtful this will be the last, and so it is certain that this issues will arise again in the future.

Featured Image via Flickr/Fumiaki Yoshimatsu

J.C. Penney Toying with New Store Idea

J.C. Penney has plans to introduce toy stores within its department stores in an attempt to draw in more customers along with their families. The efforts are intended to recapture part of J.C. Penney’s past spirit when their stores drew in both children and their parents through their holiday catalogs.

In order to reestablish a firmer foundation considering the tenuous times retailers are currently facing, the chain is hoping to capitalize on the opportunity that toy stores offer. The desired end result is to mimic the successful results after the retailer decided to revive toy sales during the 2016 holiday season for the first time in years.

Instead of toy departments, J.C. Penney plans to add toy shops permanently to all of its stores, which is currently cumulative to more than 1000 locations. The chain has already introduced toy shops to 100 stores, and is planning to accommodate the back-to-school special event through an expansion of its assortment.

This companywide rollout is a demonstration of the aggressive measures the retailer is willing to take to demonstrate its competitive edge and relevance amidst the ever growing influence dominated by Amazon.com and more flexible competitors with physical store locations. This is the first company to introduce toy venues as a means of attracting more customers, as other retailers including bookstore chain Barnes & Noble have also bet on commercial merchandise targeted at families.

The decision is based on the year-round demand to buy toys, and by creating not only fun and creative toys but a reflective environment in which to sell the toys coupling the biggest brands and most popular products will encourage higher traffic for both the toy stores and the surrounding departments. The idea is to increase both the turnover and revenue generated by customers, even buying a single, simple toy is an increase in the company’s revenue stream.

The toy shops will be displayed together or peripheral to Disney Collection products, and will feature a wide range of items, including dolls, actions figures, and board games. These toys will be developed in collaboration with Hasbro, Mattel, and Fischer Price. The toys will also be available via the company’s website, with plans for the current selection to double in size as well as add additional items in tome for the 2017 holiday shopping season.

The introduction of toy shops also serves another purpose as an experiment for store-within-a-store concepts. This concept also for more efficient use of space while also opening up locations for brands that either were too late to claim a location within the chains department stores, or were unable to commit to a full-sized department. J.C. Penney has had previous success with this setup, handling floor space over to beauty products firm Sephora and athletics apparel company Nike. Toys assimilate better into the design of beauty products, as customers are encouraged to play with display models and develop and affinity for the product prior to purchasing.

It is important to continue innovating new ways of attracting customers to your stores, which J.C. Penney has faced firsthand as its foot traffic has decreased due to digital competition and fast-fashion competitors such as H&M and Forever 21. It is important to note that there is balance that needs to be maintained, as using toys as a means for drawing customers is beneficial so long as it does not replace the intentions of customers visiting the chain. Otherwise, J.C. Penney may find itself solely in the business of selling toys, and no longer a department store.

J.C. Penney has reported its need to close 138 locations recently, and while it is doing better than its main competitor Sears Holdings, the toy shop concept will be an important factor in determining its future.

Uber-Yandex Ride-Sharing Merger in Russia

Uber and Yandex have agreed to a merger of their ride-sharing businesses in Russia and five eastern European markets with Yandex. This is the second withdrawal on Uber’s global presence since their exit from China a year ago. Yandex, which is essentially the “Google of Russia,” will be the leading partner in this newly established company.

Yandex and Uber both stated that they will join together in Russia, Armenia, Azerbaijan, Belarus, Georgia, and Kazakhstan through a new company operating in 123 cities. Uber will invest $225 million into the company, owning 36.6 percent of the company. Yandex on the other hand will be investing $100 million into the new company, but owning 59.3 percent of the company. The remaining 4.1 percent will be held by employees according to a fully diluted basis.

Uber will also be contributing its UberEATS food delivery business into the merger venture, which will act under the joint company in the 6 previously mentioned countries. Despite Uber’s influence as a global ride-sharing company, Yandex holds a more dominant position in the specified regions, providing services including Web search, maps and mobile navigation in the region.

