News links for 12 Apr 2013
Russia slashes 2013 growth forecast – FT.com
“Russia has slashed its economic growth forecast for 2013 by a third on the back of an unexpected slowdown in the first quarter.
GDP growth for the year is now expected to be 2.4 per cent, down from 3.6 per cent previously expected, Andrei Klepach, deputy economy minister, told Interfax news agency.”
T-Mobile’s Boosted Offer for PCS Should Pass – Analysts – Deal Journal – WSJ
“Late Wednesday, the German telecom announced it was amending its offer for MetroPCS by putting $3.8 billion less in debt on the new company and by reducing the interest rate the new company will owe the parent when the deal is done. Deutsche Telekom also extended the amount of time it pledged to hold its T-Mobile/MetroPCS shares to 18 months from 6 months.
The deal doesn’t add to the price MetroPCS shareholders are getting, but does go straight to a key concern that holders and proxy advisers had raised: Deutsche Telekom was straddling the new company with unfair terms.”
Taiwan’s HTC: not so brilliant, but management is resilient | beyondbrics
“HTC is, after all, not the only company facing problems. Sales have fallen at many of Taiwan’s PC brands and other tech manufacturers, and few have seen management changes.
“It’s really not a good culture because a lot of investors say that HTC should see some big change in management or someone should be responsible for this really bad performance,” said one analyst in Taipei.”
“Mobile magazine Flipboard revealed today that over half a million personalized magazines have been created on its platform since the launch of the new feature just two weeks prior. During this time, the company also added 3 million new users to its service, bringing its total user base to now 53 million.”
OK, now I’m convinced Facebook is trying to be creepy — Tech News and Analysis
“Somehow, using offline data to target ads seems like a stretch for a company already facing a privacy backlash and that has such rich data to mine from inside its own platform.”
How Bad Is the PC Market? Analysts Count the Ways. – Arik Hesseldahl – News – AllThingsD
““We ultimately don’t believe that tablets are ‘replacing’ PCs (very few people we have met have actually retired their PC because of a tablet),” analyst Toni Sacconaghi of Bernstein wrote in a note to clients today, “but they are contributing to PCs being used less — which, in turn, is pushing out the replacement cycle for PCs. This is a big deal.”
Shaw Wu, analyst with Sterne Agee, placed at least some of the blame for the market’s poor performance at Microsoft’s door. “We frankly believe Microsoft’s strategy of forcing user interface changes that nobody wants has proven to be a disaster,” he wrote in a note issued today. “Not to mention the customer confusion with too many choices with multiple form factors.” He now expects the PC market to contract in 2013 by 5 percent, down further from his earlier 2 percent guidance.”
“These are mid-range devices by today’s standards. The Mega 6.3 features a 6.3″ HD (720p) LCD display, 1.7GHz dual-core processor, 8MP rear camera, 1.9MP front camera, 8/16GB internal storage, expandable microSD storage slot, 3200mAh battery, LTE and HSPA+ radios, and Android 4.2.
The Mega 5.8 on the other hand is even lower in ranks, with a 5.8″ qHD LCD display, 1.4GHz dual-core processor, 8MP rear camera, 1.9MP front camera, 2600mAh battery, 8GB internal storage (microSD slot too), and Android 4.2.”
Yep, LinkedIn Acquires Newsreader Startup Pulse for $90 Million – Mike Isaac – Social – AllThingsD
“it’s yet another move by LinkedIn to expand beyond being just a static resume service for recruiters and professionals. Spearheaded by executive editor (and former Fortune and Wired journalist) Dan Roth, LinkedIn has made major strides in pushing original and partner content through the site, aiming to keep users returning and engaged on a regular basis.
“We believe LinkedIn can be the definitive professional publishing platform — where all professionals come to consume content and where publishers come to share their content,” LinkedIn SVP of product and user experience Deep Nishar said in a company blog post. “Pulse is a perfect complement to this vision.””
