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US Economy Grows at Slower Pace

Ensuring stable and gradual growth the overall economy in the United States is very important. While the economy has continued to grow a little bit recently, recent news reports (http://www.reuters.com/article/us-usa-economy-gdp-idUSKBN1711MX) have pointed out that the growth is a little bit slower than initially expected.


According to the US Commerce Department, the overall economy in the United States only grew by 1.6% in 2016. This overall level of growth does show progression in the growth of the United States, but was lower than the 2.5% growth in 2015 and was the lowest level of growth overall since 2011. Overall job growth also remained positive as jobless claims fell to a seasonally adjusted 258,000. This was then the 108th straight week where such claims were below 300,000, a level that has been a milestone marker for jobless claims.


While the overall rate for 2016 seems to be stagnant, it does appear that the growth was slower in the first half of the year than the second. In the fourth quarter of the year, the economy grew 2.1% compared to the prior year and the third quarter grew 3.5% compared to the prior year. The overall growth rate was affected by a number of different factors. On the positive side, the amount of consumer spending in the fourth quarter was higher, but the country also had its highest level of imports in several years, which offset some of the national growth.


The growth of the economy will be a major focus in the coming year. With the change in the administration, it remains to be seen how it will impact the level of consumer spending, job growth, and reliance on imports. The current administration has stated that they will focus on bringing a significant amount of jobs and manufacturing back to the United States, which could lead to an overall increase in the amount of consumer spending, reduction in imports, both of which would have a positive impact on overall growth.


Bitcoin in Crisis

Bitcoin has always had a controversy between those who say it’s the future and others who say it’s a pipe dream. But now Bitcoin supporters are fighting with each other and going for what looks like a power grab. The price of Bitcoin plummeted by 25% because of this infighting.


Opposing Factions:

Digital gold or electronic cash neither is wrong or right, just different strategies.

Those on the side of digital gold would rather have Bitcoins capped with no further mining and have other networks that act more like cash and linked to Bitcoin. Similar to how US dollars are backed by gold. This ideology being supported by Bitcoin Developers.


While the supporters of electronic cash would prefer Bitcoin to act more like the federal reserve and simply print more money. This being supported by Bitcoin Unlimited.


The developers and the miners both need each other but have opposing incentives, so they don’t fully trust each other. “Bitcoin is one of those things where nobody wants to be seen as controlling it,” says Bitcoin developer Andrew DeSantis.


The Current Situation:

The plummet in price was caused by a fear that a small group of people from one of the factions would gain too much control rather than the balance of competing interests.


Roger Ver and Jihan Wu are supporters of Bitcoin Unlimited which has been accused of trying to acquire enough control of Bitcoin that they would then make previous versions of Bitcoin incompatible. Both have denied this and called it a conspiracy.

The Ideological disagreement has become an all-out power struggle


Future Outlook:

DeSantis and other bitcoin developers have brought up the possibility of a nuclear option. They can change the Bitcoin software so that it no longer works on the hardware currently running it. It would be a catastrophe for companies that operate within the world of Bitcoin.


Peter Todd, a bitcoin protocol researcher who is aligned with DeSantis and Core. “I think the most likely scenario is that nothing will happen. I really mean nothing.”


But Eric Lombrozo, a Bitcoin Core developer, says, “I’d rather that not happen. I think it’d be dangerous for the network to go down that route. It’s basically a warpath.


Wells Fargo Bank Agrees to Pay $3.6 Million in Penalties to Settle Claims by CFPB

Wells Fargo Bank, one of the largest U.S. private student loan lenders was accused by Consumer Financial Protection Bureau (CFPB) of illegal loan servicing practices. The company claimed in a New York Times news article on August 27th, 2018 that they were aware of the issues and had started to correct the problem before CFPB began their examination. The examination was a result of thousands of borrowers’ claims accusing the banking institution of providing misinformation concerning payment options. Borrowers also claimed Wells Fargo Bank allocated their payments to maximize late fees.