Uber’s position has significantly weakened as more competition has developed as well as the scandals resulting in Uber CEO Travis Kalanick resigning from his position. Instead of trying to adapt and dominate each market around the world, Uber is better off allying itself with local players that dominate their fields to compensate for the over encompassing regulations that Uber was originally responsible for upholding. This does not absolve Uber of ensuring their drivers and riders are protected and fairly treated, but instead of controlling the specific regulations, Uber will be in charge of supervising that the proper regulations are being managed by its partner companies.

While some may view the ratio between what Uber is investing and the percentage of ownership of the new company they are receiving is unfair, but it is in fact beneficial for Uber in the long run. The partner company is responsible for everything beside operations, and all Uber has to focus on in these new developments are the operations themselves. Uber in fact saves on logistics costs, and grant themselves a powerful platform to spread its services throughout regions that are otherwise impenetrable by foreign businesses. While Uber’s position within the new company is up to the discretion of Yandex, 36.6 percent is not an insignificant portion that does provide Uber with some leeway.

In this relationship, Yandex will be controlling the direction of the proverbial ship that is the new company, and it is up to Yandex that the environment either maintains a status quo or proves beneficial for the new company, so that it can continue its operations. UberEATS is a helpful tool in ensuring that even when the drivers are not working with riders, they are still maintaining a revenue stream through food delivery.

It will be interesting to see if more countries follow suit in establishing a merger with Uber. Local companies can use Uber as proof of a powerful global business partner, further establishing and improving the local company’s reputation. As long as rates are competitive, the ride-sharing and food delivery components that Uber provides can act as free publicity and a fairly dependable revenue stream.

One thing to keep in mind are the recent news involving Uber, and whether establishing a partner relationship will in fact diminish the partner company’s reputation, as one interpretation is that through partnership the company in fact condones the behavior exhibited by Uber drivers and the reaction to criticism.

Considering the increase in ride-sharing companies even within the U.S., maybe Uber will consider new mergers with local companies, should mergers become an established business practice that’s proves profitable for Uber.

Data Breach Exposes Millions of Verizon Customer Records

Verizon’s partner Nice Systems suffered a data breach that exposed the records of 6 million customers. The data was accessed through an unprotected Amazon S3 storage server, leaving records compromised by customer service calls facilitator. Verizon claims that despite the data breach no loss or theft of customer information occurred.

The records in question are logs from residential customers who had called Verizon customer service within the past 6 months. The cause of the breach was a misconfigured security setting on the server that would enable anyone who knew the website address to access and download the files. This is exactly what happened as an employee of Nice Systems accessed the unprotected Amazon S3 storage server. Thankfully, Verizon reports that no external party had access to the data, minimizing the potential damage scope to the single employee that will bear the burdens of their responsibilities.

Each record included the customer’s name, mobile number, and significantly, the customer’s account PIN, along with their home address, email address, and their Verizon account balance. While some records were partially redacted to protect the security and privacy of customers, most were not. This means that anyone with access to the records could have impersonated a subscriber and been granted access to their account, or have sold the information to third parties that could find a use for the data provided.

Verizon and Nice Systems have reported an investigation into the security breach, commenting that the data was part of a “demo system,” but refusing further elaboration. Due to the undisclosed nature of the context regarding the statement, it is uncertain as to whether this is fact, presupposing that the breach did not have as large an impact as it could have, or simply damage control. The breach was first discovered by Chris Vickery, a research working for cybersecurity firm UpGuard, who noticed the breach on June 13th. After privately informing Verizon, an investigation was conducted and the data was finally secured on June 22nd, nine days after the breach was initially reported.

This is not the first case of a data breach with a major mobile carrier, and this is not the first security breach for Verizon. In 2015, data broker Experian experienced a major breach that resulted in the exposure of similar information for 15 million T-Mobile customers. And in 2016, Verizon’s enterprise unit had data stolen by hackers, resulting in the exposure of information regarding IT services to companies that are put up for sale online.

