90 seconds at 9 am: Apple bites

90 seconds at 9 am: Apple up after beating Samsung in patent case and applying to ban S series phones; Spain braces for 21% GST rate; China eyes export rescue

28th Aug 12, 9:01am by Bernard Hickey

Here's my summary of the key news overnight in 90 seconds at 9 am, including news markets remain subdued ahead of this Friday night's speech by US Federal Reserve Chairman Ben Bernanke at a central bankers symposium at Jackson Hole in Wyoming.

Some economists warn the markets' expectations of strong signs of more money printing may be dashed. Stocks have risen 10% since June on talk both America and Europe would print more money to buy government bonds and reduce longer term interest rates. See more here at Bloomberg.

Meanwhile, Apple shares rose 2% to near record highs overnight after it was awarded US$1 billion in damages from Samsung in a patent infringement case in America. Apple has now applied to ban Samsung's S series phones from sale in America. See more here at Bloomberg.

The S&P 500 closed flat, but the Dow was down 0.3%. The New Zealand dollar was marginally lower at 80.8 USc.

Elsewhere, German Business confidence fell in August for the fourth straight month as the Euro-zone debt crisis continues to drag on activity. See more here at Bloomberg

In Spain, consumers are bracing for an increase in its GST rate to 21% from 18% on Saturday as news emerged of a 25% slump in spending on pharmaceuticals after the withdrawal of a state subsidy. See more here at Bloomberg.

In China, Premier Wen Jiaobao urged fresh measures to support exports to help meet economic targets as China heads for a hard economic landing. See more here at Bloomberg.

(Updated with details)

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41 Comments

by Andrewj | 28th Aug 12, 9:08am 1346101707

Bernard, you missed the local news,

And he's worth every bloody penny

>>>>>>

Paul Reynolds appears to have been paid about $13 million in cash and shares during his final year with Telecom.

Almost $11m of cash payments included his final year's salary of $1.9m, two years' worth of short-term incentives totalling $4.8m, a $1.75m termination payment, a $2.1m long-term incentive payment that was paid out early, and $331,000 in special payments.

http://www.stuff.co.nz/business/industries/7558407/13m-makes-Reynolds-y…

by Kunst | 28th Aug 12, 9:27am 1346102877

Price increase for consumers.

Managers responsible of Telecom or other companies who make such, unethical, enormous payments should be sacked and go to jail for a few years – at least.

by David George | 28th Aug 12, 10:03am 1346105027

Nice for Reynolds. Make a complete pigs ear of running the company, numerous cock ups and loose 50% of shareholder value then walk off with a substantial fortune. To add insult to injury, and not reported in the link, a meaty tax cut worth an additional 6% of income. The tab to be picked up with a tax rise for our paper boys and girls plus flogging off irreplaceable national assets.

I'm fed up with this Government. The dotcom raid, Warners re-writing our labour laws, sleazy back room deals over the TPP, asset sales - it's plain as day where their loyaltys lie,

The latest thing is they are looking at re intruducing the resrtictions on parallel importing. The (entirely reasonable) suspicion is that the US multinationals want this as part of the TPP.

Why do we even need a Government, I'm sure Sinopec, Warners and McDonalds are quite capable of running the country. Oh wait, they already are!

by Stephen Hulme | 28th Aug 12, 2:01pm 1346119300

I thankfully am not one who supports an out moded, out dated, monopolistic, over rated dynesty, with a vested interest in the POOR SERVICE...they eschew.

Aren't Telecom one if not the main partner of the government funded national fibre optic high speed internet roll out?

by Christov | 28th Aug 12, 9:31am 1346103070

Well there's a twist, (no pun Intended, yet)......... are these the same markets and journo's adamant for the last month that QE was a given , factored in..?

Yourself incuded for some time now Bernard , almost as if it were to be celebrated confirmation of Bernake's shortcomings.....................sigh eh..?

You know the speculative markets take the hit if the helicopter doesn't fly on a spray it everywhere mission.......

