What you may have missed in the business news last week:
1. The Fed Announces No Tapering
The most recent fad in central banking has been the offering of “forward guidance” to markets. That is: instead of monetary policy being a surprise, it’ll be so covered with warnings and hints and general press leakage* that formal announcements will be nothing more than a rubber stamping.
*Okay, maybe not that one.
But after months of forwardly guiding everyone to the conclusion that the Fed was going to start buying less Mortgage-Backed Securities each month (currently, the monthly acquisition works out to around a 12th of the American annual deficit each month – and that was before the deficit started its sequester tumble), Bernanke went “Surprise! I had you. I really had you. Hahaha!”
The basis for the continuation: the Fed is worried that the economy can still turn for the worse; and, like, that damned Debt Ceiling again.
In the great paradox that is human behaviour, this news led to a surge in value in the stock market.
My personal suspicion: the whole problem with QE was that the money flooded out of the United States via carry trade into the emerging markets in search of better returns (see my Risk On Risk Off post). By threatening to cut off QE, that money began to return, leaving poor India, Brazil, Turkey and co in a tailspin. It’s now sort of staying in the US, hanging on with baited breath for the tapering announcement. So at least the returning cash can now do what it was meant to for a while – which is stimulate the US economy.
Starbucks has been celebrated by American gun activists for allowing the open display of revolvers-in-holsters within its American stores. There was even a Starbucks Appreciation Day – which caused some awkwardness when the gun activists tried to host it in places like Newtown… In fact, Starbucks shut down that store before it could happen.
It’s not that SB was doing it on purpose – their policy was just to follow whatever the State policy was on the open carry of guns.
This turned them into a battleground where pro-gun activists would arrive for coffee wearing guns, and anti-gun activists would confront them.
Sounds, um, dangerous?
My question: how exactly are you going to stop your gun-sporting customers from arriving fully-armed? If I were a barista being told to tell them to stop, I’d be demanding danger pay. Just saying.
3. Penthouse files for bankruptcy.
Be on the look-out for further laments about amateur hour and free online content destroying the livelihoods of those poor Penthouse models. Etc.
In case we didn’t have enough acronym in our lives, enter the CFPB AKA the Consumer Financial Protection Bureau.
JP Morgan will be refunding $309 million to customers: seems that they charged customers for credit-monitoring services that they, well, never provided. Which is an inflammatory way of saying that they started charging for the service before the customer officially signed a document to say that they wanted it. Luckily, the CFPB was on the case.
JP Morgan Chase also got a $20 million fine.
5. Blackberry tries and fails to work on iPhone and Android.
BBM was rolled out for iPhones and Android devices over the weekend.
Then it was unrolled after Blackberry picked up an issue with an unofficial Android version.
Unofficial Android version?
Blackberry also took the opportunity last week to announce some job cuts, and a possible $1 billion impairment loss on unsold inventory.
Let me put that $1 billion into perspective. Back in March of this year? Their total inventory balance was only $0.6 billion. Madness!
6. The borrowing begins for South African Platinum Mines.
Notham Platinum announced that it would be attempting to raise $103 million to offset three weeks of lost production in April, and to do some repairs.
The way I phrased that makes it sound like the primary objective is to cover the revenue losses from those three weeks. No – the bigger objective is the repairs, and some improvements.
But still – at least a fifth of that money is to make up for that lost revenue.