After the sell off, stocks may actually be cheap

Sell Off Wall Street - A Silver Lining

Wall Street is finally breathing a sigh of relief after the S&P 500 Index managed to hold on to its first weekly gain of the year. One prominent market watchers had commented that inspite of signs of strength; stocks are still in store for a thundering reset. The ruthless sell off Wall Street had faced during the last few weeks could have a silver lining.

 According to FactSet, the S&P 500 Index is presently trading at around 15 times the earnings; analysts tend to expect constituents companies to post over the next year. This reading is known as `forward P/E on the popular measure of valuation which is compared to a 15 year average forward P/E ratio of 15.7. The conclusion collected from historical comparison is based on the timeframe taken into account.

 It is worth observing, in this case that the current valuation level tends to represent the premium to the average of 14.3 observed over the past five and ten years periods. Since the firm in the meantime is probably using various earnings estimates, IQ of S&P Capital current forward valuation number is 15.7 though they also observed that was under the 15 year average.

Broad Market Trading in Abyss

David Stockman who was the former OMB Director under President Ronal Reagan, is of the opinion that the broad market has been trading in the abyss after breaking beyond 1,870 in 2014, since then with a meagre one percent return. He had commented that they had been there for 700 days and had something like 35 attempts at rallies where all have failed for the `four no’s’. For him the four no’s comprise of a combination of no escape velocity, no earnings growth, no dry powder from the central bank and no reflation.Accompanied together, it leads him to the belief that the U.S. economy seems to be on the point of a full blown recession.

He further adds that they are getting to a point where the chickens are coming home to roost and there is no help from the central banks and that is why these rallies seem to get weaker as well as shorter. He is of the belief that the overflow of easy money from central banks all across the world has shaped a credit crisis which is so severe that it could probable take years to come out of what it has created.

High Powered Money – Enormous Expansion of Credit

Market watchers have pointed out a stunning $21 trillion collective balance sheet built up all around the globe, up from 2.1 trillion only 20 years back. He has said that this is high powered money which has resulted in an enormous expansion of credit as well as financial valuation bubble.

Stockman has observed that the speedy increase of credit has caused debt all over the world of over $225 trillion and has mentioned that they `are at peak debt’. Stockman, at this point considers that the hands of the Fed could be tied up after being on zero interest rates for almost a decade. There is nowhere to go but negative and it is time to get out of the market completely.

The S&P 500 has been progressively in correction territory in 2016and the large-cap index closed the week at around 11% from its 52 week high. However Stockman is of the opinion that it could plunge another 30% from its present trading which takes it back to levels not envisaged since 2012.

China has a $1.2-trillion Ponzi finance problem

Chinese borrowers are taking on record amounts of debt to repay interest on their existing obligations, raising the risk of defaults and adding pressure on policy-makers to keep financing costs low.

The amount of loans, bonds and shadow finance arranged to cover interest payments will probably rise 5 percent this year to a record 7.6 trillion yuan ($1.2 trillion), according to Beijing-based Hua Chuang Securities Co., whose lead fixed-income analyst was top-ranked by China’s New Fortune magazine in 2012 and 2013. Dubbed “Ponzi finance” by Hyman Minsky, the use of borrowed funds to repay interest was seen by the late US economist as an unsustainable form of credit growth that could precipitate financial crises.

Chinese companies are struggling to generate the cash flow needed to service their obligations as economic growth slows to the weakest pace in 25 years and corporate profits shrink. While the debt burden has been eased by six central bank interest-rate cuts in 12 months and a tumble in corporate borrowing costs to five-year lows, the number of defaults in China’s onshore corporate bond market has increased to six this year from just one in 2014.

“Some Chinese firms have entered the Ponzi stage because return on investment has come down very fast,” said Shi Lei, the Beijing-based head of fixed-income research at Ping An Securities Co., a unit of the nation’s second-biggest insurance company. “As a result, leverage will be rising and zombie companies increasing.”

China Shanshui Cement Group Ltd. became the latest company to default on yuan-denominated domestic notes last week, as overcapacity in the industry hurt profits and a shareholder dispute stymied financing. State-owned steel maker Sinosteel Co., which pushed back an interest payment on a bond last month, postponed it again this week.

Metrics of corporate health in Asia’s largest economy have deteriorated as growth slowed. The number of Shanghai- and Shenzhen-listed companies that have less cash than short-term debt, net losses and contracting revenue has increased to 200 as of June, from 115 in the year-earlier period, according to data compiled by Bloomberg.

The amount of bad debt among Chinese banks rose 10 percent in the third quarter from the previous three months to 1.2 trillion yuan, about the size of New Zealand’s economy.

