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Profitable airlines face grumpy investors

Fri, 2015-06-12 02:00

U.S. airlines are having a great year, but the major carriers’ stock prices have tumbled this week, thanks to growing fears that airlines will overreact to the the good times and mess things up for investors. 

The planes are fuller so they're flying with fewer empty seats. And fuel prices are extremely low.

Joe Schwieterman, a transportation professor at DePaul University in Chicago, says demand has been strong and ticket prices low, "so the fares out there are actually pretty attractive. And we really thought this was going to be a summer where airlines could, in effect, rake it in."

And investors don’t like it when airlines cut prices if it isn’t clear that will result in greater market share. In fact, in the past it’s given airlines quite the stomach ache when their expansion gets whacked by a spike in fuel prices or a reduction in consumer demand.

Seth Kaplan, managing partner of Airline Weekly, says "investors are worried that airlines are just going to put too much supply in the marketplace and grow more quickly than the economy."

"When we look at the schedules for the next bunch of months and into early 2016, airlines are indeed looking to grow more rapidly than the economy," Kaplan says. He adds that growing too fast can result in reduced profits and grumpy investors.

Do not pass Go. Do not collect $122,874

Fri, 2015-06-12 01:45
14 million

That's how many government employees may have had their information stolen in what is being called the largest hacking of U.S. government data in history. As Bloomberg reports, this new number dwarfs the 4 million the government initially estimated. Victims include former and current government employees, as well as government contract workers.

4 percent

Thursday was the first time this year that mortgage rates rose above 4 percent, as reported by the Wall Street Journal. This leads some traders to believe that the Federal Reserve may soon raise short-term interest rates.

$122,874

That's how much a Kickstarter campaign raised to fund the making of a board game called "The Doom That Came to Atlantic City." Unfortunately for everyone involved, that game never materialized. Now, the FTC has ruled that game creator Erik Chevalier failed to refund backers and did not deliver on promised rewards. As CNET reports, Chevalier has been prohibited from misrepresenting a crowdfunded campaign, will be forced to pay all refunds and was fined $111,793.71.

800 years

That's how many years ago the Magna Carta was sealed. It is credited as providing many of the underpinnings of the U.S. Constitution. Best warn the Brits that the Yankees are coming: Funded by donations to the American Bar Association, about 800 American lawyers are headed to London for the rededication of the Magna Carta memorial at Runnymede.

13 episodes

That's how many "Orange Is the New Black" episodes — the show's entire Season 3 — premiered on Netflix Thursday night. No doubt viewers have already taken to binge watching all of them in a row. But why not pause your marathon to take a look into the culture of binge watching TV, as we ask if it is, in fact, the future of television.

Silicon Tally: These are not the fridges you're looking for

Fri, 2015-06-12 01:41

It's time for Silicon Tally! How well have you kept up with the week in tech news? 

This week, we're joined by Greta Johnsen, co-host of the Nerdette podcast.

Click the media player above to play along.

Migrating whales, migrating tourists

Thu, 2015-06-11 14:29

Every year, whales migrate all over the world, up and down both North American coasts. They travel from Southern Asia and Australia to Antarctica, from Japan and Russia to Alaska and all across Northern Europe. With them, they bring tourists — whale watchers who spend money seasonally to catch a glimpse of a whale. 

Ecotourism is a multibillion-dollar-per-year industry with whale watching contributing about half a billion dollars annually, according to University of British Columbia bioeconomist Rashid Sumaila. 

As whales migrate from cold to warm waters, breeding and feeding hotspots around the world have booms and busts in the whale watching business. Washington state, California and Mexico are among the most well-known places to see humpbacks and other whales, and they have thriving whale watching industries. But other places, like Quebec and Ireland, are investing in their own growing ecotourism markets.

Quebec recently spent about $300,000 as part of a $600,000 advertising campaign to attract whale watchers. Last year, 300,000 people visited Quebec to whale watch, up 100 percent from the year before. And whale watching tourism globally is growing too, possibly because of the appeal of seeing an endangered animal in the wild. 

Sumaila says that the whale watching business depends upon protecting whales and oceans. The already unpredictable industry is taking a hit because of changing migration patterns — a result of warming oceans and acidic waters. As the whales adapt to their changing environment, "there will be losers and there will be winners" in business, Sumaila says. 

