The husband and wife behind Zaggora used social media to build a hot activewear brand

May 21, 2013 7:08 pm

A start-up that is fit for purpose

By James Pickford

©Charlie Bibby

Image matters: when deciding who should be the public face of the company, Malcolm and Dessislava Bell calculated that a female entrepreneur would generate more publicity

It was while road-testing the 21st prototype of her brainchild in the gym that Dessislava Bell realised she had made a breakthrough. “I lost a couple of inches off my waist in two weeks,” she says. Mrs Bell had alighted on an idea that, at first glance, holds little consumer appeal: skin-tight women’s exercise shorts designed to retain so much body heat that the wearer breaks into profuse, free-flowing sweat. Prompted by the effect of heat on physical performance and the fashion for high-sweat Bikram yoga, she spent months researching heat-inducing fabrics and design on the internet. The buying public appears to have reacted with anything but distaste to the calorie-burning “HotPants” produced by Zaggora, the London-based company founded by Mrs Bell, a 28-year-old former investment banker at JPMorganChase, and her husband Malcolm, an ex-investment manager. Read more of this post

Accounting graduates face job market squeeze. And the notion of an accounting degree as a safe bet is under threat.

Accounting graduates face job market squeeze



‘The supply of accounting education providers has increased – the market will become saturated and it will become difficult to get jobs,’ says Professor Raymond da Silva Rosa Photo: Bohdan Warchomij


The trend towards offshoring low-level finance jobs and the fragmentation of financial services are affecting the job outcomes of accounting graduates. Confidential data being circulated among academics shows 25 per cent to 40 per cent of accounting graduates from the nation’s top universities haven’t secured work in the sector within a year of graduating. The market for accounting roles is becoming saturated. And the notion of an accounting degree as a safe bet is under threat. Read more of this post

Federal Reserve Bank of New York President Bill Dudley Says He Can’t Be Sure If Next QE Move Is ‘Up or Down’

Dudley Says He Can’t Be Sure If Next QE Move Is ‘Up or Down’

Federal Reserve Bank of New York President William C. Dudley said he has not decided whether the Fed’s next move should be to enlarge or shrink its bond buying program as he called for a fresh look at its eventual retreat from record asset purchases.

“Because the outlook is uncertain, I cannot be sure which way — up or down — the next change will be,” Dudley said in a speech today in New York.

Dudley adds his voice to a debate on the Federal Open Market Committee about what to do with its program of bond purchases, designed to lower the 7.5 percent unemployment rate. While many Fed officials have voiced support for shrinking purchases as the next step, Dudley, who is also vice chairman of the FOMC, signaled willingness to increase purchases. Read more of this post

Gold ETF Sellers Facing Tax Surprises at 28% Gains Rate

Gold ETF Sellers Facing Tax Surprises at 28% Gains Rate

Investors who dumped shares in gold exchange-traded funds amid the biggest selloff in the metal in four years may be in for a shock: capital-gains taxes are higher than for stocks and bonds.

Profits from investments in ETFs that back their shares with physical holdings of precious metals face taxes as high as 28 percent for investments held at least a year. That’s the rate the U.S. Internal Revenue Service applies to items it considers “collectibles,” such as coins, art, silver and gold. Long-term gains from stocks and bonds, including equity and fixed-income ETFs, are taxed at a maximum 20 percent.

“There are some tax surprises out there lurking for them when they go to sell,” Tim Steffen, director of financial planning at wealth-management firm Robert W. Baird & Co. in Milwaukee, said of gold exchange-traded product investors. Read more of this post

Gold’s Fall Stings University Endowment, saddling the second-largest U.S. college endowment with more than $300 million in paper losse

May 21, 2013, 5:22 p.m. ET

Gold U. Takes It on the Chin

Hit Is $300 Million at Endowment for Texas Schools, Which Invests in the Metal



Gold’s slump has saddled the second-largest U.S. college endowment with more than $300 million in paper losses. But the swoon hasn’t shaken the faith of Bruce Zimmerman, who since 2007 has been chief executive of University of Texas Investment Management Co.

“We always prefer that our assets go up, rather than down, but we’re not day traders,” said Mr. Zimmerman, whose company invests $29.5 billion for the benefit of the University of Texas and Texas A&M systems. “Gold is a hedge, and it still fills that role.” Lately, investors have been dumping gold anew, citing limp inflation, a raging stock market and a reduced need for a safe-harbor investment. Gold prices fell Tuesday, their eighth decline in the past nine sessions. Few investors have suffered from the recent tumble like Utimco, which ranks behind only Harvard Management Co. in terms of assets in the university-endowment world. The organization holds about $1.1 billion of gold-related investments, down from about $1.4 billion before gold began heading south last October. Read more of this post

Hai Di Lao, a successful Chinese hot pot restaurant chain featuring waiters who swing 10-foot-long noodles around tables, tries to make the jump to the U.S.

