Draghi Jackson Hole Speech Marks Turning Point in Rhetoric: Barc

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Draghi Jackson Hole Speech Marks Turning Point in Rhetoric: Barc 2014-08-24 20:15:49.477 GMT

By Madeleine Lim Aug. 24 (Bloomberg) -- Draghi emphasis on need for stimulus both on supply and demand side probably marks first time ECB president has argued for boost to aggregate demand, Barclays economist Philippe Gudin wrote in note. * Major breakthrough with 1st time reference to “overall fiscal stance of euro area,” implicit recognition that some countries, particularly Germany, could run expansionary policy * Draghi sided with France, Italy, which have argued for more flexibility rather than Germany * Favors euro area budget for large public investment program * Explicit mention of medium-term inflation expectations, in part. 5y5y inflation swap rate below 2%, as cause of concern for ECB signals potential for more near-term action * Chances for outright QE as next step have increased, though still not expected before year-end

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Jackson Hole Message Is Labor Markets Don’t Justify Higher Rates

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BN 08/24 17:11 Jackson Hole Message Is Labor Markets Don’t Justify Higher Rates

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Jackson Hole Message Is Labor Markets Don’t Justify Higher Rates 2014-08-24 19:58:13.732 GMT

By Jeff Kearns and Simon Kennedy Aug. 25 (Bloomberg) -- Global central bankers led by Federal Reserve Chair Janet Yellen said labor markets still have further to heal before economies can weather higher interest rates. * Signaled international monetary policies are set to diverge as economic recoveries increasingly differ, while placing jobs at center of decision-making by saying stronger hiring and wages are still needed to drive demand * Focus on jobs suggests Fed, BOE to tighten policy within a year as their economies show signs of strengthening; in contrast ECB President Mario Draghi, BOJ Governor Haruhiko Kuroda acknowledged they may be forced to deploy fresh stimulus * Story Link:NSN NATMFK6JIJUP<GO>

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Less Dovish Fed Speak Heightens Risk of Market Shock: G+ Econ

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Less Dovish Fed Speak Heightens Risk of Market Shock: G+ Econ 2014-08-24 20:25:27.427 GMT

By Madeleine Lim Aug. 24 (Bloomberg) -- Investors will begin to price out financial repression by raising risk premiums on front-end UST yields, exiting global EM carry trade, G+ Economics chief economist Lena Komileva writes in note. * Yellen signaled in Jackson Hole speech Friday that fighting “labor deflation” no longer a policy concern, which means Fed’s room for extended monetary stimulus is diminishing * Dilutes “considerable time” commitment for keeping rates low; shift toward policy normalization means end to Fed’s low-vol policy framework, in which markets still remain highly invested * Even small shifts in Fed language in more hawkish direction may have large ripple effects on global markets

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>>> What to look at this week end



Macro
- Greek Banks Can Use Greek Bonds for ECB Funding: Kathimerini
- Sapin Says Euro Area Risks Spiraling Contraction: Repubblica

Keep an eye on :
- AIR FP : Airbus considers sale of Atlas Elektronik stake; could prompt new bid from Thales
- AIR FP : Galileo Satellites Missed Targeted Orbit, Arianespace Says
- BBY LN : Balfour May Boost Its Infrastructure Investments: Sunday Times
- BG/ LN : said to be in talks to sell stake in Tanzanian Gas Field (BG hold 60% stake in Block 3)
- BELG BB : Bpost/Belgacom stake sale not a priority for Belgian government
- BKIA SM : Spain Won’t Sell More Bankia Shares Before October, EP Reports
- BPOST BB : Bpost/Belgacom stake sale not a priority for Belgian government
- POG LN : Said to be in talks with a China state bank regarding possible bailout
- ROG VX : Roche Agrees to Buy Intermune in $8.3b Transaction, 38% premium vs Fr. close
- RTL BB : RTL Group Should Pay its Taxes, Hungarian Government Says: WSJ
- SIE GY : Siemens Aims to Make Offshore Wind Farms Cheaper: Handelsblatt
- TEF SM : Telefonica Considers Raising Bid for Vivendi’s GVT: Messaggero {NSN NAR3AZ6TTDS0 <go>}
- UCB BB : Actavis Confirms Patent Challenge for Generic of UCB’s Neupro
- VIV FP : Vivendi Well-Placed With Offers From GVT Suitors, Investir Says {NSN NARC8H6TTDS0 <go>}
- WPP LN : WPP’s Russia Profit to Fall Over Ukraine, Sorrell Tells Express

FT : Jawbone device would let you wear your life on your sleeve

Jawbone device would let you wear your life on your sleeve

You walk into a bar. The lights dim and the music swells as the sensor on your wristband detects a compatible soul on the other side of the room. It also knows that you are at high risk of developing diabetes within two years.
Jawbone, the wearable devices company, is working on technology to make such scenarios possible, according to multiple patent applications that it has filed in Europe and the US.