Profits At High, Wages At Low – Business Insider
Calculated Risk: “The Rapidly Shrinking Federal Deficit”
“The federal budget deficit is shrinking rapidly. …[I]n the 12 months through March 2013, the deficit totaled $911 billion, or 5.7% of GDP. In the first three months of calendar 2013–that is, since the increase in payroll and income tax rates took effect on January 1–we estimate that the deficit has averaged just 4.5% of GDP on a seasonally adjusted basis. This is less than half the peak annual deficit of 10.1% of GDP in fiscal 2009. “
Surprise! Wealth is more evenly distributed in the eurozone than in the US | Money Supply
“The wealthiest 10% of households in the euro area hold just above half of total net wealth, whereas in the United States that group holds around three quarters of total net wealth. As for income, the highest-earning 10% receives 31% of total income in the euro area and 44% of total income in the United States. This comparison illustrates that both wealth and income are more evenly distributed in the euro area than in the United States.”
BBC News – Japan move raises talk of currency controls
“Japan is flooding its economy with money and it is causing ripples across the region. Central banks in South Korea and Indonesia are both meeting on Thursday and they face a dilemma.
Do they do nothing and just let the Bank of Japan pump billions of dollars into the market to stoke growth? Or do they, and other Asian nations, try to protect their own economies?”
China to miss growth mark as big reforms bite | South China Morning Post
“Yu said the mainland’s gross domestic product would grow at less than 8 per cent this year amid Beijing’s tightened monetary policy to dampen inflation and rising home prices.
Most economists expect growth of 8.1 per cent this year, with the exception of Nomura, which has forecast 7.7 per cent.
The most daunting challenges for the economy were rising non-performing loans and excess capacity in various industries, Yu said.
Bad debt and excess capacity have been brought on by years of overinvestment. Over half of mainland GDP, including property purchases, is fuelled by investment.”
Boost to China’s money supply brightens outlook | South China Morning Post
“Banks doled out 1.06 trillion yuan (HK$1.31 trillion) of new local-currency loans in March, 51.5 billion yuan more than a year ago, the People’s Bank of China said yesterday. M2, a broad measure of money supply, rose 15.7 per cent year on year last month, exceeding the official full-year target of 13 per cent.
“Credit and monetary data were above market expectations, mainly reflecting the desire of the central bank to keep liquidity ample,” said Song Yu, a China economist at Goldman Sachs.”
La venta de vivienda sube en febrero el 17,3%, según el INE | Economía | Cinco Días
The number of housing transactions in Spain was pretty good in February, with numbers showing year-on-year increases.
La vivienda en España sufre el mayor descenso de precios de toda la UE | Economía | EL PAÍS
This article gives a bit more detail on the changes in house prices in the EU. The worst decline was in Spain. Other notable declines in house prices were Romania -9.1%, Slovenia -8.9%. Increases were Latvia +9.8%, Estonia +5.8% and Malta +5.4%. These figures are for the year ending in Q4 2012.
El FMI alerta del riesgo de burbuja por los estímulos de los bancos centrales | Economía | EL PAÍS
The IMF is ow warning of bubbles emanating from the excessive stimulus being produced by the world’s major central banks.
Austerity plan for Ireland was a mistake and counter-productive – ex IMF official – Independent.ie
““There seemed to be a view, then and now that most of the bank debt was quasi sovereign debt and debts need to be repaid because if they are not repaid that will cause financial instability. That was the decision take at the time and that continues to be the view today.
He added that there was a perception that doing so would have had catastrophic results, which, he said, is not the case.
“My reading of history of sovereign defaults is that they can be well managed. And the notion that these defaults are extremely costly is historically not true.””
BBC News – Cyprus’s future: Is euro membership viable?
“Thinking about the future is hard for many of those struggling with the crisis in Cyprus – yet it is essential to consider how an economic recovery could be engineered, and whether this would be best done within or outside the eurozone.”
