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Monthly Archives: January 2013

How to Bank Coin From the Coming Forex Wars

 

“LONDON (MarketWatch) — Central banks around the world have tried just about everything to drag their economies out of recession. They have slashed interest rates to three-century lows, printed money in vast quantities, and recapitalized banks with soft loans.

So far, however, they haven’t had much success. Now they have one last weapon left in the armory — a currency depreciation.

All-out currency wars are now looming.

A series of central banks, both large and small, have begun to target a lower exchange rate as a way of boosting their economies. Read: The warning from the Bundesbank’s Weidmann about currency wars.

Whether it works remains to be seen. For investors, however, that may be less important than figuring out which countries will be successful in getting their currencies down — and which other assets will go up in value if an all-out currency war does break out.

In the immediate wake of the financial crisis of 2008 and 2009, policy makers agreed not to engage in competitive devaluations.

Beggar-my-neighbor trade polices are part of the textbook explanation for the Great Depression of the 1930s and no one wanted to repeat the mistakes of that decade.

The British managed to slip through a 25% drop in the value of sterling GBPUSD +0.23% without anyone noticing very much (a sign perhaps of the pound’s diminished importance in the world). But otherwise, currencies stayed much were they were before the crisis struck. Indeed, the main feature of the foreign-exchange markets in their last five years has been their extraordinary stability; while every other asset price went haywire, most currencies stayed where they were….”

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A Breakdown of What America Makes in Earnings

“Median weekly earnings in the U.S. for wage and salary workers was $775 at the end of 2012.
But just how much you make depends on a number of factors, including your race and gender,
CNNMoney gives you a snapshot into what Americans earn:

The more schooling you have, the more you get in your paycheck….”

Full article and graphs 

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World Economic Forum’s Schwab: Income Inequality Creates Unsustainable Society

This is what i just said…no?

“The rise of income inequality throughout the world represents a serious threat to the global community, says Klaus Schwab, who founded the World Economic Forum.

The forum begins its annual meeting Wednesday in Davos, Switzerland.

“We have too large a disparity in the world,” he tells CNBC on the eve of this year’s meeting.

“We need more inclusiveness. If we continue to have un-inclusive growth and we continue with the unemployment situation, particularly youth unemployment, our global society is not sustainable.”

In the United States, the unequal distribution of income has skyrocketed since the early 1980s.

From 1979 to 2007, the top 1 percent of households saw their income soar 275 percent on average (after inflation), according to the Congressional Budget Office. Meanwhile, the bottom 80 percent experienced a gain of just over 20 percent.

“We have to think in terms of how to create growth which is more inclusive,” Schwab says….”

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Richard Rahn: D.C.’s Tradition of Printing Money to Pay Bills is Self-Defeating, Judgement Day Not To Far Off

“The current debate about the debt vote is minor league compared with what will happen when the government literally cannot spend more than it is taking in. That time may be nearer than you think.

It is true that the U.S. government can always “print” money to pay its bills, but at some point, printing more money becomes self-defeating because the resulting increase in the government bond interest rate and required interest payment will spiral out of control.

At that point, the government will be forced to operate on a pay-as-you-go basis, as any individual or business is forced to do when they can no longer get credit. Several California cities are now in this situation…”

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$CSCO To Buy Intucell for $475 Million

 

“Bessemer Venture Partners racked up a huge win today. Two years ago it invested $6 million in exchange for nearly half the equity of Israeli startup Intucell, whose networking tech lets carriers handle more mobile traffic. Today, Cisco announced plans to buy Intucell for $475 million in cash, and BVP tells me it will take nearly half that sale price.

Funding Intucell’s entire $6 million Series A round was a risky bet for Bessemer. At the time, the startup had just six employees and no customers. But together, two of Bessemer’s partners realized there was something special about Intucell and its self-organizing network (SON) software.

SOLVING THE MOBILE DATA CRUNCH

Intucell’s technology helps mobile carriers dynamically adjust their cellular grid to maximize mobile traffic speeds and minimize dropped calls. Without SON software, a carrier’s service slows down and becomes less stable under heavy load or when users travel to the edge of a geographic block of the static grid. Any optimization had to happen manually, which was inefficient and inadequate.

Intucell’s SON uses big data to assess the state of a network and lets a carrier’s towers communicate with each other. That way they can expand or contract their cells in real-time so customers on the fringes of a block get picked up by neighboring towers, and users in the center of that block get much better reception….”

