The Booming Industry of Apps

“Nearly five years after Apple Inc. kicked off the mobile-apps craze, the industry is booming.

App stores run by Apple and Google Inc. now offer more than 700,000 apps each. With so many apps to choose from, consumers are estimated to spend on average about two hours a day with apps. Global revenue from app stores is expected to rise 62% this year to $25 billion, according to Gartner Inc.

The apps industry has matured in some respects. Some of the Wild West tactics of five years ago—like scams to accrue more downloads—have given way to more order as Apple and others tighten their rules. App developers are more methodical about marketing their apps and focusing on the few apps that work best.

For every Instagram, the wildly popular photo sharing app that Facebook Inc.FB -0.40% bought for $1 billion last year, there are hundreds of thousands of apps that don’t catch on.

As the battlefield shifts to new geographies, new categories and new devices, developers are still trying to figure out which business models are the most profitable….”

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On the Wires 

“We have written about China’s ghost towns — neighborhoods with massive new buildings not inhabited by any people.  Many see this as the clear evidence of overbuilding and a housing bubble.

Some economists, like Yale’s Stephen Roach has said, however, that China’s modernization is “the greatest urbanization story the world has ever seen,” and that these ghost cities will soon become “thriving metropolitan areas.”

But analysts say most Chinese people can’t afford the types of homes being built in the ghost cities.

China has been trying to get a grip on its property market for some times now and some say officials are in control and have been deflating the housing bubble.

However, the risks of the housing bubble evolving into a financial crisis appear to be high…..”

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“Stratasys Ltd. (NASDAQ: SSYS) reported fourth-quarter and full-year 2012 results before markets opened this morning.

For the quarter the 3D printer maker reported adjusted earnings per share (EPS) of $0.40 and $96.4 million in revenues. In the same period a year ago, Stratasys reported an EPS loss of $0.94 on revenue of $78.3 million. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.38 and $52.83 million in revenue.

On a GAAP basis, Stratasys posted a quarterly net EPS loss of $0.09 compared with a GAAP net loss of $0.17 in the fourth quarter of 2011.

For the full year, Stratasys reported adjusted EPS of $1.49 on revenues of $359 million, compared with adjusted EPS of $0.94 on revenues of $277 million for fiscal year 2011. The consensus estimates called for full year EPS of $1.38 on revenues of $199.96 million….”

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“(NYSE: BYD) reported fourth-quarter and full-year 2012 results before markets opened this morning.

For the quarter the casino operator reported an adjusted earnings per share (EPS) loss of $0.31 and $625.8 million in revenues. In the same period a year ago, the company reported an EPS loss of $0.03 on revenue of $606.7 million. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for an EPS loss of $0.13 and $635.37 million in revenue.

On a GAAP basis, Boyd posted a quarterly EPS loss of $10.24, compared with a GAAP net loss of $0.01 in the fourth quarter of 2011. The quarterly loss was mostly due to a $994 million impairment charge on the 87-acre site of Boyd’s planned Echelon development in Las Vegas. The company also announced this morning that it has sold its Echelon site on the Las Vegas Strip to a Malaysian gambling group for $350 million in cash.

For the full year the company reported an adjusted EPS loss of $0.28 on revenues of $2.489 billion. The consensus estimates called for a full-year EPS loss of $0.11 on revenues of $2.5 billion….”

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“Federal Reserve Vice Chair Janet Yellen is the favorite to replace Ben Bernanke, and she’s just delivered a speech in DC titled Challenges Confronting Monetary Policy.

The whole speech is worth reading, but pretty much this is the most important line:

Turning to the potential costs of the Federal Reserve’s asset purchases, there are some that definitely need to be monitored over time. At this stage, I do not see any that would cause me to advocate a curtailment of our purchase program….”

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“(Reuters) – Berkshire Hathaway Inc is on the hunt for more deals like its planned purchase of H.J. Heinz Co , Warren Buffett, the conglomerate’s chief executive, said on Monday.

“If we get a chance to buy another Heinz, we will do that,” Buffett said on CNBC.

Berkshire likes the ketchup maker’s business, the price of the $23 billion deal, and its partner in the transaction, private equity firm 3G Capital, Buffett said in an extended interview.

“We hope to own Heinz 100 years from now,” Buffett said. “If you own great brands and you take care of them, they’re terrific assets,” he said.”

“Treasury 10-year yields touched a five-week low as Italy moved closer to a new election, boosting demand for the safest assets, after an anti-austerity vote last week left Europe’s third-largest economy in political deadlock.

U.S. 10-year notes were little changed after a survey showing China’s services industries slowed last month sent Asian and European stocks lower. Euro-area finance ministers meet in Brussels today to discuss issues including a bailout for Cyprus. In Rome, Stefano Fassina, a top aide to Democratic Party leader Pier Luigi Bersani, said Italy may need to hold another vote this year after passing new electoral laws.