He hopes the growing ecotourism industry will begin to give back to conservation and preservation efforts around the world. Without the whales, there is no business. 

The debate against affordable housing in Marin

Thu, 2015-06-11 13:34

We’re looking at the issue of affordable housing through one place where housing is not exactly affordable: Marin County, just north of San Francisco.

George Lucas*, filmmaker and longtime Marin resident, says he'll use more than $100 million to finance, entirely, 224 low-income apartments on a piece of land he owns called Grady Ranch, in an area called Lucas Valley — named long before the filmmaker moved there.

Some of the housing will be for low-income seniors and some will be so-called "workforce" housing, aimed at people who earn about 80 percent of the area’s median income. In Marin, that means between $65,700 and $101,400 a year depending on household size. A Lucas spokesperson said that Lucas wants to do something nice for seniors and workers in Marin.

Maximum income to qualify for low-income housing for a household of four 

Graphic: Tony Wagner/Marketplace | Data: California Department of Housing and Community Development

In part one of this two-part series, we we heard from folks who say this kind of project is exactly what the county needs. But not everyone has embraced the idea. Listen to the second part of the series here:

Read more below...

Here are some of the different perspectives Marin County residents have on the project, as well as the larger issue of affordable housing in Marin: 

Maria Rodriguez is an administrative assistant who has worked for the County of Marin for 15 years. She lives in a small apartment with her husband in the Canal District, a crowded, industrial part of Marin.

“There’s a lot of apartment buildings, sometimes two or three families to a unit,” she says. “The rest is mostly auto repair shops and paint shops.” 

The day the details of George Lucas's affordable housing project came out, Rodriguez called PEP Housing, the non-profit developer that will be managing the project, and asked to be put on the waiting list for an apartment at Grady Ranch, once the units are built.

“I read it in the paper and I said ‘Wow!.’ They took my name and number and said, 'we'll send you an update,'” she says. “I think it's wonderful.” 

Maggie McCann (pictured right), is president of the Lucas Valley Homeowners Association. The well-manicured subdivision is a couple miles from Grady Ranch, down a winding country road.

When McCann heard that George Lucas was pushing ahead with plans for the affordable housing development, “it made my heart sink and my stomach feel bad,” she says.

McCann says she has gotten emails from neighbors concerned with how many more kids the new housing will bring in to local schools, and how it will impact fire, police and other community services in the area.

“We are not against affordable housing,” she says. “We just want to see it done in a sensible, responsible, good way.” 

Liz Dale (pictured, center) grew up in Lucas Valley and still lives there. She’s on the board of the Lucas Valley Estates Homeowners Association.

“I used to ride my horse on this ranch when I was growing up. I think it’s beautiful,” Dale says.

She says she doesn’t want the design of the new buildings at Grady Ranch to interfere with the scenic environment and rural feel of the place or "stand out as a sore thumb.”

Tom Taylor (pictured, left) also lives in Lucas Valley Estates, and frequently hikes the ridge-top above Grady Ranch.

“There's trails back there that most of the people in this valley really cherish. I don't want to see a high rise if I'm hiking back in those trails.”

Bruce Anderson raised his children, and now his grandson, in Marinwood, another subdivision in Lucas Valley. He says he’d like to see the quality of life that drew him to the valley be available to families along the income spectrum. 

”It can be shared with another 200 or 300 people in our 5,000-person valley here,” he says. “I think we have one of the best school systems in Marin. They're doing a tremendous job for my grandson. I'd like that to be available to many more people.”

 

 

 

Tarey Read is the President of the Board of Directors of the Marinwood Community Services District. She has lived in Lucas Valley/Marinwood for more than twenty years, in a house her late husband bought in 1969 for $19,700. Property values have skyrocketed since then.

She supports the affordable housing project George Lucas is planning for Grady Ranch. "I think this project is so well-conceived and so needed and appropriate." 

 

 

  

Justin Kai is also on the Board of Directors of the Marinwood Community Services District. Kai lives with his wife and infant son in Lucas Valley/Marinwood. His family moved to the neighborhood four years ago.

It was a “financial stretch,” he says, but they loved their home’s big backyard and access to good quality schools.

