Tuesday, August 30, 2011

Japan’s new prime minister faces tough challenges


Finance Minister Yoshihiko Noda emerged as a surprising but seemingly welcome victor in the contest to become Japan’s sixth prime minister in five years on Tuesday, although he will likely face several potential stumbling blocks as leader.
Noda replaces Naoto Kan who resigned last Friday, as he had promised after the Japanese parliament passed a bond-issuance bill and renewable-energy bill.


As well as spearheading reconstruction efforts following the earthquake, key challenges for the 54-year old Noda will include managing the country’s massive debt pile and keeping the yen — currently at levels where profits for exporter firms are often hampered — in check.




“Noda is a strong advocate of tax-funded fiscal reform. He champions hikes in income, corporate and other ‘core taxes’ to pay for reconstruction, and seeks a higher consumption tax to fund future social-security obligations,” said Seiji Adachi, an economist at Deutsche Bank.




Still, those fears may be unfounded. The Nomura analysts said, assuming that income tax is hiked by 10% from 2013, they estimated that the impact on real gross domestic product growth would be just 0.03 percentage points in 2013 and 0.06 percentage points in 2014.





Noda was reportedly helped to election victory by the support of lawmakers unhappy with the idea of power broker Ichiro Ozawa gaining more influence within the party.

The Barclays Capital strategists said.that if Noda attempts to resolve the split within the DPJ between pro- and anti-Ozawa forces, then that “could harden the rift between the ruling and opposition parties, and vice versa.”

In that situation, support for the DPJ could wane, lead to dissolution in the lower house and increase the probability of an election in 2012, they said.

On the other hand, if Noda focuses on reconciling the DPJ and opposition parties, then that will mean he’s likely concentrating on smoothing the path for implementing two extra budgets related to earthquake-reconstruction spending, they said.

Thursday, August 25, 2011

Steve Jobs, the iconic leader of Apple Inc. who transformed the habits of generations of consumers by creating a slew of innovative products and has battled several illnesses in recent years, resigned as chief executive of the technology giant Wednesday, saying “the day has come” for him to step down.







Apple’s board appointed long-time lieutenant Tim Cook to replace him on Jobs‘s recommendation.






Jobs, who made everything from the personal computer to the iPod, iPhone and iPad a part of daily life, submitted a letter to the Apple board of directors announcing that he would leave as CEO.






Jobs will remain involved with the company. Apple named him to the position of chairman of the board of directors — a position which did not previously exist at the firm. Two board members have been serving as co-lead directors up to this point.






“People sold on the rumor, and may sell a little more on the news, but it’s way undervalued right now,” Sutherland said. “I think the fundamentals will eventually take over, and the stock will be a great buying opportunity.”







Investors and consumers have long feared the prospect that Jobs would soon step down from running the day-to-day operations of the company, given his talent for bringing new technology to large masses consumers in a palatable manner.


At the same time, he brought untold value to Apple shares, which have skyrocketed from around $9 a share a decade ago to more than $375 today, for a gain of more than 43 times.


Sales for the company are up 12-fold from a decade ago and have continued to climb thanks to an ever-evolving line of products that seem to resonate with the buying public. The concern is whether Apple can stay innovative without Jobs’s instincts to guide them.

Wednesday, August 24, 2011

Friday, August 19, 2011

U.S. stocks extend weekly losing streak to four


“Given we have a high level of anxiety and we’re coming into a weekend, people would rather be flat than long,” said Randy Frederick, director of trading and derivatives at Charles Schwab Center for Financial Research.

“The only thing that would make it cascade below levels we put in last week was if we found the EU really turning into a banking crisis,” said Michael Gibbs, a managing director and director of equity strategy at Morgan Keegan.
The Dow Jones Industrial Average and the Standard & Poor’s 500 Index both closed out the week at levels above their closing lows of the prior week, when a volatile market had the Dow making triple-digit moves each day.


After climbing as much as 120 points during Friday’s session, the Dow industrials lost 172.93 points, or 1.6%, to end at 10,817.65, down 4% from the week-ago close.

Hewlett-Packard Co. weighed most heavily among the blue chips, off 20% a day after the personal-computer maker reduced its outlook and said it might spin off its PC unit. 

“H-P’s earnings met expectations, but [the company] downgraded its forecast for the rest of the year. The bigger problem is that we have very few retail and institutional players in this market,” Marc Pado, U.S. market strategist at Cantor Fitzgerald, wrote in an emailed note.

The market is “following a normal path of figuring out if the lows of last week are indeed the bottom for this correction, which is EU driven, and EU focused,” said Gibbs, a managing director and director of equity strategy at Morgan Keegan.

