National News

If the DOW is closed for a holiday and no one is around to trade, does it still make a sound?

Marketplace - American Public Media - Mon, 2014-01-20 11:43

It happens all the time, U.S. stock markets close for uniquely American holidays like Martin Luther King, Jr. Day and President's Day, Hong Kong’s stock exchange closes for the Buddha’s Birthday and the Lunar New Year. 

It’s mostly not a big deal, but there are subtle (and sometimes not so subtle) changes during these events that show just how connected our global financial system is. 

LESS VIBRANT, LESS VOLATILE

“Often, holiday markets are less vibrant than days when major market centers are not closed,” says Andy Brooks, a Vice President at T. Rowe Price. Institutional investors will try to avoid global transactions, because “it’s kind of hard to effect a transaction when most people aren’t there.”

In fact, markets are measurably less volatile, according to University of Houston finance professor Craig Pirrong.  That’s because people trade on information, and they get information from trading. Less of one means less of the other, and in a global economy, information has no boundaries. 

 MARKETS LISTEN TO EACH OTHER. WHEN ONE IS QUIET, THERE’S LESS TO TALK ABOUT.

“The trading process itself generates information about the value of stocks,” says Pirrong. For example, people watch one another to see how they react – almost like a poker game.  Who’s buying? Why did that mutual fund just dump a bunch of shares? “So, to the extent that there’s less information being generated by the trading process in the U.S., that means there’s less information in these other markets.”

BUT WHEN EVERYONE’S BACK TO THE PARTY, THERE’S ALWAYS GOSSIP TO CATCH UP ON

The next day when a market opens, everyone has to catch up on what news that did occur.  “When the markets open, they have to incorporate all this news into stock prices very quickly,” says John Elder, professor of finance at Colorado State. As a result, once “we see higher average volatility.”

Elder says you can see this even after a weekend,  “On Mondays for example, markets tend to be more volatile than on Wednesdays.”

BUT LET’S NOT OVERBLOW THIS

Heather Brilliant is head of equity and corporate research for Morningstar, where she takes the long view.  “A planned market closure is generally not a big deal.” 

Still, once in a while, weird things can happen, a stock might move dramatically in Hong Kong while its price is frozen in the U.S., or you can get very one-sided market reactions to a given piece of news. “Let’s say a company reported earnings today in Europe and investors didn’t like the earnings, and many people wanted to get out. Well, perhaps if the U.S. market had been open,” says Brilliant, “there would be enough countervailing people interested in buying that stock.”  But the U.S. market isn’t open, and in Europe everyone is very pessimistic about this company and overwhelmingly dumps the stock.  “Therefore, the price could go down more than it would otherwise.” 

But again, this tends to get corrected once all markets are open again.   

AND A WORD OF WARNING FOR INVESTORS

All in all, when one market is out of the game, the others are a little duller and sometimes a little bit weirder, and it’s usually temporary, which leaves T. Rowe Price’s Andy Brooks with a word to the wise: “Investors should be wary to take any market moves made during holiday markets as having incredible significance, because you will often see a recalibration when everyone gets back to work.”

A Promise Unfulfilled: 1962 MLK Speech Recording Is Discovered

NPR News - Mon, 2014-01-20 11:39

Last fall, curators and interns at the New York State Museum were digging through their audio archives in an effort to digitize their collection. They unearthed a treasure: a reel-to-reel tape of Dr. Martin Luther King Jr.'s speech commemorating the centennial of the preliminary Emancipation Proclamation.

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Open for business on Martin Luther King Jr. Day

Marketplace - American Public Media - Mon, 2014-01-20 11:24

U.S. financial markets are closed for Martin Luther King, Jr. Day, as are federal government offices, schools and banks. The holiday was established in 1986 and was adopted by all the states thereafter, though in some cases not without controversy.

Despite the holiday, around most cities today, most retail businesses aren't actually closed. “We would of course like more businesses and more people to recognize and commemorate the birthday of Dr. Martin Luther King,” says Dedrick Muhammad, director of economic programs at the NAACP.

A survey of HR managers released by Bloomberg BNA last week found that 35 percent of U.S. employers (private, government, and nonprofit) plan to provide a paid day off for the holiday. That percentage has been creeping up very slowly in the past decade and is now on-par with President’s Day. It's higher than Columbus Day (16 percent) and Veteran’s Day (22 percent), but lower than the Friday after Thanksgiving (73 percent) and Christmas Eve (42 percent full-day, another 12 percent half-day), which are not federal holidays.