“There are a number of uncertainties like the Italian elections, the issue of Cyprus and these things bring risks to the market,” said Piet Lammens, head of research at KBC Bank NV in Brussels. “This is the context in which bonds normally do well. We are, in the short term, bullish on Treasuries because when you look at the 10-year yield there is still scope for it to fall.”

Benchmark Treasury 10-year yields rose less than one basis point to 1.85 percent at 7:47 a.m.New York time, according to Bloomberg Bond Trader data, after reaching 1.83 percent, the lowest level since Jan. 24. The rate declined 12 basis points, or 0.12 percentage point, last week, the most since the period ended Aug. 31. The price of the 2 percent note due February 2023 fell 2/32, or 63 cents per $1,000 face value, to 101 11/32.

The 10-year rate may reach 1.80 percent in the next few weeks, Lammens said. The yield last fell to that level on Jan. 2, according to data compiled by Bloomberg.

Italian Impasse….”

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“Goldman Sachs Group Inc. (GS) and Citigroup Inc. (C) stepped up warnings to shareholders about cyber attacks as the U.S. prodded banks and government agencies to bolster their defenses.

Online and mobile banking give new points of entry that can be used to disrupt or penetrate operations, the two New York- based firms said last week in annual regulatory filings. The companies said they’re vulnerable to tactics that overload websites to shut off public access, such as assaults that disrupted the nation’s largest lenders late last year.

U.S. banks speculate that foreign nations, organized crime or terrorists are behind efforts to cripple their websites and warn that costs to keep intruders at bay will rise. President Barack Obama directed the government on Feb. 12 to develop voluntary cyber security standards for companies running vital infrastructure and plans to push Congress to set formal rules.

“We are going to see more disclosures, and that’s a warning sign that things are really getting bad,” said Lawrence Ponemon, chairman of Ponemon Institute LLC, a Traverse City, Michigan-based security research firm, which predicts a 30 percent increase in expenses tied to cyber intrusions this year.

Attacks in December hit Bank of America Corp. (BAC),JPMorgan Chase & Co. (JPM), U.S. Bancorp, Wells Fargo & Co. (WFC) and SunTrust Banks Inc. (STI), two executives at security companies said at the time. PNC Financial Services Group Inc., the second-biggest regional bank, said in its annual filing that cyber attacks may hurt customer confidence and increase costs at the Pittsburgh-based company.

Security Breaches…”

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“West Texas Intermediate crude fell to trade near $90 a barrel after money managers cut bets on rising prices.

Futures retreated for a third day in New York after sliding to a 10-week low on March 1. Net-long positions in WTI dropped 16 percent, according to data from the Commodity Futures Trading Commission. Services industries in China expanded at the slowest pace in five months in February, a survey of purchasing managers showed yesterday.

“Oil is going to remain under pressure for a while yet,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, who correctly predicted last month that prices were set to drop. “When prices were strong last month there was an influx of fresh speculative buying, and the opposite is happening now.”

WTI for April delivery fell as much as 59 cents to $90.09 a barrel in electronic trading on the New York Mercantile Exchange. It was at $90.51 at 11:33 a.m. London time. The volume of all futures traded was 10 percent below the 100-day average. Prices declined 2.6 percent last week for a second weekly drop and are down 1.4 percent this year. WTI last traded at $90 on Dec. 31.

Bullish Bets

Brent for April settlement gained 11 cents to $110.50 a barrel on the London-based ICE Futures Europe exchange. The volume of all futures traded was 52 percent higher than the 100- day average. The European benchmark grade was at a premium of $19.99 to WTI futures, from $19.72 on March 1….”

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“………Gold for immediate delivery added 0.1 percent to $1,577.77 an ounce by 9:49 a.m. in London. Prices, which slipped 0.3 percent last week, gained as much as 0.6 percent and fell as much as 0.2 percent today. Futures for April delivery rose 0.3 percent to $1,577 on the Comex in New York. Futures trading volume was 13 percent above the average in the past 100 days for this time of day.

Bullion rallied the past 12 years as nations from the U.S. to China pledged more stimulus to bolster economic growth. The metal is down 5.8 percent this year and fell for a fifth month in February, the longest run of declines since 1997. Investors sold the most ever from exchange-traded products last month, and the 2,506 metric tons now held is 4.8 percent below the Dec. 20 record, data compiled by Bloomberg show.

Silver for immediate delivery added 0.5 percent to $28.7388 an ounce in London. It’s down 5.3 percent this year and reached $27.9631 on March 1, the lowest since Aug. 20. A close at $28.007 would be a 20 percent drop from Oct. 4, the common definition of a bear market.

