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Market jitters lead to more declines as investors face growing risks

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It’s been a shaky month for investors in North American markets.

Tuesday saw benchmark stock indexes register more triple-digit declines — an occurrence that’s become all too familiar in recent weeks.

All three major U.S. indexes — the Dow Jones, S&P 500 and Nasdaq — have fallen at least six per cent so far this month. Canada’s S&P/TSX composite isn’t far behind with a 5.5 per cent decline of its own in October.

Motivations to sell also seem to be increasing, according to analysts.

Everything from geopolitical events to concern over slowing economic growth, disappointing company earnings, and higher interest rates are being blamed for the recent slide in stocks.

Karl Schamotta, chief market strategist at Cambridge Global Payments, said strong growth in the U.S., which has enjoyed one of the longest expansions on record, is “beginning to show its age.”  

“The Trump administration’s double-barrelled stimulus package is beginning to lose steam — tax cut impact was heavily front-loaded, and historical evidence would suggest that the ‘multiplier effect’ associated with government spending will diminish quickly,” Schamotta said. 

“With the Democrats likely to mount stiff opposition after the mid-terms [elections], markets are increasingly aware that the pork barrel is nearing empty.”

Large industrial companies like Caterpillar and 3M, which are considered bellwethers of the global economy, sank more than 5.7 per cent and 4.4 per cent respectively in New York on Tuesday. Their earnings’ reports disappointed investors and ignited fears about how rising borrowing costs, wages, and tariffs will affect company results.

Trade protectionism is also playing a bigger role in the markets, according Schamotta. He thinks many companies that accelerated purchases ahead of tariffs are now sitting on excess inventory, and higher supply chain costs will likely be a drag on earnings for many years to come. 

Higher rates hurt liquidity

Added to the slump in stocks, the CBOE Volatlity Index, which measures trading volatility on Wall Street, jumped as much as 25 per cent today to its highest in more than a week.

Bipan Rai, executive director of macro strategy at CIBC Capital Markets, said there are definitely more risks ahead, given that central banks are no longer providing the degree of liquidity that they had been in years past.

“All else being equal, it’s the liquidity withdrawal story that is most relevant, considering that is what causes the rate at which future returns are discounted to rise,” Rai said.

“Liquidity withdrawal will affect higher premium assets like emerging market assets and global equities first, before they move into other assets. This is a theme that markets will have to deal with in the quarters ahead,” he said.

Meanwhile, the Bank of Canada is widely expected to raise interest rates on Wednesday for the fifth time since it started its tightening cycle in July of last year.

Falling oil

Strategists at the Bank of America Merrill Lynch expect the central bank to continue to raise its key lending rate after tomorrow’s expected rise until it hits 2.75 per cent by the end of 2019.

Another factor weighing on the Canadian market was declining oil prices, which brought down heavyweight energy shares like Suncor Energy and Imperial Oil.

Crude oil prices fell to their lowest level since September, tumbling more than four per cent in New York, after Saudi Arabia pledged to meet any supply shortfall that resulted from Iranian sanctions.

Alfonso Esparza, senior market strategist at foreign exchange brokerage Oanda, said the bull run in the stock market is at a turning point where it’s running out of steam at a time of high uncertainty in world politics.

“The last quarter of 2018 will be packed with market events as central banks are expected to close out the year with major policy decisions, while there are big political events like the U.S. midterms, Italian budget, Brazil elections, etc.,” he said. 



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Here Are Some Of The Most Outrageous Perks Cities Offered Amazon

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Did Amazon successfully trick cities and states around the country into a bidding war that gave it leverage to negotiate with the two cities ― New York City and Arlington, Virginia ― it planned to launch in all along?

The company will probably never say, but the range of perks that so many places offered hints at just how much control Amazon, a company headed by the richest man in the world, wielded in this year-long game. 