May 21, 2013, 6:49 p.m. ET

Chinese Hot Pot Chain Hai Di Lao Makes Move to U.S.



A Hai Di Lao employee, near right, performs a ‘noodle dance’ at a table of diners at a Beijing branch of the restaurant.

If P.T. Barnum had ever opened a restaurant, it might look a lot like Hai Di Lao, the popular chain of 75 Chinese eateries planning its first foray into the U.S. market this fall. Talk about a three-ring circus: Diners pass the time in the waiting area with Internet terminals, board games and kids’ toys. They can nibble on unlimited free snacks. Or kick back for a shoeshine, manicure or hand massage. In the dining room, patrons wearing full-size aprons provided by the restaurant lean together over the boiling caldrons embedded in each table, dropping morsels of uncooked meat, fish, vegetables or tofu in a spicy steaming broth, then dipping them in flavorful sauces. On special holidays, magicians in colorful, traditional masks perform tricks. Patrons order using iPads. Periodically, a server breaks into the restaurant’s signature Olympic-style “noodle dance.”

Such showmanship, along with service, has set Hai Di Lao apart in China’s burgeoning restaurant landscape and has distinguished it from competitors that also sell hot pot, the traditional communal cuisine that originated in Mongolia centuries ago. Spicy versions emerged from the southwestern city of Chongqing and expanded in neighboring Sichuan province and then across China. Hot pot is particularly popular with groups of young people and families. The act of pulling food from the caldron lends to the chain’s name, which in Mandarin means “fishing in the bottom of the sea.” Read more of this post

Hidden Bad Loans in Chinese Banks Raising Ponzi Risk

Hidden Bad Loans Raising Ponzi Risk

05-21 17:19 Caijing

Interest arbitrage practices, which constitute a self-loop within the financial sector, are likely to weaken the links between finance and the real economy and negatively impact the real economy.

By staff reporters Wang Peicheng, Dong Yuxiao, and You Xi

Official statistics show that the banking industry in China had 526.5 billion yuan worth of non-performing loans and a bad loan ratio of 0.96 percent by the end of the first quarter of 2013, which represents a 0.01 percent increase in the bad loan ratio since the end of 2012. However, the ratio is still below general expectations, given the slow and zigzagging growth in the real economy.

The real condition is far more serious than that reflected on financial reports, as are the potential risks in certain areas. “There is no point trying to gauge the actual risks facing the domestic banking industry with the bad loan ratio,” said an official at the China Banking Regulatory Commission (CBRC). Read more of this post

China’s banks face no-win situation; Given the continued downgrading of Chinese prospects, there may well be worse to come

May 21, 2013 5:29 pm

Inside Business: China’s banks face no-win situation

By Henny Sender

Given the continued downgrading of Chinese prospects, there may well be worse to come

When hundreds of private equity executives met in Washington last week to discuss emerging markets, China dominated the debate. This outcome at the International Finance Corporation and Emerging Markets Private Equity Association conference is hardly surprising, given how important China is for the health of the world economy and for the price of everything from coal to copper to credit.

Analysts have downgraded China’s growth prospects once more, making it clear that its slowdown is more than a cyclical phenomenon. Growth of 8 per cent used to be the floor and has instead become the ceiling, as Ruchir Sharma, managing director of Morgan Stanley Investment Management, puts it. Slowing growth is not necessarily a bad thing, if the quality of the growth improves. Maybe in time, it will. But not today. The rebalancing is still more aspiration than reality. Read more of this post

Buffett, With His Magic Touch, May Be Irreplaceable

MAY 21, 2013, 6:50 PM

Buffett, With His Magic Touch, May Be Irreplaceable


Acquisitions usually come with a nice premium for the seller. But when Warren E. Buffett is the buyer, there is typically something of a discount.

The ability to make acquisitions on favorable terms is a testament to Mr. Buffett’s personality and skills as a deal maker. It also highlights an almost unsolvable problem for his company, Berkshire Hathaway, and its shareholders. When its 82-year-old chief executive is gone, who will negotiate such sweet deals?

