The S&P 500 went up 29 percent in the year gone by. The Nasdaq Composite rose nearly 40 percent. But this has prompted an argument that stock prices in 2013 were like cotton candy, lots of size, but not a lot of substance. Marketplace's Economics guy Chris Farrell has been considering this.
The argument comes down to the idea that the gains of 2013 reflected more of the Fed's quantitative easing rather than any real economic improvement, and that prices are bound to come tumbling back down sooner or later. But does the claim that the stock markets' gains have no substance, hold up?
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Never paid for local TV news? Well, that may be changing. Cincinnati’s WCPO-TV is going to offer local investigative stories behind a paywall. It’s added 30 digital staffers.
“What they’re saying is, don’t think of us as TV, think of us as your best local digital news source,” says Ken Doctor, a media consultant.
The way WCPO-TV sees it, it’s go digital and dominate -- or die. Adam Symson, who is chief digital officer for the station's owner, E.W. Scripps, says Cincinnati’s many TV and radio stations won’t all survive. Symson is hoping a beefed up web presence will ensure market dominance.
“This is not just an investment in growing a digital audience,” he says. “This is an investment in the brand, WCPO, the television ratings and the digital audience.”
The question is, will people pay for something they’re used to getting for free? Other TV stations are watching WCPO’s web experiment closely, to find out.
Today is the second day of the new year and if you haven't started with major life changes you are already a day behind schedule. You might be hoping to get some help from apps. Whitson Gordon, editor in chief of Lifehacker, joins us to offer some advice.
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All this week we've been talking to people about their predictions for tech in 2014. Today we hear from Dave McClure, founding partner at the Venture Capitol firm 500 Startups. McClure traveled all over the world last year. We asked him what kind of software everyone everyone will be using this year. He says expect more growth in messaging apps around the world. Also, don't be surprised if online and mobile video sees a big boost in parts of the world where television is restricted.
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New York gets a new mayor this week -- Michael Bloomberg is being replaced by Bill De Blasio. And one of the things the new mayor will be looking at is the taxi of tomorrow: A fleet of green Nissan vehicles that launched this fall, fitted with some custom technology absent in the usual yellow cab. Former mayor Bloomberg pushed hard for the new cars, but their future is uncertain. Nonetheless we hopped into one recently for a ride from Manhattan to the boro of Brooklyn, accompanied by Ted Mann, who covers transportation for the Wall Street Journal's greater New York section, to help detail some of the new cab's features.
Foreclosures are way down from the worst of the housing crisis. But as we start this new year, don’t be surprised if some places see a rise in foreclosure sales. That’s because foreclosures that have been slowly working their way through judicial pipelines are now coming to market. That may prove a rude awakening in some areas.
In almost half of states, foreclosures have to go through court. The idea is to do everything possible to protect homeowners, but these judicial foreclosures can take a long time, sometimes take years.
Tom O’Grady is CEO of Pro Teck Valuation Services, which analyzes housing data. He says foreclosure is quicker in non-judicial states.
“It’s kindof like ripping the bandaid off, instead of pulling off slowly,” O’Grady says.
He’s found that non-judicial states have bounced back from the low point of their housing crises faster than judicial states.
Non-judicial states worked through their foreclosure pain – and inventories -- up front, says Dave Stevens. He’s head of the Mortgage Bankers Association.
“The home values were depressed much quicker, much faster, but now they’re in significant recovery,” says Stevens, who points to the double digit appreciation in places like Phoenix, Arizona.
“That’s gonna be very different in states like New York, New Jersey, and Florida where they have now the backlogs that are just hitting the market,” he says.
Foreclosures tend to sell for about 30% less than non-distressed sales, Stevens says. When there are lots of foreclosures in the market, they pull down the value of the homes around them. That means some communities won’t get to share in the housing recovery just yet.
It’s the first trading of the New Year at Shenyin Wanguo stock brokerage house in Shanghai. A gray haired man everyone calls ‘Old Chen’ watches stock prices along the floor-to-ceiling trading board. On the Shanghai stock exchange, red numbers -a symbol of communism- are good. Green numbers mean share prices are falling. "Look at the board!" screams Chen. "It’s the first day of the year and it’s all green! This is a casino - A communist party casino! We can’t possibly win against them. I gotta stop coming here," he mutters, still staring at the board.
This is not the response from investors China’s government was hoping for when they reopened the market to new listings. Securities analyst Qian Qimin says China will have to do a lot more to restore investor confidence. "The rate of return investing in stocks in China is lower than the bank deposit rate," says Qian. "Insider trading also continues to be a big problem."
Back on the trading floor, trader Jin Demin says investing in stocks in China is hopeless in a country where the markets are controlled by the state. Jin says when US stocks go up, China’s drop. When US stocks drop, China’s drop further.
Today, Greece takes over the presidency of the European Union, at a time when 27 percent of Greeks are out of work. The country's not winning the award for the most popular member of the EU anytime soon.
For the next six months, Greece will organize meetings, conferences and set policy priorities. Greek politicians say they want the EU to focus on the economy and jobs.
Mark Lowen, the BBC's Athens correspondent, tells us what to expect.