Verizon and all mobile carriers need to a great deal more investing into cybersecurity to ensure that their customer’s data is protected. Regardless of whether the data is stored on a third party site managed by a partner, the ones responsible for the damage caused by the data breach is Verizon themselves. Customers place their faith in Verizon to ensure that their privacy is maintained and considering that this is not the first time Verizon has suffered a data breach, it is certain that Verizon’s reputation has taken a hit.

Regardless of the severity of the consequences from a data breach, the trust that customers place in Verizon is minimal at best. Looking on the lighter side, that this server was a demo suggests that the impact will be reduced, but even then it shows customers of the efforts Verizon goes through to fulfill their corporate social contract to the customer. Needless to say, these cybersecurity methods need serious updating and securing if Nice Systems ever wants to be partnered with a mobile carrier again. Only time will tell as to whether Verizon and Nice Systems compensate the customers for the data breach, beginning with whether more customers will have important private information redacted to minimize potential damages in case of another data breach.

Featured Image via Flickr/Mike Mozart

Yellen Reports Fed Rate and Portfolio Plans

Fed Chair Janet Yellen has reported that the U.S. economy is healthy enough for the Fed to raise rates and to begin tackling its massive bond portfolio. However, Yellen also cautions that a low inflation and a low neutral rate may leave the central bank with diminished leeway.

Yellen appeared before Congress to depict an economy that is still continuing to grow despite its slow pace. These incremental growths have continued to add jobs while simultaneously benefiting from a steady household consumption and a recent jump in business investment. The economy is even now continuing to be supported by stronger economic conditions abroad, according to Yellen.

In response to such a positive economic climate, coupled with the anticipation for a persistent evolution of the economy, the Fed believes that the current economic environment warrants gradual increases in the federal funds over time. This will, in turn, lead to reductions in the Fed’s portfolio of more than $4 trillion in securities, which have been stated to begin later this year.

Yellen notes that given current fund estimates, the federal funds rate would not require a dramatic increase before reaching a neutral level that neither encourages nor discourages economic activity. This neutral state is important as it ensures a more balanced status quo that does not require tinkering on the Fed’s part, therefore allowing business to be conducted in a more sustainable and predictable manner.

The Fed is leaning towards a looser or accommodating monetary policy, which would result in a lower neutral rate. To compensate for this, the Fed may be compelled to slow down the pace of rate incremental increases, but as to whether the ultimate rate stays the same but just over a longer duration or the rate is reduced remains to be seen.

Yellen has responded to doubts voiced by lawmakers and informed the House Committee on Financial Services that she expects the gradual reduction of the balance sheet will refrain from having drastic effects in markets, ensuring that all operations and practices are smooth moving forward. A reduction in the balance sheets will allow the economy and federal rates to diverge from crisis-related policies.

There is opposition from lawmakers who believe that the Fed is able to exercise too strong an influence over the economy through the tailoring of rates that results in an unnatural progression of the economy’s state. These lawmakers propose the further use of mathematic formulas to discern the rates, moving from a more rule-based monetary formula to one that is independent of the agency behind it.

As with all opposition, this has been met with criticism, as Committee Chair Jeb Hensarling compliments the work that the Fed has produced, expressing respect for the comparisons between rule-based monetary policies with some of the more common formulas. While this discussion remains in its infantile stages as far as the current economic climate is concerned, perhaps a combination of both rule-based policies with the relevant monetary formulas will establish the best results.

Yellen herself responded to such criticisms by stating that their current regulatory agenda is rather light. In fact, there are plans to ease some of the requirements imposed on banks boards of directors following the financial crisis. Furthermore, Yellen has expressed concern over proposals that policymakers worry may grant elected officials influence over what are supposed to be independent Fed interest rate decisions.

It is difficult to predict what the results of this discussion will be, especially considering that Yellen will soon be replaced when her term ends in February. However, Yellen is positive about the end of her term, as the economy appears to be a continuous cycle of hiring, spending, and investment that should foster a stronger pace of wage and price increases.