A case in point is the $28 billion buyout of the H.J. Heinz Company by Berkshire Hathaway and a partner, the investment firm 3G Capital. The deal, announced in February, is expected to be completed by the end of the summer. Read more of this post

Korean chaebol CJ Group is under a prosecution investigation over an alleged slush fund

CJ hit by slush fund probe


By Kim Jae-won prosecutors target chairman, raid offices

Prosecutors on Tuesday raided CJ Group’s Main Office and Affiliate firms, along with The Homes of a Number of executives in What appears to be an Investigation targeting Chairman Lee Jay-Hyun who is Suspected of Running a Slush Fund.  Read more of this post

World Not Ready for Mass Flu Outbreak: WHO

World Not Ready for Mass Flu Outbreak: WHO

By Agence France-Presse on 9:53 am May 22, 2013.
Geneva. The world is unprepared for a massive virus outbreak, the deputy chief of the World Health Organization warned on Tuesday, amid fears that H7N9 bird flu striking China could morph into a form that spreads easily among people. Keiji Fukuda told delegates at a WHO meeting that despite efforts since an outbreak of another form of avian influenza, H1N1, in 2009-10, far more contingency planning was essential. “Even though work has been done since that time, the world is not ready for a large, severe outbreak,” Fukuda said. Rapid-reaction systems were crucial, given that health authorities’ efforts are already hampered by lack of knowledge about such diseases, he insisted. “When people get hit with an emerging disease, you can’t just go to a book and know what to do,” he said.

Read more of this post

Pesticides Make a Comeback; Many Corn Farmers Go Back to Using Chemicals as Mother Nature Outwits Genetically Modified Seeds

May 21, 2013, 8:28 p.m. ET

Pesticides Make a Comeback

Many Corn Farmers Go Back to Using Chemicals as Mother Nature Outwits Genetically Modified Seeds



Insecticide sales are surging after years of decline, as American farmers plant more corn and a genetic modification designed to protect the crop from pests has started to lose its effectiveness. The sales are a boon for big pesticide makers, such as American Vanguard Corp.AVD +0.94% and Syngenta SYNN.VX -2.64% AG. But it has sparked fresh concerns among environmental groups and some scientists that one of the most widely touted benefits of genetically modified crops—that they reduce the need for chemical pest control—is unraveling. At the same time, the resurgence of insecticides could expose both farmers and beneficial insects to potential harm. Read more of this post

The Debt Problem Hasn’t Vanished; While deficit projections have recently moderated, the cost of servicing the national debt will explode once interest rates begin to rise

May 21, 2013, 6:59 p.m. ET

Gramm and McMillin: The Debt Problem Hasn’t Vanished

While deficit projections have recently moderated, the cost of servicing the national debt will explode once interest rates begin to rise.


President Obama has raised the national debt by nearly $6.2 trillion, the equivalent of $78,385 per family of four. It is true that projected deficits recently have been reduced. April tax filings increased 28% from 2012, but much of this was thanks to a one-time rush at the end of 2012 to report income before rates rose in January. The second largest reduction in the deficit came from Fannie Mae FNMA +11.04% taking a one-time accounting adjustment.

But unless the economy soars, or a significant budget agreement is reached, the most lasting legacy of the Obama presidency will be a $10 trillion increase in the national debt—a burden that bodes ill for the nation’s future.

Once the Federal Reserve’s easy-money policy comes to an end and interest rates return to their post-World War II norms, the cost of servicing this debt will explode. The cost will increase further as the Fed sells down its $1.85 trillion holding of government bonds, and the Social Security system runs deeper and deeper into the red. The Treasury will then have to pay interest on an ever-growing percentage of the debt. Read more of this post

Canada Real Estate Slump Only Just Beginning, Madani Says

Canada Real Estate Slump Only Just Beginning, Madani Says

Canada’s housing slump has only just begun and it is premature to say the market will have a so-called soft landing, said David Madani, an economist at Toronto-based Capital Economics Ltd.

“We don’t expect prices to rebound this year,” Madani said today at the Bloomberg Economic Summit in Toronto.

Finance Minister Jim Flaherty has acted four times in the past five years to make mortgage-lending rules more restrictive amid concern that the Vancouver and Toronto markets were overheating. Flaherty has said he welcomes a slowdown of condominium construction in the two cities and has warned consumers, who have a record debt-to-disposable-income ratio of 165 percent, not to become overextended. Read more of this post

