National News

Comcast says it needs to get bigger to compete

Marketplace - American Public Media - Wed, 2014-04-09 13:38

Before a Senate hearing on Comcast’s proposed merger with Time Warner Cable, the company dropped a lengthy memo to the Federal Communications Commission, summed up in a blog post. In part, it argued that the merger would be good for competition in broadband, since Comcast’s rivals— including telecoms like Verizon and AT&T— are so big

Which is a different question from whether they offer broadband services that actually compete with Comcast. Andy Hargreaves, a Pacific Crest Securities analyst who looks at both TV and tech, thinks Comcast already dominates, with other companies unable to consistently offer similar speeds.

He estimates that the merged company would have the best-quality service in about 70 percent of the U.S. market. He thinks that’s a problem -- it gives the company power to keep jacking up prices.  “They are exceptionally good at raising rates,” he says.

However, he doubts these questions will sink the deal. Merging the companies, he says, doesn’t actually make it much harder for a real competitor to emerge.

“It’s already near impossible,” he says. “So raising the bar from really, really, really, really, really, high to really, really, really, really, really, really, REALLY high is not that big a deal.”

David Balto, an anti-trust lawyer and a former Federal Trade Commission official, thinks the merger will likely be approved. Comcast and Time Warner haven't been competing with each other before the merger in existing markets, so consumers aren’t losing choices.

“You may not like the competitive environment,” he says, “but there are scores of mergers that the FTC and the Justice Department have approved because they could not find a loss of competition.”

Goldman Sachs considers shutting down its 'dark pool'

Marketplace - American Public Media - Wed, 2014-04-09 13:10

Goldman Sachs executives have reportedly been toying with the idea of shutting down their dark pool, known as Sigma X.

"Dark pools" are to stock exchanges what private pools are to the Y. They are places for people to trade stocks in private, and many banks have them.

Privacy and Savings

There are benefits to having a dark pool, to be sure. Customers can trade more cheaply as they don’t pay exchange fees like they would on, say, the NYSE.  For institutional investors, privacy can be critically important as well. For example, an institutional investor making a supersized buy order in the open would be noticed by sellers, who would raise the price before the order was even complete.  

“Essentially, large institutional investors like this as a way of minimizing price impact and reducing trading costs,” says Craig Pirrong at the University of Houston. 

Suspicion and Negative PR

However, there is also a great deal of suspicion over dark pools at the moment, as the flipside of privacy is decreased transparency. “There’s a considerable deal of regulatory uncertainty and legal uncertainty,” Pirrong says.

“Almost all dark pools work by taking prices from exchanges and filling orders based on those exchanges,” explains Larry Harris of the USC Marshall School of Business. So is it fair that a dark pool can use exchange prices, but not contribute to formation of those prices? Harris says: “And even worse, as the orders are taken away from those exchanges, the quality of the prices depreciates.”

Customers may see a conflict of interest as well.  

“It might be better if people weren’t worried that I was only going to my dark pool because it was my dark pool,” says Joe Gawronsky, president of Rosenblatt Securities. It’s a bit of a PR problem. 

A Liability Issue

Running a private stock exchange is no small feat. When participants’ expectations aren’t aligned with reality, or when prices in the pool become disconnected from prices on exchanges, it can be a serious liability for the entity running the pool.

“Particularly when there’s a fast moving, volatile market and the timeliness of the prices may be, for whatever reason, not appropriately reflective of the prices that were prevailing at the time,” says Andrew Karolyi, professor of finance at the Johnson School of Management at Cornell.  This happened to Goldman in 2011, and the bank sent checks to cover traders who lost out as a result.

Alternatives

Gawronsky says firms like Goldman have alternatives. “There are other methods to get price improvement and hide your order other than using your own dark pool,” he says. 

There are other entities’ dark pools, of course. There’s also IEX, an alternative trading platform designed to address what its founders argue are flaws in the structure of the U.S. equity market. Goldman has supported IEX precisely because of its commitment to transparency and market moderating effect.  

Finally, for those concerned with anonymity, Gawronsky points out that Goldman and other large banks offer algorithmic trading. These are computer-based trading mechanisms that can be used to disguise movements -- breaking up a large trade into smaller trades throughout the day, for example.   

When all is said and done: “I’m not sure it will materially affect Goldman’s revenues,” Gawronsky says.  “You could argue they don’t have that much to lose, and what do they gain? Potentially a PR win and something that customers may applaud.”

Peeps year-round: Harbinger of apocalypse

Marketplace - American Public Media - Wed, 2014-04-09 13:10

I've been away, which is maybe how I missed this, but you know peeps? Those marshmallow bird things you get around easter?   The companies that makes them -- Just Born -- says starting May 1, they'll be available all year round.   "We're making every day into a holiday," a company official said.   Allow me to exercise the Marketplace host's prerogative, and declare it this week's sign that the apocalypse is upon us.        

