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And The Winner Is….

After a year-long search, promising a “full equal” to its current Seattle HQ, Amazon splits its second headquarters between *two* cities.

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Backstory: Amazon’s Hunt

Required: metro area with 1M population, int’l airport, mass transit, quality higher education, an educated workforce, & business-friendly environment.

Promised: a full equal to current Seattle campus, $5B construction investment & 50,000 jobs.

 

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“… much less radical move than many imagined … rich places getting richer.”

Jed Kolko, Indeed chief economist, on Amazon selecting D.C. & NYC-area home bases - the biggest financial and political hubs in America. Amazon CEO Jeff Bezos says the two cities offer the ability to attract "world class talent."
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Crystal City, VA

  • Arlington area, 3 miles west of D.C., eager for new economic energy after 24K federal jobs moved out in the early 2000s.
  • Known for its outdated, ’70-80s commercial buildings connected by underground tunnel with shops & restaurants.
  • Concerns over steep housing prices, congested roads, & pricing out of lower-income residents.
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Long Island City, NY

  • NYC neighborhood, 3 miles east of Times Square, is an old manufacturing area in Queens.
  • Even before Amazon, it is one of the fastest-developing areas with 9K+ new apartments & homes built in 8 years.
  • Struggling to handle the growth with crowded schools and infrastructure issues like sewage backups with heavy rain.
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Bigger Picture:
Why it Matters

  • 238 cities in U.S. & Canada shared taxpayer-funded research trying to woo Amazon.
  • Giving Amazon an invaluable database & insight into what types of incentives communities are willing to offer as the tech giant expands building possible data and logistics centers, etc.
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Two, winning cities will split the 50,000 jobs and $5B in investment evenly. Amazon also announced it will open a customer fulfillment center in Nashville, creating 5,000 jobs. The average salary for all 3, new locations? Over $150K, according to Amazon.

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KEEPING SCORE

The gold standard for consumer lending, used by 90% of all lenders in America, is testing a new way to calculate YOUR credit score.

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What is a Credit Score?

Widely used FICO gives consumers a “credit score” so lenders know how risky it is to loan money (i.e. credit card, car loan or mortgage).

  • Based mostly on consumers’ payment histories.
  • 300-850 range (higher # better.)
  • Couple of points make a big difference: 740 is “excellent,” 680 is “subprime.”
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New UltraFICO Score?

  • Beginning next year, FICO plans to roll out *new* scoring option.
  • Consumers can choose to share checking or savings account data.
  • Avg. account balance, savings & overdraw history may boost scores for those with bad, little credit history.
  • BUT it is possible sharing this data could *worsen* your score.
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Timing Matters

UltraFICO Score *may* open up credit lines to millions even though consumer loan (credit, car, mortgage) balances reach record highs:

“Just because somebody will lend you money doesn’t mean you should take it.”

Matt Schulz, Compare Cards.
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Something to Consider

FICO has tweaked its credit score formula several times since it began in 1989, but it takes time for lenders to adopt the new scoring system.

More than half of Americans (58%) with FICO scores have “good credit” with scores above 700 – a record high.

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About 79M Americans have subprime credit scores, another 53M don't have enough data to generate a FICO score. Big Question: Does the rating system need fixing or has it protected lenders/consumers to help prevent another credit crisis?

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FEELING LUCKY?

Lottery fever is breaking out as two of the biggest jackpots top $1.4 billion dollars combined.

(… never mind the 1 in 88 quadrillion odds)

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Why Have A Lottery?

  • In theory, a lottery raises money (to contribute in addition to taxes) for initiatives like education.
  • A multi-state lottery like Powerball distributes a portion of the sales to participating states.
  • Over the years, many have debated whether or not lottery money significantly contributes to named projects.
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Placing Your Bets?
What to Know:

  • MEGA MILLIONS: Drawing Friday at 11pm ET for $970M jackpot (2nd largest lottery prize behind $1.58B Powerball jackpot won in 2016.) Lump sum payout: $513 million.
  • POWER BALL: Drawing Saturday at 10:59pm ET for $430M jackpot. Lump sum payout: $248M.
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History on Their Side?

