TIME Companies

Keurig Recalling Millions of Coffee Makers After Burn Complaints

More than 7 million units are being recalled after 90 reported burn-related injuries

Keurig Green Mountain has a problem: the coffee produced by more than 7 million of its brewing machines is a little too hot for java lovers.

The U.S. Consumer Product Safety Commission on Tuesday announced a recall of Keurig’s Mini Plus Brewing Systems, citing concerns about water that can overheat during the brewing process, spraying out and burning consumers. Keurig has received about 200 reports of hot liquid escaping from the brewer, including 90 of those that said they suffered burn-related injuries.

The company is recalling about 6.6 million units sold in the U.S. and 564,000 sold in Canada. For details about the units being recalled, see the CPSC report here.

The recalled units were produced between the end of 2009 and July 2014 and were sold at a handful of national retailers, as well as online on Keurig’s website. Keurig said consumers could contact the company for a free repair.

A bulk of Keurig’s sales are derived from the coffee portion packs it sells, not the brewing systems (though those devices are important to help maintain growth of the coffee sales). For the latest fiscal year, Keurig generated $822.3 million in sales from brewers and accessories, while the beverage packs had $3.6 billion in sales.

For those with a long memory, the Keurig recall will remind many of decades-old headlines involving McDonald’s and a cup of scalding coffee. In that infamous 1992 case, a New Mexico woman was severely burned by a cup of coffee she ordered at a drive through window. A state court jury awarded the woman $2.7 million in punitive damages, though a judge later drastically cut that award. The woman, Stella Liebeck, and McDonald’s reached an out-of-court settlement in 1994.

This article originally appeared on Fortune.com

TIME Economy

U.S. Economy Notches its Best Performance in Over a Decade

Dow Rises Over 400 Points Day After Fed Signals No Rise In Interest Rates
Andrew Burton—Getty Images Traders work on the floor of the New York Stock Exchange in Nwe York City on Dec. 18, 2014.

The improved reading was a result of an increase in personal consumption

The U.S. economy’s third-quarter performance is the strongest the nation has recorded in more than 10 years, as consumers continue to spend more as they feel emboldened by a stronger job market, a stronger housing market and rising stocks.

Gross domestic product for the third-quarter leapt a better-than-expected 5% according to the Commerce Department’s “third” estimate. That growth exceeded the prior quarter’s 4.6% increase. It also was the greatest advance since the third quarter of 2003, according to Bloomberg.

Economists had projected a 4.3% jump in GDP for the latest reading of the economy, according to a poll conducted by Bloomberg. And no economist polled by Bloomberg had expected a revision as high as the Commerce Department reported: the consensus range was between 4% to 4.5%.

The improved reading was a result of an increase in personal consumption that was more than the Commerce Department had initially reported, as well as greater federal, state and local government spending, an increase in exports and residential fixed investment. Imports, however, decreased.

There had been some indications the economy was performing well even before the Commerce Department report. Retail sales leapt a better-than-expected 0.7% in November, the strongest growth the Commerce Department has reported since March of this year. Fortune earlier this week reported that U.S. shoppers spent a record $42 billion on Saturday and Sunday, the final weekend before Christmas and signaling Americans are perhaps more willing to open up their wallets as they enjoy savings from lower prices at the pump and feel emboldened by a stronger stock market and improves in housing and employment.

This article originally appeared on Fortune.com

MONEY Fast Food

2014 in Fast Food: A Year of Reckoning, Makeovers, and Waffle Tacos

Here's a look back at the strategies big and small, bold and sometimes bizarre, that sought to capture more of your fast food dollars over the past year.

In 2014, Ronald McDonald got a makeover, with the iconic clown mascot sporting supposedly hipper outfits including a vest, cargo pants, and sometimes a bowtie in order to—again, supposedly—win over new customers, especially younger ones. The makeover, widely decried as “desperate,” is symptomatic of a year marked with a wide range of alternately innovative and puzzling changes made by fast food players. In many ways, 2014 was a year of reckoning and upheaval in fast food, and not only for McDonald’s. Click through the gallery below and you’ll see what we mean.