Muhammad says the significance of the day can’t be captured only by how many employers provide a day off and close their doors, “I think it is fair to ask: does it always require that people just shut down their businesses? Or are there activities at businesses that actually could help highlight the memory and the legacy of Dr. Martin Luther King?”

In fact, roughly one in 10 employers support some type of commemoration, educational program, workplace or community service project to mark the day. Sarah Willie-LeBreton, sociologist at Swarthmore College, says that’s a good start. “I do think that many people see it as a day off or a day to go shopping,” says Willie-LeBreton, “and that’s something we need to work on as a culture.”

Plus, she points out, hanging up a ‘Closed’ sign isn’t always possible.

“Small businesses are in a more challenged situation because they often have a smaller profit margin,” says Willie-LeBreton. “But there are ways in which you can designate a portion of your profits to go to organizations that are advancing social equality, or engage clients in discussions.”

William Spriggs at Howard University serves as chief economist for the ACLU and he thinks the emphasis on service may distract attention from Dr. King’s focus before he was assassinated on issues of poverty and economic justice.

“A lot of people feel compelled to do an act of service,” says Spriggs. “Dr. King was calling for something far more revolutionary than painting schools or cleaning parks. He wanted to fight for things like raising the minimum wage and a guaranteed income.”

Spriggs says Dr. King was controversial in life, and it’s good there’s a holiday now to keep his controversial ideas front and center.

Rosetta Space Probe Gets Interplanetary Wake-Up Call

NPR News - Mon, 2014-01-20 11:20

The European comet-chaser has been in hibernation for nearly three years in an effort to conserve power. It is due for an August rendezvous with 67P/Churyumov-Gerasimenko.

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Looking for a job? How new tech is helping companies find potential employees

Marketplace - American Public Media - Mon, 2014-01-20 11:19

Technology is making all kinds of choices for us these days, like how Netflix and Pandora can use big data to tell us which movies and music we might like. Now, it’s changing the way job seekers and employers connect.  Case in point: 21-year-old Isaiah Bien Amie, a Boston College senior who’s on track to graduate this spring with a major economics. 

He wants to get an MBA, but first he needs a job, so Bien Amie signed on with AfterCollege.com. The free website sends college students and recent grads curated alerts with job and internship postings based on where and what they study. 

It also allows employers to contact students directly. Bien Amie signed up a month ago and says he’s already had two interviews. 

“I think they are capable of getting a sense of who I am as a person and tailoring my search to make sure that the jobs that they are posting are intriguing to me,” Bien Amie says.

The matchmaker at AfterCollege is a bunch of math; the website started in 1999 as a searchable job board and it’s kept track of who applied for what. Last year, the company fed all that data through an algorithm and started recommending jobs.

“You have basically a reduced likelihood that you’re going to end up in a job you don’t like, or that you’re going to become a worker that the employer doesn’t like,” says CEO Roberto Angulo.

AfterCollege is one of a growing number of companies that are developing high-tech tools for the job market. As the economy recovers millions of people still need jobs, and hiring methods are outdated, according to Rosemary Haefner, Vice President of Human Relations at CareerBuilder.com. “You send in a piece of paper, whether it’s through a job board and it’s electronic or hard copy, and it’s, ‘here’s my life story, please recruiter read it.’”  She compares the interview process to going on a few dates, then getting married.  “What these products that are coming into the marketplace are really saying, is that there are so many more important parts to figuring if it’s a match.”

A new company called Knack makes video games employers can use to analyze job applicants’ personalities and talents. In one game dubbed “Wasabi Waiter” you play a server in a busy sushi bar who has to multitask to keep customers happy.

“From that they can infer all sorts of characteristics about you like your perseverance and your creativity, even your extroversion,” says Erik Brynjolfsson, a Knack adviser and Director of MIT’s Center for Digital Business.  “Those are things that don’t show up on your resume or your college transcript.”

Brynjolfsson says using big data to connect more companies with the right talent could have trillions of dollars in economic value. “Doing matchmaking for people’s careers and for the efficiency of companies and ultimately for the whole economy, that’s big money, and that’s something that’s going to hopefully lead to more fulfilling careers for a lot of people.”

He compares the way technology is opening up how companies work to what the microscope did for the study of biology. In the future, the future he believes more hiring decisions will be based on hard data, instead of software and gut reactions.

Looking for a job? How new tech is helping

Marketplace - American Public Media - Mon, 2014-01-20 11:19

Technology is making all kinds of choices for us these days, like how Netflix and Pandora can use big data to tell us which movies and music we might like. Now, it’s changing the way job seekers and employers connect.  Case in point: 21-year-old Isaiah Bien Amie, a Boston College senior who’s on track to graduate this spring with a major economics. 