“I made great sacrifices to be here,” he says. “I think it's selfish to expect that someone else should be able to acquire (it) for little or next to nothing.”  

Photos: Krissy Clark/Marketplace

*Disclosure: George Lucas has been a large donor to the University of Southern California. Marketplace was produced by USC until April 2000. The school retained a production credit as part of the sale to our current parent company, American Public Media. Marketplace has no editorial or financial relationship with USC.

Jack Dorsey: Twitter co-founder, Square CEO, punk

Thu, 2015-06-11 13:11

Update June 11, 2015Twitter CEO Dick Costolo is stepping down July 1, and Jack Dorsey, one of the original founders of the company, will fill in as interim CEO.

You have about a 0.00006 percent chance of starting a billion-dollar business. Jack Dorsey didn't just start one — he's got two.

Dorsey was 29 when he launched Twitter with his pals Evan Williams, Biz Stone and Noah Glass back in 2006. His handle, @Jack, is Twitter's first personal account.

Since then, he has launched Square, a mobile payment company that he hopes will change the way we pay for thngs. You've probably used Square at an independently-owned store or restaurant. It's a little white minimalist card reader that plugs right into an iPad or iPhone. The company has also gotten into organizing, and even lending. It's hoping to be a one-stop-shop for small business owners.

Dorsey talked about Square and his life since Twitter at Dig Wines, a wine shop in San Francisco — where, by the way, Square readers are at the cash register.

Square’s “aha!” moment:

It was really our founding moment when our co-founder Jim McKelvey, who was my boss when I was 15 years old back in St. Louis Missouri, called me and said he just lost a sale of his glass art because he couldn’t accept a credit card. And he was calling me on his iPhone which was a super computer… We have all this power in our hands, but why couldn’t we do a simple thing, or something that seemed as simple, as accepting a piece of plastic? Which is far more convenient than cash, far more convenient than a check. Why isn’t that possible? The company is an answer to that question.

On how Square works:

The insight really came from looking at the back of the credit card and the back of the credit card is a magstripe. And a magstripe is really the same technology that a cassette tape is. It’s audio. If you listen to the audio on a magstripe, it sounds like a squirrel screeching really loudly. You know, if you put a read head next to that, then you can decode that audio into numbers and those numbers you can send up to processors. All that was required was an audio jack that didn’t just put sound out but also had mic in, and every iPhone at that time had a mic in ring that we just plugged into. Suddenly, we were able to push that audio into and decode those into numbers.

On what he does as a CEO:

First, assembling the right team. (That means) hiring, certainly, but it also means parting ways with folks that just aren’t cutting it…making sure that we’re paying attention to that team dynamic and [that] it’s collaborative and it’s really challenging itself. Number two is making sure decisions are being made. I say that if I have to make a decision, we have an organizational failure. (That's) because I don’t have the same context as someone who is working day to day with the data, with the understanding of the customer. I definitely see the organization and the people in it as the ones to make the decisions, because they have the greatest context for what needs to be done.

On how his experience with Twitter affected how he started Square:

I was a first-time CEO. It’s not a position I necessarily wanted to be in. It’s a position that I was grateful for but was put in, and we were growing extremely extremely fast. But what I took from all of that is how important it is to really focus on the fundamentals. And the fundamentals that I found were the company and the team, and Square was interesting because we definitely made new mistakes, because I wasn’t going out and saying “Well I’m going to get into microblogging again.” We did something completely different and we got into finance. When I started Square, I was in credit card debt. I had a terrible FICO score. I lived all the pain that our merchants live every single day. We took those lessons and we baked it into the product.

On the connection between emotion and finance:

When I walk into a place like this (wine shop), there’s an emotion. When I take this bottle of wine home after I purchase it, there’s an emotion. No matter how much of our life moves online, we will always have places like this where we come together. We trade stories. We communicate. We see each other, and I think it’s a mistake to extract the soul from commerce because it enables a lot of these experiences that we treasure for the rest of our life. 

On Square’s legacy:

I definitely want Square to have a massive impact, and I think it has the potential to be that. I’m going to work as hard as I can to make sure that’s the case. Really what that means is that that’s accessible to more people.

Predicting the first line of his obituary:

Jack Dorsey, punk.

