Netflix Boss Reed Hastings Wrote An 11-Page Manifesto On The Future Of TV

How Netflix CEO Reed Hastings Sees the Future: Netflix Wins, Apps Win and So Do HBO, ESPN and the Cable Guys

APRIL 24, 2013 AT 1:27 PM PT

Fresh off a triumphant earnings report, and with investors once again clamoring for his shares, Reed Hastings has something to say. A lot to say: The Netflix CEO has written an 11-page essay that lays out his vision for the future of streaming video. If you’re looking for news, you won’t find much here — nearly everything in the document, published on Netflix’s investor website, is a repeat of things Hastings has said or written in recent years. But if you’re at all interested in the way Hastings thinks things are going to play out in the battle for video eyeballs, and why he thinks Netflix will win many millions of them, it’s well worth a read. I’ve embedded the document below so you can scan it at your leisure. If you’re in a hurry, some bullet points:

  • The one new nugget here is a Hastings prediction, held by many other people, that we’re moving to a world where “apps replace channels.” Hastings mentions apps nearly 3 dozen times in his essay, and makes it clear that he sees Netflix first and foremost as an app provider.
  • Hastings figures that lots of other video services will figure the same thing out. And he goes out of his way to mention others that are already there or close to it, citing ESPN, HBO and the BBC.
  • But those who don’t get it are screwed, he says: “Existing networks, such as ESPN and HBO, that offer amazing apps will get more viewing than in the past, and be more valuable. Existing networks that fail to develop first-class apps will lose viewing and revenue.”
  • In the past, Netflix has tacked back and forth on whether it is competing head to head with HBO. Now Hastings is back in “we’re coming for you” mode: “The network that we think likely to be our biggest long-term competitor-for-content is HBO … They have global reach and strengthening technology capacity.”
  • But while Netflix now has as many U.S. subscribers as HBO — and while Hastings thinks he can eventually double or triple his current 30 million — he figures it will take him a while to truly compete with HBO. “While we are passing HBO in domestic members in 2013, it will be several years before we are peers with them in terms of Original programming, Emmy awards, and international members. It wouldn’t be surprising to us if HBO does their best work and achieves their highest growth
    over the next decade, spurred on by the Netflix competition and the Internet TV opportunity.”
  • But Hastings also reiterates his argument that there’s room for lots of streaming video services, just like there are lots of cable channels today. Translation: Don’t worry, Jeff Bewkes: Just because we’re coming for you doesn’t mean we’ll crush you. Also, please keep selling us Time Warner’s content! Thanks!
  • Hastings also continues to offer olive branches to the entrenched cable guys, especially those that also sell broadband: “At times we have worried about the strategic motivations of ISPs that are also MVPDs, but the absence of cord-cutting has mitigated this concern. … Internet video services like Netflix,, iTunes and YouTube are not currently a material strategic problem for companies that are both an ISP and an MVPD.” Translation: Hey Comcast, Time Warner Cable, Verizon! It would be pretty cool if we figured out a way for you guys to bundle us along with your other video services! Let’s (continue to) talk!

Google search proves to be new word in stock market prediction

Last updated: April 25, 2013 9:47 pm

Google search proves to be new word in stock market prediction

By Richard Waters in London

Searches of financial terms on Google can be used to predict the direction of the stock market, according to an analysis of search engine behaviour stretching back nearly a decade. The research, by UK and US academics, is the latest attempt to mine online behaviour patterns for clues about future movements in financial markets.

The findings appeared to show that people do more searches on terms such as “stocks”, “portfolio” and “economics” when they are worried about the state of the markets, said Tobias Preis, associate professor of behavioural science and finance at Warwick Business School. Rises in search volumes for such terms are generally followed by stock market declines, according to the research published in the journal Scientific Reports. By contrast, a fall in financial searches often points to greater optimism among investors, leading to a rising market. Read more of this post

Over the last 21 months, the SNB has expanded its balance sheet by an amount equivalent to 40% of Swiss GDP. Yet the Swiss franc hasn’t weakened

The Short Yen Trade Is The Hottest Trade In The World — But There’s One Big Risk To It

Matthew Boesler | Apr. 25, 2013, 12:55 PM | 2,901 | 2

It’s the hottest trade in the world right now: betting the Japanese yen will decline against the U.S. dollar. As part of the Japanese government’s new “Abenomics” strategy to lift the Japanese economy out of a decade of deflation, the Bank of Japan (BoJ) recently announced a massive quantitative easing program, unprecedented in scale. Investors – especially those outside of Japan – have taken this as a sign that the Japanese government and the BoJ are serious about weakening the yen and inducing a little inflation. A mini market crash caused by a fake AP tweet earlier this week showed how correlated the short yen trade is with risky assets in general right now. While the S&P 500 tanked in response to the tweet, the yen instantly strengthened against the dollar. And since so many investors are now using the cheap yen – which has already weakened considerably in recent months – to fund carry trades in other risky assets, it’s important to consider what else could derail the short yen thesis, which has become one of the most “consensus” trades on the planet.

