Analyzing the top news stories across the web

Jan. 12 2015 3:14 PM

This Is the Reason Why You See “Sale” Signs Everywhere When Walking Into a Store

This post originally appeared in Business Insider.

Think back to the last time a store had an unadvertised sale.

You probably can't.

That's because, according to Mark Ellwood, author of Bargain Fever: How to Shop in a Discounted World, those big red sale signs that you see plastered all over stores are what gets shoppers to buy, not the actual marked-down prices.

Ellwood says these signs are known as "information cues" in the retail world, and we're powerless at resisting them—no matter if there's actually a sale going on.

Ellwood cites an MIT study where customers randomly received one of three catalogs, all featuring the same dress but at different prices ($54, $49, and $44).

In the first round of the study, the $49 dress—the cheapest option—was the best-seller. In the second round, though, an all-caps “for sale” sign was added next to each of the dresses. In this round, each price level sold equally as many dresses.

It wasn't a one-off. The author cites a second (unpublished) MIT study to caution consumers to check prices before grabbing the item with the big red sticker:

In this experiment, 200 different products from 18 different locations of the same convenience store chain were put into three groups. Products in the first group (the control group) were sold in the same way at the same price as always. Products in the second group (the quietly discounted group) were marked down 12 percent, but no sale sign was used. Products in the third group were marked with a red and yellow, all-caps “low price” sticker, but the price remained the same as always. Ellwood says, “The results were telling.”

He writes:

The quietly discounted group sold just over 17% more units than the control. But the group with the LOW PRICE sticker also had increased sales, in this case by 3.4%. That profit uptick cost the store nothing more than the price of printing a few flimsy sheets of paper.
It's a reminder to double check the true discount any time you're nudged by a splashy sign to pick up a supposed special offer in the grocery store.

And it's not just a coincidence that all those information cues are red, either.

According to Ellwood, red is an “eye-catching color”—literally—because it has the longest wavelength, making something that is red appear closer to us than it actually is.

Ellwood also points out that after black and white, red is the next color to appear in a language.

He writes:

The longer the word for a color has been in use ... the greater the number of associations, meanings, and nuances it can acquire. In this way, the color itself gains more impact. In other words, since we've been using the word for red far longer than that for, say, purple, it's embedded more deeply into our psyche. Thanks to both history and physiology, we notice a bright red sale sign more quickly and with greater interest than any other color.
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Jan. 9 2015 2:27 PM

Janet Yellen Faces a Challenging Economic Dilemma as Oil Prices Fall

This post originally appeared in Business Insider.

Falling oil prices may be good news for consumers who have seen prices at the pump start falling and the prices of other goods starting to drop as well, but it could prove a headache for Federal Reserve Board Chairwoman Janet Yellen.

That’s because the U.S., which just posted an astonishing 5 percent gain in GDP, is now flirting with deflation.

The Fed is thus facing a bizarre economic dilemma: It has runaway growth and collapsing prices at the same time. The weapons available to Yellen to fight deflation are flimsy. Normally, the Fed would want to lower interest rates. But they are already at zero—there is nowhere left to go. And, of course, house-on-fire economic growth usually calls for higher interest rates, which would only exacerbate the deflation side of the problem.

The Fed most recently faced this problem in the 1980s, when low oil prices spurred runaway growth. The Fed took its eye off the ball at the time, leading to nearly 5 percent inflation by 1990.

Both Brent and West Texas Intermediate crude oil prices have fallen by more than half since June as the U.S. shale oil boom increased the supply of the commodity and signs that emerging-market growth is slowing weighed on demand. The rout was also compounded by the surprising decision by OPEC in November not to cut production in response to falling prices.

Those falls in oil prices are pushing inflation below the Federal Reserve’s 2 percent target, potentially delaying the likelihood of rate hikes despite a buoyant economy.


Goldman Sachs

As Jan Hatzius, chief economist at Goldman Sachs, writes in a recent note: “It is not inconceivable that Fed officials will hike even if core inflation ends up close to 1 percent, as long as they are convinced that the weakness is entirely due to temporary factors such as energy prices and oil. But the hurdle for how convincing other data need to be in this case would increase significantly.”

That is, the Fed may put its 2 percent target aside if the Federal Open Market Committee, or FOMC, decides that prices are being depressed by short-term factors that will eventually stabilize or reverse, pushing inflation back toward target. The International Monetary Fund forecasts 3.1 percent growth in the U.S. over 2015, while the country’s unemployment rate was 5.8 percent in November, around the level that many economists consider the “natural rate” below which wage gains would be expected to start pushing up prices.

