Daily: Recent economic data relatively constructive
At this point, I think the main weekly will end up being a comprehensive technology and tech stock overview. There have been a lot of stories in the computer and mobile space that deserve comprehensive treatment to pull a bunch of different threads together for a holistic view of what this might mean for the sector. Meanwhile the daily today has a ton of links. I am only halfway through my links with this batch and I have much more reading to do. So I think I will end up doubling up on links today or tomorrow to present all of these.
The most important theme developing now is the concept that the US economy is picking up some steam just ahead of the fiscal cliff. As I indicated a few days ago, if anything I am – relatively speaking – more constructive on the US macro case and there is good reason for that. The employment data was bolstered today by a very good US retail sales number and last week by a consumer confidence number that is at multi-year highs. Moreover, Bloomberg’s macro surprise index is telling us that data is now surprising to the upside. To me, that says the US is growing at a still sub 3% level but that the economy is picking up marginally. This is countered by the still deep recession in the European periphery and some declining numbers elsewhere.
In this context, economic policy is crucial. First, in the US with regard to the fiscal cliff. I think this is the number one threat to global recovery. Then there is the austerity-led downturn in Europe and the slowing in emerging markets. All in all, I continue to believe the US will lead the way because of its relatively robust economic performance as compared to Europe. Europe is already getting doubts about austerity from the IMF as well as the periphery. So, policy-wise, I do not expect things to get more contractionary, but rather more reflationary. But, the US can move in the opposite direction from a reflationary to a contractionary economic policy.
None of this has anything to do with stocks though. Earnings are falling at a meaningful pace and that limits upside to shares. If the economic cycle turns down, the sell off would be large. But there is still a decent and growing chance that reflationary policy will keep shares elevated. I know that’s a very wishy washy outlook but I think we are at a pivot moment here and I am looking for data that moves us substantially in one direction. More on this in coming dailies.
Surprise Jack Welch Missed Shows Better U.S. Growth – Bloomberg
“The economy is improving more than professional forecasters anticipated, particularly in data on employment and housing, according to the Bloomberg Economic Surprise Index, which compares 38 indicators with analysts’ predictions. The index, based on gauges compiled by private businesses and trade groups in addition to government, confirms U.S. growth is generating jobs in the face of a global slowdown and looming federal spending cuts and tax increases known as the fiscal cliff.”
QE3 is Ben Bernanke’s masterstroke of market manipulation – Quartz
I don’t share these sentiments. Market manipulation as the route to success? No.
“The US economy is far from being out of the woods and unemployment is still too high. But if things continue to roll the Fed’s way, the central bank’s focus on buying mortgage-backed securities—which simultaneously makes it more attractive for would-be home owners to borrow and for banks to lend—might just go down as Fed Chairman Ben Bernanke’s masterstroke of market manipulation. And that could be an inspiration to other central bankers — from the BoE to the ECB — trying to prove they remain relevant.”
BBC News – China inflation rate dips to 1.9% raising easing hopes
“China’s policymakers have been given more room to boost stimulus measures after the country’s inflation rate dipped in September.”
Euro zone’s strong factory output surprises in August | Reuters
“Industrial production in the 17 countries sharing the euro rose 0.6 percent in August from July, the EU’s statistics office Eurostat said on Friday, beating expectations of a 0.4 percent fall forecast by economists in a Reuters poll.
That was lifted by a strong showing in France and Italy, which along with Germany make up around two thirds of the euro zone’s industrial output.”
Europe
Citi lowers probability of Grexit to 60 percent from 90 percent | Reuters
Greece Will Probably Leave Euro Within Six Months, Borg Says – Bloomberg
“As European Union leaders prepare for a summit next week devoted to saving the euro, Swedish Finance Minister Anders Borg said Greece may quit the common currency within the next six months.
“It’s most probable that they will leave,” Borg said today on a conference call from Tokyo, where global finance officials have gathered for the annual meetings of the International Monetary Fund. “We shouldn’t rule out this happening in the next half-year.””
BBC News – IMF’s Christine Lagarde backs more time for Greece
“She said in a BBC debate held in Tokyo that this might be better than “frontloading heavily”, or making Greece pay the most upfront.
But the biggest contributor to Greece’s bailouts, Germany, rebuffed the idea.”
Portugal plans higher transactions tax, pension cuts | Reuters
“Portugal’s 2013 budget plans to impose a financial transactions tax of up to 0.3 percent and to cut pensions next year, going well beyond a proposal from the European Commission which floated a tax rate of just 0.1 percent.”
Immobilien: Paris erwartet neuen Rekord bei Wohnpreisen – Nachrichten Geld – Immobilien – DIE WELT
Massive austerity from Portugal in terms of tax increases. This will kill demand.
Technology
Apple’s iPad takes a massive bite out of PC sales – Technology, Business – Independent.ie
“According to a new study from research firm IHS iSuppli, personal computer sales are expected to fall this year for the first time in more than a decade, as tablets begin to make significant inroads into their market.
The study forecasts some 348.7 million computers will be bought this year around the world, down from 352.8m in 2011. Assuming that forecast holds, and with the back to school — the busiest time for laptop sales — already passed, it will be the first time since 2001 that PC sales have declined.
Meanwhile, technology firm Gartner said PC shipments fell 8pc during the third quarter of the year.”
