News links for 8 February 2013
Rumor: Apple planning ‘iPhone 5S’ and new 5-inch ‘iPhone 6’ for 2013
“A new report out of the Far East claims Apple will release both an upgraded “iPhone 5S” as well as a new “iPhone 6” with a larger 5-inch screen this year.
The details come from investment news service BrightWire, which cited a report out of Chinese mobile phone information site Laoyaoba.com. That source reportedly spotted two new iPhone models at Apple’s suppliers.”
BBC News – Long-term mortgage rates fall to record lows
“Interest rates on some new mortgages fixed for five years have fallen to the lowest levels on record.
There are currently 16 lenders offering mortgage loans at less than 3%, if borrowers can put down large deposits.
HSBC’s internet lender First Direct has launched a new deal with an interest rate of just 2.69%, if a borrower can put down a 35% deposit.”
This is an interview with the head Austrian social democrat in the European Parliament. He says the EU budget is catastrophic – but because he believes Europe needs to do more and the revenue shortfall needs to be made up for that purpose. His remarks are indicative of the now contentious EU budget in the wake of David Cameron’s decision to put British EU membership to a referendum. I expect more jousting against the EU by politicians, delegitimising federalism in Europe. On the other hand, backers of more Europe will be out in force as well. O it’s not clear what impact this will have on the electorates.
The Oldest Known Common Ancestor of Humans Looked Like a Chill Rat-Possum Thing | Motherboard
“Man’s common ancestor with the rest of the mammal tribe may have been a small rat-like insectivore with a really long tail. Say hello to one of your oldest relatives, named Protungulatum donnae.
This new research, published in Science, suggests that P. donnae was the first animal to have all the characteristics of placental mammals, which would place the rise of the bulk of modern mammals in the post-dinosaur period.”
Asteroid 2012 DA14 is closing in for a close encounter – and a swift kick – Cosmic Log
“NASA’s calculations show that Earth’s gravity will perturb the 150-foot-wide (45-meter-wide) asteroid’s orbital period, which had been getting close to Earth’s own one-year orbit. “Earth is going to put this one in an orbit that is considerably safer than the orbit it has been in,” Yeomans said.
That makes 2012 DA14 nothing more than one of the universe’s most vivid reminders that we live in a cosmic shooting gallery. The rocky asteroid’s orbit is so well-known that Yeomans can say it will pass by Earth at a minimum distance of 17,200 miles (27,700 kilometers), plus or minus 100 miles. That’s in the “sweet spot” between GPS satellite orbits (6,000 to 12,000 miles) and geosynchronous telecom satellites (22,000 miles), Yeomans said.”
Mammal ancestry expanded after dinosaurs died off
“Comparing physical characteristics across 86 mammal species, living and extinct, and cross-checking with genetic data to create age estimates, the Science journal study concludes that the original shrew-like ancestor of mammals with a placenta sprang up from earlier mammals within 400,000 years of the end of the Age of Dinosaurs. And the species likely first sprang from older marsupial-like mammal types in South America and North America, rather than in Africa, given the geologic timing of events.
Genetic evidence alone had pointed to an older origin for most non-marsupial mammals, while fossils pointed to an earlier one. The new analysis adds to evidence favoring the more recent origin for the plethora of mammal varieties now seen on Earth.”
The Aleph Blog » Blog Archive » Is High Yield Expensive?
“Yes, I think high yield is expensive, and stocks as well. We have replaced a set of maniacs who were creating CDOs, with a single maniac, the Federal Reserve. The Federal Reserve has less effect on junk bonds because they directly affect Treasuries and Agency MBS. Those are far more similar to AAAs than junk bonds.
When CDOs were bidding for every yieldy bond, they compressed relative yield spreads to unbelievable levels. Today, those unbelievable yields come from the Fed. They bid for MBS and Treasuries, leaving others to seek yield in riskier notes.
There is real risk here, and the Fed will get whacked when normal yield relationships, and real yields re-emerge.”
“The collective self-censorship over a US drone base in Saudi Arabia is but the latest act of government-subservient ‘journalism'”
Wall St hedge fund manager tries to force Apple to share out its $137bn cash pile – Telegraph
“David Einhorn, the outspoken head of Green Light Capital, said Apple must “examine all of its options to unlock the growing value of its balance sheet for all shareholders”.
Until recently, Apple shares were the hottest on Wall Street as the success of the iPhone and iPad sent them to a record high of $705 in September.
Since then, fears that Apple’s growth is slowing and its margins are shrinking have seen the shares lose more than a third of their value.
The steep drop has heaped pressure on chief executive Tim Cook to find ways of returning the cash the company has accumulated to shareholders. Mr Einhorn is suing to prevent Apple eliminating preferred shares, something the Silicon Valley company wants to do at its annual shareholder meeting this month.”