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HSBC Quietly Accumulates Bars of Silver

“…..Silver has now rallied for 7 days due to the flood of inflows into silver backed ETF’s and investment demand for coins and bars internationally. Analysts polled by Reuters expect silver to rise in 2013.

Holdings of iShares Silver Trust, the world’s largest silver ETF, stood at 10,689 tonnes on Jan. 22, up 604.9 tonnes, or nearly 6 percent, from the end of 2012.

By comparison, SPDR Gold Trust, the world’s top gold ETF, saw an outflow of nearly 15 tonnes so far this year.

This has helped silver prices rally over 6% so far this year and 4.5% last week alone. The close above $32/oz yesterday was bullish technically and could lead to silver testing the next level of resistance which is at $34/oz.

The U.S. Mint has sold out of 2013 American Eagle silver coins and will resume sales the week of January 28 when the US Mint said inventory would be replenished.

Chinese silver turnover surged to 2,200 tonnes on Friday and analysts say Chinese investor’s interest in silver is continuing to rise as many are looking at silver as a cheaper alternative to gold.

Hence, trading volumes for the precious metal on the SGE soared in 2012….”

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Oldest Bank in the World Crashes and Burns from Derivatives

“Last week, following documentation from Deutsche Bank (and Nomura), it became clear that Italy’s Monte Paschi (BMPS) bank (the oldest in the world) has engaged in derivatives with the German and Japanese banks in order to save itself during the financial crisis. The derivatives, according to Bloomberg, were done off-market and allowed the booking of large upfront gains which covered losses optically that the bank faced as European liquidity dried up completely – the offsetting ‘losses’ are now coming due. Today, amid growing outcry over the ‘deal’, the former head of BMPS hasresignedBloomberg reports that Giuseppe Mussari, now Italy’s top banking lobbyist, was the Chairman of BMPS during the derivative deal period. BMPS shares were halted after plunging dramatically as investors are still unclear of the extent of losses it faces on derivatives. If that was not enough chicanery, there is a twist in that none other than Mario Draghi, as Director of the Bank of Italy, would have had to vet Mussari (and his banks’ regulated books) during this period – as BMPS accumulated what is obviously undocumented derivatives positions to intentionally obscure losses. Once again, years later, it seems the truth comes out – and of course we would expect no-one to go to jail – and the lying in Europe (then and now) continues unabated – as the reality of financial system health remains hidden from view.


 

Via Bloomberg,

Former Banca Monte dei Paschi di Siena SpA Chairman Giuseppe Mussari quit as Italy’s top banking lobbyist as scrutiny of the lender’s use of derivatives deepens….”

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Truth in Labeling Gone: Food Fraud Up 60%

“So what is food fraud anyway?  Well, it’s sort of what you would expect.  It’s when companies label food one way, but the truth turns out to be completely different.  I have been predicting an escalation in this trend for years, since it was obvious that as inflation led to increases in food prices, companies would resort to this type of behavior to keep margins inflated.

So in their latest study, the non-profit food fraud detectives at the U.S. Pharmacopeial Convention (USP) show us the extent of this extremely dangerous trend.  From ABC News:

It’s what we expect as shoppers—what’s in the food will be displayed on the label….”

 Full article

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Egan Jones Ratings Gets Barred From Rating Certain Bonds by the SEC

 

“The U.S. Securities and Exchange Commission barred Egan-Jones Ratings Co. from issuing ratings on certain bonds, an unprecedented step by the regulator and a setback for a small credit-rating firm with a history of courting controversy.

The SEC said Tuesday that Egan-Jones couldn’t officially rate bonds issued by countries, U.S. states and local governments, or securities backed by assets such as mortgages, for at least the next 18 months.

The ban was part of an agreement the SEC reached with Egan-Jones and its president, Sean Egan, to settle charges that they filed inaccurate documents with the regulator in 2008. The SEC alleged that Egan-Jones misled investors about its expertise, and that Mr. Egan caused the firm to violate conflict-of-interest provisions.

The firm and Mr. Egan agreed to the settlement without admitting or denying the findings.

Mr. Egan didn’t respond to a request for comment. He has been outspoken in the past in his defense of the firm and its ratings…..”

