All posts by jinmanli2018

Chicago is stepping up to be a trading hub for crypto

By Jinman Li
Medill Reports

Chicago is becoming a honeypot for cryptocurrency and will attract more and more crypto companies in the future, panelists said Tuesday at a luncheon panel hosted by the Executives’ Club of Chicago.

The birth of stock futures trading in the last century in Chicago demonstrated the city’s innovative spirit, said Sunil Cutinho, the president of CME Clearing. Compared with other metropolitans such as New York and San Francisco, Chicago focuses more on markets and has a unique ecosystem as a financial center, he added.

The different players in the ecosystem such as exchanges, financial institutions and technology companies are entering the cryptocurrency space, forming a concentration of upgrading power in Chicago, said Peter Johnson, vice president at Jump Capital, a Chicago-based venture capital firm.

Johnson said that Kraken, a bitcoin exchange based in San Francisco, is going to open its largest office in Chicago in 12 to 18 months.

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Relation between money and happiness contingent on an individual’s situation

By Jinman Li
Medill Reports

Whether money can buy happiness varies among individuals, contingent on their backgrounds and situations and how much money the person earns.

A 2017 study from Purdue University using data from the Gallup World Poll, which surveyed more than 1.7 million people from 164 countries, found that earning between $60,000 and $75,000 a year is ideal for what lead author Andrew Jebb called “emotional well-being” in a press release. The finding aligns with a 2010 research from Princeton University, which found that people’s level of happiness rises with their annual income when it is below $75,000, but the correlation does not exist beyond that point.

Nancy Ladd, a financial advisor at Trinity Financial Advisors LLC, said although money is not the driving force of people’s happiness, it does come into play, especially when it is below a certain amount, which, according to the research, is earning $75,000 a year.

“That’s really a minimum point where people basically start to feel that they can keep their head above the water,” Ladd said.
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Mixed outlooks are revealed for Northern Trust’s future stock performance

By Jinman li
Medill Reports

Analysts and shareholders have mixed outlooks for Northern Trust Corp.’s stock price in the next 12 to 24 months, with changes in interest rate and the potential to expand just some of the challenges the financial services company faces.

Although just one of the 21 analysts polled by Bloomberg has a sell rating on Northern Trust’s stock, seven analysts rate it as a buy and 13 rate it a hold, with an average 52-week price target at $111.55. The stock closed at $107.04 on Tuesday. Its 52-week low was on May 17 at $85.41, and its 52-week high was on March 12 at $110.81.

“They’re close to being undervalued, but just not quite there yet,” said Jeffery Harte, an analyst at Sandler O’Neill & Partners LP who has a hold rating on the stock. “It’s a pretty good company with really good growth prospects, but it also has a much higher valuation P/E multiple than its peers, so it is priced appropriately.”

The trailing 12-month price-to-earnings ratio for Northern Trust, which measures its share price relative to its per-share earnings, is 20.96, compared with the financial sector average of 19.60, according to data compiled by Reuters.

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M1 Finance users double after firm ends trading fees

By Jinman Li
Medill Reports

Can a securities brokerage make money without charging transaction fees?

M1 Finance LLC, a Chicago start-up, removed fees for its customers’ trades in December 2017, and has witnessed its number of users more than double to 25,000 since then. The company’s assets under management now total $100 million.

Brokerage firms have been drawn into a “price war” in the past few years, as a result of increasing efficiency brought by technological improvement and the popularity of passive funds and exchange-traded funds, or ETFs. Big players such as Fidelity and Charles Schwab both trimmed their commission rates in 2017.

“We saw price compression everywhere in the industry, from automated robo-advisers to old institutional players,” said Michael Savino, vice president of investment operations at M1 Finance. “We saw this as an inevitability and we wanted to be one of the first people there.”

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Debates continue on the Obama Presidential Center’s impact on Woodlawn’s economic future

By Jinman Li
Medill Reports

What’s not to like about the proposed Obama Presidential Center?

It’s a 19-acre complex of museum, library, plaza and athletic center, which was announced in May 2015 to be built in Chicago, the winner over several competing cities. The former president and first lady Michelle Obama selected the historic Jackson Park on Chicago’s South Side as the center’s location, adjacent to the eastern edge of the University of Chicago campus where Obama used to teach.

Despite promised multi-billion dollar benefits, more than one year after Jackson Park was chosen in July 2016, debates continue on the center’s impact on South Side neighborhoods.

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Chicago’s only black-owned credit union soldiers on

By Jinman Li
Medill Reports

While black-owned banks disappear, another black-owned financial institution perseveres.

South Side Community Federal Credit Union, or SSCFCU, at 5401 S. Wentworth Ave., is the only black-owned community credit union in Chicago. The not-for-profit financial institution is chartered and insured by the National Credit Union Administration (NCUA), an agency of the federal government.

The closure wave of black-owned banks nationwide has been going on for decades, with the total number halved from 44 in 2007 to 22 in 2017. In Chicago, the number slid from four to two, according to the Federal Deposit Insurance Corp., underscoring the financially-underserved situation of the city’s black communities and the difficulties for a local black-owned financial institution to survive.