 

  • Breakfast Wars

    141222_EM_FastFood_1
    Courtesy of Taco Bell

    The year in fast food got under way with the much-anticipated national launch of a Taco Bell breakfast menu, featuring the Waffle Taco. McDonald’s has thoroughly dominated the fast food breakfast world over the years, and Taco Bell’s encroachment on its turf was equal parts bold and nasty—including ads that mocked McDonald’s for being old-fashioned and outdated, and that used real-life Ronald McDonalds to endorse Taco Bell’s breakfast. The squabbles expanded into a broader war over fast food breakfast, which is the only traditional meal time that’s been experiencing sales growth of late. For its part, McDonald’s has introduced new breakfast options and rolled out free coffee offers twice in 2014 in order to win over customers. While McDonald’s remains the leader in fast food breakfast and chain restaurants overall, the expansion and increased competition from Taco Bell and other players in the fast and fast casual space are a big part why the Golden Arches has struggled mightily—a theme throughout 2014.

  • Personalization

    141222_EM_FastFood_2
    ZUMA Press, Inc / Alamy

    Higher quality ingredients and some level of customization in food ordering are highly prized by millennials. They’re also both central parts of the “fast casual experience and prime reasons that Chipotle, Panera Bread, and the rest of the restaurant category are flourishing. To try to stay competitive—and perhaps even hip with the youngsters—old-fashioned brands such as Pizza Hut and McDonald’s raised the bar on personalized orders in 2014. The former introduced a whole new menu featuring six new sauces, 11 new crusts, and four spicy “drizzles” that can be mixed and matched, while the latter has been frantically expanding a build-your-own burger concept to offset underwhelming sales.

  • Expanding Menus

    141222_EM_FastFood_3
    Alamy

    In addition to expanded breakfast and more personalization options, plenty of quick-service restaurants plodded on with a years-in-the-making trend of bolstering up menu choices in general. At the start of 2014, McDonald’s franchise owners were complaining about how large the menu had gotten—25 items for the “Dollar Menu and More” section alone, where most things cost $1 or $2. Expanded menus slow down service (especially at the drive-thru), but that hasn’t stopped many fast-food operators from trying to attract customers with more and more choices. The two most obvious examples are Starbucks, which has been adding tea and alcohol to menus left and right and broadly expanded its food selection and plans on doubling food sales in five years, and Pizza Hut, which simultaneously made its menu larger and more personalized to woo younger customers in particular. On a smaller scale, Wendy’s decided to add the highly successful Pretzel Bacon Cheeseburger to the menu permanently, and virtually every national fast food establishment keeps on rolling out limited-time offer items regularly.

  • Shrinking Menus

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    Bloomberg—Bloomberg via Getty Images

    Shrinking Menus
    While the pressure to expand menus still exists, McDonald’s in particular has come to realize that there are limits to how big a menu can get before it hurts the business. Items like the McWrap, which comes with two choices of chicken and three sauce options and cannot be prepared in advance, slow service to a halt—making it virtually impossible to McDonald’s goal of getting orders to customers in one minute or less. After yet another report of declining same-restaurant sales in early winter, McDonald’s decided it was finally time to cut the menu, which had grown to 121 items, a 75% increase in a decade. The fast food giant is now testing the removal of some Quarter Pounders and other sandwiches to make the menu more doable (and profitable) for the company. Casual sit-down dining chains including Chili’s and Red Lobster likewise decided in 2014 to trim back menus, which had metastasized and proven unwieldy and not particularly popular with customers.

  • Digital Ordering and Payments

    141222_EM_FastFood_4
    Anatolii Babii / Alamy

    Burger King, Taco Bell, Starbucks, Chick-fil-A, Dunking Donuts, and McDonald’s are among the fast-food operators that advanced the options to pay for purchases—and often, order before ever setting food in the restaurant—with a smartphone in 2014. When you think about, it especially makes sense for fast food players to be at the forefront of the mobile payment sphere: These businesses are based on the premise of satisfying cravings in a hurry, so of course they love the idea of customers being able to order with the tap of a phone, before really thinking through what it is they’re ordering. The advent of Apple Pay, accepted at McDonald’s, Subway, and Panera Bread, among others, is good for business too because customers don’t need to have cash or even a credit card on hand to get their fix of food.

