5 Global Business Headlines From Last Week (Oct. 26 to Nov. 1)

The 2016 Republican presidential candidates have done it again in the ratings, and this time it’s for CNBC. Coffee giants Starbucks and Tim Hortons are in hot water over their paper cups. Sweden’s central bank – the Riksbank – has decided to leave interest rates at -0.35 percent. The Federal Reserve has delayed raising interest rates again, but it may raise rates in December. PayPal’s Working Capital initiative has paid off big time for small businesses and entrepreneurs.

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

These are the five global business headlines from last week.




1. Republicans Do it Again for Another Network

The Republican Party is quickly proving that it’s big business for the major television networks. After establishing records over at Fox News and CNN, the GOP created another record for the folks at CNBC. Is this due to Donald Trump or the incredible number of presidential hopefuls?

As the 10 candidates clashed with the moderators, between 10 and 13 million Americans watched the third Republican party debate of election season. This blows the previous record out of the water, which came in 2012 when 3.1 million watched the primary debate involving Mitt Romney, Ron Paul, Newt Gingrich, Rick Perry and Rick Santorum.

Despite the big numbers for CNBC, it still fell below Fox’s 24 million viewers and CNN’s 23 million eyeballs. Many are attributing these numbers to GOP frontrunner Donald Trump’s presence, but considering that the headlines have been all about Ted Cruz and Marco Rubio it may not exactly be true.




Nevertheless, the business news network is likely pleased with the major numbers. The network sold all of its advertising spots with a price-tag of $200,000 per 30-second spot.

Due to the dissatisfaction of the debate format, advisers from the dozen or so campaigns met privately over the weekend to discuss how they can combat poor questions, debate formats and even the moderators. The Republican National Committee (RNC) has expressed similar concerns.

The “bad faith” performance of CNBC, which is owned by NBC Universal, has caused so much frustration that the GOP has actually canceled a partnership over a Feb. 26 debate. Here is a statement from RNC Chairman Reince Priebus:

“The CNBC network is one of your media properties, and its handling of the debate was conducted in bad faith. We understand that NBC does not exercise full editorial control over CNBC’s journalistic approach. However, the network is an arm of your organization, and we need to ensure there is not a repeat performance.”

’Reince Priebus’

The latest national polls show Trump is still leading, but Ben Carson continues to gain momentum. The rest of the candidates are polling in single digits.

2. Tim Hortons and Starbucks Under Fire Over Paper Cups

Just where do those paper cups sold at Starbucks and Tim Hortons go? The average consumer would likely think the recycling bin. However, a new investigation suggests that the paper cups aren’t adequately placed in the recycling, but instead the landfill.

According to a CBC Marketplace investigation, many of the paper cups you use to drink your coffee from are not sent to a recycling plant but a landfill. This has drawn the ire of many organizations and consumers.

The government media outlet made this discovery after it had placed cups with tracking devices into store recycling bins at 14 Starbucks stores and 14 Tim Hortons locations. The CBC staff then later recovered seven cups from each chain, but they were in bins for garbage pickup. The other cups, meanwhile, were not found.

“It certainly casts some doubt on the integrity of the whole process,” said Conrad MacKerron, senior vice-president of As You Sow. “To find out that in some areas at least the bins are out there but they (the cups) are going right into the garbage, that’s outrageous.”

The two coffee titans have generated both buzz and criticisms for the amount of waste that is created by these plastic disposable cups. In order to combat public concerns, both brands have regularly stated that they’re committed to environmental responsibility which is why they also have in-store recycling bins for paper cups and offer ceramic mugs to customers.

Considering that Canadians use up about 1.5 billion disposable coffee cups a year – or half a million trees – there may be cause for alarm.

3. Sweden’s Interest Rates Remain in Negatives

Sweden
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Swedish consumers can continue to see negative interest rates in the Scandinavian country.

The Riksbank, Sweden’s central bank, announced that it will leave interest rates unchanged at -0.35 percent. This has been the norm since this past summer. It was believed the central bank would slash rates even further, but Riksbank Governor Stefan Ingves decided instead to conduct another round of its own version of quantitative easing, or QE.

