Tuesday was worth a trillion for Amazon (AMZN.O).
The enormous e-commerce company just became the second in the U.S. to ever reach such a sum. As per Cheddar, "(Amazon) saw shares rise to $2,050.50 just before noon, putting its valuation just about $100 billion behind Apple, which crossed the line a little over a month ago." As CNN reports, "Amazon and Apple now make up more than 8% of the entire value of the S&P 500." According to Reuters, "(Amazon's stock price more than doubled in a year as it grew rapidly in retail and cloud computing." The company began 2018 with a valuation of $580 billion.
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While a $100 billion difference seems significant, experts predict it may not be long before Amazon leaves Apple in the dust… if trillions can be considered a speck. "The stock's 74 percent gain this year is more than double that of Apple, and if shares of both companies keep the same pace, Amazon could close the gap by the end of the year," notes Cheddar.
But the trillion dollar mark for Amazon was short-lived, at least for now. According to The New York Times, the company ended the day (Tuesday) "at $2,039.51, below the $1 trillion threshold."
So, how did Amazon arrive at this this apex? As The New York Times explains, "Amazon captures 49 cents of every e-commerce dollar in the United States. It employs more than 550,000 people and generates $178 billion in annual revenue. Amazon's founder and chief executive, Jeff Bezos, is worth nearly as much as Bill Gates and Warren E. Buffett put together." He has a net worth of more than $150 billion.
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To further put things in perspective, "Contrast Amazon with the brick and mortar sector, where 90% of American retail spending still takes place. In order to get to a $1 trillion market cap, you'd have to add up the valuations of the 14 largest big box retailers ranked by 2017 revenues," describes CNN.
As one might expect, reaching $1 trillion isn't something we see every day, but along with Apple and Amazon, it has been done before by China Petroleum. As Cheddar reports, "China Petroleum did so on the Hong Kong exchange back in 2007, but those shares have since plummeted, giving the one-time oil giant a current market cap of around $121 billion."
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Apple took 38 years to hit $1 trillion, Amazon needed just 21. And Amazon crosses into so many sectors. "Amazon has its fingers in many pies, and it's successful in most of them. On top of its centerpiece online store, it has a thriving cloud services business that includes the likes of AWS, Alexa and Prime Video. It's rapidly expanding its hardware offerings, and you can't ignore the value of Whole Foods," notes Engadget.
As we approach Q4 and end 2018, will Amazon trickle into trillion-dollar territory again? And will they continue to rise? Bezos would bet his bottom dollar.
When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The Federal Reserve
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.