Tired of paparazzi harassing you at LAX?

Thu, 2015-06-11 13:00

Pity the poor, tired celebrity in yoga pants and Uggs, looking like a hot mess after a long flight fighting the paparazzi on the way to the limo — actually, that does sound terrible.

At LAX in Los Angeles, Delta Air Lines is throwing the celebrities a bone, thanks to its newly renovated terminal. After purchasing a first-class ticket, for just $350 extra, a Porsche hybrid will meet arriving celebs on the tarmac and drive them through a secret tunnel to meet their own drivers out on the street. 

Departing travelers can use their own VIP entrance and secret corridor, and even get an escort to a private lounge.

So do you think you need a famous person ID card to do this? Or will good old money suffice? 

Somebody try it and let me know. 

Facebook’s controversial plan to bring web to the world

Thu, 2015-06-11 13:00

Facebook wants to get the whole world on the web — for free. There must be a catch, you say? Never.

The social media giant recently nixed plans to launch a satellite that would have put millions of people on the grid. Despite this announcement, the site is still going full steam ahead on its mission to connect low-income countries to the information that so many of us take for granted.

The idea seems harmless enough, but it still has many critics worried. This is because users of the company’s Internet.org app will only have access to Facebook’s version of the internet.

Internet.org Vice President of Product Chris Daniels laid out the the company’s vision in an interview with Marketplace's Molly Wood.

“Facebook’s mission is to make the world more open and connected,”  he says, “and Internet.org’s mission is to bring the two-thirds of the world online who have never been online before.”

He says that Facebook wants to reach more of that population by using mobile infrastructure that’s already in place.

The business model is simple: local carrier partners pick up the tab for the data when users access a preselected list of sites. Users will have to pay their carriers if they want to see more of the Internet. Free sites offer resources on everything from prenatal care to job listings. Internet.org also features a messenger app provided by, who else, Facebook.

The project hasn’t always been welcomed with open arms; the company recently received backlash from Indian officials concerned about how much control Facebook has over the Web.

Daniels says this is the wrong way to look at it. “Our belief here is that the principles of net neutrality must coexist with programs that bring people online.”

In other words, if giving away free (albeit non-neutral) internet is wrong, they don’t want to be right.

Daniels maintains that Facebook’s not in it for the money. And, despite the controversy, he’s pretty upbeat about the hullabaloo.

“If it wasn’t impactful, there wouldn’t be skeptics,” he says.

Good retail sales don't necessarily mean all's well

Thu, 2015-06-11 13:00

New numbers out Thursday show American retail sales are up 1.2 percent. That’s a nice improvement from the previous month, when spending barely budged. The news has some on Wall Street smiling — but beware monthly snapshots.

“You have to not pay too much attention to ups and downs that happen monthly,” says former Fed economist Ann Owen, now a professor at Hamilton College.

Taking a wider view can paint a different picture for some analysts. Many are unsatisfied with the job market, particularly the quality of jobs being created and the wages workers are earning.

“Are we creating enough good jobs that will give you a decent middle-class standard of living?” asks Cary Leahey, senior adviser at Decision Economics. “There’s a lot of concern about that.”

Weaker paydays, of course, mean less money flowing through the economy. None of this is to say Owen, Leahey or their colleagues are forecasting doom. They just think it’s too early to throw a party.

There are also economists who are more optimistic.

“There are some little signs that we look to that say maybe it’s not as grim as people fear,” says Beth Ann Bovino, U.S. Chief Economist for Standard & Poor's.

She says a number of key data she watches gives her confidence that wages will rise.

Mark Garrison: My assignment today: become the enemy of joy, by peering beyond some recent hopeful economic indicators. Wipe the smiles off the faces of those who are cheering recent positive news about spending and jobs. Our multi-pronged assault on macroeconomic merriment begins with former Fed economist Ann Owen.

Ann Owen: You have to not pay too much attention to ups and downs that happen monthly.

Taking a wider view can paint a different picture. She’s not satisfied with the job market.

Ann Owen: There’s still room for improvement.

A big problem is the kind of jobs Americans are able to get right now. Economist Cary Leahey, with Decision Economics, worries their paychecks are too low.

Cary Leahey: While we are creating jobs, are we creating enough good jobs that will give you a decent middle-class standard of living and there’s a lot of concern about that.