And so they rightly should, as that is the nature of speculation.

by Andrewj | 28th Aug 12, 9:45am 1346103950

http://market-ticker.org/akcs-www?post=210729

by offcut | 28th Aug 12, 9:50am 1346104225

How about we drug test all beneficiaries; including all those of the South Canterbury Finance bailouts, all Telecom shareholders and employess who are being bailed out of their lack of re-investment in their business via the govts boadband rollout, the farming community that benefits from a lack of cost recovery of environmental degradation (postponing Carbon tax initiative), Doctors for whom the major player is govt subsidies, drivers who benefit from subsidised roading projects...etc etc.

The Govt guarantee for the banks etc during the early days of the financial turmoil surely must make banks beneficiaries? Therefore all their employess!

Government has so many dependants these days; the best game in town is to circle the Beehive (lobbyists )and contrive to get favours (legislation) to favour your sector.

Yes indeed lets line up the beneficiaries in this economy and get some drug testing under way. Your turn Ms Bennet. Midstream please!

by Andy Rodgers | 28th Aug 12, 10:56am 1346108218

offcut -That's a very perceptive comment.

by offcut | 28th Aug 12, 9:51am 1346104317

Oops wrong place. I better get tested :)

by Kate | 28th Aug 12, 10:04am 1346105069

I imagine we'll get to 20% GST in the next couple of years.

At that point, I'll start up a 'farm tour' operation with a coffee shop facility :-).

by steven | 28th Aug 12, 10:14am 1346105648

Problem is GST a regressive tax, ie the poor are impacted the worst and they actually have the least (if any) spare money. So all that really happens is with a higher GST they buy less essentials.....the very things like food that are also getting more expensive.

So while yes I think taxes will increase its going to be focused at the top....like the UK a new higher rate, probably a lot higher 50% maybe 70%. The thing is, at that end the things like whiteware and TVs are getting cheaper so if you have disposable income your money goes further....let alone the obscene pay they have now and the increases. That cant last IMHO. There will be a voter revolt if only at the ballot box, take Greece extremists get votes becase the main parties are such losers.....I think that will be a trend....Here we are milder, more voted Green....I thought it might be a one off, now Im not so sure.......

regards

by steven | 28th Aug 12, 11:01am 1346108508

Here we go, trot out the libertarian dogma....

I often think this site should claim religious status and go for a tax free status....most of what's printed here is religiuous mumbo jumbo anyway.

In terms of stalling the economy with higher taxes, there is enough examples and info out there to say that isnt a supportable statement.

regards

by Gummy Bear Hero | 28th Aug 12, 12:47pm 1346114848

...... I often think that too , when the " watermelon men " trotsky out their spiel on " peak this " and " armageddon " that ......

Maniacal Malthusian Luddite Religious Zealotskies !

...... I then I think , " steady on , Gummy , old bean , we can't all be on the right , some have to balance things out by being on the wrong , and voting Labour-Green " .....

Bless 'em , the little pinkies ....

by steven | 28th Aug 12, 12:51pm 1346115106

Excellent Gummy, dilusioned as always.....hope you get a big discount off prozac.....

regards

by steven | 28th Aug 12, 7:36pm 1346139364

Well lets start by looking at the opposites, low taxes Bush years, nice low taxes economy went no where, Clinton years high taxes economy did quite well.

http://krugman.blogs.nytimes.com/2012/08/01/dooh-nibor/

"the Romney people respond with deep voodoo, invoking the supposed fabulous growth effects from his tax cuts. And who could argue? Remember how the economy tanked after Clinton raised taxes? Remember how great things were after Bush cut them? Oh, wait."

Lets see high taxes that work, well Sweden.

In terms of stalling, well cutting taxes should have boosted the Bush years it didnt happen....we are in a second gilded age where the top 1% have taken all of the profit of the last 30 years...if you want to continue in la la land, well fine.

regards

by Kate | 28th Aug 12, 11:18am 1346109480

Just curious - in NZD terms can you put some numbers around what you consider poor, middle class and wealthy, not in income, but in stored capital, i.e. asset terms?

Since the introduction of PAYE I believe we have made the mistake of thinking about wealth and subsequently taxation, principally in terms of income (and profit), rather than real wealth. As I see it, real wealth is a 'store' or 'excess' (of money and/or capital/assets) to that required to maintain a healthy, comfortable life for oneself and ones dependents.