Data siphoned in Fed reserve hack a “bonanza” for spear phishers | Ars Technica
“Sensitive details on thousands of banking executives lifted from a hacking involving the Federal Reserve represent a potential “bonanza” for spear phishers looking to snare high-value targets in personalized scam e-mails, a security researcher said.
The list is no longer readily available online, but according to Chris Wysopal, CTO of security firm Veracode, it contained details from a Federal Reserve-related database that Anonymous-affiliated hackers claimed to breach on Sunday. It included 31 fields, including home addresses, e-mail addresses, login IDs, and cryptographically hashed passwords.”
US north-east braced for 2ft of snow as major storm approaches | World news | guardian.co.uk
“Residents of the US north-east are bracing themselves for a major winter storm that could deliver up to 2ft of snow in areas including New York City and Boston on Friday and Saturday.
A blizzard warning is due to come into effect from Boston down to New York City on Friday morning, while Rhode Island, Connecticut and parts of New Jersey are also likely to be affected. The National Weather Service warned that the conditions will make travel “extremely dangerous” and said people in affected areas should not venture out into the storm.”
BBC News – China reports better than expected trade data
“Exports, a key growth driver, surged 25% in January from a year earlier. Most analysts had forecast a 17% jump.
Imports surged 28.8% indicating a robust pick up in domestic demand.
Separate figures showed that the inflation rate slowed to 2% in January but there was concern over a spike in food prices as vegetable costs soared.”
Japan Trade Figures Highlight Challenges – WSJ.com
“Figures released Friday showed that the current account, which measures trade in goods and services as well as overseas income, came in at a deficit of Y264.1 billion ($2.8 billion) in December. For all of 2012, it did manage to maintain a surplus of Y4.70 trillion but that was the smallest since comparable data became available in 1985. The surplus was possible only because of income from overseas investments, as the merchandise trade deficit jumped to its highest level since the 1985 alteration in the data.
The country’s trade performance has become a central worry for Japan’s new government. The figures are likely to pressure the nation’s central bank to take on greater monetary easing to help push the yen lower and make Japan’s manufacturers more competitive against rivals.”
Buffett’s Son Says He’s Prepared Whole Life for Berkshire Role – Bloomberg
“The transition to a second generation of the family atop the board makes sense only if Howard Buffett doesn’t have operational duties, said Jeff Matthews, a Berkshire shareholder and author of “Warren Buffett’s Successor: Who It Is and Why It Matters.” The father has encouraged public policies that reward people based on their merits, rather than connections, saying in 2007 that he favors “equality of opportunity.”
It is “hard to argue that out of all the potential successors to Warren Buffett, that Howard Buffett is absolutely the best guy, unless you take into consideration what the role is,” Matthews said in a phone interview. “The role as chairman is not CEO. It’s to preserve the Berkshire culture. And when you look at it that way, he’s probably the right guy.””
China trade picks up and inflation eases – Telegraph
“Much of the change was due to the Lunar New Year holiday, which distorts China’s economic data each year. But analysts said data reported Friday looked promising.
Export growth accelerated to 25pc from the previous month’s 14.1pc as companies rushed to fill orders before shutting down for a holiday break of up to two weeks. Import growth accelerated to 28pc, more than quadruple the previous month’s 6pc.
China’s trade growth has rebounded in recent months in a sign of economic recovery but longer-term trade measures are likely to show lower growth than January’s double-digit increase.”
Germany’s trade surplus rises to second highest level since 1950 | Business | guardian.co.uk
“German imports declined by 1.3% in December, defying expectations of a rise of 1.4%. But exports inched up 0.3% from November, driving the full-year trade surplus to €188bn (£160bn), the second highest since records began in 1950.
Christian Schulz, from Berenberg Bank, said: “German trade was weak at the end of 2012, with exports failing to rebound from their sharp November fall and imports falling further.
“But overall, German exporters did impressively well in 2012, with exports rising by 3.4%, despite the euro crisis and weakness elsewhere. Imports on the other hand were surprisingly weak given that Germany’s strong fundamentals should have supported domestic demand.””
BBC Sport – Lance Armstrong: US firm sues disgraced cyclist for $12m
“SCA Promotions insured bonuses paid to Armstrong when he claimed his fourth, fifth and sixth Tour de France wins.”
Justice Department, states weigh action against Moody’s | Reuters
“The Justice Department and multiple states are discussing also suing Moody’s Corp (MCO.N) for defrauding investors, according to people familiar with the matter, but any such move will likely wait until a similar lawsuit against rival Standard and Poor’s is tested in the courts.”