The patents, which are being pursued by BodyMedia, a wearable healthcare group Jawbone bought in April, relate to what the company calls “lifeotypes” – unique profiles of individuals that combine real-time fitness data with other information such as health records, an individual’s mood or online purchase history.
The data profiles, which could be used for a variety of purposes from dating to predicting illnesses, are likely to have highly controversial privacy and data protection implications.
Jawbone’s lifeotypes are similar to the “master profiles” compiled by large data brokers such as Acxiom, which encompass hundreds of details about each of the more than 700m people in Acxiom’s database.
In May the US Federal Trade Commission called for tighter regulation on the data broker industry after a 17-month investigation found that they created categories that focus on health conditions such as pregnancy, diabetes and high cholesterol.
Last year the Financial Times revealed that many of the top fitness apps were selling information to around 70 third-party companies.
Jawbone declined to comment on the lifeotype technology “for commercial reasons”.
Patents do not necessarily signal that companies will launch a product, and the Jawbone documents are worded speculatively, suggesting the product “could” or “may” contain certain features.
However, Kathleen Fox-Murphy, a European patent lawyer at London-based law firm Taylor Wessing, said Jawbone’s patent applications were “pretty complex and extensive”.
“They have probably done quite a lot of technical work on the system for creating lifeotypes, and can see it has wider scope, but they haven’t necessarily developed all the features they mention.”
The system involves generating “lifeotype” profiles from pieces of data known as “life bits” and then more complex data-sets known as “life bytes”.
The patents draw analogies with how genes encode physical and other traits. In one example, they describe a life bit being the position of a person’s body at a point in time, the life byte being that they stand more than sit, and then the relevant lifeotype being “a runner with low bone density, hypertension and diabetes”.

WSJ : Apple's Next Act for the iPad

Apple's Next Act for the iPad

Apple's AAPL +0.74% next iPhone may hog the spotlight in coming weeks, but don't forget the iPad.

It is tempting to relegate Apple's tablet—its second-biggest business—to a sideshow, given stagnant growth. Unit sales have slipped in the last two quarters year over year and analysts expect a similar trend in the current period.

This is hardly peculiar to Apple. Tablet sales across the globe have slowed significantly, growing only 8.4% year over year in the second quarter versus 58.5% in the same period last year, according to IDC. Still, the recent trend seems like a rapid meltdown for the company that essentially invented the modern tablet market. But if this is a problem for Apple, it is a relatively high-quality one.

The company still has the largest market share in tablets, and takes an even larger share of the profits. IDC estimates that Apple accounted for about 28% of global tablet sales in the second quarter, with Samsung coming next at 18%.

Part of the reason tablet sales have declined is that, compared with smartphones, most tablets carry a higher price tag and have a longer replacement cycle. Analysts now model a three-to-four-year replacement cycle for tablets compared with a two-year cycle for smartphones. It also is worth noting that most tablets—iPad included—sell without the subsidies from wireless carriers that help keep gross margins on the iPhone at around an estimated 50%.

Apple has made clear it isn't giving up on tablets. Nor should it.

The company has essentially locked up the premium corner of the business, as evidenced by lackluster sales of nearly every other high-end tablet. Companies that have managed to take some of Apple's market share have done so at a cost, selling at much lower price points that leave those devices with thin margins.

For instance, Lenovo saw the sharpest unit sales growth during the second quarter in the tablet market, according to IDC. Its best-selling tablet on Amazon.com AMZN -0.40% is currently priced at an about 53% discount to the cheapest iPad with comparable specs.

Apple's premium pricing likely means its market share will continue to decline as more competitors flood into the market's low end. Apple and Samsung saw their combined market share decline in the second quarter, thanks in part to a strong uptick from so-called white-box manufacturers making inexpensive tablets for markets such as China, according to data from NPD DisplaySearch.

But Apple needn't control the market for the iPad be an important—and profitable—business. In fact, the average selling price for the iPad rose nearly 2% year over year in the June quarter despite a 9% decline in unit sales in that time. UBS estimates total iPad gross margins reached 30% in the quarter compared with 25% in the December period.

For Apple, the iPad is about more than just unit sales, as the device also provides an important extension for the company's iOS platform. Revenue from iTunes, software and services grew 14% year over year for the nine-month period ended June 28—Apple's fastest-growing segment in that time.

Morgan Stanley estimates that Apple's platform generates about $1 of revenue per user a month, with gross margins that are now accretive to Apple's overall margin. This means the bigger end-goal for Apple is likely going to be drawing more revenue out of users, rather than just relying on design tweaks to boost hardware sales.

