National / International News
Airing on Thursday, April 16, 2015: There's word today that Japan has overtaken China as the number one foreign holder of US treasuries. I'm speaking of Japanese pension funds, the Japanese government and other Japanese investors. We consult Adolfo Laurenti, chief international economist at Mesirow Financial in Chicago on the shift to US debt. Plus, the world's largest car maker by volume, Toyota, is saying it plans to invest $1.4 billion to build two new factories in Mexico and China. The announcement marks an end to three-year freeze on expansions that Toyota imposed on itself. More on that. Electronic payments-through companies like PayPal-are supposed to make it easier and safer to buy things online. But we found that it doesn't always translate when you're trying to make a purchase across borders.
It's been more than a year since Malaysia Airlines Flight MH 370 was lost with 239 people on board. Officials now say they'll double the already huge search area to 46,000 square miles next month.
Yale University’s School of Medicine is deciding whether to create an online version of its physician’s assistant master’s program. Its first attempt failed because it couldn't get accreditation. Yale says it’s “reviewing the matter” and may try again.
Yale’s partner in all this is the education technology company 2U, which has plenty of other customers, many of them Ivy League schools.
“There’s a lot of demand for us right now,” says Chip Paucek, CEO of 2U. He says universities want to enroll students online to address shortages of workers in some fields. But online degrees also bring in more tuition dollars.
“A university needs to figure out how to pay its bills and be sustainable," he says. "Just like any enterprise.”
But some degrees lend themselves more to online learning than others.
“So learning statistics or data science online, certainly learning some of the computer sense, skills and knowledge,” says Andrew Kelly, education scholar at the American Enterprise Institute.
Kelly says degrees that require hands-on training, like physician’s assistant’s programs, are more difficult, because universities have to find hospitals where online students can train.
Ahead of its IPO, Etsy priced its shares at $16, with an estimated value of $1.78 billion. But Thursday saw those numbers explode, with shares opening at $31, which placed the company value at $3.4 billion.
The 10-year-old marketplace for vintage and handmade goods, is a ‘B Corp,’ or ‘benefit corporation’ - i.e it’s certified as a company that benefits the community. It's notable because very few (Etsy is only the second) for-profit companies with B Corp certification go public.
“If it can do good for the community, for the consumer, for the vendors, it satisfies the B Corp requirement and gives them a good rating,” said Santosh Rao, head of research at Manhattan Venture Partners.
The other reason, Rao added, is strategic: “They need to keep the vendors happy. 80 percent of their business is repeat customers and loyalty is important for the company.”
Etsy’s vendors, however, are mostly small businesses that, on average, don’t make much more than the U.S. median income. That means they aren’t nearly as wealthy as those who typically invest in the stock market.
It’s always risky to buy stock in any company, Rao said, but “nothing wrong in having them come in and especially this one where they are committed to the community.”
Although Etsy hasn’t been profitable recently, the IPO is likely to help, according to Rao. It would help them raise the money to grow bigger and expand beyond the U.S.
But the bigger Etsy gets, the higher the chances of its business becoming more commercial. That could be a problem since many, including Rao, believe its loyal customer base is the result of its stated mission to promote the opposite: artisanal goods and small, community-based businesses.
“It was designed originally for that,” said Rao. “It wasn’t meant to be a big, high-scale commercial operation and that’s where they made the market.”
Etsy could keep the commercialism at bay, said Rao, because it was a ‘B Corp.’
“They don’t have to necessarily look at the bottom line every quarter,” he said. “In the end they have to show a path to profitability to show they they are a good business but there’s no near-term, absolute imperative to show a profit.”
But even Rao believes there’s a strong likelihood of it being bought over by a bigger company. “I’ll give 60 percent odds that they will be acquired,” he said.
Coal-mining companies Peabody Energy and Murray Energy have sued to block the Environmental Protection Agency from finalizing its Clean Power Plan, the Obama administration’s broadest plan to reduce carbon-dioxide emissions from power plants. Today lawyers present oral arguments in the federal Court of Appeals for the District of Columbia.
In general, the law favors the EPA, according to Harvard law professor Jody Freeman, a former attorney for the Obama White House who wrote the book on climate change and U.S. law, published by the American Bar Association.
If the court allows the case to move forward, "I would be very surprised," she says. "Now, of course, look: Courts sometimes do unusual things."
A decision against the EPA— even if reversed later— would mean delay, which could be costly to President Obama, who has a tight timeline.
"He wants to get this done by the time he leaves office," Freeman says. Otherwise, a Republican president might easily undo it in 2017.
"So, this is for all the marbles," Freeman says. "This is a very high-stakes case that is playing out in the courts and will keep playing out in the courts."
The plaintiffs have trouble, win or lose. According to a new analysis from Bloomberg New Energy Finance, this will be a record year for the closing of coal-fired power plants.
"That is driven by multiple factors," Bloomberg analyst Ethan Zindler says. "In the short-run, it’s really not being driven by the Clean Power Plan."
There have been other regulations, plus competition from cheap natural gas, and the inefficiency of many plants, some of them 50 years old.
One of the plaintiffs, Peabody Energy, was removed from the S&P 500 stock index in September 2014.
The world’s largest carmaker by volume, Toyota, says it plans to invest $1.4 billion to build two new factories in Mexico and China.
The announcement marks an end to a three-year, self-imposed expansion freeze. The new plant in Guanajuato, Mexico, will turn out 200,000 compact Corollas per year by 2019. The plant in Guangzhou, China plans to start production in 2017 with a capacity to make around 100,000 cars a year.
The free-trade agreements between Mexico, the U.S., and Europe, coupled with Toyota’s new super-efficient global architecture has the potential to set a new competitive threshold for the car industry.