Stocks Continue to Slide as Troubles Persist in Europe
Hemera Technologies/Thinkstock(NEW YORK) — Worry over the shaky situation in Europe forced the markets down again Thursday.
The Dow had its 11th loss in 12 days, closing down 156 points at 12,442. The Nasdaq gave up 60 to close at 2,813, and the S&P fell 20 points Thursday, closing at 1,308.
A temporary Greek cabinet, to be in power until at least next month’s election, has been sworn in. Spain, meanwhile, was forced to pay sharply higher interest rates to raise more than $3 billion at a debt auction.
There’s no change in the number of people seeking unemployment benefits last week. The four-week average, a less volatile measure, fell from roughly 380,000 to 375,000.
Copyright 2012 ABC News Radio
Facebook IPO: $38 Shares Biggest Tech Offer
Justin Sullivan/Getty Images(NEW YORK) — Facebook announced Thursday that its initial public offering of common stock will be priced at $38 a share, valuing the company at $104 billion, the largest for a U.S. tech company.
As media and investor interest in Facebook’s IPO has grown over the past weeks, the company priced its IPO at the highest end of its earlier estimates. On Tuesday, Facebook raised its IPO price range to $34 to $38 a share, from $28 to $35.
To satiate the growing investor appetite for shares of the social media company, on Wednesday Facebook increased the number of shares to be sold at the market debut by 25 percent.
The company is offering 421.2 million shares of common A stock, which includes 180 million new shares that will be sold by the company and 241.2 million shares sold by existing shareholders such as early investors and Facebook’s founders.
Facebook’s investment bank underwriter, Morgan Stanley, ultimately determines who gets shares of the company before shares are sold to the larger public on Friday, said Jim Krapfel, IPO analyst with investment firm Morningstar. All of the 421 million shares will be sold Thursday night at the offering price to those investors who met the minimum buy-in requirements, which was millions of dollars for institutional investors.
“The higher your account size and the more business you do with the company, or if your track record indicates you purchased technology IPOs in the past, you’re more likely to receive shares and are likely to get a higher allocation, but there’s no guarantee,” Krapfel said.
Investor consensus predicts the stock will trade higher Friday and close up, but to what extent is unknown, said Krapfel. Morningstar has valued the company at $32 a share.
“It wouldn’t be surprising to see the stock trade up into the 50s intraday and into the close,” he said.
Copyright 2012 ABC News Radio
Facebook’s Eduardo Saverin ‘Spits in the Eye of the American People’
Jim Spellman/WireImage(WASHINGTON) — Sens. Chuck Schumer and Bob Casey on Thursday delivered a scathing status update for “eye-spitting” Facebook co-founder Eduardo Saverin: Stop attempting to dodge your taxes by renouncing your U.S. citizenship or never step foot in the U.S. again.
“This guy just thinks he can rip us off by engaging in this scheme,” Casey, D-Pa., said at a Capitol Hill news conference. “We’ve got troops overseas that are sacrificing on our behalf every day, all the values that we hold dear. And Mr. Saverin spits in their eye, he spits in the eye of the American people. It’s an insult. He should be held accountable.”
Saverin, 30, relinquished his U.S. citizenship in September 2011 before the company announced its planned initial public offering of stock, which will debut this week. The move was likely a financial one because he owns an estimated 4 percent of Facebook and stands to make $4 billion when the company goes public.
“Saverin has turned his back on the country that welcomed him and kept him safe, educated him and helped him become a billionaire,” Schumer, D-N.Y., said. “This is a great American success story gone horribly wrong.”
Saverin, who was born in Brazil, raised in Miami and educated at Harvard, would reap the benefit of tax savings by becoming a permanent resident of Singapore, which levies no capital gains taxes. He has lived there for several years.
“This tax-avoidance scheme is outrageous,” Schumer added. “Eduardo Saverin wants to ‘defriend’ the United States of America just to avoid taxes we aren’t going to let him get away with it.”
So to stop Saverin, and others who have relinquished their citizenship for tax avoidance, Sens. Schumer and Bob Casey, D-Pa., unveiled the “Ex-PATRIOT” – “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” – Act. The act is intended to respond directly to Saverin’s move, which they call a “scheme” that would “help him duck up to $67 million in taxes.”
The plan would re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country. If the Internal Revenue Service determines that people renounce their citizenship to avoid taxes, according to the proposal, they would then be subject to a 30 percent capital gains tax on future investment gains in the United States, regardless of where they live. But most notably, the plan would bar individuals like Saverin from ever re-entering the United States again.
The proposal would affect any American who has $2 million in net worth or an average income tax liability of at least $148,000 for the previous five years and then seeks to renounce his or her citizenship. The person will be presumed to have renounced his or her citizenship for tax avoidance purposes unless the individual can demonstrate otherwise to the IRS.
The burden of proof would be on people to show that they didn’t relocate for tax purposes. There would be no penalty if it turned out that they renounced their citizenship for legitimate reasons.
The law now is already supposed to bar re-entry for individuals like Saverin, but there have been problems enforcing it, the senators say, pointing to the 1,700 people last year who gave up their U.S. passports, up from 235 in 2008. The law, passed in 1996, contains no enforcement provisions. No individual has ever been barred from returning to the United States for tax avoidance, so the proposal would add an enforcement component.
“Pay your taxes in full or don’t ever try to visit the U.S. again,” Schumer said.
Saverin has defended his move to Singapore in a statement to ABCNews.com.
“My decision to expatriate was based solely on my interest in working and living in Singapore, where I have been since 2009,” he wrote. “I am obligated to and will pay hundreds of millions of dollars in taxes to the United States government. I have paid and will continue to pay any taxes due on everything I earned while a U.S. citizen.”
“It is unfortunate that my personal choice has led to a public debate, based not on the facts, but entirely on speculation and misinformation,” he continued.
But some, like Schumer, don’t buy this argument.
“Anyone who believes Mr. Saverin didn’t do this at least in good part for tax purposes is quite gullible,” he said today.
