‘Shallow Risk’ and ‘Deep Risk’ Are No Walk in the Woods

Jul 26, 2013

THE INTELLIGENT INVESTOR

‘Shallow Risk’ and ‘Deep Risk’ Are No Walk in the Woods

By Jason Zweig

BF-AF445_INVEST_G_20130726172020

Earlier this week, the Dow Jones Industrial Average hit 15567.74, a new high. That was the 28th time this year the Dow closed at a record. At these all-time-high prices, just how much riskier stocks are than alternatives like bonds, cash or gold depends largely on how you define “risk.” William Bernstein, an investment manager at Efficient Frontier Advisors in Eastford, Conn., and the author of several books on investing and financial history, says risk takes two basic forms—and understanding the difference can help investors figure out what they should be afraid of. What Mr. Bernstein calls “shallow risk” is a temporary drop in an asset’s market price; decades ago, the great investment analyst Benjamin Graham referred to such an interim decline as “quotational loss.” Shallow risk is as inevitable as weather. You can’t invest in anything other than cash without being hit by sharp falls in price. “Shallow” doesn’t mean that the losses can’t cut deep or last long—only that they aren’t permanent. “Deep risk,” on the other hand, is an irretrievable real loss of capital, meaning that after inflation you won’t recover for decades—if ever. Read more of this post

China has at least 36 local governments with as much debt, on average, as Detroit

China has at least 36 local governments with as much debt, on average, as Detroit

By Jake Maxwell Watts @jmwatts_ 4 hours ago

China’s National Audit Office announced on Sunday that it is conducting a comprehensive review of all local government debt, which has long been considered a potential time bomb that threatens for China’s economy. But how bad is the debt really? An audit that took a sample of 36 local governments at the end of 2012 (15 provinces, their capital cities, the municipalities of Tianjin, Shanghai and Guangzhou, and one district from each municipal city) found that those authorities had taken on a total of 3.85 trillion yuan ($628 billion) in debt, up 12.9% from 2010. That works out to $17.4 billion each—just under the $18 billion in debt held by the US city of Detroit, which filed for bankruptcy earlier this month. Read more of this post

Small Stocks Are in Eye of the Index; Inclusion in Russell 2000 May Distort Some Stock Values

July 28, 2013, 6:46 p.m. ET

Small Stocks Are in Eye of the Index

Inclusion in Russell 2000 May Distort Some Stock Values

JUSTIN LAHART

MI-BX482_RUSSHE_NS_20130728173005

The Russell 2000 is the benchmark for small-capitalization stocks. But some stocks in it aren’t that small. This may pose a problem for investors, even as the index has been hitting all-time highs. The argument for small stocks is clear. Research has consistently shown that over long stretches small-cap stocks beat their bigger brethren. A driver has been the fraction of fast-expanding small companies on their way to becoming large ones. Yet some of them may no longer be in the Russell 2000. Which stocks Russell designates as small cap counts. The iShares Russell 2000 ETFIWM -0.40% the ninth largest of all exchange-traded funds, has about $25 billion under management. More than 400 mutual-fund portfolios, with over $370 billion under management, use the Russell 2000, or its subindexes, as benchmarks, said Morningstar. Read more of this post

Startups Take Off in South Korea; Successful Entrepreneurs Reinvesting in Fledgling Companies

Updated July 29, 2013, 12:07 a.m. ET

Startups Take Off in South Korea

Successful Entrepreneurs Reinvesting in Fledgling Companies

JAEYEON WOO

OB-YH880_subscr_G_20130725023742

A package for expectant moms in their early pregnancy

SEOUL—When Paek Jin-joo was pregnant with her first baby, it was challenging for her to figure out what she needed to know and buy as an expectant mother. Spending hours looking up the Internet was too time consuming. “I thought to myself how convenient it would be if someone could offer tips and help shop for products necessary for pregnant women,” says the 35-year-old Ms. Paek, who was an office worker at an online education company in Seoul before setting up her own company, 10Box, in October last year. As the U.S. startup scene experiences a slowdown this year, South Korea is one place that is booming. The country is one of the most wired nations in the world with broadband penetration at over 100%. The number of Korean startups has nearly doubled to 28,193 in 2012 from just 15,401 in 2008, according to data from the Korean Venture Capital Association. Steady growth in the number of startups in South Korea in recent years is getting a fresh push from successful entrepreneurs reinvesting in fledgling companies, as well as commitment from the government to provide backing. But competition and scaling the business have been major challenges for some of the country’s startups. Read more of this post

