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Financial Analysts Watch Turkish Protestors

14 Jun

Civil unrest in Turkey is causing some concern on the part of credit agencies over whether Turkey will be able to maintain its economic performance.  While Turkish markets have recently rallied in light of Moody’s decision to upgrade the country, anti-government protests have occupied the capital and other Turkish cities for more than two weeks.  Protestors claim the political part in power is moving public policy to favor Islamic law, even though the country is officially secular.  A recent law curbing alcohol sales seems to have been the last straw for the non-religious half of Turkish citizens, and protests have persisted and in some cases become violent.

Rating agency Moody’s, led by Raymond McDaniel, said that the Turkish government will need to act swiftly and effectively to curb the unrest in order to maintain its newly achieved rating of Baa3, because the protests could reduce tourism revenue and thus affect the country’s debt to income ratio.  The protests could also make foreign investors hesitant to bring capital into the country if the government is seen as unstable, which is why agencies are emphasizing the dependence on the government’s reaction to the protests, rather than on the protests themselves.  Overall, both Moody’s and rival agency Fitch said there is no danger of a credit downgrade at this time.

The Turkish economy is performing better than expected this year and has managed to bring unemployment to the lowest rate in seven years.  Inflation is also down and the working class seems to be happy.  So far the protests are isolated to the educated groups of people who are against religious rule, rather than being able to ignite the working class.  Most analysts feel the protests will be controllable and not effect Turkey’s economy.

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Sony Makes Brilliant Move

13 Jun
Sony Playstation

Sony made brilliant use of Xbox’s PR fumbles.
Image: Shutterstock

If you aren’t a gamer, you may not be aware of the recent waves in the gaming industry as the next generation of console development is rolling out.  It began with Microsoft’s announcement of the Xbox One in late May.  Microsoft has fumbled the promotion of the new console, not only upsetting the gaming community with its lackluster game development but with a feature that many game enthusiasts have long feared.  Not only will the system require an online connection to play, but will essentially render used or borrowed games useless without a significant fee to Xbox for a new verification code.  While Microsoft scrambled to clarify the online features and announce more game titles, the sour taste from the original announcement is still fresh in consumer minds.

Especially now that Sony has swiftly used the bad PR to its advantage with its announcement of the Playstation 4 console. Not only did Sony include a montage of new games during their announcement at a major electronics conference, but also practically bragged that it would be a hundred dollars less than the Xbox.  Two complete its One-Two punch to Microsoft, Sony made a twenty-two second instructional video on how to share used games (you hand your game over to your friend).

Sony stocks spiked right after the Xbox announcement, indicating that Xbox may have some trouble peddling its new wares to the market.  However, it ultimately seems that Xbox is targeting another market entirely.  The promotion for the device has heavily stressed its cloud computing capabilities, indicating the ability to streamline a wide variety of media consumption at record speeds.  Television and movies are more important to the Xbox One marketing strategy, and may attract buyers who are not as upset about not being able to buy used games.  Meanwhile, Playstation is executing a pro-gamer strategy perfectly, using everything from pricing to humor to rake in loyalty. It will be interesting to see which one pays off.

When Big Companies Trick Kids

28 May
McDonald's logo

9-Year-Old Hannah Robertson gave McDonald’s a piece of her mind.
Image: McDonald’s

Nine-year old Hannah Robertson doesn’t think tricking kids is okay, and she’s not afraid to tell people so. Last Thursday, McDonalds Corporation held its annual shareholder meeting, and the pint-sized public speaker gave CEO Don Thompson a piece of her mind.

“Something that I don’t think is fair is when big companies try to trick kids into eating food that isn’t good for them by using toys and cartoon characters,” she said during a Q&A session. “If parents haven’t taught their kids about healthy eating then the kids probably believe that junk food is good for them because it might taste good.”

Hannah’s mother, Kia, is a member of Corporate Accountability International. She also created an interactive nutritional game called “Today I Ate a Rainbow,” is a nutritional blogger, and makes healthy cooking videos with her daughter.

“It would be nice if you stopped trying to trick kids into wanting to eat your food all the time,” Hannah said, continuing on to close with her question: “Mr. Thompson, don’t you want kids to be healthy so they can live a long and happy life?”

