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America’s Middle Class Is Addicted to a New Kind of Credit

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It’s called the online installment loan, a form of debt with much longer maturities but often the same sort of crippling, triple-digit interest rates. Bloomberg reports: 

If the payday loan’s target audience is the nation’s poor, then the installment loan is geared to all those working-class Americans who have seen their wages stagnate and unpaid bills pile up in the years since the Great Recession.

In just a span of five years, online installment loans have gone from being a relatively niche offering to a red-hot industry. Non-prime borrowers now collectively owe about $50 billion on installment products, according to credit reporting firm TransUnion. In the process, they’re helping transform the way that a large swathe of the country accesses debt. And they have done so without attracting the kind of public and regulatory backlash that hounded the payday loan.

“Installment loans are a cash cow for creditors, but a devastating cost to borrowers,” said Margot Saunders, senior counsel for the National Consumer Law Center, a nonprofit advocacy group.

For many families struggling with rising costs and stagnant wages, it’s a cost they’re increasingly willing to bear.

S&P 500 Index Hits All-Time High

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The S&P 500 index closed at an all-time high Monday, extending a recent string of gains in what’s mostly been a solid month for the market. AP reports: 

The benchmark index closed at 3,039.42, around 14 points above its previous record set on July 26. The S&P 500 notched its latest milestone after weeks of hovering just below its prior high.

Monday’s rally came at the beginning of a busy week of corporate earnings and economic reports and with investors expecting another interest rate cut by the Federal Reserve.

Coming into this week, investors have been encouraged as most of the companies that have reported quarterly results the past couple of weeks that beat Wall Street analysts’ forecasts for earnings growth.

Currency is Popular Again, Especially the $100 Bill

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People in many of the world’s most advanced nations — including the United States, the euro area and Japan — are holding more of it than ever. In the U.S., for example, currency in circulation stood at an estimated $1.76 trillion as of late September, according to the Federal Reserve. That’s about 8.2% of gross domestic product, up from just 5.6% before the 2008 financial crisis and close to the highest level in at least 36 years.​ Los Angeles Times reports: 

If people need less cash to pay for stuff, why do they want to hold so much of it? The answer, it seems, is that they’re turning to currency as a store of value.

Consider the kind of cash they favor: Increasingly, it’s large denominations such as $100 bills, which are the most convenient for stashing away big sums. Benjamin Franklin’s share of total U.S. currency in circulation reached 80% in 2018, up from 73% a decade earlier, Federal Reserve data show.

Since 2017, the $100 bill has surpassed the $1 note as the most widely circulated U.S. currency…

When safe investments such as deposits or government bonds yield little or less than nothing, people aren’t missing out by holding paper money. This illustrates why central banks can’t push rates too far below zero: Instead of spending the money or watching their savings shrink while sitting in the bank, people will just withdraw their cash and put it in the mattress.

Economy’s Bumpy Ride is About to Get Bumpier

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The U.S. economy has hit a lot of bumps in the road lately and the way forward is unlikely to get any smoother. MarketWatch reports: 

The first big clue will come Wednesday. Gross domestic product in the third quarter running from July to September is forecast to fall to about 1.4% from a 2% pace of growth in the spring.

GDP is the official scorecard, so to speak, of how well the economy is doing. Historically the U.S. has grown more than 3% a year, but the last time it reached that mark was in 2005. Most economists think the U.S. can grow no faster than about 2%, at least not for any extended time.

The other piece of bad news is due Friday when the governments reveals how many new jobs were created in October. Economists predict the U.S. generated fewer than 100,000 new jobs last month, a figure that would be the lowest since May and one of the weakest numbers in seven years.