  • Worker Strikes

    141222_EM_FastFood_5
    Scott Olson/Getty

    Periodic walkouts by fast food workers around the U.S., combined with a big protest outside McDonald’s headquarters in Illinois in May, which led to hundreds of arrests, have brought various versions of the “Fight for $15″ (a campaign to boost all fast food employee wages to a minimum of $15 per hour) into the national spotlight in 2014. The movement appears to be growing, with walkouts in 150 cities in September, then reaching 190 cities during a planned strike in December. While it seems unlikely that the world’s biggest fast food companies will give in (and certainly not easily), they may not have a choice in some parts of the country: Seattle instituted a $15 minimum wage this year, and cities such as Los Angeles, San Francisco, Chicago and New York are considering doing the same—moves that would affect not only fast food workers, but all low-wage employees.

TIME Companies

Dov Charney, Bruised Ex-CEO of American Apparel, Down to Last $100,000

American Apparel ousted its CEO, Dov Charney, who has been the target of lawsuits alleging inappropriate sexual conduct with female employees in Los Angeles, California on June 19, 2014
Ringo Chiu—Zuma Press/Corbis American Apparel ousted its CEO, Dov Charney, who has been the target of lawsuits alleging inappropriate sexual conduct with female employees in Los Angeles, California on June 19, 2014

From CEO to ... a couch. Times are tough for American Apparel's controversial ex-CEO

Dov Charney, the ousted chief executive of American Apparel, is down to his last $100,000. He is also apparently sleeping on a friend’s couch in Manhattan’s Lower East Side. And he is “suing everyone, by the way,” as a Bloomberg reporter puts it.

Charney tells Bloomberg that he took a loan from hedge fund Standard General to boost his shares in American Apparel on the understanding that the investment firm would help him get back into the company, from which he had been suspended for six months.

But the investment firm hoodwinked him, he claims: Standard General controls Charney’s shares in American Apparel as collateral and added new members to the retailer’s board. That board last week fired Charney, whose blustery reign over American Apparel was marred by piles of lawsuits alleging sexual harassment and discrimination.

Standard General said in an emailed statement that it had “supported the independent, third-party and very thorough investigation into the allegations” against Charney that led to his firing by American Apparel’s board. The firm said its “objective is to help American Apparel grow and succeed.”

Now, this ex-CEO is penniless, in relative terms: American Apparel paid Charney, its founder, an annual salary of $800,000. The clothing purveyor is also worth about $226 million to $243 million.

Still, it’s not all bad news for Charney — he’s been linked with a possible takeover bid.

[Bloomberg]

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TIME Taiwan

Uber Bans Mulled in Taiwan, Mainland Chinese City of Chongqing

CHINA-BAIDU-UBER-INTERNET-TRANSPORT
Greg Baker—AFP/Getty Images Journalists wait for the start of a signing ceremony between Uber and Baidu at the Baidu headquarters in Beijing on Dec. 17, 2014

Uber currently operates in eight Chinese cities as well as being on trial in Chongqing

After courting controversy in India and across the U.S., ride-sharing app Uber has now fallen foul of authorities in Taiwan and the Chinese city of Chongqing, over allegations that drivers are not appropriately licensed.

Officials in Chongqing, home to more than 30 million people, said in a statement Monday that Uber drivers operating without commercial licenses amounts to “illegal behavior,” reports Reuters.

The Taiwanese Transport Ministry is likewise mulling whether to shut down Uber’s website and apps.

The news comes less than a week after Uber won investment from Chinese web juggernaut Baidu, the nation’s leading search engine.

[Reuters]

TIME stocks

Jobs Confidence Gives Big Boost to Stock Market

A trader on the floor of the New York Stock Exchange on Dec. 22, 2014.
Andrew Burton—2014 Getty Images A trader on the floor of the New York Stock Exchange on Dec. 22, 2014.

