It's natural to want to get the most bang for your buck when you buy a house. So perhaps you're tempted -- rather than seeking out an established, solidly middle-class community -- to purchase a home in a neighborhood that (you hope) is up-and-coming.
Maybe you've spotted a cute neighborhood with older houses that are slowly being remodeled. A few cafes have opened, and some offices are moving into the area. You've notice a new coffee shop and co-working space. And, tellingly, a look at the recent sales data shows you that home prices have climbed 10 percent year-over-year for that ZIP code. "Great," you think. "This is a clearly an emerging neighborhood. I'll buy here."
Not so fast! Before you sign on the dotted line, you need to seriously weigh the pros and cons against your personal values, goals and preferences to decide what's best for you.
Paula Pant ditched her 9-to-5 job in 2008. She's traveled to 30 countries, owns six rental units and runs a business from her laptop. Her blog, Afford Anything, is a gathering spot for rebels who refuse to say, "I can't afford it." Visit Afford Anything to learn how to shatter limits and live life on your own terms.
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When asked what the world's most precious commodity is, most people would rattle off guesses from a list of the usual suspects -- things like gold, platinum, oil or diamonds. However, there is a commodity more precious than any of those, one that has the potential to rise in value dramatically over the next decade, and one that you can easily invest in.
If you want to know what it is, just watch any episode of a survival reality show. Whether it's "Man vs. Wild," "Survivorman" or even "Naked and Afraid," the first thing the TV survivalists do after assessing their situation is to look for this precious commodity -- clean, drinkable water.
We need water to live. The average person can last up to six weeks without food, but according to Dr. Claude Piantadosi, a professor of medicine and pathology at Duke University, the longest you could expect to survive without water is about 100 hours. And of course, water also is needed to grow the produce and raise the livestock we eat. It cools our cars and industrial machines. It keeps us clean and is essential for processing our waste. Essentially, without enough water, society as we know it ceases to exist.
Though almost 71 percent of the Earth is covered with water, 97.5 percent of it is salt water, and two-thirds of the fresh water is locked up in polar ice, leaving less than 1 percent of all the water in the world useful for society's needs. Fundamentally, that limited supply is the reason water prices could float much higher in the future.
Californians have seen the cost of their water go up dramatically due to increased demand and a long drought. The state's Department of Food and Agriculture estimates that if the current shortage isn't addressed, it will cost California as much as $2.2 billion in lost crop and livestock revenue in 2014 alone, as well as 17,000 seasonal and part-time jobs.
Investing Down Under or Via ETFs
The idea of water as a speculative investment recently got a boost from the launch of Waterfind, an Australian futures exchange for trading in water. Since the exchange went live in late March, more than 16.5 billion liters of water have changed hands through its online marketplace. Though that's a drop in the bucket in terms of global water reserves, it is still an important symbolic step in the commoditization of water as an investment vehicle.
But you don't have to live in Australia or learn about futures to add water investments to your portfolio. Some American exchange-traded funds offer exposure to companies and entities whose success rises and falls with the price of water.
PowerShares Water Resources Portfolio (PHO) is the biggest and most popular of these ETFs. Consisting of mostly small and mid-cap companies that produce products to conserve and purify water for business and industry, it includes well-known names such as American Water Works (AWK), Flowserve (FLS) and Toro (TTC).
PowerShares Global Water Resources Portfolio (PIO) is similar to PHO except that, per its name, it has a more global focus. Though American companies make up the largest allocation, the United Kingdom, France, Brazil and Japan are also well-represented.
S&P Global Water Index ETF (CGW) includes domestic and international companies and is half water utilities and half water equipment and materials companies.
First Trust ISE Water Index Fund (FIW) holds a global portfolio of companies that earn their revenue from the potable and wastewater industry, 90 percent based in the U.S.
Brian Lund's blogoffers more on personal finance, the stock market, investing and the secret to eternal life.
Americans, it turns out, are pretty good at predicting their chances of becoming unemployed over the next year, and they tend to spend accordingly. That's according to research by Michael D. Hurd and Susann Rohwedder, researchers at RAND Corp., who analyzed data from over 2,500 households from the RAND American Life Panel. Hurd and Rohwedder found that spending in certain categories, including eating out, clothing and entertainment, tends to decline much more than overall spending in response to fears over unemployment.
At the same time, Hurd and Rohwedder found that people's fixed costs, including rent, utilities and car payments, remain relatively stable amid fears of unemployment. Those expenses are, after all, difficult to adjust quickly, even in the event of an actual layoff. When people felt less secure in their jobs, though, they reduced spending on clothing by about 14 percent, dining out and other forms of entertainment by 11 percent and personal care, which includes things such as haircuts or pedicures, by 12 percent.
The data, which was collected at regular intervals between the fall of 2008 and April 2013, showed that even at the beginning of the Great Recession, spending had already started to fall, before the spike in unemployment that would come later, simply because people's expectations about the future had changed. During periods of actual unemployment, Hurd and Rohwedder previously found that people cut back their spending in these categories even more, with a drop of 61 percent on clothing and apparel spending and 49 percent on dining out after two months of unemployment. Overall spending declined just 11 percent after two months of unemployment.
People with a high expectation of unemployment did increase spending in one area, though: public transportation. "It's cheaper to use public transportation than to use your own car, so it's a way of reducing expenses in a relatively painless way," Hurd says. Even if you still have a car, you can pay less for gas and upkeep by using it less.
"If somebody perceives from their work situation that there is a high probability they will become unemployed, they will cut back [on spending] rather than wait until it actually happens," Hurd explains. That finding in itself in a revelation, since researchers previously doubted that people could make such accurate predictions about the future of their employment.
Taking that kind of preventive action to cushion the blow of a potential future layoff is exactly what they should be doing, Hurd says. "It's much easier to reduce spending a little bit over a long period of time than to reduce spending by a lot over a short period," Hurd says. You might hardly notice cutting back on food spending by 5 percent over a year or longer, but suddenly cutting back by 30 percent would be more difficult.
