Links: 2013-02-12
News links for 12 February 2013
College Costs, Battled a Paycheck at a Time – NYTimes.com
“This series examines the implications of soaring college costs and the indebtedness of students and their families.”
“the claim about health care is wrong. And no servicemember who does less than 20 years gets a pension, unless he has to medically retire.
Like every combat veteran of the Iraq and Afghanistan wars, the former SEAL, who is identified in the story only as “the Shooter”, is automatically eligible for five years of free healthcare through the Department of Veterans Affairs.
But the story doesn’t mention that. “
While Hutton means to say that central banks should facilitate deficit spending, the part that caught my eye was this one.
“In Japan, I was simultaneously aware of what a toll two decades of deflation had levied on Japanese society, but also of the compensatory force of Japan’s underlying economic strength. But gloom and pessimism still suffuse the country. “
Apache Cheapest as $16 Billion in Deals Numbs Investors: Energy – Bloomberg
“Ranked the largest U.S. energy company focused solely on oil and gas exploration in 2010, Houston-based Apache has become the least-valued explorer among peers. At 8.8 times estimated profit, the stock trades at less than a third of the average ratio of the Standard & Poor’s 500 Oil & Gas Exploration & Production Index members.
Apache’s market value has fallen below the $36 billion it tallied three years ago before Chief Executive Officer Steve Farris bought more than $16 billion of drilling prospects across the world. Competitors Anadarko Petroleum Corp. and EOG Resources Inc. passed it up. Apache promised to expand output 29 percent by the end of 2016 compared with last year’s second quarter, yet well disruptions, earnings misses and Egyptian unrest cast doubt on its acquisitions becoming a growth engine.”
BofA: We’re In The 1% Of Investor Bullishness – Business Insider
“BofA’s proprietary measure of investor sentiment is clocking in at extreme levels.
According to the firm’s Bull & Bear Index, which tracks sentiment using indicators like hedge fund market exposure, fund flows, long-only investor positioning and so forth, investors are more bullish than they were in 99% of periods since 2002.”
VMware Facing Tough Times, Shares Down 16% And Could Drop Another 20% By Year’s End | TechCrunch
“VMware shares are off to a rough start in 2013. They are down 16 percent since the beginning of the year, with expectations that shares could drop another 20 percent by year’s end.
Barron’s, which reported the outlook this morning, examines the numbers pretty thoroughly.The stock enjoyed a big run that started at the depths of the recession in November 2008 at $18 and climbed more than 300 percent to a recent price of $79. Today the stock closed at $77, near its 52-week low of $76.25 per share. The high for the share over the past 52-weeks is $118.79.
But over the past 12 months and so far this year, shares are off — in part due to the poor financials it reported on January 28. Most notably, VMware’s revenues for the next quarter and the year ahead are below expectations.”
A credit vigilante arrives at the Fed | Gavyn Davies
“In summary, the speech argues that the credit markets have recently been “reaching for yield”, much as they did prior to the financial crash. Although not yet as dangerous as in the period from 2004-2007, this behaviour is shown by the rapid expansion of the junk bond market, flows into high-yield mutual funds and real estate investment trusts and the duration of bond portfolios held by banks.
Governor Stein suggests (hypothetically) that this may become a policy headache within 18 months and, in a break with the Bernanke/Greenspan doctrine, he indicates that the right weapon to deal with this might well be to raise interest rates, rather than relying solely on regulatory and other prudential policy to control the process. This would obviously come as a big surprise to the markets, which have tended to view the Fed’s stated concerns about the “costs of QE” as so much hot air.”
“Although many traditional media outlets and journalists see reader comments as having little or no value, publishers like Gawker and The Verge see them as a potential source of revenue — and even potential hires.”
“The legal argument — and the business case — against the rule making it illegal to take your phone to a different carrier”
David McWilliams » Ireland thrown a lifeline
“Now, the short term. In the years ahead, the deal will improve our national cashflow in the same way as financing a kitchen extension or a car on an interest-only loan would improve your weekly cashflow. You hope that your house will rise in value in the meantime, made more attractive by the kitchen, and you hope that there will be no calls on other loans that you might have taken out. After all, you elected to go for ‘interest only’, not just to improve your cashflow, but in order to let you borrow more.
More borrowing is what ‘getting back into the market’ means in plain English.
So Ireland hopes that, over the next few years, there will be no more euro bond/credit problems because we have loaded more debt on ourselves. If there is another shock to the system, the high-yield risky countries with lots of debts – like Ireland, Spain or Italy – will suffer speculative attack, default will threaten, money will flow out and yields will rise. As night follows day, another crisis will occur.”
Euro Ministers Seek New Crisis Momentum as Unrest Returns – Bloomberg
“European finance chiefs will seek to win back crisis-management momentum to navigate through emerging political pitfalls after markets signaled last week that the three-year crisis is far from over.
Ministers from the 17-member euro area meet in Brussels today to discuss aid to Cyprus and Greece as a tightening election contest in Italy and a political scandal in Spain disrupt market calm. Group of 20 finance chiefs and central bankers will gather in Moscow Feb. 15-16.”
Apple Margin Squeeze Has No Easy Fix Amid 33% Share Drop – Bloomberg
“Apple Inc.’s profit margins are falling back to levels not seen since sales took off after the 2007 debut of the iPhone, as competition and lack of breakthrough products pressure the company to lower prices.”
