The concept of sharing is so far ingrained in our everyday that most of us couldn’t imagine living in a world where we can’t share a ride, couch-surf or leave our dog with a stranger at the tap of a screen. The advancement of the sharing economy, defined by Google as an economic system in which assets or services are shared between individuals, is a prime example of this.
In fact, per the Innovation Report 2018 published by Lloyds, the global sharing economy is expected to grow to $335 billion (approximately £261 billion) by 2025. That’s considerable growth in comparison to 2014, when the estimated size of the global sharing economy was circa $15 billion (approximately £12 billion.)
This isn’t surprising when in theory the sharing economy is supposed to save resources, strengthen regional and local communities, cut costs, enable consumption for lower income groups, increase investments and provide new jobs. However, while there is a plethora of benefits to the sharing of assets and services, there is also countless risks.
In analysing Lloyd’s innovation report, British marketplace OnBuy.com wanted to share how American and British consumers feel toward the sharing economy and what they believe the risks and benefits are.
To achieve this, OnBuy designed graphics to showcase data collated by Lloyds from more than 3,000 US and UK consumers as well as representatives from 30 sharing economy companies.
In terms of benefits, both American and UK consumers believe ‘it can be cheaper for users’ - the number one benefit to the share economy, at 60% and 58% respectively.
Thereafter, it is clear American consumers are more enthused with other benefits, such as ‘it is more convenient for users’ and ‘it provides more flexibility for users’ at 52% apiece.
Comparably, just 39% of British consumers believe ‘you can earn money from your assets when you aren’t using them’. While 43% of American consumers would say the same.
In terms of risks, American consumers believe ‘there’s a risk to personal safety interacting with strangers’ which is cited as the number one risk to the share economy, at 60%.
While British consumers are caught between ‘there’s a risk to personal safety interacting with strangers’ (44%) and ‘there is no guarantee of the quality of the service or facilities (44%) in sharing their opinions on the number one risk.
Other risk factors to consider include ‘people sharing their assets could have them damaged’ (American 46%; UK 42%) and ‘people sharing their assets could have them stolen’ (American 43%; UK 41%.)
Lastly, 37% of American consumers and 33% of British consumers agree ‘there aren’t sufficient safeguards or protections in place for users’ in the sharing economy.
Cas Paton, Managing Director of OnBuy.com, comments: “If the sharing economy is to reach the proposed $335 billion mark in 2025, the industry needs to thoroughly consider the opinions of consumers. Today, the way people spend money and interact with the everyday is changing. Companies need to match this change with innovative products which meet the needs and expectations of their customers.
To combat risk, Lloyds recommends sharing economy companies partner with insurers to enhance credibility, instil confidence and build trust to drive business growth and gain a competitive advantage. I truly believe this is the way forward. Especially considering 58% of American and UK consumers currently believe the risks outweigh the benefits of using sharing economy services.”
(Source: OnBuy.com)
The guide, on How to Make Money from eSports, also labels the United States as the highest-earning country and Dota 2 the highest-paying game.
Aimed at both talented gamers and those who have an interest in eSports, content included uses historical data and cutting-edge insight to offer realistic guidance to those who dream of being the next MVP (Most Valuable Player).
Jesse “JerAx” Vainikka, from Finland made short of $2,500,00 last year, topping the five highest-earning players in 2018:
- Jesse “JerAx” Vainikka ($2,290,632)
- Johan “N0tail” Sundstein ($2,282,717)
- Sébastien “7CKNGMAD” Debs ($2,280,217)
- Topias “Topson” Taavitsainen ($2,249,842)
- Anathan “ana” Phan ($2,249,136)
2019 is set to be particularly profitable, with the highest-earner predicted to pocket $3,292,966 in winnings.
Top tips to being the best include:
- The qualities most appropriate for streaming and competing.
- Step by step guide on how to become a streamer or pro-league player.
- How to monetise channels.
- An overview of affiliate marketing.