Peeps year-round: Harbinger of apocalypse.

Marketplace - American Public Media - Wed, 2014-04-09 13:10
I've been away, which is maybe how I missed this, but you know peeps? Those marshmallow bird things you get around easter?   The companies that makes them -- Just Born -- says starting May 1, they'll be available all year round.   "We're making every day into a holiday," a company official said.   Allow me to exercise the Marketplace host's prerogative, and declare it this week's sign that the apocalypse is upon us.        

What To Do Now That The Heartbleed Bug Exposed The Internet

NPR News - Wed, 2014-04-09 13:08

As companies scramble to patch a bug that exposed much of the Internet for two years, you can protect yourself by practicing some good Web hygiene.

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Banning Traditional Animal Slaughter, Denmark Stokes Religous Ire

NPR News - Wed, 2014-04-09 12:49

The country's move to require animals to be stunned before being killed is seen by some as an affront to religious methods of slaughter. But now Jews and Muslims are working together to protest it.

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Federal Plan To Save Prairie Chickens Ruffles State Feathers

NPR News - Wed, 2014-04-09 12:45

The federal government just listed the lesser prairie chicken as a threatened species, but states are pushing back hard, saying that restrictions could negatively impact a number of industries.

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Ukrainian Protesters Seize Weapons, Raising The Stakes

NPR News - Wed, 2014-04-09 12:37

Pro-Russian demonstrations have led to standoffs in three Ukrainian cities. The confrontation is considered especially dangerous in Luhansk, where protesters took over a building filled with weapons.

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'Kissing Congressman' Video Puts Scandal In Unusual Focus

NPR News - Wed, 2014-04-09 12:27

A video of married Rep. Vance McAllister in a passionate embrace with a co-worker has put his job in peril. In a prudent move, he decided against pursuing an FBI investigation into who leaked it.

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Wanted By The FBI: Bank Robber With Perfect Grammar And Spelling

NPR News - Wed, 2014-04-09 12:18

The bureau is seeking a 30-something black male who writes stickup notes with "proper spelling, grammar, and punctuation."

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Obama Honors Victims Of Fort Hood Shooting

NPR News - Wed, 2014-04-09 12:07

President Obama is traveling to Fort Hood, Texas, on Wednesday to attend the memorial service for those killed in last week's shooting.

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With Proposed Mega-Merger On The Hill, Spotlight's On Consumers

NPR News - Wed, 2014-04-09 12:07

Comcast and Time Warner executives ran into stiff opposition as they pitched their proposed merger to the Senate Judiciary Committee. The deal would give the combined company a large share of both pay TV and broadband internet service markets. In both cases, lawmakers wanted to know how consumers would be affected.

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Pursuing IRS Controversy, House GOP Pivots Toward Crossroads

NPR News - Wed, 2014-04-09 12:07

House Republicans want former IRS official Lois Lerner prosecuted for allegedly revealing information about one of their most powerful outside groups, Crossroads GPS.

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Before Classes Even Begin, Mass Stabbing Leaves School Reeling

NPR News - Wed, 2014-04-09 12:07

Police say that 20 people were injured — some of them critically — during a knife attack at a suburban high school outside Pittsburgh. A 16-year-old boy is in custody following the attack.

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Toyota Pulls Over 6 Million Vehicles Worldwide

NPR News - Wed, 2014-04-09 12:07

Toyota is recalling 6.4 million vehicles due to defects. The recall comes at a time of heightened scrutiny of automakers, only weeks after Toyota agreed to a $1.2 billion settlement with the U.S. government for misleading consumers.

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Medicare Pulls Back The Curtain On How Much It Pays Doctors

NPR News - Wed, 2014-04-09 11:59

Physicians and health data specialists caution that the information can be easily misconstrued. Some cancer doctors receive payments that cover the cost of expensive drugs for patients.

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Pop Stars Are Sippin' On Patron, And Teens Are Bingeing

NPR News - Wed, 2014-04-09 11:52

If you know Ciroc and Patron, you may well be listening to a lot of songs that name-check brand-name alcohol. And if you're a teenager, you may be binge drinking a lot more, researchers say.

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Obama: Passing Of Fort Hood Victims 'Shakes Our Soul'

NPR News - Wed, 2014-04-09 11:33

For the second time in five years, President Obama delivered a message of resilience and service at a memorial service for slain soldiers at Fort Hood, Texas.

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Gut-Eating Amoeba Caught On Film

NPR News - Wed, 2014-04-09 11:28

Dangerous and impolite: This little guy triggers food poisoning in people by biting off chunks of intestine, chewing on them for a bit ... and then spitting them out.

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House Votes To Refer IRS Official Lois Lerner To Justice Department

NPR News - Wed, 2014-04-09 10:46

The House Ways and Means Committee voted to send the Justice Department a criminal referral over what they said was the former IRS official's "extreme bias."

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