globalEDGE Blog Archive July 2015

The business risk companies are now facing has increased greatly due to global interconnectivity and its associated danger. These risks are quick to evolve and there is little a company can do besides being prepared, which hopefully allows it to bounce back and emerge even stronger.

Commodities are generally a good measure of how the market is doing overall; how abundant and fluid certain resources are can explain a lot about the economy and its patterns. When so much of the world, independent and corporate investors alike, has deeply vested interests in such a large market-one whose health is constantly up for debate, it is difficult to know when the warning signs are considerably worrying. Internationally, the world is facing a massive supply glut with Middle Eastern producers turning over oil at record production rates and the recent emergence of other serious oil producers, including the U.S. Even with such steep price drops, petroleum is not the only factor. One commodity index in particular, that tracks an array of different commodities, is currently trading far below recorded levels from before December 2008. Prices drop, the market recalibrates, and volatility is appeased, if only temporarily. But with recent global events surrounding Greece banks and the Chinese market bubble, perhaps it is time to look below the surface and into the past. 

China is home to the world’s second biggest stock market. This market, which peaked with a value of above $10 trillion, has been on a tumultuous ride in 2015. The market was up over 150% until June, when it suddenly crashed. The largest market in China, the Shanghai market, lost 32% in a four week slide that bottomed out on July 8. The smaller Shenzhen market slid 40% over the same time period. Immediately following this prodigious selloff, the market proceeded to have its strongest two-day rise since the 2008 global crisis. This summer’s stock market madness in China has left onlookers with many questions; principally, what caused this historic volatility and what is next for the markets?

El Niño is a weather and climate phenomenon that is characterized by unusually warm sea surface temperatures. During the El Niño, warm water moves from the Western part of the Pacific Ocean to the Eastern equatorial Pacific Ocean, often accompanied by a change in trade winds. This occurrence can cause significant economic impacts, which could directly impact the agricultural economy first, but later can be felt in the global marketplace.

Earlier this month, United Kingdom Chancellor George Osbourne declared that there would be a new legal living wage of £7.20 per hour. Employers are required to pay this amount starting in April of 2016 to employees aged 25 or older, and this rate is expected to rise to £9 per hour by 2020. The existing minimum wage for those over 21 is £6.50 an hour. Although the U.K. government predicts that around 2.7 million low wage workers could benefit from the change, many organizations and citizens throughout the country are fiercely opposing the soon-to-be implemented measure.

The mass globalization being realized in business today is drastically changing the way people communicate within a company. Obvious trends in the workforce recently are the acceleration of work processes, globally dispersed teams, and increasing outsourcing of knowledge-intensive work. The boost of globalization represents both an opportunity and significant risk for companies. Now, companies are able to pull in new employees from larger, more competitive international pools, but it is a known struggle for employers to retain these highly qualified workers for the long term. In order for businesses to stay competitive today, thinking and planning for the workplace of the future is imperative. Only companies that are able to communicate successfully will be able to stay competitive in an international market and keep themselves in the running as a potential employer.

For the first time in nearly 80 years, Mexico is holding an oil auction in which energy firms from all over the world will compete. Is this bid for oil going to hold lackluster results or is it the key for Mexico's energy reform? Petróleos Mexicanos, mononymously known as Pemex, virtually controls the entire nation’s oil industry. Nationalized in 1938, Pemex was designed to push out external parties like the U.K. and the U.S. following major labor disputes and their ostensible domination of the energy markets. Therefore, the auctions being held are a step, or leap, in the opposite direction. The bidding marks the first time ever that private oil companies are being allowed to set up in Mexico and that oil contracts are being sold off. For a country whose oil industry has been monopolized for 77 years, the auctioning offers a world of possibilities to both Mexico and its prospective investors. To be exact, the sell-off is estimated to draw in a revitalizing $62.5 billion for the Mexican economy.