Weaker paydays, of course, mean less money flowing through the economy. None of this is to say Owen, Leahey or their colleagues are forecasting doom. They just think it’s too early to throw a party. Now, plenty of economists are willing to at least contemplate ordering a sheet cake.

Beth Ann Bovino: There are some little signs that we look to that say, like, you know, maybe it’s not as grim as people fear.

Beth Ann Bovino is U.S. Chief Economist for Standard & Poor's and is willing to let a little joy into the picture, mainly because key data she watches have her predicting wages will rise.

Beth Ann Bovino: That means more money in people’s pocketbooks and that means more money to spend. So I expect this to continue.

So whether you wanna be cautiously optimistic or just plain optimistic, don’t let just one report sway you too far. In New York, I'm Mark Garrison, for Marketplace.

PODCAST: Costco cars

Thu, 2015-06-11 03:00

There is news today that retail sales went up 1.2 percent in May. More on that. Plus, Costco is closing in on becoming the biggest car retailer in the nation, thanks to a policy of selling cars at a fixed, discounted price. And no, they don’t come in packs of two. We'll also talk to Univision’s Leon Krauze about the Mexican midterm elections this past weekend.

Another Costco bonus for members: discount cars

Thu, 2015-06-11 02:00

Nearly 50 million Americans pay an annual fee of $55 to $110 a year at Costco so they can stock up on giant packages of steeply discounted paper towels or even bargain-priced jewelry.

But a growing number of Costco members are also turning to the company to score a ride. Costco has become a major player in the world of car sales. The retailer says it helped move about 400,000 cars last year.

“Costco is essentially acting as a middle man,” says Jeff Schuster, senior vice president of forecasting at LMC Automotive. “They are working with the manufacturers to bring in vehicles and essentially set a price for the vehicle.”

Costco negotiates price discounts that can save members $1,000 on average.

“So their members then don't have to haggle,” Schuster says.

John Rand tracks Costco at the research firm Kantar Retail. He says Costco offers special opportunities like brokered car purchases and even vacations because it’s focused on growing and retaining its membership base. Rand says 80 percent of its net revenue comes from member fees.

“Costco is in many ways not really a retailer," he says. "They tell you what they are: they're a club ... and as a club their mission is constantly to provide something extraordinary to members.”

The virtual doctor will see you now

Thu, 2015-06-11 02:00

Walgreens, the nation’s largest retail pharmacy chain, has announced plans to provide virtual medical exams to patients in 25 states by the end of the year.

The news is part of a larger trend of giving patients less expensive alternatives to a doctor's office visit.

Patients will be able to use the Walgreens mobile app to access doctors who can then write prescriptions for common ailments such as, say, pinkeye or a sinus infection.

Jon Linkous is CEO of the non-profit American Telemedicine Association. He says the growing trend will increase healthcare access and provide greater convenience.

“Patients who are now customers can look at this application and avoid the long waits that it might take for them to get an appointment at a primary care doctor as well as having to go into a waiting room filled with other sick people,” Linkous says.

Walmart, CVS, and RiteAid are exploring plans to launch their own virtual clinics, but there are also risks. That is according to Andy Haig, director of e-Health at the University of Michigan.

“What's most important that people need to realize is that primary care medicine is a book that is about 20,000 pages wide, and there is a reason for that,” Haig says.

This is a business model, it’s not a quality model," he says. "A few major lawsuits may change things for the better, and I'm hoping that these large companies are smart enough to play the odds and be sure they have good quality and they place limits on their treatment.”

UnitedHealthcare and Anthem are also making plans to roll out telemedicine services by next year.

The virtual doctor will see you now

Thu, 2015-06-11 02:00

Walgreens, the nation’s largest retail pharmacy chain, has announced plans to provide virtual medical exams to patients in 25 states by the end of the year.

The news is part of a larger trend of giving patients less expensive alternatives to a doctor's office visit.

Patients will be able to use the Walgreens mobile app to access doctors who can then write prescriptions for common ailments such as, say, pinkeye or a sinus infection.

Jon Linkous is CEO of the non-profit American Telemedicine Association. He says the growing trend will increase healthcare access and provide greater convenience.

