Despite scandal, Uber raising $1 billion at a $40 billion valuation

Uber CEO Travis Kalanick has been criticized for his company's tactics, but it's not impacting the fundraising.

NEW YORK (CNNMoney)

The company is looking to raise $1 billion in funding at a $40 billion valuation, a source with knowlege of the deal confirmed to CNNMoney. (Bloomberg first reported the valuation last week.) The company, currently valued at $17 billion, would be worth more than Netflix (NFLX, Tech30).

Additionally, Uber is working with Goldman Sachs on a separate round of funding, according to the source. The bank is offering its high net worth clients the option of convertible debt that could eventually be converted to stock. (This was first reported by Fortune.)

This comes just weeks after an Uber executive came under fire for suggesting the company dig up dirt on journalists who criticized the car service.

One investor called the recent controversies "PR misfires" that have yet to affect the business.

"The [company's] numbers are astronomical," he added.

"In terms of brand awareness, there's no company bigger than Uber right now," Bluerun Ventures Partner John Malloy told CNNMoney. "Late-stage investors have an appetite to be involved in ... what's looked at as the breakthrough company."

First Published: December 1, 2014: 7:36 PM ET

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Japanese voters to give verdict on Abenomics

HONG KONG (CNNMoney)

At best, his record has been mixed. Yet he's gambled his future by calling snap elections and asking voters to buy his cure of government spending, money printing and reforms for a second time.

So why is Abe confident enough of victory to risk being thrown out of office two years early? The simple answer: There's no obvious alternative, politically and economically.

Japan's opposition is in disarray, and opinion polls indicate his party will win again. That's despite waning support for his economic strategy -- known as Abenomics.

There are good reasons for this. Two years ago, the country was just beginning to emerge from a recession. As the election campaign kicks off Tuesday, the economy has slipped back into reverse.

That's not to say nothing has changed. Higher government spending, massive monetary easing by the Bank of Japan, and modest progress on some reforms has fueled a stock market boom and reversed a trend of falling prices.

The benchmark Nikkei has risen nearly 65% from the beginning of 2013, and core inflation is near 1%.

At the same time, wages have lagged and many of Abe's proposed reforms -- the keys to sustained growth -- failed to launch. On Monday, Moody's slashed Japan's credit rating and expressed reservations over the country's rising debt levels.

Related: Moody's downgrades Japan on debt worries

The bottom line for many economists is that it's too early to throw in the towel. Not least because there are no easy answers. Japan needs growth if it's ever to control government borrowing that has left the nation saddled with debt worth nearly 2.5 years of economic output.

"Japan's economic problems are still far from being solved but that is no reason to abandon the fight against deeply-ingrained deflation with all its associated economic costs," Marcel Thieliant and Mark Williams of Capital Economics wrote in a research note.

Abe is betting that voters will make the same calculation, and he will earn the right to spend four more years steering Japan toward revival.

The most important lesson of the past two years is that Abe and his central bank chief can't do it alone -- and lawmakers will need to bite the bullet on painful reforms.

"Hopefully, the recent weakness of the economy will serve as a wake-up call to policymakers that monetary easing alone is not enough to lift economic growth," Thieliant and Williams said.

Related: Even Abenomics can't ignore Japan debt

First Published: December 1, 2014: 9:16 PM ET

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FBI warns of hacking threat after Sony attack

The FBI is warning businesses of a new malicious software that was used to attack Sony Pictures.

NEW YORK (CNNMoney)

The threat comes from the same type of malicious software that infected Sony's computer systems, a law enforcement official told CNN.

As a result of the attack on the Hollywood studio, Brad Pitt's "Fury" and the remake of the musical "Annie," have become available on illicit web sites. Screener copies of at least five unreleased Sony films have also made their way online.

Sony is "exploring the possibility" of a North Korean link to the hacking, according to Re/code and other reports. That's because Sony is about to release "The Interview," a comedy starring James Franco and Seth Rogen. Its plot entails an attempted assassination of the North Korean leader Kim Jong-Un.

Businesses were alerted about the new threat and what the hackers could do once inside the business' computers.

The FBI routinely advises private industry of various cyber threats found during investigations, the FBI said in a statement Monday night.

This data is provided in order to help systems administrators guard against the actions of persistent cyber criminals, it said.

The alert was first reported by Reuters.

CNN's Pamela Brown contributed to this report.

First Published: December 1, 2014: 7:57 PM ET

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U.S. losing its appeal for foreign students

NEW YORK (CNNMoney)

A new global migration report by the Organization for Economic Cooperation shows American universities are losing their supreme position in the global education system.

