• Qualcomm Rallies on Fine News
    Posted by on February 10th, 2015 at 11:20 am

    Qualcomm ($QCOM) is reacting well to yesterday’s news. The stock briefly broke $70 per share this morning. Until the recent rally, Qualcomm had fallen $20 in six months.

    big.chart02102015

  • Morning News: February 10, 2015
    Posted by on February 10th, 2015 at 6:57 am

    U.S. Warns G20 Against Using Exchange Rates to Boost Exports

    Greek Negotiators Should Learn a Little From Britain

    China Fines Qualcomm Record $975 Million in Anti-Monopoly Case

    Netflix Offers Streaming Video in Cuba

    Russia Faces Battle Over Billions in Oil Taxes After Crude Slump

    Oil Falls as IEA Warns Stocks May Hit All-time High

    UBS Profit Boosted by Tax Gain

    HSBC Could Face US Legal Action Over Swiss Accounts

    SoftBank Struggles With Burden of Sprint

    Canon to Offer $2.8 Billion Bid for Sweden’s Axis AB to Venture Into Surveillance Products Market

    Huge Solar Farm Opens in California: Enough Energy for 160,000 Homes

    Spain Airports Valued at $9.8 Billion Ahead of Partial Sale

    Roger Nusbaum: Financial Rules For a Simpler, Happier Life

    Jeff Carter: Should Startups Ever Merge?

    Joshua Brown: Lost Shark Tank Pitches

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  • Qualcomm to Pay $975 Million Fine
    Posted by on February 9th, 2015 at 4:52 pm

    Earlier today, I noted that Qualcomm ($QCOM) was nearing a final deal with the Chinese government to pay a massive fine to settle charges of “anti-competitive” practices. The stock opened at $68 this morning, nearly hit $69, then slowly slid back to $67 as the day wore on. Still, the stock gained a little over 1% on the day.

    After the close, Qualcomm announced that it has indeed reached a deal with China. The price tag is $975 million. That works out to about 60 cents per share.

    Qualcomm Inc said on Monday it agreed to pay China a fine of $975 million, ending a 14-month government investigation into anti-competitive practices.

    The deal also sees chip-maker Qualcomm lower its royalty rates on patents used in China, the company said in a statement.

    Discussions in Beijing over one of the most contentious cases under China’s 2008 anti-monopoly law had intensified in recent weeks, culminating in meetings between Qualcomm senior executives and National Development and Reform Commission (NDRC) officials on Friday.

    Investors seem relieved. I know I am. The stock is back above $68 in the after-hours market.

  • Value Vs. Growth Since 1979
    Posted by on February 9th, 2015 at 2:51 pm

    I’m glad to see that FRED, the St. Louis Fed’s Data Library, has added the Russell indexes to their database. Here’s a look at the Russell 3000 Value Total Return Index divided by its Growth counterpart:

    Value has indeed beaten Growth over the long run but the premium hasn’t been terribly impressive, about 1.3% per year. Since 1988, it’s run about 0.6%. (That’s Value over Growth, not over the entire market.) Perhaps more surprising is how volatile the Value premium has been. In fact, there have been 20-year stretches where Growth has outperformed. We’re currently in a 12-year winning streak for Growth.

    Value does work, but it takes a lot of time.

  • Qualcomm to Pay Massive Fine
    Posted by on February 9th, 2015 at 9:08 am

    This has been building for a long time but it appears that Qualcomm ($QCOM) is about to pay the government of China of a massive fine for “anti-competitive practices.”

    There’s not much Qualcomm can do except pay the fine. The stock may rally simply on the news that this matter may finally be resolved. Reuters reports:

    Qualcomm Inc is likely to pay China a record fine of around $1 billion, ending a 14-month government investigation into anti-competitive practices, after the U.S. chipmaker and the regulator made significant progress during talks last week.

    The deal, which may also see Qualcomm lower its royalty rates by around a third on patents used in China, could be announced as soon as Monday, a source said.

    Discussions in Beijing over one of the most contentious cases under China’s 2008 anti-monopoly law have intensified in recent weeks, culminating in meetings between Qualcomm senior executives and National Development and Reform Commission (NDRC) officials on Friday.

    Qualcomm’s fine would be the largest paid by any company in China. The company would also agree to make changes to its licensing practices, though those are not expected to alter its business model.

  • RT Must Be Ostracized
    Posted by on February 9th, 2015 at 8:57 am

    I was recently invited to appear on the RT television network to discuss financial markets and the economy. I declined, and I wanted to explain why. RT is not an ordinary news network, as you might think of one. Instead, it’s a propaganda arm of the Russian government, and they peddle the most absurd programming. RT regularly features Holocaust deniers, 9/11 Truthers and tinfoilers of all stripes, and it’s slickly packaged as regular news. I won’t even mention the oleaginous crank Max Keiser.

    But my favorite is Karen Hudes, whom RT has interviewed a few times. RT calls Hudes a World Bank whistleblower, but they neglect to discuss some of her more colorful beliefs. For example, Ms. Hudes believes the world is secretly controlled from the Vatican by Homo Capensis, a large-brained, non-human species. The bishops’ miters hide their elongated skulls.

    To be clear, I have no interest in censoring Hudes, or RT or anyone else. In fact, I share their goal of making their views far better known than they are. One of the neglected arguments for Free Speech is that allows you to shine a light on dumb ideas.

    I recently tweeted this about some of Ms. Hudes’s views. I was glad to see that Edward Lucas, a senior editor at The Economist, obliquely referred to Ms. Hudes at the recent security conference in Munich.

