Fed reduces economic forecast and extends bond buying
Fed Reserve Chairman Ben Bernanke said the Fed would extend a program, known as Operation Twist, to drive down long term interest rates until year end and will keep short term rates at record lows until 2013. According to the Associated Press, Bernanke said the economy is under threat from Europe’s debt crisis and that the unemployment levels are likely to remain the same throughout the year. He indicated that employers have become wary of hiring and that unemployment will probably stay above 8 percent. The economy is predicted to grow between 1.9 and 2.4 percent this year, sharply less than the previous estimates in April. Markets fell on Thursday after Bernanke’s speech. The Dow closed down 12 points ending at 12,824. Asian and European markets are mostly negative on Thursday.
Eurozone manufacturing index falls along with China
The HSBC Purchasing Managers Index, or PMI released for the Eurozone fell to 44.8 points in June, down from 45.1 in May. Any reading less than 50 indicates an economy is contracting. Manufacturing in China also declined, according to the Associated Press. The PMI in China fell to a 7 month low of 48.1 in June, down from 48.4 in May. According to CNBC, the Chinese new export sub-orders index fell to 45.9, its lowest level since March 2009. China’s manufacturing index has not been consistently above 50 since June 2011.
Indian outsourcing businesses challenged
Outsourcing from countries such as the U.S. contributes nearly $69 billion to India’s economy and makes up a quarter of its exports, according to the Wall Street Journal. The outsourcing sector has been challenged recently by slowing demand from Europe and the U.S. Additionally, high inflation and skills shortages are pushing up prices. Staff are quick to jump ship for better jobs. There is also rising competition from countries such as Indonesia and Mexico. The Philippines has grown its outsourcing revenues from almost nothing in 2001 to $11.25 billion in 2011. The happy sitcoms and movies based on the Indian outsourcing businesses may soon need to change their plot lines.
Obama’s Banker Friend Reined in by UBS
UBS banker, Robert Wolf, a close friend and large fundraiser for President Obama, has been asked by his employer to have all media relations flow through them, according to CNBC. Wolf apparently golfs and vacations with the President in addition to hosting several fund raisers on Obama’s behalf. Wolf, who makes about $5 million annually from UBS via salary and bonuses, has been positioned by the media as the face of UBS in the US. This does not sit well with his superiors at UBS. Additionally, in a year when Wall Street is moving away from the President, Wolf’s relationship has not been seen as a plus for the banking giant.
Starbucks to open Tazo Tea bar
Starbucks is planning to open its first tea shop using its Tazo brand, according to the USAToday. The store will open near its headquarters and will include a tea bar where customers can blend their own tea with the help of a “tea partner”. There will be 80 varieties of loose leaf tea, tea lattes and iced teas as well as pastries. Starbuck hopes to extend its Tazo tea brand in the same way it has extended its coffee brands.
Facebook as a bank?
A new online survey by Cisco in May conducted among 1,061 consumers indicated that 30 percent might one day use Facebook for some type of banking service, according to the American Banker. Although Facebook does not currently offer banking products, it is trying to make its payment system more compatible with existing systems. It is moving away from Facebook credits into real currency. Fourteen percent of survey respondents indicated they would like a payment service from Facebook with a prepaid account they could reload.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law. She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.
Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences. She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth. Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.
McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)
Catherine is the mother of four and is involved in many school and community events.