National / International News

How will low inflation complicate the Fed’s plans?

Marketplace - American Public Media - Wed, 2014-09-17 13:42

When the Labor Department released the Consumer Price Index numbers for August, Janet Yellen got a shock.

Everybody expected the CPI  to come in just shy of the Fed’s goal of 2 percent inflation. But the actual number was 1.7 percent. 

Inflation is just not being  cooperative.

“CPI is a little bit like the puppy that refuses to get housebroken and is spoiling the Fed’s carpet,” says Jonathan Lewis, who, yes, is in the midst of training a stubborn puppy,  but is also Chief Investment Officer at Samson Capital Advisors.  

He says today’s inflation numbers are a mess for the Fed – a warning flag. 

“The low inflation numbers are a symptom of weakness in the economy," says Mark Gertler, who teaches economics at New York University. "The economy is still not as strong as we would like."

That’s a problem for the Fed because it can’t raise interest rates when the economy is weak, and the Fed can’t keep rates near zero forever.  

But there is a bright side.

“The lower inflation is actually giving them quite a bit of breathing room," says Gennadiy Goldberg, U.S. Strategist for TD Securities. "There’s very little pressure on the Fed to hike interest rates now.”

And everybody expects inflation to get up to where the Fed wants it, eventually.   

As asset manager and dog lover Jonathan Lewis puts it, puppies will get trained sooner or later. It just takes some longer than others.

Yahoo will make a lot of money off the Alibaba IPO

Marketplace - American Public Media - Wed, 2014-09-17 13:42

Alibaba—the huge and profitable Chinese e-commerce site—debuts on the U.S. stock market under the ticker symbol "BABA" on September 19, with an initial public offering expected to price at $66-$68 per share. That would deliver proceeds of approximately $25 billion, making Alibaba the world's biggest IPO ever.

A principal beneficiary of the IPO is Yahoo, which owns 22.4 percent of Alibaba, and is now divesting of a portion of that holding. After taxes, Yahoo will likely net in excess of $6 billion. The company has indicated that roughly half of that will go back to shareholders in the form of dividends, said internet equity analyst Scott Kessler at S&P Capital IQ.

But, given that Yahoo has had virtually no growth in years, Kessler thinks the company should use some of its windfall to make a bigger splash in the market.

“To significantly move the needle in terms of how people think about Yahoo and how it’s positioned,” said Kessler, “we think a bigger, bolder strategy makes sense.”

Kessler suggested Yahoo could make additional billion-dollar-plus acquisitions, as it did last year with Tumblr, especially in the fast-growing mobile market. Yahoo’s recent acquisitions have mostly been smaller deals designed primarily to scoop up engineering talent from promising startups.

Technology analyst Carl Howe at 451 Research said Yahoo might buy up more Chinese internet companies as it divests of some of its Alibaba stake. He also expects a strong push into the mobile-payments market. Howe added that the company might also invest more to compete for eyeballs and online ads with rivals Google and Facebook.

“Buy into some sort of big content deal with another source of traffic—for example, Netflix or HBO—boosting business by driving more traffic,” Howe said.

Bayern Munich 1-0 Manchester City

BBC - Wed, 2014-09-17 13:26
Bayern Munich's Jerome Boateng scores a last-minute winner to deny Manchester City a point in their Champions League opener.

Will the Scottish referendum come down to 'Braveheart' or cool head ?

Marketplace - American Public Media - Wed, 2014-09-17 13:25

Tomorrow, the people of Scotland vote on whether they want independence from the rest of the United Kingdom.

The economic case against going it alone seems compelling.

A string of major companies say they’ll pull their headquarters out of Scotland if it votes for separation, and big supermarket chains warn that they will have to push up their prices. Deutsche Bank claims the country could be plunged into another Great Depression.

And yet with each grim new warning of disaster, support for separation seems to grow. Is this a case of the heart ruling the head?

"I think it’s driven by a kind of collective madness," says Niall Ferguson, expat Scot and professor of history at Harvard.

"I live in the United States but still feel myself every inch a Scotsman. This will be a disaster. This is a bit like Colorado seeking its independence. This is just astonishing to behold," he says.