- How to find your niche (as a streamer or player).
- How to get noticed and rise from a gamer to a pro-league player.
2018 proved to be a successful year for the top five highest-earning eSports players, who each took home an average of $2,270,509.
With prediction data, the average winnings of the top five players are set to rise by 39.6% from $2,270,509 in 2018 to $3,169,957 in 2019.
The highest-paying game in 2018 was Dota 2, which awarded a staggering $41,395,452 in prize winnings. Further success is apparent for Dota 2, which is forecasted as the highest-paying game for the next five years.
Below, Finance Monthly hears from David Worthington, VP, Payments at Rambus, on the growing obsolescence of cash.
According to the World Payments Report, compiled by Capgemini and BNP Paribas, the global volumes of non-cash transaction volumes grew by 10.1%, reaching 482.6 billion between 2015 and 2016. In addition, McKinsey’s recent Global Payments 2018 report highlighted an 11% growth generated by payments, which topped $1.9 trillion in global revenue.
A thread that runs through both reports, which helps to explain this combination of transition and growth, is real-time payments (RTP). How then are RTP – aka faster or instant payments – evolving around the globe?
Innovation in real-time payments
Many countries around the world are at various stages of implementing RTP, and challenges still remain.
In early October 2018, US Federal Reserve Governor Lael Brainard outlined the organization’s commitment to addressing current systematic issues limiting the growth of RTP. Summing up the challenge faced in markets around the world, she said, “faster payment innovations are striving to keep up with this demand, but gaps in the underlying infrastructure pose challenges associated with safety, efficiency, and accessibility.”
As a result, Brainard added, “we need an infrastructure that can support continued growth and innovation, with a goal of settlement on a 24/7 basis in real time.”
With established initiatives such as The Clearing House’s RTP system however, America is in a good position to accelerate adoption and implementation of faster payments.
Investment is not limited to America, though. Across the Atlantic, the TARGET instant payment settlement (TIPS) service has launched to increase the speed of euro payments in the European Union, settling payments in central bank money, irrespective of the opening hours of a user’s local bank.
In the Southern Hemisphere, it has now been a number of months since the launch of Australia’s New Payments Platform (NPP), and Reserve Bank of Australia Assistant Governor, Lindsay Boulton, has highlighted the government’s hesitancy to move services to the platform without it being firstly tested by industry. To encourage private sector interest in the scheme, a sandbox for developers to test APIs has been unveiled but there is clearly more work to be done.
But Capgemini is optimistic, expecting that NPP will drive non-cash transactions growth by not only enabling RTP, but also providing further value-added features.
Faster payments – faster fraud
These are just examples of two countries and global demand for faster payments is clearly going to grow. This growth, however, can provide the environment for increased fraud if new systems fail to learn from the problems experienced by previous implementations.
It is well known that where money goes, fraud follows. The ability to move funds quickly allows criminals to evade traditional checks like the identification of out-of-pattern activity, automated clearing house (ACH) block services and manual reviews.
There are various security approaches available to fight against fraud, but tokenization has already proved successful in protecting in-store and online card payments, with all the major payment systems, digital wallets and original equipment manufacturers adopting the technology.
By replacing unique sensitive information or data with a token, the risk associated with account-based fraud can be significantly reduced, fostering safe and secure RTP initiatives across the world.
The so-called ‘resource curse’ has reduced a once prosperous nation into a financial meltdown. The increased social and economic upheaval has sparked protests on a nationwide level and led many poor people to lose faith and withdraw their allegiance to President Nicolás Maduro. Amidst the political and economic turmoil, the EU, the US and a number of other countries across the globe have recognised opposition leader Juan Guaidó as the South American nation’s rightful interim president. In a bid to alleviate “the poverty and the starvation and the humanitarian crisis” currently gripping Venezuela and stop “Maduro and his cronies” looting the assets of the country’s people, US President Donald Trump has announced sanctions against Venezuela’s state-owned oil company PDVSA. US National Security Adviser John Bolton announced that the measure will “block about $7 billion in assets and would result in more than $11 billion in lost assets over the next year”. Effective from 29th January, the sanctions guarantee that any purchases of Venezuelan oil from US entities flow into blocked accounts and are supposed to be released only to the country’s legitimate leaders.