Is there an Incentive for Active Retail Mutual Funds to Closet Index in Down Markets? Fund Performance and Subsequent Annual Fund Flows; Study finds there’s no big benefit to active management in down markets

Is there an Incentive for Active Retail Mutual Funds to Closet Index in Down Markets? Fund Performance and Subsequent Annual Fund Flows between 1997 and 2011

Aron A. Gottesman Pace University – Lubin School of Business – Department of Finance and Economics

Matthew R. Morey Pace University – Lubin School of Business – Department of Finance and Economics

Menahem Rosenberg Pace University

April 26, 2013

Abstract: 
Closet indexing is the practice of staying close to the benchmark index while still maintaining to be an active mutual fund manager and probably also charging fees similar to those of truly active managers. Recent work shows active mutual fund managers were much more likely to closet index during down markets. Indeed, closet indexing became so popular that it accounted for about a third of all mutual fund assets during time surrounding 2008. In this paper we set out to answer the question of whether there actually is an incentive for mutual fund managers to closet index during down markets. To do this we examine the relationship between annual fund performance and subsequent annual fund flows in both up and down markets. Using this approach we find that the relationship between fund performance and subsequent net fund flows is significantly different in up markets years as compared to down market years. Specifically, we find that fund performance does not drive subsequent flows nearly as much in down markets as it does in up markets. Indeed, in up markets, we find a strong positive relationship between fund performance and subsequent flows. Conversely, in down years, the amount of outperformance or underperformance does not significantly influence the next year’s fund flows. Hence, based on these results, there is an incentive for active managers to closet index in down markets as investors do not reward outperformance with higher flows.

Fund managers should go into the closet when markets drop

Study finds there’s no big benefit to active management in down markets

By Michael Shagrin
July 25. 2013 3:54PM

Fund managers have every incentive to mimic their benchmark when markets are down, according to researchers at Pace University and Touro College. During up years, a strong relationship exists between fund performance and net flows. However, during down years, outperforming or underperforming a benchmark does not have a significant impact on the subsequent year’s flows. This means that “there is an incentive for active managers to closet-index in down markets, as investors do not reward outperformance with higher flows,” according to the researchers, who recently conducted a study, “Is There an Incentive for Active Retail Mutual Funds to Closet Index in Down Markets? Fund Performance and Subsequent Annual Fund Flows between 1997 and 2011.”  Read more of this post

9-Year-Old Massachusetts Girl Carissa Yip Becomes Youngest-Ever Chess Expert

9-Year-Old Massachusetts Girl Becomes Youngest-Ever Chess Expert

GRANT WELKERASSOCIATED PRESS JUL. 28, 2013, 5:51 PM 1,382 4

CHELMSFORD, Mass. (AP) — Only three years or so since first picking up the game of chess, 9-year-old Carissa Yip can already look down at 93 percent of the more than 51,000 players registered with the U.S. Chess Federation. She has risen so far up the rankings that she has reached the expert level at a younger age than anyone since the chess federation began electronic record-keeping in 1991, a new level she reached in recent weeks. Her father, Percy, who taught her until she began beating him within a year, said she could reach master level in as soon as a year. “Some never reach master level,” he said. “From expert to master, it’s a huge jump.” Read more of this post

Former kindergarten teacher Keith Green started his own YouTube channel, Cakes by Choppa after Spider-Man cake video viewed 15.8 million times around the globe – earning him huge advertising revenue.

Get rich on YouTube

July 19, 2013

Larissa Ham

Choppa-making-a-Mickey-Mouse-cake-620x349

Choppa making a Mickey Mouse cake.

