Posts by Rick Newman
Rick Newman at Yahoo Finance 2 days ago
American decline. You hear about it everywhere, even if the United States remains the strongest economy among an underperforming set of peer nations.
Ordinary people sense the problem. Nearly two-thirds of Americans say the nation is headed in the wrong direction. A surprisingly large portion of Americans believe (mistakenly) that China’s economy is more powerful than their own. Whether America’s best days are ahead or behind will be a recurring debate in the presidential race that’s just heating up.
Other concerns include worsening income inequality, elevated levels of debt in Washington, a rickety economy over-dependent on the Federal Reserve’s black magic, and subpar education. Even the wealthy may be at risk. “I’m most worried about American public education, for our most vulnerable students, but also our most elite,” Eva Moskowitz,CEO of Success Academy Charter Schools in New York City, told us.
Rick Newman at Yahoo Finance 2 days ago
Small business is a big deal—not just for the economy, but for any politician hoping to get elected.
So it’s not surprising that Hillary Clinton, the Democratic frontrunner for the 2016 presidential election, has declared that she intends to be the “small business president.” Expect the same, more or less, from every other candidate who makes the ballot.
Clinton has a four-point blueprint for how to revitalize small business, which includes slashing regulations, expanding access to capital, cutting taxes on new businesses and improving their access to national and international markets. (And she posted it on LinkedIn, an entrepreneurial social media site popular among entrepreneurs.) But every politician says basically the same thing, and not much changes. Here’s what business owners say Clinton would really have to do if she wants to spur a small-business renaissance:
Rick Newman at Yahoo Finance 4 days ago
More Americans have health insurance. Fewer people have to worry about catastrophic medical costs. Those are notable accomplishments of the Affordable Care Act.
But 31 million Americans remain “underinsured,” which means they have healthcare coverage but still face out-of-pocket medical costs that could cause serious financial stress. Like workers who are underemployed—holding a job but for less pay or fewer hours than they’d like—the plight of the underinsured is often overlooked by policymakers, employers and public health advocates; they have insurance, after all, which means they’re better off than people who don’t.
Most people who get health insurance under the ACA qualify for subsidies that help cover the cost of premiums, and some get additional tax breaks for medical costs they actually incur. There are no government subsidies for people who get health insurance through an employer, which is still the way most non-senior adults get coverage.
Rick Newman at Yahoo Finance 5 days ago
Strapped consumers. A strong dollar. An incomplete turnaround plan.
But Walmart faces a bigger problem that shareholders and company executives may not have come to terms with yet: American shoppers are losing interest in what traditional department stores sell. “People no longer waste money just to show the stuff they have,” says Sarah Quinlan of Mastercard Advisors. “We’d rather have an experience. This is how we will continue to spend going forward.”
Walmart remains a prodigious retailer, with nearly $500 billion in annual sales, making it America’s biggest company. It’s certainly not going away. But growth is painfully slow and could very well stay that way. Same-store sales in the U.S. grew just 1.1% compared with 2014, which is less than inflation and income growth during the same period of time (both were around 2%).
Rick Newman at Yahoo Finance 6 days ago
Elon Musk is part entrepreneur, part magician.
The CEO of both Tesla (TSLA) and SpaceX has built companies in two tough industries where most startups wither and die. Tesla has created a new paradigm for electric cars, while SpaceX has proven that private firms can handle space missions once tackled only by deep-pocketed governments.
But Musk may be even wilier than his many fans realize. A new biography, "Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future," by tech writer Ashlee Vance describes how Tesla nearly ran out of money just two years ago, with shareholders largely in the dark about the firm’s desperate finances. “Too many [buyers] were sitting on the sidelines and it caught up with them,” Vance tells me in the video above. “People weren’t coming to Elon and alerting him to this.”
Rick Newman at Yahoo Finance 8 days ago
That obviously hasn’t happened, and the big car companies have begun to pay close attention to Tesla’s products and future plans.
Like other automakers, Ford recently opened a lab in Silicon Valley, Tesla's home base.
“Tesla has proven what a lot of people thought was not possible without 50 years of experience building cars,” Moray Callum, the top designer at Ford Motor Co. (F), said during a recent meeting with reporters in New York City. “The introduction of a new carmaker is not as impossible as once thought.”
Nonetheless, Tesla and its visionary CEO, Elon Musk, are changing the way century-old automakers design and build cars.
Tesla and Musk might feel otherwise.
What’s going … right?
A lot of people -- okay, we in the press most of all -- focus on bad news. So, while at the recent Milken Institute Global Conference in Los Angeles, we asked business and political leaders to tell us what makes them most optimistic about America. Most, you can see from our video, had ready answers.
The best thing about America, according to our informal poll, is its can-do spirit.
“The U.S. … is still the envy of the world in terms of our innovation, our education system, our transportation and infrastructure, our knowledge-based system, everything,” Mark Weinberger, CEO of consulting firm EY, told us. “We’re top of the charts.”
These problems aren’t unique to the United States, however. Most nations in the developed world are struggling to cope with slowing growth (or worse, outright stagnation) and the disruptive consequences of a technology revolution. And America has advantages over many peer nations.
The American consumer is letting investors down. People aren’t buying enough clothes, housewares or TVs. Weak retail sales numbers are holding back the stock market, with shares of many big retailers such as Macy’s (M), Kohl’s (KSS) and J.C. Penney (JCP) languishing during the last month.
Investors, however, may be looking for the wrong kind of spending. Americans are, in fact, getting out their wallets—but they’re not spending it with traditional retailers. “We’re seeing people consistently spending. We just don’t want stuff,” says Sarah Quinlan of MasterCard Advisors. “We are spending on experiences. And it doesn't matter what your income level is, you have to feel you’re getting a value for the experience you're purchasing. ”
Here are several things Americans are spending plenty of money on:
And here’s where consumer spending has been surprisingly weak:
You have to get rich these days just to finance a comfortable retirement.
That’s the conclusion financial advisors are increasingly coming around to, as they gauge the direction of the economy in a strange new world of glacial growth and super-low interest rates. “Twenty years ago, someone with a million bucks would have said, ‘that’s great, I can draw down $100,000 a year, I’ll be just fine,’” Jim McCaughan, CEO of Principal Global Investors, tells me in the video above. “But now, with very low rates, the problem of funding a retirement is much more difficult.”
Retirees don’t need to be told that low rates have cut sharply into the returns on fixed-income investments. But they may need to rethink how to prepare for what might happen in the future. Many investors are waiting for interest rates to go back up, once the Federal Reserve starts hiking short-term rates later this year or early next year. Meanwhile, the Fed is gradually winding down its vast “quantitative easing” program, which deliberately forced down long-term rates. So as that pressure eases, rates ought to go back up. Right?
Rick Newman at Yahoo Finance 11 days ago
It sounds so enticing: Hook up your lights, thermostat, refrigerator and garage door to the Internet, and control it all from anywhere, via your smartphone. Or better yet, let the “smart home” run itself based on your habits and preferences.
Technology promises many remarkable things, and companies ranging from Google (GOOGL), Apple (AAPL) and Samsung to a host of richly funded startups now hope to cash in on the next big thing in computing: the “Internet of things,” which begins in your home and is centered on your wireless router. But there are risks that many consumers, wowed by the latest “smart” gizmos, may fail to recognize. “All of these devices are basically little computers, and like all computers, they’re hackable,” Marc Goodman, author of the bestseller Future Crimes, tells me in the video above. “We see all of these devices being attacked by criminals one way or another.”