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Ballerina Misty Copeland counts herself lucky

Thu, 2016-06-30 11:20

Update: Misty Copeland was promoted Tuesday, June 30 to principal dancer for the American Ballet Theater. She's the first-ever African-American woman to hold that title.

 

Age starting dance: 13

Height: 5 feet 2 inches

Bust: "Bigger than most"

At least, that's how ballerina Misty Copeland describes her numbers-defying career in dance. A soloist with the American Ballet Theater in New York, Copeland recently explained how she doesn't really fit into the traditional model for ballet, but still made it work.

“All of those numbers, they just don’t add up to create a classical dancer,” she says. "No matter what, I'm going to be who I am."

Listen to the full conversation from our live show in New York City in the audio player above.

Tesla is disrupting more than just the car business

Sat, 2016-02-06 16:01

Tesla Motors is building the world's biggest battery factory just outside of Reno, Nevada. The company is calling it the “gigafactory,” and when it’s up and running in 2016 it’s expected to make Tesla’s electric cars much more affordable. 

“In a single factory we're doubling the worldwide capacity to manufacture lithium-ion batteries,” says J.B. Straubel, Tesla's chief technology officer. 

That's significant enough. But the company also plans to develop batteries for use with solar-power generation – giving Tesla a shot at challenging public utilities as an energy source, Straubel says.

“At the price points that we're expecting to achieve with the gigafactory ... we see a market that is well in excess of the production capability of the factory,” says Straubel.

The market for batteries is an offshoot of the booming business for solar panels, particularly in states such as California, where solar is becoming commonplace.

“We sign up approximately one new customer every minute of the workday," says Will Craven, director of public affairs at California-based SolarCity.

Much of the excess energy harnessed by solar panels is returned to the power grid, Cravens says. This means homeowners and businesses may earn a credit from their power companies, but have no say over when and how that energy is used.

The partnership with SolarCity will use rooftop solar panels fitted with Tesla’s battery packs to allow customers to keep that energy in-house. That means they can use it however, and whenever, they want. The concept puts Tesla in direct competition with utility companies.

“Stationary storage, or backup storage, is really being considered the ‘Holy Grail’ of renewable electricity generation,” says Ben Kallo, an analyst with the Robert W. Baird financial services firm.

Kallo points out that the intermittent nature of renewable energy sources makes them less reliable because the wind doesn’t always blow and the sun doesn’t always shine.  But with the ability to store that energy, renewable energy sources can compete head-to-head with utility companies for customers.

“There are still many utilities out there who kind of have their head stuck in the sand and just hope that this goes away. What we're seeing is really building momentum,” Kallo says.

Forward-minded utilities might look at Tesla’s business model as an opportunity, he says.  Energy-storage technology could be used to build capacity in their existing grids, and also build new infrastructure for battery-powered cars and homes.

 

Living in a wildfire zone

Thu, 2015-08-27 13:01

Hundreds of wildfires are burning in the West. The drought that's dried out the region got the fire season started early, and so far, this is shaping up as one of the worst years ever in the Pacific Northwest.

Lieutenant Kurt Stich of Cowlitz 2 Fire and Rescue fights fire — and boulders, snakes and bee stings — on the south side of Lake Chelan in central Washington state.

Anna King/Northwest News Network

But every year in the West there's a fire season. Malibu, not many miles from the city of Los Angeles, has had so many wildfires that the writer Mike Davis wrote an essay called "The Case for Letting Malibu Burn."

The community of Topanga sits deep in Topanga Canyon, in the Santa Monica Mountains, between Los Angeles and Malibu. It's an old hippie haven. Neil Young even wrote and recorded most of "After the Gold Rush" there. It's a beautiful place to live, but the scenery comes with a cost: worrying about nature.

More and more houses off Topanga Canyon Boulevard are being incorporated into the natural wildland.

Andy Uhler/Marketplace

Beth Burnham lives on 16 acres about a mile off the main road. She's got a big house, and she and her husband have horses and chickens. They call it paradise, but this is also California — a land of natural disasters. They say they're not worried about mudslides or flooding or even an earthquake.

"Fire is the devastating event that will happen out here," she says.
 
It will happen. Topanga Canyon is full of chaparral — shrubs and trees adapted to a dry climate that burn explosively.