The Dow Jones is once again inching toward the 18,000-point mark

Tech stocks and growing confidence in the job market helped to propel the S&P 500 and Dow Jones Industrial Average to record highs Monday.

The S&P 500 gained 0.4% to finish at 2,078.54. The Dow Jones rose 155 points, or 0.9%, to end the day at 17,959.44.

The U.S. market rose broadly on Monday after posting huge gains to close out the previous week, effectively rebounding from a seven-day sell-off earlier this month.

Early in the day, the Gallup polling organization reported that confidence in the job market had hit its highest point since the recession. Meanwhile. Investors seemed to shrug off the news that existing home sales in the U.S. dropped 6.1% in November.

Facebook and Intel both shot up by roughly 2% on Monday as tech companies helped spur the day’s rally.

Markets got a major boost last week when the Federal Reserve said it would take a patient, measured approach to its planned interest rate hike coming at some point in 2015.

The S&P 500 recent performance is a major turnaround from the market retreat earlier this month, when the index dipped below the 2,000-point mark. The index is up more than 100 points, or 5.4%, since the middle of last week, when the market saw some of its biggest gains in years.

Meanwhile, the Dow Jones Industrial Average is also riding a huge turnaround from previous weeks with more than 888 points gained — a 5.2% swing — since last Wednesday. The Dow Jones is tantalizingly close to crossing for the first time the 18,000-point mark — a symbolic milestone the index approached two weeks ago before the market began to sink.

The Nasdaq composite also recorded its fourth-straight day of gains, rising 16 points, or 0.3%, to finish Monday at 4,781.42. The tech-heavy index is also up more than 5% since the middle of last week and has gained more than 230 points over that period.

This article originally appeared on Fortune.com

MONEY Economy

Dow Races Past 18,000

141222_INV_Humbug
Jeffrey Coolidge—Getty Images

But is this "Santa Claus" rally in the stock market being driven by an economy that's naughty or nice?

The Dow Jones industrial average climbed above the 18,000 level for the first time ever, shortly after the government released a report showing the U.S. economy grew at an annual rate of 5% in the third quarter—much faster than was initially thought.

The report also pointed out that consumer spending increased faster than expected, a sign that the improving labor, stock, and housing markets are finally being felt by American households.

Given this fact, conventional wisdom says the market is enjoying a normal Santa Claus rally. But conventional wisdom is wrong. Here’s why:

At the end of most years, stocks tend to surge for reasons of good tidings and good cheer. This year, however, the bulk of the near 1,000-point rise in the Dow that began a week ago has really been driven by bad news around the world.

As economies in Europe, Asia, and Latin America have all slowed more than expected, expectations for global growth have sunk, driving down oil and commodity prices. In fact, crude oil prices have tumbled by nearly half, to around $61 a barrel since the summer.

Brent Crude Oil Spot Price Chart

Brent Crude Oil Spot Price data by YCharts

For American consumers, this is an early present from the North Pole. The average price of regular-grade gas in the U.S. has fallen to $2.47 a gallon, the lowest point since 2009, which leaves more money to stuff into Christmas stockings at this time of the year.

Yet for large parts of the rest of the world, falling oil prices and the slowing economy spell trouble.

Falling energy prices, for instance, are wreaking havoc on the budgets of emerging economies that are dependent on oil revenues to maintain their finances. Russia, Algeria, Iraq, Iran, Nigeria, and Libya all require oil prices above $100 a barrel to keep their debt/gross domestic product ratio from rising, according to a recent report from Goldman Sachs.

Even Middle Eastern oil producers such as Kuwait, the United Arab Emirates, Qatar, and the Saudis need oil above $63 a barrel to maintain their financial health, yet oil is barely over $60 a barrel now.

As global economies start to sputter, investor faith has faltered, as seen by the flight of cash away from global currencies into the U.S. dollar. In recent months, the value of the dollar has jumped nearly 13%, which strengthens the buying power of Americans but hurts the finances of most of the rest of the world.

^DXY Chart

^DXY data by YCharts

To keep their currencies from losing even more value, central banks around the world are now in the unenviable position of having to raise interest rates even as their economies crave rate cuts to boost growth.

The U.S. Federal Reserve is the one big exception.

