“Companies are having to fill pension deficits resulting from the Bank of England’s policy of quantitative easing (QE) instead of growing their business, MPs have been told.”
“VMware plans to cut about 900 jobs, or 7 percent of its workforce, as part of a restructuring. The company also issued cautious 2013 forecast, due to a decline in U.S. federal government bookings and continuing concerns about the sluggish economy in Europe.
The company reported on-target fourth-quarter earnings and said it expects revenue of $1.17 billion to $1.19 billion for the first quarter, an increase of 11 percent to 13 percent, but still short of the $1.25 billion estimated by analysts on average. For the full year it forecast revenue of $5.23 billion to $5.35 billion, lower than estimates of $5.42 billion.”
“Fed asset purchases will probably do little to help reduce 7.8 percent unemployment, economists said, with 57 percent of them predicting the program won’t help boost the number of jobs created this year.
Economists who expect gains from so-called quantitative easing say it will account for an increase of 250,000 jobs during 2013. Last year, the economy added 1.8 million jobs.”
“Japan’s government approved on Tuesday a $1.02 trillion draft budget for the next fiscal year that aims to nudge tax revenues above new bond sales for the first time in four years, but still relies on borrowing to cover 46.3 percent of its spending.”
“Latvia’s economy has attracted international attention out of all proportion to its size. Many observers know that Latvia returned to strong economic growth after a severe downturn in 2008 and 2009 and a tough austerity program. In late 2012, Latvia even repaid the IMF in full, several years early.
But the international consensus ends there. Critics of Latvia’s economic strategy point to continuing high rates of unemployment and poverty; advocates point to the benefits of frontloading spending cuts and tax increases to lay the foundations for recovery.”
In this Dutch-language article Economist Heleen Mees argues that the problem in the US is really a supply side problem and that easy money will not fix it.
“Gross domestic product in the last three months of the year was just 1.5 per cent higher than a year earlier, the Bank of Korea said on Thursday. That pace pulled full-year growth down to 2 per cent, the weakest figure since 2009. The central bank had forecast annual growth of 3 per cent as recently as July.”
“Yahoo reported a fourth-quarter profit of $272.3 million, or 23 cents a share, compared with a profit of $295.6 million or 24 cents a share a year ago. Revenue excluding traffic acquisition costs was $1.22 billion, compared with $1.17 billion for the year-earlier period. Adjusted profit was 32 cents a share.
Analysts polled by FactSet on average were expecting a profit of 27 cents a share on revenue of $1.21 billion.”
“top GOP officials are calling for a more strategic mix of opposition and accommodation, though of course they wouldn’t dare call it that. Broadly put, it looks something like this: fight Obama on some issues but don’t give him easy public relations wins by getting bogged down in fiscal fights and obstructing proposals like immigration reform. And, oh yes, offer an agenda of your own.
Wisconsin Rep. Paul Ryan has been the most explicit about this new tack and gave it a name, or perhaps a euphemism, in a speech in Washington on Saturday at a conference staged by the National Review Institute: “prudence.””
“Loans to companies and households in the eurozone contracted for the eighth month running in December, showing low official borrowing costs are having little success in reviving investment and spending.”
“Take the politicians out of politics.
Compensate the unemployed with credit/debt/government spending and use automated fiscal stabilisers to tweak inflationary and deflationary side-effects.”
This makes Apple more Amazon-like than we might think.
“Apple’s reclassification of its revenues to isolate iTunes’ software, media and services separately from its hardware products has revealed the hidden billions of dollars in revenues the company has been earning on top of its hardware sales of computers and gadgets, revenues that now dwarf the company’s iPod sales.”
“None of this rules out the recurrence of a housing market bubble. It just suggests that increased liquidity in housing markets is a necessary but not sufficient condition for getting there. We’d also need to see a sustained increase in expectations for appreciation. It will take some time to generate that, particularly given the traumatic nature of recent home-price movements.”
“Net of cash, it’s a $330 stock.”
“Moody’s Investors Service Inc. downgraded six of Canada’s largest banks, citing concern about high consumer-debt levels and elevated house prices.
The move underscored the headwinds buffeting what was once one of the more resilient developed economies amid the global economic crisis.
