The Finance Whisperer

The New Top Jobs in Demand

 

It seems that high unemployment and a volatile market have rearranged the country’s perception of most desirable jobs.  Once considered unexciting and humble, accounting jobs are rising dramatically in popularity.  People have a newfound appreciation for secure and gainful employment, and accounting positions fit the bill, so to speak, perfectly.  In fact, according to a leading accounting and finance recruiting agency, accountants are in such high demand that many are in a position to ask for a raise or promotion!  Recent studies determined this job to be the most desirable in the country, especially in fields such as oil, gas, manufacturing, health care, and hospitality.  Extensive regulation requirements obligate every company to develop a proficient accounting department, so they are constantly in demand.  Here are six finance and accounting jobs that are gaining status:

1. Accountant
2. Accounts Payable/Receivable Clerk
3. Financial Analysts
4. Controllers
5. Medical billing supervisors
6. Auditors

If any of these positions match your skills and interests, consider exploring them as a possible next career move!

Technology Sector Still Thriving

Much to the surprise of many Wall Street analysts, the technology sector continues to thrive, faring far better than the vast majority of the economy.  Apple reported record results last week for its third quarter, selling 20.3 million iPhones, up 142% year-over-year, and 9.25 million iPads, up 183% year-over-year.  In addition, Apple has released a new Mac Mini, the new Lion OS X, and an improved Macbook Air.

In other news, Spotify, the British music streaming company, is performing well after entering the U.S.  It is predicted to give Pandora, Apple, and Amazon a run for their money.  Tech IPOs continue to spring up across the country and beyond.  One such IPO was Zillow.com, the online real estate site, which doubled its price on the day it went public.  Skullycandy, a popular producer of electronic accessories, also went public this week.  Google and Yahoo earnings are up, and are likely to maintain the high bar in the coming weeks.  Keep an eye out for emerging technology companies to come!

 

Economists Predict U.S. Downgrade

 

A recent Reuters poll found that the majority of economists believe that the United States will lose its AAA credit rating at one or more key rating agencies.  These economists (30 out of 53 polled) cite the delay in the debt decision as the primary reason for the impending downgrade.  Every day that passes without a decision only increases the likelihood that the U.S. will lose its first-class rating.  The majority of economists also believe that the political contention has already harmed economic growth. 

A downgrade would put the U.S. at higher risk of recession, but could potentially permit financial markets to ride out the storm.  On the other hand, according to financial analysts, a default would have a major impact on the entire global financial system and could potentially set another financial crisis in motion.  The sooner we resolve the debt debate, the better!

Wall Street's Impact on the Debt Decision

For weeks now, many politicians in Washington, including the current administration, have tried to communicate to the public the urgency attached to the national debt decision.  Yet despite all their warnings, the economy seems relatively stable. Stocks have dipped on a few occasions, but not in any way that suggests impending economic disaster.  As a result, these politicians are quickly losing credibility in their claims that the debt debate needs to be resolved immediately; in fact, the steadiness of the economy has led other politicians to resist the deadline even more determinedly.  The warnings were intended to spur reluctant politicians to concede to the deadline and accept compromise, but such actions do not seem to be taking place.   

According to Mohamed El-Erian, CEO of Pimco, the major bond manager, “The Aug. 2 deadline is not as hard as indicated by Secretary Geithner.”  Mr. El-Erian is not especially concerned about a U.S. debt default, arguing that Washington will find a solution long before it becomes an issue.  On the flip side however, ratings agencies have warned that they will have to lower the United States’ rating if the government does not come through with a “credible” solution.  If the U.S.’ rating were to drop, the consequences could be disastrous for the national economy.

Obama Retains Support from the Finance Sector, Despite Unfavorable Regulation

As the 2012 presidential election draws nearer, campaign fundraising is well underway.  Given President Obama’s 2010 financial overhaul law, you might not expect him to be especially popular among the financial sector.  The law imposed rigid new rules on banks, affixed limits on some executives’ bonuses, and added regulation of hedge fund managers.  Republican presidential candidate, Mitt Romney, has won a lot of support in the financial sector due to his outspoken opposition of the overhaul.  Yet according to a recent poll by the Center for Responsive Politics, Obama still has plenty of Wall Street endorsement. 