Société Générale FX strategist Alvin Tan says the biggest risk to the “widespread expectation of lower yen over the next several quarters” is pretty simple: a global slowdown in economic growth. He uses the Swiss National Bank (SNB) as an example. Over the last 21 months, the SNB has expanded its balance sheet by an amount equivalent to 40% of Swiss GDP (the new BoJ program will fall short of that). Yet the Swiss franc hasn’t weakened. Of course, the reason for this is the ongoing euro crisis and the flight to safety into Swiss francs that has caused the currency to appreciate. So, the comparison, considering the context, is not really apples-to-apples. That is, unless you consider a scenario in which global growth enters a slowdown phase. Read more of this post

Billionaire Mark Cuban Is Massively Short The Yen; “in early December, I went and took every penny of debt that I had – with the Mavericks, and personal debt, and everything – and converted it to a yen loan at mid 80s”

Mark Cuban Is Massively Short The Yen

Matthew Boesler | Apr. 25, 2013, 4:39 PM | 10,455 | 12

Entrepreneur Mark Cuban made an interesting admission today on CNBC: he’s massively short the yen. The conversation started with a discussion on tech stocks, but then Cuban said: Honestly, I don’t jump into a lot of public technology stocks other than to have fun and trade every now and then. Where I have made my biggest trades have been in currencies, because there is a lot more transparency, and a lot more information available, than there are with stocks. It’s just a more efficient market, in my mind. CNBC anchor Scott Wapner then asked Cuban, “Now that you went there, I’ve got to ask you: what are you trading now? Are you short the yen, like everybody else?”

Cuban replied: Yeah. Actually, in early December, I went and took every penny of debt that I had – with the Mavericks, and personal debt, and everything – and converted it to a yen loan, when I think [the yen] was in the mid 80s [against the dollar]. So, I’ve been really happy with it. When the value of the currency decreases, it reduces the burden of the debt in real terms. The yen has decreased from “the mid 80s” against the dollar (when Cuban says he converted the loans) to around 100 against the dollar today, so Cuban has done pretty well on his yen trade so far.

Venture capital flight away from life sciences as the costs, time, and uncertainty involved in developing medical ideas have risen to “crisis” levels

April 25, 2013 9:58 pm

Venture capital flight away from life sciences

By April Dembosky in San Francisco

Venture capitalists are fleeing investments in life sciences, as the costs, time, and uncertainty involved in developing medical ideas have risen to “crisis” levels, according to a new report released on Thursday.

First-time financings are suffering in particular, with only 20 life sciences companies receiving start-up funding in the first quarter of 2013, the lowest number seen since the second quarter of 1995. Read more of this post

Latin America Threatened With Cancer Epidemic

Latin America Threatened With Cancer Epidemic

By Agence France-Presse on 9:29 am April 26, 2013.
Sao Paulo. Latin America faces a cancer epidemic unless governments act quickly to improve health care systems and treat the poor, scientists said.

The researchers pointed to around 13 deaths for every 22 cancer cases in the region, compared to around 13 deaths for every 37 cases in the United States and around 13 deaths for every 30 cases in Europe.

The main reason, according to the study published in the British journal The Lancet Oncology, is that too many people are diagnosed with cancer at a late stage when the disease is much harder to treat and more likely to kill.

“Researchers estimate that by 2030, 1.7 million cases of cancer will be diagnosed in Latin America and the Caribbean, with more than one million deaths from cancer predicted to occur annually,” said the report launched at the Latin American Cooperative Oncology Group (LACOG) 2013 conference in Sao Paulo. Read more of this post

Norway’s $720 billion oil fund to become active investor

April 25, 2013 6:06 pm

Norway’s oil fund to become active investor

By Richard Milne in Oslo

Yngve Slyngstad, chief executive: ‘As a top-five investor we would expect to have that dialogue [with the chairman]’

Norway’s oil fund is to become a more active investor by helping pick directors at companies in which it has significant stakes in a big shift of strategy at the world’s largest sovereign wealth fund.