Not all governments have released the details of their bids, but those that have showed just how much they were willing to put on the line. Aside from the billions in tax incentives most locales offered, here’s a look at five of the most outrageous things governments brought to the table ― often at the expense of taxpayers. 

Free Pets, Hotel Rooms, Aquarium Memberships And More

Dallas is perhaps the best instance of a city’s willingness to sweeten the deal with extravagant perks, offering up taxpayer dollars to provide free things to Amazon employees. 

That offer included free one-year memberships to the Dallas Zoo, Dallas Children’s Aquarium, Dallas Arboretum, Texas Discovery Gardens and the Trinity River Audubon Center for any employee hired between 2019 and 2021, and waived pet adoption fees at the Dallas Animal Services adoption center for Amazon employees until 2022. 

One of the pricier perks offered was an estimated $1.5 million in free rides on “shuttles, pedicabs, courtesy carts, or other quick transit solutions” to help HQ2 employees get around while the city improves its transit system. 

Additionally, Dallas offered the company 2,000 free nights at a city-owned hotel and 100 free days of event space. 

Renaming Public Property For Amazon

The state of Georgia said Amazon would have the opportunity to rename streets around a future campus in Atlanta.

Suggestions included Amazon Lane, Alexa Way, Prime Place and Kindle Rd. 

“Simply put, Atlanta has a long history of Amazon love,” the state said in its attempt to woo the company.

It also promised to explore the possibility of turning one of Atlanta’s MARTA transit cars into a vehicle for transporting Amazon products around the metropolitan area. 

Notice If The Media Is Looking Into Amazon

It wasn’t just the helicopter landing pad that helped Virginia win over a slice of the new Amazon headquarters. As part of its offer, the state will notify the company within two days of receiving any Freedom of Information Act requests about Amazon “to allow the Company to seek a protective order or other appropriate remedy.”

FOIA requests are often filed by members of the media to obtain previously unreleased information or documents controlled by the U.S. government. For example, it was through a FOIA request that The Daily Beast revealed last month that Amazon had met with U.S. Immigration and Customs Enforcement to pitch the agency on its facial recognition surveillance technology.

A Say In How Taxes Would Be Spent

Fresno, California, offered Amazon the chance to be the “ultimate corporate citizen,” as Fresno Mayor Lee Brand described it to KQED, by letting Amazon have joint say with the city in how the taxes the company paid would be spent. 

The deal would have established a so-called Amazon Community Fund for Amazon’s tax money to be managed by five people: two elected officials, one community representative and two Amazon appointees.

“I’ve never seen a proposal to give a company formal control,” Greg LeRoy, executive director of the economic development nonprofit Good Jobs First, told KQED. “That’s really off the charts.”

A ‘Blank Check’ For Transit Projects

While many bids include promises to make transit easier for HQ2 employees, Maryland Transportation Secretary Pete K. Rahn took things a step further in the state’s bid.

“Our statement for HQ2 is we’ll provide whatever is necessary to Amazon when they need it,” he told state senators during a hearing on his department’s budget. “For all practical purposes, it’s a blank check.”

That amount, he continued, “could be more or could be less” than the $2 billion in unspecified transportation upgrades already laid out in the state’s formal bid. 



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Here Are Some Of The Most Outrageous Perks Cities Offered Amazon

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Did Amazon successfully trick cities and states around the country into a bidding war that gave it leverage to negotiate with the two cities ― New York City and Arlington, Virginia ― it planned to launch in all along?

The company will probably never say, but the range of perks that so many places offered hints at just how much control Amazon, a company headed by the richest man in the world, wielded in this year-long game. 

Not all governments have released the details of their bids, but those that have showed just how much they were willing to put on the line. Aside from the billions in tax incentives most locales offered, here’s a look at five of the most outrageous things governments brought to the table ― often at the expense of taxpayers. 

Free Pets, Hotel Rooms, Aquarium Memberships And More

Dallas is perhaps the best instance of a city’s willingness to sweeten the deal with extravagant perks, offering up taxpayer dollars to provide free things to Amazon employees. 