Thus far, eighty of President Obama’s major fundraisers, or bundlers, have successfully raised over $11.8 million for the 2012 election.  These eighty bundlers, who represent one third of Obama’s fundraisers, work in real estate, finance, and insurance, and combined they have contributed more money than any other industry.  Many of these finance professionals are well-known executives in their field.  By the end of the 2008 presidential election, this group had raised $16.1 million for Obama, suggesting they are on track to match the number by the coming election date!

Borders Fails to Keep Up in Rapidly Changing Industry

Borders’ going-out-of-business sales began today at all 399 stores.  A 40-year-old company, Borders was the second-largest book retailer in the U.S. and employed 11,000 people.  The liquidation process will likely bring in between $250 and $284 million, which the company will use to pay back its creditors.  The company hopes to make a deal in the near future with Books-A-Million, the third-largest bookstore in the U.S., which would enable up to 35 stores to stay open.  Most importantly, the deal would allow 1,500 Borders employees to continue working.   

Borders declared bankruptcy in February, blaming its competition from Barnes & Noble and Amazon.com as the primary reason for its downfall.  Borders’ liquidation only further emphasizes technology’s growing role in American society; both Amazon.com and Barnes & Noble have successfully evolved to embrace the e-book market, unfortunately at the expense of the Borders franchise.  Hopefully Books-A-Million can find a way to adapt to this rapidly-changing industry.

Wall Street Prepares for Debt Default

While the government scrambles to pull a plan for the debt ceiling together by August 2^nd, Wall Street is already preparing for the worst.  Finance professionals are very concerned about the country’s market credibility—with or without a plan in place.  As a result, many companies are already working on reducing the risk of holding Treasury bonds and concocting strategies to make profits in the event of turmoil. 

Typically speaking, Treasury bonds are considered one of the safest investments; as such, they are often used as security deposits in market trade.  But banks are now being forced to review their holdings to assess their future value.  If the government does not come up with a plan before August 2^nd, the country will no longer be able to finance government obligations without raising the $14.3 trillion cap on government borrowing, and the Treasury will have immense difficulty meeting interest payments.  The Treasury could also have trouble fulfilling its obligations to government employees and programs such as Social Security and Medicare. 

Despite the unlikelihood that the U.S. defaults on its debt, there has been serious volatility on the market.  Expert economists emphasize the importance of the U.S. maintaining its standing as the most creditworthy country in the world.  Wells Fargo CFO, Timothy J. Sloan, argues that banks have no choice but to proceed with caution.  He asserts, “Because nobody knows what is going to happen, nobody knows how to prepare.”

Indecision on the Debt Ceiling Debate: First Washington, Now the Nation?

 

Yesterday, President Obama announced his support for a new plan to reduce the national deficit, devised by a group of six Republican and Democratic senators.  The senators, aptly named the Gang of Six, proposed a $3.7 trillion deficit reduction over the course of ten years.  Major points in the plan include spending caps through 2015, slowing cost-of-living increases for Social Security and other programs, lowering the cost of Medicare and Medicaid, reducing tax breaks, and scaling back tax rates.  Some disapprove of the plan’s changes to tax rules.  Others are in favor of the plan, but argue that legislation on it cannot be drafted fast enough to meet the August 2^nd debt ceiling deadline.

Despite the nation’s frustration with Washington’s inability to come to a decision on the debt issue, it seems everyone is having a hard to making up their minds: according to a recent poll, 38% of Americans believe the debt ceiling should be raised, while 31% believe it shouldn’t.  But a month ago, only 29% believed the debt ceiling should be raised, while 39% disagreed.  The overall back and forth on this issue demonstrates how difficult and complex this decision really is.  At this point, major plans on the table include the Gang of Six, McConnell and Reid’s Plan B, the House GOP’s “Cut, Cap, Balance” plan, and Obama’s original Grand Bargain.  Time is running out before the deadline, and major steps will undoubtedly be made in the coming weeks.