Two men work for Burnham, armed with chainsaws and weed trimmers, cutting back dead trees and brush. 

This is maintenance. The hard work was done when Burnham bought the property 13 years ago. A crew worked for weeks cutting back the chaparral to create a clear area around her buildings.

It was expensive. But she knew it had to be done.
 
"I'm fortunate to have these guys, I'm fortunate to be able to pay them," Burnham says. "It's a balance. Most people don't have these kinds of people or these kinds of tools. If a person has a gardener, it's more of a typical mowing and watering — basically 'blow and go."  But most people in Topanga don't even have gardeners."
 
Burnham would know. She's co-president of the North Topanga Canyon Fire Safe Council. The group writes grants to help those residents without as much money make their homes safer.

For every multimillion dollar estate out here, there's a little cabin built in the 1950s and '60s. And Cal Fire maintains it's the responsibility of individual homeowners to make their houses fire-safe.

Janet Upton, Cal Fire's deputy director, says compliance is pretty steady. One problem the agency deals with now is timing, because clearing brush with power tools at the height of fire season can start fires.
 
"And so folks are well meaning, they listen to our prevention messages in the spring," she says. "They think, 'Mental note: I've got to do my clearance.' And then they don't get around to it."
 
Ed Smith teaches at the University of Nevada-Reno and coordinates Nevada's Living with Fire Program. He says clearing a defensible space around a house is imperative. But convincing homeowners to do it is another thing.
 
"There's a variety of reasons why people don't take action," he says. "One of them is the aesthetics and the desire to live in a natural setting."

Many people want a view of Lake Tahoe, so they're reluctant to augment the natural landscape to make their homes fire-safe.

Amy Ashcraft/Flickr

Smith said some people also just feel bad about cutting down a tree — even though that might save other trees.

"If a fire does occur, and the people in the community felt the same way, and you lose your forest, was that worth it?" he says. 
 
Even those who do all they can to protect their home live with the realization that fire is going to come some day.

Which raises the question: Does it make sense to live out here?

Whether or not it makes sense, lots of people are moving closer to the wildlands. Over the last 25 years, about 2 million acres a year have been converted into what firefighters and experts call the wildland-urban interface: houses in the fire zone.

Scott Ferguson lives in a part of Topanga where his house is close to his neighbors. It's landscaped with wooden staircases and paved pathways.
 
"Don't sit there and worry about it, because if you're going to worry about burning up, you should just move," he says. "Because the reality is, it's just something that's there. It's a possibility."
 
Next month marks the 10-year anniversary of the Topanga Fire, which burned nearly 40 square miles and caused $16 million in damages. Beth Burnham says she spends a lot of her time thinking about that possibility.

"This is a community of somewhere between eight and 10 thousand people with one road, basically, in and out," she says. "How are we all going to get out of here when the fire is coming down?"

The Topanga Fires of 2005 caused $15.8 million in damage to the area.

Justinm / Flickr

Digital assistants: If they only had a brain

Thu, 2015-08-27 13:00

If you’ve ever used Apple's Siri, Microsoft's Cortana or another so-called “virtual assistant” on your smart phone, chances are there has been some cursing involved. That frustration has created a big opportunity for whomever can make a better one. Now Facebook is stepping into the fray on a small scale at first. For a few hundred users in the Bay Area, Facebook’s Messenger app will now come with a feature called M.

M “can purchase items, get gifts delivered to your loved ones, book restaurants, travel arrangements, appointments and way more,” David Marcus, Facebook’s vice president of messaging products, wrote in a post announcing the pilot.

So why is it so hard to make a virtual assistant that actually works?

“Some of the problems are pure technical problems,” says Justine Cassell, co-director of a project at Carnegie Mellon to build what she calls “the next-next-next generation personal assistant.” The $10 million project is funded by Yahoo.

For example, it’s hard for machines to understand all of us all of the time — and not just what we’re saying, but what we actually mean.

To overcome some of the technical challenges, Facebook’s M will be text-only for now, avoiding the often comical limitations of voice-recognition technology. Human “trainers” will help interpret requests and supervise responses.

 “The trainers, very simply, will make sure that every request is answered appropriately, and each time that happens, that’s a lesson for the machine,” says Oren Etzioni, CEO of the Allen Institute for Artificial Intelligence.