Yngve Slyngstad, chief executive of Norges Bank Investment Management as the fund is known, is joining the nomination committee of Swedish truckmaker Volvo in a move that will see the oil fund formally participate in selecting directors for the first time.

“I think active is a fair description. We think it’s the responsibility of the larger investors to be more involved in what in the UK is referred to as stewardship and have a dialogue not just with the CEO and CFO but also the chairman of the board,” Mr Slyngstad told the Financial Times. Read more of this post

Gravity Theory of Einstein’s Proved Right—Again

Updated April 25, 2013, 7:28 p.m. ET

Theory of Einstein’s Proved Right—Again



Scientists have subjected Albert Einstein’s famous theory of gravity to its toughest real-world test so far—and it has prevailed.

The theory, which was published nearly a century ago, had already passed every test it was subjected to. But scientists have been trying to pin down precisely at what point Einstein’s theory breaks down, and where an alternative explanation would have to be devised.

Einstein’s framework for his theory of gravity, for example, is incompatible with quantum theory, which explains how nature works at an atomic and subatomic level. Read more of this post

Yen Bets Don’t Add Up for Hedge Fund Giant Rennaissance Technologies; The firm’s recent challenges underscore how even hedge funds with stellar records are having a tougher time beating the market lately

Updated April 25, 2013, 6:16 p.m. ET

Yen Bets Don’t Add Up for a Fund Giant


Renaissance Technologies LLC, a hedge-fund heavyweight, has been bruised in the market’s recent turbulence.

Two of the three hedge funds that the company makes available to outside investors have suffered sizable losses this month, largely due to the big drop in the Japanese yen, investors say.

At the same time, Renaissance continues to raise cash at a slower pace than some had expected. The firm manages about $6 billion of cash for outside investors—down from about $25 billion in 2007. Read more of this post

Fed Zeroes In on Vulnerability to Rate Rise; Fed is scrutinizing the nation’s biggest banks to ensure they can handle an eventual rise in interest rates

April 25, 2013, 8:26 p.m. ET

Fed Zeroes In on Vulnerability to Rate Rise


The Federal Reserve is scrutinizing the nation’s biggest banks to ensure they can handle an eventual rise in interest rates, as concern grows among regulators about the risks posed by a long low-interest-rate environment.

On Thursday, a panel of federal regulators charged with identifying market risks warned that a sudden rise in interest rates could have a destabilizing effect on financial markets. The Financial Stability Oversight Council, in its third annual report, cited interest-rate risk as one of seven major vulnerabilities to financial stability.

“A sudden spike in yields and volatilities could trigger a disorderly adjustment, and potentially create outsized risks,” the council said in its report. Read more of this post

Europe’s Unemployment Problems Worsen; Southern Europe’s economic malaise echoes Great Depression

Updated April 25, 2013, 3:25 p.m. ET

Europe’s Unemployment Problems Worsen

Spain and France Both Record New Highs, Adding to Pressure to Ease Up on Austerity in Favor of Economic Stimulus



As unemployment rises to 27.2% of the workforce, the Spanish government is about to introduce a budget that eases austerity measures. Friday’s budget will be another sign that supporters of austerity are losing the political battle in Europe as the social cost becomes too high. Unemployment in Spain and France has jumped to new highs, data showed Thursday, lending ammunition to a growing chorus calling for easing the euro zone’s austerity drive as the cure for its debt crisis because of the high social fallout.

The jobless rate in Spain rose sharply to 27.2% of the workforce in the first quarter, the highest level since records began in the 1970s. In France, the number of registered job seekers who are fully unemployed rose to more than 3.2 million, topping a previous record set in 1997. The weak figures in France and Spain, two of the biggest euro-zone economies, come on the heels of sharp rises in unemployment in March in the Netherlands and Sweden—an indication that the European Union’s northern members are also suffering from the bloc’s economic weakness.  Read more of this post

The dirty little secret among luxury goods companies is that they have been persistently overcharging their best customers in China

April 25, 2013, 1:13 p.m. ET

Luxury-Goods Firms’ Little China Secret



Makers of luxury goods have found a way to add to their profits: Charge Chinese consumers more than their counterparts in the U.S. and Europe. The WSJ’s Wei Gu tells Deborah Kan why luxury cars and fashion brands are more expensive in China. The dirty little secret among luxury-goods companies is that they have been persistently overcharging their best customers in China. With Chinese appetite for everything from expensive cars to handbags is starting to moderate, companies that count on the country as a big growth driver may have to do the unthinkable and lower their prices.