In 2000, nearly one in four students looking for education abroad picked a college in the U.S.

In 2012 -- the latest year for which data is available -- it was just 16%.

Although the U.S. still attracts the highest proportion of foreign students, other countries are becoming increasingly popular, biting into the U.S. market share.

All other English-speaking developed countries and Spain have increased their share of foreign students.

The United Kingdom has seen the biggest growth in its share, trailing closely behind the U.S. with 12.6%. This is good news for British universities, as foreign students pay up to three times more in tuition than students from Britain and the EU.

South Korea has also increased its share dramatically, from less then 0.2% in 2000 to 1.3% in 2012.

Related: America's brain drain dilemma

More than 4.5 million students enrolled outside their own country in 2012, with three-quarters of them studying in developed countries. Over half came from Asia, with China now representing 22% of all international students, followed by India and Korea.

The OECD praises countries that welcome international students, saying they boost local economies, since they speak the language and employers understand their qualifications.

Related: 6 things you need to know about STEM

First Published: December 1, 2014: 4:05 AM ET

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Moody's downgrades Japan on debt worries

HONG KONG (CNNMoney)

The downgrade takes Japan's rating to A1 from Aa3. Moody's said its outlook was stable, suggesting another downgrade was unlikely any time soon.

Moody's cited rising government borrowing, growing demand for social programs due to a rapidly ageing population, and the slow pace of economic reforms as reasons for the downgrade.

The rating cut comes as Japan faces a full slate of questions about its plan for economic revival -- dubbed "Abenomics."

The idea was that central bank stimulus, combined with government spending and reforms, would boost prices, leading to more robust growth for the world's third largest economy.

Related: Bank of Japan stuns market with even more stimulus

The program has delivered mixed results. Prices are rising after 15 years of deflation, but Japan's economy slipped into recession in the third quarter following the first phase of a sales tax hike.

The surprisingly poor performance led Prime Minister Shinzo Abe to delay a second sales tax increase, and call new elections.

Moody's said the tax hike delay "could have merits," but it warned Japan was still struggling to find a way to stimulate growth with government debt worth 245% of gross domestic product and rising.

Related: Even Abenomics can't ignore Japan debt

Debt levels will only start to decline "under the most favorable combination of economic and fiscal reforms," Moody's said.

To make it happen, the ratings agency said Japan will need to execute tax and social security reforms, end deflation, improve productivity and grow the economy by more than 3.5% annually.

First Published: December 1, 2014: 5:06 AM ET

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Stocks: 6 things to know before the open

LONDON (CNNMoney)

Here are six things you need to know before the opening bell rings in New York:

1. Japan downgraded: Moody's cut its credit rating on Japan by one notch, citing concern about the government's ability to revive the economy and control its borrowing at the same time.

2. Commodity calamity: Gold prices are on the ropes after Swiss voters rejected a proposal to force the country's central bank to sharply increase the proportion of its reserves held in the metal.

Oil is tumbling again in the wake of OPEC's decision last week not to cut production to soak up a supply glut created by weaker world demand, strong U.S. output and quota-busting by some of the cartel's members.

Related: Fear & Greed Index

3. Ruble rout: Russia's ruble plunged more than 4% against the dollar to a new record low. Oil and gas revenues make up about half of Russian government revenue. The weaker currency helps Moscow absorb some of the pain of lower oil prices by propping up revenues in ruble.

4. Stock market movers -- Oil companies: ConocoPhillips (COP), Chesapeake Energy (CHK), Schlumberger (SLB) and Hess (HES) were among a roll call of oil producers and service companies under pressure again in premarket trading.

Related: CNNMoney's Tech30

5. Seeing red: Most major Asian markets ended with clear losses, except the Nikkei which was boosted by a weaker yen.

European indexes were also lower in early trading, taking a knock from new data that showed manufacturing activity slowed in November in Germany, France and Italy -- the eurozone's top three economies.

U.S. stock futures were weaker. The ISM manufacturing index will come out at 10 a.m.

Related: Cyber Monday deals: Where to find them

6. Market recap: U.S. stocks closed mixed after Black Friday's short trading session. The Dow barely budged, the S&P 500 was down 0.3% and the Nasdaq closed 0.1% higher.

But the Dow and S&P 500 both ended up for the month of November.