Bank of Montreal, Bank of Nova Scotia, Caisse centrale Desjardins, Canadian Imperial Bank of Commerce, National Bank of Canada and Toronto-Dominion Bank were all downgraded one notch, with a stable outlook, said Moody’s, a New York-based debt-rating firm said.”
“Sources say the world’s largest magazine publisher is expected to begin a significant round of layoffs this week.
I don’t have more details about the coming cuts. But the Time Inc. employees I’ve spoken to seem to put great stock in Keith Kelly’s report from earlier this month, which predicted that up to 700 of the publisher’s 8,000 employees may go in this round.”
“Art Cashin, director of floor operations at UBS, said he has heard chatter of the pair trade that, while lacking specific data to back it up, “made for interesting cocktail speculation over the last few weeks.”
Essentially the trade has worked like this: One side has used Apple as a stand-in for the computer and telecom industries, while the other component has used some of its direct and indirect competitors against Apple’s direction.
Facebook, for one, has seen its shares surge after its disastrous initial public offering last spring while Apple has slumped.
Traders interviewed Monday pointed to a number of other companies that have benefited: Personal computer makers Dell and Hewlett-Packard, and smartphone competitors Research in Motion and Samsung, for instance. (Read More: Samsung Follows Apple Results With Record Profit)”
“The latest version brings SwiftKey’s precognitive autocompletion and flow text entry to even more input fields (still no email, passwords, or certain other apps) while providing easier corrections, more languages, and carrying over a few features from SwiftKey 3.”
“Moody’s Investors Service has cut the ratings of six Canadian financial institutions, including the previously “Aaa” rated Toronto-Dominion Bank, due to concerns about rising consumer debt and high housing prices.”
“Market watchers have predicted that Apple could sell a cheaper iPhone for around $199 without a contract subsidy. At that price point, it’s projected that Apple could attain gross margins around 30 percent.
Currently, Apple’s cheapest smartphone option is the iPhone 4, which is available for $450 without a contract in the U.S. But the price on that same handset moves up to $490 in China and $750 in Brazil when local taxes are added”
“We’ve received pricing information for this new iPad model. The pricing is in line with a higher storage capacity, coming in at around $799 for the WiFi-only model and $929 for the Cellular-compatible model in the United States. So, new capacity sounds even more likely.”
“Greek bank deposits rose by €6.4bn, to €167.8bn. They have been relatively stable since June elections eased fears the country might drop out of the currency bloc, but are still almost one-third below their December 2009 peak.
Private sector deposits at Italian banks rose 3.7 per cent to €1.497tn in December after a slight rise in November and hit a new record high.
Deposits in other countries at the sharp end of the eurozone crisis were little changed.
In Ireland they decreased 1 per cent to €197.0bn and were down in Portugal 1.4 per cent to €210.4bn.
Spanish banks recorded a 0.2 per cent increase to €1.52tn at end-December.”
“Lots of news sites believe that using the Facebook platform — or other smart systems — can help reduce the amount of trollish activity in their comments. But the truth could be much simpler, and much less palatable for them, than that.”
“A strong report on durable-goods orders sparked selling in safe-harbor Treasury bonds, sending benchmark 10-year yields above 2% for the first time in nine months.
The 10-year yield, which moves inversely to the note’s price, hit as high as 2.004%. That was the highest level since April 2012.
The benchmark 10-year note’s price fell by 11/32 in early Monday trade in New York, yielding 1.988%, according to data provider Tradeweb. The yield has climbed more than 0.25 percentage points this month. The 30-year bond was 17/32 lower, yielding 3.161%.”
“Iceland won a sweeping victory in a court fight over its responsibilities to foreign depositors in the Icelandic bank Landsbanki, which failed in 2008.
The court of the European Free Trade Association on Monday said Iceland didn’t breach European Economic Area directives on deposit guarantees by not compensating U.K. and Dutch depositors in Landsbanki’s online savings accounts, known as Icesave accounts.
The ruling of the EFTA Court is final and can’t be appealed.”
“The immediate solution to the euro’s existential problem came in the form of the European Central Bank’s “outright monetary transactions“. The ECB was supported by the progress made by governments in agreeing to reinforce monetary union with greater fiscal union, political integration and banking union.