Fancy earning $17,000 in just one hour, without leaving home? That’s what former kindergarten teacher Keith Green – known to all as “Choppa” – did after he filmed himself creating a Spider-Man cake and posted it on YouTube a year ago. It took him less than an hour to decorate the cake and edit the video but it’s since been viewed 15.8 million times around the globe – earning him huge advertising revenue. Choppa says he believes his video went viral thanks to timing – close to the release of movie The Amazing Spider-Man, and rock musical Spider-Man: Turn off the dark – but also “the fact it’s so simple”. The 33-year-old, who once dreamt of being an animator, got his first taste of cake decorating as a child while helping his mother create tasty gems from Women’s Weekly cookbooks. Two years ago, as a hobby, he started his own YouTube channel, Cakes by Choppa. It took off so quickly that six months ago the kindergarten teacher of 14 years quit his job to focus on his weekly online videos.

Read more of this post

China 3% Growth Risk Seen by Barclays Signals Likonomics Anxiety

China 3% Growth Risk Seen by Barclays Signals Likonomics Anxiety

A copper price collapse of more than 60 percent, zinc cut by up to a half and oil down to $70 a barrel. That’s the fate facing world commodity markets should China’s growth dip to 3 percent in the next three years — a scenario economists at Barclays Plc (BARC) are now examining.

They’re not the only ones building models based on a steep decline in growth in the world’s second-biggest economy. Nomura Holdings Inc. (8604) estimates a one-in-three chance of a sharp drop by the end of 2014, and Societe Generale SA sees a “non-negligible risk” of less than 6 percent growth this year and an outside chance of 3 percent average expansion for this half and next. Read more of this post

How Much Slowdown Can Beijing Tolerate? The notion of a bottom line for growth and stability is a myth. The truth is more complex

How Much Slowdown Can Beijing Tolerate?

July 22, 2013

By Minxin PeiABOUT THE AUTHOR

The notion of a bottom line for growth and stability is a myth. The truth is more complex.

The once-mighty Chinese economy is now headed in one direction only – downward. GDP growth was 7.5 percent in the second quarter of this year, down slightly from 7.7 percent in the first quarter. In the last quarter of 2012, the Chinese economy grew 7.9 percent. The deceleration from 7.9 to 7.5 percent may seem relatively minor – only 0.4 percentage point in six months. However, when annualized, this figure means that the Chinese economy has lost about one-tenth of its growth momentum since last year. Read more of this post

China Plans Urgent Audit of Public Debt

July 28, 2013, 6:43 a.m. ET

China Plans Urgent Audit of Public Debt

Burgeoning Borrowing Adds to Stress on China’s Financial System

PAUL MOZUR and TOM ORLIK

China MS 2_0 China Corporate Debt to GDP_0 China MS 1_0 China MS 3_0 China MS 4_0 China MS 5_0 China MS 6_0

BEIJING—China will conduct an urgent review of overall public debt, highlighting concerns about burgeoning official borrowing that are adding to stress in China’s financial system and limiting Beijing’s capacity to support flagging growth. In a one-line statement on Sunday, China’s National Audit Office said it would carry out an examination of total government debt, acting on the orders of the State Council, China’s cabinet. A separate article in the Communist Party mouthpiece People’s Daily said the order came Friday and that work would begin on the audit on Monday. The article, citing unnamed sources, said the Audit Office would temporarily suspend other projects to begin work on the audit, suggesting the urgency of the task. Read more of this post

Michael O’Leary, the outspoken CEO of Ireland’s Ryanair, is fanatical about making air travel affordable for the masses

SATURDAY, JULY 27, 2013

No Frills, and No Excuses

By JONATHAN BUCK | MORE ARTICLES BY AUTHOR

Michael O’Leary, the outspoken CEO of Ireland’s Ryanair, is fanatical about making air travel affordable for the masses. He’s pretty keen on rewarding shareholders, too. The pitch for owning Aer Lingus.