He wants to get an MBA, but first he needs a job, so Bien Amie signed on with AfterCollege.com. The free website sends college students and recent grads curated alerts with job and internship postings based on where and what they study. 

It also allows employers to contact students directly. Bien Amie signed up a month ago and says he’s already had two interviews. 

“I think they are capable of getting a sense of who I am as a person and tailoring my search to make sure that the jobs that they are posting are intriguing to me,” Bien Amie says.

The matchmaker at AfterCollege is a bunch of math; the website started in 1999 as a searchable job board and it’s kept track of who applied for what. Last year, the company fed all that data through an algorithm and started recommending jobs.

“You have basically a reduced likelihood that you’re going to end up in a job you don’t like, or that you’re going to become a worker that the employer doesn’t like,” says CEO Roberto Angulo.

AfterCollege is one of a growing number of companies that are developing high-tech tools for the job market. As the economy recovers millions of people still need jobs, and hiring methods are outdated, according to Rosemary Haefner, Vice President of Human Relations at CareerBuilder.com. “You send in a piece of paper, whether it’s through a job board and it’s electronic or hard copy, and it’s, ‘here’s my life story, please recruiter read it.’”  She compares the interview process to going on a few dates, then getting married.  “What these products that are coming into the marketplace are really saying, is that there are so many more important parts to figuring if it’s a match.”

A new company called Knack makes video games employers can use to analyze job applicants’ personalities and talents. In one game dubbed “Wasabi Waiter” you play a server in a busy sushi bar who has to multitask to keep customers happy.

“From that they can infer all sorts of characteristics about you like your perseverance and your creativity, even your extroversion,” says Erik Brynjolfsson, a Knack adviser and Director of MIT’s Center for Digital Business.  “Those are things that don’t show up on your resume or your college transcript.”

Brynjolfsson says using big data to connect more companies with the right talent could have trillions of dollars in economic value. “Doing matchmaking for people’s careers and for the efficiency of companies and ultimately for the whole economy, that’s big money, and that’s something that’s going to hopefully lead to more fulfilling careers for a lot of people.”

He compares the way technology is opening up how companies work to what the microscope did for the study of biology. In the future, the future he believes more hiring decisions will be based on hard data, instead of software and gut reactions.

N.J. Lt. Gov. Denies Strong-Arming Mayor Over Sandy Relief Funds

NPR News - Mon, 2014-01-20 09:54

Lt. Gov. Kim Guadagno calls the accusation by Hoboken Mayor Dawn Zimmer "false" and "illogical." The latest flap comes as Gov. Chris Christie's administration is embroiled in a scandal over the politically motivated closure of bridge lanes.

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PODCAST: Iran curbs nuclear program

Marketplace - American Public Media - Mon, 2014-01-20 08:12

The news from the Tehran and the United Nations today is that Iran has stopped its most sensitive uranium enrichment work. It's part of a deal with world powers to ease worry about the country's nuclear program. It also clears the way for a partial lifting of sanctions. 

Martin Luther King, Jr., advocated for both civil rights and the economic betterment of those at the bottom of the income ladder. And while the civil rights movement has delivered upward mobility for many African-Americans, it hasn't had much impact on the persistently high level of African-American unemployment.

The government job has lost some of its luster. There have been pay freezes, hiring freezes, and on top of that, there was the shutdown just a few months ago. 

U.S., EU Lift Some Iran Sanctions After Assurances On Uranium

NPR News - Mon, 2014-01-20 08:11

Inspectors from the International Atomic Energy Agency report that Tehran has halted the highest level of uranium enrichment, a key part of the sanctions deal reached earlier this month.

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'Meet the Beatles,' 50 years later

Marketplace - American Public Media - Mon, 2014-01-20 08:04

Fifty years ago today, Capitol Records released the Beatles' first album, "Meet the Beatles." In the current era of integrated marketing plans for the launch of a new album, movie, or online enterprise, you might think the release of the first big-label Beatles album in the U.S. would have been the fruit of months of planning with the full force of Capitol Records behind it. But that wasn’t exactly the case. Beatles historian Kenneth Womack, an English professor at Penn State, tells the story to Marketplace Morning Report host David Brancaccio. Click the audio player above to listen.

Why are American credit card companies using outdated technology?

Marketplace - American Public Media - Mon, 2014-01-20 07:12

Target and Nieman Marcus customers are among the tens of millions whose credit cards have been compromised in recent hacks. The news is sparking a lot of questions about American credit card security. That brings us to the next part of our series on Wall Street technology. Today we're looking at why American banks and retailers are still using the same old magnetic strip cards, instead of more secure chip and pin cards commonly used abroad. Chester Wisniewski, from the digital security firm Sophos, discusses the story with Marketplace Tech guest host Mark Garrison. Click the audio player above to listen.