Other critics of Scottish independence say Scotland’s in the grip of "Braveheart"  fever, carried away on a wave of emotion by a fantasy of liberation.

But the calm, softly-spoken, supremely rational professor of economics - and supporter of independence – Mike Danson says, "that’s absolute nonsense."

“Nobody talks about 'Braveheart' in Scotland,” he says. “For very, very few people is that what independence is about. Some have said it will be the first case of a country trying to become independent on the back of economics, rather than on the back of heart, emotion and identity.”

More than 200 small and medium-sized Scottish businesses and a handful of large ones support independence. They say if the country separates, it will be much more prosperous and fair than it is today. Frances Barron, who owns a small cheesecake manufacturing firm in southwest Scotland, says she’ll definitely be voting yes… and using her head.

“I would say the majority of people voting yes will be voting with their head," says Frances as she stands in her factory, supervising the baking of another batch of toffee banana cookies. "People are getting their eyes opened, and their mouths hang open when they hear just how wealthy this country is, and how well positioned we are to move forward with independence."

Including its geographic share of North Sea oil, Scotland is per capita richer than the rest of the UK – and it raises more tax. With oil, whiskey and other products, it’s a champion exporter.

But the oil is declining, and most of its exports go to England. If it has to adopt a new currency – and the rest of the UK has made it clear it will not allow an independent Scotland to continue using the pound with the protection of the central bank – Scotland could find it has higher transaction costs selling to its biggest market.

Feelings are running high. The referendum campaign has grown increasingly emotional on both sides, with angry exchanges in the street. But David Bell – professor of economics at Stirling University thinks that when most people enter the polling booths tomorrow, the head will rule the heart.

"There are a lot of very passionate people involved in this, no question about this," says Bell. "But I’m not convinced that that’s what the average voter will be thinking about when they go into the booth. It’ll be cool , calm, economic calculation."

By Friday, we will learn whether Scotland will go it alone. It could be some time before we know for sure whether that means the heart or the head has prevailed.

House Passes Bill That Authorizes Arming Syrian Rebels

NPR News - Wed, 2014-09-17 13:20

Even though it was backed by both party leaders, the vote split politicians within their own ranks. The final tally on the narrow military measure was 273 to 156.

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Police 'not alerted' to abuse doctor

BBC - Wed, 2014-09-17 13:09
Authorities failed to alert police of suspicions about a paedophile doctor more than a year before his arrest in December 2013, it emerges.

Man airlifted after Snowdonia fall

BBC - Wed, 2014-09-17 13:06
A 45-year-old man from Powys is airlifted to hospital in Bangor after falling while on a peak in Snowdonia.

Can advertisers pressure the NFL?

Marketplace - American Public Media - Wed, 2014-09-17 13:02

Football season had a rough start this year.

Former Baltimore Ravens running back Ray Rice was caught on tape knocking out his fiance and Minnesota Vikings Adrian Peterson was indicted for child abuse, putting a spotlight on how the NFL handles domestic violence. Many fans haven't liked what they've seen, and now they're joined by another group the league may have to listen to: its sponsors.

McDonald's, Visa, Campbell's Soup, CoverGirl: A growing list of NFL sponsors have come out with statements applying pressure to the league. Anheuser-Busch, which has a $1.2 billion, six-year contract with the NFL, used some of the harshest language, saying: "We are disappointed and increasingly concerned by the recent incidents that have overshadowed this NFL season. We are not yet satisfied with the league's handling of behaviors that so clearly go against our own company culture and moral code."

"The NFL here is a multibillion-dollar business," says Gabe Feldman, director of the sports law program at Tulane University. "If some of those billions start to get threatened, I think the NFL is going to stand up and take notice."

But so far, sponsors have stopped short of publicly threatening to tear up their contracts with the NFL. Radisson hotels ended its limited sponsorship with the Minnesota Vikings, but when it comes to individual teams and players, the stakes are lower. But the costs — like having the Radisson logo in the background at press conferences responding to child abuse allegations — are higher.

"There's a lot of sports properties but there's only one NFL," says Kenneth Shropshire, director of the Wharton Sports Business Initiative.

