News links for 14 Feb 2014
Happy Valentine’s Day!!
“Comcast and Time Warner don’t just have big cable networks, they have a lot of Wi-Fi. Those networks could be rented out to other carriers or used to launch a mobile data service of their own. Comcast could use its souped-up hotspot network as a launching point for becoming a mobile provider in its own right. It can’t build a mobile data network on Wi-Fi alone. It simply wouldn’t be able to squeeze the coverage out of it on a cellular network. But there’s a growing trend toward “Wi-Fi first” mobile carriers in the U.S., popularized by Iliad’s Free Mobile in France, and emerging in the U.S. with mobile virtual network operators like Republic Wireless.”
“”I don’t know if the deal is too big to fail to be approved but it is definitely too big to sail through either the Department of Justice or the FCC without serious, serious examination,” said former FCC Chairman Reed Hundt. “Only Comcast could have paid this price and the combined company, if approved, would tilt the balance of power at every negotiating table in media and content and broadband and equipment industries.”” “Significantly, it will not reduce competition in any relevant market be because our companies do not overlap or compete with each other,” Roberts said. “In fact, we do not operate in any of the same zip code.”
“Comcast has a good track record of getting deals passed by regulators, and the company spends a significant amount of time and money making friends in Washington. Even if this deal is approved, it may come with significant conditions that could cause Comcast some heartburn. Earlier this month both the Justice Department’s antitrust chief and FCC Chairman Tom Wheeler went out of their way to stomp on SoftBank Corp’s idea of buying T-Mobile USA over worries about decreased competition. AT&T executives are still sore over regulators’ denial of their $39 billion plan to buy T-Mobile in 2011. This deal is different since cable companies like Comcast and Time Warner don’t compete in the same markets, like AT&T, T-Mobile and other wireless carriers. Comcast has already offered to divest three million customers as part of the deal to keep its overall national market share at under 30 percent to appease regulatory concerns.”
“In a memo Thursday morning, Comcast EVP David Cohen described the company’s $45.2 billion merger with Time Warner Cable as a “friendly transaction” that’s “firmly in the public interest” — partly because of competition from Google Fiber, Netflix and Hulu.”
“Economists at Deutsche Bank note that certain figures like employee tax receipts, which are growing at a 4.5 percent year-over-year rate, about the same as a year ago, suggest the economy has not downshifted, meaning retail sales and other reports are indeed being affected by seasonal conditions.”
“The poll of 80 economists conducted this week forecast GDP growth slowing to a 2.2 percent annualized rate in the first quarter, down from 2.5 percent in a January poll, and after a brisk 3.2 percent in the final quarter of 2013.”
“If a majority vote in favour of a proposal to join the United Auto Workers (UAW) union, it “would be a radical departure from the past approach in the South to economic development,” says Vanderbilt University’s professor David Cornfield. Moreover, it would be a particularly German approach to collective bargaining, with workers given more control over day-to-day management through “work councils”.”
“The government in its advance estimate for fourth-quarter GDP said inventories increased $127.2 billion, the largest rise since the first quarter of 1998. At December’s sales pace, it would take 1.30 months for businesses to clear shelves, up from 1.29 months in November.”
“Apologists for the 1 percent generally argue that our rising levels of inequality are the consequence of globalization and technological change — forces of nature over which mere people and nations have had no control. They often blame U.S. workers for lacking sufficient training. But they omit from their diagnosis the shift from stakeholder to shareholder capitalism.”
“Right on cue, the plunge in emerging markets that started this year has given us, courtesy of the analysts at Morgan Stanley, the Fragile Five. Comprised of Indonesia, South Africa, Brazil, Turkey and India, they have been singled out because their big current-account deficits mean they are acutely vulnerable to a sudden exit of foreign capital. The trouble is, it isn’t true. The real Fragile Five are not the five emerging markets mentioned by Morgan Stanley, but are, in fact, five developed economies that hardly anyone is worried about. The next crisis will start, as did the last one, in one of the developed economies. It is far more likely to come from France, Germany, Britain, Australia or Canada. Those nations are the real Fragile Five — and far too few investors are worrying about them. “
“Nazarbayev, who has ruled the oil-rich nation for more than two decades, said the government should use 1 trillion tenge ($5.4 billion) from the rainy-day fund to boost the economy during 2014 and 2015.”
“China’s consumer inflation hugged a seven-month low in January and showed no signs of accelerating anytime soon, a consolation for the government which may need to loosen policy should economic growth founder. Producer prices slid for the 23rd consecutive month by 1.6 percent from a year ago, the National Bureau of Statistics said on Friday. Consumer prices, on the other hand, were up 2.5 percent, level with December and slightly above market expectations.”
The media are latching on to this but the sums from this one firm are relatively small in the overall scheme. “Six Chinese trust firms have lent more than 5 billion yuan ($824.6 million) to a delinquent coal company, state media reported on Friday, raising the prospect of further defaults in China’s so-called shadow banking system.”
“When it comes to corn imports, the big worry for Chinese leaders lies in the history of another crop: soybeans.
The thinking is: “We cannot have a situation like it was with soybeans, where we now heavily rely on imports,” Huang Dafang, the director of the Biotechnology Research Institute of Beijing’s influential Chinese Academy of Agricultural Sciences, told reporters Thursday.”
If US farmers switch to soybeans, this will be a big negative for Argentina because that is a major source of export revenue for Argentina and US production would decrease prices. Also see the article on China and soybean and corn
“”The eurozone’s recovery has moved up a gear,” said Chris Williamson, chief economist of Markit. “Not only has the pace of growth picked up to the fastest since the second quarter of 2011, but the recovery is also becoming more broad-based, encompassing core and so-called ‘periphery’ countries alike.” Earlier, French government figures indicated the country’s economy grew by 0.3% in the last three months of 2013.”
Portugal’s annualized growth rate in Q4 was 1.6%, after a 0.9% decline in Q3. GDP was 0.5% higher in real terms compared to Q3. In 2013, GDP was down 1.4% after contracting 3.2% the year before.
Portugal’s economy contracted 1.4% in 2013 but it grew in the last quarter at a 1.6% rate.
“That was Greece’s sixth consecutive year of a recession, caused mainly by austerity measures demanded by the EU/IMF. GDP contracted by 23 percent over 2008-13 and is expected to grow by 0.6 percent this year. “