Mobile Commerce Worth $4.29 Billion in Q1 in China, But One Company Dominates

Mobile Commerce Worth $4.29 Billion in Q1 in China, But One Company Dominates

May 21, 2013

by Steven Millward

We know that mobile commerce in China was worth $7.8 billion in 2012 – and is expected to rise to $41.4 billion in 2015 – but who are the biggest e-commerce brands among the nation’s mobile shoppers? New statistics from iResearch give us that answer and show that one company seriously dominates. The clear market leader for mobile-based shopping in China is Taobao, the iconic consumer-to-consumer shopping mall from Alibaba that’s been rocking China for a decade. In terms of the value of mobile purchases among Chinese consumers, Taobao leads with 75.1 percent market share. Some of that is from the parent company’s B2C marketplace Tmall. In second place in this sector is Jingdong (formally called 360Buy), which is also China’s second largest B2C e-tailer. Its share of the mobile sector is a lot lower than its share of the overall China B2C shopping market, suggesting that Jingdong – and, indeed, all other such Amazon-like brands – needs to seriously sharpen up its mobile strategy. I notice that, if we again compare mobile spending share with overall market share, it’s only two fashion e-commerce companies that are punching above their weight when it comes to mobile shoppers – own-brand clothing e-store Vancl and specialist handbag site Maibaobao. Here’s the market share pie chart: A fairly slow shift to m-commerce

iResearch estimates that Q1 2013 will see Chinese mobile netizens spending a total of RMB 26.6 billion ($4.29 billion) in all of these e-commerce companies. That indicates that 2013 will indeed be the biggest ever year for mobile commerce in China – possibly exceeding the research firm’s earlier estimates of $15.7 billion for the entire year: In Q1 2013, we see that PC-based shopping still dominates the country’s e-commerce sector , but mobile is rising fast, anticipated to reach 7.6 percent of purchases in the first quarter: If you can handle any more massive numbers you might like to know that China’s entire e-commerce industry looks set to be worth $177 billion in 2013. Keep an eye on our ‘e-commerce in China’ tag to get more news on this massive market.


US farmland faces asset bubble test

May 21, 2013 5:23 pm

US farmland faces asset bubble test

By Gregory Meyer in New York

A century ago, US farmland real estate enjoyed a huge boom. Interest rates were low. Grain prices were high. The world’s appetite for agricultural exports seemed endless. Now, as a strikingly similar story unfolds, land investors are hoping for a different ending. From 1900-19 US farmland gained 70 per cent. Then the farming economy was hit by a rise in interest rates and a slowdown in food imports after the first world war. Land prices collapsed back to turn-of-the-century levels by 1940. Over the past decade, US farmland prices have doubled as the Federal Reserve has held interest rates at historic lows and demand has stayed strong. The big question is what will happen when monetary policy is tightened and the supply of grain grows. The question is important not only for farmers bidding at country auctions, but also for big investors that have poured billions of dollars into farmland as a “real asset”. After embracing timber land and commodity futures, some are touting acreage planted with corn, cotton, almond or soya as a wager on rising population and incomes. “It’s a long-term belief in an upward trend,” says Linda Assante of investment firm Jasper Ridge Partners.

That belief is about to undergo a stiff test. First, most US crop prices are falling – CBOT corn delivered after the harvest is about $5 a bushel, the lowest in almost a year, as US, Brazilian and Argentine farmers eye record crops. Second, interest rates have nowhere to go but upwards. “When we get a combination of those two things – declining grain prices and rising interest rates – we’re going to see an adjustment in farmland values in the Midwest,” says Stephen Gabriel, chief economist at the Farm Credit Administration, which oversees government-sponsored agricultural lenders. “A 20 per cent decline would not be out of the question.” Read more of this post

SAP seeks programmers with autism; “We share a common belief that innovation comes from the edges”; “[People with autism] have strong attention to detail and an ability to identify mistakes.”

May 21, 2013 9:20 pm

SAP seeks programmers with autism

By Chris Bryant in Frankfurt

SAP, the German business software company, wants to tap into a new talent pool by hiring hundreds of people with autism to programme and test its ­products.

SAP announced on Tuesday that it hoped people with autism – a developmental condition that can impair a person’s ability to communicate and interact with others – would ultimately account for 1 per cent of its 64,000 strong workforce.

Some people with autism, which affects about 1 per cent of the general population, score very highly on intelligence tests and possess extraordinary ­powers of observation and ­concentration. Read more of this post

Samsung-LG Misstep on TV Screens Creates Opening for Sony

Samsung-LG Misstep on TV Screens Creates Opening for Sony

Samsung Electronics Co. (005930) and LG Electronics Inc. (066570) are reworking their strategies for high-end TVs after spending billions of dollars on a new display technology that’s behind schedule and costs almost $10,000 a set.

The misstep by the Koreans has created an opening for Sony Corp. (6758), Sharp Corp. and Chinese maker Skyworth Digital Holdings Ltd. (751) Those companies are introducing TVs using conventional liquid-crystal displays that offer resolutions rivaling the new technology for about half the price.