Over time, the machine will learn to do more on its own.

What Facebook and its competitors want, Etzioni says, is to be your mobile portal to internet and everything it offers. The easier they make it for you to get what you want without leaving their ecosystem, the more money they stand to make.

 

Just how strong are those fundamentals?

Thu, 2015-08-27 13:00

During this week’s wild ride for stocks, analysts have been telling people not to freak out because, essentially, the stock market is not the economy and vice versa. Kai Ryssdal says that on Marketplace so often that a fan built that phrase into a drinking game. (Which, by the way, is not to be played while driving!)

There’s a phrase politicians like to use: “the fundamentals of our economy are strong.” As for economists, they answer questions about economic fundamentals by looking at an array of numbers.

There’s the gross domestic product, of course, which we learned Thursday grew at a 3.7 percent rate last quarter. Beyond that, analysts watch a mix of data including a range of employment and inflation numbers. Housing and industrial production data help too. Context is vital.

“There’s been a lot of talk about wages simply rising at around 2 percent,” says Bernie Baumohl of the Economic Outlook Group. “But that only tells half the story. You have to look at the rise in income relative to inflation.”

And with inflation currently low, 2 percent wage growth isn’t quite so disappointing.

It’s also important to look beyond the headlines, such as when the big employment report comes out a week from Friday.

“Certainly the overall unemployment rate is a number that a lot of people focus on,” says former Fed economist Ann Owen, now a professor at Hamilton College. “But I think when we wanna think about the health of the labor market right now, there are some really key numbers.”

She carefully watches the portion of Americans currently working or job hunting, a number that’s now stuck at 62.6 percent.

Add all this up, and many economists see a mixed bag.

“We’re not looking at growth in incomes or output that would make you, you know, wave your fist in the air and cheer,” says Michael Strain, an economist at the American Enterprise Institute. “But we’re also not looking at a situation that you would describe as terrible.”

Mark Garrison: Asking economists to only pick three numbers is like asking kids at a birthday party to only take three bites of cake. No chance.

Michael Strain: I think it takes more than three.

Ann Owen: I wouldn’t always have the same top three.

That’s Michael Strain at the American Enterprise Institute and Ann Owen, a Hamilton College professor formerly at the Fed. But we can at least narrow it down to some key categories. There’s GDP of course, which we learned today grew at a 3-point-7 percent rate last quarter. Beyond that, they watch a mix of data including a range of employment and inflation numbers. Housing and industrial production data help too. Context is vital, says Bernie Baumohl of The Economic Outlook Group.

Bernie Baumohl: There’s been a lot of talk about wages simply rising at around two percent. But that only tells half the story. You have to look at the rise in income relative to inflation.

And with low inflation, two percent isn’t quite so disappointing. You also have to look beyond the headlines. That’s what Owen will do when the big employment report comes out a week from tomorrow.

Ann Owen: Certainly the overall unemployment rate is a number that a lot of people focus on, but I think when we wanna think about the health of the labor market right now, there are some really key numbers for people to be thinking about.

Like the percent of people working or job hunting, currently stuck under 63 percent. When Strain looks at all this and more, he sees a mixed bag.

Michael Strain: We’re not looking at growth in incomes or output that would make you, you know, wave your fist in the air and cheer, but we’re also not looking at a situation that you would describe as terrible.

So the fundamentals are Ok. In New York, I'm Mark Garrison, for Marketplace.

China's Wanda buys Ironman race series

Thu, 2015-08-27 13:00

The Ironman triathlon competition has just been swallowed up by the Chinese conglomerate Dalian Wanda Group.

The company announced today it bought Florida-based World Triathlon Corporation for $650 million. Wanda already owns the AMC movie theater chain in the U.S. It recently bought a Swiss sports marketing firm and a portion of a Spanish soccer team. It calls the Ironman purchase part of its “comprehensive sports strategy.”

“There’s a possibility that they see this as an opportunity for vertical integration in a completely different area of sports entertainment,” says Karl Gerth, who studies China at the University of California, San Diego.

He says the company wants internationally well-known brands like Ironman to draw attention — and people — to the hotels and other properties it already owns.

Wanda says triathlons are “on the cusp of explosion” in China, but Jeff Wasserstrom at University of California, Irvine is skeptical.

