author

About Goran

Blog posts

Finance

The House legislation passed Saturday narrowed the income eligibility for $1,400 stimulus checks. If the changes make it into the final bill, fewer Americans will see the stimulus payments. The newly-set thresholds would leave millions of families without this round of financial relief, the Penn Wharton Budget Model estimates. The decision has come as a result of a compromise between president Joe Biden and moderate democrats, who suggested tightening the income eligibility for the third round of stimulus checks. Most of the Republican members of Congress are against Biden’s relief plan. Even though they recognize the importance these payments have for the recovery of the US economy, they disagree on the eligibility requirements. Biden’s initial proposal was to set the cap at $100,000 for individuals, $150,000 for single parents, and $200,000 for couples. Voicing Republicans’ and some moderate Democrats’ concerns, this new legislation is supposed to make the final bill lower while setting the income thresholds higher.  The proposal suggests lowering income caps to $80,000 for individuals, $120,00 for single parents, and $160,000 for married couples. It is a modest 5% change, as stated by Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, with roughly 12 million adults still without the relief payments. The economy is looking anemic, and the new stimulus package would be more than welcome. However, some seven million upper-middle-class families do not meet the new eligibility requirements and those that do will receive smaller sums, based on the quicker phase-out rate. Those who criticize the proposed legislation suggested that cutting down the $1.9 trillion relief package could have been done differently, by reducing the volume of local and state aid.  Some are skeptical, saying that the Democrats’ proposal was far from a relief effort and that the citizens’ cry for help in these unprecedented times should be addressed more vigorously. Among them, Congresswoman Alexandria Ocasio-Cortez tweeted on Wednesday that working people need “more generous relief checks, $15 min wage, ending the filibuster to protect our democracy”. Some also argue that the phase-out rates are exceedingly steep, resulting in worse low-income households’ situations.  The bill is about to move forward this week. Democrats would need the support of the whole caucus, given the fact that the party has only fifty votes in the Senate and uncertain GOP support.

March 16,2021
Read Article
Finance

Highly anticipated changes to Paycheck Protection Program rules set in motion earlier in March and designed to deliver generous relief to the most vulnerable small businesses might be coming too late.With the program set to expire in just a few weeks, lenders say they don’t have enough time to adapt to the changes. As such, newly eligible loan-seekers are having difficulty finding lenders willing to accept applications before the deadline.Under the program’s previous rules, unprofitable businesses weren’t eligible for loans. But the new formula introduced by the Biden administration allows sole proprietors to get loans based on their income before expenses while expanding eligibility to include minority-owned, veteran-owned, and women-owned businesses. This opens the door to small businesses, self-employed people, and non-profit organizations devastated by the coronavirus pandemic.However, the move comes dreadfully close to the March deadline. Major lenders that already have a severe backlog of applications, including JPMorgan Chase and Bank of America, refused to adapt to the changes. The latter has stopped accepting new applications altogether.Bill Halldin, a Bank of America spokesman, justified this by pointing to more than 30.000 applications that need to be processed before the deadline.Meanwhile, the policy changes are only fueling confusion among borrowers who were initially advised by lenders to submit their applications after the new, more lenient standards were set in place.Those who applied as soon as the White House made the overhaul announcement are now either being approved under old requirements or asked to repeat the application process. There is also no route for those already approved to apply again under better terms.Considering that there is still $119 billion left out of $284 billion authorized for the program, both lenders and borrowers are calling for an extension with admirable tenacity. The Biden administration hasn't asked for an extension yet, but key congressional leaders are open to the idea. The P.P.P. status will come under the spotlight during an upcoming hearing at the House Small Business Committee.In the meantime, small businesses across America are hoping for an extended deadline to get much-needed funds to keep their businesses alive during this unprecedented crisis.

March 16,2021
Read Article
Startups

The Covid-19 pandemic shifted the stream of capital toward online businesses. As a result, venture capitalists are buying up startup stocks left and right, often at exorbitant prices, to stay in the race for stakes led by large investment companies. February was an excellent month for tech startups, as the total investment in them amounted to a whopping $35 billion. This is just $6 billion short of the record high in January 2021, and it still created 22 startup unicorns. One of the most significant investments was the $500-million stake in Elon Musk’s aerospace company SpaceX. Many incredible listings went public in March, and big investment companies seem to be furthering the overpricing trend. Tiger Global Management and Coatue Management are often named as the mammoths pushing VCs to pay more. The former has led some of the largest deals this year, most notably the $450-million round of funding for Checkout.com, turning it into another startup billionaire. To keep up, VCs halved their investment-decision time. Business software and eCommerce companies have benefited the most from this investment craze, prompted by the overall shift to web-based daily life due to the pandemic. However, many seasoned investors warn against jumping on board and making hasty decisions. While this shift in investment trends is bound to help many new startups, it also increases the risk of failed ventures, as not all companies will live up to these grand expectations. Arun Mathew, a partner at the VC firm Accel, illustrated this danger in the interview he gave the Financial Times: “Not every company can be Zoom or Snowflake.” Whether VCs will learn this harsh truth the hard way remains to be seen.