A comparison of three models from Mercedes-Benz, Audi NSU.XE +0.16% and BMWBMW.XE +1.55% shows that, on average, listed prices of luxury sedans in China are 64% more expensive than similar vehicles sold in the U.S. This looks counterintuitive, considering goods made in China are supposed to be cheaper. Read more of this post

In China, Air Quality Boosts SUVs; The big winners should include domestic players like Great Wall Motor who saw SUV sales volumes jump 90% year-on-year in February

April 25, 2013, 4:50 a.m. ET

In China, Air Quality Boosts SUVs



Following a run of several smog-ridden months in China, investors might be looking to bet on fuel-efficient or electric cars. In fact, it is sales of sport-utility vehicles that are soaring. The number of SUVs sold in China jumped 43.4% in the quarter ended March 31 compared with a year earlier, according to IHS Automotive. Total auto sales volumes were up just 13.8%. China’s middle class consumers see SUVs as a status symbol and view them as a safer option on the country’s notoriously dangerous roads, says China Auto Analyst Michael Dunne.

Ironically, air pollution might be playing a part too. China’s government rolled out new fuel-efficiency regulations last month aimed at the country’s air quality problem. A quirk in those rules could juice the SUV market, says Bernstein Auto Analyst Max Warburton. Fuel-economy targets based on different car weights—including easier targets for heavier vehicles—mean manufacturers have an incentive to make more SUVs, Mr. Warburton says. Something similar occurred in the U.S. in the 1980s, when more relaxed fuel-efficiency standards for heavier cars saw the big auto makers invest heavily in minivans and SUVs. The big winners should include domestic players like Great Wall Motor2333.HK +2.99% and foreigners like Jaguar-Land Rover, owned by India’sTata Motors 500570.BY +4.19% . Great Wall Motors saw SUV sales volumes jump 90% year-on-year in February, more than twice the increase in overall vehicle sales. The company boasts 35-40% of the low-end SUV market and 8% of the market overall, Nomura says. Read more of this post

How Chinese Subsidies Changed the World; Since 2008, through government subsidies, the manufacturing capacity of China’s solar-panel industry grew tenfold, leading to a vast global oversupply

How Chinese Subsidies Changed the World

by Usha C.V. Haley and George T. Haley  |   8:00 AM April 25, 2013

Last week, LDK Solar, a struggling Chinese manufacturer of solar wafers and panels, announcedthat it had missed $24 million in bond payments. This news followed the bankruptcy in March ofWuxi Suntech, the main operating subsidiary of the world’s largest maker of solar panels, after it defaulted on a $541 million bond payment.

It is no coincidence that this upheaval in the Chinese solar industry is occurring at a time when the central government’s subsidies that had financed the industry’s explosive expansion have declined even as problems in the global solar-panel market have soared.

Since 2008, through government subsidies, the manufacturing capacity of China’s solar-panel industry grew tenfold, leading to a vast global oversupply. A surge in exports of Chinese panels depressed world prices by 75%. In 2012, China’s top six solar companies had debt ratios of over 80%. Our research showed that without subsidies, these companies would be bankrupt. If the Chinese government sticks to its decision to stop funding unprofitable solar-panel manufacturers and support a revamping of the industry, more bankruptcies and restructurings are sure to follow. Read more of this post

Edir Macedo, Brazil’s Billionaire Bishop; Prosecutor says that Macedo’s promise of riches amounts to fraud; “The preachers make use of the faith, desperation, or ambition of [their followers] to sell the idea that God and Jesus Christ only look upon those who contribute financially to the church”

