20120610-222852.jpgGood morning

The headlines:

  1. President Obama has not solved the housing crisis.

    Link: What is this talk of “carrots-not-sticks”?

    Wrote about it here.

  2. Apple is more awesome.

    Link: But also more horribly expensive – sneaky.

    So the WWDC has happened, and Apple has announced iOS 6 (for all the iPhones, iPads and iPods), trouncing Google Maps* for an Apple version that seems to involve something that looks like a helicopter. And Siri comes to the iPad.

    There is also the newer, thinner, lighter Macbook Pro (the Retina Version), which is going to be a separate line to the other Macbook Pro line, just more expensive. And yet, retina screens and more flash memory. Not sure what all of that means, but the adjectives “faster” and “prettier” seem appropriate. The other Macbook pro line has new chips and a new port to connect it to a TV.

    And there have been some updates to the Macbook Air. Also chip-related.

  3. The Wall Street shrug.

    Link: Agreed.

    This is in response to Jamie Dimon’s public “excoriation” that will be happening in front of Congress this week over the JP Morgan trading losses. The rest of Wall St appears to be going “But, like, whatevs, you make losses from time to time – that’s how it rolls”.

    Well exactly. Even $2 billion ones. Lest we forget, Facebook investors have lost a collective more-than-$40-billion since trading began a few weeks ago. Maybe Marky Z should be testifying in front of Congress. It just seems a bit discriminatory against bankers. Which is racist. Or careerist. Or classist. Or something.

    But the real reason I mention it is because a $2 billion loss on a trade has lost shareholders a collective $27 billion in market cap (through lower share prices). Does that sound reasonable?

    Buy JP Morgan shares.

  4. Meanwhile, back at Johnson & Johnson’s

    Link: The $2.2 billion anti-psychotic – crazy!

    Oh yes – and Johnson & Johnson have supposedly agreed to pay $2.2 billion to settle a US probe into its marketing of its Risperdal** antipsychotic drug. This is meant to include a misdemeanor plea and a criminal penalty of $600 million.

    It would also resolve civil claims that J&J paid kickbacks to the company that dispenses drugs at nursing homes.

    I would hope that someone is making J&J’s CEO testify in front of Congress. A $2 billion trading loss VS a $2.2 billion settlement for misleading doctors and forcing the distribution of your drug?

    Give that CEO some Risperdal.

  5. The US sanctions*** an exemption from sanctions.

    Link: how kind.

    The US has added to seven countries to the list of countries exempted from Iran oil sanctions: India, Malaysia, South Korea, South Africa, Sri Lanka, Turkey and Taiwan. They’re all done enough to reduce purchases of Iranian oil.

    To recap: the oil sanctions are not actually imposed on Iran – but on countries purchasing oil from Iran. If a country doesn’t reduce oil purchases, the US banks will stop processing any transactions being undertaken by the central bank of that country. Or something along those lines.

  6. The IMF says that the Yen is over-valued.

    Link: And therefore, the Bank of Japan should be stimulative.

    The Yen is over-valued because the world’s money is looking for safe havens – and Japan is seen as a safe haven****. Therefore, according to the IMF, the Bank of Japan should address that issue by being more stimulative and issuing more bonds.

    I just wonder how much of an impact any stimulus would have on the Yen’s exchange rate. As the market reaction to recent credit rating downgrades***** have demonstrated, crisis economics doesn’t exactly reflect the rationality of classical Keynesian economic responses. More stimulus could just result in an increase in Japan’s capacity to absorb more foreign cash flows – which would only serve to further strengthen the currency.

    Or maybe rationality will win out, and everyone will expect the stimulus to result in higher inflation******. Except – that’s not really what has happened in Japan in the past, now, is it?

  7. One of Warren Buffett’s companies orders jets.

    Link: About 425 of them.

    That’s $9.6 billion dollars worth.

    Goodness that’s a large number. Maybe he should go and testify in front of Congress.

    WB, being the contrarian that he is, undoubtedly approves. Berkshire’s NetJets is getting in there while the financing is low-cost, and taking a bet on a recovery in the next few years. This would be NetJets’ third purchase of aircraft in the last two years.

    When you bet – bet big.

That’s all for now.

Have a good day.


**Sounds like the name of a Franschoek/Stellenbosch vineyard in the Cape. Which is probably a better antipsychotic. Mountains, vineyards, bottles of riesling sipped on cherrywood patio. Heaven.

***Does anyone else find it ironic that the word sanction can mean both “authoritative permission” and “authoritative punishment for failing to act with permission”? Talk about political double-speak…

****Despite having what is the highest public debt to GDP ratio in the world – at least, it was the last time I checked. I stand to be corrected on this.

*****ie. almost no reaction at all – in fact, occasionally the exact opposite reaction to what’s expected. 

******higher inflation = depreciating currency