Ebola claims more victims

Jul 28, 2014 20:41 UTC

The Ebola outbreak in West Africa has gotten scarier. More than 670 people have died of the disease in Guinea, Sierra Leone, Liberia, and now Nigeria, which on Friday confirmed that a man in Lagos had died of the deadly disease. Over the weekend, Liberia closed most border crossings into and out of the country to try to clamp down on the spread of the virus, which can kill up to 90 percent of victims (in this outbreak the fatality rate is around 60 percent).

Here’s what the outbreak looks like geographically as of late last week.


The governments trying to battle Ebola in West Africa are up against two huge issues: first, there’s a lot of mistrust of health care workers in the region where the disease is most prevalent. The family of an Ebola patient in Sierra Leone “forcefully removed her from a treatment center and took her to a traditional healer,” Reuters reports. She died Saturday in an ambulance after authorities found her and tried to get her back to the treatment center.

The second problem: the health workers trying to battle it are getting sick themselves. The doctor in charge of treating the outbreak in Sierra Leone tested positive for the disease last Wednesday. Reuters reported over the weekend that two American doctors working in Liberia also contracted it. Samuel Brisbane, a senior doctor working in Liberia, recently died.

Millennials: forever renters or just delayed homeowners?

Jul 25, 2014 18:26 UTC

The White House wants to help you move out of your parents’ basement. That was the message from Jason Furman, the chairman of the White House’s Council of Economic Advisers, at the Zillow Housing Forum in Washington yesterday.

Here are the basics: housing is a big driver in the U.S. economy. Young people aren’t buying houses during the recovery at as high a rate as they did historically, which is at least part of the reason that the housing recovery (and thus the great economic recovery) from the Great Recession has been sluggish. The question is why, and to what extent will this trend become permanent?

The takeaway from Furman’s speech is that the White House is worried about what these trends mean for the economy, but it doesn’t think it’s a permanent situation. Policy-wise, says Furman, making sure young people graduate from college (if they start) and can find steady jobs is the best way it can help this situation.

This isn’t the easiest chart in the world to read (note that the right y-axis is inverted), but it shows that there’s some correlation between the headship rate — essentially how many people aren’t living in their parents’ basement — and the unemployment rate. Loosely speaking, when people can’t find jobs, they move back in with their parents.

You need a job to move out... shocking I know

Furman noted there are a lot of other factors that contribute to the secular decline of homeownership among young people today, but the most important one is probably increasing education rates. That in turn is a factor in two different trends that could be keeping young people from buying homes: high student debt loads and delayed marriages. However, neither of these problems mean young people won’t eventually become homeowners if they have steady jobs and access to credit — they’ll probably just have to wait a little longer.

“There is no strong reason to believe that millennials are dramatically different than the generation of Americans that preceded them,” says Furman. It’s too bad it will probably be another decade before we find out if that’s true or not.

Pepsi pops, Coke fizzles in Q2

Jul 24, 2014 19:56 UTC

The two giants of the beverage empire reported earnings this week, with PepsiCo outperforming estimates and Coca-Cola missing them.

For Coke, global sales volume rose 3 percent, but beverage sales were flat in North America. This is partly because Americans are drinking fewer diet sodas, Reuters reports. Interestingly, sales of regular Coke rose 1 percent in North America, which the company attributes to “demand for smaller packages of the product, which Coke has found to have generated more ‘brand love.’”

Pepsi announced organic revenue grew 5 percent in its snacks business and a 2 percent organic sales increase in its beverage business globally. Reuters writes that this is good news for the company, which is currently trying to battle activist investor Nelson Peltz, who “is urging the company to split its more successful snack division from its sluggish beverage business. Peltz said last week that a proxy fight at PepsiCo was a ‘possibility.’”

