Links: 2013-05-08
News links for 8 May 2013
Microsoft prepares rethink on Windows 8 flagship software – FT.com
“Microsoft is preparing to reverse course over key elements of its Windows 8 operating system, marking one of the most prominent admissions of failure for a new mass-market consumer product since Coca-Cola’s New Coke fiasco nearly 30 years ago.
“Key aspects” of how the software is used will be changed when Microsoft releases an updated version of the operating system this year, Tami Reller, head of marketing and finance for the Windows business, said in an interview with the Financial Times. Referring to difficulties many users have had with mastering the software, she added: “The learning curve is definitely real.””
Will paper gold click with heavy metal fans? | South China Morning Post
“ICBC, with its eye apparently on the mobs of mainland shoppers buying all the gold chains they can from Hong Kong jewellery shops, has launched yuan “paper gold”.
What is paper gold? It is a piece of paper by which ICBC promises to pay you returns that track the price of gold. If you own the investment for a year and gold rises 20 per cent in that time, the bank is obliged to pay you that full return.
ICBC previously offered a Hong Kong dollar version of this investment. Its latest twist is to price it in yuan. This was partly to make it attractive to mainland investors, who have watched the price of gold fall 9 per cent since the beginning of last month, and are snapping up the metal on the perception that it is cheap.”
Facebook still worth probably no more than $25 a share: Barron’s | Reuters
“Facebook trades for 75 times its 2013 earnings estimate using generally accepted accounting principles (GAAP), while Google (GOOG.O) trades for less than 20 times its 2013 earnings, the article said.
While a sharp rise in mobile ad revenue helped Facebook increase its overall revenues by 38 percent in the quarter versus a year earlier, that mobile ad revenue came at the expense of desktop ad revenue, which was flat, Barron’s said.
The paper warned that desktop ad revenue may start to drop, meaning investors are assigning a “hefty” market value to Facebook of $71 billion, based largely on just $1.5 billion in mobile ad revenues. Expenses were up 60 percent in the quarter, it added.”
China HSBC April services PMI sinks to two-year low | South China Morning Post
“Growth in China’s services sector slowed sharply in April to its lowest point since August 2011, a private sector survey showed on Monday, in fresh evidence that economic revival will remain modest and may be facing wider risks.
The HSBC services Purchasing Managers’ Index (PMI) fell to 51.1 in April from 54.3 in March, with new order expansion the slowest in 20 months and staffing levels in the service sector decreasing for the first time since January 2009.”
Ukip surge brings four-party politics to Britain – FT.com
“If the local elections are any guide, the 2015 general election will be one of the most unpredictable in a generation.
According to a BBC projection, the council results would give Labour 29 per cent at the next election with the Conservatives on 25, Ukip 23 and the Liberal Democrats 14.”
With caution, Japan’s neighbors welcome ‘Abenomics’ | Reuters
“Emerging Asian neighbors are bracing for a surge in capital flows after Japan’s unprecedented bid to pump up its long-moribund economy but most believe the upside of cheap cash and a stronger Japanese economy outweighs the risks.”
Europe’s jobs crisis comes into sharper relief | Reuters
“Europe’s policymakers are starting to recognize chronic unemployment as a crisis in its own right, rather than something that will resolve itself when the economy improves.”
Thailand’s boom is sustainable, unlike the one in 1997 | South China Morning Post
“The recent boom in public and private investment has unquestionably resulted in strong credit growth since 2010, but Thailand’s economy and finances appear to be on a firm footing, unlike in 1997.
Thailand’s public debt-to-GDP ratio is a modest 44 per cent. Household income is rising, thanks partly to two successive rises of 40 per cent in the minimum wage. And thanks to low global commodity and energy prices, inflation is benign.
The game-changer for Thailand in terms of investor perception came with the election of Yingluck Shinawatra as prime minister in 2011. The credit rating agency Fitch raised Thailand’s sovereign rating to BBB-plus in March, on the back of a new political stability.”
Q&A: David Rosenberg on what investors need to fear most – The Globe and Mail
“For this week’s live discussion at Inside the Market, we were joined by David Rosenberg, chief economist with Gluskin Sheff + Associates Inc.
Lately, Mr. Rosenberg has been more positive on the U.S. stock market, especially dividend-producing securities. But he’s cautioning the party won’t last forever.”
Ex-Bush-Beraterin: Es werden wieder D-Mark-Scheine gedruckt | Wirtschaft
Pippa Malmgren, a former advisor to George W. Bush, believes that the Germans are already preparing themselves for a eurozone breakup. She believes that the Deutsch Marks are already being printed…just in case.
The enduring glow of gold: Andy Xie – Caixin Online – MarketWatch
I am sceptical that this will turn out to be an accurate forecast.
“The global economy has already entered into stagflation with a growth rate of 2% and inflation at 3%. The inflation rate is likely to rise above 4% in 18 months while the growth rate will remain stuck in the same range.