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$NVS Chairman to Step Down

“BASEL, Switzerland— Daniel Vasella, the longtime chairman who helped create Swiss drug giant Novartis AG NOVN.VX +5.41% through a big 1996 merger, is stepping down next month after 25 years at the company, Novartis said as it reported a rise in net profit and flat sales in the fourth quarter.

Novartis said it is nominating Joerg Reinhardt, chief executive of Bayer Healthcare AG and a one-time contender for the Novartis CEO job, as the company’s new chairman. If shareholders approve him for that job, he will step down from his Bayer post in August, Novartis said.

Joe Jimenez will remain as Novartis chief executive. Novartis vice chairman Ulrich Lehner will lead the board until Mr. Reinhardt’s likely arrival in August.

Dr. Vasella, 59, said he felt the time was right to step down after a long tenure at the company. “Novartis is solidly on course to navigate the volatility and uncertainties of today’s economic environment,” he said in a statement.

“I am confident in the leadership of Joe Jimenez and his top team, the company’s strategy with its commitment to innovation, and the course charted to strengthen Novartis as one of world’s leading health-care companies. I have therefore concluded that after 25 years with the company, the time is right for me to ensure a smooth transition.” He didn’t say what his future plans involve…..”

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Lawsuits Against Corporate Fraud Hit a 7 Year Low

“WASHINGTON, Jan 23 (Reuters) – Fewer investors are taking corporate America to court for fraud.

The number of new federal securities fraud lawsuits seeking class-action status fell to a 7-year low in 2012, according to a study by Stanford Law School and Cornerstone Research released on Wednesday.

Just 152 such lawsuits were filed last year, down 19 percent from 188 in 2011, mainly because of fewer lawsuits challenging mergers.

Last year’s total is also 20 percent below the average of 190 for the period from 1997 to 2012.

Only 2005, when 120 lawsuits were filed, was a quieter year for new cases. And in last year’s fourth quarter, just 25 new securities fraud lawsuits were filed, the fewest in any quarter since 1997, the first year included in the study.

Big companies also were sued less in 2012 than in prior years. Seventeen companies in the Standard & Poor’s 500 index were named as defendants in 2012, versus an average of 31 over the prior decade….”

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Dwindling Inventory Helps to Boost Home Prices by 0.6% in October, 5.6% for 12 Months Through 11/2012

“U.S. home prices climbed 5.6 percent in the 12 months through November as buyers competed for a dwindling inventory of properties, according to the Federal Housing Finance Agency.

Prices rose 0.6 percent from October on a seasonally adjusted basis, the FHFA said today in a report from Washington. The average estimate of 15 economists in a Bloomberg survey was for a 0.7 percent advance….”

Full report

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Earnings Preview for $AAPL

“$AAPL is covered almost every hour by the financial media and reported on by outside websites quite literally thousands upon thousands of times each and every day. Today is reckoning day as the consumer electronics giant and largest company by market cap is due to report earnings after the close of trading.

Thomson Reuters has a consensus forecast of $13.44 earnings per share (EPS) and a gain of 18% in sales to $54.73 billion. For the current quarter’s guidance, Thomson Reuters has a consensus grouping of $11.70 EPS and $45.63 billion in revenue, for 16.4% expected sales growth. Wall St. will be focused on margin compression.

What investors need to care about the most is that Apple’s fundamental growth story remains, but its stock is broken and similar to peaking trends seen in many past great tech stories. It closed at $504.77, and its 52-week trading range is $443.14 to $705.07. Analysts have been lowering their price targets regularly of late, and the consensus price target from Thomson Reuters is now just under $710.00 for one-year from now. Apple is still worth some $475 billion in market value….”

Full article

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Mortgage Applications Rise 7%

“The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications this morning, noting a rise of 7% in the group’s seasonally adjusted composite index, following a rise of 15.2% for the previous week.

The seasonally adjusted purchase applications index rose by 3% from the previous report. On an unadjusted basis, the composite index rose 9% week-over-week. Year-over-year the unadjusted purchase index is up 26%.

Though this week’s increases are smaller than last week’s, the upward trend continues. The historically low interest rates certainly have a lot to do with that, especially for folks looking to refinance existing mortgages. Applications for refinancing remained flat at 82% (seasonally adjusted)….”