“Well, we’ve heard stories about skiing being poised to explode, we’ve been hearing about other things," he says. "But they are real niche things, and there is a bit of oversell.”

But he does agree with the company’s assessment that China’s middle class is ready to move away from watching popular sports to joining in.

David Berri, a sports economist at Southern Utah University, says what makes triathlons appealing is that it’s not just for the most elite of athletes.

“Well, what we’re seeing as economies grow around the world," he says, "and incomes go up around the world, there’s more and more interest in all sorts of sports. One could argue this is a sport that lots of different people can participate in.”

And they need gear, hotels, training space and air time, which Wanda is happy to provide.

Singing the 'Happy Birthday' blues

Thu, 2015-08-27 10:43
$100,000

That's how much a major motion picture is likely to be charged by Warner/Chappell Music for using the "Happy Birthday" song, says attorney Mark Rifkin, who is suing the company, claiming the copyright is invalid. That's right, it's copyrighted, and Warner/Chappell is the owner. So movies and restaurants go to creative lengths to use other songs. It could be worse; in Tajikistan, a man was fined about $634 for simply celebrating his birthday in public, according to the BBC. Turns out you violate more than a copyright in the Asian republic — public birthday parties are against the law.

$750,000

That's the amount twins Durland and Darvin Miller say they've been offered for the registered domain Twins.com, as told to Grantland's Ben Lindbergh. The San Jose, California, men registered the site in 1995, envisioning twin-related news. Fast forward to present. The twins aren't using the site, and Major League Baseball all but three team sites — one of them Twins.com. The Millers, who really are Twins fans, by the way (their dad is from Minnesota), say they were unsuccessful in contacting the team about a deal. Twins President Dave St. Peter says the team hasn't reached out because buy a URL is MLB Advanced Media's domain, so to speak. If it never works out, that's OK too. The Millers are happy to keep Twins.com in the family.

$1.76 billion

That's GameStop's second-quarter revenue, released Thursday, and it's better than analysts expected. But the brick-and-mortar store is struggling to remain relevant in the age of downloadable games, Sally Herships reports. People are still buying games boxes, and one way to increase those sales is stuffing them with collectible goodies — like figurines or accessories for the digital characters themselves. "These are the kinds of things that hardcore fans get all excited about," says Evan Narcisse, reporter with video game website Kotaku.

Flores-Roux is a nose ahead in the perfume business

Thu, 2015-08-27 10:30

Rodrigo Flores-Roux, head perfumer at Givaudan perfumes, says that “a perfumer’s life is a little bit busy.” That explains why his office is covered in perfume bottles — some professionally packaged, others in clinical bottles titled with a label maker. Magazines, postcards and photos fill up the rest of the space.

It’s all inspiration for when Flores-Roux sits down to create a scent. The first step usually involves a computer and a process that he says resembles creating a recipe.

You think about a certain mixture of things. For example, I am going to do something that has to be very fresh and masculine. So I think about something that is going to be a little bit citrusy, but I want it to have tons of lavender, because lavender is going to be my theme. So you choose one or two, you mix them in different amounts, etc., in order to create something that will be pleasing, will have signature, memorability and hopefully not only make millions of dollars, but it will also become signature and innovative.

The “recipe” is sent to a lab around the corner from Flores-Roux’s office. It’s “literally where the magic happens” he says.

The lab is filled with technicians — junior perfumers — in white lab coats, working with bottles that are neatly stacked on shelves at each work station. The air is heavily perfumed. Flores-Roux stresses a good perfume isn’t made up entirely of “good” smells.

“You can use horrifically stinky scents, but in the right amount, they add something.”

Outside of the lab, the business of perfume is cutthroat.

“We are sharks." Flores-Roux says. "We are Godzillas, and we want to crush the competition, and actually sometimes we get crushed,” he says.

Much of the work a perfumer does is on spec — a company decides to create a signature scent, and they approach several perfume houses like Givaudan at once.

“We are briefed at the same time in a competitive way,” says Flores-Roux. All the candidates create a scent they hope will be chosen by the client. But “only one wins. I do have to say, it’s very, very sad, because you put your life there, and then you’re not chosen. And guess what? You do not get paid. It’s a business model that is very strange and a little sadomasochistic, but that’s the way it is.”

