Our Thoughts

FJY News to Know #55

The IMF Revises Its Global Projections Amidst Economic and Natural Turmoil

The International Monetary Fund (IMF) has edited its global growth forecasts, mostly due to a sharp slowdown in India. With trade wars weighing on exports and investments, the global economy expanded by 2.9% last year — its slowest pace since the global financial crisis. Other factors taken into consideration are the unprecedented bushfires in Australia and natural disasters in the Caribbean. The IMF now sees growth at 3.3% this year, below its October projections for 3.4%. It has also cut the 2021 forecast to 3.4% from 3.6%. However, the IMF upgraded China’s 2020 growth forecast by 0.2 percentage points to 6.0% — because of the revised U.S. trade deal. To read more about the IMF’s global economic analysis, click here.

 

Google Has Just Reached the $1T Mark — Rivaled Only by Apple and Microsoft

Alphabet Inc., Google’s parent company, just passed the $1T capitalization mark — Making it the third tech company to reach this benchmark. Alphabet is only exceeded by Apple at $1.38T, and Microsoft — valued at $1.27T. A combination of factors, including the purchase of YouTube, advertising sales, and investing in upcoming markets — has fueled its growth. Google’s ad revenue, which accounted for 84% of Alphabet’s total annual sales in the past quarter — has helped create an annual revenue growth of 20% this past decade. Despite their remarkable valuations, the ‘Big 3’ have drawn antitrust investigations by the Department of Justice and the FTC. To read what finance experts are advising regarding investing in big tech, go here.

 

China Has Committed to a Marked Increase in U.S. Imports — But Can the New Numbers Be Realized?

President Trump just signed the Phase One trade deal with China last Wednesday. One of the most outstanding items is China’s commitment to import $200 billion in additional manufactured goods, agricultural products, energy sources, and services. Despite this appealing number, executing this enterprise could present some formidable obstacles, based on recent trade history. Probably the only way it can accomplish this is to substantially decrease imports from other countries. Besides creating issues with these other countries and the World Trade Organization, the price of various commodities may not change since worldwide demand isn’t increasing. The other obstacle is that tariffs are not addressed in the agreement: If there is no lowering of tariffs, this will make it much more challenging for China to increase U.S. imports by 77%, to an upwards of 150% — since U.S. goods could be more expensive than other countries. To see a chart of the tariffs from the trade war, click here.

 

Student Loan Debt is at a Staggering Amount — And Politicians Are Taking Serious Note

Student loan debt reached $1.6T in 2019 and continues to grow as many are not paying down balances swiftly. The average student debt balance is now around $35,000. As the issue continues to spiral out of control, it’s finally getting the attention of the politicians. Some Democratic candidates have proposed ideas to reduce or cancel this monumental debt, which is a positive development. The higher education bubble began to form back around the 1980s — similar to the housing bubble. Just as people could pay for a home with home mortgage loans, they paid for indispensable college degrees with financial loans. Most students were told that a college degree was the best investment — one which would pay off in a healthy labor market. However, the result has been a highly educated — but financially neurotic — generation. To read more about plans on dealing with student debt, go here.