Featured Image via Pixabay

Overestimated IPOs Valuation Drops

Snap Inc. and Blue Apron Holdings Inc. have faced difficult discrepancies in stock valuation during their transition from private to public valuations. What were the two most anticipated IPOs have now become case examples of inconsistencies between private and public funding? They now serve as a reminder that stock value is not the only important aspect of running a successful business, indicating a bleak short-term future and possibly a poor long-term future as well if the operations remain the same.

The source of the overpricing these two companies face is twofold. Investors ever urgent drive to have a part in the next big hit, essentially a bet on future innovation helps drive up the value of unprofitable companies facing fierce competition. What often occurs is that investors then begin to invest in anything with potential, diversifying their risk portfolio while maximizing future profits. This influx of wealth and promise leads to the second source of overpricing, in which the companies themselves receive feedback that what they are doing is enough, resulting in a lack of growth and foresight.

When these two scenarios occur, public market investors show reluctance to reward rich market values without proof of financial health and future growth. Just because private investors were willing to invest in a company does not mean that their intent will translate in public commercial appeal. And this is how Snap and Blue Apron find themselves trading below their initial public offering price.

Now as previously mentioned, there is more to running a successful company than market value, and despite Snap’s and Blue Apron’s market value is below the expected public offering price, this does not mean there is no hope for the company. However, market value is an estimation that communicates the status of a company to potential investors, and so having a negative valuation could produce a positive feedback loop that continues a decrease in a company’s stock price. The negative sentiment can erode customer relationships, employee morale and the ability to raise more money, which results in making a turnaround significantly more difficult. This is why it is so important that companies do not overshoot what public investors will be willing to pay based on private funding. Otherwise, it is not just your stock that will take a beating.

Regarding the specifics of stock prices for Snap as an example, Snap’s stock prices fell from $17-a-share IPO to $15.44 on Tuesday. With such a major decline, Snap’s market capitalization is valued at about $18.2 billion, which is a major contract to the anticipated high-end valuation target of $40 billion. Other companies including Snap may need to give investors an exit opportunity, which will stand as a true test of whether the valuations are fair.

Considering the current lack of discernable financial health and future growth plans, Snap and Blue Apron are expected to continue their decline in valuation at the IPO stage over the next two years. These expectations are based on the fact that these companies do not live up to the worth dictated by private investments, and are therefore likely to continue suffering for it.

Snap’s situation has been influenced more by external pressures, as the IPO has faced numerous criticisms regarding its growth due to competition from Facebook Inc.’s Instagram app. Competitors often gain an upper effect when a company fails to deliver, as the customers and investors immediately switch over to what is considered to be better performing based on reputation. Because of this, by June, Snap was the most-shorted new U.S. technology stock of the year.

EPA Intends Reversal of Controversial Alaskan Gold Mine Opposition

The Environmental Protection Agency (EPA) has proposed withdrawing its 2014 determination barring any large-scale mine in Alaska’s Bristol Bay. The Trump administration has been working hard and taken several key steps towards paving the way for this controversial mine. A successful implementation allowing the mine would be a distinct reversal from former President Barack Obama’s opposition to the project.

The initial reasoning for why there was a barring of a mine in the area was due to the potential damage that would imperil the region’s sockeye salmon fishery. Taryn Kiekow Heimer, a senior policy analyst at the National Resources Defense Council, has stated that the only thing that’s changed since the initial barring is the politics attached to the mine. Asides from politics, the relevant facts, science and opposition to the mine have remained unchanged, persisting in sounding the message that it would be “the wrong mine in the wrong place.”

The EPA’s actions result from a legal settlement with Pebble Limited Partnership, a subsidiary of Northern Dynasty Minerals Ltd. As with most settlements, the agreement did not provide direct immediate approval for the construction of a mine, but it instead paved the way for the Canadian firm to apply for federal permits that would eventually produce a mine in Alaska. This path for federal permits is something the Obama administration had previously countered, restricting access and therefore blocking the construction of the mine.