Hurd says he was surprised to find that almost three in four households said they reduced their spending because of the financial crisis. "Since Americans are known for overspending, that sounds very frugal," he says. It's possible that the economic uncertainty motivated that shift, he adds.
Behavioral Finance
One problem with that natural reaction, though, is that when Americans spend less, it can exacerbate the problems of a struggling economy. "It's very clear that in our surveys, people who had no economic shock themselves but were fearful of getting laid off reduce spending. Maybe they have some undefined fears, so the natural response is to draw back, and that is partially responsible for the continued decline in the macro economy," Hurd says. Expectations, he adds, aren't very well understood but are extremely important at both the macro and individual levels.
While Americans might not be able to do much on their own to buoy the overall economy, they can protect their finances by cutting back on their spending in small amounts even before they fear losing their jobs to avoid having to do so suddenly in response to a loss in income. "It would be better for people to spend less early on and to save," says Hurd, adding that people should first assess their own financial situation to determine how much of a buffer they need to have tucked away.
Hurd also recommends spending time thinking about the probabilities of various events occurring, from getting a raise to paying for college to a child. Planning financially for both good and bad events can help avoid unpleasant shocks, he says.
It's also possible to go too far in the other direction, Hurd warns. "Saving is not free -- you can save too much because you're overly pessimistic, and that could be costly also," he says.
Josh Reynolds/APNews Corp. CEO Rupert MurdochBy RYAN NAKASHIMA
LOS ANGELES -- Even though Rupert Murdoch's $76 billion bid for rival media-giant Time Warner (TWX) has been rejected, that doesn't mean how you watch TV shows and movies will stop changing any time soon.
The cash-and-stock bid by Murdoch's Twenty-First Century Fox (FOXA) was partly meant to counter consolidation among TV distributors, including Comcast (CMCSA) and Time Warner Cable (TWC) and AT&T (T) and DirecTV (DTV).
The more must-have channels such as HBO and Fox News Channel are assembled under one company, the stronger that company's bargaining position in demanding licensing fees from the TV distributors, no matter how big they get.
Time Warner also owns TV channels CNN, TNT and TBS, along with the Warner Bros. movie studio, which includes Batman, Superman and Harry Potter. Fox owns the 20th Century Fox movie studio, the Fox broadcast network and such TV channels as Fox News and FX.
Much of the value is in the television channels because of the ever-increasing fees they are able to command from cable and satellite TV providers. Disputes over such fees have led to temporary blackouts of popular channels from various systems.
The Comcast-Time Warner Cable and AT&T-DirecTV deals are both undergoing regulatory review. In disclosing the rejected bid Wednesday, Time Warner and Fox indicated that their talks were over, but analysts don't expect Murdoch to give up. The offer was worth about $86.30 a share based on Tuesday's closing price.
If talks resume and a takeover succeeds, analysts see some possible consumer benefits.
TV Everywhere Could Get a Push
A combination could accelerate the industry's "TV Everywhere" push, in which traditional media companies make their channels available over the Internet as part of a TV subscription. It's the pay TV industry's answer to the rise of streaming services such as Netflix (NFLX), YouTube and Amazon.com (AMZN).
The hang-up in making those channels available online has partly been licensing deals with content producers. A unified company with an even larger suite of channels from TBS to FX could make such deals standard industrywide. Apps modeled after Time Warner's successful HBO Go could also be applied to more networks.
"A player with more scale would be able to work on that and make digital content offering more user-friendly to the consumer," Nomura analyst Anthony DiClemente said.
Movie Studios Could Shorten Theater Exclusivity
With a North American box office market share of around 30 percent, a combined Warner Bros.-20th Century Fox movie studio could push movie theater companies to shorten the time between when a movie hits theaters and when it's available for sale or rental through digital outlets like iTunes.
A shortened window helps studios spend less money on marketing because they wouldn't have to advertise each time a movie becomes available on a different platform. Theater companies have pushed back, as earlier digital release times could cut into ticket sales.
"They would have a lot of ability to experiment with new release patterns for movies," FBR Capital Markets analyst Barton Crockett said.
ESPN Could Get a Challenger
While there's no guarantee that the cost of sports rights would come down, a merger would reduce the number of bidders for such rights and allow a combined company to spread acquired content over more channels. For example, after Comcast bought NBCUniversal, it rebranded Comcast's Versus channel as NBC Sports Network and used it to carry figure skating and hockey during the Winter Olympics in Sochi.
Fox could bolster its sports channel, Fox Sports One, by combining efforts with Time Warner's TNT to recapture the rights to broadcast NBA basketball games when they expire in 2016. TNT currently shares those rights with Walt Disney's (DIS) ESPN and ABC.
TNT also has rights to college basketball and professional golf, adding to Fox's Major League Baseball and NASCAR racing.
"A combined portfolio of sports could better challenge ESPN," DiClemente wrote in a research note.
But There Are Possible Downsides
To blunt the rise of streaming services such as Netflix and Amazon Instant Video, a combined company would have more power to withhold content or demand steeper licensing fees. That, in turn, could force streaming services to raise subscription prices.
And further consolidation puts more media voices under the control of one entity. That's why Fox, which operates the lucrative Fox News Channel, is willing to sell Time Warner's CNN, according to one person familiar with the matter. That person spoke on condition of anonymity because that deal point wasn't officially made public.
It's unclear how regulators would view so many pay TV channels being owned by the same company.
And It's Not Over Yet
DiClemente and Janney analyst Tony Wible both believe that with interest rates low and with Fox having a healthy balance sheet, Fox could raise its bid above $100 per share by borrowing more money.
It also could set off interest by other bidders for Time Warner, which in turn could set off other mergers among content companies that don't want to be left out.
"It's a chain reaction," Wible said. "There will be more consolidation on the content side."
Crockett agreed. "I think what this is, is 'Game on.' "
-AP Business Writers Mae Anderson in New York and Tom Murphy in Indianapolis contributed to this report.