The situation in Venezuela has puzzled social scientists for years. On paper, oil-exporting countries and their economies are supposed to be thriving. Why is this not the case for Venezuela and what does the ‘resource curse’ have to do with it?
The Oil Curse Explained
The resource curse is a concept that a number of political scientists, sociologists and economists use to explain the deleterious economic effects of a government’s overreliance on revenue from natural resources.
In Venezuela’s case, being overconfident in its status as an oil powerhouse, the country’s socialist government became so dependent on oil production that it managed to lose track of its food production. Farms and other similar industries were expropriated by the government, which combined with the lack of private ownership due to the country’s socialist regime, led to a massive decrease in food production. Crop farmers weren’t able to acquire pesticides from now-government owned chemical companies, animal farmers weren’t able to acquire feed from crop farmers and food depleted. Nationalising businesses meant that business owners were forced to stop food production, while the government ignored food production altogether due to its full reliance on oil riches, which became the main focus.
As with any commodity, stock or bond, though, the laws of supply and demand cause oil prices to change. In 2014 for example, when oil prices were high, Venezuela’s GDP per capita was equivalent to 13,750 USD, while a year later, due to a dip in oil prices, it had fallen 7%.
This example perfectly illustrates the resource curse concept. A country, in most cases an autocratic country, becomes so dependent on a single natural resource that it disregards all other industries. The government is happy because the revenue is enough to feed them and secure their position of power. Naturally though, over time all other branches of the economy slow down to the point when the commodity prices inevitably drop, the country’s economy is not equipped for survival. According to the concept, the resource curse is an issue seen in the Middle East, however, it has never been so clearly displayed as it is now in Venezuela.
US Sanctions & their Impact
As mentioned, the oil industry is the main sector that is responsible for Venezuelan government’s revenues - for more than 90% of revenues to be precise. Before delving into the way the sanctions are expected to affect the country’s economy, let’s take a look at the country’s oil production stats. According to data from Rystad Energy, in 2013, Venezuela was producing 2.42 million barrels per day, while the output today is lingering above the 1 million mark. Production has been dropping more intensely in recent months and even without the recent US sanctions, the oil production in the country would have experienced a drastic drop due to lack of investment. Trump’s administration’s restrictions are only rubbing salt into the wound.
Even though the White House’s intention is to make oil revenues reach the people of Venezuela and bypass Maduro’s government, which owns most of the oil industry through PDVSA, the sanctions have the power to be disastrous for the country’s economy and potentially set off a domino effect in the global energy market. Two things are worth mentioning here: Venezuela used to be the fourth biggest crude importer in the US (after Canada, Saudi Arabia and Mexico), while the US is Venezuela’s number one customer. Thus, the problems that arise from the sanctions are that A) US Gulf Coast refineries are frantically looking for alternate sources for the crude oil that Venezuela has been providing them with up until now and B) Venezuela, on the other hand, is struggling to find new customers. On top of this, the US was Venezuela’s key source of naphtha, which is the hydrocarbon mixture used for diluting crude. Without it, PDVSA won’t be able to prepare its crude oil for export. Rystad Energy forecasts that some operators in Venezuela will run out of the crucial diluent by March.
However, not all hope is gone. Paola Rodriguez-Masiu from Rystad Energy believes that the impact of the sanctions will be significantly lower than Washington has predicted and says that: "The oil that Venezuela currently exports to the US will be diverted to other countries and sold at lower prices. For countries like China and India, the news was akin to Black Monday. They will be able to pick up these oil volumes at great discounts." She adds that Venezuela exports 450,000 barrels of oil per day to the US – a little under half of its total output and the amount of new oil which will flood the markets. Mrs Rodriguez-Masiu also mentions that so far, oil markets have massively shrugged off this new oversupply as investors have been pricing in the crisis in Venezuela for quite a long time.
