May 9, 2024

Archives for May 2013

Vitriol Online for Cheerios Ad With Interracial Family

The commercial ends with the word “Love” on screen.

The spot, heartwarming to many, began on national television on Monday and was uploaded to YouTube on Wednesday. But it has caused a furor for the maker of Cheerios, General Mills, because an interracial cast portrays the family.

The advertisement, which features a black father and white mother, has generated vituperative comments online, but General Mills says it stands by the commercial.

The ad will “absolutely not” be withdrawn, Meredith Tutterow, associate marketing director for Cheerios and Multigrain Cheerios at General Mills in Golden Valley, Minn., said Friday.

“There are many kinds of families,” Ms. Tutterow said, “and Cheerios just wants to celebrate them all.”

The casting has attracted angry comments, many of them overtly racist. The volume of negative remarks on YouTube reached the point that General Mills has temporarily disabled the commenting function.

On the approval/disapproval counter accompanying the video, which continues to register likes and dislikes, there were more than 700 “thumbs down” as of Friday evening, compared with more than 6,400 “thumbs up.”

As those numbers suggest, the preponderance of comments online and in social media about the commercial was positive, and Ms. Tutterow added, “We’re really gratified.”

But the fact that there were so many negative remarks — including racist language — has attracted widespread attention. For example, the AdFreak blog that is part of Adweek.com ran a post under the title “It’s 2013, and People are Still Getting Worked Up About Interracial Couples in Ads.”

Ms. Tutterow said she was not taken aback by the amount of negative reactions or their tone, but, “We’re a bit surprised it’s turned into a story.”

General Mills always hears from consumers, pro and con, about its ads, especially a major brand like Cheerios, Ms. Tutterow said. She added that the YouTube comments would be enabled again, but she did not know when.

The interracial family cast might be the first for a Cheerios commercial, Ms. Tutterow said.

But it is certainly not the first TV commercial for a major consumer brand to depict an interracial family.

There was speculation that the presence of an interracial family in an ad for a brand as familiar and ubiquitous as Cheerios may have generated the attention, or perhaps it was the debate on the front page of the popular social-news site Reddit.

General Mills reacted quickly to the negative comments as they began arriving in midweek. After a Twitter user wrote on Wednesday about the “horrible, racist comments” on YouTube, a reply was sent from the official Cheerios Twitter feed that thanked him “for the head’s up,” adding, “They’ve since been removed.”

The commercial was produced by Saatchi Saatchi in New York, part of the Publicis Groupe.

Lynne Collins, a spokeswoman at the agency, said, “It is important for us to make sure the work reflects the people we’re trying to sell products to.”

This article has been revised to reflect the following correction:

Correction: May 31, 2013

An earlier version of this article misstated the word that is displayed onscreen at the end of the Cheerios commercial. It is “Love,” not “Smile.”

Article source: http://www.nytimes.com/2013/06/01/business/media/cheerios-ad-with-interracial-family-brings-out-internet-hate.html?partner=rss&emc=rss

Doctor’s Doubts Imperil Lucrative Diabetes Drugs

“I said, I’m not interested in your money, go away,” Dr. Butler recalled.

Merck no doubt now wishes it had. When Dr. Butler finally agreed to do the study, he found worrisome changes in the pancreases of the rats that could lead to pancreatic cancer. The discovery, in early 2008, turned Dr. Butler into a crusader whose follow-up studies now threaten the future of not only Januvia but all the drugs in its class, which have sales of more than $9 billion annually and are used by hundreds of thousands of people with Type 2 diabetes.

“I knew some stuff that I thought was a worry and I was obliged to pursue it,” said Dr. Butler, chief of the division of endocrinology at the University of California, Los Angeles.

Based on his latest study, both the Food and Drug Administration and the European Medicines Agency have begun investigations that could lead to new warnings on the drugs, or even to their removal from the market.

Or they could result in no action at all.