Cyprus May Loosen Bank Restrictions in Days – WSJ.com
“Harris Georgiades, who spoke to The Wall Street Journal by phone from Dublin where he was meeting with his euro-zone counterparts Friday, said a move to increase the limit on domestic financial transactions to €300,000 ($393,000) would “effectively” free up movement of capital in Cyprus. In the next few days, restrictions on international banks will also be lifted, he added.”
Cyprus mulls early EU structural funds: officials | Reuters
“Cyprus is considering putting EU structural funds to earlier use to help its stricken economy but is not asking for a bigger bailout from the euro zone and the International Monetary Fund than the agreed 10 billion euros, EU officials said on Friday.”
Cyprus forced to find extra €6bn for bailout, leaked analysis shows | World news | The Guardian
“Less than a month after deal was agreed bailout bill has risen to €23bn – larger than entire year’s output from country’s economy”
“We enter earnings season with the Dow (DJI) and S&P 500 (^GSPC) having recently passed their all-time highs. One of the narratives for why the markets keep rising (aside from the Fed’s easy money policies and optimism about a U.S. economic recovery) is strength in corporate profits and earnings. Meanwhile, there are warnings coming from some commentators of a bubble in stocks or a bubble in bonds, or a bubble in certain areas of the credit market.
Fund manager John Hussman wrote in a recent weekly market commentary, “the real hook, in my view, is the absence of a bubble in any individual sector, and instead a bubble in profit margins across the entire corporate sector.””
EconoMonitor : Ed Dolan’s Econ Blog » A Disappointing, Procyclical, and Highly Politicized Budget
“In short, the budget proposal is, as we have been led to expect, a fundamentally political document. Some of its features, like the Buffet rule and a ban on deductions for corporate jets, are aimed at shoring up the administration’s liberal base. Other features, like the “balanced” mix of taxes and spending cuts, are designed to position the White House as the occupant of a reasonable middle ground while casting Congressional opponents as extremists.
Will it work? Probably not.”
FDIC’s Hoenig: Basel III Is Well-Intended Illusion – Real Time Economics – WSJ
“International regulators hoping to bolster the health of the world’s largest banks are fooling themselves by focusing on risk-weighted capital measures, Federal Deposit Insurance Corp. Vice Chairman Thomas Hoenig said Tuesday.
Mr. Hoenig said focusing primarily on Tier 1 capital and risk-weighted assets doesn’t work because bank managers adjust their balance sheets to account for regulators’ decisions on which assets are considered more risky.”
iPhone 5S to offer multiple screen sizes, analyst says | Apple – CNET News
“Apple’s next iPhone will be available in two or three different screen sizes and launch in July, says an analyst with Topeka Capital Markets.”
ekathimerini.com | Greek unemployment hits new record of 27.2 pct in January
“Greece’s jobless rate scaled a new record of 27.2 percent in January from a revised 25.7 percent in December, the country’s statistics service ELSTAT said on Thursday.”
ekathimerini.com | Juncker: Greece cannot tolerate any more austerity
““Greece can no longer bear intense measures of structural adjustment,” Juncker said during a parliamentary speech Wednesday.”
Ex-IMF official warns austerity ‘untenable’ – FT.com
“A senior official with the International Monetary Fund who helped negotiate Ireland’s bailout in November 2010 has admitted the troika of international lenders botched the €67.5bn programme by focusing almost exclusively on austerity.
Ashoka Mody, the IMF’s former mission chief to Ireland, said on Thursday it was time to ease up on Europe’s policy of austerity, warning further delay in changing course risked dragging out the continent’s economic recovery.”
Seven year extension to Irish bailout loans agreed – Independent.ie
“Earlier, in exclusive interview with the Irish Independent, Finance Minister Michael Noonan said he expected a deal on EU bank regulation this weekend at the Ecofin conference of EU finance ministers — which would be a positive step towards a multi-billion euro package to ease the burden on the taxpayer.
