WORK-LIFE BALANCE / SEP. 02, 2015
version 6, draft 6

5 Global Business Headlines From Last Week (Aug. 24 to 30)

Markets worldwide suffered a severe, Mohammed Ali-style beating last week. One former White House official and Treasury Secretary is urging the Federal Reserve to proceed with caution regarding a possible interest rate hike in September. Burger King offered a peace offering with McDonald’s to create the McWhopper. Kraft Heinz had to recall a lot of Oscar Mayer turkey bacon. And Scotiabank raised its dividend following a strong third quarter.

These were the top global business headlines from last week.

See Also: 5 Global Business Headlines From Last Week (Aug. 17 to 23)

1. What the Heck Happened in the Market?

Global stock markets may have slightly recovered but 2015’s own Black Monday is still stinging the New York Stock Exchange, the Toronto Stock Exchange, the Shanghai Composite Index, the German DAX, and so many others.

At the start of the trading session, the Dow Jones Industrial Average was actually in the red by more than 1,000 points, an unprecedented beginning.

The general consensus is that China’s weak economic data and collapsing stock prices – nearly 2,000 stocks dropped at least 8.5 percent – led to the major downfall of stock exchanges everywhere. It may not be over because the People’s Bank of China (PBOC) and the Communist government are still trying to contain the falling markets with stimulus, interest rate reductions, and yuan devaluations.

Others say, however, that U.S. stocks have been overvalued for too long and this was the opportunity for a market correction. Some contrarian investors will go as far as blaming the Federal Reserve for its quantitative easing (money printing and low interest rates) like Euro Pacific Capital president and CEO Peter Schiff.

“Both markets are responding to the Federal Reserve’s threat to raise interest rates,” Schiff told Newsmax. “It’s the Federal Reserve that’s been propping up the US economy and more specifically the US markets to the detriment of the US economy but the Fed was propping up our markets with quantitative easing and zero percent interest rates.”

Have we reached the bottom? Most financial analysts say the worst is yet to transpire because September is usually the worst month of the year for trading, plus the Fed is on the cusp of raising interest rates.

2. Former White House Official Warns of Fed Rate Hike

Writing in an op-ed piece published in The Financial Times, former Treasury Secretary and Obama economic advisor Larry Summers warned that the Federal Reserve would make a "serious error" if it increased interest rates in the near future.

Summers, also a Harvard University professor, opined that tightening monetary policy would very well cause inflation to be lower than the two percent target rate set by the Fed. Raising rates could also pose a risk to the labor market and reverse gains made in the past couple of years.

"(It) will adversely affect employment levels because higher interest rates make holding on to cash more attractive than investing it,” he wrote. “Higher interest rates will also increase the value of the dollar, making US producers less competitive and pressuring the economies of our trading partners."

He added that the Fed doesn’t have to boost rates, especially at a moment of fragility. Summers noted a rate hike, no matter how large or small, could send a part of the financial system into a "crisis, with unpredictable and dangerous results."

The former White House official isn’t the only person to urge caution on a rate hike.

Keynesian economist Joseph E. Stiglitz wrote that the Fed should delay any rate hike until wage and job growth intensifies. Federal Reserve Bank of Minneapolis president Narayana Kocherlakota purported that a rate hike could deter spending.

Bloomberg meanwhile published an article citing low inflation, the China crash, and a lackluster labor market as reasons for stalling a rate hike.

The Federal Open Market Committee (FOMC) will be deciding whether or not to move ahead or wait to raise rates in September.

3. Burger King Offers 'McWhopper' Peace Deal with McDonald's

McDonald's Burger King

Would you eat a burger of 726 calories and 36 grams of fat? Burger King was hoping you would.

The iconic burger franchise proposed a one-day peace deal with McDonald’s that would have see the two chains create the McWhopper, a mixture of McDonald’s Big Mac and Burger King’s Whopper burgers.