There were probably a few intakes of breath after Hannah’s speech finished, and I imagine Mr. Thompson was probably sweating bullets. An impressive fourth grader, to be sure. But he handled the question as well as he could have.

Hannah Robertson

Hannah and her mother Kia make healthy cooking videos.
Image: TodayIAteARainbow

Thompson first thanked Hannah for her question and said it was a pleasure to have met her earlier. Then he went on to refute her insinuation that he doesn’t care about keeping kids healthy.

“First off, we don’t sell junk food, Hannah,” he said, continuing on to talk about his own children and their cooking habits at home (fruits & veggies included!). Then he went on to say that McDonalds had made a lot of healthy changes over the years, like adding apples, side salads, and fat-free milk to Happy Meals and the $1 menu—and he says they’re hoping to “sell even more” of those healthy items in the coming years.

While those claims are all true, Hannah’s mother, Kia Robertson, is calling for “genuine change” at McDonalds. Both she and her daughter brought up the issue of childhood obesity, citing unhealthy eating habits as a major factor—habits they say are worsened by the fast food industry’s child-targeted marketing.

“CEO Thompson, don’t you think a good place to start would be to leave our children alone and let us parents decide what’s best for them?” she asked.

Bitcoin Shows Promising Future

23 May
bitcoin

Bitcoin online currency is stabilizing at $120 per Bitcoin.
Image: Zach Copley / Flickr CC

Born out of online shopping habits and the desire for less regulatory control in finance, the Bitcoin is making some pretty serious progress with early adopters.  Although the currency is four years old, Bitcoin recently gained public attention when the trading price skyrocketed to over $230 dollars each.  The online currency has now stabilized to $120 dollars per bit coin, a massive increase over this time last year when it traded around $5.00 per Bitcoin.

Last weekend, about 1,000 Bitcoin enthusiasts gathered for Bitcoin 2013, a conference on the virtual currency in Silicon Valley. Attendees included a flood of start-ups, venture capitalists, Bitcoin vendors and exchange providers, and libertarians looking for more freedom in commerce.  Rather than using credit cards to make online purchases and deal with having to give companies personal information, Bitcoin works like a virtual cash, where only the money is verified rather than your identity.  Other benefits of using Bitcoin include the ability to back up your cash funds, a reduced risk of fraud, and short verification time for transactions.

Cameron and Tyler Winklevoss were on site at the conference as star investors in the new currency.  The twin brothers are credited with giving Mark Zuckerberg the idea for Facebook.  Along with the director of the Bitcoin Foundation Peter Vessenes, they called for the standardization, support and regulatory policies necessary to make Bitcoin thrive.  Right now, about $45 million in Bitcoin transactions take place daily, and that number is only expected to increase.  As more people adopt the currency, the price is expected to stabilize. For now, the Bitcoin foundation is preparing to hire a lawyer to work with Congress on better regulation for the new currency.

3D Printing Opens Worlds of Possibility for Entrepreneurs

16 May

As the price of 3D printers continues to drop and sales increase, new services are opening up to anyone who has an idea.  Suddenly, the jumping through hoops process of creating a prototype have disappeared.  No longer do people have to suffer the lack of flexibility of manufacturing plants commit to buying 50,000 copies of their own invention just to get it to market.

Now, services like Shapeways can make your design idea a reality almost immediately.  Some of their applications simply make a black and white drawing into a 3D model, with no extra technical knowledge on your part required.  Shapeways will even sell your design for you in their online marketplace if you choose.  With 8 different materials to print with, the possibilities are abundant and everything from art and jewelry to machine parts and tools can become a reality.

A start-up called Kor Ecologic has designed a car using 3D printers that is aimed to be the world’s greenest car. Urbee, as it is named, is lightweight, aerodynamic and requires little material and labor compared to other cars manufactured today.  The car comes with a solar kit for garage rooftops to recharge the battery.  Someday, surely every city will have small companies making custom cars to order out of someone’s garage.  Urbee is just one example of how 3D printing will eliminate manufacturing competition overseas, re-localize economies, and even the playing field for small businesses and start-ups.