Brash, cocky, outrageous? Michael O’Leary, chief executive of Ireland’s Ryanair, has been called all that and more. And no wonder. He dressed as the Pope when his airline opened a new route to Rome. He wants to charge passengers who stand in line to use the bathroom on his fleet of Boeing 737-800s. And—get this—he has offered to donate the levy to charity “for incontinence, or something like that.” Read more of this post

Launch of Lee Kuan Yew’s new book: One Man’s View of the World

Launch of Lee Kuan Yew’s new book

20130729_leekuanyew_book_sph_myp

Monday, July 29, 2013 – 10:45

AsiaOne

SINGAPORE – Straits Times Press, the book publishing unit of Singapore Press Holdings (SPH), announced today the launch of Mr Lee Kuan Yew’s new book. Titled One Man’s View of the World by Lee Kuan Yew, the 400-page volume conveys Mr Lee’s views on the future of the major powers and regions of the world. The book is made up of 11 chapters. The first seven cover countries or regions: China, the United States, Europe, other Asian powers (Japan, India and Korea), South-east Asia, Singapore and the Middle East. Mr Lee also gives his views on the global economy and energy and climate change. Read more of this post

End game in property wait; Hong Kong Monetary Authority announced 27 cases of negative equity involving residential mortgage loans, the first time that negative equity has reared its ugly head since June last year

End game in property wait
Mary Ma
Monday, July 29, 2013
The Hong Kong Monetary Authority announced that as at the end of June, there were 27 cases of negative equity involving residential mortgage loans. This is the first time that negative equity has reared its ugly head since June last year. It would be imprudent to say the resurgence of negative equity cases is alarming, as they mainly related to mortgages with unusually higher loan- to-value ratios. But it’s still a development that shouldn’t be ignored. Following the property market crash during the 2003 SARS outbreak, many homeowners were trapped in negative equity. Nobody wants to see that again. Now, everyone is asking the same question – have home prices peaked? Read more of this post

Joseph Wong Chong-chun leads his family business as chairman and chief executive of Stelux to become one of the three largest watch makers in Hong Kong

Man on a mission
Natalie Ngan
Monday, July 29, 2013

6_2013072819323160578Stelux02

The boss of one of the leading watch makers and retailers in town did not exactly start out as a timepiece fan. “I didn’t know how to appreciate watches when I was young,” says Joseph Wong Chong-chun, who leads his family business as chairman and chief executive of Stelux Holdings International (0084). “But my dad gave me one before I went to Britain for university. That’s when I developed a liking for watches.” Wong got a bachelor’s degree in industrial engineering from the University of Bradford, and a master’s in operational research from the University of Southampton. His father Wong Chue-meng was the founder of Stelux, which started making watch components in 1963 and grew to become one of the three largest watch makers in Hong Kong. Read more of this post

Giorgio Riello’s account of the history of cotton reveals much about globalisation

July 28, 2013 3:43 pm

A rich picking for the re-emerging powers

Review by James Crabtree

Giorgio Riello’s account of the history of cotton reveals much about globalisation

images (23)

Cotton: The Fabric that Made the Modern World, by Giorgio Riello,Cambridge University Press, RRP£25/$35

The skyline of south Mumbai is dominated by imposing neo-gothic buildings, with ornate turrets and grinning gargoyles that might look more at home in Manchester or London than the financial capital of modern India. These incongruous edifices at first seem to be the likely result of simple colonial ambition (some might say of excess). But the impetus behind their construction actually came from a more unlikely commercial source: the global cotton trade. Read more of this post

Peter Drake gave himself a $26 million loan before his $3 billion mortgage fund empire, LM Investments, collapsed in March.

LM fund gave loan to Drake

July 29, 2013

Michael West

peter-drake

Peter Drake gave himself a $26 million loan before his mortgage fund empire, LM Investments, collapsed in March.

Adding this to other loans, including a $16 million loan to a Hong Kong company controlled by the Kiwi-born businessman, and it appears that Drake owes LM at least $46 million and is headed for bankruptcy. Drake brought a defamation action against Fairfax Media and the author of this story before the collapse of his $3 billion fund empire. Read more of this post

Investors Are Lab Rabbits in Central Bank Experiments

Investors Are Lab Rabbits in Central Bank Experiments

The European Central Bank and Bank of England are emulating Ben S. Bernanke’s experiment in offering monetary-policy guidance to financial markets. Investors could well end up being the guinea pigs. Bond prices have fluctuated during the last three months, with the yield on the 10-year Treasury note swinging from 1.63 percent to 2.74 percent, the fastest jump since 2010, as the Federal Reserve chairman struggled to provide a clearer picture of when and why the central bank will reduce and then end its asset purchases.