Customer in France Accidentally Received a Phone Bill of €11,721,000,000,000,000

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A woman in France received a bill for €11,721,000,000,000,000 (that’s 11.7 million billion euros – more than 5,000 times the gross domestic product of France) – it took her days of wrangling with helpline staff to stop it being debited from her bank account. The Guardian reports: 

Solenne San Jose. of Pessac, a Bordeaux suburb, had just lost her job and wanted to end her phone subscription, when the final bill arrived. She told her local paper, Sud Ouest: “I nearly had a heart attack. There were so many zeros that I couldn’t even work out how much it was.”

She called Bouygues Telecom, the phone company headed by Martin Bouygues, a friend of Nicolas Sarkozy, but was told by shrugging staff there was nothing they could do. One said: “It’s calculated automatically.” Another told her she would be contacted about paying in instalments. Several calls later, an adviser admitted it was a mistake: San Jose owed €117.21. The company has apologised and let her off the real bill.

Billionaire to Buy America’s Most Expensive Mansion for Almost $200 Million

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Hedge funder Steven Schonfeld, a New York billionaire, is in contract to buy an oceanfront Palm Beach, Florida, estate for just under $200 million, say sources close to the deal. New York Post reports: 

The home is about a half-mile south of President Donald Trump’s private club, Mar-a-Lago. Schonfeld already owns a $90 million mansion in Old Westbury, which has his own personal chef and a private nine-hole golf course.

The Palm Beach estate, which is on the ocean and the Intracoastal Waterway, is currently owned by philanthropist Sydell Miller, who co-founded Matrix Essentials, a hair and beauty line, with her late husband, Arnold.

Schonfeld, 60, was the 18th-highest-earning hedge fund manager this year, according to Forbes. 

Hong Kong Parking Spot Just Sold for Almost $1 Million

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If anyone needed further evidence of Hong Kong’s sky-high real estate prices they found it this week with news that a car parking spot sold for almost $1 million. Bloomberg reports: 

The space went for HK$7.6 million ($970,000), making it the most expensive place to park an automobile in the city, and perhaps anywhere in the world. The seller was Johnny Cheung Shun-yee, a businessman with a reputation for flipping property. He made around HK$900 million last year in about nine months by buying and selling floors in an office building.

The car-parking spot is actually in the same building — The Center in Central, which also happens to be the priciest office tower in the world. For the cost of the parking space, you could buy a one-bedroom apartment in Manhattan.

“A lot of those owners in The Center are in finance or in other high-growth businesses,” said Stanley Poon, a managing director at Centaline Commercial. “To these tycoons, it’s not a significant purchase if you compare it to the value of the office floors they own.”

Apple Pay Overtakes Starbucks as Most Popular Mobile Payment Platform in the US

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Apple Pay has overtaken the Starbucks mobile app to become the most popular mobile payment system in the United States, claims a new report out today. MacRumors reports:

According to eMarketer, Apple Pay became the market leader last year, when 27.7 million Americans used the app to make a purchase. Since then, however, Apple Pay has grown even faster than expected.

In 2019, Apple Pay will have 30.3 million users, or 47.3 percent of mobile payment users. That compares with Starbucks’ 25.2 million customers via its mobile app in the same year, representing 39.4 percent of mobile payment users.

“Apple Pay has benefited from the spread of new point-of-sale (POS) systems that work with the NFC signals Apple Pay runs on,” said eMarketer principal analyst Yory Wurmser. “The same trend should also help Google Pay and Samsung Pay, but they will continue to split the Android market.”

The Boomer Generation is Becoming One of Haves and Have-Nots

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Four recent studies reveal that wealth inequality among boomers specifically has been growing, turning this massive generation into one of haves and have nots. The nonpartisan reports, which analyzed boomers’ retirement security, financial assets and housing status, come from the U.S. Government Accountability Office (GAO); the National Institute on Retirement Security think tank; the St. Louis Fed’s Center for Household Financial Stability and the Harvard Joint Center for Housing Studies.