Exclusive: FTC moving closer to Google antitrust case – sources | Reuters
“Four of the FTC commissioners have become convinced after more than a year of investigation that Google illegally used its dominance of the search market to hurt its rivals, while one commissioner is skeptical, the sources said.
All three declined to be named to protect working relationships.”
Unmasking Reddit’s Violentacrez, The Biggest Troll on the Web
“If you are capable of being offended, Brutsch has almost certainly done something that would offend you, then did his best to rub your face in it. His speciality is distributing images of scantily-clad underage girls, but as Violentacrez he also issued an unending fountain of racism, porn, gore, misogyny, incest, and exotic abominations yet unnamed, all on the sprawling online community Reddit. At the time I called Brutsch, his latest project was moderating a new section of Reddit where users posted covert photos they had taken of women in public, usually close-ups of their asses or breasts, for a voyeuristic sexual thrill. It was called “Creepshots.” Now Brutsch was the one feeling exposed and it didn’t suit him very well.”
First impressions of Apple’s new iPod touch: Superb — Apple News, Tips and Reviews
“Overall, I’m quite happy with the new iPod touch so far and I anticipate most others that buy one will feel the same. There isn’t much not to like: Apple has put together an iPod that’s extremely comparable to it’s latest iPhone, minus the GPS and cellular connectivity. Plus, there’s no monthly service fee, which is why I decided to sell my iPhone 4S; I don’t have the need for two phone accounts.”
Survey: More cellphone users developing ‘nomophobia’ | The Detroit News | detroitnews.com
“Dopamine comes when an addict sees the chance to use a drug of choice. It comes when a person separated from a loved one realizes a reunion is finally coming.
Theories linger that people get a surge of the chemical when they find text messages or email — good or bad — on a smartphone.
Kent Berridge, a professor of psychology and neuroscience at the University of Michigan, said he knows of no research on the issue but that the theory is plausible. Cues that represent the delivery of new information, like the ping of an email, often trigger dopamine.
“The stronger the dopamine surge, the stronger the connection, the motivational pull,” he said.
Neurotransmitters or not, nomophobia is real, said Dr. Dennis Kottler, a psychiatrist and part of a four-iPhone family.”
If Going Without Your Phone Makes You Want To Flip Out, You Might Be Nomophobic – The Consumerist
” If you find yourself mildly freaking out when you’re not near your phone, you might have nomophobia, otherwise known as the fear of losing or being unable to use a cellphone. Just another condition they didn’t have to deal with way back in yore.”
Greece shocked at EU peace prize amid economic ‘war’ | World news | The Guardian
“”I just cannot understand what the reasoning would be behind it,” said Panos Skourletis, the party’s spokesman. “In many parts of Europe, but especially in Greece, we are experiencing what really is a war situation on a daily basis, albeit a war that has not been formally declared. There is nothing peaceful about it.””
Samsung Galaxy Nexus ban overturned as court deals blow to Apple | Technology | guardian.co.uk
“Judges say California court ‘abused its discretion’ by banning sales of Samsung smartphone for infringing Apple patents”
Analysis: As PC era fades, good times may be over at Intel | Reuters
“As tablets and smartphones draw more and more users away from PCs, Intel Corp is facing some difficult questions.”
Elsewhere
Hard to be Easing by Nouriel Roubini – Project Syndicate
“QE3 reduces the tail risk of an outright economic contraction, but is unlikely to lead to a sustained recovery in an economy that is still enduring a painful deleveraging process. In the short run, QE3 will lead investors to take on risk, and will stimulate modest asset reflation. But the equity-price rise is likely to fizzle out over time if economic growth disappoints, as is likely, and drags down expectations about corporate revenues and profitability.”
This drawing is hilarious.
The Role of Politics in Wealth Distribution – NYTimes.com
“Seven of the 10 most affluent counties in the nation are near Washington, D.C. That means a growing number of educated people are making a very good living advising, lobbying and otherwise influencing the federal government. This is a talent drain. It’s far from obvious that we are getting better policy as a result, and true wealth creation has not kept pace.
As Matthew Yglesias, a columnist for the online magazine Slate, has pointed out, there is also a subtler point about those wealthy Virginia and Maryland counties. They have high per capita incomes, not only because they attract educated, government-oriented professionals, but also because their zoning and building codes limit the supply of low-cost housing. That’s a significant government intervention that hurts lower-income people, who must pay more. Privilege-seeking through government is often most pernicious when it has a tidy front and a well-manicured green lawn.”
Oct. 13: Arizona and the Spanish-Speaking Vote – NYTimes.com
“In the past couple of elections, polls have underestimated Democrats’ standing in states with heavy Hispanic populations. (The two senate races that the FiveThirtyEight forecast called incorrectly in 2010 — Nevada and Colorado — are both states with a healthy number of Hispanic voters.)
This may be because many polling firms that conduct interviews only in English miss some Hispanic voters who are more comfortable speaking Spanish.”
BBC News – Nobel Prize: Alvin Roth and Lloyd Shapley win economics award
“Alvin Roth and Lloyd Shapley have won the 2012 Nobel Prize in economics.
The Royal Swedish Academy of Sciences cited the US academics for their work on the “theory of stable allocations and practice of market design”.”
“The clearest and most effective way to simplify regulation has been advanced in a series of important papers by Anat Admati of Stanford (with co-authors including Peter DeMarzo, Martin Hellwig, and Paul Pfleiderer). Their basic point is that financial firms should be forced to fund themselves in a more balanced fashion, and not to rely so heavily on debt finance.”
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