Posts by Rick Newman
- Rick Newman at Yahoo Finance42 mins ago
How does this end?
That question has been applied to many intractable scenarios, and it’s what global investors want to know as pro-democracy protests in Hong Kong continue with no end in sight. In some ways, the protests seem to be intensifying: Some demonstrators have threatened to take over government buildings if Hong Kong’s top government official doesn’t resign. The protests have disrupted many local businesses, with Hong Kong’s Hang Seng stock index down nearly 4% since the protests began a week ago.
Threats and ultimatums raise the specter of violent confrontations, recalling the 1989 Tiananmen Square massacres. But it may be far more likely that the protests lose steam and business eventually returns to normal in China’s financial capital. “If this type of disruption goes on, I think local residents are going to feel their daily life is being impeded and they will want this movement to stop,” Fred Teng, chairman of the nonprofit Hong Kong Association of New York, tells me in the video above.
- Rick Newman at Yahoo Finance3 hrs ago
Six months ago 2014 was looking like a washout for General Motors (GM). A safety defect involving faulty ignition switches was mushrooming into a huge recall affecting 2.6 million vehicles, now linked to at least 23 deaths. Instead of finally putting the 2009 bankruptcy filing and government bailout behind it, GM seemed likely to veer into fresh obstacles on a rutted road to recovery.
Yet GM keeps ringing up impressive sales, defying predictions of yet another stall. Crosstown rival Ford (F), meanwhile, is shaping up as the surprise loser of 2014. GM sales in September surged by 19.4% over 2013 levels, with sales for the year up 4.3%. Ford’s September sales, by contrast, dropped by 2.7%, with year-to-date sales down 0.5%. GM's stock rose on a down day for the markets; Ford's stock fell.
- Rick Newman at Yahoo Finance1 day ago
Some things are worth investing in. But that doesn’t make them cheap.
There’s broad evidence that a college education pays off, since college grads on average earn at least twice as much as mere high school grads. But it can also be a struggle to come up with the funds to pay for college, with the typical cost of a bachelor’s degree hitting $102,000, according to the nonprofit Hamilton Project. The price tag for a top private-school education can easily be twice as much.
New research by Hamilton, along with a separate report by Payscale, can help families figure out how to optimize education spending and make sure the investment turns out to be worth it. Both reports rank college majors according to the income earned by people who chose each field of study. Some of the findings aren’t surprising: Quantitative fields emphasizing math and science produce the highest earners, for instance, while people interested in social work, education and the arts clearly aren’t in it for the money.
- Rick Newman at Yahoo Finance2 days ago
Arab Spring? Or Occupy Wall Street?
Global investors are searching for the best analogy to help understand protests in Hong Kong that have been simmering since summer but recently burst into a chaotic spectacle of blocked roads, riot police and tear gas.
A movement known as Occupy Central has been clogging Hong Kong’s most prominent streets to protest a recent decision by the Chinese government in Beijing regarding the province’s 2017 elections. The government’s ruling will allow universal voting, for the first time, in the 2017 election — a reform promised as part of Hong Kong’s handover from the U.K. to China in 1997. Candidates, however, must be nominated by a government committee, a provision democracy advocates regard as a sham that will produce a ballot larded with the Communist Party’s hand-picked operatives.
With protests intensifying, Hong Kong’s Hang Seng stock index fell 2% on Monday, and it’s down 4.5% over the past week. Markets in Europe and the United States have fallen by less, as investors gauge what will happen next — mindful that political disruptions in Ukraine, Iraq, Syria and Libya barely bothered the markets during recent years.
Peter out or intensify?
- Rick Newman at Yahoo Finance5 days ago
Everybody’s used to hearing how crony capitalists use the public purse for their personal enrichment. This is a rare turnabout tale in which taxpayers ended up winning at the expense of moneyed interests.