“Patients who are now customers can look at this application and avoid the long waits that it might take for them to get an appointment at a primary care doctor as well as having to go into a waiting room filled with other sick people,” Linkous says.

Walmart, CVS, and RiteAid are exploring plans to launch their own virtual clinics, but there are also risks. That is according to Andy Haig, director of e-Health at the University of Michigan.

“What's most important that people need to realize is that primary care medicine is a book that is about 20,000 pages wide, and there is a reason for that,” Haig says.

This is a business model, it’s not a quality model," he says. "A few major lawsuits may change things for the better, and I'm hoping that these large companies are smart enough to play the odds and be sure they have good quality and they place limits on their treatment.”

UnitedHealthcare and Anthem are also making plans to roll out telemedicine services by next year.

Advocates say insurers are driving away sick customers

Thu, 2015-06-11 02:00

The Department of Health and Human Services is currently in the initial review period for health care plans to be sold on exchanges for the 2016 open enrollment period. They’re making sure plans comply with the complex regulations in the Affordable Care Act, or ACA. But this time around, some groups are objecting to minute details in plans. Advocates and patients say some insurers are designing their benefits to drive away people with preexisting conditions.

One such patient is Sarah Truman, of Portland, Oregon. Truman wakes up every day and sorts through her stockpile of pills. “I take 17 pills a day—on a good day,” she explains.

Truman has psoriasis, the autoimmune disorder that causes flaky and scaly skin. She also has psoriatic arthritis, a related condition that causes painful joint swelling.

Even under her Obamacare plan, she still spends hundreds of dollars each month on co-payments. That's actually an improvement. But one crucial intravenous medication — a type of chemotherapy — costs more than a copay.

“That right now is $15,000 a month, and that’s treated as a co-insurance, not a co-pay,” Truman says.

Since Truman has 20 percent co-insurance rate, she pays 20 percent of the cost: $3,000 a month. Even though she has a well paying job, she still has to go to food banks to afford her kids’ food. Advocates say plans like hers force patients to either pay very high costs or find a different plan, thus undermining the purpose of the affordable care act.

Douglas Jacobs, a masters student in Public health at Harvard University, surveyed how plans priced their drugs

“We found a full one in four plans were practicing what we called 'adverse tiering,'” he says, meaning that the drugs a person needs for a condition are prohibitively expensive under that plan.

“The whole purpose of the Affordable Care Act was to distribute risk in a way that made healthcare affordable to individuals who couldn't get to it before Affordable Care Act was passed,” Jacobs says.

And advocates say the clearest-cut example of adverse tiering was found in Florida by the AIDS Institute.

“There are discrimination protections in the ACA, and they are trying to get around those,” explains Carl Schmid, the AIDS Institute’s vice president of policy.

The AIDS Institute says it's discrimination because some Florida plans put all HIV medications into the highest tier—even generics. Schmid says it’s a tiny nudge to keep expensive groups of people away from those plans. The AIDS Institute objected and sent a letter to the Obama administration.

“The administration has said that this is discrimination,” Schmid says. “Now we need them to enforce the law.”

They also complained to Florida’s insurance regulator, and eventually insurers placed some HIV medications into cheaper tiers. The insurers declined to comment on pending legal matters.

The Department of Health and Human Services is reviewing whether this kind of drug pricing is discrimination on the basis of preexisting conditions. Their ruling should apply by next year’s open enrollment.

Say yes to the Pinterest board

Thu, 2015-06-11 01:59
30 percent

That's the portion of Pinterest boards dedicated that are wedding-themed and set to private. Sometimes, you just want to plan your wedding in secret, and as the Washington Post reports, some of these brides-to-be are only lacking one thing for their perfectly manicured day: an actual groom.

175

That's how many workers have been laid off from J. Crew following a disappointing earnings report. This includes the current head designer, Tom Mora. As CNN Money reports, sales for the company were down 5 percent from this time last year.

8 years

That's how long a new deal between Nike and the NBA will last. As part of the agreement, the Nike swoosh will appear on uniforms, and Nike replaces Adidas as the exclusive provider of clothing for the league. As Time reports, fans and players of were dissatisfied with the style of uniforms provided. Apparently, basketball players don't like sleeves.

5

That's how many subreddits were banned by Reddit for violating its rules on harassment. As Mashable points out, the move is a distinct change in direction for the site, as it has previously let users largely guide the direction of the content. 

$1,000

That's the average savings for customer buying a car from Costco. How does the superstore haggle the deals? By acting as the middleman between manufacturers and buyers, brokering deals on behalf of customers. And since 80 percent of its net revenue comes from member fees, it can afford to focus on lowering prices.

What Big Pharma wants from the big trade deal

Wed, 2015-06-10 13:00

On Wednesday, a few pages from the secret Trans-Pacific Partnership trade agreement were published by Wikileaks and reported on by the New York Times. They seemed to indicate changes that go against the wishes of the pharmaceutical industry, eliminating language that sought to guarantee drug companies “competitive market-derived prices” when they sell overseas. 

But the pharmaceutical industry has been lobbying lawmakers on the TPP since the beginning, and shaping far more than this one section of the agreement, according to Lee Drutman, senior fellow at the New America foundation and author of "The Business of America Is Lobbying."

Jay Taylor, head of international affairs for the Pharmaceutical Research and Manufacturers of America says the industry is seeking, among other things, vital protections of intellectual property. But Judit Rius Sanjuan, head of the Doctors Without Borders' Access Campaign, says these protections could drive up the price of lifesaving drugs in the developing world. 

A California drought loser: pool contractors

Wed, 2015-06-10 13:00

The backyard swimming pool may be an icon of suburban California, but as the state’s drought drags on, it’s a prime target for water conservation. Water utilities are putting in mandatory conservation rules and the swimming pool industry is on the losing end.

The drought is top of mind for many customers that walk into the showroom of Royal Pools in San Jose. “They want to know,” said Royal Pools’ Marc Hannigan. “Our customers who are under contract, whose pools are under way right now, are asking: is there going to be water to fill my pool?”

The concern is real, because almost 30 California cities and water agencies have banned filling new pools with potable water during the drought. Others are considering similar rules, which doesn’t surprise Hannigan. He says pools are an easy target.

“It is very symbolic and it looks good, banning swimming pools,” he said. “Really, swimming pools don’t waste water like people think they do.”

Hannigan is referring to an often-cited analysis by the Santa Margarita Water District comparing the water use in backyard pools to landscaping. A new built-in pool can require 20,000 to 30,000 gallons to fill. After that, it uses much less, just topping off.

“You put a cover on those pools, evaporation is done,” Hannigan said. “Fully half the pools we build here have automatic covers on them.”

A lawn can guzzle 20,000 gallons every year. According to the study, a pool, especially with a cover, can use less than a lawn does over time, but it takes three to five years to reach the break-even point.

Some water utilities say that’s too long to wait, because they’re facing steep cutbacks this year, up to 36 percent of their water use. So the drought rules they’re adopting are designed to send a message.

“The tens of thousands of gallons that it takes to fill a pool may not matter much in aggregate,” said San Jose Mayor Sam Liccardo. “But the reality is that compared to the necessity of the use of water for drinking, for our everyday needs, pools simply aren’t that high a priority.”

Other cities have cited similar concerns, saying in a drought as serious as this one, only essential uses of water should be allowed.

“We’re all in this thing together, and that means we all need to tighten our belts and in some ways, that’s not always comfortable,” Liccardo said.

Hannigan says the pool industry is already feeling pretty uncomfortable.

“What we don’t know is how many people aren’t calling,” he said. “How many people want a pool and are waiting, after four or five years of recession? Now they have the money and wherewithal to put a pool in, and they’re not calling.”

For now, the pool industry is getting creative. In one Bay Area city, Hannigan’s company is planning on filling a new pool by draining an old one and trucking the water over.

A California drought loser: pool contractors

Wed, 2015-06-10 13:00

The backyard swimming pool may be an icon of suburban California, but as the state’s drought drags on, it’s a prime target for water conservation. Water utilities are putting in mandatory conservation rules and the swimming pool industry is on the losing end.

The drought is top of mind for many customers that walk into the showroom of Royal Pools in San Jose. “They want to know,” said Royal Pools’ Marc Hannigan. “Our customers who are under contract, whose pools are under way right now, are asking: is there going to be water to fill my pool?”