The SSCFCU’s field of membership stretches from 22nd Street on the north to the city limits on the south and from Lake Michigan on the east to Western Avenue on the west, covering a large area of Chicago’s African-American neighborhoods.

Founded in 2003, the credit union’s total assets fluctuate over the years and grew to $4 million in 2017. Its membership is approaching 2,000. The association has no shareholders, for it’s owned by its members, who are its depositers. However, its staff totals only five, an important reason why the credit union operates only four days a week, including four hours on Saturday.

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Chinese investment flows into Japanese housing despite tightening policies

By Jinman Li
Medill Reports

Tokyo–A Chinese celebrity venture capitalist, Manzi Xue, who has more than 11 million followers on Weibo, a Chinese social media resembling Twitter, announced in January that he had bought all 11 machiyas on a street of Kyoto to develop a rental lodging business. Machiyas are traditional wooden townhouses popular with Kyoto merchants and craftspeople.

Although Xue’s dramatic announcement triggered a new run of media coverage and public discussion, Chinese purchases of Japanese housing is not a brand new topic.

“Chinese investment in Japanese residential properties has been increasing rapidly since 2013,” said Toru Otaya, associate managing director at Japan Real Estate Institute (JREI), a global research, appraisal and consultation organization. Japan’s success in its 2020 Olympic bid, the recovering economy after the reelection of Shinzo Abe in 2012, and the cheap Japanese yen are identified by Otaya as the major drivers.

According to a survey conducted by JREI based on the expected return rate of the real estate market, Japanese housing prices dipped after the outbreak of the 2008 financial crisis, and the rate of return increased. The market remained dull until 2012 when Abe took office and implemented policies to stimulate the economy. The volume of transactions grew, prices went up, and the rate of return dropped, according to JREI.

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Women-only Capsule Hotels sprout in Tokyo

By Jinman Li
Medill Reports

Tokyo–Capsule hotels, a simple form of lodging that originated in Japan in the 1970s, finds itself in a wave of increasing female focus.

A capsule hotel reduces lodgers’ needs to the bare necessities of a tiny individual pod with a bed, lights, Wi-Fi coverage, and sometimes a TV. A typical sleeping space costs half as much as a conventional hotel room.

Japanese salarymen used to be the major target audience of capsule hotels. Now business travelers and vacationers also take up a significant proportion of the expanding available space.

According to research conducted by WiseGuy Research Consultants Pvt. Ltd. in August 2017, the global capsule hotels market was valued at $159 million in 2016 and was expected to reach $226 million by the end of 2022, growing at a compound annual rate of 6.03 percent between 2016 and 2022. Although the global market is expanding fast, Japan still plays a significant role in the capsule hotel market.

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Kellogg earnings exceed estimate, stock rises

By Jinman Li
Medill Reports

Kellogg Co.’s (NYSE: K) fourth-quarter earnings topped Wall Street’s estimate, thanks to the acquisitions of protein bar maker RXBAR and Brazilian food seller Parati, as well as to favorable currency translation.

The Battle Creek, Mich.-based cereal company swung to a profit of $428 million, or $1.23 per diluted share, in the quarter ended Dec. 30, compared with a year-earlier loss of $52 million, or 15 cents per diluted share. Analysts polled by Bloomberg estimated a profit of 75.5 cents per share. Sales rose to $3.21 billion, up 3.6 percent from $3.10 billion for the same period in the year prior.

The surge in earnings came as a result of favorable mark-to-market adjustments, lower restructuring charges, and higher operating profit. The company’s quarterly reported operating profit jumped nearly seven-fold to $669 million from $98 million in the prior-year quarter. Strong productivity savings related to the Project K restructuring program, represented by the exit from U.S. Snacks segment’s Direct Store Delivery (DSD) system, contributed significantly to the growth, which offset the company’s increased investment in advertising and promotion.

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U.S. manufacturing expanded at rate close to peak

By Jinman Li
Medill Reports

The U.S. manufacturing sector continued to show strong momentum in January, beating the market consensus.

The Institute of Supply Management reported Tuesday that its January purchasing managers index, or PMI, a composite indicator of the manufacturing sector, slipped 0.2 percentage point to 59.1 from a December reading of 59.3. A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding, according to ISM.

Economists predicted an average of 58.7, according to Bloomberg.

“A change of this size can’t be meaningfully interpreted,” said Patrick Franke, U.S. economist at Helaba in Frankfurt, Germany, who describes the reading as an unchanged condition. “The strong momentum definitely continues.”

The weakened dollar, which makes U.S. manufacturing products more competitive in the international market, and the deregulatory policies under the Trump administration, contributed to the expansion, said Franke.

“The upturn of the global economy” is another driver behind the growth, which boosted new export orders 2.2 points higher to 59.8, said Louis Crandall, chief economist at Wrightson ICAP LLC, an economics research firm.

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