Oil investors have global politics on their minds these days. Crude prices, and prices at the gas pump, have been rising, right along with President Barack Obama’s threats to retaliate against Syrian President Bashar al-Assad and Vladimir Putin’s vow to help Syria if that happens. Then when it sounded like a military strike might be averted, prices fell. This is all very curious because Syria doesn’t produce much oil. It accounts for less than a tenth percent of the world’s total production.
So why do traders flip out when the U.S. saber-rattles a two-bit oil producer like Syria? “I think the markets freak out because they think the sabers are going to be extended beyond Syria into some bordering countries,” says Tom Kloza, chief oil analyst for GasBuddy.
Kloza and other analysts say the markets factor in a “worry premium” to oil prices. In this case, the fear is that a U.S. strike could spark a wider war in the Middle East and eventually disrupt oil supplies. “And I think yes, it is quite rational to say there’s at least that possibility,” says University of California, San Diego economist James Hamilton.
Hamilton blogs that the political situations in both Libya and Egypt remain highly unstable and if Iran and Saudi Arabia, who back different sides in Syria’s civil war, are drawn into a wider conflict, the flow of oil could threaten Middle Eastern crude exports.
Market analyst Stephen Schork thinks that fear is overblown. The oil market’s reaction is “just driven by fear and greed on the slight, slight, slight chance that dropping a couple of cruise missiles on Damascus will lead to some sort of broader regional conflict,” Schork says. “It’s a very limited proposition, yet we can never underestimate the stupidity of Wall Street money piling into this market.”
Other analysts point out that world oil supplies are fairly tight right now, and suggest that has factored into rising prices recently as well. Labor strikes and pipeline attacks in oil centers like Libya, Iraq and Nigeria have contributed to the problem. Analysts say if a military strike on Syria were to occur, it’s not clear how high oil prices would go. But Hamilton says a good rule of thumb is that for every dollar rise in the cost of a barrel of oil, gasoline prices will rise 2.5 cents.
They're struggling to reconcile the man they see presiding over the herky-jerky move to military action in Syria with the young anti-war senator they worked tirelessly to put in office. And they'll be watching his speech Tuesday night.
Also being removed from the widely watched index: Hewlett-Packard and Bank of America. Being added: Visa and Goldman Sachs. The changes reflect not only the companies' fortunes, but also the changing nature of the U.S. economy.
The survey of 10,000 men in six Asian and Pacific countries found nearly 1 in 4 men reported raping a woman. The results of the survey were released the same day a court in New Delhi convicted four men of the rape and murder that shocked India last December.
Insurance plans that carry higher premiums may be a bargain for consumers with costly health conditions. Lower out-of-pocket costs for some patients can offset the higher price of the coverage over the long haul.
When Ms. Wintour (widely believed to have been portrayed Meryl Streep in "The Devil Wears Prada") canceled Cyrus’ appearance on the cover of Vogue, she canceled some of Cyrus’ future earnings potential, according to style expert George Brescha. A magazine cover and associated photo shoot -- in Vogue especially -- can bring a whole new light and a whole new audience to a rising star.
“It’s all of a sudden, oh my God! I didn’t know she could look like that -- she looks amazing!” says Brescia. If the right people are dazzled by a cover celebrity’s different looks, it could lead to an endorsement deal or a clothing line.
If it’s a particularly dramatic cover -- like Marilyn Monroe’s Playboy cover or Demi Moore’s naked and pregnant cover on Vanity Fair -- it can launch a public career, says Steve Cohn, editor-in-chief of Media Industry Newsletter.
For magazines, covers are critical for newsstand sales and ad revenue. Some, like Cosmo and People, are “newsstand strong” says Cohn, which means 30-40 percent of sales come from newsstands. For those publications, the cover is a battlefield.
“Celebrity marriages and divorces do well,” says Cohn, “birth, death, and infidelity do well.”
But even for Vogue -- which, out of a circulation of about 1.2 million, only gets about 300,000 newsstand sales -- those single sales are key.
“Think about it,” says Jerry Guttman, president of publishing consulting firm Lexicon Group, “two out of three magazines on a newsstand aren’t sold and are destroyed. Half the price of the one magazine that gets sold might go towards distribution costs, and probably won’t cover the cost of the other two that get thrown away -- why would anyone have newsstand sales?”
The answer, he says, is because newsstand browsers can become committed subscribers, and because newsstand sales attract advertisers. “In order to sell advertising, a magazine needs to be able to tell an advertiser that it sold 300,000 copies on newsstands -- 300,000 people have picked up the magazine and are reading it.” The loss is an investment.
Since the cover is what draws the attention of the casual browser, the cover is king, and offers a barometer of interest in the magazine.
“Editors will line up covers from the past two years in a room and compare them with sales to figure out what the common denominator is,” says Guttman.
It could be the color red or blue or the logo -- or the person on the cover.
But in this case, Guttman says, it probably wasn’t sales. Vogue doesn’t need Miley Cyrus. It was either that Anna Wintour really didn’t like her performance at the VMAs, or “it’s really smart publicity that’s attracting attention over a nonexistent cover.”
The teen unemployment rate in this country is three times higher than the adult rate -- which is true for most of Kendrick Calkin's friends. But Kendrick, a 17 year-old from Hayward, California is learning a trade close to home.
In a backyard in the Bay Area, he's working with his grandfather, fixing washers and dryers... and getting a load of life lessons. Youth Radio sent us his story.
The Dow Jones Industrial Average is getting a big overhaul--Alcoa, Hewlett Packard, and Bank of America will be taken off the index and companies like Visa and Nike are being added on. Juli Niemann, analyst at Smith Moore & Company, joins Marketplace Morning Report host David Brancaccio to discuss.
Click the audio player above to hear more. And click here to listen to David's conversation with Andy Brooks, Head of U.S. equity trading at T. Rowe Price, for more about why the Dow made this reshuffling move.
Las Vegas is adding an eye-catching tourist attraction, in the form of a huge wheel that can take more than 1,000 people on a ride 550 feet into the sky over the city's famed Strip. The main construction of the wheel, called the High Roller, is nearly finished; it is expected to open in early 2014.