Palladium was down 0.6 percent at $719.43 an ounce. Platinum rose 0.3 percent to $1,577.10 an ounce. It fell to a seven-week low of $1,564.40 on March 1.”

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“U.K. house prices rose for the first time in nine months in February as demand for homes increased in London and southern England, Hometrack Ltd. said.

Prices in England and Wales advanced 0.1 percent from the previous month, the property researcher said in a statement today. The number of new buyers registering with agents rose 14.3 percent on the month, outpacing an 8.7 percent increase in supply. From a year earlier, values were down 0.1 percent.

“The impetus for improved market conditions and higher prices has been driven by London and the home counties of southern England, where there is the greatest mismatch between supply and demand,” said Richard Donnell, director of research at Hometrack. “We expect demand for housing to continue to grow as we move into spring.”

While higher inflation has squeezed households….”

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“Democratic Party leader Pier Luigi Bersani, whose coalition won the most votes in Italy’s inconclusive elections, insisted he would form a government on his own without seeking an alliance with his main rivals, ex- premier Silvio Berlusconi and comic-turned-politician Beppe Grillo.

“We have 460 parliamentarians, double what the right got and triple what Grillo won,” Bersani said in an interview last night on state-owned RAI3 television’s “Che Tempo Che Fa” program. “So we will have the first word.”

Bersani is trying to dispel concern about political paralysis in Italy after the Feb. 24-25 vote produced a hung parliament, with his forces controlling the Chamber of Deputies while falling far short of a majority in the Senate. So far, the Democratic Party leader has said he will go it alone, without explaining how he could win a confidence vote in the Senate needed to govern.

The possibility of reaching an alliance with Berlusconi, whose coalition lost to Bersani’s group in the Chamber by less than half a percentage point, was “unreal,” Bersani said. He also said he hadn’t met with Grillo about a possible accord and urged Grillo to move beyond his rhetoric that the old guard must go.

“He heads a movement that has a third of the Chamber, he needs to decide what he will do or we will all be sent packing, including Grillo,” Bersani said.

Limited Program

In an acknowledgment of his lack of broad support, Bersani said he would present a “limited and precise” government program focusing on eight points, including an anti-corruption law, measures against organized crime, a conflict of interest law and steps to reduce the cost of politics. All those initiatives would likely appeal to Grillo’s forces, who have campaigned against corruption both inside and outside of Italy’s political system.

The interview came hours after Bersani’s economic policy spokesman Stefano Fassina said the country may have to hold new elections “in a few months” if Bersani doesn’t get a majority in parliament. Fassina also said that the election law, which contributed to producing the split parliament, would have to be overhauled first.

Yield Surge

Italian bond yields surged after the elections ended in a four-way parliamentary split, raising doubt over the stability of the next government. Investors were looking to the election to produce a government capable of pulling Italy out of its fourth recession since 2001 and reduce a $2.6 trillion debt. Italy’s 10-year yield rose 6 basis points today to 4.852 percent, up 40 basis points from before the election.

Moody’s Investors Service said in a report Feb. 27 that the gridlock may reignite the euro-area’s debt crisis as turmoil in the bloc’s third-largest economy risks spilling over into weaker sovereign nations like Portugal and Spain….”

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“European leaders demanded that euro members press on with budget cuts to end the debt crisis as Italy edged closer to a new election after an anti-austerity vote last week resulted in political deadlock.

Finance ministers from the 17-member single-currency bloc meet in Brussels today to discuss issues including a bailout for Cyprus. In Rome, a top aide to Democratic Party leader Pier Luigi Bersani said the country may need to hold another election this year after passing new electoral laws.

“Now in Europe, after the Italian election, it seems to be a case of either austerity and savings programs or growth, but that’s a completely false premise,” German Chancellor Angela Merkelsaid at March 1 event. EU Economic and Monetary Affairs Commissioner Olli Rehn echoed those comments this weekend, telling Germany’s Der Spiegel magazine that there’s no scope for the bloc to let up on budget discipline.

Italian political instability, after last week’s election ended in a four-way split, threatens to reignite concern about the deepening of the debt crisis. Voters in the bloc’s third- largest economy revolted against German-inspired austerity measures, handing the party of comedian-turned-politician Beppe Grillo more than 25 percent of the vote with its anti-spending cut message and a call for a referendum on euro membership.

Italian Image

Italian 10-year bond yields climbed to a three-month high last week, jumping 34 basis points to 4.79 percent. Yields rose 6 basis points to 4.84 percent as of 10 a.m. in Berlin.

Still, Spanish bonds rallied last week along with Greek and Portuguese securities on speculation that the European Central Bank, which eased a market panic last year with a pledge to buy sovereign debt, will maintain control over the three-year-old debt crisis.