Ostensibly, Burger King purchased ads in newspapers across the US suggesting the International Day of Peace on September 21 would calm the decades-old burger war.

McDonald’s wasn’t too pleased, however, and rejected the proposal with CEO Steve Easterbrook writing on Facebook that the two brands could do something a little bit bigger to make a real difference. He added that they should just acknowledge there is a "friendly business competition".

"We’ll be in touch," wrote Easterbrook, adding in a postscript: "A simple phone call will do next time”.

Since the ad campaign, many people have created their own versions of the McWhopper and have posted it to YouTube.

Denny’s, the fast-casual restaurant chain, placed an ad in USA Today and said it wants to partner with Burger King to make a mash-up burger. "Hey @BurgerKing, we love the idea of a peace burger. We’re just not sure what to call this thing. Any ideas?" Denny’s wrote in its new ad.

The company suggested combining its 880-calorie Bacon Slamburger with the Whopper, and calling it The Slopper, The Slamopper or Whoppaslam. For your information, the Bacon Slamburger is a hamburger topped with hash browns, egg, bacon, and pepper jack queso cheese.

4. Kraft Heinz Recalls a Bunch of Oscar Mayer Turkey Bacon

The US Department of Agriculture’s Food Safety and Inspection Service (FSIS) announced that more than two million pounds of Oscar Mayer turkey bacon has been recalled following reports of illness upon consumption of the product.

The products included Selects Uncured Turkey Bacon and "Smoked Cured Turkey Chopped and Formed.

Kraft Heinz issued the recall, saying that some products may have been "adulterated" and could spoil prior to their "best when used by" dates. The recall was rated at Class II by the USDA.

The recently merged company discovered the issue after many consumer complaints of "spoilage-related" reports of "illness related to the consumption of these products." A Class II recall classification means that there is a small chance of "adverse health consequences" from consumption of the product.

According to a press release from the USDA, the 2,068,467 pounds of turkey bacon being recalled was manufactured between May 31 and August 6, and had been exported across the US, the Bahamas, and St. Martin.

5. Scotiabank Boosts Dividend After Strong Q3

Canadian investors in Scotiabank can expect a larger dividend in the next quarterly payout.

One of Canada’s largest financial institutions announced that it has increased its dividend by two cents to 70 cents per share. This comes as it posted a strong third-quarter that showed a gain in underlying profits from personal and commercial banking operations, both domestic and foreign. However, it did report weak results in its investment banking division.

The bank’s overall profit for the three months ending July 31 was $1.847 billion in net income, which is equal to $1.45 per share. The quarterly dividend will increase by three percent beginning October 28.

Although Scotiabank’s Q3 was strong, it was still down from $2.351 billion, or $1.85 per share, in net income in the same time last year.

Nonetheless, Scotiaband president and CEO Brian Porter says Canada’s banking operations had an overall strong quarter. "All of its key business segments – retail and small business banking, commercial banking and wealth management – delivered very good growth."

Financial analysts had initially projected a weak third quarter for Canadian banks due to lower oil prices. However, if Scotiabank’s QE earnings are any indication, banks in the Great White North may be able to thrive in a possible recession.

See Also: 5 Global Business Headlines From Last Week (Aug. 3 to Aug. 9)

Everywhere from New York to Berlin, Beijing to Toronto, stock markets plummeted and had the worst month in five years. Larry Summers thinks the United States central bank should cool it on the rate hike talk, and consumers won’t be able to take a bite out of the proposed McWhopper. Kraft Heinz had to recall over 2 million pounds of Oscar Mayer turkey bacon, while Scotiabank investors will see an additional two cents per share after the financial institution reported a strong third quarter.

Get our FREE eBook!
'6 Steps to Landing Your Next Job'

LEAVE A COMMENT

1 comment

View Comments (1)
 

RELATED ARTICLES

Get our FREE eBook!
'6 Steps to Landing Your Next Job'


G up arrow
</script> </script>