National / International News
For this week's Sandwich Monday, we try a sandwich from the famous Primanti Bros. of Pittsburgh.
Boston Marathon bombing suspect Dzhokhar Tsarnaev's trial is scheduled to start in January. Out of those 1,000 jurors, 100 of them will be questioned by prosecutors and defense attorneys.
The impact of low oil prices is juicing American families’ pocketbooks in a way similar to a stimulus package, especially if crude stays low. Call it what you want: crude oil dividend, discount, energy quantitative easing.
Oil is 25 percent cheaper since the summer. And for drivers, the stimulus is instant.
“Every additional dollar or two you save at the pump you can use as disposable income right away,” says economist Ed Hirs of Hillhouse Resources and the University of Houston. “ Now you have more money for fast food. Or the six-pack of beer that you've been foregoing the past year or two.”
If oil prices stay low, and many bet it will, the savings will add up to a $200 billion domestic annual stimulus, estimates Citigroup. That’s about the size of the congressional stimulus in 2008. Citi figures the global economic boost is $1.1 trillion – again, annually.
Economist Stephen Brown at the University of Nevada-Las Vegas figures the typical American family saves $40 a month with today’s prices.
“Consumers in Washington D.C., New York and California, among a variety of areas in the United States will all see benefits,” Brown says.
But, he says, fortunes flip for energy producers. States like North Dakota, Wyoming and Oklahoma had benefited from high prices.
Similarly, global petro-states like Venezuela are also hurting from low prices.
“It limits the ability to be able to spend on the more expensive social programs you have within Venezuela,” says global oil analyst Jamie Webster of consultancy IHS-CERA. “It just puts additional pressure on the government there.”
So there has been all kinds of volatility on Wall Street lately — triple digit ups and downs.
Well, consider this:
27 years ago yesterday, October 19, 1987, was 'Black Monday.' The Dow was off 22 percent that day which came out to 508 points. The next day, known as 'Terrible Tuesday,' nearly caused the New York Stock Exchange to collapse.
A similar drop today? 3607 points.
All this to say: context truly is everything.
Monday was a dark day for IBM investors. The company's stock price fell by more than 7 percent after it released a disappointing quarterly earnings report.
But alongside that announcement came a more unconventional one: IBM is selling its chipmaking business to GlobalFoundries. But in this "sale," GlobalFoundries is collecting the check: $1.5 billion in cash over the next three years.
"It’s the deal of a century," says Dan Hutcheson, who follows the industry for VSLI research.
The key is to look beyond the headline number. While IBM is paying GlobalFoundries in cash over the next three years, GlobalFoundries will supply chips for IBM servers for the following ten years--inputs that are key for IBM's legacy hardware.
"I know a billion and a half sounds like a lot, but it’s probably a deal for IBM, too," says Hutcheson.
"If you only look at the headline cash number, you are missing a lot of the story," says Rob Saloman, professor at the NYU Stern School of Business.
Acquisitions are complicated, and those complications can make payments to the acquirer economically sound.
"As a matter of fact, there’s another example where this happened, which is Daimler-Chrysler’s spin-off of Chrysler. In effect, Daimler paid Cerberus to take Chrysler off its hands," Saloman says.
In this case, there were tax benefits to be had, and the ire of the U.S. government to be avoided. Such deals are rare--Saloman doesn't believe there's been another this year--but aren't unheard of.
"They’re almost always manufacturing-type businesses, right?" says Peter Cowen, adjunct professor at UCLA Anderson School of Management. "Ones that have heavy overhead, certain amount of infrastructure, certain amount of scale of things that need to unwind if they can’t find a buyer."
In other words, costly businesses — that would be even costlier to shut down.
Doctors need to look at the eyes to diagnose disease, but the machines they use are big and expensive. An iPhone or tablet may do as well, scientists say, bringing eye care to the underserved.
A checkpoint near Kirkuk marks the line between Kurdish-controlled territory and the world of Islamic State extremists. Some 5,000 civilians stream across daily, lives and families divided.