The world’s two biggest television makers have struggled to profitably manufacture sets with organic light-emitting diodes, which have a brighter and sharper picture than the LCDs used in most TVs. Though both companies said they would mass-market OLED TVs last year, LG’s first model, priced at 11 million won ($9,900), hit stores in South Korea in January and Samsung still isn’t selling one. Read more of this post

Nintendo Adds to Companies Defeating Royalty Demands

Nintendo Adds to Companies Defeating Royalty Demands

Nintendo Co. (7974) fended off a second U.S. patent-infringement case this month against its Wii video-game system, adding to a trend of companies fighting royalty demands and winning.

Nintendo didn’t infringe licensing company Copper Innovations Group LLC’s patent for a way a computer interacts with a device such as a joystick, the Court of Appeals for the Federal Circuit in Washington ruled today. On May 13, the court said the Wii didn’t infringe a different licensing company’s patent for a system to track a game user’s position.

Companies including Kyoto, Japan-based Nintendo, discount retailer Inc. (OSTK) and electronics seller Newegg Inc. are winning cases brought by patent owners who rather than using their inventions to make products, are seeking royalties from those that make devices or provide services. Read more of this post

Apple Bonds Stick Buyers With $280.6 Million Loss as Rates Climb

Apple Bonds Stick Buyers With $280.6 Million Loss as Rates Climb

Apple Inc. (AAPL)’s bonds have lost $280.6 million of market value since buyers snapped up $17 billion of the iPhone maker’s debt last month, declining as yields climb from record lows.

The iPhone maker’s $3 billion of 30-year, 3.85 percent bonds, issued at 99.418 cents on the dollar, dropped 4.3 cents through yesterday to 95.145 cents on the dollar since the April 30 offering, creating a loss of $128.2 million and pushing the yield on the bonds to 4.1 percent, according to data from Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Buyers of the biggest corporate-bond offering ever are losing as speculation the Federal Reserve may start scaling back its unprecedented stimulus efforts triggers the biggest increase in 10-year Treasury yields in 12 months. Average yields on dollar-denominated investment-grade bonds have climbed to 2.78 percent from 2.68 percent since Apple’s April 30 debt sale, the Bank of America Merrill Lynch U.S. Corporate Index shows. Read more of this post

Coal miners in Australia are auctioning port assets worth tens of millions of dollars, an unthinkable prospect as recently as 18 months ago, when they were scrambling to secure berths

May 21, 2013

Coal Miners Try to Unload Australian Port Assets

By Rhiannon Hoyle and David Winning

Coal miners in Australia are auctioning port assets worth tens of millions of dollars, an unthinkable prospect as recently as 18 months ago, when they were scrambling to secure berths.

Australia exports more than 80% of its coal output, and miners signed long-term deals with port operators to lock in space at export terminals when coal prices were high. Now, these contracts are weighing on profits as companies face delays to new projects and battle falling coal prices.

Miners like Glencore Xstrata PLC GLEN.LN +3.30%and Yancoal Australia Ltd. YAL.AU 0.00%are putting excess port capacity on the block, signaling a lack of confidence that coal prices will rebound soon. But slack demand for coal and rising supply from Russia and Indonesia suggest the auctions will likely attract few bidders. Read more of this post

Leaders everywhere: companies that empower and train people at all levels to lead can create competitive advantage

Leaders everywhere: A conversation with Gary Hamel

The management writer and academic explains why he believes companies that empower and train people at all levels to lead can create competitive advantage.

May 2013

The latest M-Prize challenge, cosponsored by Gary Hamel’s Management Innovation eXchange (MIX), Harvard Business Review, and McKinsey, asks managers to submit examples of how their organizations are empowering and training individuals to lead even when they lack formal authority. In this video, Professor Hamel discusses why he believes it is vital for companies to “syndicate the work of leadership” across the organization, to redistribute power, and to change the role of the top team. This interview was conducted by McKinsey Publishing’s Simon London. What follows is an edited transcript of Hamel’s remarks.

Interview transcript

Syndicating the work of leadership

The Management Innovation eXchange is the world’s first open-innovation platform, where we’re trying to elicit bleeding-edge practices in the world of management and organization and leadership. Every so often, we run a McKinsey–Harvard Business Review management prize (M-Prize) to pull those amazing new practices and those bleeding-edge ideas up to the surface. This time around, the challenge is what we call Leaders Everywhere. And the thought underneath this is that we live in a world where never before has leadership been so necessary but where so often leaders seem to come up short. Our sense is that this is not really a problem of individuals; this is a problem of organizational structures—those traditional pyramidal structures that demand too much of too few and not enough of everyone else. Read more of this post

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