This would imply that labor-market indicators would become critical to the FOMC’s analysis of when to raise rates—and in particular wage growth. As Yellen put it in August last year, “since wage movements have historically been sensitive to tightness in the labor market, the recent behavior of both nominal and real wages point to weaker labor market conditions than would be indicated by the current unemployment rate.”

That is, rate hikes may be put on hold until people start seeing the benefits of growth in their take-home pay. Moreover, with global fears over the prospect of deflation gripping much of the developed world, the FOMC body could find itself under pressure to hold off rate hikes while inflation remains below target.

But there are big risks to this strategy. If the dip in inflation due to commodity-price falls helps to mask the underlying strength of the U.S. economy, once they stop falling inflation could come surging back and be much more difficult to control.

Below is a chart showing Barclays’ forecasts for headline inflation. As you can see, after dipping into negative territory, Barclays expects CPI to head above 2 percent by the end of 2015.

If the FOMC holds off for too long and expectations of higher inflation take hold, then it could be much more difficult for the Fed to bring it back to target over the medium term.

Moreover, Yellen has also indicated that sluggish wage growth may not prove a sufficient reason to hold rates down. Sluggish wage growth could reflect “pent-up wage deflation” that could be holding back the pace of gains, labor’s share of income could be structurally lower than it has been in the past (firms are spending a larger proportion of their money on e.g. dividends to shareholders and investment than on employees than in the past), and people who are unemployed finding it more difficult than expected to return to the workforce.

If those warnings prove accurate, prices may start to rise before wage growth picks up substantially, implying that the Fed may need to increase rates earlier.

There have indeed been numerous predictions of runaway inflation over the past few years, all of which have proved painfully wide of the mark. Nevertheless, the balance of risks has been shifting as the U.S. continues to recover from the crisis and close the remaining economic gap it left behind.

The Fed is charged with working out a safe exit strategy from its emergency policies, which many credit with having rescued the country from economic disaster. However, the collapse in oil prices has served only to make this difficult job even harder.

Jan. 8 2015 1:25 PM

This Image Isn’t by Banksy, but It’s Still Going Viral for the Right Reasons

This post originally appeared in Business Insider.

There’s an illustration being shared on Facebook, Instagram, and Twitter that claims to be a tribute created by street artist Banksy in response to the terrorist attack that killed 12 people near the offices of the French satirical magazine Charlie Hebdo in Paris on Wednesday.

While the image does have a touching message, it’s a fake—not created by Banksy.

Here’s the illustration that everyone is sharing:

Mashable is reporting that the image was posted by a “popular ‘Banksy’ account” on Instagram. The Instagram isn’t run by Banksy at all, and is actually a fan page that shares street art created by a variety of different artists—rarely with any attribution.

Banksy has issued a statement to the Independent denying that the illustration is his work. “We can confirm this is not by Banksy,” said a spokesman for the anonymous artist.

Instead, it appears that the illustration was originally posted by graphic designer Lucille Clerc, just with an added Instagram filter.

Here’s Clerc’s original Instagram post:


Break one, thousand will rise #CharlieHebdo #JeSuisCharlie #raiseyourpencil

A photo posted by Lucille Clerc (@lucille_clerc) on

Search on Facebook, Twitter, and Instagram and you’ll see plenty of popular accounts that seem to be official Banksy pages. The problem of fake social media accounts is so widespread that Banksy has even posted on his official website to deny he runs any Facebook or Twitter accounts. He does, however, have one Instagram account, which was used during his recent trip to New York.

Facebook was recently forced to remove the verification checkmark for a Facebook page for a Banksy account with millions of likes after the artist’s PR representative denied that he had anything to do with it.

The Instagram account that the pencil illustration originates from is part of a ring of fake social media profiles. As well as the fake Instagram and Facebook accounts, the administrators behind the Banksy pages also run a YouTube account that re-uploads popular viral videos to capitalize on their popularity.

Another clue that points to the image being fake is its file size. The image uploaded to the fake Banksy social media posts is pixelated and low-resolution. Banksy is an artist who makes a living from exhibiting his work, and wouldn’t want his work to be displayed in a way that made it look bad.

It’s tricky to verify new Banksy work. Because of Banksy’s continued anonymity, and the often confusing similarity to other graffiti artists, many works of art end up mistakenly labeled as created by Banksy. A handful of galleries and companies in the U.K. are, however, experts in his work, meaning that they can verify prints purported to originate from Banksy.

Nevertheless, given Wednesday’s tragic events, the sentiment is strong.

Jan. 7 2015 12:37 PM

Taxi Regulators Suspend Five Out of Six Uber “Bases” in New York City

This post originally appeared in Business Insider.