This final note comes by way of Businessweek:
The FBI says criminals have found a new way to use stolen credit cards. They scale the roof of a store and wrap aluminum foil around antennas. Stores use antennas to communicate with credit card companies. That foil blocks the transmission, which means stores can't verify whether a card is legit or stolen.
Businesses figure the connection's down temporarily, which happens every once in a while, and approve the transaction.
By the time a business finds out what the card was stolen, the criminals are long gone with the merchandise they bought and the stores ... are on the hook.
How's this for an unlikely pairing: Jimi Hendrix and George Frederick Handel. In the late 1960's, Hendrix rented a small attic apartment in Central London, which happened to be right next door to where Handel lived more than 200 years earlier.
The London odd couple of Handel and Hendrix will finally live together -- in the same museum.
For years, David Weliver, editor of Money Under 30, made financial New Year's resolutions, but they never stuck. “I made the wrong resolution, to be honest,” says Weliver. “I resolved to budget.”
At the time, Weliver was more than $80,000 in debt. The problem with resolving to budget was the same problem people run in to when they resolve to lose weight, he says. “If you just say, ‘I’m going to exercise more, I want to lose weight,’ you’re bound to not succeed, because those are very vague ideas.” Weliver was able to get rid of his debt by picking resolutions that were very specific and very achievable, such as putting aside $50 a week.
If you want to get your finances in order, specifically, what’s the first thing you should do?
“Aim for zero consumer debt. That includes credit card and auto loans,” says Jill Schlesinger, an analyst at CBS News who has more than a decade of financial planning experience.
After that, says Schlesinger, take care of the basics: Make an emergency fund to last at least 6 months and bump up your retirement contribution as much as you can. “Live beneath your means.”
That’s the major piece of advice David Jones, President of the Association of Independent Consumer Counseling Agencies, has for the resolutionarily inclined. He says that can often be achieved by making small changes to your daily routine. “We see people every day that are having trouble making ends meet,” says Jones. “Yet, they are going to Starbucks twice a day, they are buying lunches out when they could be brown bagging it.”
A lot of us are suffering because the country went through a financial rough patch, so it seems only fair that Uncle Sam should have to make a financial resolution.
“Have a regulatory regime that will prevent us from going through another financial crisis,” is what Schlesinger recommends. She says the most important thing the U.S. can do in 2014 is make sure 2007 never happens again.
“It’s very important when you have a year like we’ve just had to not gloat, but to look ahead and say, well, what could go wrong and let’s address that.”
If 2013 was a good financial year for you, says Schlesinger, max out your retirement contributions, make an emergency fund that could last you a year ... and then go out to a really nice dinner.
You can always start your diet in February.
Capers and heists are alive and well in the Internet age.
Just last year, a hacker stole more than 4,000 Bitcoins from the cloud. You may remember thieves stole $50 million worth of diamonds in Belgium, by driving onto the tarmac at the airport in Brussels and intercepting a shipment.
Tim Fernholz, reporter for Quartz, dutifully chronicled the biggest capers and heists of 2013.
Tim’s favorite heist of 2013? $26,000 worth of Pappy Van Winkle artisinal whiskey. “[That theft] hits near and dear to my heart, as a lover of bourbon,” Fernholz says. “This was Pappy Van Winkle’s 20-year-old aged bourbon, which of late in the United States, as had this very big resurgence in popularity. $900 dollars a bottle on the secondary market.” Fernholz added he doesn't think it'll be recovered anytime soon.
Check out the rest of his list over at Quartz
Home prices are rising in the Sun Belt and most big cities. Everybody talks about rising housing prices as a good thing, but it’s not so great for people trying to buy a house.
Part of the reason housing prices have taken off? Investors. Some from other countries, some from Wall Street. They've snapped up homes at bargain prices, then rented them out. Investor interest sparked bidding wars in housing markets, which Anthony Sanders saw first-hand when he bid on a house in the Virginia suburbs of Washington several years ago.
“I just happened to have one Chinese investor literally arrive at the house at the same time I did," he says. "And we almost had a foot race to the door. Fortunately, I’m faster.”
Sanders knows a thing or two about the housing market. He teaches real-estate finance at George Mason University, and says the bidding wars are producing bubbles in the hottest housing markets, like Los Angeles, San Diego and Charlotte.
“That’s where the bubbles are forming," he says. "They’re old bubble cities, that are re-bubbling.”
Sanders’s fast footwork got him the house, by the way.
Economist Svenja Gudell, the director of economic research at Zillow, watches housing bubbles carefully. Because lenders stopped making shaky loans, and the bubbles are confined to the most expensive cities, Gudell doesn't expect another housing crash.
Plus, more houses are on the market. Fewer people are underwater – owing more than their houses are worth -- so they’re selling. “You have more banks selling their foreclosures and you have more people freed from being underwater," she says. "So supply will increase.”
Gudell says as housing supply increases, prices will cool, and expects home values to rise 3 to 5 percent in 2014, as opposed to 2013's 7 percent.
Patrick Newport, a housing economist with IHS, agrees that prices won’t go up as much this year. His prediction? "A [housing] slowdown in 2015, and then going forward, prices growing maybe one or two percent above the rate of inflation.”
That's about the normal rate of growth, according to Newport. Low enough to banish housing bubbles — and housing bidding wars.