So now what?
Although Venezuela is still seen as an oil powerhouse, especially due to its production of heavy crude (which is not widely available in the world), the oil world is expecting the historic collapse of its oil output to only intensify. The country needs to offset the effects of the US sanctions, find new financing and not let the people of Venezuela bear the brunt.
This will not be easy though. As the government desperately courts new buyers for its oil, it may find them hard to come by, with Chinese sales in a pattern of decline and new markets such as India worried about quality and transport issues due to much of Venezuela’s shipping designed for shorter distance travel. Indeed the government and prospective buyers will only be too aware that it is always harder to negotiate from a position of weakness.
Unfortunately for the people of Venezuela who are struggling to get basic supplies, and are facing starvation and illness, the actions and the effects of the country’s government and the oil curse look set to reverberate for some time.
Sources: https://www.thetimes.co.uk/article/venezuela-frustrated-poor-losing-faith-in-beleaguered-maduro-22cf7f66z https://edition.cnn.com/2019/02/04/americas/europe-guaido-venezuela-president-intl/index.html https://edition.cnn.com/2019/01/28/politics/us-sanctions-venezuelan-oil-company/index.html https://www.investopedia.com/terms/r/resource-curse.asp https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=IVE0000004&f=A https://www.forbes.com/sites/ellenrwald/2017/05/16/venezuelas-melt-down-explained-by-the-oil-curse/#39dcb3d0282b https://www.ogj.com/articles/2019/02/rystad-energy-venezuela-production-could-fall-below-700-000-b-d-by-2020.html https://www.bbc.co.uk/news/world-latin-america-47104508
Senators Elizabeth Warren and Bernie Sanders and freshman Representative Alexandria Ocasio-Cortez, have all proposed major tax increases on wealthy Americans. History shows that the United States has not only survived, but thrived when the rich had higher marginal tax rates. But how much would increasing rates actually raise, and what could it do to the economy? The real reason to tax might be to decrease inequality itself.
There is a common misunderstanding about how tax brackets work in the US, and it’s causing us to have uninformed debates about taxes. In this video, Vox explains this misconception, where we’re going wrong, and how it actually works.
To solve the problem, he suggests shifting focus from providing student loans to increasing the supply of education options – including trade schools, online learning, and community colleges.
Chief economist of Moody's Analytics Mark Zandi says America's immigration policy under the Trump Administration conflicts with the country's core interests.
He says what has historically made America's economy "special" is that it attracts "the best and the brightest" from all over the world.
He also says baby boomers' retirement will make welcoming immigrants a necessity in order to help keep programs like Social Security and Medicare funded.
The study, which looks at cash and cashless technology usage in four markets—the UK, Australia, Brazil, and South Africa—shows that a cashless society may not be a realistic ambition. In fact, the survey revealed an “immovable” 24% of consumers who will never abandon cash—no matter what technological advance or leap forward is available to them.
In Brazil and South Africa, where cash use is more common, there is a strong desire for wider acceptance of cashless technologies such as payment cards and digital wallets. In both markets, 60% say that they are worried about having cash stolen from them which suggests fear of theft is a key driver rather than convenience.
In the UK and Australia, however, where the use of cashless technologies is more widespread, people are happier with their use of cash. Around 80% of people in both markets say that they are comfortable using cash.
Respondents across all countries saw cash as part of their day-to-day lives. They carry cash at all times, replenishing their wallets and purses regularly at ATMs, and are unwilling to go that last extra mile and never use cash again.
The findings suggest that cashless technologies will not replace cash completely; instead people are happier with an equilibrium between the two.