WASHINGTON -- Foreclosure activity in the United States dropped last month to the lowest level since July 2006, before the housing bubble burst, and likely will continue to drop through the first half of next year, an industry group said Thursday.
RealtyTrac, which tracks housing market trends, said that 107,194 properties across the country were at some stage of the foreclosure process in June. That marked a 2 percent decline from May and left foreclosure activity, which includes foreclosure notices, scheduled auctions and bank repossessions, 16 percent below the year-ago level.
"Over the next six to nine months, nationwide foreclosure numbers should start to flatline at consistently historically normal levels," RealtyTrac vice president Daren Blomquist said in a statement.
June was the 45th consecutive month foreclosure activity was down on an annual basis.
Declining foreclosures have reduced the supply of properties on the market, pushing home prices up. That, combined with higher mortgage rates, has slowed the recovery of the U.S. housing market.
Lenders reclaimed a total of 26,889 properties in June, down 5 percent from May and the lowest level since June 2007. Repossessions were down 24 percent from a year ago.
Nationwide, 46,743 properties were set for foreclosure auctions, a 13 percent decrease from the last year, bringing scheduled foreclosure auctions to the lowest level since July 2006.
Lenders started the foreclosure process on 47,243 properties in June, down 18 percent from a year ago, and the lowest level since November 2005.
Florida continued to have the nation's highest foreclosure rate, followed by Illinois, New Jersey and Nevada.
The RealtyTrac report also included data for the first half of the year, which showed foreclosure activity decreased in 79 percent of the 212 metropolitan areas during the first half of 2014.
Foreclosure activity for the first six months of the year was down 23 percent from the same period in 2013.
"While it's important that any remaining foreclosure infection is addressed promptly to keep it from festering, foreclosures are no longer a widespread contagion threatening to derail the housing market's return to full health," Blomquist said.
Rick Bowmer/APKaren Williams lost her son Loren in a motorcycle crash in 2005. She hoped to learn more about him through his Facebook account, but the company changed the password, blocking her efforts.By ANNE FLAHERTY
WASHINGTON -- Should your emails, web albums and other online accounts die when you do? Or should you be able to pass them down to a family member much as you would a house or a box of letters?
A leading group of lawyers says that families should immediately get access to everything online unless otherwise specified in a will. They are urging state lawmakers to enact their proposal so loved ones don't get shut out as American lives move increasingly online.
"Our email accounts are our filing cabinets these days," said Suzanne Brown Walsh, a Cummings & Lockwood attorney who led the effort. But "if you need access to an email account, in most states you wouldn't get it."
The Uniform Law Commission, whose members are appointed by state governments to help standardize state laws, on Wednesday endorsed the plan for "digital assets." It would give loved ones access to -- but not control of -- the deceased's digital accounts unless a will says otherwise.
To become law, the legislation would have to be adopted by each state's legislature. It would trump "terms of service" agreements by tech companies that prohibit people from accessing an account that isn't theirs.
"This is something most people don't think of until they are faced with it. They have no idea what is about to be lost," said Karen Williams of Beaverton, Oregon, who sued Facebook for access to her 22-year-old son Loren's account after he died in a 2005 motorcycle accident.
Facebook (FB) and other tech companies have been reluctant to hand over their customers' private data, and many people say they wouldn't want their families to have unfettered access to their life online. But when confronted with death, families say they need access to settle financial details or simply for sentimental reasons.
What's more, certain online accounts can be worth real money, such as a popular cooking blog or a gaming avatar that has acquired certain status online.
Privacy activists are skeptical of the proposal. Ginger McCall, associate director of the Electronic Privacy Information Center in Washington, said a judge's approval should be needed for access, to protect the privacy of both the owners of accounts and the people who communicate with them.
"The digital world is a different world" from offline, McCall said. "No one would keep 10 years of every communication they ever had with dozens or even hundreds of other people under their bed."
Many people assume they can decide what happens by sharing certain passwords with a trusted family member, or even making those passwords part of their will. But in addition to potentially exposing passwords when a will becomes public record, anti-hacking laws and the terms of service agreements prohibit that.
Several tech providers have come up with their own solutions. Facebook, for example, will "memorialize" accounts by allowing already confirmed friends to continue to view photos and old posts. Google (GOOG), which runs Gmail, YouTube and Picasa Web Albums, offers its own version: If people don't log on after a while, their accounts can be deleted or shared with a designated person. Yahoo users agree when signing up that their accounts expire when they do.
But the courts aren't convinced that a company supplying the technology should get to decide what happens to a person's digital assets. In 2005, a Michigan probate judge ordered Yahoo (YHOO) to hand over the emails of a Marine killed in Iraq after his parents argued that their son would have wanted to share them. Likewise, a court eventually granted Williams, the Oregon mother, access to her son's Facebook account, although she says the communications appeared to be redacted.
Williams said she supports letting people decide in their wills whether accounts should be kept from family members.
"I could understand where some people don't want to share everything," she said in a phone interview this week. "But to us, losing him [our son] unexpectedly, anything he touched became so valuable to us." And "if we were still in the era of keeping a shoebox full of letters, that would have been part of the estate, and we wouldn't have thought anything of it."
Patrick T. Fallon/Bloomberg via Getty ImagesBy Sagarika Jaisinghani
General Electric (GE) is in talks to sell its century-old household appliances business for as much as $2.5 billion, Bloomberg reported, citing people familiar with the matter.
GE's appliances and lighting unit reported revenue of more than $8 billion in 2013. The appliances business may fetch $1.5 billion to $2.5 billion in a sale, Bloomberg quoted the people as saying.
GE was waiting to wrap up its acquisition of Alstom's energy assets before pursuing options, including an outright sale, for its appliances business, Bloomberg reported, citing one of the people.
With the Alstom deal signed, GE is talking to bidders for its appliances business, Bloomberg quoted the people as saying.
GE spokesman Seth Martin declined to comment.
