STIGLITZ: America Is Being Devoured By Parasites

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“We are facing a very difficult transition from manufacturing to a service economy. We have failed to manage that transition smoothly. If we don’t correct that mistake, we will pay a very high price. Already, the average American is suffering from the failed transition. My concern is that we have set in motion an adverse economics and an adverse politics. A lot of American inequality is caused by rent-seeking: Monopolies, military spending, procurement, extractive industries, drugs. We have some economic sectors that are very good, but we also have a lot of parasites. The hopeful view is that the economy can grow if we rid ourselves of the parasites and focus on the productive sectors. But in any disease there is always the risk that the parasites will devour the healthy body parts. The jury is still out on that.”

“Commodities guru Jim Rogers was on Fox Business News this afternoon predicting disaster for 2013.

“First of all, we have tax increases January 1,” warned Rogers. “Secondly, we’ve had recession every four to six years…  Next year, it’s four to six years.”

In addition to that awful economic back drop, Rogers is concerned about a contradiction in that markets.

“Now I’ve been investing for a long time and I have noticed when good news comes out and stocks go down, something’s wrong. So you better be worried,” warned Rogers.  “I don’t know what’s wrong.  But I know we’ve had a great first quarter.  One of the best first quarters in history.  And now good news is coming out and stocks are going down.”

Rogers is short stocks and long commodities.

Here’s video of the interview courtesy of Fox Business News:”

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Revenues are up 16%; but only came in a wee bit better than expectations….

Net income was up 4%….

A $0.25 bump yoy in eps….

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“Jobless Americans are using increased tourism as a pathway back to employment, finding jobs at hotels and motels as those facilities step up hiring to meet growing demand.

“With more people on the road, we’ll need more people working in hotels,” said Jan Freitag, a senior vice president at Smith Travel Research Inc. He cited a 4.1 percent increase in first-quarter hotel bookings from a year ago as a “very positive sign” that U.S. tourism is rebounding….”

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“Italy was forced to pay 1 percentage point more than a month ago to sell zero-coupon bonds in the first auction since Prime Minister Mario Monti’s government moved back its balanced-budget target.

The Treasury sold 2.5 billion euros ($3.3 billion) of the zero-coupon 2014 debt to yield 3.355 percent, up from 2.352 percent at the previous auction on March 27. Investors bid for 1.80 times the amount offered, down from 1.86 times last month. The Rome-based Treasury also sold 943 million euros of inflation-linked bonds due in 2017 and 2019 to yield 3.88 percent and 4.32 percent, respectively. The auction’s maximum target was 3.5 billion euros.

Investor confidence in the debt of Europe’s so-called peripheral countries has eroded since Spain’s announcement on March 2 it won’t meet its deficit target this year, leading to six weeks of declines of Italian bonds. Monti last week delayed its goal to erase the deficit by one year to 2014, joining Spain in missing fiscal targets amid a worsening recession…”

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“A leading index for China rose at a slower pace in March, adding to evidence growth in the world’s second-biggest economy is moderating.

The gauge gained 0.8 percent from the previous month to 230.6, the New York-based Conference Board said in a statement today in Beijing, citing a preliminary reading. That compares with a 1 percent rise in February that was revised up from a previously reported 0.8 percent increase.

Today’s data may add pressure on policy makers to take more measures to support expansion after the economy grew the least in almost three years. China’s slowdown may cloud the outlook for a global recovery after U.S. job gains weakened and the euro-area’s fiscal crisis threatened to spread.

“This month’s reading supports a continued slowing of the economy,” Andrew Polk, resident economist at the Conference Board China Center in Beijing, said in the statement. Volatility among indicators “suggests that significant downside risks remain,” Polk said.

China’s manufacturing may contract for a sixth month in April, according to the preliminary reading of a purchasing managers’ index released yesterday by HSBC Holdings Plc and Markit Economics. If confirmed in the final reading due May 2, that would be the longest contraction since the global financial crisis.