First Published: December 1, 2014: 5:29 AM ET

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Behind the scenes of the Janay Rice interviews

NEW YORK (CNNMoney)

All manner of media outlets were vying to be the first to interview Rice, the wife of former Baltimore Ravens running back Ray Rice. Janay's decision to stay with Ray after he violently struck her in an Atlantic City casino elevator -- and after video of the incident instigated weeks of national news coverage -- drew considerable attention earlier this year.

Interest was so great that some media outlets were willing to consider unusual arrangements in order to lock down what's known in the industry as "the get."

ESPN's Jemele Hill got it, securing a three-hour interview earlier this month. Janay did not appear on camera, but the interview formed the basis of an essay, dubbed "Janay Rice, in her own words," that ESPN published on Friday afternoon, the same day Ray's indefinite suspension was overturned.

NBC's Matt Lauer also got it, winning the first on-camera interview with both Janay and Ray, which will be shown on the "Today" show on Monday and Tuesday.

So about those unusual circumstances -- some analysts have criticized the ground rules of the ESPN interview after the outlet disclosed that Janay "was given approval" over the content of her essay and its release date.

Why did ESPN agree to that? Well, for one thing, the Rices had a whole lot of leverage. As Hill told me on CNN's "Reliable Sources" on Sunday, the couple had "an array of choices" of who to talk with.

"I know people see that language and 'final approval' and they envision this process of her shooting down things not to be in there," Hill said.

"But in no way was this ever a dictatorship. It was fully a collaboration," she said. "She came into it with the mindset that she wanted to be as transparent as possible."

Related: Jemele Hill on "Reliable Sources"

"Collaboration" is a controversial word that conjures up something other than traditional journalism. But there is a long history, particularly in the sports world, of first-person pieces.

Earlier this year LeBron James announced his return to the Cleveland Cavaliers via Sports Illustrated in an first-person essay "as told to Lee Jenkins."

In this case, ESPN stressed that "no questions were off limits" when Hill met with Janay.

Reactions to the arrangement were mixed; Mediaite columnist Joe Concha criticized it on Saturday, saying Hill morphed "from journalist to stenographer."

Washington Post media critic Erik Wemple wrote Sunday that the actual content of the essay was "quite compelling," and noted that ESPN had accepted the ground rules not to gain access to, say, NFL commissioner Roger Goodell, but rather to a "victim of domestic violence -- albeit one who's trying to clear the way for her husband's return to the playing field."

Hill told me on "Reliable Sources" that she "interviewed for the interview" by meeting with Janay and her family members several weeks before the Nov. 5 interview.

Hill said Rice was motivated to speak partly because "she had gone months without saying anything."

And what about NBC? Lauer's interview was clearly taped before Ray was reinstated.

A "Today" show spokeswoman said there were "absolutely no restrictions or approval" on the questions and answers in the interview.

Asked whether NBC compensated the Rices for the interview, perhaps by licensing photos or videos from the family, the spokeswoman said there was "absolutely no licensing or arrangement of any kind."

What the Rices gained from both ESPN and NBC was exposure -- NBC, for example, showed a snippet of Lauer's interview on the hugely popular "Sunday Night Football" telecast on Sunday.

First Published: December 1, 2014: 1:21 AM ET

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Sony films surface on pirate sites after hacking attack

Brad Pitt's "Fury" is one of several Sony movies that have appeared online.

NEW YORK (CNNMoney)

Screener copies of at least five unreleased Sony films have made their way online, according to Variety.

The FBI is reportedly involved in the investigation into the apparent leak.

"The theft of Sony Pictures Entertainment content is a criminal matter, and we are working closely with law enforcement to address it," a Sony Pictures spokesperson said in a statement.

On Sunday, "Fury," which is still in theaters, and "Annie," which is scheduled to premiere December 19, were both on the Top 100 downloaded movies list of the file-sharing site The Pirate Bay.

Three other forthcoming Sony films -- "Still Alice," "Mr. Turner," and "To Write Love on Her Arms" -- have also appeared on file-sharing sites.

An extensive cyber-attack disrupted Sony Pictures' computer systems last week, causing corporate email to be crippled and forcing some employees to rely entirely on telephone calls for communication. The company is still recovering.

While the timing does match up, there has been no independent confirmation that the cyber-attack was the cause of the film leak.

A group calling itself "Guardians of Peace" appeared to take credit for the attack last week.

Re/code reported on Friday that Sony is "exploring the possibility" of a North Korean link to the hacking. That's because Sony is about to release "The Interview," a comedy starring James Franco and Seth Rogen. Its plot entails an attempted assassination of the North Korean leader Kim Jong-Un.

