Alice Van Ness, who was hired to teach hour-long yoga sessions at Facebook's Menlo Park campus, said that she would tell students before class to turn off their cellphones.
But a female employee pulled out her cellphone in the middle of a Monday session and began texting.
The San Jose Mercury News said Van Ness didn't say anything, but she gave the student what she calls a look of disapproval.
The student later complained and Van Ness was fired by Plus One Health Management.
The termination letter said Van Ness "made a spectacle" of the student.
Amid new pressures, China prepares for immediate stimulus
Chinese Premier Wen Jiabao is putting renewed emphasis on investment to sustain the country's growth amid worrying signs for the second quarter and in the jobs market. But a good deal of the effort apparently will be directed toward big state-owned companies. "Public investment will likely go up in coming months," said Zhang Zhiwei, chief China economist at Nomura Holdings, noting that this is probably "the only effective way to push up growth in the short term."
Rise in wholesale inventories reflects cooling U.S. economy
Even though oil inventories fell sharply, overall U.S. wholesale inventories were up a bit in May, echoing other indications of a cooling economy. As if to confirm that diagnosis, shipments for the U.S. box-making industry fell 0.6% in May on an average-week basis, the second consecutive month of decline.
U.S. trade deficit shrinks as exports to China, Europe grow
Stronger exports to China and Europe and lower oil prices helped narrow the U.S. trade gap by 3.8% in May. Exports for the month were up 0.2% but, given the unresolved crisis in the eurozone, this is unlikely to be sustained. "Exports are holding up, but as we go forward we are going to see pretty weak numbers given the slowdown abroad," said Jay Bryson of Wells Fargo Securities.
Fitch retains negative outlook for AAA-rated U.S.
The U.S. maintains its AAA rating by Fitch Ratings, but the outlook remains negative as well, with the agency citing Washington's deadlock over deficit reduction. "The uncertainty over tax and spending policies associated with the so-called 'fiscal cliff' weighs on the near-term economic outlook," Fitch said.
Spain announces 65 billion-euro austerity package
Facing pressure from its eurozone partners and an increasingly restive public, Spain unveiled 65 billion euros' worth of tax increases and budget cuts. As striking miners marched in Madrid, Prime Minister Mariano Rajoy announced the austerity package, telling parliament that "these measures are not pleasant, but they are necessary."
Diamond offers to return for more testimony on Libor, Barclays
Former Barclays CEO Bob Diamond would like to testify again before Parliament in the U.K. to deny claims that he was misleading in previous testimony over Libor manipulation. More hearings on the matter are set for next week, with Bank of England Governor Mervyn King and Deputy Governor Paul Tucker among those on the schedule.
Market Activities
INTERNATIONAL MARKETS OVERVIEW
The focus in the U.S. stock market Wednesday was the minutes from the Federal Reserve Board's June meeting, in which it was indicated that more stimulus might be warranted, but only if the economy turns for the worse. The news left the key S&P 500 unchanged, but the Dow Jones industrials and Nasdaq both declined. Stocks in Europe were mixed for the day. Here is a continuously updated listed of global stock indexes.
Economic Trends & Outlook
China's purchases bolster gold reserves
In a sign that mainland China is beefing up its gold reserves, the government has bought 315 tons of gold from Hong Kong this year through May. According to a Bloomberg report, China's gold imports from Hong Kong rose more than sixfold in the first quarter alone as gold again found popular demand as an investment tool.
Australian rate cuts begin to buoy consumer outlook
Australian consumer sentiment remains narrowly in negative territory, according to a July reading, though recent interest rate cuts have helped. "Finally, we have some evidence that the Reserve Bank's policy of cutting the official cash rate by 125 basis points between November last year and June this year is starting to gain more positive traction with households," said Westpac chief economist Bill Evans. "However, this result is far from convincing and should not be interpreted that we can expect confidence to steadily return to more normal levels over the months ahead."
China's share of Taiwan exports declines, easing reliance fears
Fears that Taiwan may be growing too reliant on mainland China and Hong Kong for exports were eased somewhat by first-half figures that show 38.1% of Taiwan exports going across the strait, the lowest share in several years. Officials traced the lower figure to the impact of the European debt crisis on China's economy.
Tax boost is targeted as Japan's Ozawa launches new party
Vowing to thwart plans to double Japan's consumption tax, Ichiro Ozawa introduced his new party, the latest threat to Yoshihiko Noda as prime minister. "Our first goal is to overturn the tax hike bill," Ozawa said as he unveiled the People's Livelihoods First party, which launches as the third-largest in parliament's lower house.
Analysts tone down government projections for Philippine economy
Countering Philippine government projections of steadily rising growth rates over the next three years, possibly hitting 8% by 2015, analysts say the prospects are good but not that bright. A more realistic outlook is 6% annual growth or slightly higher for the next five years, said DBS Bank economist Eugene Leow. Others noted that growth rates would depend on reducing domestic corruption and improving investment rules as well as the international economic climate, which remains uncertain.