If Saverin, or anyone else, changes his mind, he could pay his back taxes and return to the United States.
The Senators plan to move on this bill “as soon as possible” in the Senate.
Copyright 2012 ABC News Radio
Honda’s Segway Alternative? Introducing the UNI-CUB
Honda(WASHINGTON) — Is the Segway a bit too big for you? Or does it require a too much standing for your liking? Well, Honda’s got a solution in the works — the Honda UNI-CUB.
Called a “personal mobility device,” the UNI-CUB looks like a unicycle sans the cycle or wheel part.
So how does it work? Sit in the saddle and Honda’s Omni Traction Drive System lets you control the speed and direction just by shifting your weight.
Honda touts the UNI-CUB as omnidirectional, meaning the two wheels allow it to move in all directions — side-to-side, backwards, diagonally, etc. Honda will also have a smartphone app that will function as an additional control option.
While the Segway, a similar electric powered scooter released in 2002, was designed for outdoor use and is frequently used by police or security guards, the UNI-CUB has been designed for indoor use. Honda claims the precision of its motion is good for “barrier-free indoor environments.”
This isn’t the first time an automaker has tried to take on the popular Segway. In 2008, Toyota announced its own personal mobile solution, called the Winglet. The Winglet was tested, but never marketed to consumers.
And that might be the way the way the UNI-CUB goes. Honda says it will start demonstrating and testing the UNI-CUB with Japan’s National Museum of Emerging Science and Innovation in June. No additional information has been given on if and when it might be released to the public.
Copyright 2012 ABC News Radio
TD Ameritrade Shies Away from Political Spotlight
Chris Machian/Bloomberg News(WASHINGTON) — Kim Hillyer, director of communications and public affairs for TD Ameritrade, was forthright about the sticky situation her company finds itself in, thanks to founder and former CEO Joe Ricketts’ announcement that he’s interested in launching a Super PAC to attack President Obama.
“It’s certainly a difficult situation,” said Hillyer, referring to the calls from clients and members of the public prompted by Thursday’s news, first reported by the The New York Times. “We respect the right of people to have their opinions, but as a company we can’t take sides. Really what we’re about is helping our clients, that’s the message we’re telling people today.”
The campaign garnered considerable attention Thursday because of a pitch to Ricketts and his Ending Spending Action Fund that suggested an attack on the president based on the comments of his former religious and spiritual leader, Rev. Jeremiah Wright, Jr., an attack the campaign of Sen. John McCain, R-Ariz., refused to do because of the racial animus it might conjure forth. Both the Romney and McCain camps disavowed the proposal.
Ricketts, a billionaire ranked on the Forbes 400 List in 2009, retired from the TD Ameritrade board last fall, but he remains publicly identified with the company as its founder. His family is the largest individual shareholders, owning approximately 15 percent of the company. The company is an online broker based in Omaha, Nebraska.
Says Hillyer, “Obviously he is the founder of the company, but his thoughts, opinions and activities are not those of TD Ameritrade. His political work is independent from any involvement with the company.”
The Super PAC he is funding has stated its intent to spend at least $10 million on its activities. Last month, according to a filing with the Securities and Exchange Commission, Ricketts sold 521,988 share of common stock in the company for $20.04 Per Share – worth $10.46 million.
So does it bother TD Ameritrade that he appears to be cashing in TD Ameritrade stock to run this campaign? “We have many shareholders and we can’t legislate what people do with their money,” Hillyer said.
Hillyer wanted to make sure that a reporter had seen the statement from Brian Baker, president of the Ending Spending Action Fund, noting that Ricketts is “neither the author nor the funder of the so-called ‘Ricketts Plan’ to defeat Mr. Obama that The New York Times wrote about this morning. Not only was this plan merely a proposal – one of several submitted to the Ending Spending Action Fund by third-party vendors – but it reflects an approach to politics that Mr. Ricketts rejects and it was never a plan to be accepted, but only a suggestion for a direction to take. Mr. Ricketts intends to work hard to help elect a President this fall who shares his commitment to economic responsibility, but his efforts are and will continue to be focused entirely on questions of fiscal policy, not attacks that seek to divide us socially or culturally.”
“His political activities are not those of the company,” Hillyer said again.
Copyright 2012 ABC News Radio
Traveling Overseas: Best Bang for Your Buck?
Nick M Do/Getty Images(WASHINGTON) — While a growing euro storm may be brewing, the dollar has increased in value — much to the delight of American tourists.
The trend over the past few months is clear: the dollar is worth more against the euro. And that means more bang for each tourist buck.
“Americans traveling in Europe have had a tough time with the weak dollar over recent decades,” says market analyst Alec Young. “But we do get bouts where the dollar firms up.”
“We’ve recently had a very nice run for the dollar and that would benefit the U.S. tourist traveling around the world,” he says.
With the euro woes expected to linger, this summer might prove to be a great bargain for Americans heading overseas.
Copyright 2012 ABC News Radio
George Lucas’ California Housing Proposal to Become Reality
Chip Somodevilla/Getty Images(MARIN COUNTY, Calif.) — A defiant George Lucas showed his Indiana Jones-caliber feistiness when the filmmaker ended nearly 25 years of neighborhood opposition to a California studio by announcing the land would instead be used to build low-income housing.
Lucas has been trying for decades to build a state-of-the art film studio on his Grady Ranch in Marin County, Calif., but his well-to-do neighbors have blocked his plans at every step of the way. In an official statement released by his production company, Lucasfilm Ltd., he said, “enough is enough.”
“The level of bitterness and anger expressed by the homeowners in Lucas Valley has convinced us that, even if we were to spend more time and acquire the necessary approvals, we would not be able to maintain a constructive relationship with our neighbors,” Lucas said in the statement.
“We love working and living in Marin, but the residents of Lucas Valley have fought this project for 25 years, and enough is enough,” he wrote.
He said that “movies are waiting to be made” so he needs to take his project elsewhere.