Edir Macedo, Brazil’s Billionaire Bishop

By Alex Cuadros on April 25, 2013


Edir Macedo is 5-foot-6, slight, and 68 years old. He has deformed fingers, a sparse crown of graying hair, and more than 5 million followers, whose donations over the last 36 years have made him a billionaire. In Brazil, where he was born and raised, he is a major national figure, the subject of dozens of criminal inquiries, and the owner of Rádio & Televisão Record, a media conglomerate that runs the country’s second-largest television network. He is known to most everyone by the title he created for himself: He is O Bispo—“The Bishop.” Macedo is the founder of the Universal Church of the Kingdom of God, a Pentecostal denomination specializing in prosperity theology, which links faith to financial success. He preaches twice a week, often in two different cities, and the sermons are fervently watched on church websites, his Facebook page, and the miniature TV sets that Brazilian taxi drivers like to keep on their dashboard. Now and then he holds outdoor events that draw crowds of half a million. In February he addressed 5,000 of his parishioners at one of his churches in Belo Horizonte, in southeastern Brazil. High overhead, a stained-glass cross lit by fluorescent bulbs took up most of the ceiling while a theater-size screen blew him up for the pews in the back. He paced back and forth on the stage, explaining the intersection of God and money. “Which is the largest country in the world, economically speaking? It’s America, the United States. Do you know why? Because way back—this is history, you can look it up on the Internet—the colonization was done by men who believed in the word of God. And they were tithers,” he said. “That’s why you see on the dollar bill: ‘In God we trust.’ ” Read more of this post

Innovator: Matt Rabinowitz Sifts Gene Data for Healthy Pregnancies; Traditional screenings during a pregnancy’s first trimester miss 15% of Down syndrome cases and yield false positives 5% of the time

Innovator: Matt Rabinowitz Sifts Gene Data for Healthy Pregnancies

By John Tozzi on April 25, 2013


Ten years ago, prenatal screenings gave a clean bill of health to Matt Rabinowitz’s nephew. The tests didn’t show that he had Down syndrome, which raises infant mortality risks. The boy died six days after birth. While Rabinowitz mourned, the Stanford-educated data scientist began to research genetic testing. “It just seemed amazing to me that that would happen in the 21st century,” he says. Traditional screenings during a pregnancy’s first trimester miss 15 percent of Down syndrome cases and yield false positives 5 percent of the time. False alarms can lead to more invasive diagnostics, such as amniocentesis and chorionic villus sampling, which are highly accurate but increase risk of miscarriage. In the past three years, four companies have developed noninvasive tests that predict the risk of birth defects by analyzing fetal DNA that’s mingled with the mother’s blood. Rabinowitz’s company, Natera, introduced the newest of these tests in March. Based in San Carlos, Calif., Natera’s more than 200 employees use cloud computing to analyze the genetic data they extract from maternal blood samples. The software scans 19,500 of a cell’s 10 million genetic markers. Using data from the human genome project and samples of the parents’ genes, “you can reconstruct the entire DNA of the child from that single cell,” Rabinowitz says. He says it detects miscarriage-threatening conditions other screenings can miss, such as triploidy, which occurs when cells carry extra copies of each chromosome. Read more of this post

Alzheimer’s: The Costliest Killer

Alzheimer’s: The Costliest Killer

By Peter Coy on April 25, 2013


In 2006 former television journalist Meryl Comer described in the Alzheimer’s & Dementia journal what it’s like to care for a husband with early-onset Alzheimer’s disease. “At night I slip between the bed covers, careful not to disturb the stranger lying there,” she wrote. “Soon he will wake screaming and flailing his arms as if fighting off demons. … Exhausted, I drift off only to reawaken and find myself lying by his side in a pool of urine.” Eleven years earlier, before his diagnosis at age 58, Comer’s husband, Harvey Gralnick, had been chief of hematology and oncology at the National Institutes of Health (NIH). Now he was detached from reality and unpredictably violent. He knocked out her two front teeth once when she tried to bathe him—an incident she left out of her article. Comer clung to one hope. “Today,” she wrote, “the field is on the brink of major breakthroughs that may lead to more effective treatments and, ultimately, to prevention.” Seven years after Comer wrote that article, things are worse. Her husband lingers on, protected at home from the secondary infections that kill many Alzheimer’s patients in nursing homes. Now her 93-year-old mother—who in 2006 was just beginning to exhibit Alzheimer’s-related paranoia—has full-blown symptoms and lives with her as well. Comer, who has been named president of the Geoffrey Beene Foundation Alzheimer’s Initiative, puts in 12-hour shifts caring for her husband and mother and spends $100,000 a year on home nursing care, none of it covered by Medicare. She expects to go bankrupt eventually.