“If this is science, then we’re the little white lab rabbits,” said Vincent Reinhart, chief U.S. economist for Morgan Stanley in New York, who served as the Fed’s chief monetary-policy strategist from 2001 to 2007. Read more of this post

Heart Surgery in India for $1,583 Costs $106,385 in U.S.

Heart Surgery in India for $1,583 Costs $106,385 in U.S.

Devi Shetty is obsessed with making heart surgery affordable for millions of Indians. On his office desk are photographs of two of his heroes: Mother Teresa and Mahatma Gandhi.

Shetty is not a public health official motivated by charity. He’s a heart surgeon turned businessman who has started a chain of 21 medical centers around India. By trimming costs with such measures as buying cheaper scrubs and spurning air-conditioning, he has cut the price of artery-clearing coronary bypass surgery to 95,000 rupees ($1,583), half of what it was 20 years ago, and wants to get the price down to $800 within a decade. The same procedure costs $106,385 at Ohio’s Cleveland Clinic, according to data from the U.S. Centers for Medicare & Medicaid Services. Read more of this post

The Benefit of Hindsight: New rules allow ETFs to market back-tested data, but the practice is mired in murky practices that don’t benefit most investors

SATURDAY, JULY 27, 2013

The Benefit of Hindsight

By SARAH MAX | MORE ARTICLES BY AUTHOR

New rules allow ETFs to market back-tested data, but the practice is mired in murky practices that don’t benefit most investors.

Hindsight is 20/20. So it’s easy to see why investors might be kicking themselves for not investing in the PowerShares S&P 500 Low Volatility Portfolio (ticker: SPLV) in 2008. Over the past five years, the index this exchange-traded fund tracks has returned 11.7% a year — considerably better than the S&P 500’s 8.5%. There’s just one hitch: That index didn’t exist five years ago, and those returns are mostly hypothetical. Read more of this post

Hedge funds gripped by crisis of performance

July 28, 2013 12:33 pm

Hedge funds gripped by crisis of performance

By Dan McCrum in New York

Hedge funds have a performance problem. Since the turn of the decade, Wall Street’s master stock pickers have spectacularly failed to beat the market. The crisis of performance comes as the industry is under intense scrutiny over the source of past returns, with SAC Capital facing criminal insider trading charges that threaten to undermine the record of one of the world’s most successful hedge funds. The firm says it has done nothing wrong. While many hedge funds fared better than the stock market during the financial crisis, and rode the 2009 recovery back to health, they have been confounded by sometimes violent market moves over subsequent years. Read more of this post

Hollywood’s Reliance on Sequels Makes for a Pallid Picture

July 26, 2013, 7:06 p.m. ET

Hollywood’s Reliance on Sequels Makes for a Pallid Picture

ERICH SCHWARTZEL

Hollywood is having a problem with numbers. To get lucrative sequels, studios have to score with original hits, but this summer the biggest movies have titles that end in a 2 or 3. Even more than in recent years, audiences haven’t bought into original concepts despite record-setting efforts to offer big-budget features that generate healthy international ticket sales—and, down the road, ready-made sequels. Several weekends of expensive misses have some in the industry talking about “tentpole” fatigue. Moreover, the glut of megabudget flicks meant to hoist Hollywood’s fortunes is shortening the time studios can capture audiences, especially for a poorly reviewed movie. Hollywood’s dependence on sequels and franchises, particularly in the summer, is hardly new, but this season’s numbers put the issue into sharp relief. Read more of this post

The historic merger between Publicis andOmnicom that will create the world’s largest advertising and marketing services group by revenues is a bold bet that size matters in a new media world that is increasingly controlled by technology

Last updated: July 28, 2013 8:14 pm

Leviathan scrambles to connect with audience

By Emily Steel, Andrew Edgecliffe-Johnson, Adam Thompson

The historic merger between Publicis andOmnicom that will create the world’s largest advertising and marketing services group by revenues is a bold bet that size matters in a new media world that is increasingly controlled by technology. Gone are the advertising’s Mad Men days when creative shops such as Publicis’ Leo Burnett developed campaigns for the Marlboro Man. Today’s marketers are scrambling to connect with consumers amid the proliferation of media and mobile devices. Read more of this post