The sheer size and engagement of the NFL's audience may insulate it from criticism more than the NBA, which banned former Clippers owner Donald Sterling for life following racist remarks, but only after companies such as State Farm, CarMax and Virgin America withdrew their sponsorship from the Clippers.

"[The NFL is] a $10 billion-a-year industry. The next closest sports are $3 [billion], $4 billion behind. So it's astronomically larger, even though we don't think of it as such," says Shropshire.

He thinks major NFL advertisers are more likely to apply pressure behind the scenes than publicly break ties.

But there could still be looming financial implications for the sport. "I think if you were a sponsor right now contemplating an investment in NFL, you'd probably wait," says Kent Atherton of sports media firm Atherton Communications.

And if more damning details emerge, big money advertisers could do more than just talk.

Graphic by Gina Martinez/Marketplace

The Insights Of An Ebola Doctor Who Became A Patient

NPR News - Wed, 2014-09-17 13:00

Dr. Kent Brantly, an American Ebola survivor, tells NPR what it was like to suffer from the deadly and "humiliating" disease.

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Diet Soda May Alter Our Gut Microbes And Raise The Risk Of Diabetes

NPR News - Wed, 2014-09-17 12:47

There's a new wrinkle to the old debate over diet soda: Artificial sweeteners may alter our microbiomes. And for some, this may raise blood sugar levels and set the stage for diabetes.

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Europe's Family Tree Gets A New Branch

NPR News - Wed, 2014-09-17 12:47

Genetic evidence from ancient humans and modern people suggests that travelers from northern Eurasia moved south several thousand years ago. They stuck around to have kids with early European farmers.

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Ebola can 'ruin W Africa economies'

BBC - Wed, 2014-09-17 12:38
The Ebola outbreak could have a catastrophic economic impact on three West African countries, the World Bank says.

Nigeria college attacked by gunmen

BBC - Wed, 2014-09-17 12:33
Gunmen attack a teacher training college in the northern Nigerian city of Kano, with officials saying at least 15 people have been killed.

Fed Pledges To Keep Interest Rates Low For A While

NPR News - Wed, 2014-09-17 12:08

Federal Reserve Chair Janet Yellen took questions from reporters on Wednesday afternoon after the central bank's release of a new policy statement. The Fed said that its bond-buying stimulus program would end next month but it will still be a "considerable time" before short-term interest rates are increased.

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Henning says Syria visit 'worthwhile'

BBC - Wed, 2014-09-17 12:06
Video footage of British hostage Alan Henning - filmed before he was captured by militants in Syria - shows him saying going to the country was "worthwhile".

After A Long Wait, Syrian Rebels Hope The Weapons Will Now Flow

NPR News - Wed, 2014-09-17 11:44

The "moderate" opposition has been losing ground on the battlefield and pleading for weapons from the U.S. for the past couple of years. They are hoping that their fortunes have finally changed.

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Dropping its NFL sponsorship pays off for Radisson

Marketplace - American Public Media - Wed, 2014-09-17 11:42

When was the last time you thought about Radisson Hotels? Probably about a day ago, when the company pulled its sponsorship of the Minnesota Vikings.

What about before that? Hmm.

Turns out the hotel is already benefiting hugely from its decision, getting them more attention than they've had in a while.

According to research firm Amobee Brand Intelligence, Radisson got "enough social, Web and mobile impressions to account for 58 percent of its total online consumption (impressions plus mentions) for the last three months," Adweek reported.

That's a long time.

CORRECTION: The broadcast version of this story incorrectly identified “Amobee Brand Insights.” The company is called Amobee Brand Intelligence.

Scots women face World Cup play-off

BBC - Wed, 2014-09-17 11:38
Scotland miss out on automatic qualification for the 2015 Women's World Cup after losing 2-0 to Sweden.

US Fed to end stimulus in October

BBC - Wed, 2014-09-17 11:38
The US Federal Reserve says it will raise interest rates once a "considerable time" has passed after its stimulus programme ends in October.

Has quantitative easing helped the US economy?

BBC - Wed, 2014-09-17 11:36
What good has quantitative easing done the US?

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