If they had more than one loan, the loans weren’t consolidated but remained as separate loans. Wells Fargo would split their payments without allowing borrowers to specify how they wanted to allocate their payments. The consent order stated after a thorough examination that Wells Fargo failed to inform customers of their right to allocate payments. The order also stated the student loan servicing institution made it very difficult for borrowers to control costs. CFPB found Wells Fargo Bank used illegal loan servicing practices which cost borrowers higher costs and fees.



Americans owe trillions of dollars in student loan debts. The Consumer Financial Protection Bureau is doing everything possible to ensure loan servicing institutions, whether private or federal practice fairly with all borrowers. CFPB regulator, Seth Fortman said he noted in a mid-2016 report that borrowers complained often about federal loan servicers. They were accused of making it difficulty for them to enroll in special programs that lower their federal loan payments. Monthly payments are normally based on the borrower’s net earnings and monthly household expenses, including food, housing and etc.



According to New York Times, Wells Fargo didn’t deny nor admit to the findings of Consumer Financial Protection Bureau. Wells Fargo was also ordered to pay some borrowers $410,000 after finding the bank charged them higher costs and fees for serving their student loans. When consumers file complaints involving private and federal student loan servicers, CFPB has authority to investigate and examine their claims. Wells Fargo didn’t defend their actions, but stated they had already started the process of correcting their student loan servicing practices.


National Mobile Processing Payments Expected to Reach $170 Billion in the Near Future

Mobile payment processing technology is transforming the financial world with its advantages of convenience for U.S. consumers and small businesses. In 2014, more than $5 billion in payments were processed using digital phones in the United States, according to Business Insider. The number of Americans using their smartphones to process payment transactions is also predicted to increase enormously, reaching more than $170 billion in mobile payments processing, in three years. Since 2014, small businesses are taking advantage of recent development of payment processing technology, Mobile Point of Sale.



Companies, such as ShopKeep are benefitting of the increased demand for commercial payment technology. Their Mobile Point of Sale payment app accepts consumers’ payments using smartphones and tablets. The payment technology is compatible with new applications to manage inventory, process payroll and market.



The transformation of mobile payment technology started with Apple Pay and eventually Google, Chase, Android and Walmart developed their payment apps. New developments in payment technology will reduce the number of consumers using cash and credit cards. Access to cash and credit cards is quickly available using smartphones and tablets to make purchases and to pay bills online. Payment processing vendors are planning for the transformation, as cyber shoppers and online stores’ demand increase yearly.



Mobile technology has transformed greatly over the years, beginning with built-in camera, calculator, and clock with alarm feature. Smartphones added other built-in apps, including built-in camcorder, GPS, movie play, and television. New mobile technology will ultimately change the way consumers traditionally process payments. In the 1990’s consumers had to literally write a check or use cash for bill pay to creditors and merchants. Today, millions of U.S. consumers are using digital phones, tablets, laptops and PCs to process bill payments.



Consumers, small businesses and corporations are going digital for financial transactions, including payment processing, receiving payments and online banking. Analysis of the payment technology industry indicates an increase in mobile payment processing technology sales to small businesses and an increase of Americans using smartphones for most payment processing, in the near future. Entrepreneurs are using tablets and phones for running their online businesses, including tracking inventory, processing payments to vendors, and receiving payments from customers. By 2019, consumers and small businesses are expected to contribute to the increase in mobile payments processing.



Buffett Praises John Bogle, an Altruistic Money Manger

Warren Buffett’s annual Berkshire Hathaway letter is seen as a financial goldmine by many investors. In this year’s letter, in addition to dispensing financial insights, Buffett gives a tip of the hat to an accomplished financial advisor.

Many investors would cite Warren Buffett as an example of an altruistic financial innovator. According to the Oracle of Omaha, though, John Bogle, the founder of Vanguard, is the MVP of financial experts in the United States.

Buffett writes that Bogle has done more for American investors than anyone else, according to Business Insider. Buffett explains that, rather than seek the high fees many fund managers receive, Bogle urged investors to put their money in index funds where they could achieve superior results by avoiding unnecessary fees. Bogle’s Vanguard Group pioneered index fund investing and helped investors achieve superior returns.

The fees that Bogle refused to charge could easily have made him a billionaire. Instead, he has become moderately wealthy while protecting the earnings of millions of Americans. It certainly seems that John Bogle is a fund manager who puts investors’ needs first.