Syrian Opposition Threatens To Sit Out Peace Talks

NPR News - Mon, 2014-01-20 07:07

The main group opposing the Assad regime has issued an ultimatum demanding that a U.N. invitation to Iran to participate in the discussions be revoked.

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Iran says it's curbing uranium enrichment

Marketplace - American Public Media - Mon, 2014-01-20 06:18

The news from the Tehran and the United Nations today is that Iran has stopped its most sensitive uranium enrichment work. It's part of a deal with world powers to ease worry about the country's nuclear program. It also clears the way for a partial lifting of sanctions. To hear more about this story from the BBC's Matthew Price, click the audio player above.

American Held In North Korea Asks U.S. To Secure His Release

NPR News - Mon, 2014-01-20 06:12

The 45-year-old missionary who was convicted and sentenced on charges of subversion appeared before a select group of journalists from Western agencies to make his plea.

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China GDP lowest since 1999

Marketplace - American Public Media - Mon, 2014-01-20 06:05

China reported its lowest Gross Domestic Product in 14 years. In 2013, China's economy only grew by 7.7 percent, lower that economists were expecting. But Shaun Rein, managing director of the China Market Research Group, says that this slowdown may be useful.

"The underlying reasons are healthy," Rein says. "The country can no longer rely on heavy investment and exports for growth, so the government is trying to push more consumption. And in 2013, 13.6 percent retail sale growth came in and showed that shift is starting to happen."

To listen to the interview, click the audio player above.

Desperate patients smuggle prescription drugs from Mexico

Marketplace - American Public Media - Mon, 2014-01-20 05:27

In borderland Texas, a widespread lack of health insurance goes along with poverty, and high rates of diseases like diabetes, obesity, high blood pressure.

Cheaper prescription drugs to treat these conditions are available across the border in Mexico. But physicians and law enforcement are tracking a relatively new trend -- the smuggling of medicine in bulk from Mexico to U.S. patients who no longer feel safe shopping for them over the border.

Pharmacist Jorge Sandoval says people who buy his medicines these days often buy for people they don’t even know.

"There's a trade in legal prescription medication," he says. "The trade is generated by people (in both countries) who want to buy medicine at a lower price. People are bringing in ice chests to fill with medicines that they sell to friends and relatives.”

About 33 percent of Texans have no medical insurance, the highest percentage of uninsured in the nation.

That’s one reason why, for years, people have crossed the border for cheaper medicine. The diabetes medicine Metformin is $35 a month here in the U.S., only $15 in Mexico. The blood thinner Coumadin is $60 a month here, $15 in Mexico.

But what’s new is a cottage industry of smugglers buying medicines in bulk to bring back to the U.S.

At emergency rooms on the border, physicians like Juan Nieto of Presidio, Texas say patients are at risk. He says they’re increasingly showing up with medications that don’t look right.

"These are medications that sometimes can’t identify. They appear to be black market, homemade," he says.

Nieto said patients are unapologetic about how they get medicine from Mexico, even if they don’t buy it themselves.

“Some of them say they have them bring it over for them, others say they just buy them here," Nieto says.

"Medications have made the scene in flea markets," he explains. "It’s a good avenue for people to be inconspicuous in obtaining their medicines, without seeming like they’re dealing with a drug dealer."

Branwyn Maxwell-Watts, a small business owner in West Texas, is hardly a dealer. She's a married mother of four, and engaged in her tight-knit rural community. But she crosses the border to buy medicine for friends and herself.

“Mainly diabetes, a ton of high blood pressure medicine. For me it’s migraine medicine, "she says. “It’s something that I was providing that they needed. I didn’t think about the consequences, I still don’t, because I still do it.”

A recent report by the British medical journal The Lancet says Maxwell’s case isn’t rare.

“There’s a lot of people, and even people that I know who’ve gone down there in the past, that won’t go down there now," Maxwell says. "Not even for their medicine. So they’re always asking, ‘Do you know anyone who is going that can pick this up for me?’.”

Medical professionals are sometimes asked the same question.

“I had a patient who had blood pressure, high cholesterol, congestive heart failure and diabetes," recalls physician’s assistant Don Culbertson, who has a license to prescribe prescription medicine.

Culbertson is talking about a patient who said he couldn’t afford to buy the medicine in the United States.

So he went to Mexico himself.  Then Culbertson showed up at U.S. Customs, knowing it’s illegal to bring back medicine for anyone but yourself.