Having solved its urgent problem, the eurozone needs to deal with a new dilemma: that of an appreciating currency. There is a growing number of countries seeking to weaken their own currencies. Indeed, in the last six months, the euro has appreciated by 11 per cent against the US dollar and by 8 per cent in nominal trade weighted terms. It has appreciated by a lot more against the Japanese yen.”
“”I anticipate that continued purchases of mortgage-backed securities and longer-term Treasury securities will be needed well into the second half of 2013,” John Williams, president of the Federal Reserve Bank of San Francisco said in a speech earlier this month.
Not all Fed officials agree with the stance. That means arguments are likely to surface at Fed policy meetings about how long to continue buying bonds. Signs of this tension emerged in minutes of the Fed’s December meeting that showed some officials favored ending the bond-buying programs by midyear or sooner, while others thought they should probably continue through this year.
“We must not ignore the possibility that the low-interest rate-policy may be creating incentives that lead to future financial imbalances,” Kansas City Fed President Esther George said in a speech earlier this month. She noted that prices of bonds, agricultural land and high-yield loans are at “historically high levels.” If they fall sharply, it could hurt the economy.”
“The volume of retail sales fell by 0.1 per cent in December compared to the previous month, the latest figures from the Central Statistics Office show.
The figures also revealed the volume of sales decreased by 1 per cent on an annual basis last month, the largest decline in five months.
If the volatile motor trade is excluded, the volume of sales rose by 0.8 per cent last month compared with November, resulting in an annual increase of 0.8 per cent.”
“The U.S. housing recovery is starting to show up in corporate results.
Companies that sell power tools, air conditioners, carpet fibers, furniture and cement mixers are reporting stronger sales for the fourth quarter, providing further evidence that a turnaround in the housing market is taking hold.”
“In doing research for a post on “The Enterprise Cool Kids” at the tail end of last year, I interviewed Silicon Valley veteran Marc Andreessen about where he thought the enterprise was headed.
While excerpts of that interview made it into the post, the transcript of the entire interview was so good it deserved to be published in its entirety.”
“The analyst estimates that 152.1 million Android smartphones were shipped globally in the quarter, nearly double the amount shipped in the year ago quarter (80.6 million) — taking Android’s global smartphone share from 51 per cent at the end of 2011 to 70 per cent at the end of 2012. Meanwhile, global smartphone shipments for the full year 2012 reached a record 700.1 million units — increasing “robustly” from 490.5 million units in 2011.”
“iPhone sell-through growth in the international market appears to be slowing. As Raymond James analyst Tavis McCourt points out, international sell-through growth for the device fell to about 35 percent in the fourth quarter of 2012 from 40 percent in the third (McCourt estimates iPhone sales outside the U.S. were 29.2 million for the period). Now, 35 percent growth is still impressive. Thing is, it was more easily achieved, thanks to some shifts in the iPhone launch cycle.
“This would be a strong result, except for the fact that the comp was easy internationally for Apple, as the iPhone 5 launches occurred far earlier this year in most countries than last year’s 4S launch,” McCourt explains. “March will be a tougher comp internationally.””
“A ruling by the Washington, DC federal appeals court in Noel Canning v. NLRB pretty much ends the ability of presidents to make recess appointments, a measure that has been used since 1867. The suit successfully challenged a NLRB rulemaking on the grounds that three of the five directors were recess appointments which meant the NLRB lacked a quorum to give it authority to act. Georgetown law professor Adam Levitin believes this decision will stick.”
“Mark Carney’s comments on monetary policy at Davos, though not specifically about the UK, opened a wide gap between his thinking and that of outgoing governor Sir Mervyn King). The latter expressed doubts last week about the ability of monetary policy to boost the economy further, given his concerns about the UK supply side, and his related worries about the 2 per cent inflation target.
At Davos, Mark Carney showed very little sympathy for any of this, arguing that there is plenty of scope for monetary policy to boost the developed economies further, and specifically saying that it might be appropriate to allow inflation to run above 2 per cent for a time in order to achieve this. It would be very surprising if Mr Carney were willing to make such remarks unless he believesthey apply to the UK.”