Capital Markets & Financial Products
Foreign hedge funds get clearance to find clients in China
Foreign hedge funds get clearance to find clients in China
Foreign hedge funds have been cleared by Beijing to do business with wealthy Chinese for investments abroad, people in the industry say.
Foreign direct investment in China eases
Foreign direct investment in China was down 1.9% in the first five months of the year from the year-earlier period, according to a report by the U.N. Conference on Trade and Development. The report noted difficulties in finding loose investment funds in a global economic climate constrained by economic uncertainty.
Traders seek safety in rapidly growing South Korean bond market
Daily volume in South Korea's bond market has nearly doubled since the beginning of the year as sovereign bonds win the attention of traders amid a flight to safety in uncertain times. The gains come at the expense of stocks, with capitalization of the Kospi market declining by 100 trillion won over the past two months.
Standard Chartered advises less Taiwan equity exposure
Investors should reduce their exposure to Taiwanese equities while the world works through its current economic difficulties, advises Standard Chartered Bank. "We see a muddle-through scenario as likely to continue in the coming months and possibly years. ... Data around the world has been weaker than expected," Steve Brice, chief investment strategist at Standard Chartered, said in Taipei.
Mumbai exchange rises
Mumbai's MCX Stock Exchange has been cleared by regulators to trade equity and stock derivatives, making it India's third full stock exchange. The Mumbai exchange, also known as MCX-SX, currently trades only in currency futures.
People & Personalities
AlpInvest to focus on Asia from Hong Kong base
AlpInvest Partners of the Netherlands plans to allocate 10% to 20% of its 1 billion euros in annual second private-equity investments to Asia and other emerging markets through its new secondary-investments office in Hong Kong. Neal Costello from AlpInvest's New York office will run the Hong Kong operation, which is soon to be joined by Nicole Ying Su from the secondaries team in Amsterdam.
Banking-job cuts appear likely across Asia
Persistent global economic woes probably mean further reductions in the ranks of bankers across Asia, joining recent job cuts by Credit Suisse, Morgan Stanley, Deutsche Bank and Goldman Sachs.
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Libor is an extremely important figure in international finance, tied to some $500 trillion in transactions. It certainly would be advantageous to derivatives traders if they could game the number to benefit their trading positions. So that part of the motivation to influence the submissions is clear.
But Libor is also extremely hard for a single institution to manipulate.
Libor is the outcome of a complex submission process. For the biggest dollar and euro Libor contracts, 16 banks submit estimates of their own borrowing costs to Thompson Reuters. The highest four figures and lowest four figures are dropped, and the central 8 averaged. This means that a bank attempting to throw in a low-ball figure would usually fail to manipulate the final number at all, producing no gains for its traders.
In fact, many who work in credit and derivatives trading are convinced that there is no way for Libor to be consistently manipulated for trading gains. Every single one of the traders I've talked to thinks the procedure is just too robust, despite the lack of regulatory oversight, for any individual bank or trading group to "move the needle."
But we have the stubborn fact that Barclays traders apparently believed they could move the needle. Were they delusional? Or had they figured out something other traders missed?
Let's start with the basics. Banks do have incentives to typically understate their borrowing costs. In a crisis, for example, a bank might want to conceal from the market and regulators the fact that its borrowing costs are rising. (This is what most of the Libor scandal coverage related to Barclays has focused upon.) But a bank misreporting its borrowing costs for this reason doesn't really care about the ultimate Libor number. It's not really trying to manipulate Libor at all. It's trying to manipulate the perception of its financial health.
Banks also have another institutional reason to misreport Libor. The balance sheets of many banks are counter-intuitively skewed to profit from lower interest rates in a non-inflationary environment. Although we usually think of interest revenue as being important for banks, modern banks make money in ways quite apart from charging interest on loans. In fact, the largest banks typically have large interest-rate derivative portfolios and interest-rate trading desks that can create financial incentives to misreport rates.
Economists Connan Snider and Thomas Youle, of UCLA and the University of Minnesota, respectively, examined bank exposure to Libor and found powerful incentives to manipulate. Bank of America, Citigroup and JPMorgan Chase, for example, each have huge derivative portfolios tied to Libor and each reported huge profit increases while Libor fell in the first quarter of 2009. Because each bank provides so little transparency about the source of the earnings, however, it is impossible to tie the rising profits directly to falling Libor. But the circumstantial evidence is quite strong.
Snider and Youle explain:
"Given the large notional values, if their portfolio had just a net exposure of 1% to the Libor this could contribute significantly to their net interest income. J.P.Morgan, for example, possessed a notional value of over $54 trillion in interest rate swaps in the fourth quarter of 2008. If their swap position had just a 1% net exposure to the Libor, then their costs on their contracts would be proportional to $540 billion. It then follows if they were to succeed in modifying the Libor by 25 basis points in a quarter they would make 1=4 540 :025 = 0:337 or $337 million in that quarter. If they had a 10% net exposure they could make $3.37 billion
So a small change in Libor could result in potentially large profits, depending on portfolio composition.