“We have several opportunities to build the production stages in communities that see us as a creative asset, not as an evil empire, and if we are to stay on schedule we must act on those opportunities,” Lucas wrote.
But he saved the zinger for the last paragraph of the two-page statement.
“We plan to sell the Grady property expecting that the land will revert back to its original use for residential housing,” he wrote. “We hope we will be able to find a developer who will be interested in low income housing since it is scarce in Marin. If everyone feels that housing is less impactful on the land, then we are hoping that people who need it the most will benefit.”
Lucas’ move to make the upscale neighborhood affordable-housing friendly raised questions about whether he’s attempting to exact revenge on his stubborn neighbors or even whether he’s bluffing about a plan that’s not real.
Thomas Peters, president and CEO of the Marin Community Foundation, can vouch for the plan’s seriousness. The foundation is one of the largest in the country for investing money in philanthropic projects, so Peters immediately put a call into Lucasfilm after reading the statement.
“Was this just an edgy comment or does it have something to it? I was pleasantly surprised that Mr. Lucas and his top company folks responded immediately that he was quite sincere about it,” Peters said.
Peters has known Lucas, 68, for more than 20 years and Lucas has now made the land exclusively available to the foundation for development.
“[The proposal] was entirely focused on that positive outcome. It was not, as many people have speculated, ‘This is how I’ll show them,’” Peters said. “[Lucas] doesn’t need, and doesn’t have, any energy whatsoever for looking over his shoulder.
“He was passing a little frustration, as well he should after … years of back and forth, but the fact of the matter is that he’s done with that proposal. That’s a set decision,” he said. “The good news, depending on people’s perspectives, is we’ll get this done and we intend to do it here. He’s also a guy that gets things done. We’re going to do this.”
The land in question is about 1,000 acres of “gorgeous, roaming land filled with oaks, eucalyptus trees and creeks,” Peters said. Like Lucas’ other two ranches, he builds on 3 percent of the land and preserves the rest.
That leaves the foundation with about 200 acres for the proposed housing project, which he says is more than enough. Early plans are looking at building about 300 apartments and condos on the land, most likely for senior citizens in need. Peters estimates the project will take about two years to complete.
“[Lucas has] been an extraordinarily good steward of the land and neighbor and planner and job creator,” Peters said. “Most communities would bend over backwards to welcome him.”
Lucas’ projects in the county have created hundreds of jobs and brought in hundreds of millions of dollars in revenue, Peters said.
Copyright 2012 ABC News Radio
Jobless Claims Stay Put at 370,000
Spencer Platt/Getty Images(WASHINGTON) — Jobless claims didn’t budge last week, remaining at 370,000, the Labor Department reported Thursday.
The figure for the week ending May 12 is a revision from the previous week’s number, which was initially said to be 367,000.
The four-week average, however, did see some movement, dropping by 4,750 to 375,000.
Copyright 2012 ABC News Radio
Fired Las Vegas Hotel Worker Sues for Pregnancy Discrimination, Wages
iStockphoto/Thinkstock(LAS VEGAS) — Melodee Megia, a former employee at The Cosmopolitan Resort and Casino in Las Vegas, claims she was told she was fired from her job for saying “bye bye” on the telephone instead of “goodbye” while eight-months pregnant.
She has filed a lawsuit against the hotel for pregnancy discrimination and a class-action suit for workers’ wages, saying employees were not paid for the time they had to wait for and change into their uniforms on a daily basis.
Megia worked at the hotel from November 2010 until September 2011, when she said she was fired “based on her pregnancy,” according to court papers filed with the Clark County District Court in Nevada last week.
Megia was a “room service sales” employee answering the telephone when hotel guests called for room service, and occasionally assisting in room delivery, her lawyers said.
She is represented by labor attorneys Mark Thierman and Jason Kuller.
Thierman said “she was denigrated verbally and was mistreated because of her pregnancy,” while having a “behind-the-scenes” job at the hotel.
Amy Rossetti, public relations director of The Cosmopolitan of Las Vegas, said in a statement, “As a matter of company policy, we do not comment on pending litigation.”
In March 2011, according to the lawsuit, Megia was asked to deliver a “pleasure packet” of condoms to a hotel customer, when Megia’s supervisor said, “Isn’t it too late for that? You should have thought about it before getting knocked up.”
“From that point forward, the director of room service frequently gave [Megia] dirty looks or shook his head disapprovingly,” the suit said.
On Sept. 16, 2011, when she was eight months pregnant, the “stated reason for [her] termination was that she said ‘bye bye’ instead of ‘good bye’ on the telephone to a room service customer,” according to the suit.
“In fact, this was merely a pretext as [Megia] had been subject to harassing conduct and other pretextual discipline leading up to her termination since the time her pregnancy was learned by [the hotel],” the suit added.
In the same filing to sue the hotel for unspecified damages for pregnancy discrimination, Megia also made class-action allegations for unpaid wages on behalf of the hotel’s employees.
Workers were not permitted to wear their uniforms outside work and had to pick up and drop off their uniforms before and after their shifts, often leading to additional overtime for which they were not paid, the suit claimed.
The suit said employees also had to change into their uniforms on-site in an area away from where they clocked in and out for the day.
Copyright 2012 ABC News Radio
Pepsi Drops Tennessee Walking Horse Sponsorship
DON EMMERT/AFP/Getty Images(NEW YORK) — In the wake of an ABC News investigation revealing extreme animal cruelty, Pepsi has canceled its sponsorship of the annual Tennessee Walking Horse championship, the Celebration.
The discontinuation of the relationship was “effective immediately,” according to Pepsi spokesman Dave DeCecco. The company said its logo was removed Wednesday from the Celebration website, prior to the broadcast of the ABC News report on Nightline.
The report featured undercover video made by the Humane Society of the United States that showed one of the top trainers in the Tennessee Walking Horse industry, Jackie McConnell, beating and torturing horses in his stables outside Memphis.
An ABC News investigation found that large numbers of the famed horses have been tortured and beaten in order to make them produce the high-stepping gait that wins championships.
