Category Archives for "News"

Weather is a hot commodity… no, literally

Weather is an unpredictable beast: It directly determines the fate of ~30% of U.S. businesses, and it still sometimes wreaks havoc, albeit indirectly, on all other industries. 

Extreme rainfall, drought, unusual temps, and monster winds have very real financial implications for companies in the agriculture, energy, construction, sports, travel and tourism industries. 

It’s snow joking matter 

Traditional insurance only covers low-probability, catastrophic events like earthquakes — not high-probability, less-dramatic-but-still-detrimental acts of nature like a crazy-warm winter. 

But, in 1996, along came a financial umbrella in the form of weather derivatives — instruments that provide indexes for hedging risks and (whoa) turning weather into a tradable commodity with monetary value. 

CME, a derivatives marketplace, allows companies to enter into insurance-like contracts, paying premiums to sellers to assume the risk of certain indexes related to temps, precip levels, etc. 

Depending on whether the specified index threshold occurs within a given window (e.g., “If local temps fall below freezing at least 15 days in October”), either the seller keeps the profit or pays out — without requiring proof of damage. 

Don’t rain on my trade

In 1999, CME introduced weather futures and options — exchange-traded derivatives. Unlike CME’s other, privately negotiated contracts, these futures are standardized and traded publicly on the open market via online auction and negotiation. 

These derivatives are attractive portfolio additions to some investors due to their low correlation with traditional financial markets. 

Since its introduction, the futures exchange has seen steady growth. CME currently lists derivative contracts for nearly 50 cities globally, and trading continues to increase.

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Made in China: The surveillance giant thinks every country should use its technology

Fun fact: Today, over 18 countries — including Ecuador, Zimbabwe, Uzbekistan, Pakistan, Kenya, and Germany — use intelligent surveillance systems to monitor their citizens. Funnest fact: Those systems are all made in China.

That’s because in the last decade, the Chinese government has become the surveillance capital of the world (see “social credit” system), watching citizens from tens of millions of cameras and billions of travel, internet, and business records. 

Now, the government has found a way to make the technology more “affordable” to market toward other countries. But, is citizen surveillance really keeping danger on the streets further away? Or is tech-driven authoritarianism even closer than it appears?

Oh, how far we’ve come

“They’re selling this as the future of governance,” Adrian Shahbaz, research director at Freedom House, said of China’s new surveillance exports. “The future will be about controlling the masses through technology.”

He’s not wrong: According to The New York Times, even countries that couldn’t afford the technology at least signed up to receive training in topics like “public opinion guidance” (AKA censorship).

But don’t worry, Beijing now offers loans to governments that can’t afford surveillance systems — so no country ever has to suffer the hardships of an under-surveilled state.

Never take the loan

In 2011, Ecuador received a Chinese-designed surveillance system in exchange for oil — one of its main exports — but that was only the beginning.

Ecuador has since taken out around $19B in Chinese loans to finance Chinese-built infrastructure projects like dams, bridges, and highways. To settle the bill, China gets to keep 80% of Ecuador’s oil.

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America’s weirdest trade secret theft cases

Most of the trade secret theft cases we read about relate to high-profile tech suits: Uber stealing from Waymo, Apple screwing over Qualcomm, or Huawei pilfering T-Mobile.

But here’s a new one: As the Chicago Tribune reports, popcorn maker CaramelCrisp has filed a federal suit claiming that one of its ex-employees heisted 5k top-secret files that “[put] its secret recipes at risk.”

It’s a reminder that even the nichest of niche businesses must go to battle to defend their trade secrets.

What is a trade secret, anyway?

In sweeping terms, a trade secret is any information (be it a “formula, pattern, compilation, program, device, method, technique, or process”) that gives a company a competitive edge, and derives financial value from not being known to the public.

The classic example is Coca-Cola’s secret recipe, which is known to only 2 living people and is supposedly locked in a multimillion-dollar vault

But popcorn companies have trade secrets too

According to CaramelCrisp (more commonly known as Garrett Popcorn), its popcorn recipes were available to only 3 employees, each of whom had to verify her identity with a biometric thumbprint for access.

Allegedly, one of these 3, former employee Aisha Putnam, got her salty little hands on “information about recipes, batch pricing, product weights, [and] production processes,” and shared them via email with competitors — an offense that can come with hefty restitution fees and jail time.

It gets weirder

Believe it or not, a popcorn trade secret doesn’t even crack the list of strangest trade secret theft allegations we’ve read about:

  • Walter Liew stole trade secrets from DuPont relating to the production of the chemical titanium dioxide (used to make the cream in Oreo cookies brilliant white). He was caught and is currently serving a 15-year prison sentence.
  • A Hooters competitor allegedly stole “a blueprint used to recruit and retain” Hooters Girls.
  • A Columbia Sportswear employee shared trade secrets (including  blueprints for a pair of “Electro clogs”) with universally hated footwear purveyor, Crocs.

As they say, the greatest secrets are usually hidden in the most unlikely places.

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High school proms are getting extremely expensive

Ahhhh, prom, that fairy tale night of limos, glamour, dancing, buckets of fresh pig blood, and — a TON of cash.

According to the most recent data (compiled by Visa in 2015), the average prom attendee spends $919 on the likes of tickets, dresses and tuxes, haircuts, shoes, jewelry, makeup, manicures, corsages, tanning, transportation, dinner, and post-prom activities.

High school proms are getting extremely expensive 1

The tradition began more than a century ago as a simple “night of firsts,” and started to evolve into an elaborate affair in the 1950s, when American families found themselves flush with disposable income. Today, prom is a veritable money-pit.

The average middle-income family spends $234k raising a kid (0 to 17); at $919, prom represents about 0.4% of this entire 17-year cost.

These rising costs have drawn criticism that prom isn’t accessible to everyone. Though for many, it never has been: Until 2013, a handful of proms were still segregated — and in some states, gay couples have been banned from attending prom altogether.

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Extreme renters: Young, well-paid people are choosing not to own anything

As NPR’s Sam Sanders reports, a small but growing number of 20-something professionals are shunning ownership altogether and turning to the sharing economy for all of their basic needs.

They rent everything — beds, workspaces, cars, bicycles, furniture — and live a life of self-imposed ultra-minimal ownership.

Who needs stuff?

Poised to grow to $335B by 2025 (a 20x increase), the sharing economy is trickling down into the granular cracks of capitalism: You can now rent everything from a vacuum cleaner to a dog.

As a result, some young professionals, like 27-year-old Steven Johnson, see no need to own anything.

Johnson uses Lyft and Uber instead of a car; a PodShare bunk bed in lieu of an apartment; a gym membership for fitness, laundry and showers; and WeWork to run his business. He owns only two outfits, which he rotates accordingly.

Material minimalist / digital hoarder

Though folks like Johnson rent by choice, many others use the sharing economy as a financial crutch. A rough housing market coupled with insane student loan debt has prompted some millennials to pare down — at least when it comes to material items.

“I talked to a lot of minimalists,” one researcher told NPR. “They own like 30 things, but … they hoard digitally. They have tons of photographs. They have thousands and thousands of Instagram posts.”

Nothing says minimalism like a WeWork insta-selfie.

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