The business sells home appliances under the GE Monogram, GE Cafe and Hotpoint brands.
The move is part of GE's strategy of divesting businesses and restructuring itself to boost its valuation to be in line with its peers.
The company has outlined plans to divest $4 billion worth of industrial businesses this year to focus its portfolio on businesses with high returns.
GE CEO Jeffrey Immelt attempted to sell off the home appliance unit in 2008, hiring Goldman Sachs (GS) to explore options. Immelt said at the time that the division was too tied to the tumultuous U.S. market and needed to be more globally focused, Bloomberg reported.
GE's shares were up 1.7 percent at $27.06 in afternoon trading on the New York Stock Exchange.
WASHINGTON -- The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labor market recovery was gaining traction.
The economy's brightening outlook was dimmed somewhat by another report Thursday showing a tumble in housing starts and building permits last month.
"This part of economy is going in the wrong direction while the rest of the economy is picking up," said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.
Initial claims for state unemployment benefits dropped 3,000 to a seasonally adjusted 302,000 for the week ended July 12, the Labor Department said. Economists had forecast first-time applications for jobless aid rising to 310,000.
The four-weak average of claims, considered a better gauge of labor market trends as it irons out week-to-week volatility, hit its lowest level in seven years.
Prices for U.S. Treasury debt extended gains after the data, while U.S. stock index futures held losses.
The claims data covered the survey week for July nonfarm payrolls. Claims fell 12,000 between the June and July survey period, suggesting another month of solid job gains after June's hefty 288,000 increase.
Employment has grown by more than 200,000 jobs in each of the last five months, a stretch not seen since the late 1990s.
Pablo Martinez Monsivais/APFederal Reserve Chair Janet Yellen testifies Wednesday before the House Financial Services Committee.
Federal Reserve Chair Janet Yellen cautioned Tuesday the Fed could raise interest rates sooner and more rapidly than currently envisioned if the labor market continued to improve faster than anticipated by policymakers.
Economists currently don't expect the U.S. central bank to start raising interest rates before the second half of 2015. The Fed, which is wrapping up its monthly bond buying program, has kept overnight lending rates near zero since December 2008.
The claims report showed the number of people still receiving benefits after an initial week of aid was the lowest in seven years in the week ended July 5. The unemployment rate for people receiving jobless benefits fell one-tenth of a percentage point to 1.9 percent during the same period.
While the broader economy has rebounded from the first-quarter slump, housing is struggling to get back on track since stalling in late 2013 in the wake of a rise in mortgage rates.
Groundbreaking declined 9.3 percent to a seasonally adjusted annual 893,000 million unit pace, the lowest since September, the Commerce Department said in a separate report. That was the second straight month of declines and confounded economists' expectations for a rise to a 1.02 million unit rate.
Apart from high borrowing costs, housing has been constrained by a shortage of properties for sale, which is keeping house prices elevated and pricing first-time buyers out of the market.
Groundbreaking for single-family homes, the largest part of the market, tumbled 9 percent in June to a 575,000 unit pace, the lowest since November 2012. Single-family starts in the South hit a two-year low.
Starts for the volatile multifamily homes segment dropped 9.9 percent to a 318,000 unit rate.
Permits fell 4.2 percent to a 963,000 unit pace in June. Economists had expected them to rise to a 1.04 million unit pace. With permits now leading starts, groundbreaking could pick up in the months ahead.
Permits for single-family homes increased 2.6 percent to a 631,000 unit pace, the highest level since November. Permits for multifamily housing tumbled 14.9 percent to a 332,000 unit pace.
-Additional reporting by Richard Leong in New York.
The party may soon be over for companies trying to dodge U.S. taxes through so-called "inversions."
Inversions, where a U.S. company buys a firm in a foreign country and relocates there to avoid paying U.S. corporate taxes, which are among the highest in the world, are becoming the target of the Obama administration. It's a move that has become very popular lately particularly among pharmaceutical companies. But the president wants it to stop.
Saul Loeb, AFP/Getty ImagesTreasury Secretary Jacob "Jack" Lew
Treasury Secretary Jack Lew spoke at a conference Wednesday encouraging Congress to enact laws that would ban the practice immediately and retroactive to May. That could jeopardize deals in the works for Medtronic (MDT) and Mylan (MYL).
As part of Lew's discussion on business reform he also said the tax rate for corporations could be lowered to the 20 percent range, which is a big improvement from the current top rate of 35 percent.
BMW is recalling roughly 1.6 million more of its 3-Series cars from model years 2000 to 2006. The issue has to do with air bags in the front passenger seat that when deployed could cause fragments of metal to hit passengers' faces. The air bag inflator is made by Takata, which has been responsible for millions of recalls over the past few years. This week's BMW recall is a much larger one but not the first related to the air bags. Last year it recalled 42,000 3-Series models for the same problem.
In trading Wednesday on Wall Street, the bulls beat the bears with the Dow Jones industrial average (^DJI) gaining 77 points, the Nasdaq composite (^IXIC) up 9 points and the Standard & Poor's 500 index (^GPSC) picking up 3 points.
When flying nowadays, you are constantly nickeled and dimed for things you once didn't have to pay a penny for and the airlines have come to rely on that revenue. Airlines around the world took off with $31.5 billion in fees last year. Adjusted for inflation that is more than 11 times the fee revenue just six years ago. Most of the fees -- 60 percent of them -- come from credit card companies paying airlines for frequent flyer miles it then offers to its customers. Of the money coming out of our pockets, the biggest revenue came from baggage fees followed by fees for things like drinks on board and advanced boarding. Three U.S. airlines topped the list for bringing in the most non-fare revenue: Delta (DAL), United (UAL) and American (AAL).
And finally, home-sharing website Airbnb, which has faced legal challenges in many cities around the world, including New York City and San Francisco, has just rebranded itself to give itself a new identity. While it features an entirely new looking website with video, it is its logo that is creating the most buzz among social media sites. Let's just say it's a little suggestive. The company says it is meant to look like an upside-down heart but does anyone really buy that? One thing's for sure. The campaign has worked so far. For a rebranding, it's getting lots of play.
