Markets around the world are riding high as the end of the financial quarter approaches next week. Michael Hewson, chief market analyst at CMC Markets (UK), joins Marketplace Morning Report host David Brancaccio to explain what's behind the surprising strength.
Click on the audio player above to hear Michael Hewson in conversation with Marketplace Morning Report host David Brancaccio.
Behind the heavily secured doors of Tourneau’s New York workshop, watchmakers work on repairing the world’s most expensive timepieces, worth tens, even hundreds of thousands of dollars. With all the Rolexes inside, one expects to find an elderly Swiss man in a milking jacket in charge.
But the luxury watch seller’s technical director is American Terry Irby, a third generation watchmaker. His gentle Arkansas accent and pristine white lab coat give him the air of a country doctor; one with a magnifying eye loupe around his neck instead of a stethoscope. He’s running something of a teaching hospital for watch repair; an unusual program that combines students from tough backgrounds with the fantastically pricey watches that wrap the wrists of billionaires and celebrities. It’s a bid to save a threatened profession, while bettering the lives of some at-risk young people.
During a recent class, Irby leans over the workbench of 20-year-old Justine Hernandez, showing her how to delicately take the hands off a watch -- a tricky thing to do without scratching its face. The tools she uses include some of the smallest tweezers you’ve ever seen, because many watch parts are the size of gnats.
Like others in the class, Hernandez comes from Manhattan Comprehensive Night & Day High School. It’s for older students -- those whose progress may have been held up by poverty, homelessness, or run-ins with the law. The timepieces they work with come from a whole different world.
“We were looking at all the beautiful watches and there’s this one watch that stands out -- costs like $40,000, which is like a car, probably a couple of cars,” Hernandez recalls.
The skills she’s learning could lead to a stable job with solid pay. Irby says qualified watchmakers start at $50,000 and are in demand around the world. Students who do well in the class can move on to paid internships at Tourneau, which can lead to full-time jobs.
This program isn’t just corporate goodwill. Wristwatches are fashionable again and the company needs people.
“I have often said that I would take ten watchmakers today if I could find them,” Irby explains. “Our biggest complaint is that we can’t do the job fast enough.”
Irby’s office overlooks the floor where the watchmakers work, quietly hunched over benches tending to the world’s finest timepieces, some new and others passed through families over the decades. Among those at work is Edwin Larregui, a recent graduate of the program. Irby speaks highly of his talent and dedication and expects him to be in watchmaking a long time.
Fresh from wrapping up work on a handsome Cartier worth several grand, Larregui recalls a time when he got so wrapped up in his work that he unwittingly went home wearing his eye loupe. He giggles as he recounts the funny looks people gave him on the train home. Then he turns serious, speaking with the calm satisfaction of a young man who has finally found something he loves, something he’s great at.
“It’s a part of me now,” Larregui says.
Come January, when companies in Minnesota can officially register as benefit corporations, Sunrise Banks hopes to be one of the first in line.
This new class of company lets firms declare that a higher social purpose is as important as profits. The idea has only been around for a few years but a growing number of states now offer the classification.
Sunrise Banks is a Twin Cities-based, family-owned firm. Chief executive David Reiling says the company has always had a social mission to help unbanked and underbanked people get better access to capital.
“What the means from a local standpoint is over 60 percent of our loans are made each year in low and moderate income communities,” he says.
Reiling thinks that's consistent with the idea of a benefit or b-corporation. The concept involves putting a goal, like improving the community or environment, on equal footing with profit-making.
Patagonia is one of the best known examples of a benefit corporation. It sells outdoor gear while trying to limit its environmental footprint.
David Reiling thinks the designation could boost Sunrise Banks' brand -- and profitability.
"We see it actually increasing and expanding because we're a b-corporation," he says.
B-corporation status also affords some legal protections. They'd apply less to a firm like Sunrise, where Reiling and his parents are majority owners, and more to publicly held companies.
If shareholders sue because social goals overtake profit goals, management has a defense: the company was set up with a social mission.
Critics of benefit corporations still expect plenty of lawsuits.
"Because ultimately there will be disputes between shareholders and management on the appropriate course,” says Charles Elson, a corporate governance expert at the University of Delaware. “[It’s] fabulous for the courts. Lousy for the investors."
Elson thinks firms that fail to turn a profit could hide behind their social missions, or unethical companies could masquerade as do-gooders.
"I think it's one of these things that sound great, but when it's developed it creates a lot more problems than solutions," he says.
Right now it's a problem a growing number of companies are willing to have. Twenty-two states have adopted laws allowing b-corporations, and legislation is sitting on the governor’s desks in three more.
The pension system that contributed to Detroit’s bankruptcy is changing. Current city workers will be switched to a new pension plan at the end of the month – one in which they’ll shoulder more risk in the future.
But that still leaves an elephant in the bankruptcy courtroom: the judge’s opinion that pensions people have already earned can be modified in bankruptcy.
That's "despite the fact that pensions cannot be modified outside of bankruptcy under the Michigan Constitution,” says law professor Laura Bartell of Wayne State University. “That is the provision that has been the source of all the consternation in the pension community.”
California’s state pension system CalPERS has been particularly vocal. CalPERS is huge, with 1.7 million members.
It's also an interlocked system, says bankruptcy lawyer and UCLA professor Ken Klee. He says CalPERS invests payments from a number of municipalities.
“And so when somebody can’t pay in their share because they’ve gone into bankruptcy, it puts a burden on the rest of the pension system,” he says.
Not every state authorizes municipal bankruptcies, but California has had a bunch of them.
Foreign-owned U.S. businesses employ 5.6 million American workers, according to a new report from the Brookings Institution.
The report says more than a third of those jobs are in manufacturing, with an increasing share in the service sector, banking, high tech, and even pharmaceuticals.
The foreign investment isn’t just clustered in a few big cities, says Devashree Saha, a Brookings senior policy analyst who wrote the report. Saha notes that in Raleigh, N.C., more than half of pharmaceutical jobs are in what's known as the foreign direct investment sector.
She says FDI in the U.S. fell by more than half from 1999 to 2012, because of competition from developing countries. But that competition is falling off.
“There are very few opportunities and the US seems like the better of several not-so-great options,” says Moyara Ruehsen, who teaches international finance at the Monterey Institute.
Ruehsen says now, foreign investment is picking up again, because investors see the U.S. as a safe haven.
The Labor Department will be directed to start drafting rules making clear that the Family and Medical Leave Act applies to same-sex couples.
Cheri and Phillip Lindsay both have a rare condition that causes them to gradually lose skin pigment in patches. But it was easier for her to deal with it, Cheri says, because of her dad's example.