Dr. Butler faces powerful opponents in the makers of the drugs and many diabetes specialists, who say his studies are contradicted by other evidence.

“The data are inconclusive,” said Dr. Robert Ratner, chief scientific and medical officer of the American Diabetes Association. He said even if there were some excess risk, it would be “exceptionally low.”

Nancy Thornberry, who heads diabetes drug development at Merck, said that clinical trials, the gold standard of medical evidence, had found no increased risk of pancreatic disease from Januvia, even when results of trials were pooled to achieve greater numbers. “In fact, my mother takes sitagliptin,” she added, referring to Januvia by its generic name.

Questions about whether the drugs raise the risk of pancreatitis, a painful and possibly lethal inflammation of the pancreas, arose soon after the first one, Byetta, now sold by Bristol-Myers Squibb and AstraZeneca, was approved in 2005. The drugs’ labels already contain warnings about that. What is new and potentially more serious is a possible risk of pancreatic cancer, which is virtually untreatable and kills most victims within a year.

Many people in the field compare Dr. Butler to Dr. Steven Nissen, the well-known Cleveland Clinic cardiologist whose warnings about Avandia, a different type of diabetes drug, led to its being banned in Europe and highly restricted in the United States.

Both men have faced criticism from those who call them zealots. The F.D.A. is about to examine data suggesting that Avandia might not be so dangerous after all. Some critics say Dr. Butler overstates his conclusions and that his findings have not been replicated by others.

“Basically, no one in the entire world over the last 10 years, with thousands of animals,” has found what Dr. Butler found, said Dr. Daniel J. Drucker, a professor of medicine at the University of Toronto and a consultant to many drug companies.

Still, Dr. Butler is not easy to write off. He is a former editor of Diabetes, the flagship journal of the American Diabetes Association. And he has some defenders.

“He should be an American hero, actually, a rugged individualist who is not going to be browbeaten,” said Dr. Edwin Gale, professor emeritus at the University of Bristol in Britain, who recently wrote a commentary with Dr. Butler on the drugs.

Dr. Butler was born in Kenya to British parents, though he has worked in the United States since 1987 and is an American citizen. His wife, Dr. Alexandra E. Butler, a pathologist who occupies the office next to his, has also worked on some of the studies.

In the last month, lawyers defending drug companies against a lawsuit claiming that Byetta had caused a patient’s pancreatitis, subpoenaed virtually all of Dr. Butler’s records.

“I think the message here is they want him out of business,” said Brian Depew, a lawyer representing the plaintiff, Ross Hubert of New Hampshire, who claims that Byetta caused him to get pancreatitis. Dr. Butler said U.C.L.A. told him not to comment on the subpoena.

More than 100 lawsuits representing 575 plaintiffs around the country are claiming injury from Byetta, mostly pancreatitis, according to the latest quarterly regulatory filing from Bristol-Myers. Forty-three suits claim that Januvia caused pancreatic cancer, according to Merck.

This article has been revised to reflect the following correction:

Correction: May 31, 2013

An earlier version of this article referred imprecisely to Dr. Butler’s position of at the University of California, Los Angeles. He is the chief of the division of endocrinology at the university — not chairman, which the school uses for the head of the department of medicine.

Article source: http://www.nytimes.com/2013/05/31/business/a-doctor-raises-questions-about-a-diabetes-drug.html?partner=rss&emc=rss

Economix Blog: Affordable Care Act Could Be Good for Entrepreneurship

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

The Affordable Care Act is expected to produce a sharp increase in entrepreneurship next year, according to a new report from the Robert Wood Johnson Foundation, the Urban Institute and Georgetown University’s Health Policy Institute. The number of self-employed people is expected to rise by 1.5 million — a relative increase of more than 11 percent — as a direct result of the health care overhaul.

One major barrier to entrepreneurship in the United States — beside the usual risks involved with starting a company — is that it has been difficult to get health insurance on the individual market. Those who do end up founding or joining a start-up are often able to do so because they have a spouse with employer-sponsored insurance, or because they are keeping a day job with a bigger company. (This was the case, for example, for most of the people involved with Leap2, a Kansas City start-up that I profiled last fall.)