Flores-Roux says he doesn’t wear perfume at work — no one does at Givaudan — but when he goes out, he’ll “empty the bottle.” Spritzing a perfume cloud and walking through it? He does not approve.

“That’s nonsense, and that’s a waste of money. I want people to wear perfume and to own it and to express themselves with perfume. Putting it in the air is a waste of money. You might as well not wear it,” he explains.

For Kai, Flores-Roux recommends a scent he created for John Varvatos called “Artisan.” Get a virtual whiff below and stay tuned to see what others in the office thought.

Brian Chesky of Airbnb on "the worst idea ever"

Thu, 2015-08-27 09:00

The first step in starting a successful business is having a good idea, but sometimes even a bad one can work. Brian Chesky started Airbnb on the risky premise that people would agree to open their homes to strangers, and it worked. He didn’t just build a $10 billion company, he changed culture as we know it, helping to usher in the sharing economy.



PODCAST: Happy birthday, now cut me a check

Thu, 2015-08-27 08:25

First up: market's seem to be mellowing slightly, but that doesn't mean we're out of the volatile, volatile woods. We look at what that could mean for interest rates. Next, financial planners are telling people to stay the course and think about the long term, but what if you don't have that kind of time? Finally, you can sing the "Happy Birthday" song all you want but be careful about putting it in that screenplay you're working on. Believe it or not, the copyright is owned by Warner/Chappell Music, and they've been known to charge six figures for its use.

Fed hosts meeting of banking leaders

Thu, 2015-08-27 02:53

World banking leaders will gather in Jackson Hole, Wyoming starting Thursday night for an annual meeting hosted by the Federal Reserve.

Janet Yellen and some members of the Federal Open Market Committee, which sets monetary policy, will not be attending. Still, there will be enough "intellectual firepower" there, says Ian Shepherdson of Pantheon Marcoeconomics, to make the event an important one for Wall Street.

Investors will be listening for hints that could help them figure out whether the Fed is still likely to raise short-term interest rates in September, or whether it will wait until later in the year.

"I think the key is to look to see what happens in the next four employment reports," says Patrick Newport at IHS Global Insights, who thinks any delay will be a short one.

'Don't panic' is good advice even if you're retiring

Thu, 2015-08-27 02:00

"Stay the course" and "don't panic" were common tips as the stock market dropped this past week. But what about people who are so close to retirement, they can practically smell it? Traditionally that means folks who are almost 65 or older, but to financial planners,  it can mean anyone who plans to stop working full-time within 10 years.

Whether you're a year away from retirement or 30 years, the advice is the same, said Elizabeth Mannen, an investment advisor with Wells Fargo Advisors: "Don't sell at the bottom. Don't turn a trip into a fall."

If a vacation in Bali was in your retirement future, you wouldn't liquidate stocks to pay for it—if you'd budgeted wisely -- she said. Still, the last few days have been really emotional.

"I've only had one person cry," Mannen said, "so that's good."

That was someone who was already retired. William Delwiche, an investment strategist with Baird, said having lots of money tied up in stocks is a bad idea.

"As you approach retirement, you should be moving more of your assets to less risky or less volatile investments," he said.

Too late? Delwiche said not to worry.

"An event like you're having over the past few weeks shouldn't have much of an impact," he said. Usually after a sharp drop, the markets do come back.

How volatile is the market? Let's consult the VIX

Wed, 2015-08-26 14:04

The Volatility Index (VIX) measures whether or not there’s too much fear or optimism in the markets. Robert Whaley, father of the VIX, says at the “beginning of the week it was about at a level of 12, at the end of the week it was at 28. That was the biggest percentage increase the VIX has ever had in its entire history.”

Currently, the VIX is around 34 percent. But what exactly does that mean? “It’s a measure of the volatility you expect over the next 30 days,” Whaley says. He adds that the VIX is usually around 20 percent.

So what happened with the VIX on Monday? “The spread between the bid and the ask was so large that it introduced a lot of noise into the VIX itself,” he says. Basically there was too much volatility for the volatility index.

Whaley explains, “I think the market’s simply overreacting to what’s going on in China.”

Moving forward, Whaley says things will get better.

“Things will calm down. There’s just too much repeated information flow about one issue, and it just has tended to scare people.”