“All too often, you have to cheat to win in this sport,” said Keith Dane of the Humane Society.
The undercover video led to a federal grand jury indictment of McConnell. The tape shows McConnell and his stable hands beating horses with wooden sticks and using electric cattle prods on them as part of a training protocol to make them lift their feet in the pronounced gait judges like to see.
In another scene, McConnell oversees his hands as they apply caustic chemicals to the ankles of the horses and then wrap them with plastic wrap so the chemicals eat into the skin.
“That creates intense pain and then the ankles are wrapped with large metal chains so the horses flinch, or raise their feet even higher,” said Dane of the Humane Society.
McConnell is expected to enter a guilty plea to one count, according to his lawyers.
He declined to comment, or apologize for his acts, when approached by ABC News this week outside his home.
Leaders of the Tennessee Walking Horse industry maintain that such brutality is rare and that trainers do not have to cheat to win championships, which can add millions of dollars to the value of horses.
“They do not have to cheat to win,” said Dr. Steve Mullins of the group called SHOW, which oversees inspections of horses before major events. “You don’t have to do this kind of junk to win. … And we are terribly against this stuff.”
The industry group maintains that the vast majority of horses are not subjected to the cruel practice of “soring.”
But a random inspection by the agents of the Department of Agriculture at last year’s annual championship found that 52 of 52 horses tested positive for some sort of foreign substance around front hooves, either to cause pain or to hide it.
Dr. Mullins told ABC News there could be innocent explanations for some of the foreign substances found by the inspectors.
Copyright 2012 ABC News Radio
Foreclosure Filings Down to Lowest Level Since 2007
iStockPhoto/Thinkstock(NEW YORK) — Is the foreclosure crisis in the U.S. nearing its end? New numbers out Thursday by RealtyTrac show that foreclosure activity is down to a near five-year low across the country.
“In April 2012, there were less than 189,000 properties with foreclosure filings during the month. That was a 57-month low. That’s the lowest level we’ve seen since July 2007,” says Daren Blomquist with RealtyTrac.
Blomquist credits the decrease partly to banks being more willing to work with struggling homeowners.
“More properties that would have become foreclosures otherwise are actually becoming short sales. The lenders are becoming much more aggressive in agreeing to short sales,” he explains.
This has likely helped lead to a drop in the number of filings in the West. Foreclosure activity is down in Arizona, California and Nevada — states that were hard hit by the foreclosure crisis — according to RealtyTrac.
But, Blomquist cautions homeowners are not out of the woods yet.
“It’s not that foreclosures have completely gone away by any means, but at least they’re heading in the right direction and finally have kind of gotten through this very big batch of bad loans that triggered the foreclosure crisis in the first place,” he says.
And while the outlook has improved on the West coast, the picture is grimmer towards the East. Filings are up year over year in Florida, Indiana, Michigan, New Jersey and Pennsylvania, RealtyTrac reports.
Copyright 2012 ABC News Radio
Facebook’s IPO: What It Means For You
LOIC VENANCE/AFP/Getty Images(NEW YORK) — At the same time the price and public clamor for Facebook’s blockbuster IPO is rising, experts’ expectations for the company’s performance are in decline.
The company on Tuesday raised the asking price of its offering — expected on Friday — from a range of $28-$35 to $34-$38.
In a survey of 124 portfolio managers and buy-side analysts conducted by Rivel Research Group, only 8 percent said they expect to see Facebook trading above its offering price six months after the initial public offering. Thirty-one percent said they expect the offering to have no impact whatsoever on the overall market for IPOs.
Yet excitement among ordinary investors for the IPO continues to run high, given that past IPOs have made some investors rich. An analysis by ABC News shows, for example, that a share of Johnson & Johnson bought at the IPO price of $375 would be worth $10 million today. A share of Apple bought at the 1980 IPO price of $22 would be worth about $44,800 now.
The fact that Facebook’s stock has been virtually impossible for little guys to buy in advance of Friday’s offering may only have heightened the shares’ appeal, on the principle that what people want most are things they cannot have.
Jay Ritter, an expert on the history of IPOs and a professor of finance at the University of Florida, says Facebook’s offering is indeed historic.
“This is more than just another IPO,” he says. “It’s the largest ever for an Internet company, and among the largest for any in U.S. company in history.” It’s unprecedented, he says, for a company just eight years old to receive a market cap of $100 billion.
Ritter says other recent IPOs have raised comparable amounts, including Visa’s IPO and GM’s in 2010. Both companies had name recognition: “Everybody knows GM. Lots of people have a Visa card.” Yet neither offering generated anywhere near the excitement as Facebook’s.
Of course, neither company had a chief executive of Mark Zuckerberg’s star power or youth appeal. And, says Ritter, neither had Facebook’s “blistering” growth rate.
“People confuse rapid growth with a good investment,” he says.
Now the $100 billion question is, can Facebook maintain that growth by better monetizing its 900-million-plus users?
Copyright 2012 ABC News Radio
Facebook Employees Will Be Ringing in IPO with ‘Hackathon’
Peter Foley/Bloomberg via Getty Images(MENLO PARK, Calif.) — It’s going to be a sleepover at Facebook the night before the big IPO.
Employees from the social networking site will be holding what the company calls a “hackathon” Thursday night.
According to Facebook, “Hackathons are a big tradition at Facebook. They serve as the foundation for some great (and not so great) ideas. It gives our employees the opportunity to try out new ideas and collaborate with other people in a fun environment.”
Basically, the company’s employees spend the night working on their ideas to see where they go. Everyone at the company is invited.
This is something they have done in the past, but this will be their last such endeavor as a private company.
The next morning, Mark Zuckerberg will ring the opening bell on Wall Street, making many of these employees millionaires and billionaires.
Copyright 2012 ABC News Radio
‘Baggage Battles’: Airports Auction Lost, Misplaced and Forgotten Luggage
iStockphoto/Thinkstock(MIAMI) — Ever wonder what happened to that piece of lost luggage that was never seen again? In some instances, the airport where it was left could have auctioned it off for profit.