Economists have looked at whether this insurance-related job lock is deterring self-employment and the formation of new businesses, and the data suggest it is. A Journal of Health Economics paper, for example, found that business ownership rates jumped sharply from just under age 65 to just over age 65, when people become newly eligible for Medicare. Using Current Population Survey data, the same paper also found that wage and salary workers are more likely to start businesses from one year to the next if they have a spouse with employer-based insurance.

A working paper from the Upjohn Institute looked at a change in the law in New Jersey that expanded access to individual health insurance. It found that the law seemed to increase self-employment, particularly among “unmarried, older, and observably less-healthy individuals.”

The report released Friday applies those findings to a model of what will happen in 2014, based on the Affordable Care Act’s provisions for “universal availability of non-group coverage, the financial assistance available for it, and other related market reforms.” The authors also adjusted their numbers depending on the access that residents of various states already have to individual health insurance. (Vermont, for example, already has a statute that allows the self-employed to obtain small group coverage.) Over all, they found, the ranks of the self-employed are likely to rise 11.5 percent, from about 13.1 million to 14.6 million. A table with their state-by-state estimates is below.

By the way, the paper does not mention this, but the same forces that will make it easier for workers to become self-employed may also make it easier for workers to retire early. I have heard anecdotally about people in their late 50s or early 60s who would like to retire but can’t do so because they’re basically uninsurable (for now) on the individual market; I wonder if we’ll notice a wave of retirements in this age group come 2014.

Article source: http://economix.blogs.nytimes.com/2013/05/31/affordable-care-act-could-be-good-for-entrepreneurship/?partner=rss&emc=rss

Economist Sergei Guriev Doesn’t Plan Return to Russia Soon

Mr. Guriev had taken steps to withdraw his candidacy for the board of Sberbank earlier this week, but bank officials said it was too late to remove his name from the ballot, which made Friday’s announcement all the more dramatic. He received more votes than any other candidate — indeed more than the bank’s chairman.

Though the votes for Mr. Guriev were cast days ago, before the news broke that he had fled, the results leave little doubt that he has the sympathy of a range of powerful figures in the world of finance and government. The bank’s chairman, German Gref, said Mr. Guriev could remain on the board and take part in board meetings by teleconference.

Mr. Guriev’s ideas had helped guide economic policy during the presidency of Dmitri A. Medvedev. After Vladimir V. Putin returned to the post, Mr. Guriev became one of the most prominent people to vocally support opposition causes. Since then, prosecutors have questioned him repeatedly in a conflict-of-interest case centering on a 2011 report he helped write that criticized the prosecution of Mikhail B. Khodorkovsky, a Putin rival and oil tycoon.

Kremlin officials have cast Mr. Guriev’s decision to leave the country as a purely personal one, but many in Moscow saw his flight as part of a new and foreboding phase in the crackdown on political opposition.

The Sherbank vote is “a display of solidarity from what are known as ‘in-system liberals,’” said Yevgeny N. Minchenko, director of the International Institute for Political Expertise in Moscow. Mr. Guriev, he said, is well connected in this circle of powerful technocrats who still dominate in Russia’s economic sphere, corporate world and system of higher education.

For days, Moscow insiders have been debating whether Mr. Guriev had truly been in jeopardy, and on Friday he offered a detailed account in e-mail exchanges of what led to his decision to leave Russia. He said scrutiny from investigators in the court case had mounted over the spring, culminating in a sudden — and, to his mind, alarming — demand that he surrender five years’ worth of professional and personal e-mails and submit to searches of his office and home.

In particular, he was worried that investigators were preparing to name him as a suspect rather than a witness in the conflict-of-interest case. Prosecutors contend that some of the experts who helped write the 2011 report that criticized the prosecution of Mr. Khodorkovsky had received money years earlier from his company, Yukos.

