National News

Time Warner is going to spin off its magazine namesake. In fact, the company is getting rid of all of its magazines.  Time Inc. will become an independent company.

Time Warner says it wants to focus entirely on its TV and film businesses -- and it’s pretty easy to see why. Magazines are expensive to run, sales at newsstands are down, and advertising is down.

Time Warner is following a trend. News Corporation has announced plans to split off its newspaper and book division, including the Wall Street Journal and HarperCollins. It’s  part of a strategy of separating high growth areas -- like cable networks -- from traditional media. 

Dan Kennedy, who teaches journalism at Northeastern University and has been following this trend, says these magazine spinoffs will only survive if they cut way, way back.

“The Time, Inc. magazines in particular are legendary in the industry for the way they throw money around,” he explains. “I guess that’s going to have to stop.  It just means fewer bodies, less reporting.” Just look what happened at Newsweek. It’s gotten rid of its print version, and is only available online.

Kennedy says the most successful magazines will be those that find a niche.  Specializing in something that a group of readers is really interested in and willing to pay for.

North Korea's government has said it reserves the right to carry out a pre-emptive nuclear attack against the United States ahead of a U.N. vote on tighter sanctions against the communist regime.

The Security Council meets later today to approve fresh economic sanctions against Pyongyang after the country carried out an unauthorized nuclear test on February 12.

The BBC's Lucy Williamson in Seoul says the sanctions will target "the funding that the U.S. believes is going into North Korea's military program." The new set of restrictions will focus on the country's international banking operations.

Earlier this week, North Korea also threatened to scrap the 60-year truce which ended the Korean War.

The Geneva Auto Show opens in Switzerland this week. It’s usually a glitzy affair, but while U.S. carmakers are on the rebound, gloom has descended on the European auto industry. Car sales in Europe have plunged as a result of the economic crisis, and that’s a big problem for European carmakers.

In the auto business, Philippe Houchois, an analyst at UBS, says there’s a very important rule to live by: “Cars become stale after a while."

In other words, you need new models, and that’s what car shows are for.

General Motors is unveiling a new convertible Corvette in Geneva, but David Bailey of Coventry University says struggling European automakers don’t have much to show this year.

“It could cost up to a billion dollars to get a genuinely new car to market,” says Bailey. “So it's hugely expensive.”

With cars sales in Europe at a 17-year low, there’s little money to spend on innovation.

France's Peugeot and Renault have presented revamped, SUV-style models, but Houchois says the risk is that as profits drop further, European manufacturers will fall into a downward spiral -- less investment means fewer new cars. 

“And over time, you drop off the shopping list of car buyers,” says Houchois. He says that presents an opportunity for U.S. carmakers and others to snatch up European customers.

Coupa Cafe in downtown Palo Alto is a popular hangout with Stanford students and techies. So it’s no surprise that they offer free Wi-Fi. 

But when I get to my table, turn on my phone and open my browser, it takes me to Facebook. It instructs me to log in to get free Wi-Fi.  (You can bypass the sign-in but that wasn’t totally apparent to me.)

Facebook says its experimenting with a few local businesses to “offer a quick and easy way to access free Wi-Fi after checking in on Facebook.”

Rocky Agrawal, a consultant at reDesign mobile, suspects there’s more to this than good will.

“It’s a good way for Facebook to know where you’re at, they can deliver all sorts of new offers,” Agrawal says.

Companies are banking on location based advertising to bring in big money for mobile, but there are a lot of hurdles to clear before companies like Facebook can target your location precisely.

Matthew Groves created the app “Dude, Where’s My Car.” It relies on GPS and that can be problematic.

“It all depends on where you’re at, are you in a parking lot, are you around tall buildings or trees, basically do you have a clear view of the sky,” Groves says.  

Using location data from cell towers is another option, but Groves says that’s less accurate because there aren’t enough of them. To get around that problem, he says companies like Google are testing their own Wi-Fi hotspots, which offer free Internet.

As for Facebook, it gave the Coupa a wireless router, which can be tied to a location. Argawal says, you can imagine tech companies like Facebook sending out routers to millions of businesses.

“So all of the sudden you have precise locations on every business you’ve shipped that too,” Agrawal says.

And so one day soon, someone like me could get an offer for a free smoothie to go with my ham sandwich.

There have been multiple signs of a comeback in the crucial housing sector in recent weeks. It’s a sector that typically leads the way out of recession, but has lagged badly in this recovery.

In January, existing home sales were up 15.6 perecent. New home construction is expected to rise steadily this year, and home prices are climbing across the country.

Connect the dots -- and you get to Home Depot and Lowe’s. The big home improvement chains reported higher sales and predicted continuing growth when they released earnings this week. They’re also hiring up for the spring shopping season.

Debbie Kitchin of InterWorks general contractors is a steady customer of the big chains, as well as local suppliers to the professional trade. She was giving a tour of a quaint little bungalow her firm is renovating in Portland, Oregon. The house, about 1,600 square feet, recently sold for $225,000. It’s in an older residential neighborhood of streets lined with towering fir trees, where the real estate market is now brisk again after the housing slump of the late 2000s.