One of the busiest hubs in the United States is Miami International Airport, where M-I-A isn’t just the airport’s call letters, but could easily stand for luggage that is “missing in action.” The airport is home to an enormous graveyard of discarded duffel bags and carry-ons that have been cast aside. There are also forgotten bikes, laptops, surfboards, cameras, cellphones, even paintings and crutches — all of which have gone unclaimed or don’t carry identification.
“We take the time to make sure that we reconnect the item with the person if that’s possible,” said Miami International spokesman Marc Henderson. “But, you know, the airport is not a storage shelter. So after 60 days, it’s like, OK, it’s time to have an auction.”
Last year, across the United States, nearly 2 million suitcases were reported to be either lost, damaged or delayed. About 10,000 bags go missing at Miami International alone every year.
To avoid losing your luggage, Henderson said it is as simple as keeping your bag with you at all times.
“I walk the terminal all the time. Traditionally on average one or two times a day, I will see a bag that is not attended,” he said. “Somebody has walked away, have gone into a shop, they’ve gone into an eating establishment. They’ve left their bag there.”
That’s a “no-no,” Henderson said, because of the heightened security at airports today. He also suggested not packing anything of significant value, or if you must, carry those items with you on the plane.
Miami International hosts a lost luggage auction twice a year to a standing room-only crowd who pays a $3 admission fee to get in on the bidding action. Most of the patrons are just regular folks who are looking to turn a quick profit.
Billy Leroy, who owns an eclectic props and antique store in New York City, was one of the bidders in Miami and is also one of the stars of the Travel Channel’s new reality TV show, Baggage Battles, which airs on Wednesdays at 10 p.m. ET/PT. The show follows three teams of savvy auction specialists who travel the world to place bets in high-stakes luggage auctions.
Dozens of these auctions happen at airports all over the country, with thousands of bags and millions of dollars at stake. Bidders can’t open the unclaimed bags and have to rely on their instincts to place bets on what could be inside — which could be anything from expensive jewelry or just laundry.
Only after bidders win the bags do they get to open them and find out if they have hit the jackpot.
“You’ve got to shoot from the hip and just vibe it,” Leroy said of betting on the bags. “I mean, it sounds crazy but that’s how I do it, that’s how I make my business is by my gut feeling.”
Faced with a mountain of luggage, bidders are given about an hour to pick up the bags, handle them and get a feel for what they might be carrying. Leroy also said he employs a “smell test,” and said he won’t bid on a bag that smells bad.
“Heavy is good, but carry-on is good too,” Leroy said. “Expensive carry-on is good, and heavy, expensive carry-on is good, but heavy expensive carry-on could have dirty underwear in it.”
But Leroy said that formula can sometimes backfire because an expensive-looking bag could be a fake.
Miami International has made as much as $100,000 in a single auction and it’s not just off lost luggage bags. They also auction off singular items in bulk, where bidders can take bets on bags of jewelry or electronics that have been left at TSA checkpoints, or entire cargo loads of discarded items.
Copyright 2012 ABC News Radio
Stocks Fall for Fourth Consecutive Day
Hemera/Thinkstock(NEW YORK) — After initially climbing into positive territory upon news from the latest Federal Reserve meeting, stocks fell Wednesday on worries about Europe’s shaky financial situation, particularly in Greece.
The Dow closed down 33 points at 12,598. The Nasdaq lost 20 points to close at 2,874, while the S&P gave up just six points, closing at 1,324.
The markets continue to be held back by fear that Greece’s political unrest could lead to the nation’s exit from the European Union.
Meanwhile, the Federal Reserve has released the minutes of its latest meeting. Members are ready to do more to stimulate the economy if growth falters, or even if there are more signs that it will. That’s in stark contrast to the Central Bank’s previous meeting, when the Fed initially said no new help was needed.
Copyright 2012 ABC News Radio
General Motors to Add 600 New Jobs
Bill Pugliano/Getty Images(DETROIT) — General Motors is adding 600 new jobs at its Lansing Grand River assembly plant to assist with the development of the Cadillac ATS, the auto company announced Wednesday.
A GM official said it has already hired 460 of the new hires and has identified who will fill the balance of the new positions. The new hires will be utilized in the plant’s second shift.
The auto company has used the Lansing Grand River plant exclusively for its manufacturing of Cadillacs. The ATS will be the auto maker’s first small luxury vehicle and is expected to compete with the BMW 3 series and Mercedes Benz C class within that market space.
The company hires are expected to make an estimated $16 an hour.
Copyright 2012 ABC News Radio
General Motors to Add 600 New Jobs
Bill Pugliano/Getty Images(DETROIT) — General Motors is adding 600 new jobs at its Lansing Grand River assembly plant to assist with the development of the Cadillac ATS, the auto company announced Wednesday.
A GM official said it has already hired 460 of the new hires and has identified who will fill the balance of the new positions. The new hires will be utilized in the plant’s second shift.
The auto company has used the Lansing Grand River plant exclusively for its manufacturing of Cadillacs. The ATS will be the auto maker’s first small luxury vehicle and is expected to compete with the BMW 3 series and Mercedes Benz C class within that market space.
The company hires are expected to make an estimated $16 an hour.
Copyright 2012 ABC News Radio
Skechers to Pay $40 Million for False Toning Shoe Claims
Konrad Fiedler/Bloomberg via Getty Images(WASHINGTON) — Skechers advertised that its toning shoes would help people lose weight, build muscle and get in shape, claims that will now cost the company $40 million in a settlement with U.S. regulators.
The Federal Trade Commission announced Wednesday the company has agreed to the settlement on charges that it “deceived consumers by making unfounded claims” about its Shape-ups, Resistance Runner, Toners and Tone-ups lines of shoes. Consumers who bought the shoes are entitled to refunds.
“Skechers’ unfounded claims went beyond stronger and more toned muscles. The company even made claims about weight loss and cardiovascular health,” David Vladeck, director of the FTC’s Bureau of Consumer Protection, said in a statement. “The FTC’s message, for Skechers and other national advertisers, is to shape up your substantiation or tone down your claims.”