 

Yesterday, President Obama announced his support for a new plan to reduce the national deficit, devised by a group of six Republican and Democratic senators.  The senators, aptly named the Gang of Six, proposed a $3.7 trillion deficit reduction over the course of ten years.  Major points in the plan include spending caps through 2015, slowing cost-of-living increases for Social Security and other programs, lowering the cost of Medicare and Medicaid, reducing tax breaks, and scaling back tax rates. 

Some disapprove of the plan’s changes to tax rules.  Others are in favor of the plan, but argue that legislation on it cannot be drafted fast enough to meet the August 2^nd debt ceiling deadline.

 

Despite the nation’s frustration with Washington’s inability to come to a decision on the debt issue, it seems everyone is having a hard to making up their minds: according to a recent poll, 38% of Americans believe the debt ceiling should be raised, while 31% believe it shouldn’t.  But a month ago, only 29% believed the debt ceiling should be raised, while 39% disagreed.  The overall back and forth on this issue demonstrates how difficult and complex this decision really is.  At this point, major plans on the table include the Gang of Six, McConnell and Reid’s Plan B, the House GOP’s “Cut, Cap, Balance” plan, and Obama’s original Grand Bargain.  Time is running out before the deadline, and major steps will undoubtedly be made in the coming weeks.

Warren Buffett Deems Debt Debates Not Worth the Trouble

As the August 2^nd deadline for the national debt limit decision draws nearer, the arguments within the White House and Congress seem to grow more dramatic and distressing every day.  President Obama has already stormed out of a meeting, and it has been suggested that Treasury Secretary Timothy Geithner is considering leaving office.   However, according to Warren Buffett who met with President Obama in the Oval Office yesterday, the country would be better off without a debt limit. 

“All it does is slow down a process and divert people's energy, causes people to posture.  It doesn't really make any sense ... To have this artificial limit, which always gets raised in the end, disrupt the activities, in an important way, of Congress, periodically, I think is a waste of Congress's time."

Buffet went on to argue that a compromise to allow the White House to raise the debt limit without the approval of Congress would be a grave mistake, and he believes rushing the decision to make the August deadline would be an unnecessary risk.  Contrary to the belief of others, Buffett also highly doubts that the nation will default on its debt.

As for the “big plan” to reduce deficit by four trillion dollars over the next ten years, Buffett is a supporter.  “We’re going to have to come to terms with [the deficit reduction],” he said, “so the real question is whether…we have the foresight to do it today, or we keep waiting and waiting and waiting.”  Hopefully we can do our best to think ahead about the best way to solve this issue, but in the meantime, at least in the wise eyes of Warren Buffett, an immediate limit on government debt is not worth this much trouble.

Tech Companies Gaining Traction with Business School Grads

 

A new survey suggests that recent business school graduates are increasingly more inclined to work for a technology company as opposed to a major bank.  When those surveyed were asked to name the top five firms they would prefer to work for, four out of 10 of the most popular companies named were tech companies.  Students’ first choice was McKinsey & Co., followed closely by Google Inc.  Facebook, Amazon, and Apple also made the top 10 list.  Global chief talent officer for Bain & Co, Russ Hagey, said of the trend, “Top talent is thinking about their resume and about where they’re going to be challenged and excited, which I think might explain some of the tech companies on the list.”

While students also named several large banks as ideal employers, many career counselors at top business schools have noted a growing preference in smaller firms.  Jana Pompadur Kierstead, Harvard Business Schools’ Head of the Career and Professional Development office, told the Wall Street Journal that the percentage of students taking finance positions increased from 34% in 2010 to 39% in 2011.  She added that this increase was almost entirely credited to more roles at hedge funds and private-equity firms.  According to Eduardo Hurtado, co-president of the finance and investment club at Stanford Graduate School of Business, “People don’t want to spend [years] in a role before they get to have some kind of larger impact, which is something you can get in a smaller firm.” 

As values shift for each graduating class and the economy switches gears, industries rise and fall in popularity. These trends will be very interesting to follow in the coming years.