globalEDGE Blog - Page 145

A great resource for all small businesses in Michigan is the Michigan Small Business Development Center (SBDC). With services that range from no cost to a small fee, Michigan business owners and entrepreneurs can take advantage of business plan development, financial management, business workshops, raising capital, export strategy, and technology commercialization. The Michigan SBDC provides invaluable resources to the Michigan business community. With a global market that is changing everyday, having these types of resources at your fingertips could make a world of a difference in keeping a business competitive. Make sure to check out other globalEDGE Michigan resources for access to other sites that could help take your business from a single location to a global brand.

The Federal Funds Rate (FFR) is designed to either stimulate saving or spending based on the level of economic growth. Following the 2008 financial crisis, the rate was slashed in attempt to temporarily buoy the markets, but the current economy is calling for an increase in the rate. The series of rate increases proposed by the Federal Reserve were set to be enacted sometime around fall of 2015, although more recently analysts predict that the September 16-17 meeting specifically will reflect any actions taken by the central bank. This rate hike, planned for quite some time now, is becoming increasingly ambiguous as the Fed faces tension following the recent succession of turbulent economic events. Chief among these stressors is the IMF, which is urging the Federal Reserve to cut a little slack for the sake of the global economy.

An article written recently by Tomas Hult, Director of Michigan State University's International Business Center, focuses on the devaluation of the yuan and the impact it will have on the U.S. economy. He argues that the impact on U.S. businesses will not be as negative as many people think and cites research to support his position. His article appears in Fortune's online publication and can be accessed by clicking here. 

Mexican President Enrique Peña Nieto is now at the halfway point of his 6 year presidential term. On Wednesday, he delivered his third State of the Union address, during which he highlighted his plan to boost the Mexican economy. Although a number of measures and reforms were proposed, many Mexican citizens believe that the President’s reforms have not succeeded due to the corruption and economic uncertainties present throughout the country.

As of late, there has been a lot of talk of whether the United States Federal Reserve Bank will raise interest rates in September. Typically, the Federal Reserve would raise its benchmark interest rate when the economy is growing too fast to encourage people to spend less and save more. This slows the economy down, thereby reducing inflationary pressure. A raise in interest rates signals a perception that inflation is rising and that the economy is healthy and growing.

The last six years of economic crisis have taken a huge toll on Greece’s fishing industry, with fish being the country’s second largest agricultural export. Diminishing household buying power has stifled the demand for fish domestically; a problem that has been exacerbated by a weakened banking sector that is unable to provide sufficient cash to customers. Exporting fish to countries in a more stable economic position could revive this industry, yet even this solution is laden with problems.

On Monday, August 24th, Chinese stock markets fell by 8.5%, creating a major crash in the Shanghai Composite. Investors have called this day China's 'Black Monday' because of the dent it has left in China's business as well as the consequences it has caused for the global economy. The crash was caused by many factors including the staggering amount of people investing in the Chinese stock market, suffering businesses with high stocks and prices, margin calls, and the sudden selling of stocks by these same investors. The stock market crash has had damaging effects on billionaires and global markets. Although some markets seem to be in recovery, the crash could be seen as a sign of a bigger problem in China.

Even though global market trade has been in a bit of disorder lately, great advances are expected in trade between Asia, Africa, North America, and Europe by the year 2020. Currently, China's trade is growing, just not at margins seen in the past. With only an expected annual growth rate of 5% over the next five years, China's slowing trade growth comes at a cost from weaker growth among emerging markets. This slowing of China's trade will lead to new trade expansion in the global market.

The ECB is still struggling to keep Greece above water, while China is dealing with its market crash. The surprise yuan devaluation has agitated global markets further. When the People’s Bank of China (PBOC) decided to weaken its currency to get back on the right track, the USD, JPY, and EUR have been forced to adjust accordingly. Anytime a nation deliberately interferes with its currency, ripples are sent through the markets. China, with its 1.9% devaluation, has made waves. Last year, it was Europe in this position, and in 2013 it was Japan’s Abenomics with a weak yen at the helm of its policy that took center stage. With China’s recent move, countries all over are engaging in competitive devaluations to protect currencies. With an increasing number of countries being involuntary drawn in and a few apparent losers already, this is shaping up to be quite a turbulent currency war.

With multiple billion-dollar deals already announced this year, total takeover-deal announcements are on pace to reach $4.58 trillion in 2015. This mark would exceed to previous record high of $4.29 trillion set in 2007, just before the global financial meltdown.