Gross domestic product expanded 8.1 percent in the first three months of 2012 from a year earlier, the fifth quarterly slowdown, as Premier Wen Jiabao waged a campaign to cool consumer and property prices and exports weakened on sluggish global demand…”

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“Australian core consumer prices rose last quarter at the slowest pace since 1998, driving the currency and bond yields lower as investors increased bets the central bank will resume cuttinginterest rates next week.

The so-called trimmed mean gauge of core prices advanced 0.3 percent from the previous quarter, the Bureau of Statistics said in Sydney today, the lowest rate since the third quarter of 1998. The consumer price index rose 0.1 percent from the previous three months, compared with 0.6 percent forecast in a Bloomberg News survey, as banana prices slipped 60 percent…”

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“Coking coal prices are set to rebound as early as July from four straight quarterly declines asChina and India seek raw material overseas to fire new steel production in the world’s fastest-growing major economies.

Contract prices that fell to $206 a metric ton for the quarter ending June 30 may rebound to average $225 a ton this financial year, based on the mean estimate of 10 analysts, steelmakers and mining companies surveyed by Bloomberg. Contracts of coking coal, a key ingredient used to make steel, peaked at $330 in the June quarter last year…”

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“European stocks rose from a three- month low and Spanish and Dutch bonds climbed as the nations sold debt, while copper advanced before data that may show rising U.S. home sales. Australian government bond yields sank to record lows after inflation unexpectedly slowed.

The Stoxx Europe 600 Index (SXXP) appreciated 0.6 percent as of 11:27 a.m. in London while Standard & Poor’s 500 Index futures gained 0.3 percent. Spain’s 10-year bond yield dropped six basis points while the rate on the Dutch note declined seven basis points. Australia’s 10-year yield fell nine basis points to 3.68 percent. Copper added 0.5 percent and the cost of insuring against a European sovereign default dropped….”

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“French Socialist presidential candidate Francois Hollande’s campaign pledge to reverse Europe’s austerity drive met German resistance, pointing to tension between the region’s two biggest economies.

Hollande, who polls show will oust incumbent Nicolas Sarkozy in May 6 elections, yesterday said the absence of economic growth prospects explained the record score for anti- euro National Front leader Marine Le Pen in the April 22 first round….”

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“Royal Dutch Shell Plc (RDSA), Europe’s largest oil company, agreed to buy Cove Energy Plc (COV) after raising its bid to 1.12 billion pounds ($1.8 billion), securing a stake in gas fields discovered off Mozambique.

Shell increased its offer for Cove to 220 pence a share from 195 pence, matching a rival proposal from Thailand’s PTT Exploration & Production Pcl (PTTEP), the Hague-based company said in a statement today. The board of London-based Cove has agreed to the Shell bid…”

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Asia

Europe

Futures

Currencies

Commodities

LIBOR, EURIBOR, 10 year yields for Italy, Spain, France, and Germany

US futures are mildly higher, despite weakness in Asian trade. China is down more than 1.4% and Japan 0.9%

The results were included in an updated S-1 filing for Facebook’s FB 0.00%  planned initial public offering on Monday afternoon. No date, share amount or price range has been set yet for the offering, which is widely expected to take place sometime next month.

The filing added the company’s operating results for the first quarter, ended March 31. Overall revenue jumped to $1.06 billion from $731 million in the same period last year. Advertising revenue made up 82% of the total, with the remainder coming from payments and other fees generated over the social network.

Net income for the quarter was $205 million, down from $233 million in last year’s first quarter as total costs rose to account for 64% of overall revenue compared with 47% in the same period last year.

The filing also noted an increase in monthly active users to 901 million, up from 845 million as of the company’s last filing on March 27. Average revenue per user, or ARPU, was up 6% from last year’s first quarter, though down 12% from the December period.

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By Caroline Liinanki

A growing understanding of the composition of hedge fund returns is letting investors capture the return streams of hedge funds through systematic exposure to persistent risk premia (returns above the expected risk-free rate of return). This provides investors with diversification away from equity market risk in a low-cost, liquid and transparent manner, but without the downsides of investing in a hedge fund.

For a long time, hedge fund returns were believed to derive purely from manager skill and clever investment decisions based on active management. However, the academic literature has identified that it is not so much skill as exposure to certain return sources that can explain the majority of returns in certain hedge fund styles.

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