Should the index close below that level, “it stacks the odds the lows are not in,” said Gibbs. “You can’t draw a line in the sand, you have to eyeball that now expecting the market is going to bounce around it or even under.”

Flashbacks
“We had a crisis here in the fall of ‘08, and we’re getting flashbacks,” said Frederick at Charles Schwab, who also noted that open interest for equity options contracts hit a record high during the week, which “mostly means people are out there trading this market.”

Citigroup Inc. and J.P. Morgan Chase Inc. reduced their growth outlooks for the U.S. economy, while Germany’s chancellor rejected the notion of a jointly issued euro-zone bond.

In the coming week, seven S&P 500 companies are expected to report earnings. Of the 485 that have reported second-quarter results so far, 71% have exceeded Wall Street’s expectations, according to Thomson Reuters. 

Tuesday, August 16, 2011

Monday, August 15, 2011

Germany reiterates 'no' to eurobonds


BERLIN (AP) — Two leading German ministers reiterated their opposition to issuing jointly guaranteed European government bonds as a means to end the eurozone's crippling debt crisis.

Finance Minister Wolfgang Schaeuble told German news magazine Der Spiegel in its edition dated Monday that so-called eurobonds are out of the question as long as the currency zone's 17 nations still run their own fiscal policy, and that different interest rates for eurozone nations were needed to provide "incentives and the possibility of sanctions to enforce solid financial policy."

Schaeuble acknowledged that the EU must, and will, beef up its response to the crisis to assist the heavily indebted nations, but that "there won't be a collectivization of debt or unlimited assistance."

Chancellor Angela Merkel has long ruled out eurobonds, and Economy Minister Philipp Roesler joined the chorus Monday, describing jointly guaranteed debt as "the wrong way" out of the crisis.

"Eurobonds would mean that everybody shares the same interest burden which would be a punishment for (financially) sound nations," he was quoted as saying by German news agency dapd. "We cannot want this for Germany and for all other good states."

Eurobonds would be a major step toward the bloc's economic integration, and are billed by supporters as an overnight solution to the crisis. Italy, Greece, Belgium and Luxembourg are among the nations calling for eurobonds.
The debate over eurobonds has ratcheted up ahead of Tuesday's meeting in Paris between Merkel and French President Nicolas Sarkozy, though eurobonds are not expected to form part of the discussions.

"Eurobonds won't be an issue at the meeting tomorrow in Paris," Merkel's spokesman Steffen Seibert stressed Monday.

Instead, he said the two leaders will discuss strengthening financial and economic cooperation and governance across the eurozone.

"This is one of the lessons from the euro crisis ... we need a stronger economic cooperation across the eurozone," he added, declining to specify which concrete proposals will be discussed at the meeting.

The principle behind eurobonds is that European countries would guarantee each other's debts, so that investors would see the bonds as super-safe and loan at low interest rates. The hope is that lower borrowing costs would prevent any more financial bailouts.

But Germany as the most creditworthy European country fears it would face higher borrowing costs and more risks if it had to borrow jointly with financially shaky nations.

Eurobonds could drive down the borrowing costs for troubled eurozone countries immediately, but Germany maintains that cheap credit without a powerful European institution overseeing the member states' budget and fiscal policy cannot be a solution.

Skeptics also point out that the current European Union treaty forbids countries from assuming each other's debts, and say it would be difficult to avoid reckless countries borrowing too much on the good credit of the more careful ones.

The European Central Bank last week had to step in and start buying Italian and Spanish government bonds to drive down high interest yields that threatened those countries. The bank is shouldering the burden of fighting the crisis until national parliaments approve new powers for the European Union's bailout so it can buy government bonds or help recapitalize banks if necessary.

The focus in the markets later will be ECB figures indicating how much the bank splashed out last week supporting the bond markets of Italy and Spain.

Sunday, August 14, 2011

Selena Gomez Zac Efron and looking for new partners

If Vanessa Hudgens was recently caught making out with the guitarist of "The Sounds" Felix Rodriguez, now the rumors point to Zac Efron and Rumer Willis, daughter of Bruce Willis and Demi Moore. Although nothing is official, it seems that Zac only has eyes for Rumer Willis. Among them there may be more than friendship and have become the new sensation in Hollywood.



This is a friendship of many years, but rumors of engagement emerged earlier this year.



A source told Zac, 23, and Rumer Willis, 22, "have always went everywhere together and although Jan Hollywood have not confirmed the engagement, he was already presented to Demi Moore."