I have been pretty busy off the blog these past few days so I am a bit behind. The key event was my getting a Mac on Friday and adjusting to using it instead of my PC. So far so good. I will give you a de-brief on how well it’s going once I get a decent amount of use under my belt. Also I had to write an article for the New York Times and prepare for an appearance on a TV show which I may post later.
Here’s what I’ve got for links. I have so many that I’ll break them up into different posts. This one’s on the US and Tech. Europe will be next. I only brief commentary today beyond the article specific comments and quotes.
The fact that earnings are declining at US companies should not be a surprise given the decline I reported in earnings on the national income and product accounts for Q1. But now reported earnings are showing year-on-year declines for the first time in three years and that tells you companies are not making enough money to start hiring staff en masse. For me, this shows the weakness of the latest recovery: no real income gains but good profit gains that are now petering out as consumer demand stagnates.
I should note that just because earnings have stagnated or are declining doesn’t mean that shares will also go down. Look at Apple for example. I had said that Apple would need to disappoint repeatedly before it gets knocked down. After the latest results, that may turn out to be true. But the rest of tech is down. Where are the next market leaders: housing stocks are already there. Banks actually may get there due to low valuation. BB&T is a good example. On a macro basis, valuations are not cheap, so I think the bull market in stocks may be on its last legs.
Enjoy.
Technology
Google’s Motorola Files New Patent Claim Against Apple – WSJ.com
I hate the patent wars.
“The patents relate to Apple devices including the iPhone, iPad and iPod Touch, Motorola says. Motorola is seeking a ban on the import of those products made overseas.”
Facebook Investors Cash Out – WSJ.com
Now is a good time to cash out. The economy is rolling over and may go into recession. I should note that earnings fell in the last quater for the first time in 3 years. That’s a sign of slowing economic growth.
Some Groupon Investors Give Up – WSJ.com
I can see why they have thrown in the towel. Groupon has not delivered and probably will not deliver on its IPO valuation. Has the stock fallen enough as perhaps Facebook has? I would say that Groupon looks worse from a business model and execution perspective.
Apple becomes most valuable company of all time | Reuters
“Apple Inc became the most valuable public company of all time on Monday, after its market value climbed beyond $620 billion to surpass a milestone set by Microsoft Corp more than a decade ago.”
13 tips to keep your Mac secure – USATODAY.com
Solid-state revolution: in-depth on how SSDs really work | Ars Technica
“Given that SSDs transform the way computers “feel,” every geek should know at least a bit about how these magical devices operate. We’ll give you that level of knowledge. But because this is Ars, we’re also going to go a lot deeper—10,000 words deep. Here’s the only primer on SSD technology you’ll ever need to read.”
Apple, you can’t say you weren’t warned about your new retail boss — Apple News, Tips and Reviews
“Remember when Cook unveiled Browett as his first senior hire after taking the CEO job? Back in January, I wrote about the appointment and noted Browett’s experience at pile-em-high, sell-em-cheap retailers — a philosophy very much at odds with Apple’s”
Are Apple stores overstaffed? | asymco
“The accusation that employment is being sacrificed for the sake of profits seems disingenuous. The stores were never designed as a profit center. They have to be profitable in the sense that they have to justify themselves. But we need to recognize that they on a brand and product mix that is unique to that store. In return, they are designed to sustain that brand and offer a service rather than merely a sales channel.”
BBC News – Twitter changes provokes anger from developers
Flash Data Storage Niche Heats Up – WSJ.com
“The rap against flash memory is its high cost per byte of data stored compared with disk drives. But the gap is narrowing, as companies churning out chips for consumer devices keep driving down prices and more companies adopt solid-state drives. Mr. Cancilla of IBM, which plans to use Texas Memory’s flash-based products with its own storage systems, estimates flash now costs about five to 10 times more per gigabyte stored than disk-based storage. But that is a drop from an earlier premium of 25 times to 30 times more. He expects flash will cost double or triple that of disk storage within the next two years.”
Apple scrambled to buy AuthenTec to get its fingerprint scanner into new devices
“Apple’s $356 million acquisition of fingerprint sensor maker AuthenTec was the result of mad scramble to forge a licensing agreement with the company before ultimately determining that the technology was so key to future developments that it made the most sense to buy all of the firm’s intellectual property outright and immediately.”