This potential settlement and pending reversal is the result of the EPA’s intentions to provide Pebble Mine a fair process that is simultaneously not too costing for the EPA. Northern Dynasty Minerals has been behind several lawsuits that sued the EPA regarding this matter, and have recently reported its agreement that they gain nothing more than “fairness and due process under the law.”

It is important to note that the EPA does not hold the final say in this matter, and even if they do withdraw its opposition, Pebble Mine will still have hoops to jump through. Pebble Mine would need to undergo a federal environmental review and other relevant state requirements before construction can begin, including an EPA consultation with the public, and local tribes.

The opposition to mine is composed mainly of Native Alaskans, environmentalists, fishing operators and local businesses who have been against the mine since the inception of the idea in 2004. Through prospecting, Southwestern Alaska is said to contain gold reservoirs estimated to be worth about $120 billion. However, accessing the gold mine would contaminate and create repercussions affecting the lakes and tributaries that connect to the potential site for the mine, which feeds into the headwaters of Bristol Bay.

This could potentially impact a fishery that generates $500 million a year, which is a major source of income and labor in the area. Furthermore, the revenue generated from the mines is prioritized only for Pebble Mines, while the fishery helps supports the local tribes and the public in both financially as well as a food source.

One argument against the EPA barring is based on the overstepping of bounds and regulations. The EPA has been criticized as an agency “trampling the authority of the state of Alaska,” while restricting the input of other federal agencies while also preventing the results of a mining company’s $700 million capital investment. On the other side, the EPA has been praised of protecting a valuable fishery and the village whose life depends on it. A ballot measure is being conducted that would allow lawmakers to ban any proposed mine should the project prove detrimental to the wild salmon stocks, which is currently polling at passing with a two-thirds majority.

The EPA has said it would accept public comments on the proposal for the next 90 days.

Men’s New York Fashion Week: What You Need to Know

This week marks the fifth season of the “New York Fashion Week: Men’s” fashioned by the Council of Fashion Designers of America. More than 50 brands will be showcasing their spring 2018 collections in the hopes of drawing attention from editors and retail executives. Lower Manhattan has become a playground buzzing with models, designers and the photographers that follow the latest trends.

The New York Fashion Week draws a distinct crowd compared to those of Milan and Paris which house the majority of the big brands and luxury houses. Instead, New York emphasizes an attraction for feisty brands gathering from all around the world. The diverse pool of designers and fashion influences meshes in a cultural mixing pot that provides a unique take of street wear fashion and certainly acts as a frontier for unexplored fashion designs.

One trend that is characteristic of the New York Fashion Week is the emphasis on easy sportswear being present at the runway shows and presentations. This emphasis represents the casual lifestyle and the clothing that goes along with that as an American culture. This adds a layer of complexity that the designers need to deal with, as is it not simply enough to utilize or push the latest trends in the spring collection. Instead, designers need to be flexible enough with their designs to add an idea of practical casualness that would lend the designs to being worn, and not simply displayed.

The New York event is not the first fashion event of the year, which follows a month of men’s wear shows in London, Paris, Milan and Florence, Italy. A noticeable trend this year has been the refocusing on proportion, which many fashion experts and critics expect to be on display in New York as well. Clothing is bigger, adding a fluid effect as pants look more full, while shorts are even being designed to look oversized. These changes are noted to be a reference to the late ’80s and early’90s fashion but interpreted to keep in line with today’s fashion and the need for always designing something new.

The shows are scheduled from July 10 through 14, with all events taking place at Skylight Clarkson Square in West SoHo unless specified otherwise. Cadillac has heightened its commitment for spring and summer 2018 menswear by providing each designer that will have a showing at the Cadillac House Platform with an additional grant. This grant is to further support designers with bringing their fashion visions to life, but will not be provided to those unable to have a showing. It will be interesting to see if any similar grants are provided for those who do not have the means or influence to acquire a Cadillac showing, as a means of incentivizing diversity in fashion, and not just further supporting those who are successful.