Mr. Guriev feared that the authorities could take away his passport and prevent him from leaving Russia — a serious consideration because his wife and children live in France. He said he also feared that the authorities would press him to serve as a witness in a new prosecution targeting Mr. Khodorkovsky, who is due for release from prison next year.

His informal exchanges with investigators were disturbing, he said — one of them asked if he was considering leaving Russia. In late April, increasingly anxious, he reached out to well-placed friends and concluded that his political protection had diminished.

“Some people told me the risks are acceptable, some advised me not to return, but nobody gave guarantees,” he said.

“I won’t go back even if there is a small chance of losing my freedom,” he said by e-mail. “I have not done anything wrong and do not want to live in fear.” He added that he had “no issues with Putin or Medvedev.”

Moscow’s power elite has been consumed with discussion of the case this week. In pro-government circles, many said Mr. Guriev had over-dramatized the investigation. But most analysts agreed on one thing: Mr. Guriev falls into a category of power brokers who disagree with the Kremlin’s anti-Western course and intense consolidation of power, but who have generally remained quiet about political changes.

Patrick Reevell contributed reporting from Paris.

Article source: http://www.nytimes.com/2013/06/01/world/europe/economist-sergei-guriev-doesnt-plan-return-to-russia-soon.html?partner=rss&emc=rss

Amid Recession and Rising Joblessness, Greeks Fall Prey to Employment Swindles

A month later, he was out $2,300 and still jobless.

“They told me to wire the money to cover procedural costs and the airfare,” said Angelos, 38, a father of two who declined to give his full name for fear of jeopardizing future employment possibilities. The airline ticket never arrived in the mail, and follow-up calls went unanswered. A 300-mile road trip from Athens to the northern port of Thessaloniki, the job agency’s stated location, led nowhere. The address did not exist.

Angelos, whose wife is also unemployed and who borrowed the money for the agency fee from relatives, is by no means the only Greek to have been duped in such frauds. The authorities say criminals are busy preying on increasingly desperate Greeks facing an ever-deepening recession and an unemployment rate of 27 percent over all and more than 60 percent for those under 25.

“People come to us regularly with such stories,” said a spokesman for the Greek police’s electronic crime squad, which recorded a doubling in cases of online fraud last year but has no statistics for the job swindles, which he called “a new but growing trend”

“They reel people in with offers of promising-sounding jobs, they get their money and then they disappear,” the spokesman, who spoke on the condition of anonymity because he works undercover, said of the rackets. Sometimes the advertisements refer to jobs that do exist but are exploitive, offering a fraction of the salary promised originally.

“We have evidence, but the investigation stalls as soon as it crosses the border,” said the spokesman, adding that the authorities had lodged requests for help with specific cases in Germany, Britain and other destinations favored by austerity-weary Greeks seeking a rosier future.

Thousands of Greeks have sought to emigrate since the spring of 2010, when the government signed its first loan agreement with international creditors in exchange for an array of austerity measures that have slashed living standards. There are no government statistics confirming the size, or breakdown, of the exodus. But most appear to be heading for relatively prosperous northern European countries like Germany, as well as Australia, which has one of the largest Greek immigrant populations in the world.

German government statistics showed a 43 percent increase last year in Greek immigrants and a similarly large influx from other debt-ridden euro zone countries in southern Europe, like Spain and Portugal. Many Greek émigrés are qualified professionals, with an estimated 120,000 moving abroad over the past three years, according to a recent study by the University of Macedonia in Thessaloniki.

The move is much harder for unskilled workers, particularly those who do not speak the language of the country they move to. It is they who usually fall victim to rackets, according to the police and employment sector officials.

The chief of the association representing private job agencies in Greece, Athanassios Kottaras, said he received six or seven complaints every week (they were almost unheard-of just two years ago) from Greeks moving abroad for jobs that turn out to be nonexistent or exploitive. Mr. Kottaras has appeared several times on Greek television to raise awareness about the problem, which he attributes to hundreds of illegal job agencies.