Alzheimer’s disease remains incurable and 100 percent fatal. Because of modern medicine’s successes, more people are outliving heart disease, cancer, and stroke, only to be hunted down by Alzheimer’s and other forms of dementia. It’s hard to conceive of a worse way to die than to lose one’s mind. Asked last year in a Home Instead Senior Care/Marist Poll which disease they were most afraid of having, 44 percent of Americans named Alzheimer’s, as many as named cancer and stroke combined. If nothing is done, Alzheimer’s will become the “financial sinkhole of the 21st century,” says gerontologist Ken Dychtwald, chief executive officer of Age Wave, a consulting firm. Already, treating dementia of all kinds costs more than heart disease or cancer, more than $150 billion a year in the U.S., including the value of informal care, according to a Rand Corp. study released on April 3. That number could more than double by 2040 as baby boomers age into the Alzheimer’s danger zone, Rand says. Compounding the economic impact, women, who provide most of the care, are often forced to drop out of the labor force. Read more of this post

Startup Prism Skylabs is closely tracking shoppers via video surveillance to try to match the detail of data gleaned by e-tailers

To Catch Up With E-tail, Tools to Track Shoppers in the Store

By Brad Stone on April 25, 2013


Of the many advantages online retailers enjoy over their brick-and-mortar counterparts, the preponderance of data might be the most significant. While physical stores know how many customers visit and what they buy, e-commerce sites know which section customers head to first, how long they look at each product, and who browses but doesn’t make a purchase. Venture capitalist Marc Andreessen suggested in a Jan. 29 interview with startup news site PandoDaily that, in part because of this data gap, all of traditional retail will go the way of Circuit City and Borders. “The retail guys are going to go out of business, and e-commerce will become the place everyone buys,” he said.

U.S. Census data show physical stores still account for 95 percent of retail sales. Still, they’re growing at barely one-quarter the rate of online retailers, and so several technology startups are trying to find ways to provide them with e-commerce-level data. Prism Skylabs uploads and analyzes video from in-store surveillance cameras to track customer movement and the effectiveness of promotions. “All of retail is in a knife fight,” says Steve Russell, co-founder and chief executive officer of the two-year-old San Francisco startup. “There is a lot of pressure from the online world on physical retailers to change, and we are trying to facilitate that.” Read more of this post

Apple’s 10-Year-Old iTunes Loses Ground to Streaming; iTunes’ share of U.S. digital music sales has fallen from 69 percent to 63 percent as avid music listeners turn to streaming services.

Apple’s 10-Year-Old iTunes Loses Ground to Streaming

By Andy Fixmer on April 25, 2013


A decade ago, the newly started iTunes Store gave away a song called Over My Head (Cable Car) by an obscure Denver rock group called The Fray. That was, explains lead guitarist Joe King, the band’s big break. “I’ll never forget, our manager e-mailed and said there had been 300,000 downloads,” says King. “Immediately our fan base went from several hundred to thousands, everywhere. Our tour started selling out.” These days, iTunes doesn’t offer that kind of overnight success for undiscovered musicians, despite its 435 million registered users.

Apple (AAPL) opened the iTunes Store on April 28, 2003, as a legitimate, industry-supported alternative to online music piracy, selling most individual songs for 99¢ a pop. It was the first venue to make digital music purchases mainstream. “Consumers don’t want to be treated like criminals, and artists don’t want their valuable work stolen,” Apple co-founder Steve Jobs said in a statement at the time. “The iTunes Music Store offers a groundbreaking solution for both.” Paired with Apple’s ubiquitous iPod music players and, later, iPhones, it quickly became the Internet’s de facto record store, accounting for nearly 69 percent of digital U.S. music sales at its peak in 2010, according to estimates from market researcher NPD Group. Read more of this post

Israelis Rise Up Against the Oligarchs, a group of 20 families that control about 50 percent of the value of the Tel Aviv stock exchange

Israelis Rise Up Against the Oligarchs

By David Wainer and Calev Ben-David on April 25, 2013

Ilyan Marshak was outraged when he heard that Bank Leumi would forgive as much as $42 million in debt owed by companies controlled by Nochi Dankner, one of Israel’s so-called oligarchs—a reference to the group of 20 families that control about 50 percent of the value of the Tel Aviv stock exchange. Marshak wanted to know why a rich man was getting a break while he worked odd jobs to pay off about 100,000 shekels ($27,600) of debt. “These tycoons are getting bargains because of their influence in our economy, and that comes at the expense of the public,” says the 28-year-old Tel Aviv resident.