New York City has temporarily banned some of Uber's brick-and-mortar "bases" there, but it shouldn't affect service, the company says.

Five of the six bases run by the taxi service were suspended by the city's taxi and limousine tribunal after Uber refused to hand over ride records.

The decision was handed down Tuesday.

The Taxi and Limousine Commission (TLC) was requesting that Uber hand over "the date of trip, time of trip, pick up location, and license numbers" over a finite period.

The TLC's authority to request ride information comes from a rule that says "a Licensee must truthfully answer all questions and comply with all communications, directives, and summonses from the Commission or its representatives."

Uber argued unsuccessfully that the TLC's directive was a violation of the Fourth Amendment, which prohibits unreasonable search and seizure.

The TLC says its rule is "necessary to ensure adequate protection and public safety," according to the decision.

An Uber representative told Business Insider that operations would not be affected by the ban.

Here's what Uber had to say about the TLC's decision:

Uber continues to operate legally in New York City, with tens of thousands of partner drivers and hundreds of thousands of riders relying on the Uber platform for economic opportunity and safe, reliable rides. We are continuing a dialogue with the NYC Taxi and Limousine Commission on these issues.

Jan. 5 2015 3:15 PM

29-Year-Old Russian Hedge Fund Founder Disappears With All the Firm’s Money

This post originally appeared in Business Insider.

The value of the ruble isn’t the only thing that is vanishing in Russia. A Moscow hedge fund chief executive has disappeared, along with all the money in the firm's accounts. 

That’s according to a stunning feature in the Wall Street Journal. Kim Karapetyan, 29, the youthful founder of Blackfield Capital CJSC, has disappeared, much to the dismay of his staff, which didn’t know until a group of men charged into the firm’s plush offices.

From the Journal

The firm’s employees didn’t know anything was amiss until mid-October, when three men charged into Blackfield’s offices in an upscale complex along the Moscow River in central Moscow, said people who were there.
The men, who didn't identify themselves, said they were looking for Blackfield's 29-year-old founder, Kim Karapetyan, according to the people who were there.
But Mr. Karapetyan wasn't in the office that day or the next, when senior executives explained to the staff of about 50 that there was no longer any money to pay their salaries, said one former senior executive and ex-employees. The executives disclosed that all the money in the company accounts—some $20 million, including investor cash—was also missing, they said. It couldn't be determined whether investors were from Russia or other countries.
"Our CEO just … disappeared," said Sergey Grebenkin, one of the firm's software developers, in an interview.

No attempts to contact or find Karapetyan were successful, and he is still MIA. The company’s website brags that its “systematic investment process helps avoid human-factor, cognitive-biases, and emotional-trading errors,” but the CEO running away with all your money seems like a fairly big human error.

Jan. 5 2015 1:11 PM

A Morgan Stanley Employee Stole and Posted Data on 900 Clients

This post originally appeared in Business Insider.

Morgan Stanley said it has fired an employee who had stolen data from 900 of the firm's wealth management clients.

"While there is no evidence of any economic loss to any client, it has been determined that certain account information of approximately 900 clients, including account names and numbers, was briefly posted on the Internet.  Morgan Stanley detected this exposure and the information was promptly removed," Morgan Stanley said in a statement. 

The name of the terminated employee has not been released. 

Morgan Stanley (NYSE: MS) today began advising certain Wealth Management clients that an employee had stolen partial client data.  The Wealth Management employee has been terminated, and law enforcement and regulatory authorities have been advised of the incident.
While there is no evidence of any economic loss to any client, it has been determined that certain account information of approximately 900 clients, including account names and numbers, was briefly posted on the Internet.  Morgan Stanley detected this exposure and the information was promptly removed.
Overall, partial account information of up to 10 percent of all Wealth Management clients was stolen.  The data stolen does not include account passwords or social security numbers.  The Firm is taking the precaution of notifying all potentially affected clients and instituting enhanced security procedures including fraud monitoring on these accounts.
All impacted clients are in the process of being contacted by the Firm and their Financial Advisors.  A dedicated information line also has been established at 855-398-6437 (U.S. and Canada) or 512-201-2186 (outside the U.S. and Canada).
Morgan Stanley takes extremely seriously its responsibility to safeguard client data, and is working with the appropriate authorities to conduct and conclude a thorough investigation of this incident.  

Jan. 3 2015 8:00 AM

Russia Is Building a Train That Will Zip From Moscow to Beijing in Just 48 Hours

This article originally appeared in Business Insider.