The head of Greece’s state labor inspectorate, Michalis Kandarakis, said there were about 300 such illegal job agencies in Greece, compared with the 90 legal ones represented by Mr. Kottaras. But he said closing them down was difficult, as they often changed names, staff and premises to elude the authorities. “They even lodge charges of harassment or attempted blackmail against inspectors to slow down the process,” Mr. Kandarakis said.

Article source: http://www.nytimes.com/2013/06/01/world/europe/out-of-work-at-home-greeks-face-job-fraud-abroad.html?partner=rss&emc=rss

Your Money: Protections for Gays in Workplace Are Piecemeal

“It is guys being macho,” said Jake, who wanted to withhold his last name so his employer could not identify him. “But it is still definitely something I have to be conscious and worried about. And with Ohio not having any laws protecting me, I am just afraid that if there was a confrontation, the company would let me go because it creates a hostile work environment.”

With all of the momentum behind same-sex marriage, the fact that many lesbian, gay, bisexual and transgender people lack a crucial yet basic protection often goes unnoticed: there is still no federal law that explicitly protects workers from job discrimination on the basis of their sexual orientation or gender identity.

“Where we are headed with marriage is fantastic, but at the same time, in over half of states you can be legally fired for being gay or transgender and no one is talking about that,” said Ineke Mushovic, executive director of the Movement Advancement Project, a research group that co-wrote a recent report about the job discrimination and the various financial inequities that gay people face in the workplace.

That means even if the Supreme Court were to declare that the law that denies same-sex married couples federal benefits was unconstitutional — it is expected to weigh in on the issue this month — such a decision could have a perverse effect: workers who may be permitted to add a same-sex spouse to a pension or a health plan, for instance, would be forced to expose their sexuality in a potentially hostile workplace to receive those benefits.

“As gay people are able to participate more in the normal activities and institutions of everyday life, their visibility in the workplace is more apparent and they are a more visible target for employment discrimination,” said Shannon Price Minter, a civil rights lawyer and legal director of the National Center for Lesbian Rights. “We are seeing people run into problems because of that or be fired.”

A patchwork of state and local laws, along with court and agency decisions, provides some protections. Twenty-one states and the District of Columbia prohibit discrimination based on sexual orientation, according to the June report, which was co-written by the Center for American Progress and the Human Rights Campaign.

Sixteen states and Washington, D.C., have expanded their laws to also protect workers on the basis of their gender identity and expression, which affects transgender people. Workers in any of these states can seek recourse and other penalties through state courts. Federal workers, meanwhile, are protected through an executive order and the vast majority of Fortune 500 companies have antidiscrimination policies of their own. Beyond that, many cities and counties have passed their own ordinances, though the researchers say in many cases that these measures either don’t really provide people with effective legal remedies or just fine the employer.

You might think that a discrimination claim based on a person’s sexual orientation would be covered under Title VII of the Civil Rights Act, which prohibits employment discrimination based on race, color, religion, sex and national origin and is enforced by the federal Equal Employment Opportunity Commission. And while some courts are beginning to issue more favorable decisions for gay and transgender workers by interpreting that law more broadly, advocates say that is a slow and expensive process with no guarantees.

A decision issued by the commission last year has offered support for transgender workers. Mia Macy, a former male police detective who transitioned to become a woman, was denied a job with the Bureau of Alcohol, Tobacco, Firearms and Explosives after she told the agency about her plans to change her gender.

So she filed a complaint and the Equal Employment Opportunity Commission ultimately found — relying on Supreme Court precedent and other cases — that discriminating workers on the basis of their gender identity was indeed considered discriminatory under Title VII because it penalizes them for failing to conform to gender stereotypes, explained Justine Lisser, a spokeswoman for the commission. And that type of bias is a form of sex-based discrimination. “While this ruling was issued in a federal sector case, its rationale is applicable to the E.E.O.C.’s private sector enforcement efforts,” she added.