MarketWatch reports:

Wealth disparities continue as we age. The GAO reviewed the Federal Reserve’s Survey of Consumer Finances data for households with people 55 or older and said that although disparities in income decreased as older Americans aged from their 50s into their 70s, “disparities in wealth persisted.” The continued wealth disparities among older Americans, the GAO noted, “may be due to significant differences in the median value of retirement accounts and home equity between higher- and lower-earning households.”

This finding echoes what the St. Louis Fed determined looking at wealth inequality overall in America. It determined that “wealth inequality has grown tremendously from 1989 to 2016, to the point where the top 10% of families ranked by household wealth own 77% of the wealth ‘pie.’ The bottom half of families ranked by household wealth own only 1% of the pie.”

Rich Chinese Outnumber Wealthy Americans for First Time

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The number of rich Chinese has surpassed the count of wealthy Americans for the first time as both countries keep churning out millionaires, a study by Credit Suisse showed. The Swiss bank’s annual wealth survey released on Monday found 100 million Chinese ranked in the global top 10% as of the middle of this year versus 99 million in the United States. Reuters reports:

“Despite the trade tension between the United States and China over the past 12 months, both countries have fared strongly in wealth creation, contributing $3.8 trillion and $1.9 trillion respectively,” said Nannette Hechler-Fayd’herbe, global head of economics and research at Credit Suisse.

The ranks of the world’s millionaires have risen by 1.1 million to an estimated 46.8 million, collectively owning $158.3 trillion in net assets, 44% of the global total, the study found.

Apple Card is the Most Successful Credit Card Launch Ever

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Goldman Sachs CEO David Solomon called his bank’s rollout of the Apple Card “the most successful credit card launch ever.” CNBC reports:

Solomon provided investors with an update on the bank’s new initiatives at the start of a conference call Tuesday.

“In three short years, we have raised $55 billion in deposits on the Marcus platform, generated $5 billion in loans, and built a new credit-card platform and launched Apple Card,” Solomon said, adding “which we believe is the most successful credit card launch ever.”

Continuing on the Apple Card, which the bank built in partnership with the iPhone maker, Solomon said that “since August, we’ve been pleased to see a high level of consumer demand for the product. From an operational and risk perspective, we’ve handled the inflows smoothly and without compromising our credit underwriting standards.”

Changing Your Diet Can Help Tamp Down Depression, Boost Mood

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There’s fresh evidence that eating a healthy diet, one that includes plenty of fruits and vegetables and limits highly processed foods, can help reduce symptoms of depression. NPR reports:

A randomized controlled trial published in the journal PLOS ONE finds that symptoms of depression dropped significantly among a group of young adults after they followed a Mediterranean-style pattern of eating for three weeks. Participants saw their depression “score” fall from the “moderate” range down to the “normal” range, and they reported lower levels of anxiety and stress too.

Alternatively, the depression scores among the control group of participants — who didn’t change their diets — didn’t budge. These participants continued to eat a diet higher in refined carbohydrates, processed foods and sugary foods and beverages. Their depression scores remained in the “moderate severity” range…

In this study, participants in the “healthy eating” arm of the study ate about six more servings of fruits and vegetables per week, compared with the control group. Participants “who had a greater increase in fruit and vegetable intake showed the greatest improvement in depression symptoms,” Francis said.

Participants were also instructed to increase consumption of whole grains to a recommended three servings per day, as well as three servings per day of protein from lean meats, poultry, eggs, tofu and beans. In addition, they were told to get three servings of fish per week. As for dairy, the recommendation was three servings per day, unsweetened. Participants were also instructed to consume three tablespoons of nuts and seeds per day, as well as two tablespoons of olive oil per day, and were advised to add in spices, including turmeric and cinnamon.