You see if Paul Reynolds, for example, takes his $10m+ golden handshake just earned and spends it all in Harvey Norman's on the weekend - well I'd have no problem if he paid minimal tax on that income. But, he likely won't - he'll invest that excess in some capital/asset within a framework of tax minimisation - and that's where wealth redistribution effort needs to be targeted in my opinion - those large (very large) capital stores; whether they be individual or corporately owned stores of wealth.

by powerdownkiwi | 28th Aug 12, 7:05pm 1346137524

No. 'everything else' can happen with either zero-deposit funding, or no funding at all (just goodwill).

You have to realise that, overpaid as he might have been, he still actually did something. That beats computer trading on splits, by an infinite percentage.

by powerdownkiwi | 29th Aug 12, 8:28am 1346185727

Last I heard, you were in debt.

Yet you talk of 'putting liquidity in'.

Maybe I'm too used to dealing with the real.

by Kate | 29th Aug 12, 8:55am 1346187311

Yes, as I understood it, mist, your strategy is to 'diversify' your debt and to deploy it to speculate (gamble) as a means to pay off debt.

Not wanting to degrade or demean the intention of the borrowings - but I watched alot of folks do just that in the 'heady' end of the 80s (the time our dear leader was practicing his trade at Elders) who didn't come out of the exercise at all well.

Even more so now - I don't think the little guy has a hope in hell of calculating a calculated risk. Remember, fairies are in charge.

by JackJill | 29th Aug 12, 2:08pm 1346206116

Its pretty obvious to me you see money as an organising tool, a way to have things done. Not everyone sees it this way- that's the conflict here.

by JackJill | 29th Aug 12, 3:13pm 1346210036

"they just have yet failed to find a non-parasitic way to have an alternative."

this is the core battle that goes on here, who and whom are the parasites and what system is best to kill or host the parasite!

by JackJill | 29th Aug 12, 1:51pm 1346205070

Did the chicken or the egg come come first?

All PDK and you are doing is arguing about is which came first, energy/money, and which is more important. They are both connected!

by Kate | 28th Aug 12, 7:35pm 1346139337

that's where all the borrowing comes from to fund everything else

Oh pleeeeease, mist ... tell me you are not suggesting you "believe" in some kind of robust, functioning, transparent and well regulated system of fractional reserve banking?

by Kate | 29th Aug 12, 8:21am 1346185307

But unfortunately that is what most people think the system is.

I'd have said unfortunately that is what most people don't realise the system is. The fairies gave everyone infinite credit and didn't worry about reciprocating transactions which saw the other fairies step in to give their fellow fairies the other end of the transaction from some mythical future place.

Which is why the 'fairy keepers' have conjured up the new 'magic potion' of an OBR here in NZ.

So, in conclusion - no, Mr Reynolds' bonus won't have one iota to do with 'funding everything else'. It serves one and one only person in the real world - him.

http://en.wikipedia.org/wiki/Criticism_of_fractional_reserve_banking

by JackJill | 29th Aug 12, 2:20pm 1346206831

"'I'd have said unfortunately that is what most people don't realise the system is."

That's just a junk argument. Do you know that reynolds number lift coefficient to fly on an aeroplane. most likely not and it doesn't matter.

by JackJill | 29th Aug 12, 7:01pm 1346223712

sure - but most people are passangers - salary earners - not the captain or plane builder.

'No one' would fly if you needed a pilots license to use a commercial airliner. You could argue that if everyone knew how to fly then flying would arguable more safe but it aint going to happen!

by Stephen Hulme | 29th Aug 12, 7:28pm 1346225289

well how healthy is AirNZ at the moment......

Depends on the cycle and cost of it's aircraft leases in relation to the ability to sustain profitable fares when an indifferent (oil financed) new low cost lease competitor tries to undercut it. Falling interest rate environments are always dangerous for this type of company.