Procter & Gamble: Time to freshen up; Investors are hoping that AG Lafley will unveil plans to reinvigorate the company

July 28, 2013 3:27 pm

Procter & Gamble: Time to freshen up

By Barney Jopson

Investors are hoping that AG Lafley will unveil plans to reinvigorate the company

Nick Mangold, a burly American footballer, eases his 6ft 4in frame into a barber’s chair and lets the Gillette whisker trimmer get to work on his bushy beard. The New York Jets star is in Greenwich Village as a celebrity spokesman for Procter & Gamble, which counts Gillette as one its many brands. But a clean cut is not on the cards. “I’m not a complete shave guy, as your eyes will attest,” he says. The Fusion ProGlide Styler, a $19.99 razor-cum-trimmer, helps ensure “the wife won’t kill me”, Mr Mangold explains, but his strawberry blonde beard still bears hints of the unruly haystack to which it was once likened. For P&G, beards are big business. But this pillar of corporate America is in need of more than a trim. With a market value of $223bn, it has long been the gold standard in inventing, packaging and advertising high-end products to clean hair, bodies, clothes and dishes. But the personal and household products group has reached a defining juncture in its 175-year history. In both developed and emerging economies, it faces consumer markets that are more cost-conscious, commoditised and volatile. Analysts, long in awe of its consistently high performance, are now asking: has the P&G playbook run its course? Read more of this post

Betting on start-ups can revive a tired presidency; Making things easier for risk-takers is a way to reach elusive economic goals

July 28, 2013 5:17 pm

Betting on start-ups can revive a tired presidency

By Edward Luce

Making things easier for risk-takers is a way to reach elusive economic goals

George W Bush was supposed to have said: “The problem with the French is they don’t have a word for entrepreneur.” Unfortunately he never said it (though he really should have). Today’s Washington is also ambivalent about the French word. In a bitterly gridlocked town, every politician still pays lip service to small businesses. Yet by turning a blind eye to the needs of struggling entrepreneurs, the town is conniving in their declining fortunes. President Barack Obama would help his embattled presidency and the US economy if he embraced the cause of America’s entrepreneurs. Read more of this post

Industrial giant GE is trying to do business in just-opened Myanmar, where they badly need the stuff it makes and sells. So why is this storied multinational struggling?

Why GE’s Myanmar Venture Has not been Easy

by Simon Montlake | Jul 29, 2013

img_71023_ge_last_frontier US_Cross Border_GE’s Last Frontie.indd

The industrial giant is trying to do business in just-opened Myanmar, where they badly need the stuff it makes and sells. So why is this storied multinational struggling?

In the midday haze outside the Thingaha Hotel in Naypyidaw, the new capital of Myanmar, the national flag droops alongside the Stars and Stripes and General Electric’s corporate logo. Inside the Grand Ballroom the staff scurries with last preparations for a meticulously planned gala dinner. Heading up this coming-out party is Stuart Dean, a blue-eyed, rawboned American and GE’s chief for Southeast Asia. Read more of this post

H&M Aiming to Catch Zara With Delayed American Web Push

H&M Aiming to Catch Zara With Delayed American Web Push

Hennes & Mauritz AB (HMB) began selling cheap-chic clothes online in Sweden about the same time Google Inc. (GOOG) started crunching its first search results. Fifteen years later, H&M’s American fans are still waiting for Web shopping.

If the hype is to be believed this time around — the Stockholm-based retailer has postponed twice before — in August H&M will enter the world’s biggest online apparel market, allowing American shoppers to click to buy $12.95 zebra-striped ballet flats and $59.95 trenchcoats. Read more of this post

Recall in Japan Blemishes Skin-Whitening Industry; Booming Business in Asia Is Shaken After Women Using Kao’s Kanebo Products Develop Splotches

July 28, 2013, 2:25 p.m. ET

Recall in Japan Blemishes Skin-Whitening Industry

Booming Business in Asia Is Shaken After Women Using Kanebo Products Develop Splotches

