“The circuit-breaker that halted trading in order to calm markets instead exacerbated selling when markets reopened, resulting in another shut down. The mechanism was yanked only four days after it was first used.”
The circuit breaker is just one of signals of falling China’s economy. In the past few years: Industrial growth has slowed for 18 of the past 19 quarters; manufacturing is in decline; imports and exports are sliding; The yuan is falling; GDP growth is at its slowest pace in a quarter-century; profits at state-owned firms have cratered.
Fortunately, Reforms have been being processed. According to the new five-year plan, slimming excess capacity, boosting consumption and increasing green development are three solutions to the falling economy.
Additionally, although steel mills and cement plants are being closed, E-commerce is booming and an increasing number of young people have started their own business. Therefore, China’s economy may have problems now, but it will recover soon.
Apple Inc has lost about $50-billion (U.S.) of its market value in the first four days of the year, forcing some Wall Street analysts to adjust their view on the iPhone maker.
Comments: The sluggish sale of iPhone 6s series may tell us a story: iPhone may have lost its attraction. IPhone is becoming a smartphone rather than an innovative platform.Investors now are looking forward to 7 cycle, which is expected to equipped with a new design. Would the new design be the game changer? We should wait and see.
European Union regulators have unconditionally approved FedEx Corp.’s acquisition of Dutch parcel company TNT Express NV, ending a six-month antitrust investigation that had been one of the biggest hurdles for the nearly $5 billion deal.
Comments: TNT accounts for 12% of European market. This acquisition makes FedEx a bigger competitor in Europe. Unlike UPS’s case, before the acquisition, FedEx is less than half of UPS’s market share in Europe. After the acquisition, FedEx will have a similar market share with DHL which has 41% share. FedEx will play a more significant role in E-commerce in Europe.
China’s securities regulator announced a suspension of a new “circuit breaker” mechanism designed to help stabilize the stock market, saying the system didn’t work out as expected and instead exacerbated stock losses.
Comments: Circuit breaker mechanism has been proved successful in the US and South Korea. The main cause of the failure in China was inappropriate setting. First, the gap between two levels are too small (2%, NYSE has gaps of 5% and 7%).
Then, because of the magnet effect, “Cool down” period turns into “Panic” period. Second, the threshold is too low. Since 2011, the number of changes that more than 5% (level one threshold) is 105. Therefore, comparing to US stock market, reaching threshold in China stock market is not a rare scenario.
The Canadian dollar tumbled below the 71-cent mark today, continuing its downward trend and heading for what some analysts believe will be a bottom of about 70 cents (U.S.).
Comment: In the last week, oil prices fell 10%. Admittedly, since several provinces heavily count on oil revenue, weak oil prices would jeopardize Canada economy.
Besides, mounting tensions between Saudi Arabia and Iran produce more sellers, which also lower oil prices. Last but not least, FED raised interest rate, which made US dollar stronger.
Sales in the Toronto area climbed 9.2% last year to 101,299, according to the real estate group, and the average price rose 9.8% to $622,217.
Comment: Houses are different from other ordinary merchandises. They are geographically irreplaceable. GTA population has increased from 6,574,140 to 7,050,000 in the last four years. The surge in demand may one of the biggest reasons for high real estate price.
Besides, according to Sotheby’s report, “sales of homes worth $1 million or more in the Greater Toronto Area rose 48% in 2015 from the previous year.” Analysts believe international buyers is definitely a factor.
6. RBC increasing some mortgage rates
On Friday, the Royal Bank of Canada will increase its special five-year fixed mortgage rate one-tenth of a point to 3.04%.
Comments: Federal government announced a series of new mortgage rules last year. The effect of these rules is simple. Increase cost. The motivation is simple too: Curbing the risk of a potential housing crash.
My question is: Will it be effective? According to calculation: the five-year fixed rate will rise to 3.04% from 2.94%, enough to increase monthly payments on a $400,000 mortgage amortized over 25 years to $1,901 a month from $1,881.The difference is only 20 dollars per month.
Additionally, there are still a lot of mortgage lenders outside. In a mortgage consumer’s shoes, the change of mortgage rate may be not so significant.
Ford announced that 20 more Fusions would be added to its existing fleet of 10 for experimentation in California, Arizona and Michigan.
They’ll be equipped with the latest sensor, dubbed Hybrid Ultra Puck, due to its resemblance to a hockey puck. It fits on the sideview mirror, provides precision mapping with three-dimensional models of the surroundings, and extends range by 200 meters over the current sensor.
Comments: Driversare playing an increasingly insignificant role in driving a vehicle. This innovation may largely change the auto industry. First, insurance companies may change their metrics of evaluating their customers. Second, since drivers no longer need to pay attention to road condition, satellite TV, online gaming, and reading services may be integrated in new vehicles.
Virtual reality (VR) was big at CES 2016. Countless people came to the show for a chance to experience being somewhere else. This year will see the launch of the consumer version of the Oculus Rift, a headset developed jointly by HTC and Valve, and Sony's PlayStation VR not far behind.
Comments: VR may bring innovation to the gaming industry. Wiis let players leave their couches. Now, VR headsets will bring players an unprecedented experience. Additionally, if these headsets can be connected to BD players or PCs, they may also change film making industry. New types of movie copies are capable of bringing theater-level movie experience.
The age of the smart home is here. From robot vacuums you can command from the other side of the world to fridges that can tell you when your food is going off, major manufacturers are investing in technology that is making our homes smarter than us.
Comments: Life is much easier. You can easily manage your fridge, vacuum and laundry machine by your smartphone. However, is your easier life safer than before? An integrated platform that oversees all parts of your smart home is required. Fortunately, several functions (Fingerprint, anti-hack software and encryption) have been developed and available to be utilized.
2016 is full of uncertainties and challenges. We still need to focus on these topics:
The US election. Will US fix most of its problems? Will US head to another direction? Will US maintain its leadership or just be caught up?
North Korea: Continue on Nuclear weapons or Reform and opening?
UK and EU: Will the third largest economic entity still keep unitied?
The mounting tension between Iran and Saudi Arabia: From the cold war to 21st century, the title is the same but the content has changed greatly.
ISIS and terror attack: Will our world be safer or more dangerous?
These problems are complicated and thorny. However, World economy will possibly revive after tackling various problems. 21st century is not a century of masters. But, maybe, a master is being created by solving difficult problems.