I guess that is why it costs $900 to fly Wellington to Taupo but only $50 to Auckland. Farming communities have to subsidise city types - all for the greater good I suppose- not that I fly at all anymore.

by Kate | 29th Aug 12, 5:11pm 1346217117

Yes, mist, it was a delightful analogy - and very appropriate given the additional comment on their historical nature! :-) :-)

by Kate | 28th Aug 12, 10:56am 1346108174

Well you're only stating the obvious - but if I look at the various "austerity" measures being discussed the world over - they consist mainly of:

- higher consumption taxes

- state asset sales of natural monopolies

- increased withdrawl of the state from social service provision

- increases in co-pay for socialised medicine, housing, education etc

- trend toward PPP and contracting out by governments

- increased subsidies for inept lending practices

- increased bonuses and remuneration for private and public sector CEOs - loss making and incompetent ones included.

And mounting excuses (or simply off the agenda) comprehensive capital tax, financial transaction tax, increased income tax at the very high end, high end salary caps, regulation of senior executive bonuses, higher minimum wages, quango axing, means tested super, public money, strengthening criminal prosecution and cost+ reparations for proceeds of blue collar crime (including inept lending practices), unwinding of trust provisions etc etc.

For example, on state asset sales - I constantly ask myself - why are we selling the assets of our electricity companies instead of say, Landcorp? Every NZer does not directly use the goods/services produced by Landcorp - is is not a natural monopoly (quite the opposite, it competes with private landholders in our largest export sector) - it serves no purpose other than keeping the price of agricultural land high. It is, in my opinion, an indirect subsidy to the inept lenders - who in the main, take their ever rising profits offshore.

by steven | 28th Aug 12, 11:08am 1346108888

Hi,

"mainly" yes well thats because of the right wing political dogma that seems to dominate western politics though,

The UK I think introduced a higher tax bracket....

Interesting that we are seeing PPPs raise their ugly heads here, yet these are a disaster anywhere you look...really its stealth tax by the back door. We will pay more just there are private ticket clippers jumping in....all in the name of efficiency, sadly it seems the voter falls for it.....amazing how shallow it is.

regards

by Kate | 28th Aug 12, 11:23am 1346109790

The UK I think introduced a higher tax bracket...

On income - wrong target IMO.

by steven | 28th Aug 12, 11:55am 1346111755

why wrong target? I dont follow you....

regards

by Kate | 28th Aug 12, 12:02pm 1346112149

Target redistribution efforts at redistribution/redeployment of capital stores.

by steven | 28th Aug 12, 11:09am 1346108973

Landcorp, Air NZ etc, certianly Air NZ is losing money or will do, I really dont see why its not sold becau eits a loss to private enterprise who should then make it efficient...

Like I said dogma.

more fool us.

regards

by Andrewj | 28th Aug 12, 11:14am 1346109288

THE CATASTROPHIC CONSEQUENCES OF ILLUSION

http://www.theburningplatform.com/?p=39601

by Kate | 28th Aug 12, 11:55am 1346111715

Very interesting. Worth the time.

by steven | 28th Aug 12, 12:05pm 1346112329

yes, great piece, I dont know whether to say its obvious or insightful.....

regards

by Plan B | 28th Aug 12, 11:46am 1346111163

Maybe near the end for Apple? Protecting joke patents in the US is big business for big business, but may mean little in growth markets maybe. Rounded edges and glass to edge of screen? wow. Icons- wow Is that all? Will anywhere else in the world back them up on this- not likely. Probably could only get a win like this in the US. Maybe Samsung will stop supplying Apple- now that would be interesting.

by Neville C | 28th Aug 12, 12:03pm 1346112238

Apple may have scored an own goal. The case has shown the Apple fanboys that they can get an 'Apple' phone at half the price! The case involved the older products, it doesn't include the Galaxy S3.

by Stephen Hulme | 28th Aug 12, 12:12pm 1346112749

Apple shareholders indicated the end is nigh when they opted to pay themselves dividends for the first time earlier this year. This round of shenanigans is a feeble/failed attempt to extend the payment stream as long as possible.

Samsung won hands down - As some one else pointed out they are now the recognised premiere Apple competitor. The $1 billion was cheap for such an unequivocal declaration.

by powerdownkiwi | 28th Aug 12, 7:00pm 1346137258

Wilbur Wright stopped developing his aircraft, and turned to defending his original in court.

Didn't work. You need to stay in front.