  • Lucky 6th Numbers:
    #22 or #9 (Mega Ball)
    #26 (Powerball)
  • State with Most Winners:
    New York (Mega Millions)
    Indiana (Powerball)
  • You pick or let the machine pick?
    Odds are the same.
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Why the Monster Jackpots

Powerball & Mega Millions both changed their rules in recent years to increase the chances of winning smaller prizes, but make it more difficult to take home the jackpot.

After the change, odds of winning Powerball lowered, from 1 in 175M to 1 in 292M, analysis found. But the odds of a billion dollar jackpot are 7.5 times more.

 

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U.S. lottery ticket sales totaled more than $80 billion annually, in the most recent data. That's more than Americans spent on movies, video games, books, music and sports tickets combined. Good luck!

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The *New* NAFTA?

An old trade deal evolves.

It will impact those who make the vehicles you drive & those who grow the food you eat.

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“It’s not NAFTA redone. It’s a brand new deal.”

Pres. Trump announcing the trade agreement between U.S. & Mexico. The new deal has a new name: United States-Mexico-Canada Agreement, or USMCA. The President says it "will send cash and jobs pouring into the United States"; other analysts say the impact on the overall economy will be very little.
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Behind The Scenes

  • America, Mexico & Canada have worked on renegotiating NAFTA for weeks.
  • While the U.S. & Mexico came to an agreement in August, a deal with Canada only came together on Sunday night.
  • Pres. Trump felt NAFTA didn’t favor the U.S. and campaigned on changing it.
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How It Impacts You:

  • Requires more auto parts & cars built in America – this doesn’t apply to ALL vehicles, but may raise sticker price as companies figure out costs.
  • Gives American farmers *slightly* more access to Canadian markets for dairy, eggs, & poultry products; good news for farmers hurting due to trade tensions with China.
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Something To Consider

“My expectation all along was that there would be few major changes and NAFTA would go from being one of the worst deals ever to the one of the best…. The bigger issue is the positive impact on confidence and sentiment.”

Jim O'Sullivan, economist at High Frequency Economics to CNBC.
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Important Reminder: Congress MUST approve all trade deals, so while the White House celebrates this achievement, it's not a "done deal" quite yet.

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BEHIND THE HEADLINE

New data shows Americans have the “highest household income ever“…

Do you truly feel richer?

What you should know about this data.

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BIG PICTURE: U.S.A.

Americans are earning more.

Fewer people in poverty (lowest number since 2006).

It’s a trend. Income increased last year for the third year in a row.

$61,371 = median household income.

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THE WAGE DEBATE

The American economy has grown, added jobs & workers… but data shows our income is NOT rising as quickly, as expected, as previous years, or compared to what things cost (inflation).

Do we look like we make more on paper, but have less $pending power?

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What’s Going on?

No one knows for sure: 2 theories

White House: Bad data & wage growth is good. Stats don’t consider tax cuts & other perks. Some (non-WH) economists agree.

Another theory: People reentering workforce may get lower paying or part-time jobs, or have fewer qualifications, so they make less $$.

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Something To Consider: The way the census measures median income has changed. Some say that makes the data difficult to compare to previous years. It's a good reminder data tells us only so much of a story. How do you feel about your wages and the economy?

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REALTY CHECK

 

Foreclosures – while still historically low – are rising in nearly half of U.S. housing markets. Is it the latest sign of a broader real estate slowdown?

Money

What To Know:

“The increase in foreclosure starts is not just a one-month anomaly in many local markets given that July represented the third consecutive month with a year-over-year increase in 33 metro areas, including Los Angeles, Miami, Houston, Detroit, San Diego and Austin.”

Daren Blomquist, ATTOM Data Solutions SVP, a property data firm
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Why it Matters

The Great Recession was triggered largely by the U.S. housing bubble bursting in 2007 after years of lenders giving out risky mortgages.