Apple is already rumored to be producing its next iPad for a potential launch this fall, and is also working with IBM IBM -0.43% to develop apps and services geared to businesses. Chief Tim Cook said on the company's most recent earnings call the tablet category is still in its early days, and the company plans to bring "significant innovation" to the iPad.

That may give the pioneering tablet another turn in the spotlight.

>>> BoE's Broadbent: It is possible that weak growth in pay in the UK could cont

BoE's Broadbent: It is possible that weak growth in pay in the UK could continue - Jackson hole symposium 
- Notes that goals for financial stability do not conflict with goals for inflation and growth 
- Have no intention of raising interest rates until the UK can see strong wage growth, wage growth not expected to pick up any time soon despite skills shortages 
- MPC less confident about any forecast of productivity growth over the next few years and meant that output data are no longer sufficient statistics for inflationary pressure 
- Employment has grown significantly faster and nominal pay growth has been much weaker that wed expected: during the first half of 2014, annual growth in average earnings has been around four standard deviations lower than one would have expected, given the level of unemployment and the Phillips-curve relationship between the two during the first twenty years of inflation targeting 

>>> Barron's Summary: Positive on HAS, ANF, AAPL, TRP, BG, HD, PKX; Cau

Barron's Saturday Summary: Positive on HAS, ANF, AAPL, TRP, BG, HD, PKX; Cautious on SHLD, APA 

Cover story: Pressure on PEP to spin off thriving Frito-Lay snack-food business is growing, led by activist investor Nelson Peltz of Trian Partners, who thinks move would help stand-alone beverage business improve margins; some investors, such as Robert Burnstine of Fairpointe Capital, disagree with spin-off idea, noting existing synergies are helpful to both sides of the business. 

Features: Positive on HAS: Toymaker's franchise brands, such as Transformers and My Little Pony, are thriving, and shares could return 20% in a year, including a 3.3% yield, making it a better play than MAT despite their similar price-to-earnings ratios; Positive on TRP: Canadian company offers a good alternative to MLPs, has a number of strong projects in the works, and generates lots of cash; a separation of the pipeline and power-generating assets could put shares as high as $86; Positive on BG: Agribusiness company's new CEO is trying to smooth its volatile performance, and steady earnings gains could boost shares by 15%. 

Tech Trader: Positive on AAPL: Company has long focused on having users keep photos and music stored locally on its devices, but there are signs it is beginning to prioritize the cloud, which could be a long-term rainmaker if Apple can charge monthly fees similar to those of services such as Spotify or Dropbox. Notes that Apple's stock price has reached a recent high, and has messed up its Cloud offerings in the past but this time could be different. 

Trader: Positive on ANF: Company is doing better than rivals AEO, BKE, URBN, and ARO to change course in difficult teen apparel sector, closing stores and ramping up online operations while adding more independent voices to the board; Positive on OKSB: For investors looking for an out-of-the-way stock to play a rebound in banking sector, company could prove profitable. 

Hedge Funds: Interview with Joel Greenblatt, Manager, Gotham Asset Management (top five long holdings: ENR, SAFM, BG, AXE, CAT; top five short holdings: SUSS, THC, BOBE, KMT, TMO); Interview with Tad Rivelle and Laird Landmann, fixed income investment executives at TCW, who say "There is not a lot of upside to being long rate-and there certainly could be a lot of downside if there is a shock to the market." 

Follow-Up: Positive on HD: Retailer is poised to benefit from boost in housing starts and applications for building permits, and its operating margins are better than those of rival LOW; Cautious on SHLD: Until retailer stops losing money, spinoffs and issuance of commercial paper or second-lien debt won't solve any problems; Cautious on APA: Potential plan to shed international assets and an ease on capital spending haven't boosted the shares, which still trade at a discount to those of rivals. 

European Trader: Though recent merger attempts and other deals in European pharmaceutical sector have led to stocks outperforming the broader European market, rise due to M&A speculation may obscure the failure of many companies to address important structural issues; NVS has probably gone farthest to address problems. 

Asian Trader: Positive on Posco: The worst may be over for Korean steel giant, which has been bogged down by overcapacity, falling margins, a strong won, and a weak global economy; its shares are up 19% over the past ten weeks. 

Emerging Markets: Positive on Grupo Financiero Banorte: Mexican bank has a sizable government and corporate lending business, and is well positioned to expand its commercial and consumer loan portfolio as reforms take root in country. 

Commodities: U.S. orange production and juice sales are both sliding, yet futures prices have gained 5.9% this year, and lower prices are not on the horizon. 

CEO Spotlight: Profile of MAR chief Arne Sorenson, who works to strike the right balance between a global brand and local needs, and who says his biggest imperative is forging a bond with a younger generation to keep the brand thriving. 

Streetwise: Stifel Nicolaus strategist Barry Bannister has increased his year-end target for the S&P 500 by 450 points, to 2300, making him the most bullish analyst on the Street.