The commission’s rulings may apply to public and private employers, but they are only binding for federal employers. It can also bring a case to Federal District Court on behalf of a worker, but it litigates only a small number of cases and does not have the authority to impose fines or mandate that employers follow a particular policy.

But the commission does tend to influence the courts. “Their interpretation of the law is taken very seriously,” Mr. Minter added. “It’s a big step for the E.E.O.C. to recognize that Title VII protects transgender people,” he said, noting that more courts are issuing rulings in their favor.

He also said that there were more positive court decisions for gay and lesbian workers, but it’s still early in the process. “There are a good number of court decisions using Title VII to protect gay or lesbian workers who were harassed at work and called names,” Mr. Minter said. “But what has been more challenging is to get courts to take the next step and recognize that a person who is fired for just being gay, even if there is no harassment, is also a type of sex discrimination.”

And that’s why many advocates, including the three groups in the research report, are calling for an explicit protection through a federal law.

“People should not be left in this prolonged limbo where they don’t really know if they are protected or not and in order to secure protection you will need to go through years of litigation,” Mr. Minter added.

Article source: http://www.nytimes.com/2013/06/01/your-money/protections-for-gays-in-workplace-are-piecemeal.html?partner=rss&emc=rss

Chicago Sun-Times Lays Off All Its Full-Time Photographers

The union representing many of the laid-off photographers plans to file a bad-faith bargaining charge with the National Labor Relations Board, a union leader said.

The Sun-Times Media company didn’t immediately comment on how many jobs were affected, but the national Newspaper Guild issued a statement saying 28 employees lost their jobs. The layoffs included photographers and editors at The Sun-Times’s sister publications in the suburbs.

“I’m still in shock,” said Steve Buyansky, a laid-off photo editor for three of the group’s suburban newspapers. “I’m not angry right now. Maybe I will be later.”

Mr. Buyansky said about 30 photographers and photo editors were called to a mandatory meeting Thursday morning where the editor of The Sun-Times, Jim Kirk, “talked for about 20 seconds” telling them the layoffs were a tough decision.

Mr. Buyansky said Pulitzer Prize-winning Sun-Times photographer John H. White was in the room and was among those who were laid off. “It’s sad,” said Mr. Buyansky, speaking from the Billy Goat tavern, a longtime watering hole for Chicago journalists, where about 10 laid-off photographers congregated after the meeting. “The Sun-Times had an amazing photo staff.”

Sun-Times Media released a statement Thursday to The Associated Press confirming the move: “Today, The Chicago Sun-Times has had to make the very difficult decision to eliminate the position of full-time photographer, as part of a multimedia staffing restructure.” The statement noted that the “business is changing rapidly” and audiences are “seeking more video content with their news.”

The executive director of the Chicago Newspaper Guild, Craig Rosenbaum, said an unfair labor practice charge would be filed in reaction to the company’s announcement. The union is negotiating a new contract and the company told the union at the bargaining table recently that no layoffs of photographers were planned, Mr. Rosenbaum said.

Like most major newspapers, The Sun-Times, which was bought by the investment company Wrapports in 2011, has been hard hit by the technological shift that has cause more people to rely on their personal computers and mobile devices to stay informed. As more readers have embraced digital alternatives, so have advertisers in a move that has been steadily siphoning away newspaper publishers’ biggest source of revenue.

The Chicago Sun-Times ended September 2012 with a paid circulation of 263,292, according to the most recent statement filed with the Alliance for Audited Media. That contrasted with circulation of about 341,448 at the same time in 2006. Including satellite editions that operate under other names, the Sun-Times” circulation totaled 432,451 in September 2012.

Article source: http://www.nytimes.com/2013/06/01/business/media/chicago-sun-times-lays-off-all-its-full-time-photographers.html?partner=rss&emc=rss

Little Change in Wall Street Indexes

For the first time since November, the Standard Poor’s 500-stock index posted a loss in consecutive weeks. Investors seemed willing to take money off the table after several months of gains.