Click on the audio player above to hear the entire interview. 

No worries on China's streets

Wed, 2015-08-26 13:45

The Yuan devaluation and China’s market crash has caused global chaos. But Rob Schmitz, Marketplace’s China correspondent in Shanghai, says people on the street in China really aren’t that worried. A Sichuan restaurant owner told Schmitz “that business is really good.”

“Most importantly [China’s] got a growing economy," Schmitz says. "We've seen the headlines this week about China’s market crash ... [but] China’s economy is continuing to grow at around 6 or 7 percent, faster than nearly every other economy in the world.”

Around the corner, fruit store owner Wang Tao tells Schmitz he doesn’t buy stocks because they don’t seem like a stable investment.

“Less than 7 percent of urban Chinese actually own stocks, and that’s a huge difference from the U.S., where around half of Americans own stocks,” Schmitz explains.

Schmitz talked to one man whose wife has stocks.

“He was really more worried about the news this week that China’s government was planning to invest part of the state pension fund into the stock market,” Schmitz says.

Because of this, there’s a lack of trust in China’s government and financial system.

“People really don’t care that much about what’s going on in the stock market," he says. "But if the government starts putting their money into the stock market, that’s when people will start to worry a little bit more.”

No, the economy is not like a roller coaster

Wed, 2015-08-26 13:25

When the market goes wild, people say the economy is like a roller coaster. And, frankly, I am sick and tired of this disgusting comparison. Someone has got to stick up for the inventor of roller coasters, my grandfather, Dr. Johann T. Rollercoaster.

And yes, laugh at his name if you must. It was changed at Ellis Island from the original Rollercoasterstein.

You see, the economy is nothing like a roller coaster. When the market drops, peoples’ money vanishes. When a roller coaster drops, the only thing that vanishes are your brain’s sadness receptors. Also, when a roller coaster goes up, coaster fans know it’s gonna go back down. But when the market goes up, money fans pretend it’s going to keep going up forever.

Plus, the stock market can make people rich. My grandfather, Dr. Rollercoaster, never profited off his invention. To be fair, he intended the roller coaster to be a form of rapid, short-distance transit and potentially a cure for smallpox, so he gave all the rights away.

But the most important difference is that no one has ever been hurt by a roller coaster, except for the dozens of people each year who are hurt in roller coaster accidents.

The fact is, economic downturns are cyclical, but you don’t hear the inventor of the wheel, Pete Wheel, getting slandered every time capitalism takes a nose dive. You know what else takes nose dives? Dolphins. But the discoverer of dolphins, Wesley Dolphin, doesn’t have his family name dragged through the mud after every financial disaster.

Besides, lots of things go up and down, not just roller coasters. Yo-yos, bungee jumpers … roller coasters. OK, I couldn’t think of a better metaphor for the economy than roller coasters, but I do know two things. One, my grandfather, Dr. Rollercoaster, was the best man I’ve ever met. Or, he would’ve been if he hadn’t died in a roller coaster accident 40 years before I was born. And two, don’t invest your money in roller coasters. The market for amusement rides has taken a real Dolphin.

And remember, a stock market crash can ruin millions of lives. A roller coaster crash can ruin maybe a dozen lives, tops. 

No, the economy is not like a roller coaster

Wed, 2015-08-26 13:25

When the market goes wild, people say the economy is like a roller coaster. And, frankly, I am sick and tired of this disgusting comparison. Someone has got to stick up for the inventor of roller coasters, my grandfather, Dr. Johann T. Rollercoaster.

And yes, laugh at his name if you must. It was changed at Ellis Island from the original Rollercoasterstein.

You see, the economy is nothing like a roller coaster. When the market drops, peoples’ money vanishes. When a roller coaster drops, the only thing that vanishes are your brain’s sadness receptors. Also, when a roller coaster goes up, coaster fans know it’s gonna go back down. But when the market goes up, money fans pretend it’s going to keep going up forever.

Plus, the stock market can make people rich. My grandfather, Dr. Rollercoaster, never profited off his invention. To be fair, he intended the roller coaster to be a form of rapid, short-distance transit and potentially a cure for smallpox, so he gave all the rights away.

But the most important difference is that no one has ever been hurt by a roller coaster, except for the dozens of people each year who are hurt in roller coaster accidents.