“While the proliferation of cashless payment technologies has generally led to a reduction in cash usage across developed economies, banknotes have unique properties that consumers value, such as security against fraud,” said Michael Batley, Head of Strategy, Travelex. “As long as this is the case it’s unlikely that any attempts to abandon cash completely will succeed. Even Sweden’s bid to go cashless, touted as a successful model, has seen pushback. Ultimately, only consumer demand will drive the change towards a truly cashless society and our research indicates this is further away than many realise.”
As well as revealing a lack of appetite for a cashless society, the study also reveals that opinion is split on whether it is even possible. The UK, the most ‘cashless’ country surveyed, represented the highest proportion (47%) of respondents that do not see an end to cash, closely followed by Australia (42%).
Travelex commissioned Sapio Research to survey 1,000 consumers regarding their attitudes to cash and cashless technology across four markets: the UK, Australia, Brazil and South Africa. These four countries are at different points in the “journey towards cashlessness”, as defined by Mastercard’s Measuring progress toward a cashless society report, and together give a representative overview.
(Source: Travelex)
How has the wealth management landscape developed recently and what has influenced this?
The thing I love the most about our industry is that it is always changing. In addition to changing market conditions, there are new products developed and made available on an ongoing basis, and most significantly - clients’ expectations, needs and objectives are always changing too. For investors entering or being in retirement, there are more potential solutions available today than ever before. From low-cost and no-load insurance products to ETFs and separately managed accounts focused on paying a reliable income stream from high-quality dividend paying stocks. It takes a lot of research and dedication to sift through it all, determine the best in class solutions, tune out the noise from product salesmen and advertisements, all the while knowing that a changing market environment may require a complete rethinking of the current strategy.
What are common misconceptions you find that clients have towards wealth management?
One of the first discussions I try to have with clients is about what they want versus what they need. Wants are often heavily influenced by personal biases and predispositions towards one type of strategy or another. Needs are driven by circumstances and personal expectations. It’s rare that these two align, so one of my jobs is to make sure everyone is on the same page.
Secondly, I explain and illustrate to clients that predicting outcomes in the short-term is nearly impossible (or at the very least based on luck not strategy), and that in order to be a successful investor, one must have a consistent replicable process to guide us in the decision-making process. If you trust the process, then you won’t be distracted by short-term events that can derail a sound long-term strategy.
If you trust the process, then you won’t be distracted by short-term events that can derail a sound long-term strategy.
Can you outline how you go about auditing a client’s needs and then designing a successful wealth management plan? What would you advise the first course of action to be?
Naturally it starts with a discussion on what brings them to me. Understanding a client’s concerns, goals and objectives has to be the first step. Then, comes the review of their existing portfolio and understanding why they are invested the way they are. By gaining insights into their past decision-making process, their current objectives and needs, we are able to tailor a set of solutions that addresses these issues.
How does your parent company, Bruderman Asset Management, assist in enhancing GGFS’ services?
Bruderman Asset Management has been deeply rooted in the asset management business since 1879 and has worked with some of the wealthiest families in the world. Because of their broad expertise and our ability to tap into these resources, we are able to provide sophisticated solutions and money management services to investors who might typically not be able to access these services. Of course, sometimes the simple solution is the best solution, but if something more complex is required, we have access to the expertise and tools required.
Do you expect any changes in wealth management in the US in the upcoming years?
A lot of advisers are retiring, and that will impact both clients and the industry. One of the reasons I developed our firm’s mentorship program almost a decade ago, is because we recognise the need to develop talent and we want to ensure that in 10 or 15 years our clients will receive the same level of expert advice they are getting today.
Market conditions and product availability will change, but what shouldn’t change is a well-thought-out, consistent, replicable and reliable investment process.
What are your top tips for wealth management in 2019?
Same as always, trust the process! Market conditions and product availability will change, but what shouldn’t change is a well-thought-out, consistent, replicable and reliable investment process. Don’t allow short-term events and ‘noise’ from the media to distract you from your long-term goals.