The S. P. 500 ended May up 2.1 percent, its seventh straight month of gains — the longest streak since 2009. The index is up 14.3 percent in 2013, scoring its best five-month start to a year since 1997. Over the last seven months, it has climbed 15.5 percent.

Trading has been volatile for most of the week on concerns that the Federal Reserve will retreat from its monetary policy, the main engine behind the strong rally in equities this year.

Data on Friday pointed to a soft American economy but failed to quell speculation about possible action by the Fed. Consumer spending fell in April for the first time in almost a year, and inflation pressures were subdued.

But a separate report showed manufacturing rose more than expected in May, reflecting an expansion of business activity after a contraction in April.

“The economic data we have seen over the last week or so has been quite positive,” said Peter Kenny, chief market strategist at Knight Capital in Jersey City. He added: “It also speaks to the fact that tapering or a shift in monetary policy is more likely — the more positive it is. As a result, people are more than happy to ring the register — you never go broke ringing the register on a winning trade.”

Selling accelerated near the market’s close with the rebalancing of the MSCI indexes at the end of the day. Credit Suisse forecast $19 billion in total trading as a result of the rebalancing, with $15 billion related to developed markets.

“What’s happened in the last hour here, there’s some index and month-end rebalancing that accelerated the downturn,” said Bucky Hellwig, senior vice president of BBT Wealth Management in Birmingham, Ala.

The Dow Jones industrial average slid 208.96 points, or 1.36 percent, to close at 15,115.57. The S. P. 500 lost 23.67 points, or 1.43 percent, to finish at 1,630.74. The Nasdaq composite fell 35.39 points, or 1.01 percent, to end at 3,455.91.

For the week, the Dow fell 1.2 percent, the S. P. 500 lost 1.1 percent, and the Nasdaq dipped 0.1 percent. For May, the Dow rose 1.9 percent and the Nasdaq gained 3.8 percent.

The stock market’s advance this year has come largely on supportive monetary policies from central banks around the world, which helped the markets ignore the Wall Street adage of “sell in May, go away” — a historical trend of seasonal weakness. In May 2012, the S. P. 500 fell 6.3 percent.

Energy and health care stocks were among the session’s worst performers, with Pfizer and Exxon Mobil the two biggest drags on the S. P. 500. Pfizer lost 3.6 percent to $27.23, while the S. P. health care sector index dropped 2.2 percent. Exxon Mobil slid 1.8 percent to $90.47. The S. P. energy sector index lost 2 percent.

Palo Alto Networks shares lost 10.8 percent to $48.52 after the company gave an outlook that was below expectations.

The benchmark 10-year Treasury note fell 4/32 on Friday, to 96 19/32, as its yield rose to 2.13 percent, from 2.12 percent late Thursday evening.

Article source: http://www.nytimes.com/2013/06/01/business/daily-stock-market-activity.html?partner=rss&emc=rss

Economix Blog: Little Cause for Inflation Worries

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

Periodically I am asked whether we should worry about inflation, given how much money the Federal Reserve has pumped into the economy. Based on the Bureau of Economic Analysis data released Friday morning, this answer is still emphatically no.

The personal consumption expenditures, or P.C.E., price index, which the Fed has said it prefers to other measures of inflation, fell from March to April by 0.25 percent. On a year-over-year basis, it was up by just 0.74 percent. Those figures are quite low by historical standards, and helped push consumer spending up. (Measured in nominal terms, consumer spending fell slightly in April. After adjusting for inflation, it rose.)

When looking at price changes, a lot of economists like to strip out food and energy, since costs in those spending categories can be volatile. Instead they focus on so-called “core inflation.” On a monthly basis, core inflation was flat. But year over year, this core index grew just 1.05 percent, which is the lowest pace since the government started keeping track more than five decades ago.