The Urbee from Shapeways is being called the "world's greenest car" Image: solidsmack.com

The Urbee from Shapeways is being called the “world’s greenest car”
Image: solidsmack.com

The wonder of this technology is not without its demons.  Recently, a group called Defense Distributed posted plans for printing a gun on a 3D printer online.  The plans had over 100,000 downloads before the U.S. State Department ordered the group to remove the plans.  Such actions and other thoughts have put 3D printing in the hot seat for ethical debate.  Is a system that is easier to exploit mean there will be more abuse than what we experience now? It is hard to say.  Surely, the benefits to social equality and sustainability will outweigh any negative effects the technology could have.  New technology is always met with challenges and hurdles, but one thing is for sure: 3D printing will change our world.

Pets at Home Buys Vets4Pets for Reported £40M

10 Apr

The UK pet store chain Pets at Home has expanded its business hugely with the purchase of the joint venture veterinary business, Vets4Pets. The acquisition is rumored to be in the neighborhood of £40 million and makes Pets at Home the proud owners of Vets4Pets’ 93 stand-alone locations.

 

Vets4Pets began just twelve years ago with the opening of a single clinic, and its success has now granted its owner a major windfall. Pets at Home already has 116 in-store veterinary clinics, thanks to its joint venture partnership with Companion Care. The company will continue to work with Companion Care while simultaneously integrating Vets4Pets into more of its stores. This will make them one of the largest veterinary chains in the UK.

 

“The expansion of veterinary business is a key element of our growth strategy for Pets at Home, providing additional services to our customers within our stores or close to our customers’ homes,” said Pets at Home CEO Nick Wood in a press release. “The acquisition of Vets4Pets is an important step in the delivery of this strategy. Vets4Pets is highly complementary for Pets at Home.”

 

Vets4Pets Founder and CEO Peter Watson plans on staying with the business despite its transfer in ownership. “Pets at Home holds a unique place in the retail landscape, built on a strong identity and a real passion for people and pets. It is clear to me that Nick and his team have a similar vision for their veterinary business,” he said.

 

Pets at Home was purchased in 2010 by U.S. private equity group, Kohlberg Kravis Roberts. Founded by Jerome Kohlberg, Henry Kravis and George Roberts in 1976, KKR specializes in leveraged buyouts and has participated in many notable buyouts in its thirty-seven years in business.

 

 

Fitch Threatens UK Downgrade

29 Mar

Fitch, one of three major credit rating agencies, has put the UK economy on negative watch. The agency, run by CEO Paul Taylor, says the country’s rising debt and slow growth has put it on track towards a possible downgrade in the near future. The UK was recently downgraded by Moody’s, whose CEO is Raymond McDaniel, another of the big three agencies—that means if Fitch ends up lowering the country’s credit rating as well, things may start to get a bit rocky.

 

“The persistently weak performance of UK growth, in part due to European growth, has increased uncertainty around the UK’s potential output and longer-term trend rate of growth with significant implications for public finances,” Fitch said.

 

The country’s economy shrank by 0.3% in the last quarter of 2012, according to an article from The Guardian, and another dip for the first quarter of this year is a looming possibility. If it does see another loss, that will mean a triple-dip recession. A double-dip recession occurs when a country experiences a second dip, or negative GDP after one or two quarters of growth. A triple-dip recession would be unprecedented in Britain, and brings about fear that the country will move into a “lost decade.”

 

Ed Milibrand, leader of the British Labour Party, claims that the government is to blame for this possibility. “They are shrugging their shoulders, They have run out of ideas, They are resigned to a lost decade,” he said, later emphasizing that having the right leadership in place could help move Britain out of this economic slump.

 

But Lord Mendelson, former business secretary, says it’s about the future and not the past. “Everyone knows we are in a heck of a bad way in the economy. Quite a lot more pain is going to be experienced. What we should be saying is: this is the light at the end of the tunnel. This is where we should be heading,” he says.

 

“We need to explain how we would retool and redevelop our economy. We need a politician who will fight on that rather than fight about the past or fight over what is fair and what is not fair.”