One major theme for designers is to take into consideration not only what is displayed at fashion shows, but the nature of the fashion shows itself. There is an ongoing conversation regarding how fashion shows will be performed, with 13 designers pursuing alternative show formats in an attempt to address consumer relevancy towards a more “see now, buy now” model. These hybrid collections will enable faster and more access to new collections, while also providing samples for future deals with editors and fashion executives. Should the suggested changes take off, fast fashion may result in a complete restructuring to address their supply chain to match the ever increasing pace of fashion, for fear of becoming obsolete in how consumers access fashion.

All in all, this will certainly be an interesting week for fashion, especially in determining the position of the Council of Fashion Designers of America on the global stage, and whether American fashion design will retain or gain as much influence as similar institutions in Europe.

Financial Firms Vulnerable to Class-Action Lawsuits

The Consumer Financial Protection Bureau has planned to adopt a rule that would prohibit financial firms from forcing Americans into arbitration in disputes over their bank and credit card accounts. This rule will affect millions of Americans, as they are no longer subject to the whims of financial firms and their exploitative measures the isolate individuals in order to make a profit.

Consumers are now able to band together in class-action lawsuits that could cost banks and other financial firms billions of dollars. The new rule, which is predicted to take effect next year should no major obstacles arise, is expected to create serious tensions. Both the Trump administration and House Republicans have pushed to restrict the consumer finance agency as part of an effort to lighten regulation on the financial industry. This rule will counteract against the aforementioned efforts, granting more power and protection to consumers at the expense of the financial industry.

The director of the consumer agency, Richard Cordray, stated that the ruling is following the spirit that a no one should escape accountability if they break the law, regardless of how large or powerful the individual in question may be. The rule has already faced opposition, as Representative Jeb Hensarling, a Texan Republican who has been trying to weaken the consumer agency, has stated that the rule should be rejected. Hensarling quotes that the “American people voted to drain the D.C. swamp of capricious, unaccountable bureaucrats who wish to control their lives,” which is ironic considering that the rule is an attempt to prevent financial firms from controlling the lives of ‘ordinary’ Americans.

Regardless of the opposition, the rule will be difficult to nullify due to populist appeal. There has been nationwide criticism of arbitration clauses that enable corporations to circumvent courts and take away the tools that fight abusive practices. Instead, the rule will dismantle a series of legal maneuvers that allow major American companies to block customers from going to court to fight potentially harmful business practices.

The consumer agency itself has fallen under strict supervision and criticism by pro-business groups, arguing from a political standpoint that the rule is a quality of life improvement for class-action lawyers, who more often than not donate Democratically. Similar opposition has been the request that the president remove Cordray as director to an overreach of regulation. However, supporters of the agency agree that arbitration being independent from corporate interests is a priority that needs to be addressed.

The consequences of this rule is that corporations will no longer be able to use fine print in their contracts to force consumers into secretive arbitration that pits borrowers against powerful companies with deep pockets. Most people would abandon their claims due to a lack of resources, leaving the companies free to bully customers. Example class-action lawsuits that have been limited due to arbitration include predatory lending, wage theft, sexual discrimination and medical malpractice. What reinforces this practice is that it is practically impossible to apply for a credit card, rent a car, or shop online without agreeing to private arbitration. The rule balances the scales, by enabling people to band together and pool resources.

While the protections do not apply to existing accounts, consumers would be able to pay off old loans and open new accounts that do fall under the protection of the new rule, which has the potential for a considerable impact on consumer finance. While this rule will not explicitly outlaw arbitration, this new practice is expected to effectively kill the process.

The point of class-action lawsuits is not to give people a big payout but rather results in a small payout to individuals who are part of a larger group. The intention is that the companies pay large fines to put an end to abusive practices, and provides individuals with a voice and a community that ensures that no party is being exploited. Should this rule go through, consumer finance and the way banks and financial firms conduct businesses will face major changes?