MAYUMI NEGISHI

TOKYO—Under the glare of the sun, 27-year-old Ria Ko holds a parasol, wears long gloves and applies a new layer of SPF 50 sunscreen every couple of hours. Her pale complexion is hard won—acquired through a decade of effort to stay clear of the sun—and each freckle that appears causes her a moment of distress. From Tokyo to Mumbai to Shanghai, the skin-whitening industry is booming and projected to grow into a $20 billion business globally by 2018, according to Global Industry Analysts. In Asia, a fair complexion is synonymous with beauty, higher social position and wealth. Companies are scrambling to develop the next hot product in a culture that for centuries has identified light skin as a status symbol—because it proved that a woman was exempt from field work. But the industry has been shaken after Japan’s second-biggest cosmetics company, Kanebo Cosmetics Inc. said last week that it has confirmed the appearance of white stains—some bigger than 2 inches in diameter—on the faces, necks, and hands of thousands of women who had used its skin-lightening products. Read more of this post

Samsung Seeks Growth From Component Business

July 28, 2013, 6:28 a.m. ET

Samsung Seeks Growth From Component Business

South Korean Company Says Pace of Smartphone Growth May Slow in Third Quarter

MIN-JEONG LEE

SEOUL—Samsung Electronics Co.’s 005930.SE -1.15% estimated spending of nearly $12 billion to upgrade and invest in its chip facilities this year underscores the South Korean company’s reliance on its component business to drive earnings at a time when smartphone profits appear to be hitting a plateau. According to IDC, Samsung sold about 72.4 million smartphones in the second quarter. The WSJ’s Min-Jeong Lee tells Yun-Hee Kim how Samsung is positioning itself to compete in the smartphone market. While the South Korean companyreported a 50% increase in second quarter net profit Friday to a record 7.77 trillion won ($7 billion), margins from its smartphone business—its biggest profit generator for the past year—were squeezed due to hefty marketing expenses tied to its flagship Galaxy S4 smartphone. Read more of this post

Chinese Search for Infant Formula Goes Global; The Baby Formula Barometer

July 25, 2013

Chinese Search for Infant Formula Goes Global

By EDWARD WONG

At the Sheung Shui station in Hong Kong, near the Chinese border, the trade in baby milk powder is heavy

HONG KONG — The group of 40 mainland Chinese tourists made all the requisite shopping purchases on a recent trip to Europe: silk scarves, Swiss watches, Louis Vuitton handbags. And baby milk powder, of course. Loads of it. Rushing shelves at a supermarket in Germany, Chinese shoppers stuffed a half-dozen large cans into bags, one of the tourists said. “One woman told me, ‘If it was easier to carry, we would buy more; it’s good and cheap here,’ ” recalled the tourist, Zhang Yuhua, 60, who bought two cans. Chinese are buying up infant milk powder everywhere they can get it, outside of China. And that has led to shortages in at least a half-dozen countries, from the Netherlands to New Zealand. The lack of supply is a reminder of how the consumption patterns of Chinese — and their rising food and environmental safety concerns — can have far-reaching impacts on critical daily goods around the world. Read more of this post

80% Of US Adults Are Near Poverty, Rely On Welfare, Or Are Unemployed

80% Of US Adults Are Near Poverty, Rely On Welfare, Or Are Unemployed

Tyler Durden on 07/28/2013 16:47 -0400

20130710_santelli_0

Despite consumer confidence at a six-year high, the latest AP survey of the real America shows a stunning four out of five U.S. adults struggle with joblessness, are near poverty, or rely on welfare for at least parts of their lives amid signs of deteriorating economic security and an elusive American dream. Hardship is particularly on the rise among whites, based on several measures. Pessimism among whites about their families’ economic futures has climbed to the highest point since at least 1987. “Poverty is no longer an issue of ‘them’, it’s an issue of ‘us’,” as ‘the invisible poor’ – lower income whites – are generally dispersed in suburbs (Appalachia, the industrial Midwest, and across America’s heartland, from Missouri, Arkansas and Oklahoma up through the Great Plains) where more than 60% of the poor are white. More than 19 million whites fall below the poverty line of $23,021 for a family of four – accounting for more than 41% of the nation’s destitute – nearly double the number of poor blacks and as one survey respondent noted “I think it’s going to get worse.” Read more of this post

%d bloggers like this: