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13 last-minute gift ideas pulled from holiday movies

Tue, 2014-12-23 11:04

Whether you have a holiday movie buff on your list, or you're on a mission to collect the greatest — or not-so-great — presents from such films, here's a breakdown of the cost of memorabilia that includes "Elf"-inspired lingerie and Turbo Man from "Jingle All the Way."

"A Christmas Carol" (Various releases)
Turkey, approximately $20 
Need a last-minute gift for that person on your list who has everything? Don't be a Scrooge this holiday season. A giant turkey should do the trick. Ebenezer didn't even deliver one to the Cratchits until Christmas morning.

"The Polar Express" (2004)
Sleigh bell, $64.95 gift set or about $20 elsewhere
This "first gift of Christmas" can provide some excellent accompaniment to any and all hot chocolate dance parties.

"A Charlie Brown Christmas" (1965)
Small tree, $6.49 or free
For the eternal optimists in your life. If you're feeling crafty, go outside, grab a pine tree branch and hang a single red bulb on it.

"Elf" (2003)
"For that special someone" lingerie, $29.99
Sure, you could give this to your significant other, but as the movie clearly shows, it may be the best present for your dad.

 "World's Best Cup of Coffee" mug, $12
Actually finding the world's java champion might prove difficult, so at least you can give the gift of letting someone think they're drinking the best. That's what Buddy did in "Elf."

"Jingle All the Way" (1996)
Turbo Man, about $300
An actualTurbo Man toy will set you back a few hundred bucks these days, but if you know anyone who is strangely obsessed with Arnold Schwarzenegger or superheroes that look suspiciously similar to Iron Man, this may be for you.

"The Santa Clause" (1994)
Mystery Date board game, $25.15 
Reproductions of this 1965 game are widely available, so play Santa to your own nostalgic family member.

"How the Grinch Stole Christmas" (1966, 2000)
Dog reindeer antlers,$5.02 to $11.15
Dress up your pooch in something way easier to manage than the big horn from the movie.

"Love Actually" (2003)
Joni Mitchell, "Both Sides Now" CD, $13.69
Anyone expecting a gold necklace from you this Christmas, like Emma Thompson did (heartbreakingly) in the film? Perfect, get them this instead.

"Home Alone" (1990)
Bag of green army men, $7.25
On his shopping trip, Kevin buys Tide detergent, toilet paper, a microwavable Kraft macaroni and cheese dinner, and most importantly, some of these guys. Listen to your inner kid and pick some up, too.

"A Christmas Story" (1983)
When it comes to holiday movies featuring great gifts, "A Christmas Story" offers something for everyone: dads in need of some light, kids who prefer Easter and of course, anyone who can't stand their neighbor's turkey-dinner ruining hounds (see above if in need of a new turkey).
Leg lamp, $34.52 to $249.99

Adult pink bunny suit, $49.99

Red Ryder BB gun, $27

Move over, Snapchat. There's a new app in town.

Tue, 2014-12-23 11:00

In every disaster there is an opportunity, and a market, for someone.

Confide, a smartphone app company, created an app, also called Confide, that makes top-secret business messages self-destruct, like Snapchat images. According to Confide's website, "messages disappear after they're read, ensuring all of your communication remains private, confidential and always off the record."

Confide is trying to capitalize on the Sony hack by pitching its app to big companies, according to the Wall Street Journal. Good timing.

The best part? The company is offering the service to Sony for free.

 

Russia is facing a 'full-blown economic crisis'

Tue, 2014-12-23 08:27

Western sanctions and the dramatic fall in the price of oil have taken a toll on the Russian economy. Russia’s former finance minister, Alexei Kudrin, has warned that the country is facing a "full-blown economic crisis." The BBC’s Moscow correspondent, Steve Rosenberg, tells us how people living in Russia are responding to the turmoil.

How bankers muscled ratings agencies on tobacco bonds

Tue, 2014-12-23 08:20

This story was co-published with Cezary Podkul and ProPublica

When the economy nosedived in 2008, it didn’t take long to find the crucial trigger. Wall Street banks had peddled billions of dollars in toxic securities after packing them with subprime mortgages that were sure to default.

Behind the bankers’ actions, however, stood a less-visible part of the finance industry that also came under fire. The big credit-rating firms – S&P, Moody’s and Fitch – routinely blessed the securities as safe investments. Two U.S. investigations found that raters compromised their independence under pressure from banks and the lure of profits, becoming, as the government’s official inquiry panel put it,  “essential cogs in the wheel of financial destruction.”

Now there is evidence the raters also may have succumbed to pressure from the bankers in another area: The sale of billions of dollars in bonds by states and municipalities looking to quickly cash in on the massive 1998 legal settlement with Big Tobacco.

A review by ProPublica of documents from 22 tobacco bond offerings sold by 15 state and local governments shows that bankers routinely bragged about having their way with the agencies that rated their products. The claims were brazen, the documents show, with bankers saying they routinely played one firm against its competitors to win changes to rating methods, jack up a rating or agree to rate longer-term, riskier bonds.

"Bear Stearns is the ONLY firm in two years to have negotiated new rating criteria pertaining to stress tests and tobacco sector fundamentals,” the now-defunct investment bank stated in a typical 2005 pitch for a deal led by Kym S. Arnone, who today chairs the Municipal Securities Rulemaking Board, the industry’s self-regulator.

“Fitch reached out to UBS for input so that they would fall in line with the other ratings agencies,” UBS said after they and others dropped the firm from deals because of its “constraining” stress tests. Following the conversation, “Fitch amended their stress criteria,” UBS told Michigan as it readied a 2006 deal.

In 2007, JPMorgan promised to negotiate Fitch “to their knees” if Ohio hired the bank for a $5.5 billion deal that was the largest sale, or “securitization” of tobacco settlement payments.

The 140 documents, unearthed through public records requests, show that bankers from six Wall Street firms – UBS, Bear Stearns, Citigroup, Merrill Lynch, JPMorgan and Goldman Sachs – claimed they could  convince the rating agencies to make favorable changes to their criteria.

Garnering better grades for the tobacco bonds meant the bankers could sell more of them, get a leg up on their competition and win millions of dollars in fees from the governments issuing the debt. The state and local governments were trading their annual tobacco payments for up-front cash by making the bond deals. As ProPublica has reported in a series of stories, the bonds have proved much riskier than advertised, leading to fiscal headaches for the issuers and losses for investors.

While there are no indications that the bankers did anything illegal, their claims further undermine the argument by the raters that their opinions are only the result of independent analysis – something the firms will soon be required to attest to in writing under reforms enacted in the wake of the financial crisis.

Since the economy tumbled in 2008, the estimated $36 billion of bonds issued in the tobacco sector – like so many other corners of Wall Street – have proven to be founded on shaky assumptions. In this case, the unraveling was caused by weaker-than-expected cigarette sales, which drive the size of the settlement payments. The outlook is now so bleak that in September Moody’s estimated that 80 percent of the money owed on tobacco bonds it rates won’t repay on time.

The future may be even bleaker for a $3 billion sliver of the debt. Those securities, known as capital appreciation bonds, promised balloon payoffs so large – $64 billion, all told – that they are almost certain to default. The documents show bankers pressed rating agencies to ease criteria for evaluating those bonds as well.

ProPublica shared the tobacco bond documents with S&P, Moody’s and Fitch. All denied changing their methodologies, also known as rating criteria, in response to demands from bankers.

In an interview, Nicolas Weill, who oversees Moody’s rating methodologies for tobacco bonds and similar securities, said, “We don’t negotiate criteria.” Those criteria – such as stress tests that gauge how much cash is available to repay the bonds under various scenarios – are “never, ever’’ open to deal-by-deal changes. He said the firm may evaluate different deal structures but only if they meet those criteria.

In a statement, Fitch said: “With respect to every one of the examples provided to us by ProPublica, we can affirm that no banker or other outside party unduly influenced any of these ratings decisions … We determine our ratings – they are not open to negotiation with issuers and bankers.”

S&P said in a statement: “On the whole, the assertion that S&P’s cash-flow stress assumptions for tobacco settlement bonds were relaxed is false … credit ratings change because factors that affect credit risk change.”

ProPublica shared the documents with each of the banks. All declined to comment except UBS, which said the bankers involved no longer work for the firm, which exited the municipal bond business amid the 2008 market turmoil.

ProPublica also shared the materials with the Securities and Exchange Commission, which regulates rating agencies and has been working to reform the rating process since the abuses in mortgage-backed securities. In August, the agency adopted hundreds of pages of new rules it said will help prevent “conduct and practices that were central to the financial crisis.”

The SEC also has been investigating whether S&P bent its criteria to win ratings of commercial mortgage bonds. The regulator is now seeking to suspend S&P from that part of the business in what would be its toughest action yet against one of the big three raters, Bloomberg News reported this month.

The SEC declined to comment on the documents provided by ProPublica.

The documents give the bankers’ version of what happened, and some degree of exaggeration can be expected in any sales pitch. Nevertheless, former rating analysts, lawyers and regulatory experts who reviewed the documents said the consistency of the bankers’ claims across multiple years, deals and states, compared with known criteria changes and ratings, suggests the banks’ influence was real.

“Banks have a right to advocate for their clients – that’s normal,” said Mayra Rodriguez-Valladares, a financial regulatory consultant who reviewed the documents at ProPublica’s request. “What’s going on here is very different ... this is the banks trying to convince rating analysts to make changes to their methodology, and that’s really crossing the line.”

Crafting the Recipe

Credit rating agencies’ letter grades signal their judgment as to which debts are safe to buy and which ones carry a higher risk of nonpayment, or default – akin to credit scores banks look at before they decide to make home loans.

Depending on the size of the issue, a local government issuing bonds with a “AAA” rating, the highest in the scale run by S&P and Fitch, could wind up paying millions of dollars less in annual interest to bond buyers than an entity selling an issue with a rating below “BBB-," the lowest grade for safe, investment-grade bonds.

Thus, issuers and their bankers have a natural incentive to push the credit-rating agencies to assign favorable ratings. Their leverage is that the raters’ compensation comes from money raised from the debt they rate. S&P, for example, earned $266,000 for rating a March tobacco deal in New Jersey.

Executives of S&P, Fitch and Moody’s, the three biggest firms in the business, have long maintained that their ratings are independent judgments of the creditworthiness of a bond. They have said there is no incentive to succumb to pressure because that would taint the reputation as honest brokers that their business model demands.

But as the SEC acknowledged in its recent rules, the potential conflict of interest faced by rating agencies is “more acute” in the area of structured finance. That term refers to the practice of turning streams of money – like mortgage or credit-card payments – into debt backed by those payments.

That is exactly what happened to money from the 1998 settlement.

For bankers and politicians, it was an irresistible opportunity for structured finance deals. The accord with cigarette manufacturers promised to send more than $200 billion over its first 25 years to state governments to reimburse smoking-related health care costs – and more money beyond. Even before the first payments began flowing in 1999, bankers were asking rating agencies to develop criteria for how they would grade the creditworthiness of the debt, the documents show.

From the beginning, that was going to be part art, part science.

The tobacco settlement payments are linked to inflation as well as cigarette sales, with room for adjustments based on legal disputes. That left a whole host of uncertainties, from the rate of the likely decline in cigarette sales to the potential bankruptcy of tobacco firms.

Starting in 1999, the rating agencies published their basic expectations, along with various so-called stress scenarios, for attaining various letter grades on their credit scales. They made clear that these criteria were subject to change at their discretion.

To protect investors, these criteria are supposed to be a non-negotiable element of the rating process: They are the independent recipe rating agencies use to fairly measure deals brought to them by bankers.

“Rating criteria should not be changed simply to enable securities to achieve the rating level the banker desires," said Thomas McGuire, former executive vice president of Moody’s, who worked at the rating agency from 1977 to 1995.

Going shopping

Beginning in 2002, documents show, the bankers took aim at that recipe. They sought to pack more debt into tobacco deals while preserving the highest possible grades.

“UBS's tobacco securitization team turned the sector on its head in mid-2002 when the rest of the industry was passively accepting ratings criteria, and blindly structuring securitizations to meet the most constrictive criteria of the three rating agencies (the lowest common denominator approach),” UBS bankers boasted to Michigan officials when they were wooing the state’s business in 2006.

“UBS analyzed, challenged and fundamentally changed the underpinning criteria for mainstream ratings," they added in bold italic text.

A 2002 pitch to New York State recounted how the UBS bankers said they did it. After being hired by Rhode Island on a tobacco deal, the bankers said they spent an “intensive 10 days redefining the statistical ranges employed in Moody's tobacco stress tests” using cash-flow projections they’d developed for the deal.

UBS said Moody’s agreed to alter its stress tests, allowing Rhode Island to get more proceeds out of the deal, which Moody’s rated “A1”– the highest rating it assigned in the sector.

“This was the first time that any issuer had been successful in achieving a favorable change in a rating agency's tobacco rating criteria," UBS said in a 2005 deal resume submitted to California. “As a result, Moody's decided to permanently ease its stress tests,” UBS claimed in a later California document.

The Rhode Island transaction was only the beginning. UBS said that over the following years, it “pioneered” the concept of “shopping” ratings to max out the amount of cash it could raise for its clients by pitting rating agencies against each other. Competitors followed its lead, UBS said.

It was all viewed as business as usual: “In the structured finance arena, each rating agency is accustomed to and comfortable with the ‘shopping’ dynamic,” UBS told Virginia in a 2007 pitch.

By 2005, rivals Bear Stearns and Citigroup were making similar claims about their persuasive prowess. Citigroup took credit for negotiating new stress tests with Moody’s, and in one pitch, it provided a “timeline of events” outlining its negotiations – and favorable results – with all three rating agencies.

Not to be outdone, UBS said it helped Moody’s spruce up its criteria in late 2005 after the firm didn’t get hired on a spate of deals: “Though others viewed Moody's as obsolete, UBS brought them back to the sector and worked with them to modernize their criteria.”

Weill, the Moody’s executive, declined to discuss any specific remarks by bankers.

However, an internal Moody’s document, disclosed in one of several lawsuits brought against the firm in the wake of the financial crisis, indicates that something happened in late 2005 that allowed the rater to recapture market share in rating tobacco bonds.

“Moody’s position is this market was regained in late 2005 but could be lost again,” an executive wrote to senior management in a November 2006 discussion of “competitive issues.”

‘Cherry-Picking’

As the market for tobacco debt continued to heat up in 2005, bankers added one particularly toxic security into their sales pitch: a capital appreciation bond, or CAB.

Unlike traditional bonds, CABs do not pay interest to bondholders every year, instead letting it add up into huge amounts at maturity. The CABs were often dated to mature in 40 years or later, so that regular interest-paying tobacco bonds would be paid first. CAB investors were last in line.

Some issuers, such as Puerto Rico, had already maxed out on the amount of interest-paying tobacco bonds they could sell. So the CABs helped keep the tobacco market humming. But CABs were a riskier proposition to investors, since their longer maturities meant forecasts of cigarette sales would have to hold up over many decades for the debt to repay.

To attract buyers, and get better prices, bankers needed the rating agencies to weigh in. But Moody’s didn’t rate CABs. Neither had S&P.

Fitch stepped in to fill the void.

Starting with first CAB sale in 2005, the rating agency got hired again and again to assess CABs.

With Fitch in the game, bankers pushed for more favorable treatment of CABs in areas like the stress tests used to rate the bonds. Changing the tests could allow bankers to squeeze out more money from CAB deals Fitch rated. In pitches they submitted to Michigan on Feb. 17, 2006, Citigroup and Bear Stearns each took credit for lobbying Fitch to ease up on CABs.

Just a few days later, Fitch announced that “with the advent of new bond structures,” it would update its criteria with a stress test that would make it easier for bonds 40 years or longer – the typical maturity for CABs – to get rated.

UBS bankers immediately ran the numbers and decided the change wasn’t favorable enough.

"UBS shared its findings with Fitch within 24 hours of their press release. Fitch confirmed our analysis and worked with our tobacco securitization bankers to devise a new stress test methodology,” UBS told  California in bold letters in a 2006 deal document.

Fitch did not respond to written questions from ProPublica about UBS’s claims.

Days later, in a Feb. 28, 2006, presentation to Michigan, UBS bankers bragged about getting Fitch to agree to what they called a “revision to revision” on its CAB criteria. Thanks to the rater’s more “lenient” rules for CABs, they also recommended that Michigan use Fitch on its deal, which UBS ultimately didn’t win.

By then, one of Fitch’s competitors, S&P, had decided to jump into rating CABs, too.

During the months that followed, bankers continued to press agencies to relax their criteria, pouncing on any advantage they could find. Bear Stearns claimed to have the most success negotiating favorable changes. Led by Arnone, the top banker in the sector, the firm handled enough deals to have leverage in challenging rating agencies’ criteria and picking the ones that agreed to the best terms.

“Cherry-picking” is how Arnone and her team described the ratings process in a January 2007 document submitted to Virginia. Often, the team would get “negotiations” with the agencies started before pitching a deal so they could brief governments on various criteria changes they could expect if they hired Bear Stearns. These were noted on a running list of “major inroads” with the rating agencies.

In one case, Arnone’s team told California officials in November 2006 they were seeking an adjustment to the estimated market share of cigarette manufacturers participating in the settlement. Even a tiny increase in the assumed market share, from the current 94 percent to 94.3 percent, would mean $26 million more in upfront cash to the state – if a committee of S&P rating analysts agreed to the change.

“We are highly confident that this criteria change will be approved by the rating committee," Arnone’s team said in its pitch. Six months later, S&P did publish new criteria for tobacco bonds, establishing the market share for participating firms at 94.3 percent.

Arnone, now a managing director at Barclays Capital, declined to comment or to answer written questions about the documents through a spokesman for the bank.

S&P said in a statement that its May 2007 criteria changes were actually more conservative, since they included “more severe” stress tests for cigarette consumption declines underpinning the bonds.

At the time, however, bankers disagreed. In a June 2007 document dissecting the new criteria, Bear Stearns said that, overall, S&P’s new criteria were more favorable since they allowed them to raise more cash.

Sometimes the bankers took advantage of the apparent absence of a constraint to spark negotiations.

Citigroup noticed that S&P’s new 2007 criteria chose to “remain silent” on the maximum length of the CABs it would rate. With Fitch rating CABs longer than 40 years, Citigroup had been pushing S&P to do the same.  And so, “immediately after the release of the criteria,” Citigroup’s bankers made a case for rating CABs with a 45-year term instead of 40. Goldman Sachs also sought the change.

A few weeks later, Citigroup closed an all-CAB deal in Rhode Island in which S&P for the first time rated CABs with a 45-year maturity. In general, the longer the term of an investment, the more risky it becomes because predictions are less dependable.

Just a few years into their 45-year terms, those risks been realized: The highest-rated CABs in the deal have been downgraded from a relatively safe “BBB” rating to well below investment grade. Earlier this year, Rhode Island sought to bail out the debt.

Citigroup declined to comment.

Biggest Deal of All

In the summer of 2007, Ohio officials decided to come to market with a $5.5 billion bond sale linked to their share of the tobacco settlement. It was to be the biggest such offering yet, and the stage was set for a historic showdown among bankers eager for a piece.

JPMorgan beefed up its tobacco team by hiring two key bankers from UBS. The firm said it now had a “leading tobacco bond resume.”

However, by now the landscape was changing, the bank warned. Storm clouds of the financial crisis were gathering as Congress began to scrutinize the rating agencies for their faulty grades on subprime-mortgage securities.

"What was formerly a very negotiated, fluid ratings process at Moody's is now poised to become clinical and public. Moody's criteria will be published and rigidly adhered to for the first time,” JPMorgan’s bankers lamented to Ohio in their August 2007 pitch.

The rating firms continued to insist that their work wasn’t subject to meddling from bankers.  “We offer reasoned independent forward looking opinions about relative credit risk,” Michael Kanef, an executive in Moody’s structured finance division, testified to a Congressional committee just a few weeks after JPMorgan pitched Ohio.

JPMorgan declined to comment.

Bear Stearns, meanwhile, had been readying the ground by negotiating a list of favorable rating criteria changes that would help Ohio get more cash. Among them, Bear said, were a more optimistic assumption Moody’s had agreed to about what would happen in case a cigarette manufacturer went bankrupt, and more favorable cigarette consumption declines agreed to by Fitch.

Fitch was also reviewing its ratings of the tobacco companies themselves. Bear told Ohio that an upgrade for the industry might help boost the ratings available for the bonds, including CABs, since Fitch links its ratings on the bonds to its assessment of cigarette manufacturers.

A few weeks later, on Aug. 29, 2007, Fitch made the upgrade. By then, Ohio’s bond issue was under way, with Arnone’s Bear Stearns team at the helm alongside Citigroup. Bear Stearns immediately helped Ohio cash in, selling two tranches of CABs that netted the state $319 million but promised to repay $6.6 billion by 2052. Fitch rated the CABs  “BBB+” and “BBB,” ratings that comfortably landed them within the investment-grade categories sought by the state.

The upgrade might well have been the result of Fitch’s independent analysis of the tobacco sector. But bankers at Bear Stearns also took credit.

When pitching another deal in Michigan a few months later, Bear Stearns bragged about “facilitating” Fitch’s upgrade and getting a rating agency “for the first time in the history of the tobacco market” to give CABs a “BBB+” rating. More negotiations were “ongoing,” Bear said.

Fitch disputed such claims in its statement to ProPublica: “Even if the bankers actually believed they had some sort of undue influence over us, that doesn’t make it so – they had no such influence.”

By 2008, the broader markets already were beginning to crumble under the weight of subprime mortgage debt. Bear’s competitors wondered why tobacco bond criteria were being loosened.

“We view the current rating criteria relaxation for tobacco bonds as particularly interesting and unusual given current market conditions, where the rating agencies are ‘under fire’ for rating criteria for structured financings,” bankers for DEPFA First Albany Securities wrote in a competing March 10, 2008, pitch to Michigan.

Four days later, on March 14, 2008, Bear Stearns collapsed and was sold off to rival JPMorgan in a fire sale brokered by the Federal Reserve Bank of New York. The financial crisis precipitated by the banks, with rating agencies’ help, had arrived.

 ‘Sold out’

After 2008, the market for tobacco bonds collapsed with the broader economy. Prices nosedived, too, especially for the long-dated CABs.

Downgrades ensued as cigarette sales slid more than expected. A big federal tax increase on cigarettes, announced in 2009, had dashed those expectations, and soon prompted the rating agencies to retool their criteria, too.

Fitch has downgraded Ohio’s CABs five times since they were issued. They are now considered highly speculative. S&P has also lowered ratings on its CABs to junk territory. Moody’s flirted with rating CABs, according to a Goldman Sachs pitch, but in the end didn’t.

S&P told ProPublica that its ratings on tobacco bonds reflected its own views of cigarette consumption and, as those views changed in 2009, CABs got downgraded to speculative levels. Fitch said its downgrades were prompted by lower-than-expected cigarette sales after 2006, though about half of its portfolio of rated tobacco bonds remains within investment-grade ratings.

The implosion of mortgage-backed securities graded favorably by rating agencies prior to the financial crisis triggered lawsuits, including one in 2009 by Ohio’s then-Attorney General Richard Cordray. As Ohio treasurer in 2007, he had overseen the state’s tobacco bond sale. While the state had been issuing tobacco bonds with questionable ratings, its pension funds had been investing in mortgage debt securities whose ratings also turned out to be inflated.  He sued the three big rating firms in November 2009 over $457 million of losses caused by what he called “false and misleading” ratings.

“The credit rating agencies sold out, and they sold us out," Cordray was quoted in news reports at the time. "They traded in their objectivity, and in exchange received massive profits." The lawsuit was tossed out in 2011 by a federal judge.

Congress addressed rating agencies in its 2010 Dodd-Frank financial system reform law. The Permanent Senate Subcommittee on Investigations and the Financial Crisis Inquiry Commission each concluded that the raters contributed to the 2008 disaster. In August, the SEC adopted rules requiring the firms to set up better internal controls so that business managers do not interfere with the analytical work.

More stringent policing of conflicts of interest is also required, as well as the opportunity to give everyone a chance to comment when the firms propose changes to rating criteria.

An SEC official said the rules would help avoid a repeat of the behavior that led to the financial crisis. But others who reviewed the rules and the documents collected by ProPublica demurred.

 “One of the things that the documents illustrate is that it’s not just the rating agencies alone making bad decisions,’’ said Frank Partnoy, professor of law and finance at the University of San Diego and a former Wall Street trader.  “It’s the banks manipulating the rating agencies into making bad decisions.”

 

Quiz: How colleges break your heart

Tue, 2014-12-23 04:24

At least two private universities sent acceptance emails to rejected students in 2014.

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It's beginning to look a lot like ... a strong GDP report

Tue, 2014-12-23 03:00
5 percent

On Tuesday, the Commerce Department revised its estimate of gross domestic product to 5 percent, up from the 3.9 percent reported last month. As reported by the New York Times, this is the fastest growth rate for the U.S. economy since 2003.

$30 million

Sponsoring a bowl game for college football can be expensive – some estimate it costs companies as much as $30 million. It could be a big reason why there has been a recent shake-up in bowl game sponsorships.

10 hours

The Internet went down Monday for 10 hours (some reports say nine) in North Korea, leading some to speculate that the outage was the proportionate response to the Sony hacks promised by President Barack Obama.

$16,000

WSJ reports that last week, police in Chongqing, China, raided a training session for Uber drivers. Officials say they will crack down on such car-hailing services, fining drivers as much as 100,000 yuan, or $16,000.

$5,000

If you're looking for holiday gifts for that special Scientologist in your life, Quartz has a link to a Christmas catalogue featuring L. Ron-approved holiday merchandise. Maybe you're interested in a $5,000 e-meter as a stocking stuffer?

PODCAST: It's expensive to pay for college...football

Tue, 2014-12-23 03:00

First up, we talk the biggest economic growth for the U.S. in 11 years. And college football’s new playoff system is shaking up the game off the field too. Some of the big companies sponsoring bowl games defected to another game or dropped their support altogether. We look at why there's been such a large shake up. Plus, many industries have gotten the Silicon Valley treatment (i.e. disruption), so why not Wall Street? More of our conversation with IEX CEO and President Brad Katsuyama on bringing innovation to financial services. 

It's beginning to look a lot like...a strong GDP report

Tue, 2014-12-23 03:00
5 percent

On Tuesday, the Commerce Department revised its estimate of GDP to 5 percent, up from the 3.9 percent reported last month. As reported by the New York Times, this makes for the fastest growth rate for the U.S. economy since 2003.

$30 million

Sponsoring a bowl game for college football can be expensive—Some estimate it costs companies as much as $30 million. It could be a big reason why there has been a recent shake up of sponsorship of bowl games.

10 hours

The internet went down for 10 hours (some reports say 9) in North Korea on Monday, leading some to speculate that the outage was the proportionate response to the Sony hacks promised by President Barack Obama.

$16,000

WSJ reports that last week, police in Congqing, China raided a training session for Uber drivers. Officials say they will fine drivers using car-hailing services as much as 100,000 yuan, or $16,000.

$5,000

If you're looking for holiday gifts for that special Scientologist in your life, Quartz has a link to a Christmas catalogue featuring L. Ron-approved holiday merchandise. Maybe you're interested in a $5,000 e-meter as a stocking stuffer?

Will Venezuela default? Investors think so

Tue, 2014-12-23 02:00

Venezuela’s dealing with a double whammy as far as oil prices are concerned. Oil, whose price has halved in the past year, accounts for 95 percent of the country’s exports and 45 percent of the government’s budget. Oil is the primary source for the U.S. dollars needed to sustain the country’s severe import dependence and external debt. Traders put the odds of default within the next five years at 91 percent. 

The college bowl game sponsor shuffle

Tue, 2014-12-23 02:00

College football's new playoff system is shaking up the game off the field too. Some of the big companies sponsoring bowl games defected to another game or dropped their sponsorship altogether. So what's behind the shuffle? 

Click the media player above to hear more. 

Brad Katsuyama talks disrupting Wall Street

Tue, 2014-12-23 02:00

Wall Street has many a fancy computer, with computer science whizzes to match. But some wonder why it has yet to get the full Silicon Valley treatment (i.e. "disruption"). Where is the "Amazon" of financial services?

Brad Katsuyama, President and CEO of IEX, certainly thinks it's time for a shake up. Marketplace Morning Report host David Brancaccio spoke with Katsuyama about why he thinks innovation could help right market wrongs.

Click the media player above to hear more.

 

 

Odds 'high' that Sony will air 'The Interview' in some form

Mon, 2014-12-22 14:00

Adriene Hill sat down with Wesley Morris, a film critic for the pop culture blog Grantland, to talk about the state of the film industry this holiday season.

Morris says he has plenty of choices at the movie theater this winter, but he's not interested in any of them.

"I've been calling it 'Dumpcember' ... you've got maybe 30 movies just dropped into the end of the year to qualify for awards," Morris says.

And then there's the Sony hack problem. Theaters won't profit from "The Interview" any time soon, but will Sony?

"Odds seem very high that video on demand or some streaming platform will be the primary way to see this movie," Morris says.

Attention, discount shoppers: The psychology of sales

Mon, 2014-12-22 13:42

We are in the final throes of the holiday shopping season and by this time you have been bombarded with discount offers and sales: 20 percent off, 50 percent off, buy one get one free, no money down, etc., etc.

So how do sales work, psychologically speaking?

“Imagine that a new car is $30,000 discounted to $20,000,” says behavioral economist Dan Ariely. “So you say to yourself, ‘Oh my goodness this is really worth $30,000, [but] right now it’s $20,000.’ It gives you an extra sense of value."

And because sales are temporary they create a sense of urgency says Ariely. “It’s a short time thing and you better take advantage of this.”

But do sales actually get people to spend more? Or are they used to lure shoppers in, so that store gets its slice of a zero-sum pie?

“This is not just specifically for the holidays, but we’ve been finding over time that more than half of all shoppers are saying they want to spend no more than they had in the past,” says Amy Koo, a retail analyst with Kantar. “That puts a pretty firm ceiling on what they are willing to spend.” 

Sales are also a good way to get people in the door ... but what’s really important is that they come back again after the sale is over.

“While people may be spending the same, they are actually concentrating their spending on fewer stores, which make a big difference in terms of making sure you as a retailer try to secure the loyalty of the shopper,” Koo says.

Stores do that by offering programs that give deeper discounts to loyal customers.

There’s also the low-price guarantee. Walmart for example, has the Savings Catcher program. Shoppers scan their receipt, and if they find the same product cheaper at a competitor, Walmart issues a gift card for the difference, ensuring a return visit.

At an intersection in downtown Glendale, California, I met Lejaun Smith waiting to cross the street. He had a shopping bag in his hand, and I asked him if he’d been lured into the store by a sale, and if so, did that sale get him to spend more. “Yes, on both answers,” he said.

“Yes, spend more money and yes, get me through that door. And it works every time.”

The psychology of discounts and sales

Mon, 2014-12-22 13:42

We are in the final days of the holiday shopping season and by this time you have been bombarded with offers and specials and sales: 20 percent off, 50 percent off, buy one get one free, no money down, etc., etc.

So how do sales work, psychologically speaking?

“Imagine that a new car is $30,000 discounted to $20,000,” says behavioral economist Dan Ariely. “So you say to yourself, ‘oh my goodness this is really worth $30,000, [but] right now it’s $20,000.’ It gives you an extra sense of value."

And because sales are temporary they create a sense of urgency says Ariely. “It’s a short time thing and you better take advantage of this.”

But do sales actually get people to spend more? Or are they used to lure shoppers in, so that store gets its slice of a zero-sum pie?

“This is not just specifically for the holidays, but we’ve been finding over time that more than half of all shoppers are saying they want to spend no more than they had in the past,” says Amy Koo, a retail analyst with Kantar. “That puts a pretty firm ceiling on what they are willing to spend.” 

Sales are also a good way to get people in the door ... but what’s really important is that they come back again after the sale is over.

“While people may be spending the same, they are actually concentrating their spending on fewer stores which make a big difference in terms of making sure you as a retailer try to secure the loyalty of the shopper,” Koo says.

Stores do that by offering programs that give deeper discounts to loyal customers.

There’s also the low price guarantee. Walmart for example, has the Savings Catcher program. Shoppers scan their receipt and if they find the same product cheaper at a competitor, Walmart issues a gift card for the difference, ensuring a return visit by that customer.

At an intersection in downtown Glendale, California, I met Lejaun Smith waiting to cross the street. He had a shopping bag in his hand and I asked him if he’d been lured into the store by a sale, and if so, did that sale get him to spend more. “Yes, on both answers,” he said.

“Yes, spend more money and yes, get me through that door. And it works every time.”

Why won't OPEC cut production ?

Mon, 2014-12-22 13:00

Despite falling crude oil prices, key members of OPEC reiterated over the weekend that they intend to keep drilling and pumping.

Yesterday, the oil minister for Saudi Arabia, OPEC’s biggest and most influential member, indicated the cartel would never cut production. Analyst Bhushan Bahree at IHS Energy points out that the cartel’s last supply cut in 2008 backfired when competitors ate into its market. OPEC does not want a rerun.

Persistent low prices could benefit the cartel long term: They could cultivate a new generation of car drivers who drive more and alleviate concerns in the oil patch that global demand for oil may soon peak. Political concerns are also in play: OPEC's supply-king, Saudi Arabia, could see low prices bankrupting its key nemesis, Iran. If Tehran runs out of money to support Syria’s regime, as well as its own nuclear ambitions, Valerie Marcel of the Chatham House think tank says that would go down as a victory in Saudi Arabia.

Why aren't more urinals installed in homes?

Mon, 2014-12-22 11:31

Nowadays, urinals – a somewhat primitive bathroom fixture – come in all different shapes and sizes. You can even get one coated in 24-karat gold leaf. And for the latest installment in our series “I’ve Always Wondered," we head to the men’s room to tackle one listener’s question.

It comes from Mike Dolan, who is in the military, but first and foremost, he’s a guy. “So my I’ve always wondered, why do you never see a urinal in a private home? I have a friend, my college buddy, who has four boys. That’s five males in a house, and they’re constantly flushing toilets and wasting all that water. And it’s like why don’t you just get a urinal?” Dolan asks.

Turns out they’re out there.

Marci Jones, manager of the showroom at GLS Plumbing Supply in Birmingham, Alabama, has sold a few on occasion. “It would be for the man-cave in the basement where the man’s going to be all the time, and this is something he’s always wanted in his home," Jones says, "and the wife says, 'OK, we’ll do it downstairs.'”

They remain uncommon fixtures in the home because “most women do not want urinals in their master bath,” Jones says.

Jones had some customers in the showroom, Terry and Eddie Higginbotham, that she used to make her point. With couples, the discussion about whether to put a urinal in the house usually goes something like this:

 “Would you like a urinal in your bathroom?” Jones asks Eddie. “Yes,” he says. “I’ve always thought about having one in my bathroom, because it does use less water. And it’s like a jet, it’s like, 'KUSHH!'" 

Jones asks, “What does the wife say?” On cue, Terry replies, “No.”

Homes with urinals are hard to find. I asked around and started getting odd tips, which brought me to the house of Al Troncalli. Grace Troncalli, Al's sister, inherited the house when Al passed away. 

“Look at this bathroom,” she says, “Is this the most gorgeous thing you’ve ever seen?” There is a urinal in here. And let’s just say Grace and a man she once dated appreciated it.

Even though they haven’t caught on in homes, urinals in some form have been around for centuries. The French even made them sound elegant. “The first 'pissoirs' as they were called, which were actually just barrels, were instituted under Napoleon III in the 1840s. This was part of his attempt to sort of clean up Paris,” says Andrew Howe, chairman of the history department at La Sierra University in Riverside, California.

Fast forward about 25 years to the United States, right after the Civil War. Howe says there was a huge population explosion, and workers took to the factories. Dumping urine by hand into rivers and behind bushes was impractical and gross. So in 1866 Andrew Rankin patented today’s urinal, which connected to a sewage system.

 “A lot of these factories and business owners put in bathrooms. And the urinal was much more space-saving than a sit-down toilet,” Howe says. “Much of the workforce was male, [so] urinals made a lot of sense.”

But wives were often making the decisions about the home, and why would they choose to have a urinal? Since it can’t replace a toilet, it was a luxury item ... one that many women still don’t like.

Back to our listener, Mike Dolan, and his buddy with four boys. Michele Marsden in Berryville, Virginia, is the mother of those four boys and says there’s no way she’d install a urinal in the house. “I think it’s ugly,” she says. “I think it’s absolutely ugly, yes.”

And she had a question for Mike Dolan. “I asked Mike if he’s ever cleaned toilets or if he’s ever cleaned a urinal,” she says.

The answer was no.

That brings us to the big question: Does a urinal save money? John Koeller, an engineer who studies the water efficiency of toilets and other fixtures, says a urinal won't save you much "in terms of the dollars on your water bill." While urinals use less water – as little as a pint per flush compared to a modern toilet that uses somewhere around 1.3 gallons per flush – a urinal would save you less than $40 a year.

Your best bet, according to Koeller:  “Get a dual flush toilet.”

It saves money, it saves water. And guys, it’ll save you grief from the women in your life.

Man behind 'world's largest instrument'

Mon, 2014-12-22 11:00

For the past 25 years, Peter Richard Conte has gone to work every day in the women’s casual department at the Center City Macy’s in Philadelphia. But he doesn't sell designer denim or stocking sweaters. He tickles the keys of what is billed as the largest instrument in the world: the Wanamaker organ.

Considered a national treasure, the organ is 110 years old and named for John Wanamaker, the department store magnate who bought it for his flagship Philadelphia store. He had it shipped from St. Louis in 11 freight cars. The organ now has 30,000 pipes and thousands of keys, buttons, levers and pedals. To play it well, Conte must be equal parts musician and athlete. 

“It’s a difficult instrument to play,” Conte says. “There are so many things going on. It’s multitasking at the nth degree. Literally for a five-minute piece of music I will spend up to 20 hours preparing it on an instrument.”

As the Grand Court Organist, Conte performs twice a day, Monday through Friday during most of the year. But during the holidays, the frequency increases as does the spectacle.

“At Christmas time we get thousands and thousands of people into Macy’s to hear this instrument,” Conte says. “And it actually accompanies the world famous light show. Thousands and thousands of LED lights and it ends up with this incredible finale when all the lights in the trees come on and the organ plays a really wonderful arrangement of O’ Tannenbaum. It’s a thrill because you get to have these huge audiences every couple of hours in the store. I just love what I do.” 

Organist who brings 'world's largest instrument' to life

Mon, 2014-12-22 11:00

For the past 25 years, Peter Richard Conte has gone to work every day in the women’s casual department at the Center City Macy’s in Philadelphia. But he doesn't sell designer denim or stocking sweaters. He tickles the keys of what is billed as the largest instrument in the world: the Wanamaker organ.

Considered a national treasure, the organ is 110 years old and named for John Wanamaker, the department store magnate who bought it for his flagship Philadelphia store. He had it shipped from St. Louis in 11 freight cars. The organ now has 30,000 pipes and thousands of keys, buttons, levers and pedals. To play it well, Conte must be equal parts musician and athlete. 

“It’s a difficult instrument to play,” Conte says. “There are so many things going on. It’s multitasking at the nth degree. Literally for a five-minute piece of music I will spend up to 20 hours preparing it on an instrument.”

As the Grand Court Organist, Conte performs twice a day, Monday through Friday during most of the year. But during the holidays, the frequency increases as does the spectacle.

“At Christmas time we get thousands and thousands of people into Macy’s to hear this instrument,” Conte says. “And it actually accompanies the world famous light show. Thousands and thousands of LED lights and it ends up with this incredible finale when all the lights in the trees come on and the organ plays a really wonderful arrangement of O’ Tannenbaum. It’s a thrill because you get to have these huge audiences every couple of hours in the store. I just love what I do.” 

Pope Francis is not feeling the holiday cheer

Mon, 2014-12-22 11:00

Pope Francis gave his annual Christmas address to the priests, bishops and cardinals that run the Roman Catholic Church. And it wasn't all warm and fuzzy.

The pope chastised them for workplace ills that include office gossip, jealousy and pandering to the bosses, according to the New York Times.

It's reassuring to know these things happen pretty much everywhere.

FedEx and UPS do better this year, but Amazon lurks

Mon, 2014-12-22 11:00

UPS and FedEx have spent a lot of money getting up to speed for this holiday season. And they’ve done well. But long term, they may need to do a lot better because Amazon is disrupting  the shipping business. The big carriers will have to think differently if they want to continue to compete, particularly if Amazon decides to get into the shipping game itself.

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