Central banks believe that it can spur the economy if rates are in negative territory because then consumers would be encouraged to spend their savings. Although retail financial institutions have yet to impose negative rates, many economists believe it’s a matter of time because it’ll just be too expensive for banks to hold deposits.

The policy of negative interest rates has been tested before in other countries and it is currently seen at the European Central Bank (ECB).

Now, there are a number of things that Swedes have to consider.

First, the government is gradually transforming Sweden into a full-blown electronic economy without any form of cash. Therefore, with banks getting rid of ATMs and consumers unable to access their cash, Swedes will only have the options of spending their money or having the banks take it.

Second, consumer debt is about 175 percent of disposable income. If consumers spend any more money then they’ll be in serious trouble if and when interest rates start to rise.

Third, a housing bubble is beginning to form in Sweden. A Stockholm apartment is around $6,500, which is in the same vicinity as London. Many fear that a collapse in the housing market could be similar to the Great Recession: millions of Swedes with mortgage won’t be able to afford a housing value that plummets.

“We have scored an own goal of sorts in not dealing with the housing market properly in Sweden, and in the long term that threatens the economic development.”

’Ingves’

4. Federal Reserve Holds Off on Rate Hike (Again)

Federal Reserve
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Will it or won’t it?

Once again, the Federal Reserve has delayed an increase in interest rates. The Federal Open Market Committee (FOMC) released a statement that confirmed there would be no rate hike this month. However, it did hint that a potential rate hike would come to fruition in December.

Maybe.

The federal funds rate will be kept between zero and 0.25 percent, which has been the same for seven years. Many economists had been expecting Fed Chair Janet Yellen to leave rates unchanged, citing weak economic data, low inflation levels, China’s economic downturn and a stronger greenback.

“In determining whether it will be appropriate to raise the target range at its next meeting, the committee will assess progress …; toward its objectives of maximum employment and two percent inflation,” the Fed said in its statement.

Although the general consensus is that the U.S. central bank will raise rates in December, some economists feel that the Fed is just hinting at it as a market play. There is an argument that other than the Fed highlighting “next meeting” there is no other data, suggestion or a pre-committal from the Fed.

Indeed, there are various professional market analysts and contrarian investors who feel the Fed won’t hike interest rates at all, or if they do it will happen either next year or as far as 2017.

5. PayPal Lends Out $1 Billion to Small Businesses

Is the entrepreneurial spirit dead in the United States today? No, it’s just being buried in red tape, regulations and banks’ refrain from giving them a helping hand. Enter: PayPal.

PayPal, the ecommerce payments giant, announced that Working Capital, the company’s small business lending program, has doled out about $1 billion in loans to more than 60,000 PayPal merchants in the U.S., United Kingdom and Australia.

The initiative has seen substantial growth since it launched in 2013. Last year, the company announced Working Capital was disbursing $1 million in loans every day. Fast forward a year later and it’s lending out $100 million each month.

Since the number of small businesses is down 20 percent since the Great Recession, PayPal is attempting to replace retail banks with its alternative funding methods. Financial institutions are entrenched in red tape and demand a lot of paperwork, time and other measures. PayPal simply takes a peek into its merchants’ monthly sales and determines if the small business is the right fit or not.

It is unknown as to how much PayPal makes from this endeavor, but since there is a fee involved it’s generating revenues and profits. At the same time, it’s ensuring that the entrepreneurial spirit stays alive.

See Also: 5 Global Business Headlines From Last Week (Oct. 19 to 25)

Republicans are showing that they’re big rating generators for the major television networks. Paper cups served up by Starbucks and Tim Hortons aren’t all landing in recycling bins and plants. Interest rates in Sweden are still stuck in negative territory. Interest rates in the United States have been left unchanged and may go up next month. And PayPal is proving to be a good friend to small business.

What do you think has been the biggest business headline over the past week? Let us know in the comments section below.