That offer included free one-year memberships to the Dallas Zoo, Dallas Children’s Aquarium, Dallas Arboretum, Texas Discovery Gardens and the Trinity River Audubon Center for any employee hired between 2019 and 2021, and waived pet adoption fees at the Dallas Animal Services adoption center for Amazon employees until 2022. 

One of the pricier perks offered was an estimated $1.5 million in free rides on “shuttles, pedicabs, courtesy carts, or other quick transit solutions” to help HQ2 employees get around while the city improves its transit system. 

Additionally, Dallas offered the company 2,000 free nights at a city-owned hotel and 100 free days of event space. 

Renaming Public Property For Amazon

The state of Georgia said Amazon would have the opportunity to rename streets around a future campus in Atlanta.

Suggestions included Amazon Lane, Alexa Way, Prime Place and Kindle Rd. 

“Simply put, Atlanta has a long history of Amazon love,” the state said in its attempt to woo the company.

It also promised to explore the possibility of turning one of Atlanta’s MARTA transit cars into a vehicle for transporting Amazon products around the metropolitan area. 

Notice If The Media Is Looking Into Amazon

It wasn’t just the helicopter landing pad that helped Virginia win over a slice of the new Amazon headquarters. As part of its offer, the state will notify the company within two days of receiving any Freedom of Information Act requests about Amazon “to allow the Company to seek a protective order or other appropriate remedy.”

FOIA requests are often filed by members of the media to obtain previously unreleased information or documents controlled by the U.S. government. For example, it was through a FOIA request that The Daily Beast revealed last month that Amazon had met with U.S. Immigration and Customs Enforcement to pitch the agency on its facial recognition surveillance technology.

A Say In How Taxes Would Be Spent

Fresno, California, offered Amazon the chance to be the “ultimate corporate citizen,” as Fresno Mayor Lee Brand described it to KQED, by letting Amazon have joint say with the city in how the taxes the company paid would be spent. 

The deal would have established a so-called Amazon Community Fund for Amazon’s tax money to be managed by five people: two elected officials, one community representative and two Amazon appointees.

“I’ve never seen a proposal to give a company formal control,” Greg LeRoy, executive director of the economic development nonprofit Good Jobs First, told KQED. “That’s really off the charts.”

A ‘Blank Check’ For Transit Projects

While many bids include promises to make transit easier for HQ2 employees, Maryland Transportation Secretary Pete K. Rahn took things a step further in the state’s bid.

“Our statement for HQ2 is we’ll provide whatever is necessary to Amazon when they need it,” he told state senators during a hearing on his department’s budget. “For all practical purposes, it’s a blank check.”

That amount, he continued, “could be more or could be less” than the $2 billion in unspecified transportation upgrades already laid out in the state’s formal bid. 



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New York Taxpayers Are Buying A Helipad For The Richest Man In The World

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New Yorkers, take note: While you commute in dilapidated and decaying subways, know that Jeff Bezos will be able to rely on a more upscale mode of transit to get to Amazon’s forthcoming New York City headquarters in Queens.

That’s because New Yorkers are buying a helipad for Bezos, the richest man in the world.

Buried in the 32-page, $1.5 billion agreement between New York’s various economic development agencies and Amazon is a promise by the city to help the company secure rights to a helipad on, “or in reasonable proximity to,” the company’s new site in Long Island City.

(Amazon’s other recently announced headquarters, in Virginia, also includes a clause for a helipad).

For its part, Amazon agreed to limit landings on the pad to no more than 120 a year, restrict it to “corporate use” only and agree to fly “exclusively over water or the Development Sites.”

In a prepared statement Tuesday, New York City Mayor Bill de Blasio pledged to make sure the area has the transportation infrastructure it needs. Lacking additional detail, however, Queens residents should brace for the chaos sure to follow an expected 25,000 Amazon employees who will be commuting to and from the neighborhood on a regular basis.



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