Any “significant” attempt to unravel Prime Minister Mario Monti’s reforms would risk “serious turmoil across Europe,” Holger Schmieding, chief economist at Berenberg Bank in London, said in a note today. “Our base case remains that Brussels, Frankfurt and Berlin jointly with the bond vigilantes will simply leave Italy no choice but to stay on the straight and narrow — or at least to not go astray for very long.” …”

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“HSBC Holdings Plc (HSBA), Europe’s largest bank by market value, posted a decline in full-year profit after paying a record penalty for compliance failures and said costs rose for a third year, missing its target.

Pretax profit for 2012 dropped 5.6 percent to $20.65 billion, trailing the $23.49 billion estimate of 26 analysts surveyed by Bloomberg. Revenue fell 5.4 percent to $68.33 billion from $72.28 billion, HSBC said today in a statement. The shares declined as much as 3.5 percent in London trading.

Chief Executive Officer Stuart Gulliver is being thwarted in his plan to reduce costs to 48 percent to 52 percent of revenue as the London-based lender set aside $1.9 billion to settle U.S.money-laundering probes and boosted spending on compliance by $500 million. Expenses as a proportion of revenue climbed to 62.8 percent from 57.5 percent, and wage inflation in markets such as Latin America is increasing, HSBC said today.

HSBC’s surging costs “illustrate the size of the financial performance gap to be closed,” Ian Gordon, an analyst at Investec Plc in London who has an add recommendation on the shares, wrote in a note to clients today…..”

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“The euro approached the lowest level in almost three months against the dollar as Italy moved toward a new election and before data this week economists said will show the region’s economy shrank in the fourth quarter of 2012.

Japan’s yen rose against all but one of its 16 major peers as China’s CSI 300 Index of equities dropped by the most in two years, boosting demand for haven assets. Australia’s dollar sank to an almost eight-month low against its U.S. equivalent after building approvals declined. European Central Bank policy makers, led by President Mario Draghi, will meet on March 7, while central banks from the U.K., Japan and Australia also announce policy decisions this week.

“There’s a whole rash of reasons to be mindful,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “People are rationalizing where they want to be positioned throughout the mass of event risk this week and probably the way to play it is with a long- dollar bias. The ECB’s language will be monitored very closely.”

The euro fell 0.2 percent to $1.2993 at 6:25 a.m. New Yorktime, after touching $1.2967 on March 1, the lowest level since Dec. 11. The yen gained 0.3 percent to 121.50 per euro and was little changed at 93.50 per dollar.

Italian Votes

The euro weakened last week after Italy’s electorate revolted against outgoing Prime MinisterMario Monti’s austerity measures, handing the party of comedian-turned-politician Beppe Grillo more than 25 percent of the vote with its anti-spending cut message and a call for a referendum on euro membership….”

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“Investors cut wagers on a rally for commodities to the lowest in almost four years and pulled a record $4.23 billion from funds last week as prices erased this year’s gain on a slowdown for manufacturing in China.

Hedge funds and other large speculators reduced net-long positions across 18 U.S. futures and options in the week ended Feb. 26 by 16 percent to 447,106 contracts, the lowest since March 2009, U.S. Commodity Futures Trading Commission data show. Investors are betting on a decline in copper prices for the first time since November, and reduced their crude-oil holdings by the most in 11 weeks….”

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“Australia’s dollar fell to an almost eight-month low after a report showed building approvals unexpectedly declined, adding to speculation the Reserve Bank will cut interest rates this year.

The New Zealand dollar and the so-called Aussie slid against most of their 16 major peers after China’s Purchasing Managers’ Index for services industries indicated the slowest expansion in five months. China is the largest trading partner for both Australia and New Zealand.

“Today’s data continues to paint a picture of a fairly weak domestic economy,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. (WBC) in Singapore. “Some of the softness in the Asian data is also not helping Australia. Price action for the Aussie is pretty negative at the moment.”

The Australian dollar dropped 0.8 percent to $1.0125 as of 4:49 p.m. in Sydney, after touching $1.0117, the lowest since July 12. It fell 0.9 percent to 94.61 against the yen.

The New Zealand dollar declined 0.6 percent to 82.03 U.S. cents, after falling to 81.96 cents, the lowest since Dec. 31. The so-called kiwi slid 0.8 percent to 76.64 yen.

Australian home-building approvals declined in January for a second-straight month. The number of permits granted to build or renovate houses and apartments fell 2.4 percent from December, when they fell a revised 1.7 percent, the Bureau of Statistics said in Sydney today. The median economist forecast was for a 2.8 percent gain in a Bloomberg News survey.

Rate Expectations…”

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