“The Customs officer asked me if I had anything to declare," he told Marketplace.

"And I declared, medications. And he asked me if they were from me for someone else. And I told him they were for someone else," Culbertson said.

"The Customs officer was a compassionate, reasonable person. And I know they have a job to do and laws to uphold. But they let me through that one time."

Back in Mexico, pharmacist Sandoval says  "It’s being done in kilograms the same way it’s done with illegal drugs."

Sandoval is a passive participant in this trade. Nothing he does is illegal. He can't sell to anyone without a prescription. The days of walking into Mexican pharmacies and leaving with controlled drugs like the pain medication OxyContin are long gone.

But he acknowledges that obtaining prescriptions inside Mexico is easy.

In one raid alone last summer, authorities in Texas, seized 25,000 bottles of prescription medicine like antibiotics at a flea market across from Reynosa, Tamaulipas.

Nine  people were charged with membership in a prescription drug organization that allegedly earned $5,000 a day. 

How Food Hubs Are Helping New Farmers Break Into Local Food

NPR News - Mon, 2014-01-20 05:01

The U.S. Department of Agriculture says the infrastructure for local food is lacking but growing fast. "Food hubs respond to that call," one official says.

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‘Am I crazy?' Deciding to work for the government

Marketplace - American Public Media - Mon, 2014-01-20 04:56

The government job has lost some of its luster. There have been pay freezes, hiring freezes, and on top of that, there was the shutdown just a few months ago. 

Norm Ornstein, a scholar at the American Enterprise Institute, recalls giving a speech to a group of Presidential Management Fellows -- young men and women who he says are among the government’s best and brightest.

“And when we got to the Q&A, it was all about: ‘Am I crazy?’ ‘What am I doing here?’ ‘Can I count on this as a reasonable and productive career?’” Ornstein recalls.

Questions like that aren’t unreasonable on the heels of a government shutdown. Ann Porter, a law student at George Washington University, notes federal salaries had been frozen.

“I’m not applying for a government job because they don’t pay as well as private sector positions do,” she says.

And according to her classmate, Austen Walsh, a lot is up in the air.

“It’s certainly not a sure shot whether you are going to get hired, or whether you are going to get a raise or be able to advance if you are hired, which is scary,” he says.

Maggie New deals with that anxiety directly every day. She is the associate director of career services at GW’s Elliott School of International Affairs. You can see the State Department from her office window, but it has gotten harder and harder for students to land jobs there.

“You have to have two people leave or retire or resign for one person to be hired,” New says.

As the head of career services at the Harvard Kennedy School, Mary Beaulieu has heard about that partial hiring freeze too. “When you get a sequester situation or a shutdown situation, where people’s budgets are cut, what it means is they can’t do any hiring,” Beaulieu explains.

Kennedy School students want to make a difference, she says.

“And certainly, when the government is shut down or opportunities are more limited because budgets are cut in a sequester situation, it’s frustrating for them.”

Beaulieu says she finds herself telling students this: You can tackle big problems in the public sector, but also in the private sector and at nonprofits.

Another ratings agency. Woohoo?

Marketplace - American Public Media - Mon, 2014-01-20 04:41

Count the big three U.S. credit rating agencies among those companies that could have been, but weren't hurt by the financial crisis.

Moody's, S&P, and Fitch were all accused of giving inflated ratings to mortgage investments that helped trigger the financial crisis. Yet the Big Three still control nearly 97 percent of the industry. But competition may be coming.

Five international credit ratings agencies from around the world have opened Arc Ratings. Arc's strategy is to focus on mid-size companies in emerging markets like in Africa and India. 

"We believe we know better than the local conditions to judge about the conditions of the risk," ARC chief executive Jose Esteves says. He adds that the big agencies cater to the world's largest corporations and banks.

But William Cohan, author of the book, "Money and Power: How Goldman Sachs Came to Rule the World,says breaking into the business is a long shot.

"While Arc has a chance and there is a real need to dislodge these three guys, it's frankly like trying to dislodge OPEC out of the oil market," he says. 

Cohan says he doesn't expect much of a shakeup in the $5 billion U.S. credit rating business unless the federal government demands it. And Cohan says that's a long-shot too.

Low Hopes, High Stakes For Syria Peace Conference In Geneva

NPR News - Mon, 2014-01-20 04:31

The conference, set for Wednesday, will bring together a delegation representing President Bashar Assad and the Western-backed, exiled political opposition. A lot of diplomatic capital has been spent to make this happen, but it's unclear whether there will be a meaningful outcome.

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