He also said he had pushed to be given longer to repay as much as €40bn in Irish bailout debt, but is “quite happy” with the seven-year extension that is on the table.”
Sloweniens Geldzufuhr versiegt – News Wirtschaft: Konjunktur – tagesanzeiger.ch
The three largest banks in Slovenia alone need 2 billion euros of additional capital. This is going to be a big problem.
“Allein die drei grössten Institute Nova Ljubljanska, Nova Kreditna Banka Maribor und Abanka Vipa benötigen laut Ratingagentur Fitch zwei Milliarden Euro an frischem Kapital.”
Seeking Relief, Banks Shift Risk to Murkier Corners – NYTimes.com
“Banks have been shedding risky assets to show regulators that they are not as vulnerable as they were during the financial crisis. In some cases, however, the assets don’t actually move — the bank just shifts the risk to another institution.
This trading sleight of hand has been around Wall Street for a while. But as regulators press for banks to be safer, demand for these maneuvers — known as capital relief trades or regulatory capital trades — has been growing, especially in Europe.”
Euro-Zone House Prices Fall – WSJ.com
“Eurostat didn’t publish a figure for Germany, and would not disclose the estimate for Germany upon which the overall figure for the euro zone was based.
However, other estimates suggest German house prices rose in 2012. According to a measure from property consultancy BulwienGesa AG—which is used by the Bundesbank—prices for apartments rose 5.9% in 2012, while prices for terraced houses were up 3.3% and for single-family homes 3.5%. A separate measure from the Association of German Pfandbrief Banks calculates that house prices in the fourth quarter of last year gained 4% on the same period of 2011.”
Portugal, Ireland to win time to repay loans: Dijsselbloem | Reuters
“Euro zone finance ministers will probably agree on Friday to give Ireland and Portugal seven more years to repay loans from the European Union, a senior official said on Thursday, to help both countries return to financial markets.”
EMU plot curdles as creditors seize Cyprus gold reserves – Telegraph Blogs
“First they purloin the savings and bank deposits in Laiki and the Bank of Cyprus, including the working funds of the University of Cyprus, and thousands of small firms hanging on by their fingertips.
Then they seize three quarters of the country’s gold reserves, making it ever harder for Cyprus to extricate itself from EMU at a later date.
The people of Cyprus first learned about this from a Reuters leak of the working documents for the Eurogroup meeting on Friday.
It is tucked away in clause 29. “Sale of excess gold reserves: The Cypriot authorities have committed to sell the excess amount of gold reserves owned by the Republic. This is estimated to generate one-off revenues to the state of €400m via an extraordinary payout of central bank profits.”
This seemed to catch the central bank by surprise. Officials said they knew nothing about it. So who in fact made this decision?”
Analysis: Recession-weary Portugal tests limits of austerity | Reuters
“More cuts are baked in the cake: the government is scrambling to come up with 1.3 billion euros in savings, amounting to 0.8 percent of GDP, after the constitutional court last week rejected plans to reduce public workers’ benefits.
The finance ministry responded with a freeze on non-essential spending, generating front-page headlines on Thursday that everything from school lunches to police patrols and health inspections were being curtailed.
Under orders from its troika of lenders – the International Monetary Fund, the European Union and the European Central Bank – Portugal has to make 4 billion euros in permanent savings between 2013 and 2015.”
Latvian hopes awash with Russian money – FT.com
“Latvia does not resemble Cyprus by having a large financial sector or a big government debt burden, having taken care of its public finances following a €7.5bn international bailout in 2008. Where it does look somewhat Cypriot is in its thirst for Russian bank deposits.
Non-resident deposits, those from non-Latvians, represented 49 per cent of the 12.7bn lats (€18bn) total at the end of February, one of the highest in the EU. About 80-90 per cent of those non-resident deposits come from the former Soviet Union, according to the International Monetary Fund. And they have been growing fast: non-resident deposits increased 17 per cent in 2012.”