Young People Are Quitting Their Jobs in Droves

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About half of millennials and 75 percent of Gen Zers have quit their jobs for mental health reasons, according to a new study conducted by Mind Shares Partners, SAP and Quatrics. It was published in Harvard Business Review. Fox Business reports:

That’s compared to just 20 percent of respondents overall who said they’ve voluntarily left a job in order to prioritize their mental health — emblematic of a “shift in generational awareness,” the authors of the report, Kelly Greenwood, Vivek Bapat and Mike Maughan, wrote. For baby boomers, the number was the lowest, with less than 10 percent quitting a job for mental-health purposes.

It should come as no surprise that younger generations are paving the way for the de-stigmatization of mental health. A Wall Street Journal article published in March labeled millennials the “therapy generation,” as todays 20- and 30-somethings are more likely to turn to therapy, and with fewer reservations, than young people in previous eras did.

A 2017 report from the Center for Collegiate Mental Health at Penn State University found that, based on data from 147 colleges and universities, the number of students seeking mental-health help increased at five times the rate of new students starting college from 2011 to 2016. And a Blue Cross Blue Shield study published in 2018 revealed that major depression diagnoses surged by 44 percent among millennials from 2013 to 2016.

Worker Pay is Stagnant — Economists Blame Robots

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American workers are more productive than ever, but their paychecks haven’t kept pace. Researchers with the Federal Reserve Bank of San Francisco have a culprit: robots. CBS News reports:

Economists Sylvain Leduc and Zheng Liu theorize that automation is sapping employees’ bargaining power, making it harder for them to demand higher wages. Companies across a range of industries increasingly have the option of using technology to handle work formerly done by people, giving employers the upper hand in setting pay. The result — a widening gulf between wages and productivity.

The research may bolster proposals for universal basic income, which is a government cash stipend that typically doesn’t come with requirements. Andrew Yang, a Democratic presidential candidate who’s running on a platform of giving every American adult $1,000 per month in basic income, tweeted about the economic findings, writing that automation is “making it hard for workers to ask for more.”

“We should just give Americans a raise,” he wrote. To be sure, automation is leading to massive changes in work that are hitting some industries and workers especially hard, such as lower and middle-skilled workers. For instance, the ranks of office assistants and clerical workers is expected to shrink by 5% through 2026 as offices shift tasks to artificial intelligence and other software, according to the Bureau of Labor Statistics. This could result in a loss of 200,000 jobs.

The NBA Chooses China’s Money Over Hong Kong’s Human Rights

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The Rockets and the NBA could have stood up for Morey, for decency, and for the protesters and their human rights. More than 2,000 have been injured in months of demonstrations that the Chinese government characterizes as “riots,” but selling sneakers, jerseys, and the game  But they instead folded all too readily, all too eager to hold onto the dollars that they glean from the Communist nation. RollingStone reports:

The NBA issued a sorry statement, declaring the league realizes that the tweet may have “deeply offended” Chinese fans and that they “have great respect for the history and culture of China,” as if that had anything to do with a bill that could be used to disappear journalists and critics of an autocratic regime. Morey, who The Ringer reports was at one point in jeopardy of losing his job, tweeted his own apology that read like it was dictated by his boss. Brooklyn Nets owner Joe Tsai, a co-founder of Chinese e-commerce conglomerate Alibaba, published an open letter on Facebook that referred to protesters as a “separatist movement.” Even James Harden, the Rockets’ star guard, issued a mea culpa for some reason, even though he wasn’t involved.

That last bit of rank submission to an autocratic regime captured the full extent of the NBA’s sellout to China. Several politicians on the left and right, including presidential candidate Julián Castro and Rep. Ben Sasse (R-MO), called out the NBA’s cowardice. Even Rockets fan Ted Cruz took a principled stand:

 

CNBC also reports:

China’s increasing economic engagement with the free countries of the West was supposed to open the country up to more democracy and freedom. Instead, the overwhelming evidence shows the government in Beijing has used its growing wealth and economic influence to suppress the population even more, build up its military to antagonize more of its neighbors, and increase its repressive influence abroad with massive infrastructure programs that actually translate into high-risk debt for the takers.