The FTC also alleges that Skechers manipulated and “cherry-picked results” from studies to support their claims. In one case, the FTC says Skechers touted the endorsement of chiropractor Dr. Steven Gautreau, but did not disclose that Gautreau was married to a Skechers marketing executive and that Skechers paid him to conduct the study, which the FTC alleges did not support the claims in the ad.
Skechers denies its ads were unsupported and says it “believes its advertising was appropriate.”
“While we vigorously deny the allegations made in these legal proceedings and looked forward to vindicating these claims in court, Skechers could not ignore the exorbitant cost and endless distraction of several years spent defending multiple lawsuits in multiple courts across the country,” David Weinberg, Skechers’ chief financial officer, said in a statement.
The Skechers’ settlement comes less than a year after Reebok agreed to pay $25 million to settle charges it misled consumers with false claims about EasyTone walking shoes and RunTone running shoes.
The FTC’s settlement with Skechers is part of a broader agreement that resolves an investigation that included the attorney generals from 44 states. Under the settlement Skechers is not allowed to make any claims about its toning shoes involving health or fitness benefits unless they are backed by scientific evidence.
“Hopefully, at least here stateside, this will make big companies think twice before they make these specious advertising claims,” Chris Morran, deputy editor at Consumerist.com, told ABC News. “The hurt isn’t the $40 million penalty, it’s the millions Skechers won’t be making selling toning shoes. … The sneakers are going overnight from miracle weight loss, muscle toning shoes to sneakers and that’s the bigger hurt.”
Skechers’ has also been sued by consumers alleging that Shape-ups can cause serious injuries, including stress fractures.
Copyright 2012 ABC News Radio
JPMorgan Faces New Lawsuits Over Bets Gone ‘Horribly Wrong’
Chris Hondros/Getty Images(NEW YORK) — JPMorgan Chase now faces two new lawsuits from shareholders angry over the bank’s two billion dollar trading loss. The suits, filed in federal court in New York, allege JPMorgan misled investors about the bet that went bad.
“Defendants misrepresented the losses and risk of loss to the Company arising from massive bets on derivative contracts,” plaintiff Saratoga Advantage Trust said in court papers. “These derivative bets went horribly wrong.”
Chief Executive Jamie Dimon has said the bank made “egregious” and “self-inflicted” mistakes, words that may come back to haunt him in court.
“We believe that he made false and misleading statements and omissions quite frankly,” Bruce Ventimiglia, CEO of Saratoga Advantage Trust, told ABC News.
The lawsuit names Dimon and Chief Financial Officer Douglas Braunstein.
Dimon and Braunstein knew, or could not reasonably have been unaware of, the magnitude of losses being incurred by JPMorgan,” court records said.
When JPMorgan disclosed the loss last week the bank said it resulted from a failed hedging strategy meant to insulate its portfolio from losses. Ventimiglia does not buy it.
“They have mislabeled what they were doing. They describe what they were doing as hedging strategies. We think they were outright bets,” he said.
JPMorgan Chase declined to comment on the lawsuits. The bank has also declined to give specifics about the trades, but Saratoga Advantage Trust believes “these wagers may have reached close to $100 billion dollars in size.”
“These types of derivatives trades are at the center of the 2008 financial crisis,” Ventimiglia said. “The proper disclosure of what these banks are doing is critical to investors.”
Copyright 2012 ABC News Radio
JC Penney Announces Big First Quarter Losses
Scott Olson/Getty Images(PLANO, Texas) — J.C. Penney Company experienced a stunning 20 percent drop in revenue in the first quarter of this year, the retailer announced Tuesday.
The company reported a larger than expected loss after a new strategy put in place by ex-Apple retail chief Ron Johnson ended big discounts and coupons in favor of no-sale pricing.
The quarterly earnings report is the first clear sign that many consumers don’t like the end of heavy discounting.
“While we have work to do to educate the customer on our pricing strategy and to drive more traffic to our stores, we are confident in our vision to become America’s favorite store. We fully expect that the bold and strategic changes we are making to our operations will result in improved profitability and sustainable growth over the long term,” said Johnson, chief executive officer of J.C. Penney.
Johnson told investors the company’s turnaround has been a lot harder than he expected.
Copyright 2012 ABC News Radio
New Home Construction Up 2.6%
iStockphoto/Thinkstock(WASHINGTON) — In yet another sign that the U.S. housing market is slowly improving, the Commerce Department announced on Wednesday that builders broke ground on more new homes last month.
The agency said home construction rose to a seasonally adjusted annual pace of 717,000 homes in April. That’s up 2.6 percent from the month before and more than what economists had anticipated.
Robert Denk, a senior economist at the National Association of Home Builders, says the better-than-expected figure is encouraging.
“I think this is potentially a very good number. This bodes well for the summer. Things really can — we expect the activity to pick up as the year unfolds,” he says.
“Conditions are right. Prices are low, mortgage rates are low; consumers are really sort of regaining their confidence,” Denk adds.
Copyright 2012 ABC News Radio
TransUnion Reports Decrease in Credit Card Delinquency, Debt
Getty(CHICAGO) — More people now qualify for credit cards, even if they don’t have a stellar credit history.
TransUnion, the credit reporting firm, says banks are issuing more cards, and fewer people were 90 or more days late on their payments in the first quarter of this year.
“After two consecutive quarters of increases in both the delinquency rate and average debt, it is encouraging to see a return to declines in delinquency,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “This contributed positively to a general trend since the bottom of the recession, which saw delinquency rates remain at near-record lows.”
The number of new cards sent out to consumers last year rose by more than 20 percent versus 2010.
Copyright 2012 ABC News Radio
GM Pulls Ads Off Facebook
Bill Pugliano/Getty Images(NEW YORK) — Just about everyone is excited about Facebook’s initial public offering scheduled for Friday that could value the social networking site at a whopping $105 billion.