Our state trade statistics pages have undergone a redesign and the new pages are now available on globalEDGE! These pages can be accessed individually for each state via the Global Insights menu. These new pages highlight important trade figures and data for all the states, and help compare trade volumes between states. Specifically, each state trade statistics page includes figures for total trade, top exporters, and top importers, as well as the most commonly imported and exported goods. The page also includes figures about the impact of trade on the various states’ economies. Be sure to check out these new pages to expand your global business knowledge!

The U.S. and the EU agreed on Thursday to lift nuclear-related sanctions against Iran in exchange for Iran’s compliance with international inspections and restrictions on its ability to enrich weapons-grade material. The removal of these sanctions could assist in reviving Iran’s economy, which has stagnated in post-sanction years.

The arctic ice shelves pose a difficult question to the world’s largest oil companies. According to the U.S. Geological Survey, they may contain the largest remaining untapped oil reserves on the planet, but accessing this oil requires large amounts of time and money. Factor in the recent oil crash and the increasingly uncertain outlook for the industry, and pursuing arctic oil becomes a gamble akin to a billion dollar toss up.

Many financial institutions are turning to social media as a way to attract and engage their customers. The Managing Director for TD Ameritrade, Nicole Sherrod, even works on the weekends to send tweets and interact with the firm's clients. She believes that as a result of her presence on social media, she now has "an even closer relationship with clients" and has been able to get to know them better. By posting on the weekends, she is able to show her activities after work hours and build a more personal relationship with the consumers. Twitter in particular is a useful tool to help financial service workers to navigate company guidance and industry regulations to share industry news, respond to questions from clients, and address other problems or concerns.

With small entrepreneurial business growing, it is important to know the resources that are out there to help grow your business. The U.S. Small Business Administration provides many different ideas to help expand your small business successfully, whether it is to a neighboring state or country, or to the other side of the world. Some of the suggestions include the use of technology, forecasting, building your own franchise, and developing a marketing plan. In the rest of this post, we will look a little deeper into how you can plan for successful growth for your business.

This year, economists expect that Brazil’s economy will shrink by 1% in real terms and by as much as 15% in dollars due to maxed out credit cards, rising inflation, and government increases on prices for fuel, electricity, and transportation. In the last year, consumer spending has stagnated and could even decline by 3% in 2015. However, the Brazilian e-commerce industry seems to be excelling despite all of these indicators. Price savings and the convenience of online shopping caused Brazilians to spend $30 billion online last year, which marks an increase of 9% since 2013.

As the old adage goes “the only way to go is up after rock bottom,” Greece seems unable to stop pushing its economic limits. Despite its previous bailout programs designed jointly by the IMF, ECB, and European Commission, relief arrived coupled with harsh measures. Austerity packages were the fine print for Greece’s lending agreement; yet, unemployment has checked in at 25% this year, while most of the bailout money went toward settling international debt rather than jump-starting the economy. It is perhaps this ineffective past experience that has left Greece resentful toward the idea of another double-edged bailout measure, which is why Greece is currently celebrating its new-found and likely brief freedom from dependence on external problem solvers.

Global discussion and concern about climate change has amplified in the past few years, as more research has been conducted and more world leaders have voiced their opinions on the issue. The most recent world leader to do so was Pope Francis, leader of almost 70 million Catholics worldwide, who declared global warming to be a threat to life on the planet and called for a reduction of the usage of fossil fuels. As this movement garners further support, more and more nations are turning to clean and renewable alternative energy sources to supplement, and eventually replace, their fossil fuel driven energy sources. Of these renewable alternatives, solar power is one of the most popular worldwide.

With a new development by an engineer at Michigan State University, soon a sky scraper could generate enough energy from its windows to supply all of the energy it needs. Researcher Richard Lunt, of Michigan State University, has been able to do what many have tried in the past, making a fully transparent solar concentrator. This new technology, within the next couple of years, could change the face of solar energy and global business. This new technique could change the windows in any building or the glass face on a mobile device into a solar power harvesting application.