A glance at the newspaper or a quick click to a local car dealer’s website reveals a dizzying array of promotions and offers designed to entice consumers onto the dealer’s lot, where the well-paid professional sales staff has a better than even chance of putting a person in a new car. New (and used) car sales may be the one place where the average consumer runs head-on into what is often called an asymmetry of information.In other words, the dealer has more information about the price of a car than the consumer does. The dealer knows, for example, exactly how much the car originally cost, how much it costs to keep that car in inventory, and at what price the car can be driven off the lot with a decent profit left behind in the dealer’s pocket.That does not mean that all dealers are liars and cheats. What it does mean is that when consumers are shopping for a new car they need to do what they can to gather as much information as they can in order to reduce the asymmetry.
One of the most basic decisions a consumer has to make is to choose between buying a caror leasing one. Carmakers routinely make purchase, lease or financing offers to consumers on a variety of vehicles for a variety of reasons. Dealers sometimes add to these, again for a variety of reasons. For now let’s look only at what’s happening, not why.The choice between buying or leasing a car depends to a large degree on what a particular consumer’s needs and wants are. Typically, monthly lease payments are lower than repayments on a purchase loan for the same new car. That means you can lease the car for a lower monthly out-of-pocket cost for the use of the car.
It’s important to think of buying or leasing a car as two sides of the same coin. Both provide consumers with the use of a car in exchange for cash. That’s the simple bit. It gets more complicated quickly.Regarding monthly payments, loan payments are usually higher than lease payments, according to Consumer Reports magazine, because buyers are paying off the entire purchase price of the car plus interest, finance charges and fees. Lessees only pay for the car’s depreciation during the lease term, plus interest (rent) charges, taxes and fees.
Here’s the example Consumer Reports gives:
For a 36-month loan on a $36,000 car, for example, the principal portion of the payment averages $1,000 a month. But with a lease, you pay back only the vehicle’s decline in value—the depreciation—while you’re using it.
Since that $36,000 vehicle might depreciate about $18,000 over that same 36 months, the principal portion of the monthly lease payment would be based on $500, about half as much as for the loan. Of course, at the end of the lease, you have to return the car (unless you want to and are able to come up with the remaining residual value to buy it).
To the loan principal consumers need to add finance charges. With a lease, you are paying off the cost of the principal more slowly, which means that you are paying more in finance charges because you are using someone else’s money for longer. Consumer Reports reckons that the 36-month lease on a $36,000 car costs about $1,435 more in finance charges. Some of that is returned by a tax break to lessees, and if you can invest the difference between a monthly loan payment and a monthly lease payment, the difference between financing a loan and financing a lease shrinks further. But Consumer Reports also notes:
Taken together, those benefits might offset the higher lease finance charges. But even then, lessees often have to contend with various fees and other extra costs, including lease initiation and disposal fees, which can add hundreds more to the total cost.
All these additional costs are multiplied if you lease another car whenever your old lease runs out, although some may be waived through lease-loyalty programs.
JPMorgan is making good on its promise to deploy nascent technology throughout its investment bank with the promotion of a former credit trader.
The Wall Street giant has named Samik Chandarana, an 18-year veteran at the bank, as head of analytics and data science for the corporate and investment bank, a newly created position according to an internal memo seen by Business Insider. The news was first reported by Bloomberg News' Hugh Son.
Chandarana will be responsible for heading the bank's strategy to deploy machine learning and data-based solutions throughout the corporate and investment bank, according to the memo penned by Sanoke Viswanathan, head of the chief administration office for CIB. To that end, Chandarana will collaborate within specific units to "develop cohesive data science strategy, coordinate and help prioritize the portfolio of projects, and develop a framework for the appropriate sourcing and usage of data across businesses."
Chandarana is set to report to Viswanathan, according to a JPMorgan spokesperson.
JPMorgan, which spent $9.5 billion on technology in 2016, has taken a number of steps to digitize its investment bank, an area of banking that because of its client-facing nature was long thought to be impervious to the technological transformation sweeping much of Wall Street.
Machine learning and AI technologies, at a very basic level, replicate human intellectual capabilities.
Last year, the bank launched a predictive recommendation engine to identify those clients which should issue or sell equity. And now, given the initial success of the engine, it's being rolled out to other areas.
Firm-wide, JPMorgan is upping the ante on tech, according to former COO Matt Zames.
"We are initiating pilots for a broad range of machine learning use cases – from detecting anomalies for fraud and cybersecurity, to generating targeted trading strategies to share with clients, to optimizing our client servicing channels," Zames said in an April note outlining the bank's tech strategy. "We are only at the very beginning of tapping the potential capabilities of machine learning and its benefits to our business."
A powerful tailwind propelling consumer spending: Rising household wealth, which hit a record of $89.1 trillion at midyear, thanks largely to gians in home values. Combined with modest but steady job creation and tame inflation, the increase in net worth is giving folks both the means and confidence to spend. It also helps that total house hold debt at about $12 trillion is rising only slowly. The wealth effect should keep powering spending at least in the near term, since home values stand to keep rising amid a shortage of properties on the market. Eventually rising inflation figures to dampen consumer setiment a bit. The drop in gasoline prices since 2014 has helped keep oriuces of other goods stead. Now that pump prices have largely stabilized, they will no hold back overall inflation
Mobile cyberattacks are on the rise as hackers target smartphones, tablets and other devices to infiltrate company networks and steal valuable data through weak spots in mobile devices, apps and Wi-Fi. Scores of businesses of businesses say they have at least one breach costing $50,000 to $100,000 in recent years. Fending off the attacks will not be easy for many companies. Common advice is to train workers on best security practices, but training often fails by the way side, consider rolling out more biometrics, security software and security audits.
Chip makers are readying for the next wave of electronic technology, namely connected cars and wireless sensors. Spending by semiconductor companies on equipment such as advanced robitics, chemicals optical imaging gear and more will total $41 billion in 2017, up 10% over the amount being invested this year. Samsung Micron Flash Alliance Intel SK Hynix and others will hike outlays to work on new types of memory and microprocessors that are hard to manufacture. Note a coming surge in Chinese chip production. Eleven plants are in the works in China, compared with just 10 plants in the rest of the world.
OCTOBER NEWSLETTER 2
APPLE CONTENDS AMAZON SELLS FAKE APPLE PRODUCTS
GOAL IS SMOOTH
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SHOULD YOU BUY OR LEASE A CAR
A new lawsuit filed by Apple contends that 90 percent of iPhone devices and Apple accessories it recently purchased from Amazon were fakes.The lawsuit targets a company called Mobile Star, LLC, and alleges that it is selling phony power products on Amazon that “pose a significant risk of overheating, fire, and electrical shock.”Apple says it purchased the products directly through Amazon, not a third party. Amazon is not named in the lawsuit, according to an Associated Press report.
As part of its investigation, Apple bought more than 100 items, including:
Apple says it filed the lawsuit “to protect its customers from dangerous counterfeit power products such as power adapters and charging cables” that Amazon sourced from Mobile Star.Consumers relying on Amazon’s reputation “have no reason to suspect the power products they purchased from Amazon.com are anything but genuine,” the lawsuit says:This is particularly true where, as here, the products are sold directly “by Amazon.com” as genuine Apple products using Apple’s own product marketing images.CBS News says Amazon did not immediately respond to a request for comment about the lawsuit. Meanwhile, an Associated Press report says Mobile Star also did not respond to a request for comment.The lawsuit also contends that Mobile Star supplied Groupon with dangerous counterfeit Apple power products