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$MCP Announces a $300 Million Raise in a Paper and Note Combination

“Molycorp Inc. (NYSE: MCP) may have had some serious problems of late, but now the company is raising new capital and the move is adding pressure on the stock as this will be dilutive to earnings. So what if this capital may be needed as a buffer. So what if this proves to the market that Molycorp also can still attract new investment capital.

The rare earth metals leader in the United States plans a sale of $200 million in equity and another $100 million in a note offering. Molycorp plans to use the capital to fund its capital expenditure plans that include its Mountain Pass facility in California….”

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Gapping Up and Down This Morning

NYSE

GAINERS

Symb Last Change Chg %
ERA_w.N +6.69 +55.75
PBYI.N 24.47 +1.35 +5.84
DKL.N 25.14 +0.65 +2.65
SDLP.N 28.00 +0.67 +2.45
HCI.N 24.03 +0.47 +1.99

LOSERS

Symb Last Change Chg %
CKH_w.N -2.69 -3.74
ABBV.N 36.42 -0.90 -2.41
BCAt.N 21.45 -0.35 -1.61
SUSS.N 41.73 -0.54 -1.28
ANFI.N 7.05 -0.08 -1.12

NASDAQ

GAINERS

Symb Last Change Chg %
USEG.OQ 2.17 +0.38 +21.23
RDCM.OQ 4.10 +0.71 +20.94
TECUA.OQ 7.06 +1.15 +19.46
CYCCP.OQ 9.81 +1.54 +18.62
CIMT.OQ 6.47 +0.97 +17.64

LOSERS

Symb Last Change Chg %
HOTR.OQ 2.45 -0.39 -13.73
CNYD.OQ 3.72 -0.51 -12.06
GLBS.OQ 2.16 -0.29 -11.84
TIGR.OQ 2.10 -0.25 -10.64
ARNA.OQ 8.82 -0.95 -9.72

AMEX

GAINERS

Symb Last Change Chg %
BXE.A 4.68 +0.38 +8.84
WVT.A 11.56 +0.30 +2.66
SVLC.A 2.74 +0.06 +2.24
FU.A 3.57 +0.02 +0.56
SAND.A 13.13 +0.02 +0.15

LOSERS

Symb Last Change Chg %
EOX.A 5.43 -0.12 -2.16
REED.A 5.27 -0.05 -0.94
CTF.A 22.98 -0.21 -0.91
MHR_pe.A 23.85 -0.15 -0.62

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Carlyle Group: Europe is ‘The Largest Emerging Market’ in the World

“With billions of dollars’ worth of distressed assets in its banks waiting to be snapped up by more intrepid investors, Europe is one of the “largest emerging markets” in the world, according to the chief executive of global private equity firm The Carlyle Group.

David Rubenstein told CNBC on Wednesday that, outside the U.S., the best markets to invest in were to be found in emerging markets such as China, Brazil, Peru, Chile, Nigeria…and Europe.

“Europe, we think, has a lot of appeal. It’s been beaten down so much that we think it’s like the largest emerging market in the world because prices have been beaten down and we expect growth to occur there,” he told CNBC in Davos where he is attending the World Economic Forum (WEF).

“There are many banks in Europe that will sell assets this year and next [year] and we think there are good opportunities to buy.”

He said investors were likely to see really cheap prices for some banking assets.

“I hope these are fire-sale prices, they’re probably not going to be that cheap. The banks can’t sell everything they have on their books at the prices they would probably get for them, as that would cause them difficulties. But they will sell some assets and we think it’s a good opportunity.”

European banks have been shedding assets as they seek to shrink their balance sheets. The Carlyle Group, bought investment management firm TCW – albeit an American asset -from French bank Societe Generale in 2012….”

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$AMD Post a Smaller Loss Than Expected

 

Advanced Micro Devices reported a fourth-quarter loss on a non-GAAP basis that was narrower than analysts’ estimates.

The chip maker’s shares rose after the closing bell. What is AMD’s stock doing now? (Click here for the latest quote after the bell.)

AMD reported a loss per share of 63 cents on revenue of $1.16 billion. On a non-GAAP basis, AMD’s operating loss was 14 cents per share. Revenue was down nearly a third from the year-earlier quarter as it grapples with a declining PC market and a shift toward smartphones and tablets.

The company’s gross margin contracted to 15 percent from 46 percent a year earlier.

The Street had expected a 20 cent loss on $1.15 billion in revenues, according to Thomson Reuters estimates….”

Full report

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