Marshak was one of thousands who posted on a Facebook (FB) page titled “Bank Leumi Consumer Boycott,” after a local paper reported in mid-April that the bank had agreed to erase some of Dankner’s debt as part of a broader corporate debt restructuring. The scion of a family that made its fortune in table salt and real estate, Dankner has spent the past 15 years building his own sprawling empire, which includes the country’s biggest supermarket chain, Shufersal (SAE), and its largest mobile operator, Cellcom Israel (CEL). The deal with Leumi would have allowed the businessman some breathing room as his IDB Holding (IDBH) struggles to meet payments on about $560 million in debt. Read more of this post

Regulating China’s Shadow Banking System Isn’t Easy; Attempts to bring transparency to China’s $3.4 trillion shadow banking system are foundering, judging from a pilot program in Wenzhou.

Regulating China’s Shadow Banking System Isn’t Easy

By Jun Luo on April 25, 2013

On a morning in March, row after row of chairs in the waiting room of Wenzhou Private Lending Registration Service Center sit empty. Zhou Xiang, a manager at one of the five government-sanctioned loan brokers operating in the center, which opened in 2012, hasn’t had a single customer today. “The volume of lending is so low we ourselves won’t be here long without expanding into some other businesses,” he says.

The dearth of clients helps explain the failure of China’s year-old effort to regulate informal lending. Former Premier Wen Jiabao chose to locate the center in Wenzhou, a city of 9 million in southeastern China, after more than 80 businessmen in the area committed suicide or declared bankruptcy because they were unable to make payments on black-market loans. Brokers like Zhou match cash-strapped businesses with private lenders, draft loan contracts, and monitor monthly payments.

Wen’s goal was to impose some controls on what is a huge but disorderly market. Many Chinese savers prefer to lend their money to businesses and real estate developers, rather than letting it languish in a bank account. Estimates by UBS (UBS)put the size of the nation’s so-called shadow banking system at $3.4 trillion, equal to 45 percent of gross domestic product. In Wenzhou, almost 90 percent of families and 60 percent of companies participate in the informal market for loans, according to a 2011 survey by the People’s Bank of China. Read more of this post

In China, the License Plates Can Cost More Than the Car; None of the top 10 passenger car models sold in China are Chinese brands

In China, the License Plates Can Cost More Than the Car

By Tian Ying and Alexandra Ho on April 25, 2013


Shanghai’s busy streets teem with Buicks, Fords, Volkswagens, and Toyotas. More than 9 out of 10 cars in the world’s most populous city are made by foreign companies, and it’s not just a reflection of mainlanders’ preference for Western design. Some local automakers say the city’s license plate auctions are responsible for their weak sales. Shanghai is one of four Chinese cities that limit car purchases by imposing quotas on registrations. The prices paid at Shanghai’s license auctions in recent months—90,000 yuan ($14,530)—have exceeded the cost of many entry-level cars, the stronghold of Chinese brands such as Chery, Geely, and Great Wall. While residents with modest incomes may be able to afford an inexpensive car, the registration cost is often beyond their reach. “Whenever there’s a restriction of new car purchases through the quota system, there is always a big impact on lower-price cars like the ones we make,” says Lawrence Ang, executive director of Geely Automobile Holdings (175), whose Panda minicar sells for 37,800 yuan.

After Beijing (pop. 21 million) introduced a license plate lottery in January 2011, the combined share of Chinese brands sold there plunged by more than half, to 9.7 percent for the year, according to researcher IHS Automotive. In Shanghai, which began auctioning license plates in 1994, domestic brands made up only 8.9 percent of cars sold in 2011 (the most recent data available), less than a third the level nationwide, IHS reports. Read more of this post

Watchmakers fret over China sales slump

Watchmakers fret over China sales slump

1:26pm EDT

By Silke Koltrowitz

BASEL (Reuters) – Luxury watchmakers expect sales growth to slow this year as a recovery in the United States and buoyant Middle East demand fail to offset a China slump more deep-rooted than a temporary blip caused by anti-corruption moves.

The heads of Swatch Group’s (UHR.VX: QuoteProfile,ResearchStock Buzz) biggest brand Omega and LVMH (LVMH.PA: QuoteProfileResearchStock Buzz) flagship brand TAG Heuer as well as high-end independents Patek Philippe and Ulysse Nardin all said demand in Greater China had tumbled, particularly for high-end models. Read more of this post

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