Source: Bureau of Economic Analysis, via Haver Analytics. The core P.C.E. price index refers to the price index change for personal consumption expenditures, excluding food and energy. Source: Bureau of Economic Analysis, via Haver Analytics. The core P.C.E. price index refers to the price index change for personal consumption expenditures, excluding food and energy.

Low inflation may be one reason that consumers have proven so resilient in recent months (in addition to the lift they’re getting from rising home prices). A measure of consumer sentiment released Friday by the University of Michigan surged in May, and is at its highest level since July 2007.

Article source: http://economix.blogs.nytimes.com/2013/05/31/little-cause-for-inflation-worries/?partner=rss&emc=rss

Common Sense: SAC Case Tests a Classic Dilemma

So far, Mr. Martoma has defiantly asserted his innocence and refused to cooperate with prosecutors. He could change his mind, but the clock is ticking. The government faces a mid-July deadline when it must decide whether to seek criminal charges against Mr. Cohen relating to the trades at the center of Mr. Martoma’s case.

For all concerned, the stakes are huge. The government has already convicted 73 people in the last three years in an insider trading crackdown that in its sweep and impact has been without precedent on Wall Street. But none of them has had the iconic status of an Ivan Boesky, the 1980s arbitrageur who wore a wire to record secretly the junk bond titan Michael Milken. With a net worth estimated by Forbes at $9.3 billion, Mr. Cohen could be the marquee name that would lend the investigation a new level of public awareness and potential deterrence.

Mr. Martoma could face decades in prison if convicted. His potential prison term is especially severe because the federal sentencing guidelines are based on the amount of the illegal profit, which in Mr. Martoma’s case are said to be huge. Prosecutors have called the case the most lucrative insider trading scheme ever.

Mr. Martoma is married to a medical doctor and they have three children. A long prison term could be devastating for his family. With his wife and children inside his house in Florida, Mr. Martoma fainted on his front lawn in late 2011 when F.B.I. agents arrived to warn him that he might face charges.

But Mr. Martoma may also be in a uniquely advantageous position to make a deal with prosecutors. He’s the only former SAC trader who, the government has said, had direct dealings with Mr. Cohen concerning suspicious trades. The government said the two had a 20-minute telephone conversation the night before SAC started trading shares of two pharmaceutical companies based on confidential information Mr. Martoma gained from a doctor involved in clinical trials of an important Alzheimer’s drug. So far as is known, Mr. Martoma hasn’t told prosecutors the substance of that conversation.

This is about as close as possible to what in game theory is known as the “prisoner’s dilemma,” Randal Picker, University of Chicago law professor and a co-author of “Game Theory and the Law,” pointed out. The game was developed by RAND Corporation scientists and formalized in 1950 by a Princeton mathematician, Albert W. Tucker, who gave the game its name.

In the now-classic version, the police have arrested two suspects and are interrogating them in separate rooms. Each can either confess and implicate the other, or remain silent. If only one confesses, he goes free and the other gets a harsh sentence. If both confess, each gets a reduced sentence, but still goes to jail. If neither confesses, the government lacks the evidence needed to convict and both go free.

Game theorists have demonstrated that the rational choice, or dominant strategy, is always to confess and implicate the other, even though the optimal outcome for both occurs if neither cooperates. That’s because, as Professor Picker explained, if one prisoner has confessed, the best the other can hope for is also to confess and get the moderate sentence rather than the harsher sentence reserved for those who don’t cooperate. If one prisoner doesn’t confess, the other can go free by implicating him. Although they collectively are better off if neither cooperates, their individual self-interest dictates cooperation.

That may be one reason that, when it comes to white-collar crime, “the overwhelming majority of people tend to cooperate, in my experience,” said John F. Savarese, a partner at Wachtell, Lipton, Rosen Katz and chairman of the New York City Bar Association’s White Collar Criminal Law Committee.

Article source: http://www.nytimes.com/2013/06/01/business/sac-case-tests-a-classic-dilemma.html?partner=rss&emc=rss