Sam Yeh, AFP/Getty ImagesBy Ron Grover and Bill Rigby
SEATTLE -- Microsoft (MSFT) said Thursday it will slash up to 18,000 jobs, or 14 percent of its workforce, this year as it trims its newly acquired Nokia phone business and reshapes itself into a cloud-computing and mobile-friendly software company.
The larger-than-expected cuts are the deepest in the company's 39-year history and come five months into the tenure of Chief Executive Satya Nadella, who outlined plans for a "leaner" business in a public memo to employees last week.
"We will simplify the way we work to drive greater accountability, become more agile and move faster," Nadella wrote to employees in a memo made public early Thursday. "We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making."
The size of the cuts were welcomed by Wall Street, which viewed Microsoft as bloated under previous CEO Steve Ballmer, topping 127,000 in headcount after absorbing Nokia earlier this year.
"This is about double what the Street was expecting," said Daniel Ives, an analyst at FBR Capital Markets. "Nadella is clearing the decks for the new fiscal year. He is cleaning up part of the mess that Ballmer left."
Stock Gains
Microsoft shares jumped 3 percent to $45.40 in early trading, reaching their highest since the technology stock boom of 2000.
About 12,500 of the layoffs will come from eliminating overlaps with the Nokia unit, which Microsoft acquired in April for $7.2 billion. Microsoft didn't say how many jobs would come from Nokia and how many from existing operations. The acquisition of Nokia's handset business in April added 25,000 people to Microsoft, pushing its overall headcount up to 127,000.
The Nokia-related cuts were widely expected. Microsoft said when it struck the deal that it would cut $600 million per year in costs within 18 months of closing the acquisition.
Microsoft didn't detail exactly where the remaining jobs would be cut, but said the first wave of layoffs would affect 1,351 jobs in the Seattle area.
The company said it expects to take pretax charges of $1.1 billion to $1.6 billion over the next four quarters to account for the costs of the layoffs.
Nadella's cuts are the biggest at the Redmond, Washington-based company since predecessor Steve Ballmer axed 5,800, or about 6 percent of headcount, in the depths of the recession in early 2009.
The new CEO's moves are designed to help Microsoft shift from being a primarily software-focused company to one that sells online services, apps and devices it hopes will make people and businesses more productive. Nadella needs to make Microsoft a stronger competitor to Google (GOOG) and Apple (AAPL), which have dominated the new era of mobile-centric computing.
Marking this change of emphasis, Nadella last week rebranded Microsoft as "the productivity and platform company for the mobile-first and cloud-first world."
Microsoft is not alone among the pioneers of the personal computer revolution now slimming down to adapt to the Web-focused world.
PC-maker Hewlett-Packard (HPQ) is in the midst of a radical three-to-five-year plan that will lop up to 50,000 from its staff of 250,000.
IBM (IBM) is undergoing a "workforce rebalancing," which analysts say could mean 13,000, or about 3 percent of its staff, being laid off or transferred to new owners as units are sold.
Chipmaker Intel (INTC) and network equipment maker Cisco Systems (CSCO) both said in the past year they were cutting about 5 percent of their staffs.
The U.S. Labor Department is out with its tally on weekly jobless claims, and the verdict is that it was great news. While other information is out that was not positive, the weekly jobless claims report was close enough to being in-line that it should not be a major game changer for the stock and bond market on Thursday.
Weekly jobless claim continued to improve, falling 3,000 to 302,000 in the week ending July 12 from a revised prior week reading of 305,000. Bloomberg had the consensus estimate at 310,000. The Labor Department reported that there were no special factors in this week's report, although some may consider that there is still some Fourth of July noise in the report.
The unemployment rate for insured workers was down 0.1% to 1.9%. The four-week average also fell by 3,000 to 309,000. That looks to be a low since the recession on the average.
Continuing jobless claims are reported with a one-week lag, and this is what we call the army of the unemployed. This army is getting smaller, falling 79,000 to a post-recession low of 2.507 million.
Again, great news was seen here, but it just isn't far enough off the mark to make any major waves on its own. An absolutely dismal reading from housing starts in June is another matter.
Universal Studios Florida/APThis rendering shows how Harry Potter and the Escape from Gringotts ride is supposed to look.
Things haven't been going according to plan in Central Florida's theme parks. Over the past few days, we've seen mishaps at Disney (DIS) -- one that required folks to be evacuated from a monorail, and another that cost a rider on the normally tame Pirates of the Caribbean boat ride parts of his fingers.
Operational breakdowns have also struck Comcast's (CMCSK) nearby Universal Studios Florida, where riders were stuck on its Transformers ride for reportedly about an hour on Tuesday before being escorted off. However, the most glaring problem child of the parks has to be Harry Potter and the Escape from Gringotts.
The attraction officially opened on July 8 as part of Universal Orlando's Wizarding World of Harry Potter. The queues have been long, the breakdowns plentiful. Maybe wizards just don't want us mere muggles to get in on the fun.
Time Travails
The Diagon Alley expansion is impressive. Park guests can explore the streets of faux London and the fictional Diagon Alley where shops, eateries and the mysterious Knockturn Alley have been thrilling guests downing frozen butterbeer refreshments and chocolate chili ice cream as they wave interactive wands at window displays that spring to life.
The Hogwarts Express train ride that connects the Wizarding World of Harry Potter areas in two theme parks is hands down the industry's neatest themed turn at a means of transportation. (Take notes, Disney.)
However, the long delays and perpetual setbacks at Escape from Gringotts must be debilitating to the otherwise well-received addition. Media coverage on opening day turned from excitement to frustration when breakdowns left patrons waiting more than seven hours for a ride. A week later, wait times have averaged two to three hours most days.