New Apple retail VP John Browett planned to cut jobs to raise profits
Does this sound like the moves of a company making record profits?Maybe that’s how they got those profits. But then again, maybe it’s because margins are slipping. I am surprised that this new VP wanted to take such draconian action when Apple’s retail has been a huge selling point to customers in terms of branding. The ending comment suggest this too.
Lenovo First-Quarter Profit Rises 30% – WSJ.com
“Chinese computer maker Lenovo Group Ltd. said Thursday first-quarter net profit rose 30% from a year earlier due to strong growth in personal-computer shipments in emerging markets. Net profit for the three months ended June 30 rose to $141.4 million, or $1.33 a share, from $108.8 million, or $1.08 a share a year earlier, beating analysts’ forecast of $133.8 million. Revenue rose 35% to $8.01 billion from $5.92 billion, slightly below expectations of $8.13 billion predicted by analysts in a poll.”
Apple Shares Moving Closer to Record Highs – MarketBeat – WSJ
“The stock has quickly recovered from its rare earnings miss late last month and is about $10 away from the all-time high reached earlier this year.”
The Honorable Judge Lucy Koh Accuses Apple’s Lawyer Of Smoking Crack | TechCrunch
US
“There are plenty of legitimate reasons to disapprove of the president. Here’s the big one: 8.3 percent. That’s the current unemployment rate, fully three years on from the official end of the Great Recession. But rather than make this straightforward case against the current administration, Ferguson delves into a fantasy world of incorrect and tendentious facts. He simply gets things wrong, again and again and again. “
FT Alphaville » Paul Ryan and Hayek vs Rand
Good read demonstrating heterogeneity in Libertarianism
California home prices near 4-year high – Lansner on Real Estate : The Orange County Register
Plus house sales are way up. In a housing snapback, the first thing to come back is volume and then comes price. This is what we have seen in California. I think it is clear now that a cyclical bottom is in and that the housing market will not go back there without a recession.
Risks of California muni bankruptcies rising: Moody’s | Reuters
“California likely will experience “a greater share” of defaults and bankruptcies than other areas of the country, Moody’s Investors Service said on Friday.”
New York Times Publishes Apology for Obama’s Failed Housing Policies « naked capitalism
“On the one hand, the dismal failure of the Administration’s cosmetic responses to the foreclosure mess is so evident that the New York Times is willing to acknowledge it, via a first page article titled, “Cautious Moves on Foreclosures Haunting Obama.” On the other, what the story offers is a whitewash, not an analysis.”
Niall Ferguson Has Been Wrong On Economics – Business Insider
Sober Look: Brent-WTI spread blows out again
“With the heightened geopolitical risk, Brent is now viewed as having a great deal of the upside, while WTI, impacted by strong domestic production in the US, has the downside. This divergence is keeping the spread elevated.”
Romney: I’ve paid at least 13 percent tax rate in each of past 10 years – The Washington Post
““I did go back and look at my taxes and over the past 10 years I never paid less than 13 percent. I think the most recent year is 13.6 or something like that. So I paid taxes every single year,” he told reporters Thursday.”
More on the lack of criminal cases in finance
CONVICTED: Bush 1300+, Clinton 1000+, Obama 0.0 (+/-) – Home – The Daily Bail
The Daily Bail says this is the financial fraud scoreboard for the last three administrations
Oil Rises Above $95 as Housing Permits Ease Economic Concern – Bloomberg
“Oil climbed above $95 a barrel for the first time in three months as U.S. building permits reached a four-year high and equities advanced, adding to optimism that faster economic growth will boost demand.”
Companies
FT Alphaville » Now, that is one mighty fine interest rate sensitivity disclosure
“An investor could attempt to research which banks will be best placed for such a shift. For retail banks in particular, since their business models are not as diverse as investment banks, a handy disclosure to look for in financial statements would be net interest income sensitivity.”
Analysis: U.S. corporate earnings point to further gloom | Reuters
“Earnings season is drawing to a close and the results raise a number of worrying questions about the economy’s direction.”
Brown Brothers Harriman closes research business | Reuters
“Brown Brothers Harriman has closed a business that allowed its institutional investor clients to outsource aspects of their stock research to the bank, because the operation was not bringing in enough revenue.”