You recently spoke about trade deficits in the US. Can you briefly summarise how they hurt the economy?
In the short and sometimes intermediate term, tariffs act like a tax on consumers, as they raise prices. The real question is what will the long-term result be? If, this time next year, the United States has been able to negotiate better trade deals with China and Europe, as we already have with Mexico and Canada, then the short-term pain may be well worth it. From an investment perspective, it simply means that your process should guide you towards investments that are less susceptible to the impact of tariffs or the trade war – that’s our approach.
Website: http://www.ggfs.com
What would happen to the US if it paid off its debt?
She's only the second African-American female broker in the Exchange's 226-year history. According to a 2017 study by Stanford University, men comprise 75% of the wealth management field and fill more than 80% of leadership roles.
Most recently, it was the turn of automotive giants General Motors (GM) to feel the wrath of the POTUS, who waded online to criticise the decision of the firm to close key manufacturing plants in the States as part of a major structural reorganisation.
In this post, we’ll consider the fall-out in a little more detail, while asking whether or not GM are right to consider closing some of its domestic plants.
A Look at the Closures and President Trump’s Reaction
GM dropped the bombshell earlier this week, by announcing that it would end production at a total of five plants in the US and Canada.
This includes three major manufacturing sites in Ohio, Michigan and Maryland, while the firm’s strategic manoeuvre will slash 15% of its domestic workforce and up to 14,000 jobs in total.
Not only this, but the brand is also planning to kill off several of its renowned passenger cars, including the Chevrolet Impala, as it strives to reduce operational costs, boost profits and realign its product range to suit America’s changing tastes in vehicles.
The brand is also planning to kill off several of its renowned passenger cars, including the Chevrolet Impala.
Trump is one of several politicians to have expressed dismay at the move, with the President predictably taking to Twitter to vent his frustration. In one of a number of Tweets, he also claimed that the 25% duty applied to imported trucks and commercial vans play a key role in supporting this facet of the industry, while hinting that a similar tariff may applied to cars.
Trump’s also asserted that applying such duties to car imports would prevent firms like GM from closing their domestic plants, increasing the number of vehicles manufactured in the States and boosting the industry as a whole.
This is typical of the President’s inherently protectionist stance, and with separate tariffs also being considered for Chinese cars that are imported into the US market it’s clear that GM are merely the catalyst for the latest outburst rather than the underlying cause.
Is GM Right to Restructure in this Way?
Under the stewardship of any other administration, this would not be such an emotive issue, but Trump built his election campaign on the notion of restoring America’s car industry and has polarised opinion with his strong views on immigration and foreign trade.
While the aggressive response of the President is understandable (if somewhat misplaced) given his desire to deliver on his manifesto, however, the question that remains is whether GM are right to restructure their business in this way?
The brand are certainly right to consider reviewing their product range, particularly with customer behaviour changing and consumer borrowing across loans and credit growing at a noticeably slower rate in 2018. More specifically, as customers look to spend less on cars and seek out SUV and crossovers as opposed to standard passenger vehicles, GM has sought to be proactive and realign its production to suit demand.
Ultimately, private sector firms are always governed by profit and loss, while they retain the autonomy to structure their venture however they wish in a capitalist economy.
From an economic perspective, America’s GDP growth rate also declined from 4.2% to 3.5% in September 2018, hinting at a slight economic slowdown that has caught the attention of manufacturers across a number of industries.
This, when combined with an uncomfortably high debt-to-GFP ratio of 105% and incrementally rising labour costs, may well have forced the hand of GM executives and encouraged them to restructure their venture as a way of optimising profitability.
The Last Word
Ultimately, private sector firms are always governed by profit and loss, while they retain the autonomy to structure their venture however they wish in a capitalist economy.
So, while the Trump administration can talk in emotive terms about domestic manufacturing and consider the actions of GM in the context of their own protectionist agenda, individual brands should not be concerned with this or have their interests compromised by punitive tariffs.