Total debt at listed companies has climbed to 141 percent of common equity, based on a market-capitalization weighted average, the highest level in three years.

While the total amount of debt issued to pay interest is projected by Hua Chuang Securities to increase, it’s taking up a smaller portion of overall new credit. The firm predicts such borrowing will account for 45 percent of new total social financing—which includes bank loans, shadow banking credit and corporate bonds—down from 50 percent last year, according to a November 4 report.

Plunging borrowing costs have made it less expensive for Chinese companies to gain access to fresh cash. The rate on five-year corporate debt with AAA ratings dropped to a five-year low of 3.69 percent on October 29 and was last at 3.95 percent.

At the same time, policy-makers are taking steps to insure credit keeps flowing to borrowers in need. Chinese banks shouldn’t cut or withdraw lending to companies in “temporary” difficulties, Premier Li Keqiang said last month, adding that the government will take steps to prevent systemic risks. The People’s Bank of China has cut its benchmark one-year lending rate to 4.35 percent, from 6 percent a year ago, helping to fuel 6.6-percent growth in outstanding corporate bonds this year to 19.2 trillion yuan as of October. “The lower funding rates have lessened the interest burden on Chinese companies,” said Xia Le, a Hong Kong-based economist at Banco Bilbao Vizcaya Argentaria SA.

-- Bloomberg News

8 Reasons why Call Center Agents earn more

I’m studying the IT-BPO industry for almost half a decade now. I am still a part of it. Many people still ignoring how much this industry contributes today into our society. This private sector is too young but making this nation more beautiful and fun.  I heard a couple of people why IT-BPO employees (Call center agents) keeps on earning large amount of money compare to others while just sitting around in front of a computer and talking to someone over the phone. 

Image source Data Bazaar

1.    This industry is the biggest driving force of the economy – We are bankable as a country and the workforce is totally designed for it. BPO industry is the largest contributor to our economic growth aside from remittances from our OFW’s. According to Department of Trade and industry, that this is the fastest source of employment and revenue. BPAP, an organization that monitors every IT-BPO company that by 2016 with the support of the government the revenue can reach up to 20-25 billion dollars. Considering that this industry will have 1.3 million full time employees by 2016.  

Image Source Philstar.com

2.   Real Estate won’t boom too much - Imagine the country without IT-BPO industry; you won’t see too much rising condo on the city today. Real Estate development is so hot right now because of offshore companies leasing those office buildings. Most of the clients of that real estate companies are from IT-BPO industry as well, who is maneuvering our country to become the new tiger of Asia.  The generous employers of call center agents also help IT-BPO employees start investing to condo units, foreclose properties and increase their assets while young. 

Image source from Zipmatch

3.  We are getting a lot of curses over the phone - Where can you find a person who went to college and ended up listening to the rant of another person over the phone multiply it sixty times per day? That’s how a normal scenario of BPO voice agents nowadays.  The Vampires are the shock absorbers of many irate customers of overseas companies. It’s hard for us to just listen and don’t take those curses personally. It is draining sometime but it will take a lot of conscious effort not to retaliate to the other person knowing you are being recorded over the phone.  Where can you find a job aside from BPO industry wherein people are shouting and cursing at you for the next 8 hours and you don’t feel so drained?

Image Source Jared Wellman

4.   We are exchanging our day job over our night job – 6 years of night job, that’s going to take out your health from you. We are so called Batman and Vampires. We have an abnormal sleep patterns because of the time zones that we follow since we are catering people from western world. Our safety and security is being on the line every single night as we go to work. 

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5. We are all professionals – Majority of IT-BPO employees were nurses, teachers, former entrepreneurs, IT’s, PT’s, psychology license, business ad, marketing and communication science graduate. We deserve the same treatment with other industry experts and look at the way we adapt with the change in the management. A quarterly transition with the grading system and performance metrics keep us on our toes. A globally competitive group of people is making a wave to help our nation grow more economically.  

Image source the hoarding project

6. We are making a difference indirectly to other nations - Currently as of this writing the Philippines is the number 1 in  Voice and rank number 2 in Non Voice when it comes to outsourcing destination . No wonder because we are the 3^rd largest nation in geography that can speak fluent English. That very skill can make a long way. Filipinos are adaptable that’s why we can easily mimic the accents of every nation. As of the moment my workplace can cater 20 thousand calls per day and since there are currently 1,100 BPO sites in the county right now and projected 1.3million full time employees by 2016 (Source: BPAP) we can help at least 22 million people a day. 803 billion help every year. We are consistently putting the Philippines as the universal soldiers of customer service.