March 17,2021
Read Article
Retail

Import-based retail forecasts for 2021 look promising: The expected slowdown in retail sales after the holidays was missing in 2021, and the National Retail Federation is predicting record retail sales this year. Imports are continuously growing, with retailers preparing to meet the demand as the country reopens. The Covid-19 pandemic turned shopping into a predominantly online experience, which was bad news for brick-and-mortar stores, but good news for retail overall. The initial prognosis was grim, with over 8,300 US stores closed in 2020 and 400 stores announced to close in 2021. Another 10,000 physical retailers are predicted to go belly up by the end of 2021. However, the import reports and estimates from the NRF’s Global Port Tracker tell a different story. The first month of 2021 was the busiest January since 2002 in terms of retail imports. Furthermore, February and March forecasts anticipate increases by a quarter and nearly a half of 2020 imports, respectively. To boot, Chinese New Year last year didn’t bring the usual Asian factory closure during the holidays, either. Instead, ships arriving at US ports struggled with an unexpected backlog of unloaded goods. All in all, the reports from the NRF are very encouraging. Ben Hackett, the founder of the consulting firm helping the NRF establish these predictions, places his faith in vaccine rollout. Vaccinations are already helping the dwindling retail stores, with customers going back to purchasing non-essential products, such as apparel, from physical locations. While this is encouraging, it could also go sideways: Vaccinations could shift spending trends back from hard goods to services. “The successful distribution of vaccines will help ensure that the economic recovery will likely be strong and sustainable,” Hackett said on the topic. Still, all signs indicate that the retail industry will recover. Where that recovery will go is anyone’s guess, however, as major changes are apparently imminent, with initial steps already taken by some big names.

March 17,2021
Read Article
Retail

Disney announced that a fifth of its brick-and-mortar stores would close by the end of the year in the rapid shift toward eCommerce caused by the pandemic.First on the shutdown list of 60 stores are North American locations, all scheduled to close either on or before March 24, 2021. Disney is currently closing several stores in Arizona, California, and Texas, among others.These changes are part of a bigger plan for eCommerce development. European stores might be hit next, but the media giant has yet to announce which of its 300 stores will go under in the future.In 2020, eCommerce retail sales jumped by 32.4%, signaling the move away from conventional shopping. These are grim news for those fans who consider the stores an essential part of the Disney experience. However, they can look forward to an overhaul of Disney’s online store in the near future. Disney has promised significant improvements to its e-shop, with more adult apparel collections, streetwear, premium home products, and collectibles. Considering that Disney stores are usually focused on creating a magical experience for kids, this improvement will undoubtedly cater to a much wider audience. Disney’s partnership with Target for more than 50 locations with Disney pop-up shops within the retail giant’s megastores is also in danger. On the plus side, more than 600 Disney Parks stores, third-party retailers, lifestyle, and outlet locations will remain unaffected by these closures. To say goodbye to a fifth of its shops, Disney is currently running a 30%-off storewide sale, with discount coupons for shopping at the online store. On a much happier note, after keeping its gates closed for a year, Disneyland has finally been cleared to reopen in April. The Walt Disney World Resort in Florida has been open since June 2020, but strict state regulations have kept its California counterpart closed until now. Both are and will be operating under the necessary safety measures due to the pandemic. Backed by these announcements, Disney stocks are also flying high, increasing by 6.33% within one day. The latest Disney animated feature, “Raya and the Last Dragon,” taking a whopping $8.6 million on its opening weekend certainly played a significant part in this increase.

March 18,2021
Read Article
Retail

An increasing number of Chinese consumers and e-commerce sites are boycotting well-known international retailers such as Nike and H&M. The move came as a response to various Western brands and retailers issuing statements condemning the alleged use of Uyghur forced labor in the Xinjiang province. Last week, regular consumers, celebrities, and Chinese state media outlets called for a boycott of multiple international outlets that have previously issued statements accusing China of human rights abuses. In 2020, these outlets responded to growing calls by the general public and human rights groups to react to human rights abuse allegations. Now, Chinese e-commerce sites are massively removing products sold by these producers from their stores. Chinese celebrities have also cut ties with said brands, and over 32 million people used the ‘I support Xinjiang cotton’ hashtag on the social media platform Weibo. One of the hardest-hit companies by this boycott was H&M. The company reported a loss of $122 million in the December-February period. Nike and Adidas also experienced losses, with the Chinese company Anta, often called the ‘Nike of China’, stepping in to fill the vacuum left by the boycott of these brands. The reason why clothing retailers are even involved in the question of the alleged abuse of this Muslim ethnic minority group is the Australian Strategic Policy Institute’s report that states that 82 international and Chinese companies have ties to the Xinjiang province, which represents a crucial link in the global cotton supply chain. As a result, retailers such as H&M, Nike, Victoria’s Secret, Zara, and others felt the need (or were pressured by the public) to condemn the alleged practice of Uyghur forced labor, with some companies even completely cutting ties with the region and its cotton supply. The Chinese government strongly denies these allegations. However, the reaction of the Chinese public came several months after the retailers mentioned above issued their statements. This late reaction could be due to the fact that said statements weren’t translated nor widely circulating in the Chinese public space until last week. Another explanation could be the new sanctions imposed on Chinese officials last week by the US and its allies. Even before the Chinese boycott started, some companies have quietly redacted or removed their statements condemning human rights abuses. The reasons are obvious - China is a vast and lucrative market, and most global retailers do not wish to risk losing access to such a significant source of revenue. This story is another escalation in the increasingly hostile relationship between the US and China, with lines between politics and the private sector becoming more and more blurred.

April 05,2021
Read Article