The regime in Pyongyang has been fuming about the movie for months; in June, a spokesman for the North Korean Foreign Ministry called it "undisguised terrorism and a war action" and hinted at consequences to come.

"Those who defamed our supreme leadership and committed the hostile acts against the DPRK can never escape the stern punishment to be meted out," the spokesman said.

The comedy is scheduled to be released on December 25. It does not appear to be circulating online like "Fury" and "Annie" now are.

Jose Pagliery contributed reporting.

First Published: November 30, 2014: 9:09 PM ET

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China is finally getting deposit insurance - and that's bad news for the rich

HONG KONG (CNNMoney)

The proposed insurance scheme will guarantee deposits up to 500,000 yuan ($81,395), according to a draft report released by China's State Council. The top-end limit would fully protect more than 99% of all bank accounts.

But what's good for typical Chinese could be bad for the 1%. Accounts with more than 500,000 yuan -- which make up 50% of total deposits -- will be left unprotected, according to Wei Yao, an economist at Societe Generale.

Here's the problem for big savers: China only needs deposit insurance if Beijing is now willing to let banks fail. In the past, the central government has always bailed out troubled institutions and made sure investors got their money back. Even investments offered by the country's massive shadow banking system have been considered safe.

This implicit guarantee from the government encouraged banks to make bad loans, and investors to buy the riskiest products around. Both parties could count on a government rescue.

Related: One Chinese company makes one-third of the world's cigarettes

Analysts have long argued that the way to fix this problem is for China to embrace failure. The government has acknowledged it needs to allow market forces to play a larger role in the economy, and help introduce more risk into the system.

The launch of a deposit insurance program is another clear message that the days of unlimited bailouts are over. Now, only small bank depositors will receive the government's backing.

"In a financial system where shadow banking investment is often protected, such developments represent a great leap of faith," Yao said. "This is the most critical, and yet riskiest reform measure ever undertaken."

Beijing now must carefully monitor how investors respond to the shifting landscape. Depositors could rush to move funds out of small banks and into larger institutions.

"The risk comes down to how the half of deposits -- and the entire bond as well as shadow banking investment -- that are unprotected will move about in response to the implementation," Yao said.

Related: China is not finished with rate cuts

First Published: December 1, 2014: 12:25 AM ET

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America's dual economy

NEW YORK (CNNMoney)

If you're a glass half-full type, it's easy to point to the fact that the economy is expanding again and unemployment is at a six year low. Gas is back under $3 a gallon, the stock market is at an all-time high and this year's job gains are on track to be the best since 1999.

America is certainly better off than it was during the financial crisis, and the nation looks a lot stronger economically than Japan and Europe.

America has added 2.3 million jobs in 2014

But there's a glass half-empty side of this economy, too.

Wages aren't rising for most Americans. A middle class family is actually bringing home the same income as it did in 1995, and millions of people want full-time jobs but are stuck in part-time positions.

There's no denying the rich are getting richer and the rest are stagnating.

The fact is there is truth in both sides -- the result of a slow-burn recovery from the worst financial crisis in generations.

Why voters hate the Obama economy

Here are the three key stats to that drive home America's dual economy:

1. Lucky to be employed.

On Friday the government reported another strong month of job gains. The unemployment rate is 5.8%, not far from what most economists think is typical rate of around 5% when the economy is humming along.

But the improving number masks the fact that the U.S. has 2.9 million people who have been out of work for half a year or more. That's double the number of long-term unemployed than before the recession.

Even more troubling is that the U.S. has over 7 million people who are working part-time but want full-time employment.

2. Wages aren't growing.

Americans are spenders. We like to buy things and that powers our economy. But people can't make purchases if they don't have money. That's why it's so worrying that U.S. wages aren't getting any bigger.

Wages today are about the same as they were just before the recession.

In the past year, wages went up about 2%, but that is just ahead of how fast costs have been rising so the gains are basically canceled out.

The complete list of companies that are open and closed on Thanksgiving

3. More gains went to Wall Street than Main Street.

The one area that has bounced back since the end of the recession is the stock market. It bottomed out in March 2009 and has been on an incredible tear ever since.

The S&P 500 -- the benchmark index that has a lot of funds that mimic or track it -- is up nearly 200% since that 2009 low point.

But the catch is that only half of Americans have any money in the stock market. So all those gains have only exacerbated the "have versus have not" economy.

Wealthy whites are the most likely to own stocks. And since the rich own more stocks, they benefited more.

First Published: November 7, 2014: 4:43 PM ET

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