Estonian GDP Beats Estimates to Grow 3.7% in Fourth Quarter – Bloomberg
“Estonia’s economy unexpectedly kept its pace of expansion in the fourth quarter after renewed Nordic export demand.
Gross domestic product rose 3.7 percent from a year earlier, compared with a 3.5 percent increase in the third quarter, the statistics office, based in the capital, Tallinn, said today on its website. That beat the 3 percent median estimate in a Bloomberg survey of five analysts. GDP grew a seasonally adjusted 0.9 percent from the previous three months.
The Baltic economy is set for the euro-area’s fastest growth this year after outpacing the rest of the European Union in 2011, Prime Minister Andrus Ansip told Bloomberg in an interview last month. GDP may rise about 3 percent in 2013 following a 2.5 percent to 3 percent expansion last year, he said.”
Ratings agency S&P upgrades Irish outlook to stable from negative – Independent.ie
“The move “reflects our expectation that the exchange of promissory notes for longer-term government bonds significantly reduces the Irish government’s debt-servicing costs and refinancing risk, and supports medium-term fiscal consolidation,” S&P said in a statement.
“By improving the government’s debt-maturity profile, the transaction also increases the prospects of Ireland leaving the EU/IMF bailout programme as planned at the end of 2013,” it added.
It currently rates Ireland BBB- plus.”
BlackBerry Creative Director Alicia Keys tweets from iPhone, claims Twitter account hacked
“After being announced as BlackBerry’s Global Creative Director less than two weeks ago, pop diva Alicia Keys claims her Twitter account was hacked after a specious tweet from an iPhone was sent under her name.”
Man Who Killed Osama Bin Laden – Treatment of Veteran Who Shot bin Laden – Esquire
“For the first time, the Navy SEAL who killed Osama bin Laden tells his story — speaking not just about the raid and the three shots that changed history, but about the personal aftermath for himself and his family. And the startling failure of the United States government to help its most experienced and skilled warriors carry on with their lives. “
Sport and doping – the spreading tentacles of capital | Bill Mitchell – billy blog
“I ride a bike a lot. I raced a bike in European competition for many years. I also started the www-site – cyclingnews.com – which is now the largest of its type in the world. I was regularly in contact with Lance Armstrong and spent time with him riding and recording his 1998 World Championship campaign in Maastricht. I knew team managers of some of the big teams and lots and lots of riders and other insiders. I know a lot about the insides of the sport – the bellissimo sport – the drug-riddled sport. One and the same. I also have a theoretical framework for analysing the practices in the sport that I think delivers understandings that go beyond the way the mainstream media react when some athlete tests positive to some substance that happens to be on one side of a very arbitrary and inconsistent line which demarcates legal and non-legal.
I started what became known as cyclingnews.com as a grass roots news and results service because I found it easier to post the information I got everyday from friends, contacts and, increasingly, complete strangers – on the WWW rather than send them by fax or E-mail. Many people didn’t yet have E-mail although they did have access to the burgeoning WWW. The origins of the site are recorded Here.
The grass roots www site which became so huge (more than a million hits a day in 1998) that I had to hand it over. The only problem is that the site went from being a grass roots site based on the principles of open source collectivism to a privatised mega capitalist site aiming to please corporations. In my view, while the domain name remains the same the site I started lost its meaning. It created a new meaning, which is more consistent with the dominant paradigm in the sport – corporatism and profit. The way the sport has gone.”
Stresstest: 4 NL banken geslaagd – NOS Nieuws
Here we see that the 4 largest Dutch lenders passed stress tests just 4 months ago. Yet one has been nationalized.
SNS Reaal komt niet donderdag, maar pas in april met de jaarcijfers :: nrc.nl
The nationalized Dutch lendr SNS Reaal will ot report figures on time on Thursday as originally planned. They have delayed release until April.
Few bargains to be found in Europe – FT.com
This article has it wrong about Europe. Last year, the EuroStoxx beat the S&P500 as I documented here. Nonetheless, it gives you the US bullish/euro bearish view for what its worth. The one view that seems most interesting is that last year was a one-off re-rating of Europe due to the end of Armageddon-style outcome possibilities. Still, the economy is NOT the stock market.
“Deal activity is returning, suggesting that some smart people think there is value to be had. And Europe has underperformed the US for a while. From the dawn of the credit crisis in 2007 to the worst moments of the eurozone crisis last summer, the US S&P 500 beat the FTSE-Eurofirst 300 by 69 per cent in dollar terms. It has since underperformed by 14 per cent, but it seems natural to think that the “long US-short Europe” trade should unwind further. So much money had flowed into the US as a “haven” during the eurozone crisis years.”
Technical Perspective: A Very Overbought Market – PRAGMATIC CAPITALISM
“While indicators may be topping in very overbought territory, a price top is not guaranteed. Nevertheless, conditions are less than ideal for making new commitments to the long side, and increased caution is warranted.”
America Loves Drone Strikes « azizonomics
While I agree with the thrust of this article, the point to note is the chart which shows US opinion is widely divergent from opinions elsewhere about the use of drones. From an economic perspective, this supports the likelihood that the US military budget will continue to be high as a percentage of GDP irrespective of the sequestration.
The US should grow the deficit, not shrink it | Dean Baker | Comment is free | guardian.co.uk
While this is true in the strictest sense, the sentiments don’t work politically. And this is because deficits are associated with high levels of government spending, which is seen as reckless or socialist, take your pick. My view here is that the deficit should be a non-factor driving short-to-medium term economic policy. The focus should be elsewhere.
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