The rehab on this house is top-of-the-line. InterWorks and its subcontractors are installing new floors, kitchen, master suite, insulation, energy-efficient windows. The new homeowners are empty-nesters, recently retired, who sold a larger, more expensive house in the suburbs, in order to move closer to their daughter and new granddaughter in town.

But Kitchin says a lot of her clients are staying in their homes -- which now seem to be worth something again.

“People have deferred making improvements in their homes,” says Kitchin, “because of the recession and because the value of their houses was going down. Now that they see it’s starting to turn, they feel like, ‘well, maybe it’s safe to invest in my home again.’”

Meaning, InterWorks is growing again. After downsizing from 13 employees down to four employees during the recession (and they often didn’t get full-time work), the firm now has full-time work for about half-a-dozen workers, including skilled carpenters who make as much as $25/hour. The subcontractors on the job have ‘For Hire’ signs on their trucks as well.

Which also means  that InterWorks is buying a lot more stuff. “Wood, insulation, paint, tile, flooring, whether it’s carpeting or hard-wood flooring,” says Kitchin. And the list goes on.

And that is keeping the folks at construction material and home improvement suppliers plenty busy. Home Depot will hire 80,000 seasonal (i.e., temporary) employees to handle the spring sales rush in coming months. That’s 10,000 more than last year.

At a Home Depot store in a suburban mall in Vancouver, Washington, across the Columbia River from Portland, permanent employees and new temporary hires were busy setting out the spring displays this week -- including landscaping supplies and building materials for homeowner DIY projects.

“A lot of contractors that actually may have gone out of work for a while, they’re going back into remodeling,” says store manager Robert Tilton. “And they’re building spec homes, getting a lot of support through interest rates and an easier process of getting commercial bank loans.”

Tilton says more homeowners are flocking into the store too -- getting ready to sell their homes, or just to live a little.

“The biggest do-it-yourself projects right now seem to be a lot of landscaping, curb-appeal type items, interior-exterior paint jobs,” says Tilton. “It’s a very inexpensive way to add a good look and feel to your home while adding value.”

Michael Farr follows the home improvement sector at investment firm Farr, Miller & Washington. He calls this a genuine housing recovery, but not a robust one.

“It’s something of an anemic rebound, we’re limping out.” says Farr. “But you don’t want to look a ‘gift rebound’ in the face when you get it.” He points out that residential investment averaged around 4.5 percent of GDP from World War II until the end of the housing bubble in 2007-2008. It was 2.4 percent of GDP last year.

And, Farr points out, even as consumers have deleveraged through the recession, American households still have a lot of debt left on their balances sheets (debt to household income doubled from 1980 to 2000, driven in large part by inflation in home prices and the boom in home equity loans). Home prices are now on the rise, but they haven’t rebounded nearly enough to provide an equity cushion for many homeowners to borrow against, in order to fund big home-improvement projects.

But at least that kind of investment is getting less risky from a financial standpoint, Farr says.

“People want to know that if they invest more money in their homes to repair or refurbish, they’re going to be able to get that money out, that it’s going to be worth it,” he says. “You don’t want to try and repair a house that’s simply falling in market value.” Now that home prices are rising steadily in most local markets, home-improvement spending prior to putting a home on the market appears to be a better bet.

But economists warn that this renovation recovery could still falter. Home prices have to keep rising, or homeowners won’t be able to get back what they put into their homes when they sell. And interest rates have to remain low, so people can keep refinancing their mortgages, then plowing that extra money into new kitchens and fancy shrubbery.

A stress test is the Federal Reserve imagining terrible things and seeing if banks survive.

Things like the “stock market falls 50 percent, housing prices fall 20 percent, and the unemployment rate goes back up to 12 percent” says Rebel Cole. He's a former Fed economist and a professor of finance at DePaul University who trains the International Monetary Fund on how to run stress tests.  

Cole doesn’t expect any surprises in today’s Fed results:

“In practice the stress tests aren’t very stressful. The last thing regulators want is to spook the markets. This is about engendering confidence in the banking system" and letting people know that regulators aren't asleep at the helm.

Still, the Fed could be nervous enough to tell some banks to hang on to their cash, and not to give too much to shareholders as dividends or by buying back shares. That part of the stress test won't be made public today.

Anat Admati, a professor at Stanford’s Graduate School of Business, is concerned the banks will get off easy.

“When a company pays dividends or buys back some of its shares, then it doesn’t have that money to invest or back up its debts,” Admati explains, adding that she expects the banks to be allowed to pay out tens of billions of dollars.

Admati says it's in the banks interest to be as indebted as possible -- borrow money when the rates are good, invest it, and reap the majority of the profits for shareholders. Taken too far, that makes banks vulnerable to losses.