Making a Bank Withdrawal
There's nothing wrong with the rich details of the ride's queue. It includes a majestic bank lobby with audio-animatronic goblins leading to the office-lined hallway that ends in a pre-show. That in turn leads to a goblin explaining the ride's safety features, a sensory elevator experience and a spiraling staircase that winds its way up to the loading platform.
The problem is that the seemingly perpetual breakdowns leave aspiring riders stalled. They get on Twitter. They get on Facebook. They post snapshots of bored park guests doing the same.
This is what Universal didn't want. The otherwise-spectacular ride -- and I won't play spoiler beyond saying that it's an immersive 3-D experience with some coaster elements -- is getting tagged as unreliable. Dedicated forums are ripe with stories of riders stuck on the ride and in some cases having to be escorted off the attraction if the outage can't be remedied quickly.
Universal should get it right -- in time. There's too much at stake, and there's something to be said about raising the bar at a time when Disney World a few exits away is playing it safe. It's rare when a trouble ride is closed rather than fixed, with Rocket Rods an example from Disneyland.
However, Universal is more likely to tone down problematic elements of Escape from Gringotts than it is to shutter the attraction. Muggles just need to be patient.
Andrew Harrer/Bloomberg via Getty ImagesBy Andreas Cremer and Agnieszka Flak
BERLIN and MILAN -- Fiat Chrysler has denied a magazine report saying it's in merger talks with Volkswagen, while the German carmaker said it had no takeovers on its agenda.
Germany's Manager Magazin said Thursday Volkswagen Chairman Ferdinand Piech had held talks with the owners of Fiat Chrysler about buying all or part of the group that was formed this year from the merger of Italian and U.S. carmakers.
The magazine cited unnamed company sources.
However, a VW spokesman said Europe's biggest carmaker was focused on delivering improvements at its existing operations.
"There are currently no [merger and acquisition] projects on the agenda," he said. "We are now focusing on boosting efficiency across the group."
The Agnelli family's holding firm Exor, which owns a 30 percent stake in Fiat Chrysler, denied any talks had taken place, as did Fiat Chrysler.
Shares in Fiat Chrysler jumped 5 percent to 7.98 euros on the report, but had retreated to stand up 2.2 percent by 1352 GMT (9:52 a.m. Eastern time). VW's stock was 1.8 percent lower.
VW Chief Executive Officer Martin Winterkorn said in March the carmaker, though hoarding almost 18 billion euros ($24 billion) in cash, had no plans to expand the group through acquisitions as it was focusing on integrating its 12 brand network.
VW has since sealed a 6.7 billion euro buyout of minority shareholders at Swedish truck division Scania to forge a long-planned alliance of its truck brands.
The report could suggest "diverging views" between VW's management and the supervisory board about the carmaker's future course, said Arndt Ellinghorst, a London-based analyst at investment researchers ISI Group, at a time when Winterkorn, 67, and Piech, 77, are soon likely to face a debate over succession.
Rather than talking about further expansion, top managers at VW -- concerned that profitability gains aren't keeping pace with the company's steadily growing size -- have been pushing a new efficiency program that includes 5 billion euros of cost cuts per year at the core passenger car brand.
Earlier this month, VW also denied a report it was planning a bid for U.S. truck maker Paccar next year.
Interested In Assets
"The risks from integrating Italian plants and managing a U.S. business are material and we do not believe that the potential benefits justify the risks," Ellinghorst wrote in a note to clients.
A person familiar with the situation told Reuters that VW would more likely bid for Fiat assets such as Magnetti or Alfa Romeo rather than the entire company.
A member of VW's supervisory board, which oversees the management board, said the 20 member panel had at no point of time had any discussions about a purchase of Fiat.
Still, Piech and Winterkorn have repeatedly expressed interest in Alfa Romeo despite rebuttals from Fiat CEO Sergio Marchionne.
Manager Magazin said VW was hoping to use Chrysler's U.S. distribution network to help solve its own problems in the world's No. 2 auto market where flagging sales of the VW brand in January sparked the ouster of VW's regional chief.
However, VW's U.S. troubles "are more image and pricing problems and not so much problems of distribution and manufacturing," an auto analyst said. "Buying Chrysler would not really help VW."
Fiat took full control of Chrysler at the start of 2014, creating the world's No. 7 auto group, and plans to list the merged Fiat Chrysler Automobiles in New York later this year.
Chief Executive Officer Sergio Marchionne has said he wants Fiat Chrysler to follow bigger rivals such as VW by building global brands and strengthening its position in the fast-growing and high-margin market for premium cars.
The company is counting on its founding merger and a U.S. listing to help foot the bill for its 48 billion euro plan to grow net profit fivefold and sales by 60 percent by 2018.
While rumors of a potential Agnelli family exit have surfaced over the years in Italian press, Exor has repeatedly said the stake remained a strategic investment for the family.
Manager Magazin also said VW and Fiat Chrysler's owners were far from reaching an agreement about a possible price.
-Additional reporting by Jan Schwartz, Sophie Sassard and Arno Schuetze.
WASHINGTON -- Average U.S. mortgage rates declined slightly this week with rates remaining near historic lows.
Mortgage company Freddie Mac reported Thursday that the nationwide average for a 30-year loan slipped to 4.13 percent, down from 4.15 percent last week. The average for the 15-year mortgage, a popular choice for people who are refinancing, edged down to 3.23 percent, compared with 3.24 percent last week.
Mortgage rates are below the levels of a year ago, having fallen in recent weeks after climbing last summer when the Federal Reserve began talking about reducing the monthly bond purchases it was making to keep long-term rates low.
Rates on one-year adjustable rate mortgages were 2.39 percent this week, down from 2.40 percent last week, while rates on five-year adjustable rate mortgages were 2.97 percent, down from 2.99 percent last week.
At 4.13 percent, the rate on a 30-year mortgage is down from 4.53 percent at the beginning of this year. Rates have fallen modestly even though the Fed has been trimming its monthly bond purchases. Fed Chair Janet Yellen told Congress this week that the purchases will likely end altogether at the end of October.