The concern is real, because almost 30 California cities and water agencies have banned filling new pools with potable water during the drought. Others are considering similar rules, which doesn’t surprise Hannigan. He says pools are an easy target.

“It is very symbolic and it looks good, banning swimming pools,” he said. “Really, swimming pools don’t waste water like people think they do.”

Hannigan is referring to an often-cited analysis by the Santa Margarita Water District comparing the water use in backyard pools to landscaping. A new built-in pool can require 20,000 to 30,000 gallons to fill. After that, it uses much less, just topping off.

“You put a cover on those pools, evaporation is done,” Hannigan said. “Fully half the pools we build here have automatic covers on them.”

A lawn can guzzle 20,000 gallons every year. According to the study, a pool, especially with a cover, can use less than a lawn does over time, but it takes three to five years to reach the break-even point.

Some water utilities say that’s too long to wait, because they’re facing steep cutbacks this year, up to 36 percent of their water use. So the drought rules they’re adopting are designed to send a message.

“The tens of thousands of gallons that it takes to fill a pool may not matter much in aggregate,” said San Jose Mayor Sam Liccardo. “But the reality is that compared to the necessity of the use of water for drinking, for our everyday needs, pools simply aren’t that high a priority.”

Other cities have cited similar concerns, saying in a drought as serious as this one, only essential uses of water should be allowed.

“We’re all in this thing together, and that means we all need to tighten our belts and in some ways, that’s not always comfortable,” Liccardo said.

Hannigan says the pool industry is already feeling pretty uncomfortable.

“What we don’t know is how many people aren’t calling,” he said. “How many people want a pool and are waiting, after four or five years of recession? Now they have the money and wherewithal to put a pool in, and they’re not calling.”

For now, the pool industry is getting creative. In one Bay Area city, Hannigan’s company is planning on filling a new pool by draining an old one and trucking the water over.

Why bond yields are rising across the world

Wed, 2015-06-10 13:00

Government bond yields have been rising for a couple of months now, but today they hit new highs for the year in the U.S., Japan, Germany and the United Kingdom.

Yields rise when prices fall, and prices fall when investors sell, which a lot of them are doing right now thanks to an improving economy.

"The bond market doesn't like growth. It likes recession much better between the two," says Marilyn Cohen of Envision Capital Management.

Cohen says investors cool to bonds in an improving economy, and that's what is happening now. "Things are looking better in the economy, as far as housing starts, housing sales, durable goods are looking a little bit better, and certainly car sales are looking spectacular," she says.

But there is a dark side to rising bond yields, because it could also be an indication that investors are worried about a lack of liquidity, says Karen Petrou of Federal Financial Analytics.

"We're really looking at the unintended result of well-intentioned crisis reforms," she says.

Those reforms require banks to hold onto more cash. As a result, they are not playing as big a part in buying and selling bonds, which Petrou says is leading to "significant structural changes in the bond market that have the financial system very, very spooked."

But Cohen thinks we are far from crisis mode on that issue, and that while there may be some concern about liquidity, a lot more bonds would have to be sold off at once for there to be a crisis.

For the time being, she says, rising yields will nudge interest rates slightly higher, which should be good for Wall Street and Main Street.

"Most baby boomers that are living on fixed incomes will be very happy that interest rates go up," because that means their monthly retirement incomes will go up, too, Cohen says.

Your favorite see-through Pepsi is returning

Wed, 2015-06-10 13:00


Here's a piece of news before we say goodbye and go kick back and enjoy a nice refreshing beverage. 

It seems possible that one very enthusiastic YouTube campaign could lead to the return of Crystal Pepsi

Remember Crystal Pepsi? From the '90s? It was like Pepsi ... but clear.

Well, this guy on YouTube who goes by LA Beast started a campaign to bring back Crystal Pepsi. 

Because he has 1.2 million subscribers, he got a letter from Pepsi (addressed to "Mr. Beast") suggesting he might be happy with something the company has in store. 

Next stop: grunge rock. (That's a '90s joke, by the way.) 

Just received this from @pepsi on twitter a min agoIt is my duty to share it with all of you. #BringBackCrystalPEPSI pic.twitter.com/hyTbH5spbL

— L.A. Beast (@KevLAbeast) June 8, 2015

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