Bogle’s index fund idea was initially contrarian, but it has become accepted wisdom by conservative investors. Index funds have revolutionized investing, allowing ordinary investors to diversify their holdings across sectors and across the entire market.

For an individual seeking to altruistically serve humanity, becoming a fund manager might not be an obvious choice. Clearly, though, a fund manager with integrity can make a positive difference in millions of lives.

In the wake of the subprime mortgage meltdown, in which the integrity of the financial system has been questioned, money managers at all levels could learn a lesson from John Bogle. There is nothing inherently greedy or anti-social about working in the finance industry. As in any industry, ethical people can use their positions to make the world a better place.


Wells Fargo Drops Cash Bonuses for Executives

Wells Fargo has just announced that its eight senior executives will not get cash bonuses for last year, Reuters reports. And the equity awards given for three years back in 2014 are to be cut by half as well. These executives include Tim Sloan, CEO, and John Shrewsberry, CFO. This is meant to bring accountability for the latest scandal involving this bank.


Over 5,300 employees were fired by the bank for creating over two million accounts for customers without their knowledge and consent. Fees were charged, while the employees credited for making sales targets. Customer funds were moved from existing accounts into these phoney accounts, while customers were charged fees for insufficient balances and overdrafts.


On top of that, over half a million credit card accounts were created and 14,000 of these were charged fees in excess of $400,000. The bank was fined by CFBP a large sum of $185 million, plus $5 million in customer refunds.


Wells Fargo is among the biggest banks with its stock market capitalization of $300 billion. Currently, its stock is trading at 52-week high together with many other banks, lifted by Trump’s pledges to deregulate the financial industry. Despite firings related to the phoney accounts scandal, the bank employs nearly 270,000 people.


Wells Fargo’s annual revenues approach $90 billion, and over $20 billion in net profits. This makes EPS approach $4 a share, thus giving it a P/E ratio of 15. As it seems, the bank is doing quite well despite violating customers’ trust not so long ago.


Will You Buy Stock in Snap?

Every single tech company out there wants to be the next Google, Apple, or Facebook. Sometimes, it can seem like this is too daunting a task. Many new tech companies fail, and all of that investment capital essentially evaporates into thin air. However, a tech company is sometimes able to climb high enough to get a glimpse of those lofty comparisons. Right now, the tech company lucky enough to play that role is Snap. Snap is the company behind all of those instant messages you can send people just once before disappearing from a phone or device.


Snap is ready to be bought and traded on the New York Stock Exchange for the first time. This move could instantly add billions of dollars to the company. On the flip side, it could also push the company off the edge of a financial cliff. Tech experts and investors are eagerly watching to see what will happen. Folks are optimistic about Snap’s future. The messaging app is used by Millennials, the group of Americans between the ages of 14 – 35, over 18 times a day. Offered initially at $17 a share, the stock did well on its opening day. This made Snap the most valuable company to go public since Facebook did five years ago.


Wealthy investors have already gobbled up shares, and it remains to be seen how many average people will decide to pick up a few shares for their portfolios as well. However, one downside may be the nature of the shares. Most shares in public companies grant investors voting rights. The stock shares issued for Snap do not allow the holder to vote. This means the direction of the company will not be able to be directly determined by shareholders. This might make some people rethink their purchase. Wealthy investors buying large numbers of shares like to be able to help direct a company. Casual investors also enjoy the token act of voting in a public company.


Are you planning to pick up a few shares of Snap? How do you think the company will do? Let us know in the comments below.

Snapchat: Largest Technology IPO in Years

Snap, Inc., the parent company of picture-sharing social media juggernaut Snapchat, had the New York Stock Exchange’s largest technology initial public offering in more than two years. Shares are selling for about $17 each, making the company valued at about $24 billion.


makes Snap’s rejection of a $3 billion cash offer from Facebook a few years ago seem like a good idea. But things are more complicated than they seem.