While Fed chair Janet Yellen has denied that global economic worries are influencing the Fed’s decisions on setting U.S. interest rate policy, the consensus on Wall Street is that they clearly are a factor.

Last week, just before the Santa Claus rally ignited, the Fed’s Federal Open Market Committee (FOMC) announced — as expected — that it would keep short-term rates near zero. The committee, however, threw Wall Street a curve ball when explaining its decision. For months, the Fed said that it expected that rates could stay near zero for “a considerable time.” Investors were bracing for that language to be removed from its December press release since the U.S. economy was starting to get into gear.

As it turned out, “the phrase ‘considerable time’ was not dropped from the latest FOMC statement as was widely expected. Instead, it was reinforced with a new phrase stressing that the Fed can afford to be ‘patient’ before starting to raise interest rates,” said Ed Yardeni, president of Yardeni Research.

In so doing, “the Fed didn’t remove the punch bowl; they spiked the punch,” says Sam Stovall, U.S. equity strategist for S&P Capital IQ. “Akin to lighting the tree at Rockefeller Center, this response to the Fed’s actions may have signaled the start of the Santa Claus rally.”

Why did the Fed cling to this “patient” sentiment?

Because the global slowdown allowed it to.

The U.S. economy is clearly gaining momentum, as Tuesday morning’s GDP report clearly showed. But cheap oil caused in part by a global slowdown means that consumer prices in the U.S. should be stable. That means even as GDP is rising at a brisk pace, the Fed can keep stimulating the economy with low interest rates without fear of inflation.

In other words, what’s bad for the world is good for the U.S.

Merry Christmas.

TIME Companies

China’s Xiaomi is Now Worth More Than Uber

Lei Jun, chairman and CEO of China's Xiaomi Inc., gives a lecture at Wuhan University in Wuhan, China on Nov. 29, 2014.
ChinaFotoPress/Getty Images Lei Jun chairman and CEO of China's Xiaomi Inc., gives a lecture at Wuhan University in Wuhan, China on Nov. 29, 2014.

Chinese cell phone maker valued at more than $45 billion after raising $1 billion in new funding

Xiaomi, the Chinese maker of affordable smartphones, is now worth more than $45 billion after raising over $1 billion in its latest round of funding. That makes it one of the most valuable tech startups in the world, surpassing Uber’s $41 billion valuation.

The investment round is expected to close as early as Monday and is led by All-Stars Investment, a fund run by former Morgan Stanley analyst Richard Ji, Thee Wall Street Journal reported. Other big name investors are also getting in on the deal, including Alibaba Group Executive Chairman Jack Ma and Singapore sovereign-wealth fund GIC.

Following Xiaomi’s most recent funding round in August 2013, the smartphone maker was valued at $10 billion. The company’s valuation has skyrocketed 350% over the past 16 months. Expectations are high as Xiaomi pushes its product beyond China, where it rapidly became the top-selling vendor since its launch in 2010, and many investors are hoping that it can grow as quickly in emerging markets where the demand for inexpensive smartphones is high.

Xiaomi manufactures phones that operate a customized version of Google’s Android operating system and are known for balancing quality and affordability. It has grown rapidly, overtaking Samsung Electronics as China’s No. 1 maker of smartphones based on total shipments during the second quarter this year. Xiaomi’s shipments are expected to reach 60 million units worldwide this year, up from 18.7 million in 2013.

The privately-owned smartphone maker booked a net profit of about $56 million last year, according to a regulatory filing in December. The report also revealed razor-thin margins as the company seeks to gain a broader share of the global smartphone market. Xiaomi’s operating margin was 1.8% in 2013 compared to Samsung’s 18.7%.

The report applied to Xiaomi Inc., one company among a group of companies that are referred to as Xiaomi, a company spokeswoman told Reuters. She declined to provide more information about Xiaomi Inc. and its relationship with Xiaomi’s business as a whole.

“Our holding structure is considered a commercial secret,” spokeswoman Joy Han said.

The top of the company’s corporate structure is Xiaomi Corp., which is incorporated in the Cayman Islands, and is the recipient of the current round of funding.