Cole says it doesn't make sense for banks feel the need to shovel out cash. A bank's performance is evaluated primarily on its return on equity.

"This doesn't happen in any industry I know of, we usually look at free cash flow, stock prices, but in banking, analysts look at return on equity," he says.    

The easiest way to raise your return on equity, Cole and Admati both point out, is to increase your leverage -- to borrow more.

Shareholders will have to wait a week to see whether the Fed lets banks pay higher dividends and which banks it allows to do so.

This note comes with a little bit of 'ewwww' attached.

The acting president of Venezuela, Nicolas Maduro, said today the body of his late predecessor Hugo Chavez will be permanently displayed in a glass casket so that -- and this is a quote -- "his people will always have him."

Not the first time -- think Mao and Lenin and Ho Chi Minh.

But still. Eww.

So here’s a little mystery, Wall Street style. What gives with the NASDAQ? The Dow Jones Industrial Average and the S&P 500 are at or near historic highs. But the NASDAQ -- the index that tracks mainly tech stocks -- isn’t reaching the same height.

It’s true the NASDAQ did reach a 12-year high this week. It’s just nowhere near its historic level. And given the stratospheric height it reached during the 1990’s tech bubble,  some analysts think that’s a long time off.

“Whether it’s Intel, or Microsoft, the old school, which used to be the high-flying names, are just sort of stuck in the mud,” says analyst Art Howard with Lazard Capital Markets.

And Apple -- which is so big that its fortunes can sway the entire NASDAQ has seen its shares drop 22 percent this year alone.

Economist Nela Richardson, with Bloomberg Government,  says given high unemployment and sluggish business investment, she questions this whole record setting run-up.

“I think how on earth can this economy support the rally that we are seeing in the financial markets,” she says.

Richardson says from where she sits, the slower-moving NASDAQ seems to be a much more accurate economic barometer.

New York City's Chief Digital Officer, Rachel Haot, began in the city's startup world and rose to prominence quickly. Now, she's a member of Mayor Bloomberg's administration and is advocating for more private-public collaboration in making New York a tech mecca that rivals Silicon Valley.

As part of that mission, Haot is focusing on five key areas: Internet access, technology education, open data and innovation, engagement, and developing New York's tech industry.

Hoat's goal, as she puts it, is "to fully realize New York City's digital potential and make sure that all New Yorkers are part of its digital future.” But she feels the city can always do more, especially when it comes to bringing more diversity to the tech sector.

"We still have a long way to go," says Haot. "The good news is that, for example, we have more female founders of startups in New York City than any other city in the world -- more than Silicon Valley, more than London. That's a very exciting and promising step."

Click on the audio player above to hear more of Haot's thoughts on the demographics of tech. And visit WeareMadeInNY.com to find out more about New York City's tech community.

The energy giant says it has "thrown in the towel on solar." The industry has evolved since BP entered the ring, currently emphasizing cheap production rather than research and development. BP says it just wasn't making money, though it will continue investing in other renewable resources.

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The energy giant says it has "thrown in the towel on solar." The industry has evolved since BP entered the ring, currently emphasizing cheap production rather than research and development. BP says it just wasn't making money, though it will continue investing in other renewable resources.

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With across-the-board spending cuts now on autopilot, there's a momentary lull in Washington's budget brinksmanship. So the president is using this window to try to craft a more lasting approach to the federal debt.

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With across-the-board spending cuts now on autopilot, there's a momentary lull in Washington's budget brinksmanship. So the president is using this window to try to craft a more lasting approach to the federal debt.

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A federal judge could rule as soon as Thursday in the case, which comes as the U.S. Supreme Court is also set to deal with gay marriage later this month. In Michigan, a lesbian couple sued because the state bans same-sex couples from adopting kids. Then, the judge invited them to go even further.

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Nogales, Ariz., is home to one of the nation's busiest ports of entry. Trucks line up for inspection before heading to grocery stores in the U.S. But the sequester is forcing the ports to make cuts, leading some to fear higher prices for food and strained relationships with foreign trading partners.

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Widespread police brutality under Hosni Mubarak helped fuel the uprising of 2011. But two years later, many say the police have begun to act like armed gangs, meting out collective punishment in restive areas. The police say they are the victims, under attack by anti-government protesters.

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Widespread police brutality under Hosni Mubarak helped fuel the uprising of 2011. But two years later, many say the police have begun to act like armed gangs, meting out collective punishment in restive areas. The police say they are the victims, under attack by anti-government protesters.

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Two months ago, the popular political blogger left the comfortable world of big media and struck out on his own. His bold new plan: Ask readers to pay to subscribe to his blog.

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A rice enriched with beta-carotene promises to boost the health of poor children around the world. But critics say golden rice is also a clever PR move for a biotech industry driven by profits, not humanitarianism.

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Shifting course in the face of political gridlock, President Barack Obama is making rare overtures to rank-and-file Republicans. He invited GOP senators to dinner Wednesday.

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