    We need to get back the ability to rebut and to criticize. If RT puts on people – and it does put on people who are Holocaust deniers, who think that 9/11 was an inside job, who believe that [the] Pope is a lizard – I’m not joking, this is true – we should be able to humiliate those channels and those people and the people who put them on, and the producers who put them on and push them out into the media fringes so they are no longer treated as real journalists and real programs but as cranks and propagandists.

    I think we could do a bit more of ostracism. I’m quite happy to say that if anyone puts a CV on my desk, and on that CV I see they worked at RT or Sputnik or one of these things, that CV is going into the bin and not into the intro. We would not have accepted it during the Cold War that people could move from working for Pravda, or Izvestia, or TASS, and then into jobs in Western media. Far too many people see a job at RT as the first stage on a career ladder. It’s not. It’s the last stage on a career ladder. It’s like working as a PR person for a tobacco company, but even worse. And only then would I start looking at regulatory things — and there are things we can do on a regulatory side. We have a regulated media space. In my own country, Ofcom is complaining to RT about its lack of balance. So, there are things we can do but I think those things are the last resort, not the first resort.

    He’s right. We should ostracize RT’s journalists. This should include Alyona Minkovski, a former RT-er who currently hosts HuffPost Live for the Huffington Post.

  • Morning News: February 9, 2015
    Posted by on February 9th, 2015 at 7:08 am

    Can the G-20 Deliver on Its Lofty Growth Pledges?

    Greek Markets Plunge After Defiant PM Tsipras Speech

    Alan Greenspan Says Greek Euro Exit Is Inevitable

    Crude Oil Prices Rise on Signs of Cut in US Crude Production

    U.S. Takes On Payday Lenders

    Will The Recovery Finally Translate Into Better Wages?

    HSBC Shares Decline Amid Swiss Tax Avoidance Claims

    Comcast-Time Warner Cable Deal Still Up in the Air a Year Later

    Why Alibaba Jumped Into the Smartphone Fray

    Nissan Raises Full-year Profit Forecast to $3.5 Billion

    Motorola Solutions Poised to Woo Private Equity, Contractor Bids

    Hasbro’s Holiday Quarter Profit Rises About 31%

    RadioShack Is Closing Stores, but Few Signs of Big Discounts

    Howard Lindzon: The Death of Banks…and Wells Fargo Can’t Prove They are a Bank.

    Jeff Miller: Weighing the Week Ahead: Time for “Risk On?”t

    Be sure to follow me on Twitter.

  • Just the Facts
    Posted by on February 8th, 2015 at 10:10 pm

    My pal, Josh Brown, goes all Joe Friday and lists some key economic facts. Not hopes, but facts:

    The US economy has now added more than a million net new jobs over the last three months. This was the best 90 days’ worth of hiring since 1997.

    More jobs were created in 2014 than during any year since 1999.

    759,000 people just joined the labor force and there was no post-holiday seasonal decline – it may be that temporary workers are sticking.

    Average hourly wages rose .5% in January.

    The cost of living has only risen .8% over the last year while wage growth has outstripped it, rising by 2.2%.

    21 of 50 states put through minimum wage hikes, including populous ones like NY, FL and NJ.

    US energy consumers have received a cumulative $14 billion tax cut (and counting) as a result of the oil price decline since June.

    Consumer confidence just smashed through the highest level since August 2007. Consumers are saying their “present condition” is the best it’s been since January 2008.

    Auto sales rose 14% in January 2015 versus 2014, with 1.15 million vehicles sold in the US. Auto sales are now on an annualized pace of 16.6 million vehicles, the highest rate since 2006.

    In December, commercial loan demand grew for the first time since June. Consumer loan applications and approvals are also expanding with dirt-cheap borrowing costs at levels that were previously unimaginable.

    Single-family housing starts jumped 7.2% in December to an annual pace of 728,000. This is the best level for new home groundbreaking since March 2008. There’s more on the way – single-family home building permits rose 4.5% to their highest level since January 2008.

    20% of consumers report that “jobs are plentiful” versus just 25% who say that jobs are hard to find. The differential between the two was cut in half between December and January, from -10 to -5, and shrinking.

    96% of Americans with 401(k) accounts are actively participating and the average savings rate is 12% of salary (Fidelity). Among employees contributing to a 401(k) for ten years or more, the average balance is $248,000, up 11% from the end of 2013. The average balance across all 401(k) accounts is now over $100,000 and it has doubled since the end of 2008 (Vanguard).

    US household net worth hit $81.5 trillion. This includes all stocks, bonds, properties and business values, minus any debts or liabilities. This is a new all-time record.

    I’ve always been amazed at how much good economic news upsets people.

  • Morgan’s Reading List
    Posted by on February 6th, 2015 at 9:57 am

    Morgan Housel is one of my favorite financial writers. He just compiled a list of some of the people he reads and why. I was fortunate enough to make the list.

    There are several great finance writers on the list and it’s an honor to be among them. Check it out.

  • January NFP +257,000
    Posted by on February 6th, 2015 at 8:33 am

    The jobs numbers are out. The U.S. economy created 257,000 net new jobs last month. The private sector created 267,000 jobs. The revisions for November and December added 147,000 jobs. That’s huge.

    The unemployment rate rose to 5.7%. Average hourly earnings rose 0.5% which is the biggest increase since November 2008.

    Here’s a chart of NFP over the last 20 years: