Bamboo Innovator

Green Mountain’s Buzz Poised to Wear Off; The Coffee Company’s Shares Have Had an Epic Comeback, but the Question Is How Much That Reflects Fundamentals

August 6, 2013, 7:26 p.m. ET

Green Mountain’s Buzz Poised to Wear Off

The Coffee Company’s Shares Have Had an Epic Comeback, but the Question Is How Much That Reflects Fundamentals

SPENCER JAKAB

High praise has a way of preceding big stumbles. In earlier, headier times, Green Mountain Coffee Roasters Inc.’s GMCR -2.53%machines were occasionally referred to as the iPods of coffee. Then, in the fall of 2011, questions about its growth prospects sent its shares tumbling from nearly $116 to less than $18 by the next summer. Like Apple Inc.’s music players, competition and the onward march of technology was to blame.

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Small Businesses in Jiangsu Singing the Bank Loan Blues; Lenders burned by bad loans to giants in solar and shipbuilding industries are reluctant to extend loans to family businesses as ordered, forcing some to close

08.07.2013 19:38

Small Businesses in Jiangsu Singing the Bank Loan Blues

Lenders burned by bad loans to giants in solar and shipbuilding industries are reluctant to extend loans to family businesses as ordered, forcing some to close

By intern reporter Wu Hongyuran

Several textile company owners in southern Jiangsu gathered for a meeting on July 25 to figure out how to save their businesses. One of them said local banks had been unwilling to lend since April, making life extremely hard for her and others who also run a family business in Shengze, a silk town in Suzhou, the capital of the eastern province of Jiangsu. Shengze hosts more than 6,000 small and medium-sized textile companies and a great number of spinning mills in its 118 square kilometers. Having run a business there smoothly for five years, the businesswoman at the meeting said it had become very difficult to raise funds in the past few months. These sentiments were expressed by the other businesspeople who attended the meeting. Read more of this post

Japan’s Giant New Destroyer Sends A Clear Message To China, The World; Alarming signs of Japan’s rearmament

Japan’s Giant New Destroyer Sends A Clear Message To China, The World

GEOFFREY INGERSOLL AUG. 6, 2013, 4:04 PM 22,957 76

The Izumo has been in construction since 2009. Sixty-eight years to the day of the Hiroshima bombing, Japan unveiled its new naval “destroyer” that happens to have a flat-top — dubbed “Izumo” — capable of carrying various rotary-wing aviation units, reports Eric Talmadge of ABC. Consequently, it’s also the biggest since WWII … and since Japan’s official army was disbanded. The new boat comes as Chinese officials say the country is in “no rush” to sign a code of conduct guiding military behavior in the contested South China Sea. Read more of this post

Nearly One-Third Of America’s Massive Federal Student Loan Debt Is Either Late Or In Default

Nearly One-Third Of America’s Massive Federal Student Loan Debt Is Either Late Or In Default

MANDI WOODRUFF AUG. 7, 2013, 11:49 AM 2,062 24

Student loan debt continues to swell, with more than $1.2 trillion worth of loans issued so far in the U.S.  The Consumer Financial Protection Bureau recently took a look at our student debt addiction to figure out exactly how well consumers are working at paying it down. It isn’t looking too good. Out of $1 trillion in federal loans, $214 billion are in deferment or forebearance and $89 billion are in default. It’s the 7 million borrowers in default that really have the CFPB worried.  “Defaulting on a federal student loan has serious consequences,” Rohit Chopra, the bureau’s student loan ombudsman, says. “Unlike other consumer credit, borrowers in default on a federal student loan might see their tax refund taken and their wages garnished without a court order.” Read more of this post

Why the luck is running out for Australia’s next leader; After two decades of growth, politicians should be prepared for changing fortunes

August 7, 2013 7:23 pm

Why the luck is running out for Australia’s next leader

By David Pilling

After two decades of growth, politicians should be prepared for changing fortunes

For two decades, Australia has deserved its reputation as a “lucky country”. Alone in the developed world, since 1991 it has been recession-free. It admirably weathered the global financial crisis thanks to a sound financial system and a made-in-China mining boom that has turbocharged the economy. As well as massive coal and iron ore deposits, it has huge reserves of natural gas ready to liquefy and ship to energy-starved Japan and South Korea. It continues to enjoy low public debt, low inflation and, for now, relatively low unemployment.

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Lobster industry squeezed by oversupply as demand for what has long been considered a luxury dish has not kept pace, especially since the global recession hit in 2008

Last updated: August 7, 2013 7:30 pm

Lobster industry squeezed by oversupply

By Neil Munshi in Chicago

The Maine lobster industry is being crippled by a glut of supply that many attribute to climate change, sending the price per pound plummeting and turning the crustacean into something it has rarely been before: affordable. According to figures from the Maine Department of Marine Resources, the volume of the state’s lobster harvests has skyrocketed from about 28m pounds in 1990 to 126m pounds last year as oceans have warmed, helping the shellfish and their larvae to grow faster. But demand for what has long been considered a luxury dish has not kept pace, especially since the global recession hit in 2008, even as fuel and equipment costs rise. Read more of this post

Rare questions are being asked about the power of China’s state-owned corporations as details emerge about the purchase of three mines in Shanxi Province

August 7, 2013

Silence Underground

By KEITH BRADSHER and CHRIS BUCKLEY

ZHONGSHE, China — A moribund coal mine here descends deeply, more than 3,800 feet underground. But the deal in which a Chinese state-owned conglomerate bought it may be even darker and more labyrinthine. The Zhongshe mine and two others, in Shanxi Province in northern China, are at the center of unusually public accusations of mismanagement and corruption afflicting one of the nation’s flagship state conglomerates, China Resources. Critics say that the $1.6 billion purchase was vastly overpriced and illegal and that large sums may have been squandered or, as some are claiming, improperly diverted. Read more of this post

How Siemens Lost Its Way; Every success already contains the seed of failure

08/07/2013 07:06 PM

Peter and the Wolves

How Siemens Lost Its Way

By Dinah Deckstein, Martin Hesse and Thomas Tuma

Siemens is a massive global conglomerate, building everything from trains to power plants. In-fighting and last week’s ouster of CEO Peter Löscher are just a few indications of a German giant’s decline. The company must find new markets to regain success.

A few days before all hell breaks loose around him, Joe Kaeser is sitting in his Munich office, relating anecdotes about the big, wide world of Siemens. At the time, he’s still the company’s chief financial officer. A large, black-and-white photo of the striking cliffs of Big Sur, on the California coast, one of the 56-year-old executive’s dream destinations, is hanging on the wall behind his desk. Kaeser, with surprising openness, describes how almost everyone in the company “has recently come a little unhinged.” At some point, he says, even he began to feel like a rock in the surf. Read more of this post

One day you are hot, the next day you are not – and so it is with Mongolian Genghis bonds which have suffered a sharp market correction in the wake of June’s market rout

August 6, 2013 5:56 pm

Mongolian bonds suffer amid frontier correction

By Pan Kwan Yuk

One day you are hot, the next day you are not – and so it is with Genghis bonds which have suffered a sharp market correction in the wake of June’s market rout. Back in November, eyebrows were raised in the emerging markets debt investment community when Mongolia – a country that has been rescued five times in the past 22 years by the International Monetary Fund – managed to raise $1.5bn at a price below Spain’s borrowing costs. At the time, many took the sale, which was 10 times subscribed and attracted $15bn in bids – as yet another sign that investors who were flushed with cash and desperate for yields were jumping into markets that they did not fully understand. Read more of this post

Dairy Auction Shows Fonterra’s Premium Over Rivals Narrowing After Latest Scare

Updated August 7, 2013, 3:52 a.m. ET

Dairy Auction Shows Fonterra’s Premium Over Rivals Narrowing After Latest Scare

Sale Was Seen as First Big Test After Dairy Giant’s Bacteria Warning

REBECCA HOWARD

WELLINGTON, New Zealand—The dairy industry’s biggest auction signaled thatFonterra Cooperative Group Ltd.’s FCG.NZ +1.14% tainted-milk scare has eroded its ability to charge premium prices and led to a shift in consumer sentiment toward rival suppliers. New Zealand officials saw the overnight GlobalDairyTrade auction as the first big test of the country’s ability to weather food-safety concerns after Fonterra warned days earlier that three batches of one of its dairy products may contain harmful bacteria. Dairy accounts for about a quarter of New Zealand’s exports and Fonterra is its largest supplier. Lawmakers feared the company’s latest quality issue is hurting consumer confidence, especially after countries such as China and Russia banned imports of some Fonterra products. Read more of this post

Distressed-Debt Investors Look Toward Asia; Corporate debt in Asia now exceeds 2008 levels

Aug 7, 2013

Distressed-Debt Investors Look Toward Asia

By Isabella Steger

As Asia’s economic growth sputters and banks face the prospect of rising bad debts, credit-focused hedge funds and private-equity firms are seeking opportunities to buy distressed debt. While investors in distressed credit in the region have been most active in Australia, they are starting to spot signs of trouble in other markets such as China, South Korea and India, particularly after a recent boom in corporate-bond sales sent debt levels higher. Many of those bonds will be up for refinancing in a few years, said Michel Löwy, chief executive of Hong Kong-based hedge fund SC Lowy, which invests in distressed debt. Read more of this post

In China, Air Pollution Rules Spur Big Car Purchases; Buyers Trade Up Fearing They May Get Just One Shot at a Purchase

August 7, 2013, 4:13 p.m. ET

In China, Air Pollution Rules Spur Big Car Purchases

Buyers Trade Up Fearing They May Get Just One Shot at a Purchase

SHANGHAI—As more Chinese cities propose license-plate lotteries and other ways of limiting the number of cars on the road, consumers are responding by buying more expensive automobiles with bigger engines. In Shanghai, one of four major Chinese cities with policies designed to reduce car purchases to ease pollution and traffic congestion, between 9,000 and 10,000 plates are auctioned monthly, fetching an average of 82,000 yuan ($13,400) so far this year. That steep fee helped convince David Fu, a 26-year-old bank corporate finance manager, to buy an Audi NSU.XE +0.16% A4 in June for 300,000 yuan after looking at a dozen lower-cost models including those made by Volkswagen AGVOW3.XE -0.77% and China’s home grown car makers. Read more of this post

Foods that are decades past their expiry dates are too common in Asia

Foods that are decades past their expiry dates are too common

Nury Vittachi, Bangkok | Opinion | Sun, July 14 2013, 11:05 AM

When I heard last week that inspectors had found a shop selling food that was 43 years past its expiry date, I thought, wow, they go to the same supermarket I do.
I’ve seen food items there that aren’t just dried out, but are actually fossilizing. I sometimes visit just to show my children how mineralization works: “See how microstructural features are retained, so that people in 10 million years can trace the early evolution of the MSG pie?” Anyway, in my experience you’re fine as long as you stick to foods from the Holocene and Pleistocene eras: Avoid anything pre-Mesozoic. Later, I found the actual Xinhua report about the expired food. The shop was in the Guangxi region of China. But this problem happens all over Asia. A reader once sent me a package of food he bought from the most expensive delicatessen in Hong Kong. Under the expiry date sticker was another one. And another one beneath that. And another one beneath that, etc.  Read more of this post

In American Greetings Deal, Echoes of Larger Buyout for Dell

AUGUST 6, 2013, 6:34 PM

In American Greetings Deal, Echoes of Larger Buyout for Dell

By STEVEN DAVIDOFF

This is a tale of two management-led buyouts. The first is the headline-grabbing $24.4 billion bid by Michael S. Dell and the private equity firm Silver Lake Partners to buy the personal computer maker that Mr. Dell founded. The second is the lesser-known $612 million buyout by the Weiss family of the American Greetings Corporation, the greeting card company they control. Both deals illustrate the rising tide of shareholder power, as well as the devilish issues that emerge when management tries to buy a public company. And even though Dell’s board has changed the voting rules, both companies are being tested by shareholders who view the buyouts as undervaluing their companies. Read more of this post

A misleading model: Low bond yields have in the past been bad, not good, for equity returns

A misleading model: Low bond yields have in the past been bad, not good, for equity returns