Somehow, that doesn’t impress the folks at General Motors, who pulled all its advertising off of Facebook.
While the $10 million GM spends annually on Facebook might seem like a drop in the bucket compared to what analysts say the company is worth, it could convince at least a few potential investors that Mark Zuckerberg’s empire may be built on sand.
GM, which already spends $4 billion annually on worldwide advertising, says research found that its ads on Facebook just weren’t effective.
The world’s largest automaker says it will retain a presence on Facebook on the so-called fan pages.
Copyright 2012 ABC News Radio
Philadelphia Woman, 73, Testifies Age Has Kept Her Unemployed
Courtesy of the Senate Committee on Aging(NEW YORK) — Sheila Whitelaw of Philadelphia is a college graduate and has managed three different non-profits as executive director. Despite her experience, she said one particular trait may have caused difficulty in her two-year job search: her age.
Whitelaw, 73, said she never had difficulty working or finding a job until she was laid off from a clothing business when she was 71 and had to look for work.
The U.S. Government Accountability Office (GAO) estimates that about 4.2 million older workers were unemployed or underemployed in January 2011, and 3.65 million remained unemployed or underemployed in December 2011.
Whitelaw says age discrimination may be playing a part in her ability to get part-time or full-time work.
“I have really good credentials and a very varied background but have seen myself involved in age discrimination in the workplace,” she said.
Unemployed, and with her husband, who suffers from Alzheimer’s disease, in a nursing home, Whitelaw’s income is from Social Security benefits and food stamps of $35 a month.
She said she has sent out “hundreds and hundreds” of resumes and had 15 job interviews, with employers sometimes dissuading her from applying for various reasons, such as the physical demands of the job.
Whitelaw testified in front of the Senate Special Committee on Aging on Tuesday for a hearing called “Missed by the Recovery: Solving the Long Term Unemployment Crisis for Older Workers.”
“I feel very passionate about it because I don’t get a chance to talk about it,” she said. “I know unemployment is high everywhere, but I’m not sure people are focused on the older worker and we have a lot to offer.”
The Age Discrimination in Employment Act of 1967 protects individuals who are 40 years of age or older from employment discrimination based on age, for both employees and job applicants. However, worker advocates say greater education and outreach is needed as employers continue to discriminate against the mature workforce.
While younger workers have had the highest unemployment since the start of the recession in 2007, older workers have seen the biggest increases in long-term unemployment.
By 2011, 55 percent of unemployed older workers had been actively seeking a job for 27 weeks or more, according to the U.S. Government Accountability Office. The April GAO report stated that only a third of older workers displaced from 2007 to 2009 found full-time work by 2010. Those who did had greater earnings losses than re-employed younger workers.
Copyright 2012 ABC News Radio
Many Employers Looking to Hire this Summer, Survey Finds
Tim Boyle/Getty Images(NEW YORK) — Looking for a summer job? Well, there’s good news for you. A new report out Wednesday by CareerBuilder.com says employers in many industries are boosting their hiring plans.
“We found that 29 percent of employers say that they plan to hire temporary positions for the summer, and that is the highest number we’ve seen since the recession began,” says Michael Erwin with CareerBuilder.
“Surprising to us was manufacturing: 45 percent of employers said they’re going to bring on summer hires this season,” he adds.
And as Erwin explains, some of those seasonal jobs could turn into permanent positions.
“I find that manufacturers are looking to bring on temporary help and turn those into full time help,” he says.
Hotels, restaurants and retailers also plan to add workers this summer.
Copyright 2012 ABC News Radio
Virgin Atlantic Allows In-Flight Phone Calls
Virgin Atlantic(NEW YORK) — The debate over using cellphones in flight is about to ignite once again. But this time, it’s not about safety.
Virgin Atlantic announced it will become the first British airline to provide passengers with a service to make and receive phone calls in the air. The service is available on the Airbus A330-300s, the airline’s new aircraft. It’s aimed at business travelers, but is available throughout the aircraft in all cabins.
The service, called AeroMobile, is available for customers with O2 and Vodafone network providers only.
The service “is intended for use in exceptional situations, when passengers need to send an SMS, make a quick call, or access an email on a Blackberry,” said the airline. It is also limited to six users at one time.
What’s not clear is what constitutes an “exceptional circumstance.” Also, what exactly is a “quick” call?
And if more than six people need to make a “quick call” under “exceptional circumstances,” who decides which six people get to do so?
While Virgin Atlantic may indeed be the first airline to offer this service, passengers have already demonstrated that it is possible to make in-flight calls from their cellphones without special technology. Last week, the CEO of a company that developed an app that uses VoIP was escorted off a Delta flight for making a call in-flight.
And while most passengers haven’t gone so far as to actually attempt a call, many are guilty of leaving their phone on during flight, whether intentionally or not. In a recent Airfarewatchdog poll, 24 percent of respondents said they didn’t always comply after the cabin door has been closed and a flight attendant has asked for electronic devices to be turned off.
The Federal Aviation Administration was reportedly taking a “fresh look” at its gadget policy in March and said, “As with any regulation, safety is always our top priority, and no changes will be made until we are certain they will not impact safety and security. For some time, the FAA’s rules have permitted an airline to allow passenger use of PEDs if the airline demonstrates the devices will not interfere with aircraft avionics. The FAA is exploring ways to bring together all of the key stakeholders involved, but, ultimately, testing is the responsibility of each airline.”
At the time, John Nance, aviation consultant and retired commercial airline pilot, said to ABC News: “There’s absolutely no evidence that any electronics aboard airlines interfere or have interfered in any way.”
Copyright 2012 ABC News Radio
Made in America, Please? China Shells Out for US Exports
Dynamic Graphics/Thinkstock(NEW YORK) — In China, there is a hunger for all things American — and U.S. businesses, small and large, are taking note.
According to the U.S.-China Business Council, the Chinese spent $104 billion in U.S. exports in the last year — up 542 percent from 10 years ago.