The fact is, economic downturns are cyclical, but you don’t hear the inventor of the wheel, Pete Wheel, getting slandered every time capitalism takes a nose dive. You know what else takes nose dives? Dolphins. But the discoverer of dolphins, Wesley Dolphin, doesn’t have his family name dragged through the mud after every financial disaster.

Besides, lots of things go up and down, not just roller coasters. Yo-yos, bungee jumpers … roller coasters. OK, I couldn’t think of a better metaphor for the economy than roller coasters, but I do know two things. One, my grandfather, Dr. Rollercoaster, was the best man I’ve ever met. Or, he would’ve been if he hadn’t died in a roller coaster accident 40 years before I was born. And two, don’t invest your money in roller coasters. The market for amusement rides has taken a real Dolphin.

And remember, a stock market crash can ruin millions of lives. A roller coaster crash can ruin maybe a dozen lives, tops. 

How Nevada could cast a shadow over solar

Wed, 2015-08-26 13:00

A big bet on solar energy may be about to go sour in Nevada. State regulators are considering a utility's proposal to charge owners of rooftop solar systems a monthly fee for being connected to the grid.

That kind of fee, called a demand charge, would take the savings out of solar for most homeowners, undermining the business model of solar companies. Utilities in several states are pressing for similar charges. One big solar installer, Vivint Solar, has already stopped doing business in Nevada because of the uncertainty.

"That's the definition of eliminating the industry," says Bryan Miller, who is with Sunrun, a solar installation company. "So this debate is about one word: competition."

Green groups say the Nevada demand charge could jack up solar users' bills by $70 a month.

"Which is too complicated to explain," Miller says. "And anybody could read the thousand-page filing and still not understand how much they would pay under this Byzantine set of charges and fees."

NV Energy's side? The company's Kevin Geraghty says if you own solar today, you get so many credits, you hardly pay the electric company, which runs the grid you use when there's no sun.

"At any one time, if a cloud goes by or your system fails, NV Energy service to your home will assure that your lights don't dim, they don't flicker," he says. "And that demand charge represents just how much you are depending on the grid for your energy choices at your home."

Is this about quashing competition? A power industry paper calls rooftop solar a "disruptive challenge."

"I think utilities have been not stellar examples of players in competitive businesses," says Larry Reilly, a former utility executive.

He said power companies are making less money as solar grows. One solution: charge every customer a lot more for connecting to the grid.

"The analog there is the way cable TV is billed," he says. "You pay a fixed amount to have cable TV, and if you never turn the TV on at all, you're still going to pay the charge per month.

Just last week, Nevada hit a state solar energy cap. Regulators can't lift the cap, but can allow new customers at new rates.

Late Wednesday, Nevada regulators approved a plan to continue the current rate structure for customers with solar panels until the end of calendar 2015. It amounts to a temporary victory for rooftop solar advocates, but a permanent decision will not come until 2016 at the earliest. 

Blame low wages on slack

Wed, 2015-08-26 13:00

A new report from the Congressional Budget Office is shedding some light on why wages aren’t going up, even as the unemployment rate goes down. 

Blame it on slack, the CBO says. That is, extra workers in the labor market — people who’ve given up looking for a job. 

These extra workers aren’t officially counted as unemployed because they’re not looking for work. They might be boomers who are pushed toward an unexpectedly early retirement. Or millennials who decide to stay home with the kids.

“They’d like to be working and if they really thought they could pick up the phone and get a job they’d be back in the labor force," says Chad Stone, chief economist at the Center on Budget and Policy Priorities. "But we’re not to that point yet.”

So they stay home. The CBO says this pool of would-be workers is bigger than it thought. Maybe because the severity of the recession made it really hard to get back into the workforce.

“The CBO seems to be acknowledging that there’s more slack than expected based on previous recessions," says Jonathan Rothwell, a fellow at the Brookings Institution. "So there’s this unexplained slack.”

The effect of this slack, though, is clear. Economists say it’s one factor keeping wages down. Employers know there’s this backbench of workers, waiting for a job. 

“When they have a lot of folks to choose from there’s very little upward pressure on wages,” says Marick Masters, a professor of business at Wayne State University.

One bright spot in the CBO report: It says there’s less stigma against the longterm unemployed. Because so many people lost their jobs during the great recession, and found it hard to get new ones. The report says they could return to the workforce in coming years.