Aug 3rd 2013 |From the print edition

BULLS tend to find all sorts of reasons for forecasting a higher stockmarket. This is especially true of investment-bank strategists, whose bonuses are likely to get bigger when share prices are rising. Low bond yields are often seized on by equity bulls. A recent research note from Deutsche Bank, for example, suggested there was a straight trade-off between changes in bond yields and the valuation of shares, in the form of the price-earnings ratio or “multiple”. Lower bond yields mean a higher multiple; based on current yields, shares are cheap. It is all remarkably reminiscent of the so-called “Fed model”, much loved by bulls in the 1990s. The model was based on a reference in Alan Greenspan’s 1997 congressional testimony to the close relationship between the ten-year bond yield and the earnings yield (the inverse of the price-earnings ratio) on the S&P 500 index. If the earnings yield was higher than the bond yield, then equities were cheap. Bond yields and earnings yields did indeed seem to move in tandem for about 15 years, and then the relationship broke down completely at around the turn of the century (see top chart). Read more of this post

Thrice-bailed-out Dexia suffers fresh loss

August 7, 2013 10:38 am

Bailed-out Dexia suffers fresh loss

By James Fontanella-Khan in Brussels

Dexia, the Franco-Belgian bank that was one of the biggest victims of the financial crisis, suffered further losses in the first half of 2013, raising fears in Paris and Brussels that the troubled lender could further impact their recession-hit economies. The thrice bailed-out bank on Wednesday reported a net loss of €905m in the first half of 2013, despite enjoying lower funding costs. In the same period a year ago it lost €1.17bn. The performance of Dexia is being closely watched by French and Belgian authorities as their governments own most of the residual bank. They two countries were forced to inject €11bn in fresh capital and provide €90bn in state guarantees to save the bank in the aftermath of the 2008 crisis. Luxembourg also participated in the bailouts but to a lesser degree. Further losses at Dexia – once the world’s biggest lender to municipalities – raises the prospect of fresh capital injections or state guarantees from France and Belgium. Read more of this post

India to milk advantage from curbs on New Zealand dairy products; Nearly 90% of China’s $1.9 billion in milk powder imports last year originated in New Zealand

India to milk advantage from curbs on New Zealand dairy products

5:39am EDT

By Rajendra Jadhav

MUMBAI (Reuters) – India, the world’s biggest milk producer, hopes to seize on a New Zealand dairy product contamination scare to increase its exports and add market share in China and other emerging Asian countries. India’s milk production is likely to rise almost 5 percent in the year to next March to 133 million tons, said R G Chandramogan, managing director of Hatsun Agro Products Ltd, one of the country’s leading milk powder exporters. Traditionally, most of that production stays at home as a protein staple for a population of 1.2 billion, but with domestic demand pegged at around 128 million tons, there should be more milk available to make skimmed milk powder (SMP) for export. The Indian government also usually restricts overseas sales to keep a lid on local prices. Read more of this post

Build it and they might come: A planned Thai mega-project in Myanmar runs into difficulty

Build it and they might come

A planned Thai mega-project in Myanmar runs into difficulty

Aug 3rd 2013 | BANGKOK AND DAWEI |From the print edition

THE Burmese city of Dawei lies 350 kilometres (220 miles) west of the Thai capital, Bangkok. The two are separated by a stretch of mountainous jungle and have never been connected. But over the past five years, Thailand’s biggest construction company, ItalianThai, has cut a swathe through the jungle which, once paved, will cost roughly $1m per kilometre of road. The plan is that it will connect Bangkok with a $50 billion industrial hub and deep-sea port at Dawei on the Andaman Sea.

The project was set in motion by Thaksin Shinawatra, a former Thai prime minister, who was overthrown in a military coup in 2006. When he proposed it he was still in power and it was seen by many as a vanity project that would never get off the ground. After the Burmese government started to open up two years ago, some concluded that Mr Thaksin was in fact a visionary. But although Yingluck Shinawatra, Mr Thaksin’s sister and Thailand’s current prime minister, is soon due to inaugurate the border checkpoint on the road, financial difficulties are once more calling the project into question. Read more of this post