But at the same time, Yellen said during congressional testimony that the Fed still sees the need to keep its benchmark short-term rate at a record low near zero to give the economy support.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage was 0.6 point, down from 0.7 point last week. The fee for a 15-year mortgage was 0.5 point, down from 0.6 point last week.
The average charge for a five-year adjustable rate mortgage was 0.4 point, unchanged from last week. For a one-year ARM, the charge was also 0.4 point, also unchanged from last week.
Kathy Willens/APA view of the Williamsburg Bridge and the Brooklyn skyline.
BROOKLYN, New York -- Could the key to saving America's middle class be found in a once-abandoned industrial site in Brooklyn?
When pharmaceutical giant Pfizer (PFE) closed its Brooklyn factory in 2008, 2,500 people lost their jobs. For years, the building remained vacant, another reminder of lost business and revenues. Then, over the past two years, several start-up businesses began to rent space in the location, creating a small business incubator for the city, thanks to Acumen Capital Partners and Ashish Dua.
The site that rumored has it witnessed Viagra's creation has now given birth to several new companies. Occupants now include makers of tea-based probiotics, animal leashes that support pet adoption, and even alcoholic slushie drinks.
The plant's tenants currently employ 1,000 people. However, with only 40 percent of the space occupied, and some businesses growing, the number of individuals working on the site may soon return to levels last seen when Pfizer was in residence.
It's a trend that's not limited to a single repurposed factory, nor even a single major city. Across the country, the "artisan economy" is growing. Could it be the key to saving the middle class? Some think so.
"There's a ton of jobs out there. You have to kind of craft it in your community," explains Kerry Mills to PBS. Mills' small business is Engaging Alzheimer's, which assists both suffers and caregivers of the illness to create a better environment for everyone involved. She and others in the field believe that those with an average college education can create their own livelihood as well.
The trend doesn't stop at smaller production items. People are turning their biology and business degrees into service industry positions in areas such as environmental pest control. The options for artisanal entrepreneurship seem to be limited only by the imagination.
It will take time to see if this trend will pick up more broadly, but small business has always been a key driver of job growth in this country. Maybe bringing those artisanal passions to work will be the element the middle class uses to realize their dreams once again.
Andrew Harrer/Bloomberg/Getty Images
Last week was brutal for restaurant operators that recently went public. Sandwich baker Potbelly (PBPB) saw its shares plunge 23 percent on the week after warning that it will fall short of financial expectations. It's now trading below last year's IPO price of $14.
Tex-Mex casual dining specialist Chuy's (CHUY) saw its stock take a 17 percent weekly hit on no material news. It went public two summers ago at $13, and it's trading well above that level. Chuy's also hit a 52-week low this week.
Even Yelp (YELP) -- the fast-growing firm that seems to be a play on foodies in general with folks relying on it for local restaurant reviews -- proved vulnerable. The stock may still be a big winner for early investors (it's quadrupled since going public at $15 two years ago), but Yelp shares stumbled 10 percent last week, in part because an analyst slashed its price target on the stock, suggesting that sequential growth in the number of reviews posted is starting to decelerate.
Gone Appetit
Potbelly was a market darling when it went public last summer. The stock more than doubled to close above $30 on its first day of trading. The chain -- which started selling sandwiches inside an antiques shop -- has shed nearly two thirds of its value since that first-day pop.
Potbelly's most recent slide last week came after it warned that it would earn half as much as Wall Street was expecting for the recently concluded second quarter, held back by negative comparable-restaurant sales growth and contracting margins.
Other restaurant stocks that have gone stale:
Noodles & Co. (NDLS) initially soared after going public last year. The fast casual pasta specialist hit the market at $18 last summer and within days was trading north of $50. It has shed more than 40 percent of its peak value, missing Wall Street's profit targets in back-to-back quarters.
Papa Murphy's (FRSH) is the country's largest take-and-bake chain, selling freshly prepared pizzas that consumers bake at home. It wanted to go public between $11 and $13 two months ago. It settled for $11, and the stock has slipped into the single digits.
Zoe's Kitchen (ZOES) is a fast-growing chain offering Mediterranean delicacies. It went public at $18 a month before Papa Murphy's, and it soared out of the gate. Zoe's posted blowout quarterly results last month, fueled by a 47 percent surge in sales. Comparable-restaurant sales rose a chunky 5.7 percent. The market would have typically rewarded this kind of performance, but Zoe's Kitchen finds itself trading 17 percent lower since peaking last month.
Outside of Chipotle Mexican Grill (CMG), it seems that the market isn't hungry for eatery stocks. This could be problematic for El Pollo Loco, which on Monday filed to go public. The chicken chain with more than 400 locations is hoping to raise $100 million in the offering, but it could run into resistance when it comes to Wall Street sympathy. Eatery stocks need a new recipe or at least more success stories to restore the market's confidence.
Getty Images
Walking past a penny on the sidewalk is one thing. But dashing past $10 or more is quite another.
Millions of Americans who bought electronic devices more than a decade ago could be due some cash because a bunch of companies were accused of colluding in the memory module market.
The $310 million Dynamic Random Access Memory settlement sets a low bar for consumers who believe they're eligible to collect their share of the settlement, a minimum of $10. The deadline to file a claim is Aug. 1. If you bought certain electronic devices between 1998 and 2002 you're eligible. Among the devices are computers of all sorts, video game consoles, MP3 players, printers, and DVD players.
It Takes Just a Few Minutes to File
"The settlement affects almost every consumer and business that purchased computers and other electronic devices from 1998 to 2002," Tracy Kirkham, one of the attorneys who filed the class action lawsuit, said in a statement. "We encourage everyone to file a claim to get what is owed to them."
To put in for your payout, go to the settlement page, fill out a claim form and submit it online. It takes less than five minutes, plus the time you might want to spend trying to remember what devices you might have have around your house about 15 years ago. You don't need any receipts or other proof of the purchases, just the memories. Companies that bought a large amount of electronic equipment need to show some documentation.