Our current lending environment has changed, but one property data company says “some loosening” of lending standards has put risk back into the market.

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Cause For Concern?

  • High Home Prices: Median cost of U.S. homes was up 6.2% in June vs. last year – a lower gain from the previous month.
  • Rising Mortgage Rates: 30-year fixed 4.5% vs. 4% at start of 2018.
  • Homebuilding Slows: hit a 9-month low in July and has yet to significantly rebound.
  • Fewer Foreign Buyers: Overseas purchases down a record 21%.
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Housing faces an uncertain future. A new study finds a record low percentage of millennials think buying a home is a good investment.

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TRADING UP?

America & Mexico agree *in theory* to a new trade deal.
Will Canada come a long for the ride?
(and why it may impact the cost of your next car).

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NAFTA 101

  • Trade deal negotiated under Pres. H. W. Bush & steered through Congress by Pres. Clinton.
  • Simple Overview: Lowered tariffs (taxes) between Canada, Mexico & U.S. so we could all do business more easily and cheaply.
  • Pres. Trump called it the “single worst trade deal ever” because he says it allowed American jobs to go to Mexico; many disagree.
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Why Now?

Mexico & U.S negotiating NAFTA behind the scenes for weeks.

  • New government of Mexico *just* elected & both sides want to secure deal before new leadership takes office.
  • New trade deal needs approval by Congress; completing draft puts pressure on Congress to act before or after midterm elections.
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What’s At Stake?

American jobs, industry & pay.

One example of many potential changes: New “NAFTA” agreement reportedly requires more U.S. car parts made in America with more U.S. material (like steel) in exchange for the “no tax” benefit for companies.

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Cost To Consumer

“The industry is hopeful that any changes to Nafta auto rules of origin continue to strike the right balance by incentivizing production and investment in North America while keeping new vehicles affordable for more Americans.”

Alliance of Auto Manufacturers
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The North American Trade Agreement was a result of a trifecta of Mexico, Canada & the U.S. Since the U.S. & Mexico have a working template, the big question is: Will Canada agree to negotiations or stall them?

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RECORD WIN STREAK
ON WALL STREET

9 Yrs, 5 Months & 13 Days

Stocks on track to hit the longest-running rally in stock market history.

Why the timing matters.

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Why It Matters

  • Stocks’ “bull market” (sustained period when stocks are rising & expected to continue to rise) on track to be longest in history.
  • Surprising after stocks plunged 50% during the financial crisis ending March 9, 2009.
  • Gains have added trillions of dollars to household wealth, boosting the economy and retirement savings.
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Important Context

  • Last time stocks rose for this long was the dot-com boom (October 1990 – March 2000).
  • However, during the 1990s run, stocks rose 417%. That’s nearly 25% *MORE* than this current bull market run, according to LPL Financial.
  • Bottom line: it’s the longest bull market, but not necessarily the greatest.
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“This bull market has been breathtaking…valuations in general have become stretched; however, corporate earnings have been strong, and I believe US stocks are likely to continue to outperform in the shorter term given the strength of the US economy and the perceived safety of US stocks in the midst of trade wars.”

Kristina Hooper, Invesco's chief global market strategist, as the S&P 500 rose to a new all-time high Tuesday.
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Strong earnings growth continues to power the stock market, but experts warn investors to continue to watch trade disputes and possible higher interest rates. Timing matters: the Federal Reserve, which sets interest rates, meets on Friday to discuss the economy & policy.

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Billion Dollar Bubbles

 

 

What Pepsi’s latest $3 Billion purchase tells us about the beverage industry (and our drinking habits).

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Pepsi Buys SodaStream

  • Pepsi says purchase expands healthier options, better for environment (people can create soda at home, with reusable bottles).
  • Big Picture: Major brands are battling for bubbles. Last year, CocaCola bought TopoChico, a sparkling water brand, for more than $200M.
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“Sparkling water has grown far more strongly than the overall bottled water category in the U.S.”

