By Alex Plough March 20, 2015
Janet Yellen. © International Monetary Fund
US Federal Reserve Slowly Losing its Patience
The US Federal Reserve dropped a policy statement assurance that it will take a “patient” approach to raising interest rates, but reassured markets nevertheless that rate hikes were unlikely to be announced at next April’s meeting. “Just because we removed the word patient from the statement doesn’t mean we are going to be impatient,” Fed Chair Janet Yellen told journalists at press conference in Washington on Wednesday.
Investors were rattled ahead of the announcement, fearing that aggressive rate increases would create volatility in the market, as ultra-low rates over the past nine years have pumped up stock prices.
NYSE trading floor. ©Todd Holmes
Instead, Yellen calmed nerves with the news that future rate hikes still depend on strengthening economic indicators. The US job market has rebounded strongly in the last year, adding an average of 267,000 jobs each month. But economic data points have been weaker since the start of the year, likely because of bad weather and the recent port strike on the west coast.
“This change does not necessarily mean that an increase will occur in June,” Ms. Yellen said, “though we cannot rule that out.”
Wall Street reacted to the carefully crafted message with a rally on the stock markets. The Dow Jones index was deep in the red in early trading, but jumped over 300 points on Yellen’s statements. It ended the day up 227 points, back over the 18,000 mark.
China Launches Rival to World Bank
China is turning its huge cash reserves into geopolitcal power with the launch of a $50 billion development bank that has attracted several western European members, despite urging from the US that they not join.
Shanghai ©Mike Behnken
The Chinese Asian Infrastructure Investment Bank (AIIB) is one of number of new economic programmes launched by the country, apparently to counter the US and EU grip on global development through institutions such as the World Bank and International Monetary Fund (IMF).
US leaders worried about the potential rival to its economic power have lobbied the country’s closest allies to resist joining the AIIB. In a sign of waning US influence on the world stage, the four biggest economies in Europe – Britain, Germany, France and Italy – have now asked to become founding members of the AIIB.
The news marks the next stage in an international power struggle for control of global economic institutions. China has long complained about a lack of influence at the IMF despite its powerful economy; meanwhile the US firmly controls the World Bank and the influential Asian Development Bank has been led by a succession of Japanese bureaucrats.
Frustrated by the slow pace of reforms at these organizations, China set about picking off America’s European allies one by one. Britain was the first once to break ranks last week and was followed on Tuesday by Germany, France and Italy, bringing the total up to 26 member states.
Panic in the Streets of Frankfurt
Blockupy, Frankfurt, March 18, 2015. © Montecruz Foto
Public anger against economic austerity in Europe erupted on the streets outside the new European central bank headquarters in Frankfurt, Germany this week. The protests turned violent, with hundreds of police and protesters injured.
On Wednesday, officials listened to an inaugural speech from ECB president Mario Draghi in the glass-towered building, situated on the site of Frankfurt’s old wholesale market hall. Outside, thousands demonstrated against the central bank’s austerity measures in a rally organized by a group called ‘Blockupy’ and German workers’ unions. According to the New York Times, a group of around 400 protesters tried to break through police lines guarding a bridge leading to the ECB building while smaller bands threw rocks and set fire to cars. Police responded with tear gas and baton charges.
Blockupy, Frankfurt, March 18, 2015. © Christian
Protest organisers Blockupy represent a militant new wing of the pan-European anti-austerity movement, which is led by insurgent political parties such as Syriza in Greece and Podemos in Spain, which is set to win big at the next general election. Bloomberg, in a break from its traditional news format, created a photo gallery that captures some of the most dramatic scenes from the protests.
Apple Launches TV Streaming Service
Apple store, New York City. ©Trey Ratcliff
The tech juggernaut Apple continues to crowbar itself into new industries. This week, news broke that it will launch a subscription-based TV streaming service this fall, according to a scoop by the Wall St Journal. Other new ventures recently revealed include its smartwatch, smartphone payment system and the dedicated team it has assigned to investigate self-driving cars.
Apple’s new streaming service will consist of a network of 25 channels anchored by major broadcasters such as ABC, CBS and Fox, and will sell for roughly $30 to $40 a month. Users will reportedly get access to a slimmed down selection of content, streamed straight to Apple devices such as iPhones and Apple TV.
The tech company is still in talks with broadcasters and so far has failed to sign up NBCUniversal, a major stumbling block as the network owns a number of popular cable channels such as USA, Bravo, and E! Entertainment. Analysts at Baird Equity Research suggested on Wednesday that Apple could generate $4 billion in annual revenue from the service.
Apple’s move is widely seen as attempt to attract the millenial market, whose viewing habits have forced the entertainment industry to stream more and more of its content online. Business insider spoke to two dozen young people to understand why they are ‘cutting the cord’ with traditional cable TV subscriptions.
March Madness interactives
NCAA Men’s Division 1 Basketball- Army vs. Bearcats (2012). ©West Pt., U.S. Military/ Flickr
It’s ‘March Madness’ once again, with fans across the country betting on who will win the NCAA college basketball tournament. Bloomberg has joined the fun by asking some of the biggest names in business for their March Madness brackets and tracking the results to see who picked the most winners. For those interested in the more controversial side of the tournament, in which college athletes are paid nothing yet organizers make millions in advertising revenue, Bloomberg has another data interactive that charts where the money goes.