Facebook leaves niche competitors behind

Ben Walsh
Jul 23, 2014 20:38 UTC

These are good times for Facebook. The social media site reported second quarter earnings of $0.42 per share and revenue of $2.91 billion on Wednesday afternoon. Analysts polled by Thomson Reuters expected $0.32 in earnings per share and revenue of $2.8 billion. The company’s stock is up just under 1% in after hours trading. Reuters’ Stephen Culp charts Facebook’s share price relative to the S&P 500 and five of its competitors. The comparison is striking and decidedly in Facebook’s favor.

pdfnews (4)

It was only back in April that tech stocks, Facebook included, were falling and people were scrambling to explain why.  In the intervening months, Facebook has not been alone in reversing that decline. While its more niche competitors like those charted above have performed poorly on an absolute and relative basis, year-to-date, a host of bigger tech companies’ stocks beaten the S&P 500′s 7.3% return: Google (up 8.9%); Apple (up 20.2%); Microsoft (up 20.8%). The NASDAQ itself is up 22.7%.

Perhaps the reason why Facebook’s stock performance varies so dramatically from the Zyngas and Yelps of the world is because those companies aren’t Facebook’s real competition.  It’s being treated by the market like a tech and advertising behemoth it is, not the single desktop product company it was, with performance in line multi-hundred billion dollar market cap companies. The idea that Mark Zuckerberg is building a “holding company for various properties in world domination,” as Joseph Cotterill put it, is close to the consensus view. Or, a slightly less ominous conclusion is that the market really does believe that Facebook is becoming a P&G-style brand holding company that sucks ad dollars from phones around the world.



Inflation inches up

Jul 22, 2014 19:53 UTC

The latest inflation numbers are out. According to the Bureau of Labor Statistics, the consumer price index rose 0.3 percent in June, following a 0.4 percent rise in May, mostly thanks to high gasoline prices. However, core CPI — which ignores volatile food and gas prices — was only 0.1 percent. CPI year-over-year, which is the number commonly referred to when talking about inflation, now sits at 2.1 percent (1.9 percent without food and gas).


This has implications for monetary policy, as the Fed ponders when exactly to time its first interest rate hike (currently expected sometime early next year). Here’s more detail from Reuters:

Inflation is creeping up as the economy’s recovery becomes more durable, a welcome development for some Federal Reserve officials who had worried that price pressures were too low.

The steady increases have led some economists to predict that a separate inflation gauge watched by the Fed, currently running below the U.S. central bank’s 2 percent target, could breach that target by year-end as an acceleration in job growth lifts wages.

Fed Chair Janet [Yellen] warned last week the Fed could raise interest rates sooner and more rapidly than currently envisioned if the labor market continued to improve faster than anticipated by policymakers.

China’s housing problem

Ben Walsh
Jul 21, 2014 19:07 UTC

The Chinese housing has been in rough shape for more than a year. Quartz’s Gwynn Guilford charts the latest set of bad numbers. It’s not an out of control crash just yet – prices are still rising on a yearly basis – but the boom of the last decade is certainly over.


change-in-average-price-of-new-chinese-homes-vs-previous-year-average-price-increase-for-new-commercial-housing-vs-previous-year_chartbuilder (1)

In May, Guilford argued that it may already “be too late for the Chinese government to stop its housing bubble from popping.” The problem, she said, was that economic growth had become too closely tied to housing investment. Matt O’Brien made a similar point when he said that a manufacturing-dominated view of China’s economy was out of date. After the financial crisis, demand for its exports dropped, and so China looked to housing, the sector at the heart of the crisis in the West, to drive its recovery.

And then recently, when a dip in the housing market caused slower economic growth, the government told banks to issue more mortgages. But more mortgages alone won’t necessarily mean more home buyers: credit standards will need to be loosened for that to happen. If you are worried about Chinese housing starting the next financial crisis, Simon Johnson has a relatively comforting prediction. He and co-author Peter Boone say that the whole thing will end not with a Lehman-like catastrophe, but a “ more standard credit bust, driven by the drying-up of the nonbank markets and some losses on bank loans.” In the context of bad outcomes, that’s definitely not the worst.

Charting the U.S.’s child immigrant crisis

Jul 18, 2014 18:24 UTC

The US has a child immigrant crisis. The number of unaccompanied minors sneaking across the border has soared in the last year. From Reuters:

More than 52,000 unaccompanied minors from Guatemala, El Salvador and Honduras have been caught trying to sneak over the U.S.-Mexico border since October, double the number from the same period the year before. Thousands more have been apprehended with parents or other adults.


The children sneaking across the border are mostly from Central America.