Japan current account surplus falls to record low in 2012 | South China Morning Post
“Japan posted its smallest annual current account surplus on record last year after weak global demand and a rise in energy imports pushed its monthly balance into deficit for a second straight month in December.
The monthly deficit was 264.1 billion yen (US$2.83 billion), Ministry of Finance data showed on Friday, much larger than a median estimate of 144.2 billion yen in a Reuters poll.
That cut the full-year current account surplus to 4.7 trillion yen, down by more than half from 2011 and the smallest since 1985 when Japan started compiling comparable data.”
LinkedIn posts exceptionally strong fourth quarter earnings — Tech News and Analysis
“LinkedIn posted strong fourth quarter earnings on Thursday, reporting revenue of $303.6 million, which beat analyst estimates of $280 million and was 81 percent higher than Q4 2011 revenue. Earnings per share were $0.35, much higher than analyst expectations of $0.19. Fourth quarter net income was $11.5 million, compared to fourth quarter 2011 net income of $6.9 million.
The company has so far demonstrated that its combination of subscriptions and advertising revenue can work, although whether it can keep engagement up and continue to grow its international base remains to be seen.”
Apple Cash Pile Sets Off a Battle – WSJ.com
“Some shareholders on Thursday applauded Mr. Einhorn’s move. David Rolfe, portfolio manager of the RiverPark/Wedgewood Fund—in which Apple is the biggest holding—said he appreciates Mr. Einhorn’s intent to get the iPhone and iPad maker to distribute more cash to shareholders.
Apple has “so much cash that it’s literally forcing their hand,” Mr. Rolfe said. “I understand being conservative is part of their culture, but c’mon, how conservative can you be?””
“The usual feeling is that the smaller carriers have the best customer care ratings and the bigger carriers don’t quite stack up, but that trend seems to have been turned upside down in the past year or two. JD Power has released yet another customer care survey report, where it cultivates data from thousands of users in order to see which carriers provide the best support experience.”
This is a German-language interview with Apple founder Steve Wozniak that recently appeared in WirtschaftsWoche magazine
Why it matters that the Irish promissory notes are gone | FT Alphaville
“And why this could well have been the best possible deal for Ireland.”
Ireland secures deal to reduce Anglo Irish Bank debt repayments | Business | The Guardian
“Taoiseach says plan, which the ECB appears to back, will save €20bn over next decade and bolster global confidence in Ireland”
Wozniak: Apple now ‘somewhat behind’ in smartphone features
“Wozniak spoke with German publication Wirtschafts Woche in an interview ranging from the early days of Apple to why its co-founder still waits in line in order to buy new iDevices. He said that the company he started with the late Steve Jobs is facing stiffer competition, particularly from chief rival Samsung.
“Currently we are in my opinion… somewhat behind,” Wozniak said about Apple with regard to features. “Others have caught up. Samsung is a great competitor. But precisely because they are currently making great products.””
Retailers Post Strong January Sales Growth – WSJ.com
“U.S. retailers turned in strong sales for January, a time of heavy promotions to clear holiday goods and make way for early spring merchandise.
January is the end of the fiscal year for most retailers and the month serves as a good barometer of how much consumers have left over after holiday spending and gives inklings of what type of buying may lie ahead.”
Neil Barofsky: Geithner Doctrine Lives on in Libor Scandal « naked capitalism
“Now that Tim Geithner has resigned as US Treasury secretary, it is time to survey the damage wrought from four years of his approach to the financial crisis. The “Geithner doctrine” made the preservation of the largest banks, no matter the consequences, a top priority of the US government. Aside from moral hazard, it has also meant the perversion of the US criminal justice system. The US faces a two-tiered system of justice that, if left unchecked by the incoming Treasury and regulatory teams, all but assures more excessive risk-taking, more crime and more crises.
The recent parade of banking scandals, such as the manipulation of Libor rates by Barclays, Royal Bank of Scotland and other major banks, can be traced back to the lax system of regulation before the financial crisis – and the weak response once disaster struck.”
“In sum, some market monetarists will be disappointed by this testimony of the incoming head of the Bank of England (BoE). Carney’s views are not as radical as expected since he chose to hedge his response. There is a case for a debate on reviewing the Bank of England’s mandate but flexible inflation-targeting is the right course of action, he argued. In short, he argued that NGDP targeting can work when rates are at the lower-bound but he is “far from convinced of its merits” since the policy works when people consume more, in a nod to the growth-based framework. However, he doubted whether consumers and producers would appreciate a shift in this mandate. In this context, “the main benefits of NGDP go away”, he argued.”