In China recently, Oscar Atkinson, a CEO at Silicone Arts Labs in Memphis, Tenn., visited with potential partners in Beijing and then went to a medical trade fair in Shenzhen, shopping around his company’s new skin concealer product called Dermaflage.
“The Chinese consumer is just as image-conscious as the American consumer,” he said. “We could have great success if we could find the right partner [and] overcome the regulatory hurdles, which are not significant. I’m looking forward to it.”
Even U.S. giants like Pringles and Coca-Cola have figured out there’s money to be made across the Pacific.
In Jackson, Tenn., a Pringles chip plant changes the flavors of its chips to soft-shell crab, grilled shrimp and seaweed before shipping to the Chinese middle class. Currently, one of every three Pringles cans goes overseas.
Skippy peanut butter, which is made in Little Rock, Ark., now ships to 70 countries. And Coca-Cola has created a beverage — which tastes like a sweet version of orange juice — to cater to the Chinese. The oranges come from the groves of Florida but are sold 11,000 miles away in Shanghai in a drink named Pulpy.
It’s not just food. Mack’s, the world’s largest manufacturer of moldable, silicone earplugs, now provides labels for the Chinese market.
And most of the makeup in China bears U.S. labels — which is why Atkinson was there, traveling from city to city making his sales pitch for Dermaflage.
He said the Shenzhen trade show was packed with people and international companies.
“It’s really something to behold,” he told ABC News.
But other U.S. entrepreneurs like Lion Brand Yarn in New Jersey have found another way to reach the masses in China — through Export Now, an Amazon.com-like business that helps small- and medium-size U.S. businesses sell to Chinese consumers.
“Much like customers in other parts of the world, Chinese customers are often skeptical about the quality of Chinese-made products,” Export Now said. “U.S. products…are getting more and more welcome in the local market.”
The company, which sells everything from flip-flops to T-shirts and skateboards, said that 370 million Chinese had logged in to shop for U.S products on its website so far and that last year the site had sold $60 billion in U.S products.
Copyright 2012 ABC News Radio
Facebook IPO: What’s the Big Deal and Who’s Buying?
LOIC VENANCE/AFP/Getty Images(NEW YORK) — With Facebook set to go public Friday, some may be wondering what all the buzz is all about.
Andrew Serwer, managing editor of Fortune magazine, says the social network is more than just a fad. It’s like a utility. Almost everyone uses it, and it touches everyone in terms of social networking, which is what the phenomenon is all about.
“It’s hard to think of a company that has kind of burst on the scene more quickly, with more pizzazz, than Facebook,” Serwer said. “I mean it’s ubiquitous, it’s everywhere, and so, when you have a company like that, that’s going public, that’s growing like crazy, that’s top of mind, it’s a perfect combination.”
But Serwer says that if you’ve got high hopes of scooping up a lot of shares, forget about it. The big guys on Wall Street will be getting access to all the shares.
“Professionals — they’re getting all the shares and, to some extent, we are sharing in that because they are buying shares for pension funds and mutual funds and retirement funds. So we share in it in that way, but it’s professionals, not us, who are really getting the stock,” he said.
Amid all the excitement for social network’s upcoming IPO, here is how you might have fared with some other IPO stocks:
- Johnson & Johnson for $375 at its IPO price in 1944, your investment would be worth about $10 million (source: Johnson & Johnson).
- Apple for $220 at its IPO price in 1980, your investment would be worth about $44,800.
- Amazon for $180 at its IPO price in 1997, your investment would be worth about $27,240.
- Google for $85 at its IPO price in 2004, your investment would be worth about $6,111.
- McDonald’s for $225 during its IPO in 1965, it would now be worth about $676,000. (source: McDonald’s)
- AOL for $254.50 at its (second) IPO price in 2009, it would now be worth about $270 (you made essentially no profit, taking inflation into account).
- PETS.com for $1,110 at its IPO price in 2000, it would now be worth NOTHING.
Copyright 2012 ABC News Radio
Reid Says JPMorgan Should ‘Take Their Business to Las Vegas’
Alex Wong/Getty Images(WASHINGTON) — Senate Majority Leader Harry Reid, D-Nev., suggested Tuesday that JPMorgan “take their business to Las Vegas,” after the bank’s $2 billion loss stemming from bad trades.
“Because it’s just a gamble,” the Nevada senator said Tuesday. “It’s one of the things that’s clear that they were betting like they would do at a crap table in Las Vegas. And they bet the wrong way….If they make a bad bet Uncle Sam is there. We’ve got to stop that.”
Reid said he has great respect for JPMorgan Chase CEO Jamie Dimon, but “this is a bad deal.”
The majority leader is expected to force a vote, perhaps as early as this week, on two nominees to the Federal Reserve Board, a move influenced in part by the trading loss at JPMorgan.
“It’s important that we have a fully functioning Fed,” Reid said, “The Fed, who’s responsible for drawing up those rules, should have been done a long time ago.”
Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday that it is his impression that there is “bipartisan support” for both nominees in the Senate despite Sen. David Vitter’s, R-La., objection to a full vote in the Senate.
Copyright 2012 ABC News Radio
Third Straight Day of Losses for the Dow
Hemera/Thinkstock(NEW YORK) — Stocks ended Tuesday’s session with a drop and some of the biggest losses in months, with the Dow closing down 63 points and the Nasdaq and S&P giving up nine points and eight points, respectively.
The continued losses can likely be attributed to the ongoing financial and political troubles in Greece. Nearly $900 million was withdrawn from local banks in Greece Monday, according to remarks by President Karolos Papoulias to other leaders released Tuesday, The Wall Street Journal reports. The heavy withdrawls only increase concerns about Greece’s potential departure from the euro zone.
Meanwhile, the Commerce Department says retail sales rose one-tenth of a percent in April, after stronger gains in the two preceding months. Consumer prices were flat as cheaper gas offset modest increases for food, clothing and housing.
A drop in gas prices won’t be enough to get many more of us on the road this summer. A survey by Triple A predicts only a small uptick in travelers.
Copyright 2012 ABC News Radio