Why now? “U.S. immigration officials say the crisis is being driven by a mix of extreme poverty, gangs and drug violence in Central America, as well as rumors perpetuated by human smugglers that children who reach the U.S. border will be allowed to stay,” writes Reuters.

On Monday, a plane full of women and children from Honduras were deported by the Department of Homeland Security. Meanwhile, President Obama is attempting to persuade Congress to approved emergency funds to try to control the border. Predictably, there’s a partisan fight about if, and how much, money should be approved.

The path of Malaysia Air Flight 17

Ben Walsh
Jul 17, 2014 19:09 UTC

At 14:15 GMT (10:15 A.M. EST) on Thursday, Malaysia Airlines received notification that Ukrainian air traffic control had lost contact with Malaysia Air Flight 17. MH17 was flying from Amsterdam to Kuala Lumpur. Reuters reports that the plan disappeared while flying at 33,000 feet above the conflict-torn territory.

The plane crashed about 30 miles from the Russian border, according to Malaysian Airlines. A Ukrainian interior ministry official said the plane was shot down by pro-Russian militants. All 295 people on board–280 passengers and 15 crew–were reported dead.

Reuters maps the path of the flight. The plane is not currently thought to have been in restricted air space when it crashed.


News of the flight comes four months after Malaysian Airlines flight 370 disappeared between Kuala Lumpur and Beijing. The fate of that plane remains unknown.

Ebola’s fatal toll

Arlene Getz
Jul 16, 2014 19:20 UTC

The latest outbreak of the deadly Ebola virus is getting even worse. The death toll from the worst ever outbreak in West Africa has risen to 603 since February, with at least 68 deaths reported from three countries in the region in the last week alone, the World Health Organization (WHO) said on Tuesday. Hardest hit: Guinea, Liberia and Sierra Leone. The graphic below shows the illness’s fatal swath since 1976, with Sierra Leone currently recording the highest number of deaths: 52. Liberia reported 13 and Guinea 3, according to the WHO figures.

The problem with stopping the spread is not just that the hemorrhagic fever has no known cure. Global health authorities fighting against the latest outbreak in countries with traditionally poor health care systems also have to contend with in-country hostility toward foreign medical professionals and viral-transmitting local customs such as eating bush meat or hugging and kissing victims of the virus, according to Reuters. (The virus first appeared in 1976 near the Ebola River in the Democratic Republic of Congo and is believed to have been spread originally by fruit bats. Gorillas, chimpanzees, forest antelopes and porcupines can also spread the virus.)

The outbreak has caused humanitarian problems too, with Ivory Coast border authorities blocking the return of 400 Ivorian refugees from Liberia for fear they’ll bring the disease with them. The WHO says it is not recommending any travel or trade restrictions in the affected countries and is mobilizing authorities in the affected countries to provide a better welcome for foreign doctors trying to treat the infected. In spite of these efforts, WHO spokesman Dan Epstein expects it to take “several months” for the organization to get a grip on the epidemic.

House of BRICS

Jordan Fraade
Jul 15, 2014 19:17 UTC

The BRICS nations are holding their annual summit this week in Fortaleza, Brazil, and the biggest item on the agenda is the creation of a joint development bank. While all five BRICS countries have pledged to contribute to the $100 billion development bank as well as a reserves fund, China and India are both gunning to be the nation that hosts the institution. Indian trade minister Nirmala Sitharaman made a strong push for his country, saying, “Any city in India has its natural advantages, English-speaking, very skilled manpower, and…India is very centrally located.” Still, there’s no doubt that one country is the real economic powerhouse in BRICS: China.

This Reuters graphic gives some insights into the BRICS numbers.

In terms of both GDP and total reserves, the chart shows that China is the only one of the five nations that has been on a consistent upward trend since 2005, with no dips for the global recession. Its GDP is over four times that of Brazil, the BRICS country with the next-highest GDP, and it has eight times as much reserve currency as Russia, its closest competitor. This has put it in a unique position to make deals and direct trade, according to Reuters, which also reported that China’s President Xi Jinping invited India to become a founding member of the Asian Infrastructure Investment Bank.

Xi also invited India to an APEC summit in November, bringing the South Asian country closer to its longtime goal of joining the trade organization.

  • # Editors & Key Contributors