Beating Expectations Despite Hurdles


Yesterday’s IPO was a surprise for a few reasons. First of all, Snapchat hasn’t actually turned a profit yet. That’s not to say Snapchat doesn’t make any money. It charges up to $750 million a day for a single advertisement. These ads come primarily in the form of sponsored stories, where advertisers can pay to put their own pictures and videos in front of users through the Discovery mode, and sponsored lenses, where advertisers pay to create custom animations users can put on their own pictures and videos. That could put Snapchat’s revenue at $1 billion this year.


Despite a 10-figure projection for this year’s revenue, Snapchat has yet to post a profit. Last year, it posted a $500 million loss and IPO prospectus filings actually warned that the company may never be able to achieve or maintain profitability.


Even more puzzling, shareholders won’t have voting votes and Snapchat’s user base has been stagnating this year.


The Good News


That’s not to say it’s all bad news for buyers of Snapchat. Worldwide mobile advertising budget is projected to quadruple by 2020. If Snapchat can retain and row its own audience, its revenue could benefit from that market growth. Additionally, while the app may have limited revenue capabilities with such a niche userbase, the parent company has been expressing interest in a range of tangentially related products that could expand its target audience.


Snapchat is also the most widely adopted augmented reality platform in the world. Its founders have hinted that they are just scratching the surface when it comes to the AR market, which could include hardware like a phone or wearables.


Becoming Wealthier Than the Competition

A lot of people want to become wealthy. Few people do. This is because they do not understand the fundamental laws for creating wealth. If you want to become a wealthy person, you must understand these fundamental laws in order to do so.


  1. Seek Suffering

Wealthy people share something in common. They did something uncommon. Why? Uncommon things are things that other people are afraid to do. Warren Buffett, one of the world’s wealthiest men, emphasized how his personal fortune was built by ignoring what most people do. Many people believe that copying their peers is a good way to build wealth. This leads us to another good point.


  1. Buy Low

Many people like to max out on the quality of their purchases. They have to have fresh fruit. They have to have a new car. They have to have a safe house. They have to have a popular job. They have to live in a country that has Medicare. All of these things add to the cost of living. If you insist on perfect in everything you get, you will get a less than perfect life. If you instead compromise, and are willing to settle for okay, you will do much better than most people do.


  1. Sell High

Selling high is something that a lot of people do well. You can put it another way as placing the best foot forward. If you have a rock, make sure it is well polished. Whatever you have right now needs to be excellent in appearance. Most casual investors buy based on outward appearance. They like to buy high and sell high. You will profit if you are taking dirty mineral rocks and then polishing them into beautiful gemstones.


  1. It Will Be Lonely

There is another reason most people do not become wealthy. It is lonely to do so. It is lonely to sit through graduate engineering classes as the professor belches out mysterious formulas. It is lonely to spend long nights scouring the stock market for something that is valuable and under-priced. It is lonely to turn down that spicy connection who will ruin your wallet. Becoming wealthy is lonely. That is why most people do not do it.


U.S. Jobless Claims Hit Long-Time Lows

Last week, jobless claims in the United States have fallen to a level not seen since 1973. The initial claims for unemployment benefits, Reuters reports, have fallen to 223,000. For over 100 weeks already, the new unemployment claims have stayed below 300,000 per week. This means the labor market is tightening, and the unemployment rate stands at 4.8%. And this is considered by economists to be full employment. When it comes to the number of people receiving benefits on an ongoing basis, it stands at 2.07 million.


Tightening labor market is another reason why the Federal Reserve Bank (the Fed) is likely to raise interest rates this month. The financial markets have already priced it in. Coming to economy, it grew 1.9% in the last quarter of 2016, which is not high, but still decent growth. The annualized GDP growth now stands at 1.8%.


In recent weeks, the stock market has made major gains, with Dow Jones now standing over 21,000. This continued bull run has been sparked by Trump administration seeking to cut corporate tax rates, loosen environmental and financial regulations, cut the red tape, and stimulate the economy with a massive spending on roads, bridges, airports, and other infrastructure projects.


Yet, not everyone is benefiting from this reduction of unemployment. There long-term unemployed, people who don’t even officially count among the ranks of the unemployed. Also, many jobs are low-paying or temporary, so many of the new jobs aren’t as high-paying as the jobs lost during the last major recession of 2008/2009.