Image Source RCM Central

7. We are too educated to ignore– The skill sets of the IT-BPO employees like technical, language, effective communication and right attitudes is superb. In addition to it with process specific expertise, knowledgeable groups in innovation, we can beat and eat the competition. Other industries are doing their job but you can’t ignore the fact that BPO agents are super agents because of multiple disciplines we acquired in the past. With the help of coach, trainers and environment of excellence we are all recognizable.

Image source Wisconsin

8.  We are under valued compare to our counterparts from the United States. Are you serious?  As of July 25, 2015, the average salary of a call center agent in the US is 27,000 thousand dollars a year 1,188,000 php  (http://www.indeed.com/salary/q-Call-Center-Agent-l-United-States.html)

According to Payscale. Com,the average Filipino Customer Service Representative only earns 203,569 php or  4626.56 dollars a year. The reason why offshore companies will go to the Philippines is not just to invest but to cut cost. Expenses are too heavy especially when the company is expanding. They can see that this country is a goldmine, they can get a cheap labor but the quality of the customer service is good to great. Again, skills will follow when attitude of the employees are willing to learn. That’s why BPO employees should get more perks and benefits from the offshore companies. The more employees felt that they are appreciated they will stick more to the company.

Image source Roseville

David Isaiah Angway is a Financial Evangelist

Does the Euro Have A Future

Debt Crisis – Important Failings in Design of Eurozone

Debt crisis in Europe had indicated the important failings in the design of Eurozone and predictions stating that the growth would be returning have not done much to inspire confidence according to Emma Alberici. Top economists and politicians besides Former Chancellors Alistair Darling, Nigel Lawson and Norman Lamont convey that the Eurozone cannot survive in its current form.

 During the interviews and articles for The Independent today, they were questioned on their short-term as well as long term prediction for the future of the euro. Though several are of the opinion that the Eurozone could be surviving the current Greek debt crisis particularly, if the political will invest in preventing disorderly default, none are confident that it would stay on.

They are of the belief that the new European Fiscal Compact that has been agreed in principle recently is unmanageable since it would take key financial powers from the national government as well as their electorates. Several of the economists and the politicians have disapproved the rush to strictness imposed on Italy and Greece recommending that it would be counter-productive by depressing growth and competitive imbalances among Eurozone members would be difficult to overcome. They had recommended that the ultimate consequence of the crisis would be quite a smaller Eurozone with Germany at the centre and countries like Greece, Italy, Ireland and Portugal on the external.

ECB Dropped Official Interest

As per Budget Papers `recent policy action in Europe has meant that some of the worst crisis risks have abated since the end of 2012 and global conditions are expected to gradually improve’. It is now over a year since Mario Draghi, European Central Bank President, had been credited with saving Europe by informing financial markets that he would do `whatever it would take’, to save the euro, which scarcely counts as `policy action’ and Mario’s subsequent move are still to yield any apparent success.

ECB had dropped official interests to 0.5 percent for the Eurozone and the Central Bank also had indicated that it was `technically ready’, to cut the deposit rate from the prevailing zero percent to negative territory. It would need the ECB to charge banks for safeguarding the money which would make it smart for the banks to extend credit to household as well as businesses instead of holding their money in Frankfurt, which is at the ECB headquarters.

Lower interest rate do not boost growth as they did early since people in Europe and Australia tend to be extra cautious when it comes to borrowing. With unemployment in the Eurozone, having a record of 12.1 percent, smaller numbers of people tend to have the capacity of repaying the loans they may have.

Severity – An Anti-Growth Approach 

All over Europe, severity has been considered as an anti-growth approach though no reliable alternative has come up to bring back life in the 17 countries that tend to share a currency. Vice president of the European Commission responsible for the euro, Olli Rehn, sounded the only strong note of optimism and predicted that the currency would emerge stronger from the crisis.

He stated that they would be undertaking nothing less than an economic reformation of Europe and step by step, they would be creating financial stability and the conditions for sustainable growth and job creation. However Mr Darling commented that he does not thing anyone could realistically say the Eurozone would survive with its present membership and the longer the inaction goes on, the greater the chance that one or more countries would be forced out.

Eurozone not About to Collapse but Survive …..?

Professor of Economics, Dartmouth College, Danny Blanchflower, commented that `the fundamental problem which has not been addressed is that there is no growth plan for Greece and even if a new loan is given to them, they will have no means of paying it back. The markets seem to have been priced in an orderly default.

