Amazon is replicating Uber’s business model for delivery. American consumers noticed higher prices in the month of May. Investors are "sick of" the potential "Grexit." Donald Trump is finally running for President of the United States. And Walmart had a busy week this in the world of accusations. These were the headlines to dominate business news last week.
1. Amazon Becoming the Next Uber for Delivery?
An unnamed source close to the situation revealed that Amazon may be launching a new crowdsourced delivery service called On My Way. The online retail giant would incorporate an Uber-like business model whereby it uses crowdsourced drivers to drop off packages to customers.
On My Way is part of an effort to curb rising shipping costs and boost the shopping experience.
Reportedly, Amazon is creating a mobile app that would help the driver get paid and the shopper to track their package. The entire user plan is still being talked about. For instance, should drivers be paid with money or given credit to use on the website?
The service could work because Amazon already maintains a great number of lockers in 7-Eleven stores and parking garages. Also, Amazon would tap additional brick-and-mortar stores in cities to hold these packages. They’d be paid by rent space or a per-package charge.
It would be a wise move for Amazon because it reported $1 billion in net shipping losses in the fourth quarter of 2014 and the first quarter of 2015. Moreover, in 2014, shipping costs skyrocketed 31 percent, which was more than overall revenues.
It is unknown when the service would be established or perhaps if Amazon would even give the go ahead to such an idea. We’re already experiencing the tremendous pushback from taxicab drivers and governments when it comes to Uber. The same thing could happen to Amazon, but this time from courier services and government mail agencies.
2. U.S. Consumer Prices Jump
The Department of Labor released a report last week highlighting how consumer prices spiked by 0.4 percent in the month of May, representing the biggest increase in more than two years.
With gasoline prices soaring once again, the Consumer Price Index (CPI) increased 0.4 percent, up from 0.1 percent in the month of April. Meanwhile, the core CPI, omitting energy and food costs, jumped 0.1 percent.
Here are some of the consumer price details:
- Energy prices spiked 4.3 percent
- Food prices were up 1.6 percent
- Apparel and footwear prices fell 0.5 percent and 0.4 percent, respectively
- Airline fares soared 5.7 percent
- Rents increased 0.3 percent
- Medical care prices rose 0.2 percent
This seems to have pleased Federal Reserve Chair Janet Yellen, who has maintained a target inflation rate of two percent. Yellen said in a statement that these numbers fall into their objectives and that these economic figures will help improve the labor market.
"Inflation has continued to run below our longer-run objective, in part reflecting lower energy prices," Yellen said. “Declines in import prices have also restrained inflation. However, energy prices appear to have stabilized recently. My colleagues and I continue to expect that as the effects of these transitory factors dissipate and as the labor market improves further.”
3. Is Greece Making an Exit from the EU?
Will Greece stay or go? That’s what citizens, governments and investors are wondering.
Greece put forward several new proposals that attempt to end a five-month deadlock with global creditors over its debt crisis that could see Athens make a dramatic exit from the euro. In the meantime, Greek financial institutions were given additional emergency funding late in the week over fears that an enormous amount of outflows may prevent its lenders from opening their wallets.
The European Central Bank (ECB) warned many Greek banks would shut down for a day to avoid any further runs. So far, consumers have taken out about €2 billion ($3.2 billion) in deposits from their respective banks in just three days. Yanis Varoufakis, Greece’s finance minister, has accused foreign creditors of suffocating Athens into submission and likened the situation to "waterboarding."
Many people have opined that Greece’s leaving of the European Union may finally end the multination bloc. However, one columnist isn’t buying it at all, and believes it’ll benefit the EU because of Greece’s socialism.
"It cannot be said too often,” wrote The Washington Post’s George F. Will. “There cannot be too many socialist smashups. The best of these punish reckless creditors whose lending enables socialists to live, for a while, off of other people’s money. The world, which owes much to Ancient Athens’ legacy, including the idea of democracy, is indebted to today’s Athens for the reminder that reality does not respect a democracy’s delusions."
Markets seem to be indifferent to the situation, too. Global markets rallied after news of a possible default could end the years-long negotiations.
4. Donald Trump Is Running for President
Real estate mogul, reality television star, billionaire, and… president?
Donald Trump announced his intentions Wednesday that he will be tossing his name into the 2016 Republican nomination race. Trump officially launched his presidential campaign in New York and immediately made various controversial remarks. This ends after more than two decades of Trump flirting with running for the Oval Office.
His campaign slogan is "Make America Great Again." He claimed that the "American Dream is dead," but vowed that if he becomes president in 2016 he will "bring it back bigger and better and stronger than ever before."
Trump was short on the details, though he did say the U.S. infrastructure needs rebuilding and called for a massive fence on the border with Mexico.
He did, however, deliver a number of inflammatory comments at the posh Trump Tower on Fifth Avenue. Some of them included calling illegal immigrants "rapists" and accusing the Chinese and Japanese of taking away good American jobs. Trump triumphantly stated that he "will be the greatest jobs president that God ever created."
The star of The Apprentice also alluded to his vast fortune, which consists of $9 billion. He even went as far as pointing to his Gucci store in New York as being worth more than former presidential candidate Mitt Romney.
Prior to the announcement, voters may have already been fatigued with Trump. Many remember Trump launching the Birther movement against President Obama. Also, early last week, he said the U.S. doesn’t need another Bush, referring to presidential candidate Jeb Bush.
5. Walmart Accused of Tax Evasion
It was a tough week for Walmart. The multinational retail juggernaut was alleged of misusing charitable funds and hoarding cash overseas to avoid paying taxes. What does the week ahead have in store for the company?
Using data from the United Food & Commercial Workers International Union, Americans for Tax Fairness published a new study that accused Walmart of storing $76 billion in undisclosed foreign tax havens.
According to the report, Walmart has a minimum of 78 offshore subsidiaries and branches, including 30 that were established six years ago. Moreover, these overseas subsidiaries haven’t been added to U.S. securities filings. It is estimated that, over the past six years, these foreign tax havens have assisted the retailer in erasing $3.5 billion from income tax bills.
The report authors had taken information from public documents that were published in many nations by Walmart and its respective subsidiaries.
It was also discovered that Walmart has 3,500 stores in several countries, like Brazil and China, but they’re owned by several units in Luxembourg, the British Virgin Islands, and Curacao – three very popular tax havens. Despite 90 percent of foreign assets owned by Luxembourg and Dutch subsidiaries, it doesn’t have a single store in Luxembourg, but $1.3 billion profits were made between 2010 and 2013.
Walmart responded to the report and denied any wrongdoing, and accused the union authors of "misleading" readers. The union has supported workers’ organizations in their initiatives to change Walmart’s pay structure and governance. The company further noted that it is open and transparent with the Internal Revenue Service (IRS).
"Walmart has processes in place to comply with applicable SEC and IRS rules, as well as the tax laws of each country where we operate and we maintain transparency with the IRS via real-time disclosure of our business transactions and corporate structure,” Randy Hargrove, a spokesperson for Walmart, said in a statement.
Walmart wasn’t the only target of the report. According to the study, 21 additional Fortune 500 brands have a greater number of subsidiaries overseas than Walmart. Some of them include Wall Street financial institutions, high-tech firms, and pharmaceutical corporations.
What are your thoughts on the past week’s top headlines? Let us know in the comments section below!