Good morning
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The headlines:
- Japan adds stimulus.
Link: How much is $9.4 billion really?
Sometimes, in a world of billions and trillions, the significance of a number gets lost in the relativity of it all.
For example, Greece’s economy is worth roughly €210 billion (in terms of nominal GDP): so when it receives two bailout packages of €110 billion and €130 billion respectively, and a write-down of €100 billion in debt… Well then those numbers are massive.
But when Japan prepares a stimulus package of $9.4 billion in an economy that’s worth $5.87 trillion… Well then that number is not really news at all. If anything, it’s a rounding error.
According to Economy Minister Seiji Maehara, the measures will boost domestic GDP by 0.1%. Quick calculation: $9.4/$5,870 = 0.16%. So yes – that makes sense.
A reasonably-calculated rounding error.
- Apple’s disappointing profit.
Link: below expectations.
The gross profit margin on Apple products has dropped to 36%: it’s “lowest in 4 years”. Also, Bloomberg economists were expecting a profit per share for the third quarter of $15.49; and what they got was profit per share of $11.75.
Apple is spinning this as slow sales while people held off buying an iPad in anticipation of the new iPad and iPad mini; and, you know, that they’re “not cutting corners to deliver the best customer experience in the world”.
However – that gross profit margin… Can anyone say “Foxconn”? For a fuller explanation of that veiled reference, you should read this post (news piece number 2).
I’d be quite worried. Apple has sounded shaky this week: new products breaking with Steve Jobs’ vision, being reactionary to competition rather than innovative; this gross margin issue… But change is change. It happens.
- Libor subpoenas.
Link: the US is sending them out.
Royal Bank of Canada, Societe Generale and Bank of America have been added to the list.
Just a reminder that the Libor probe hasn’t gone away.
- Microsoft does China.
Link: let’s sell the first Surface in Beijing.
The first Microsoft Surface has been sold in Beijing.
This is seen as a tactical move – as the oppositional Apple launches first in the rest of the world, and then China four months later. Which I guess is ironic, seeing as the rest of the world gets its products shipped from Foxconn.
I can’t help but wonder if Apple doesn’t have a good reason for it though. I mean – the first reaction is “piracy” and “counterfeiting”. But a number of academics have suggested that, contrary to popular/music-industry belief, counterfeiting is a form of free advertising; and it has actually benefitted the Steve Jobs vision of “everyone owning an apple product”.
And it makes sense – not everyone can own a product with the brand maintaining its status. So counterfeiting creates the aspirational lifestyle without the brand cost.
Thoughts?
- Storm season.
Link: a reminder?
Hurricane Sandy The worst storm in living memory is generating itself over the Bahamas. Hurricane Sandy, if it combines with a second storm system coming out of the Midwest, will form what is being called a “Frankenstorm”. And I quote:
“What we’re seeing in some of our models is a storm at an intensity that we have not seen in this part of the country in the past century. We’re not trying to hype it, this is what we’re seeing in some of our models” – National Weather Service meteorologist Paul Kocin.
A reminder that whatever the Fiscal Cliff might be, it could be worse? Economic woes aside: it’ll be climate that’ll get you first.
And while we’re on the topic, ask China about their water crisis. Geezlike. That graph reads like a blooming orange rose of desert:
That’s all for now.
Have a good day.