The problem lies in a disorderly default which means default and exit for Greece. There seems to be moments to play out at the final hour though two and a half years down, he has little confidence that there would be an orderly way out’.Professor of Economics, New York University, Nouriel Roubini states his opinion that `the Eurozone is a slow motion train wreck.

 Not only Greece, other countries too are bankrupt. There is a 50% probability that over the next three to five years, the Eurozone will break up. Not all the members are able to stay. Greece and probably Portugal may exit the Eurozone, Greece within the next 12 months while Portugal would take a while longer.

According to Jim O’Neil, Chairman of Goldman Sachs Asset Management, Former head of global economic research at the bank states that `the reality is that too many countries joined the euro in the first place and ultimately without dramatic change, they can’t probably survive. According to some the Eurozone is not about to collapse but whether it could be constant over the long term is not known.

When is the Best Time to Buy Foreign Currency

Being Smart Essential – Buy Foreign Currency

Bob Atkinson of TravelSupermarket advises that one could save a tenner for every £100 one tends to spend abroad, by being smart. He states a traveller should `plan what one is going to do and how they are going to spend overseas though not any plastic. Look for credit and debit card which are designed for usage overseas.

The market-leading deals like the Halifax Clarity credit card and Norwich & Peterborough debit card, have no hidden currency loading fees or transaction fees. If one tends to spent for instance 600 euros on one of these cards they tend to actually spend about £470 based on the prevailing rates.

On comparing it to the worst option which is to rock up at an airport and actually buy euros without pre-ordering, they endup spending about £515 on the present day’s rate at some place like Heathrow’. He further adds `that’s a difference of around 10% which means it’s effectively like throwing away £10 for every £100 spent on holiday’.While purchasing holiday cash, most of the people leave it till the last moment and tend to completely ignore it at times till they arrive at the airport.

Commodity loaded with Poor Exchange Rate/High Transaction Fees

Several travellers generally pay more than the going rate for their holiday cash hence some advance planning could help them in avoiding poor exchange rates or exorbitant transaction fees. Most of them tend to leave this job at the last minute resulting in paying extra pounds or more.

Just as one would check for the best deals on hotels and flights, they should also do the same when it comes to purchasing foreign currency which is a commodity that is often loaded with poor exchange rate combined with high transaction fees. Individuals should avoid buying the holiday cash at the airport since it is the most expensive place to purchase the spending money and the rates are extremely bad since the providers have a captive audience.

The main issue is `time’ and one should be wise in thinking about currency much in advance prior to leaving for the holiday. The first step to be taken is to look at the exchange rates which would help in maximising how much local currency one would get from the exchange.

Euro, the single currency, till recently has maintained its strength and customers are recommended to purchase their euros when the pound could make gains against the single currency. In the meantime, sterling has performed more positively against the single currency and holidaymakers need not rush and buy euros now.

Knowledge on Value of Currencies

On the contrary, if one is heading out to the United States, one could be wise in purchasing dollars sooner instead of later since at the moment the pound tends to perform well against the dollar though the same is not expected to last. Gaining knowledge on the value of currencies one could be looking to purchase, could save them of money in the long run.

The only way to know if one is getting the best exchange rate is to be knowledgeable on what the currency rate is. Prior to the trip, one needs to check on currency converter to have an idea of what exchange rate to expect. If undertaking a prolonged trip, check on the rate periodically to remain updated of any major changes.

According to Alistair Cotton, corporate dealer at currenciesdirect.com states that `now is a very good time to be buying US dollars. We are still on multi-year highs and businesses and people travelling abroad this year should be taking advantage at these levels’.

Fastest/Simplest Method - Online

Lucy Lillicrap of AFEX comments `current levels provide an excellent opportunity to buy the dollar at rates rarely seen since before the financial crisis’. Jeremy Cook, chief economist at worldfirst.com on the other hand states that he `thinks that the US dollar will progress through the year as one of the best performing currencies in the G10 space as the economy continues to rebound.

The Federal Reserve is much like the Bank of England, trying to remain vague on when interest rate rises will come but a stronger economy, fuelled by strong domestic industry and receding fiscal drag will increase the pressure on Federal Reserve chair Janet Yellen to normalise policy sooner rather than later’.

According to Josh Ferry Woodard of TorFX, he states that `in the light of Fed chair Janet Yellen’s suggestion earlier that the interest rates could be raised in the USA by April next year, it is possible that the US dollar is the one currency that the pound may struggle to stay afloat against.

For this reason, it is a very good time to buy US dollars; the pound-to-dollar exchange rate may not reach levels this high for a long time’. The fastest and the simplest method to buy currency is online, on the internet where it would be easy to compare rates and one could also get a much better deal.