With inflation twice as high as the growth rate, the global economy will slip deeper into stagflation.”
Portugal Marks Return to Bond Market – WSJ.com
“Portugal took a crucial step toward weaning itself off international financial aid Tuesday by raising €3 billion ($3.92 billion) in its first 10-year bond sale since requesting a bailout two years ago.
The new bonds, which attracted €10.2 billion in orders from investors, yielded 5.67%—one of the highest rates in the euro zone but much lower than in 2011, when Portugal was essentially closed out of bond markets because investors demanded such high returns for the risk of holding the its debt.”
Cajamar bond to break 2-year savings bank drought | Capital City | IFRe
“Cajas Rurales Unidas Sociedad Cooperativa de Credito (Cajamar) is poised to be the first of Spain’s troubled savings banks to sell a benchmark bond issue in over two years, with demand for its €500m covered deal reaching almost double that amount.”
Portugal paga 5,65% para colocar 3 mil milhões de dívida a 10 anos – JN
Portugal paid 5.65% interest to place 3 billion euros of paper for 10 years. A very good result.
NYC Tallest Condo Corridor Gets New Entrant With Steinway – Bloomberg
“The 57th Street corridor, near such New York icons as Central Park and the luxury shopping district of Fifth Avenue, is appealing to international investors who are seeking Manhattan residential real estate as a haven for cash, according to Jonathan Miller, president of New York-based appraiser Miller Samuel Inc.
“It’s this new high-tower district that has a global appeal,” he said. “It’s almost a new segment of the market: high-end residential immersed in Midtown.””
Fink Says U.S. Workers Need Mandatory Retirement Savings – Bloomberg
“BlackRock Inc.’s (BLK) Laurence D. Fink, head of the world’s largest asset manager, said U.S. employers should be required to put money aside for their employees’ retirement, similar to Australia’s superannuation system.”
Portugal to slash 30,000 public sector jobs and raise retirement age – Telegraph
“Portugal’s prime minister has announced that the government plans to slash 30,000 public sector jobs as part of a sweeping package of spending cuts to satisfy international creditors.”
In the Long Run, Niall Ferguson, Keynes Was Right – Bloomberg
“This long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
Keynes was saying that macroeconomic models that can’t explain the ups and downs of real life are worthless. This critique of macroeconomics is about as cutting today as it was 90 years ago. Keynes’s supposed obsession with the short-term at the expense of the long-term simply isn’t in the text.
The economy’s persistent weakness has created an underclass of millions of people who want to work full time but can’t get full-time jobs. From now until they die, these people are likely to be less productive — and earn less — than they otherwise would have. They also tend to be unhappier.
The human misery and economic waste that this causes are substantial costs. Curiously, people like Mankiw don’t seem to give much weight to these costs, despite their frequent reminders about the alleged costs of government debt. Biographers and historians might want to look into that.”
What the Danish negative rate experience tells us | FT Alphaville
“a deposit rate cut will likely drain liquidity from the Euro area banking system and accelerate the early repayment of LTRO funds. Negative interest rates on deposits incentivize banks to “get rid” of their excess deposits rather than suffer an erosion of capital.”
European and Asian languages traced back to single mother tongue | Science | The Guardian
“Eurasiatic languages from Portugal to Siberia form ‘superfamily’ with root in southern Europe 15,000 years ago, scientists claim”
Bank of China shuts account with North Korea’s Foreign Trade Bank – FT.com
“The Bank of China has stopped doing business with a large North Korean bank, falling into line with a US-led sanctions push to restrict funding for Pyongyang’s nuclear programme.
The decision to close the bank account follows an increase in tensions on the Korean peninsula and may be a sign that Beijing is willing to place more pressure on Pyongyang.”
Germans Splurge on Italian Homes Locals Can’t Afford – Bloomberg
““I’d say 60 percent of our closings are with Germans, which is much higher than in previous years,” Rosenmaier said by telephone from her Engel & Voelkers office in Cernobbio on Lake Como. “Why? Fear of inflation, the uncertainty on the financial markets, fear of what happened in Cyprus,” the latest European country to get an international bailout.”
Danes as Most-Indebted in World Resist Credit: Mortgages – Bloomberg
“After amassing personal debt equal to almost three times income, mortgage borrowing grew at the slowest pace last quarter since 2000, the Association of Danish Mortgage Banks said this month. Bank lending at Nordea Bank Denmark A/S, the country’s second-largest lender, fell to its lowest in more than a year.
“From a risk perspective, it’s good that consumers are deleveraging,” Anders Jensen, chief executive officer of Nordea Bank Danmark A/S, said in an interview. “From an income perspective, we won’t make any money from lending.””
Germany grapples with skilled labour shortage – FT.com
“Bringing workers from outside Germany is only a small part of what politicians say must be a range of solutions to the labour shortage, including getting more women into the workforce and keeping older employees in work for longer. But migration is also a solution that chimes with the grim employment situation in other parts of Europe.