Wall Street Journal, on how sparkling water market has grown more than 30% in recent years. In the meantime, Americans are drinking less soda.
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Are Bubbles Actually Healthier?

What we know (from somewhat limited studies) about carbonated water:

  • Helps with hydration.
  • Doesn’t strip bone density (as reported in mid-2000s).
  • May (mildly) impact your teeth enamel.
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The man who invented sparkling water also discovered oxygen (as we know it) ... and the rubber eraser! The Englishman believed in the American Revolution & was lifelong friends with Benjamin Franklin. We have his must-read bio on our source page.

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Apple’s Trillion Dollar Day

From its humble start in a California garage to now the FIRST & MOST valuable company ever at
$1,000,000,000,000.

Why some say the focus on the $$$$ may miss the point of the company’s true value.

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iPhone Center Stage

  • Apple now worth more than all but 26 countries in the world. 
  • Why? Better than expected iPhone sales in its latest earnings report pushed the stock higher.
  • Stock price impacts the worth of the company or “market cap.”
  • Apple “beat” expectations, but some analysts lowered #’s wks ago because of concerns re: iPhone sales.
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What’s Next?

New iPhone expected in Sept. Predictions of a larger & a cheaper version.

Some Wall Street analysts think Apple’s stock has room to trade even higher, which would lift its market cap OVER $1T.

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Why $1T Ain’t Everything

“The fact that you have a billion and a half people with Apple devices around the world in a sense gives them a user base that if they can figure out other ways to make money off that user base.”

NYU professor Aswath Damodaran to CNBC, pointing out that even if Apple's iPhone sales slow now, its CURRENT customer base has great value.
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Food for thought: Apple makes many of its products in China, where trade tensions run high w/U.S. re: tariffs. One commentator says companies with the highest market cap often underperform in the years ahead. Read his analysis on our source page.

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WHEN SHE MAKE$ MORE

1-in-4 women are the family breadwinner, but when it comes to reporting it they say it’s just crumbs.

Why husbands & wives BOTH lie and say the *MAN* earns more.

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“Manning Up & Womaning Down”

  • Census found inconsistencies in incomes reported vs. IRS tax forms and investigated.
  • When a wife earns more, both husbands & wives exaggerate man’s earnings on avg of 2.9%, diminish woman’s by 1.5%.
  • Says couples “minimize the violation” of social norms by lying.
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“It’s kind of like if he’s shorter than she is, she doesn’t wear heels. It’s in the cultural DNA that if anyone should be bigger, richer, more successful, it should be the man.”

Bill Doherty, marriage therapist & Univ. of Minnesota professor on the marital struggles he's seen when the women is more successful professionally.
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Bigger Picture

2013 Study: Marriages in which the woman earns more are less likely to form and when they do, more likely to end in divorce.

Pew survey: 71% say very important for man to support a family financially to be a good husband or partner, 32% for women.

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Social norms impact self-reported data, and the Census Bureau warns that makes it less reliable.

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LAST VHS STANDING

In its heyday, a new Blockbuster store opened every 17 hours, but now only one remains in the US… and it may have a $40 late fee to blame for its downfall.

 

 

 

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Internet Killed the Video Store

  • Last remaining store is in Bend, Oregon after 2 close in Alaska.
  • It’s privately owned; pays a licensing fee to Dish Network to use the Blockbuster name.
  • Its IBM computers run the same floppy disks from 1990s renting DVDs, Blu-rays & video games.
  • No plans to close anytime soon.
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The Ultimate Late Fee

Reed Hastings once said he created Netflix in 1997 out of frustration over a $40 Blockbuster fine after returning Apollo 13 late.

At its peak in 2004, Blockbuster had 9K stores. Filed for bankruptcy in 2010.

Today, Netflix has 125M global subscribers.

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The real kicker? Blockbuster's CEO passed on an opportunity to buy Netflix back in 2000 when it was just a DVD mailing company. The asking price? $50 Million. Netflix is now worth $163 BILLION. Read more about the decision here.

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