 

 

Apple, iPhone and the Chinese economy

Wed, 2015-08-26 13:00

China’s Shanghai Composite Index continues to fall, causing a whole lot of hand wringing about U.S. companies that count on the growing Chinese middle class.

One of the most vulnerable companies appears to be Apple. The Chinese market accounted for about a quarter of the Apple's revenue last quarter; China is responsible for a lot of the company's growth.  

The Economist publishes something called the "Sinodependency Index," a ranking of how dependent U.S. companies are on China. Apple's at the top.

"On the surface it looks like, 'Oh, this might be bad, this might mean sales will drop,'" says Chris Christopher from IHS. But he says a Chinese stock market meltdown does not mean disaster for Apple. He expects Chinese consumers will continue to pay a premium for Apple's products.

It helps that the near-term fortunes of the Chinese middle class aren't that closely tied to the fortunes of the markets.

"In China, because people have high savings, they have a huge cushion," says professor Linda Lim from the University of Michigan's Ross School of Business. The Chinese middle class also have jobs. So Lim thinks "the consumption part of the Chinese economy should be relatively stable."

But China's economic slide could pinch Apple in other ways. 

Consider the devaluation of the Chinese yuan.

"When the sales in China get converted to U.S. dollars, it has a negative impact in how much gets converted back to U.S. dollars," says Gene Munster, an analyst at Piper Jaffray.

Some of Apple's manufacturing contracts are agreed to in dollars, which could also hurt the company's bottom line.

Apple could raise prices of the iPhone in China, but that might encourage Chinese smartphone buyers to look more closely at the competition. 

China's luxury buyers are an endangered species

Wed, 2015-08-26 13:00

China’s latest economic troubles could be the last thing luxury companies need. Once the great hope for growth for American and European makers of handbags, shoes and jewelry, the Chinese luxury buyer is now a threatened species, with China’s currency losing value and stock market slumping.

Bain & Company data show 70 percent of luxury purchases by Chinese happen abroad, so the battle for Chinese luxury buyers is actually fought in places like New York’s Fifth Avenue. It’s a murderer’s row of credit-card chomping monsters like Tiffany, Louis Vuitton, Armani and others. They are Venus fly traps for deep-pocketed shoppers, luring them in with handsome stores and polar-strength air conditioning.

Whether Chinese visitors like Jayce Zhao and his parents keep buying is a big deal for luxury companies. Walking out of a Rolex store, he says the family is not scaling back after China’s economic troubles.

“No,” he insists. “Nothing changes.”

Nearby, on 59th Street, luggage-store manager Bill Kim shows off a sleek black Tumi case. Chinese visitors often buy the biggest, nicest ones he’s got. Then they fill them up with goods bought around the corner on Fifth.

“The Chinese tourists who are already here are not too impacted by this change,” he says.

Sales staff at various luxury stores had the same take. For now at least, Chinese wealthy enough to vacation in New York aren’t cutting back. But it’s important to remember that many in China who own luxury goods bought in New York have never actually been here.

Many Chinese shoppers get their luxury goods through people like Lucy Lee. She is the vital link in a particularly Chinese chain of commerce called daigou. Chinese pay people like her to shop abroad and ship the products to them. They avoid high Chinese tariffs and feel confident they’re getting the genuine product. For Lee and other Chinese living abroad, it’s a nice side job, in her case, extra income while in school.

Daigou buyers in China have money, but not always to the point where they can travel abroad. Lee describes her clients as “middle class.” Since the currency devaluation, they’ve been asking very different questions.

"'You do consider the depreciation of Chinese yuan, right?’ They will confirm that,” Lee explains. “So I think that will definitely hold them back.”

If middle-class Chinese buyers dry up, that’s a nasty warning sign for luxury companies. A weaker Chinese currency could hurt efforts to sell more to Chinese customers.

“I think it’s huge,” explains Perry Wong, managing director of research at the Milken Institute. “That really will cut down on the appetite to buy expensive products.”

Wall Street is pouncing. A new analysis from data firm Markit shows a sharp rise in investors betting on luxury stocks to drop.

What happens in China, doesn’t just stay in China. It comes all the way to Fifth Avenue and goes back again.

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