An important highway known as the Indiana Toll Road— running for 157 miles in the northern part of the state — declared bankruptcy this week. The toll road, which includes portions of I-80 and I-90, is the sort of public-private partnership many analysts feel will be the most effective and maybe only way to fund big infrastructure projects in the future, since governments are generally short on cash. So the toll road’s bankruptcy — not something you hear about every day — seems to raise troubling questions about funding methods for roads and bridges that even President Obama has endorsed.
- Rick Newman at Yahoo Finance8 days ago
My healthcare plan is fine. But yours is probably lousy.
That seems to be the way Americans evaluate the convoluted U.S. healthcare system these days, according to new data published by the Employee Benefit Research Institute. In its annual survey of workers, EBRI found a majority consider the healthcare system overall to be poor or fair, a notable deterioration compared with the numbers from 2013. There was a corresponding drop in the portion saying the system is good, very good or excellent.
Yet the number of Americans satisfied with their own healthcare plan has been going up, the opposite of what you’d expect if the broader system were actually getting worse. The percentage of Americans rating overall healthcare as fair or poor has risen from 49% in 1998 to 61% in 2014. Yet the portion saying they're satisfied with their own plan has ticked up from 87% to 88% during the same time. Here’s a chart showing the trends:
So why, when it seems the vast majority of Americans are satisfied with their own health plan, would they also feel the overall healthcare system is getting worse?
- Rick Newman at Yahoo Finance9 days ago
The Occupy movement shook things up for a few weeks when it stormed into New York City and a few other metropolises in 2011. Then it faded away.
There appears to be an Occupy-style uprising on climate change at the moment, with the largest march ever on the issue hitting Manhattan on the eve of a big United Nations confab on the topic and residual protesters continuing to demonstrate. But hope for a meaningful reduction in global carbon emissions is premature, because most of the world is thoroughly addicted to fossil fuels. It could take hundreds of marches over decades to change that.
- Rick Newman at Yahoo Finance9 days ago
To the list of worriers who feel financial markets are getting overheated, add 20 more.
Finance ministers from the Group of 20, which includes the United States, the U.K, the European Union and China, warned at their latest meeting that financial markets may be headed for a slump. “Downside risks persist, including in financial markets,” the group said in a statement from Cairns, Australia. “We are mindful of the potential for a build-up of excessive risk in financial markets, particularly in an environment of low interest rates and low asset price volatility.”
It’s unusual for government finance ministers to comment on the direction of financial markets, yet concern about inflated stock prices is now mainstream, as Aaron Task and I discuss in the video above. Since the market bottom in 2009, the S&P 500 has risen by about 200%, while overall U.S. economic output has only risen by about 20%. Stock prices relative to earnings are above historical averages. Many top investors have been predicting a market correction for months.
- Rick Newman at Yahoo Finance12 days ago
For everybody wondering why the economic recovery feels like a recession, here’s the answer: We’re still at least five years away from regaining everything lost during the 2007-2009 downturn.
Forecasting firm IHS Global Insight predicts that real median household income — perhaps the best proxy for middle-class living standards — won’t reach the prior peak from 2007 until 2019. Since the numbers are adjusted for inflation, that means the typical family will wait 12 years until their purchasing power is as strong as it was before the recession. That would be the longest period of stagnation, by far, since the Great Depression of the 1930s.
Even though the recession officially ended in 2009, median household income declined until 2012 (which suggests maybe we ought to reconsider the way we define recessions). The total decline from the peak in 2007 to the bottom in 2012 was 8.3%. For a family earning $50,000, that means they would have been getting by on $4,150 less per year.
- Rick Newman at Yahoo Finance14 days ago
American investors will clamor for a piece of the action this week when Chinese e-commerce giant Alibaba (BABA) holds its highly anticipated initial public offering. Yet even though the firm will be listed on the New York Stock Exchange, Alibaba is unknown to most Americans, and a huge splash in financial markets won’t necessarily raise the company’s profile on Main Street.
[Yahoo Finance's parent company, Yahoo, has a 22.6% ownership stake in Alibaba and stands to profit from the IPO.]