Russia plans to build a new high-speed railway, with trains that would speed from Moscow to Beijing in just 48 hours. At the moment, it takes about seven days to commute between the two cities and the route requires changes. According to Romanian website Glasul, the Kremlin has awarded the project to China Railway High-speed (CRH), a subsidiary of the state-controlled China Railway (CR), which is working in a joint venture with the local firm Uralvagonzavod. CR is famous in the train industry for operating the world’s only magnetic levitation train in an urban area, the Shangai monorail.

Previously, Russia had commissioned a French firm, Alstom, for the first work on the rail line between Moscow and Kazan. Alstom is one of the leading high-speed train manufacturers in the world: In 2007 it set up a new record for conventional-wheeled high-speed trains, speeding up at 574 kilometers per hour (357 miles per hour). It also operates the urban tram line in Nottingham. But since France did not deliver its order of Mistral ships in late November this year, it appears the Russian government took it personally and decided to switch that branch of the construction of the high-speed railway to CRH, which is now in charge of the whole line, from Moscow to Beijing.

Here is a map showing the different branches:


Business Insider

The Moscow-to-Beijing direct route will measure about 7,000 kilometers (4,340 miles), effectively three times farther than the longest high-speed railway in the world, the Beijing-to-Guangzhou train, which is also operated by CRH (in red, above). 

Glasul reports that the new railway is a top priority for both the Chinese and Russian governments, having been discussed directly by the prime ministers of the two countries, Dmitri Medvedev and Li Keqiang, in recent bilateral meetings. Glasul writes that other supporters include the German automobile corporations Volkswagen, BMW, and Mercedes, which are all more than keen to speed up the shipping of their vehicles from China to Europe.

The new route will probably replace the mighty Trans-Siberian railway, connecting St. Petersburg to Vladivostok (the blue line in the map above). First, the old route doesn't go through Kazan, a city that in recent years has become more and more central to the Russian economy. Second, and more importantly, it takes about 15 days to travel the Trans-Siberian route from start to finish, whichm compared with 48 hours for the new line, sounds like a heck of a long time.

Dec. 31 2014 3:23 PM

These Are the Countries That Will Rage the Most on New Year’s Eve

This article originally appeared in Business Insider.

New Year’s Eve celebrations come with a lot of expectations—and one of them is the fact that you will be staying up until dawn toasting to the new year. But if all you want to do is have a bit of champagne and call it a night, you're not alone. According to data collected by Jawbone, a fitness tracker company, nearly one-third of Americans are asleep before midnight. 

Jawbone collected information from hundreds of thousands of its users who track their sleep patterns through the wristband UP, and broke it down geographically. With that data they created a map that shows just how late people from around the world stay up on New Year’s Eve: 

Apparently the best country to party in on New Year’s Eve is Russia. Since Christmas was removed from the calendar during the Soviet era, all of the traditions of Christmas were moved to New Year’s Eve. The holiday has become a "super-holiday," in which people stay up late drinking, “Father Frost” comes to give gifts to children, and people decorate “New Year trees.” 

Only 71.2 percent of jawbone users in the U.S. make it to midnight, compared to the astounding 95.4 percent of Russians who are awake. In the United Kingdom 84 percent of users are up until midnight, 79.4 percent in Canada, and 69.9 percent in Australia (the country that gets the most sleep).

South American countries had a large proportion of users staying awake past midnight —in Argentina 97.5 percent stayed up, 94.2 percent in Brazil, and 96.1 percent in Chile. Brian Wilt theorized that a reason the South American countries had such late average bedtimes is due to the fact that their New Year’s Eve in in the summer. 

China and Israel are asleep earlier than any other countries in the world, which make sense since they both have their own New Year’s traditions that are celebrated on different days. 

But the sleepy U.S. had an average bedtime of 12:55 a.m., compared to Russia’s average of 3:36 a.m. 

In fact, only one city in the U.S. made the world's  top 19 list: 

So for those in the New York City area, maybe you should check out Astoria this year. 

For more information on the study, check out Jawbone's website here

Dec. 31 2014 12:44 PM

Orbitz and United Are Suing a 22-Year-Old Who Figured Out How to Game Airlines

This article originally appeared in Business Insider.

As a side project, 22-year-old computer whiz Aktarer Zaman built a website called Skiplagged, which searches out cheap airfares, particularly a type of cheap airfare called Hidden City that is frowned upon by the airlines. Last month, United and Orbitz filed a lawsuit trying to shut his website down, Bloomberg reported at the time. In the lawsuit, United and Orbitz call Skiplagged “unfair competition” and say it promotes “strictly prohibited” travel, reports CNN Money’s Patrick Gillespie. They’re asking for $75,000 in damages. But instead of bowing, he’s fighting.