This article originally appeared on Fortune.com

TIME Economy

Here’s the Big Problem With America’s Economic Recovery

Janet Yellen
Chip Somodevilla—Getty Images Federal Reserve Bank Board Chairman Janet Yellen

Yes, the U.S. is roaring back—especially compared to competitors—but that doesn't mean we're out of the woods yet exactly

If you could write one headline to encompass the past six years of economic history, it would probably be “U.S. Leadership Is Over.” The financial crisis, the Great Recession and the tepid recovery that followed seemed to mark a permanent decline in American market hegemony. But the past few months of economic data are calling all that into question: U.S. gross domestic product and jobs growth are the strongest they’ve been since the crisis. CEO surveys are predicting a new era of business spending. And the effect of the dramatic fall in oil prices since last summer will likely mean the equivalent of a $100 billion tax cut for U.S. consumers.

For an economy made up 70% of consumer spending, that could mean the beginning of that virtuous, job-creating consumption cycle that we’ve been awaiting since things went to hell in 2008. What’s more, with trouble in developing markets like Russia, India and Brazil as well as most of Europe, the U.S. is suddenly no longer the epicenter of market trouble but rather the best hope for global prosperity. The question everyone is asking now is, Can the U.S. lead the world again?—-economically, at least.

Times have changed since the U.S. last found itself in a similar position. Then, back in the late 1990s, when the Asian debt crisis had everyone predicting the end of a great run of global growth, the worst-case scenario never came to pass. Even as China and the other big Asian markets tanked, U.S. growth powered along at nearly 4%, helping the rest of the world maintain a respectable 2.5% average.

But now China represents four times as much of the world’s growth as it used to, having swapped places with Europe in terms of importance. The debt crisis and major economic slowdown happening in the world’s most populous nation are big reasons that oil prices have fallen—Chinese businesses and consumers are using much less energy these days. That creates a contagion effect in countries like Brazil, Nigeria and Russia and in parts of the Middle East, which have economies that are increasingly driven by China. No wonder experts like Morgan Stanley’s Ruchir Sharma are proclaiming that the next global recession will be “made in China.”

What does all that mean economically for the U.S.? While the fall in oil prices is great short-term news for middle- and low-income Americans—who are already buying more gas, cars and big-ticket appliances as a result—it also makes it tougher for American energy producers to pump out of the ground all that homemade shale oil and gas we’ve been hearing about for the past several years.

Unlike the Saudis, who can practically dig with a teaspoon and hit oil, we have to frack for it, and that’s expensive. Saudis need about $25 a barrel to make money on oil. We need at least $70, and most of the energy development and production happening in the U.S. now was set up at a time when prices were over $100. Currently they are hovering around $60, thanks not only to a sluggish China but also to the unwillingness of Saudi Arabia to cut production in order to boost prices (which may be part of a complex geopolitical strategy by the Saudis to put pressure on rival petro-autocrats in Iran, as well as Putin’s Russia).

All of this matters, and not just because energy is the de facto scoreboard for the global economy these days. If U.S. energy producers decide that they can’t afford to stay in the game with prices so low, that could hurt American manufacturers who were basing their expansion plans on cheap power. They might cut jobs, which cuts consumer spending, which cuts jobs … head-spinning, I know. The bottom line is that the evolution of the global economy over the past couple of decades blunts the ability of the U.S. to carry the rest of the world economically in the years ahead.

While it’s an amazing thing that the U.S. is likely to outgrow many emerging markets this year, the crucial question will be how robust the U.S. recovery will remain in the face of the global slowdown. At the risk of being a Cassandra, I’d feel better if I thought the U.S. recovery had been built on a firmer foundation, like a strong housing recovery or a real pickup in wages. Neither is the case. Rather, this recovery is genetically modified—it was engineered by the Fed’s $4 trillion money dump and interest rates that are still near zero. As they begin to rise—as they almost certainly will toward the middle to end of 2015—the monetary scientists in Washington will step back from the petri dish and see if the economy can sustain what they kick-started. Only then will we be able to gauge whether the U.S. has regained its position as the driver of the global economy.

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