A Growing Split Within Republicans On Too Big To Fail Banks | The Baseline Scenario
“On the one hand, a growing number of influential voices are pushing for measures that would limit the size of megabanks or even push them to become smaller. Richard Fisher, president of the Federal Reserve Bank of Dallas, continues to draw a lot of attention, as does Thomas Hoenig, the former president of the Federal Reserve Bank of Kansas City and now vice chairman of the Federal Deposit Insurance Corporation. And Jon Huntsman planted a strong conservative flag on this issue during his run for the presidency in 2011.
This assessment is now shared much more broadly across the right, as seen in recent opinion pieces by George Will and Peggy Noonan, as well as regular analysis by James Pethokoukis of the American Enterprise Institute, including on the issue I write about today.
But some other Republicans are pushing back, as seen this week in a paper by Hamilton Place Strategies, a group headed in part by communications professionals who previously worked with President George W. Bush, John McCain and Mitt Romney. “
How house prices have risen 43-fold since 1971 – Telegraph
“A carton of milk would set a family back by £10 and a roast chicken would have a £51 price tag if food costs had risen in line with house price increases over the last 40 years, research by Shelter has found.
The charity said that the typical value of a house had increased by just over 43 times since 1971, from £5,632 to £245,319.
If a family’s weekly shop had increased at the same rate, it would now stand at £453, which is six times the actual figure of around £75.”
Mark Carney: What he told MPs – Telegraph
“Mark Carney’s remarks to MPs on the Treasury Select Committee on his views on inflation, QE and the Bank of England’s role in the economy.”
Brazil inflation: it gets worse | beyondbrics
“Is inflation getting out of control in Brazil? The national statistics office said on Thursday that consumer prices rose by 0.86 per cent in January, bringing the annual rate to 6.15 per cent. That’s up from 5.84 per cent in December and heading closer to the upper limit of the government’s tolerance range of 6.5 per cent, two percentage points above its inflation target.
The target, it seems, has been forgotten. And if industrial production figures out this week are any guide, it is unlikely to be remembered any time soon.”
David McWilliams » Why we should not pay the promissory note
“We know that keeping a dead bank alive with real money makes no sense, but we are told that the consequences of not paying the money will be dire. But what are they, these consequences?
Here I write as a former central banker and I can tell you the consequences are likely to be minimal. We know the ECB won’t push the little red button and detonate the nuclear option. It didn’t do that in Greece. It knows failure in Ireland will bring the Japanese solution closer, so that will be avoided at all costs. ATMs will continue to work. Life will go on and if you believe that the Irish state will be around in one hundred thousand years or one million years, pay back the promissory note in installments of euro 30,000 a year. We would still be paying it. We would have simply adjusted the terms of the IOU. There are all sorts of things we can do because the IOU is one part of the Irish state paying back another one, so who cares? Yes of course it’s monetary financing, but this is what you do in deflationary times, with unemployment at close to 15%, emigration rampant and GNP down almost a quarter in six years. As they’d say on Operation Transformation, “Cop on”!
The ECB is in a bind, not us.”
BBC News – UK industrial output rose 1.1% in December
“UK industrial output rose 1.1% in December from the previous month, according to the Office for National Statistics.
The rise – which includes figures for energy production and mining – was higher than many economists’ predictions of a 0.9% rise.
Manufacturing output rose 1.6% for the month, after falling 0.3% in November.”
BBC News – India cuts economic growth forecast to 5%
“The latest growth estimates for the current financial year is just 5% – yet another cut as India struggles with high inflation and weak investor sentiment.
India’s growth has slowed in recent months because of several factors, not least the sharp slowdown in its manufacturing and services sectors.”
Tax Hikes Backfire, Greece’s Revenues Plummet | Greece.GreekReporter.com Latest News from Greece
“Despite big tax hikes as part of austerity measures demanded by international lenders, tax revenues fell precipitously in January, with the Greek Finance Ministry reporting a 16 percent decrease from a year earlier, and a loss of 775 million euros, or $1.05 billion in one month.
The government took in only 4.05 billion euros ($5.47 billion) in tax revenues in January, far short of its target of 4.36 billion euros ($5.89 billion), a $420 million shortfall in one month, and during an annual holiday sales period for shops who are bleeding customers and shutting down by the thousands.”
How a Nation Got Snookered by a Phony Narrative – Bloomberg
“Uncertainty didn’t carry much weight in the fourth quarter. In fact, it looks like we got snookered by a euphemism that was more an excuse to prevent an undesirable political outcome (tax increases) than a reflection of intent. While Congress dawdled until the very last minute to avert the fiscal cliff, businesses seized the day and went about their business.
With automatic spending cuts and budget negotiations ahead, the uncertainty principle is bound to reassert itself. I hope you’ll remember the gap between fourth-quarter expectations and reality before you repeat that narrative to two friends, who will tell two friends, and so on, and so on, and so on.”