A series of lawsuits followed a 2002 U.S. Justice Department investigation that found the makers of DRAM worked together to artificially inflate prices. Among the companies that paid into the settlement fund are Hitachi (HTHIY), Micron Technology (MU), Samsung (SSNLF) and Toshiba (TOSBF).
Circumstances surrounding a plane crash in eastern Ukraine caused jitters on Wall Street Thursday. The markets were just treading water until news broke that a Malaysia Airline jet had crashed while flying over territory where pro-Russian separatists have been battling against the army. Reports suggest that it may have been shot down, though by which side is still unclear.
At the end of the day, the Dow Jones industrial average (^DJI) was 161 points lower, the Nasdaq composite (^IXIC) had fallen 62 points, and the Standard & Poor's 500 index (^GPSC) was down by 23 points.
Investors flocked instead to safe-haven bets like gold and Treasuries, but there were some stock winners on this jam-packed earnings day.
The country's largest health insurer, United Health (UNH), released its quarterly report. Revenue rose 7 percent but profits fell, mainly because of higher taxes. Nevertheless the results topped expectations and shares gained 1.5 percent. Rival Humana (HUM) also rose sharply, up 3 percent.
Toolmaker Snap-on (SNA) beat on earnings, and it was one of the top winners in the S&P 500, gaining 4 percent.
Earnings rose 90 percent at Morgan Stanley (MS), which beat on profit and revenue. The stock initially gained but then lost half a percent as the broader market sold off.
M&T Bank (MTB) reported a drop in profit as mortgage-banking revenue declined and the stock dropped slightly.
Earnings more than doubled at the world's largest private-equity firm, Blackstone Group (BX) and its shares gained half a percent.
Chipmaker Sandisk (SNDK) beat on earnings but the stock dropped 13.5 percent as the outlook for both margins and sales in the current quarter disappointed.But overall this year, the stock has been on tear. Year-to-date, it is up 31 percent
Barbie maker Mattel (MAT), the toy industry's largest player, dropped more than 6.5 percent on a steep drop in sales and profits in the last quarter. Its traditional toys aren't as popular nowadays, but its American Girl line continues to shine.
Yum Brands (YUM), which owns Taco Bell, Pizza Hut and KFC also sold off after reporting earnings. KFC's business in China rebounded, but sales continued to drop in the U.S. The stock fell more than 6.5 percent.
And the largest auto dealership chain in the U.S., AutoNation (AN) reported an 8 percent increase in revenue in the last quarter and growth in all of its businesses, but that failed to meet expectations and shares fell 8 percent.
Microsoft (MSFT) shares gained 1 percent on news it is slashing 18,000 jobs. That is about double what was expected since Satya Nadella took over as CEO.The stock has been a winner this year though: It is up 18 percent.
And finally, Dresser-Rand (DRC), which makes engineering equipment for the energy sector, soared 12.5 percent on reports Siemens is considering an offer.
-Produced by Karina Huber.
What to Watch Friday:
The University of Michigan releases its initial survey of consumer sentiment for July at 9:55 a.m.
The Conference Board releases leading indicators for June at 10 a.m.
These major companies are scheduled to release quarterly financial results
You've landed a huge promotion and a raise -- congrats!
But before you ring up the champagne, let me provide a sober word of warning: Don't let this next rung on your career ladder be the beginning of the end of your financial health.
Sometimes, a raise can turn into a curse instead of a blessing. Here are seven common but ill-advised ideas for spending that extra money.
Paula Pant ditched her 9-to-5 job in 2008. She's traveled to 30 countries, owns six rental units and runs a business from her laptop. Her blog, Afford Anything, is a gathering spot for rebels who refuse to say, "I can't afford it." Visit Afford Anything to learn how to shatter limits and live life on your own terms.
Monkey Business Images/Shutterstock
There's a clear connection between financial and physical health. Those with the resources get the care, advice and information they need. Those without wind up at emergency rooms and lack the professional support to understand and live healthier lifestyles. And, clearly, if you save for retirement, you'll have more resources available when your health declines with age.
But there may be a more direct connection. According to researchers at Olin Business School at Washington University in St. Louis, retirement planning can predict likelihood of improving health. Lamar Pierce, an associate professor of strategy, and doctoral candidate Timothy Gubler analyzed data eight industrial laundry plants in multiple states. The information included whether employees contributed to their 401(k) plans and how they reacted to potentially adverse health news.
Saving for retirement and addressing health issues went hand in hand.
Employees had initial health screenings. They and their personal physicians received the results. According to the study, 97 percent of the employees had at least one abnormal blood test. A quarter had a "severely abnormal" finding. Employees received information on "risky health behaviors and anticipated future health risks." The researchers -- who controlled for such factors as demographics, job types and initial health -- studied the workers for two years for signs of attempts at improving their health and for any changes to financial planning habits.
It turned out that saving for retirement and addressing health issues went hand in hand. Those who put money into their 401(k)s improved on tests for such health risk indicators as blood glucose and cholesterol 27 percent more than non-contributors. Other factors that you might expect to make a difference -- conscientiousness, financial need, life expectancy or whether workers took professional advice -- didn't.
The researchers concluded underlying psychological factors linked both retirement planning and improving health outlooks. At issue is the idea of time discounting, in which people choose a smaller reward today rather than wait for something bigger further down the line.
That said, as the study of statistics points out, correlation and causation are not the same thing. Suddenly putting money into retirement savings doesn't mean that you'll actually listen when the doctor says eat less and exercise more. Then again, it can't hurt, and perhaps the act of thinking ahead might change your attitude, your life expectancy, and how comfortable those extra years might be.
The U.S. Labor Department is out with its tally on weekly jobless claims, and the verdict is that it was great news. While other information is out that was not positive, the weekly jobless claims report was close enough to being in-line that it should not be a major game changer for the stock and bond market on Thursday.