Some Misapprehensions Among People Concerning the Emerging Market

It is often noticed surprisingly that people from various countries even the developed nations have various misconceptions regarding the global emerging market. On a recent survey about health treatment, women’s rights and also culture and education, people have great misinterpretations. The same thing happens in the case of the present condition of social and economic advancement in the global frontier market. Some non-profit institutions have made some statistical steps about the development in this world market.
 
Most of the people in UK, United States, and Norway and so on are enquired and their answers are found wrong. In comparison to some developed countries, Germany showed quite better and correct results since here 2 out of 8 questions are correct. But in a very developed country as USA, one out of ten is right.Therefore, most of the German citizensare likely to have low misapprehensions regarding the emerging world.

The misconceptions known from a survey-

In case of questions about the income distribution, the situation is somewhat problematic from the viewpoint of commercial and investment since one has to learn who has the money if one decides to get money. According to a survey in the year1975, almost 70% of the world’s citizens who was able to afford any trip internationally by airplane are inhabitants in the United States as well as Europe whereas in the present day, 50% of the inhabitants in the whole world belong to United States and Europe.

The misconceptions are also seen regarding the continent of Asia. The knowledge about global population is very important. Similarly, it is also significant to know about the number of rich and middle class people in the world. The majority of people also get wrong how many people live in Asia. This information will make certain about the improved commercial practices, good investing systems and also ability of recognizing how the whole world is changing.According to Ola, the news media is also responsible about the unawareness of people in our world. The nations, which created less social growth, can produce interesting stories than others.

Some challenges faced by the emerging markets-

There are a lot of threats and challenges that a firm can suffer in the global marketplace. Regardless of the fact that, the business is very large or local firm threats often exist, there are various types of economic systems such as capitalism, mixed economy and so on.

The present economic crisis has brutally impacted several businesses. Many business enterprises have been closed due to the recession. It shows that businesses have to adjust their strategies in accordance with the economic condition. The economic recession needs businesses to downscale employees and reduces cost. Economic setting also controls product costs.One of the main challenges to the businesses is their transactions in Euro that is changeable very often. There is also challenge concerning the serious competition in the global market of goods.

Overall Market Situation According to the Value of Gold

Gold measures the overall market trend and thus every person depends on the metal to accumulate the useful resources. The banks and other organizations maintain the suitable economic backdrop in accordance with the gold commodities.

The price of gold settles the overall economy around the world that varies according to the countries. So, the financial institutions need to maintain the suitable balance representing the entire market value.

The Central Bank however stands as an exception that is capable to sustain the suitable monetary. Even during the difficult circumstances, the organization can fulfill the market values without any intricacies. Therefore, the users are able to acknowledge the real time benefits in terms of money or the liquid cash.

The Major Reason Behind the Above-Mentioned Fact

The bank reveals that the skilled economists are responsible for the extraordinary outputs. Incorporating the sophisticated skills and other features helped them to come out with the effective results.

Therefore, the smart policies and other features that they represent accumulate the smart features accordingly. Here, the users can explore zero as well as negative interest rates that serve as the inspiring feature.

However, the users need to read the terms and conditions before investing. It helps you to pick up the right option that would meet all your monetary demands. Alongside, it also implements the innovative strategies ensuring the optimistic results that maintain ample resources eliminating all the hurdles.

The Role of the Equity Market Investors

The users who want to invest with an intention to gain increased resources need to seek the help of the efficient organization like the Central Bank. Get familiar with the complete system that helps you to select the ideal option eradicating all the negative issues.

Communicate with the representative knowing the details of the services that you would receive. In addition, carry out all the legal proceedings that help you to become the valid user. So, you are able to establish the strong monetary condition that would show you the suitable way to success. Learn how to accumulate the assets that represent the well-merited treasures accompanied with other beneficial solutions.

Make sure that you concede the original solutions exactly according to your needs without any sort of difficulties. Moreover, you can compare the options with other organization understanding the real time situation.

Always Remain Updated

It is important that the users should always comprehend the suitable information regarding the price of gold. It would help you to acknowledge the customized services that reveal the accurate solutions. Before you obtain the schemes, evaluate the entire market position that would aid you to gain adequate knowledge.

Develop the effective position ensuring the relevant outputs implementing the suitable features from the selected organization. Finally, you can see the growing rate of the graph according to which you can incorporate the feasible attributes.

Carry out a detailed discussion with the experienced persons knowing the true outputs that you would receive. Gradually, you can set up the strong monetary infrastructure along with all the optimistic upshots.