“Everything Skiplagged has done and continues to do is legal, but the only way to effectively prove this is with lawyers,” he said in a blog post on GoFundMe, where he’s trying to crowdfund at least $20,000 to pay his legal bills.

So far, he’s raised almost $33,000 with the total raising every minute, thanks to all the press attention this lawsuit has gotten. (In the time it took us to write the post, the total raised grew from $14,000 to $17,000.)

“I really don’t know how much this lawsuit is going to ultimately cost, other than probably a lot,” he told donors on GoFundMe. “However, you have my word that how every cent is spent will be posted here. If there are any remaining funds, those will be completely donated to charity. I haven’t decided which yet, but if you have any suggestions, do send me a message.”

Hidden City travel is when you book a longer flight that includes a layover to your real destination because it’s cheaper than flying direct. You travel with carry-on and you get off the plane during the layover.

Travelers feel that this is a perfectly fair, legit way to travel: They’ve paid for the flight—why does the airline care if they sit in the seat the whole time? But airlines frown on it. They want you to pay rates according to their complicated pricing schemes. They argue that booking a flight like this makes it difficult to track passengers and that it unfairly takes advantage of the hub-and-spoke nature of airfares, where airlines fly to hub cities and add connecting flights from there.

Anyone can search and book his own Hidden City flights, but it’s a time-consuming mess to search through many cities, hoping to find a cheaper flight that has a layover at your true destination. Skiplagged does that searching for you. And finding such a flight isn’t a given. Often it tells you that there are no lower-cost Hidden City flights available that fit your travel needs.

As you might imagine, airlines hate this practice. If the airline discovers that you are getting off the airplane at a layover, it might cancel the ticket without refund, reports Bloomberg. It may do other things, too, like void frequent-flyer mileage.

Zaman told CBS News that his site merely shows the airfares, it doesn’t book the tickets. “I haven’t made any money from this,” Zaman said. He’s been paying for the costs of the website out of his own pocket. But now, the Internet has taken an interest and people are opening up their wallets to help with his legal fight.

United sent us this statement: “This practice violates our fare rules, and we are taking action to stop it to help protect the vast majority of customers who buy legitimate tickets.”

An Orbitz spokesperson told us that Zaman had found a way to help Skiplagged’s visitors book the flight directly on Orbitz.

“Skiplagged had developed technology that provided a direct link to our booking engine. So when it had identified a hidden city itinerary there was a ‘book now’ button that the customer clicked, directed them to Orbitz and then we processed the transaction not knowing the intent of the customer,” a representative told us. “We asked Skiplagged to disengage that link but they originally declined. We have since blocked the link and I believe the link to Orbitz is no longer displayed.”

The Orbitz representative also told us if some airlines catch a passenger on “a hidden-city routing, that ticket will be voided consistent with published fare rules and a refund will not be authorized.”

The representative explained, “While some independent operators might encourage consumers to try to break ticketing rules, we have an obligation to uphold airline fare rules and also protect consumers from making purchases that could be invalidated.”

We’ve reached out to Zaman.

Here’s a chart posted by Skiplagged that shows how often Hidden City fares are cheaper than longer fares on a flight in August between Seattle and New York.

The dark blue shows Hidden City fares.


You can follow the progress of this crowdfunding campaign and lawsuit on

Dec. 31 2014 8:00 AM

Dunkin’ Donuts Has Huge Expansion Plans

This article originally appeared in Business Insider.

Expect to see more Dunkin' Donuts shops in the near future. According to Quartz, Dunkin' Brands CEO Nigel Travis wants 200 Dunkin' Donuts in California in the next five years. Travis also plans to re-launch Dunkin' Donuts in Brazil, where the company closed its doors a decade ago. He plans to have 100 shops there by 2020. Additionally, he is aiming for an expansion across the UK, with 144 new stores set to open.

This vast expansion plan is in part because Dunkin' Donuts is not nearly as ubiquitous as other coffee chains are in the US. In fact, there aren't any locations in several states throughout the midwest, such as Minnesota. Shops are sparse in Texas, California, and throughout the Pacific Northwest, too. Travis knows that it would be impossible to keep the company alive without expanding outside of state lines.

Travis's strategy for expanding internationally is to re-brand the franchise in every new country. This might even mean changing the brand's namesake menu completely. For instance, in India, Dunkin' Donuts introduced a burger called the "Tough Guy Burger." The Wall Street Journal also reported that the donuts on the diverse menu include unique flavors, like white chocolate with guava and chilli.

Dunkin' Donuts has already been experimenting with innovating its menu. In 2013, the company introduced gluten-free pastries to the menu.