Latest figures from Germany’s labour office show that almost 500,000 workers from Spain, Portugal, Italy and Greece are now working in Germany – an increase of 8 per cent over the previous 12 months.”
“So far, so good for Abenomics. Now the question is will policymakers back off soon after seeing such positive results? We have seen such stop-go policy in Japan in the past when attention turns back toward the size of the deficit. Are Japanese policymakers in it for the long-haul? “
Gore Is Romney-Rich With $200 Million After Bush Defeat – Bloomberg
“he made an estimated $100 million in a single month. In January, the Current TV network, which he helped to start in 2004, was sold to Qatari-owned Al Jazeera Satellite Network for about $500 million. After debt, he grossed an estimated $70 million for his 20 percent stake, according to people familiar with the transaction.
Two weeks later, Gore exercised options, at $7.48 a share, on 59,000 shares of Apple Inc. stock that he’d been granted for serving on the Cupertino, California-based company’s board since 2003. On paper, it was about a $30 million payday based on the company’s share price on the day he claimed the options.
That’s a pretty good January for a guy who couldn’t yet call himself a multimillionaire when he briefly slipped from public life after his bitterly contested presidential election loss to George W. Bush in late 2000, based on 1999 and 2000 disclosure forms.”
Slovenia considers privatizations to avoid bailout | Reuters
“Slovenia is looking to sell its largest telecommunications operator and the second largest bank, sources said, as its steps up efforts to shore up its finances and avoid an international bailout.”
Deutschland braucht sechs Millionen Gastarbeiter – News Wirtschaft: Konjunktur – tagesanzeiger.ch
According to a German government report, Germany will need 6 million guest workers by 2025 to fill in a large gap in workers due to changing demographics.
George Osborne’s Fear of Ghosts – NYTimes.com
“the long-term rate, to a first approximation, is a weighted average of expected future short-term rates. Unless markets believe that Britain is going to default — which it isn’t, and they won’t — this is more or less an arbitrage condition that ties down the long run rate no matter what happens to confidence. Or to be a bit more precise, it’s hard to see what would drive up long rates except a belief that the BoE will raise short rates; and why would it do that unless it sees economic recovery in prospect?”
Lessons from Latvia | iMFdirect – The IMF Blog
“Many, including me, believed that keeping the peg was likely to be a recipe for disaster, for a long and painful adjustment at best, or more likely, the eventual abandonment of the peg when failure became obvious.
Nevertheless, given the strong commitment of both Latvia and its European Union partners, the IMF went ahead with a program which kept the peg and included a strongly front-loaded fiscal adjustment.
Four years later, Latvia has one of the highest growth rates in Europe, the peg has held, and the fiscal and current accounts are close to balance.
If my list is about right, one cannot avoid the question of how many of these conditions apply to Europe’s southern periphery countries.
The sad truth is that many of these conditions are not satisfied elsewhere. True, the adjustments that these countries have to make are smaller than those Latvia had to make. But their economies are less flexible, less open. They have less obvious potential gains in productivity, at least in the tradables sector. They had much higher public debt to start.”
US Fed’s Tarullo calls for higher bank capital levels | Reuters
“U.S. regulators could order the biggest banks to ramp up their capital holdings beyond what is called for under an international agreement, a top Federal Reserve official said on Friday.
Fed Governor Daniel Tarullo said in a speech that the leverage ratio – which limits the amount of money a bank can borrow to fund its business – established by the international agreement, known as Basel III, may have been too low.”
How a Much-Heralded Bank Reform Proposal Could Actually Blow Up the American Economy | Alternet
“The right question to ask is, why would anyone seek to exclude the non-commercial banks from Brown-Vitter? Well, there’s something going on behind the scenes: Let’s call it Clash of the Financial Titans. Since the financial crisis, the commercial banks have gotten special treatment from the Federal Reserve and the regulators. They know they can be bailed out if they run into trouble. So does everyone else, which gives them a huge advantage over other kinds of financial institutions which do not have the same assurance. The big banks get money cheaper because people know they’ll be backstopped. The big boys also sometimes move risky parts of their business, like derivatives, in and out of the insured deposit sections of their firms, when dubious creditors worry they might go belly-up.”
France to get more time to cut deficit as euro zone recession bites | Reuters
“France will get two more years to meet its budget deficit target because of the country’s poor economic outlook within a recession-hit euro zone, the European Commission said on Friday.
Presenting economic forecasts for the next two years, Olli Rehn, the European monetary affairs commissioner, also confirmed earlier statements that Spain would get the same leeway.
Others, including the Netherlands, Slovenia and non euro-zone Poland, are likely to get a year more to get their budget gaps below the 3 percent of gross domestic product European Union ceiling. The formal decision will be announced on May 29, when the Commission will make macroeconomic recommendations.”
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