But, again, is it possible to manipulate Libor? Certainly, if there were a cartel of banks who secretly agreed to push down (or up) Libor, it would be possible. But there's no evidence of any such cartel. What's more, traders would be tempted to break from the cartel to create surprise swings in Libor and damage their competitors.
Youle and Snider present a more nuanced method of manipulating Libor. They note that Libor submissions, which happen every day, are highly predictable. Typically, each bank's quote is close to or exactly the same as the day prior. We can add to this that the submitters often make use of back-channels—talking to other traders, data collectors, analysts—to predict if the market has moved overnight.
A bank armed with the ability to predict the Libor submissions of others could aim its own Libor submission at a "pivot point" at the bottom of the central two quartiles. This would weight the average downward.
Youle and Snider discover that the actual submissions of many banks follow this pattern. Bank submissions are bunched around the pivot point, implying banks are trying to manipulate Libor downward.
This still doesn't really explain, however, what it was the derivatives traders at Barclays thought that they were accomplishing by requesting changes to the submissions on particular days. It still should have been all but impossible to move Libor by very much. Were the traders just deluded?
( CNBC )
Starbucks has spruced up its Android app for U.S. users with a tie-up with PayPal. The new feature lets you top off your electronic Starbucks card with funds from your PayPal account, a facility that iOS users began to enjoy in April this year. Starbucks is also releasing the Android app with PayPal functionality outside the U.S. for the first time--to caffeine lovers in Canada. A version of the Android app without PayPal functionality is also launching in the U.K., where Britons already have access to Starbucks' daily iTunes offers.
Amazon Announces GameCircle With Handy Features For Kindle Fire Gamers
Amazon has just announced GameCircle, a new set of APIs for Kindle Fire game developers. GameCircle's offerings include an achievements feature, so you can keep track of the badges and awards you collect within a game, and a leaderboard system for competing against other gamers. But the most interesting GameCircle feature is a sync option that saves your current game to the cloud if you have to switch Kindle Fire devices or restore a deleted game.
It's an interesting and necessary play on Amazon's part--Apple provides many of the same features in its Game Center for iOS players, and it's another way Amazon can keep hold on its share of the tablet market, especially in the wake of Google's recently launched Nexus 7 tablet, which costs an identical $199. And if the rumors are true that an Amazon smartphone is on the way, it's easy to see why the company is making sure developers have the option to build seamless cross-device game experiences.
Proposed EU Bill Could Boost Digital Music Sales In Europe
The EU is considering changing its regulations on music licensing which could ultimately benefit online music stores owned by Apple, Amazon, Google, and others by unifying the market place versus the complex layers of national rules that exist. The New York Times, which got wind of the proposed bill before its official release today, explains that the new measures could speed up the rate at which royalties are collected across the EU. This means owners of copyright on music may get paid more reliably, and quicker. Michael Barnier, the internal market commissioner and proposer of the new bill, hopes the changes will help dissolve licensing barriers between countries.
Twitter Finds A Feature Phone Partner In MediaTek
Twitter and MediaTek have announced a new partnership that will integrate Twitter with feature phones worldwide. Facebook already has a deal with the Taiwanese chip maker, the alliance being part of the social network’s plan to grow quickly in swelling mobile markets in places like India. For Twitter, it’s the latest in their push to polish up their mobile lineup--just yesterday, Twitter published a substantial update to their iOS and Android apps. The slew of new features include push notifications, an ability to view expanded tweets, easier navigation to Twitter profile pages, all capped off with the new Twitter bird icon.
Nokia Adds Three More Patent Suits To Lineup Against RIM
Nokia has filed three more patent suits against RIM in Munich, Germany. Foss Patents spotted the additional three filings, which adds to Nokia’s existing cases against RIM (and others), which the company filed earlier this year. It’s the latest blow in a rough week for RIM--yesterday, it held its annual investor conference where the company’s executives faced some rough questions from shareholders.
Satellite Launcher LauncherOne Joins Virgin Galactic's Fleet
Virgin Galactic's target passengers aren’t just space tourists anymore, the company is also signing up space-faring satellites.The newest addition to the Virgin Galactic fleet is the LauncherOne, a satellite launcher. Richard Branson announced plans for the new craft at the Farnborough Airshow in the U.K. today, saying that the goal is to make satellite launching (comparatively) affordable for private organizations and laboratories, even universities and schools. Virgin Galactic has been developing the launcher along with a low-cost satellite builder Surrey Satellite Technology Limited (SSTL) for some time now.
Virgin Galactic already has investment from four companies: Imaging technology builders SkyBox Imaging and GeoOptics, satellite builder Spaceflight Inc., and everyone’s favorite asteroid mining company, Planetary Resources. Together, they’ve paid up for “a total of several dozen launches,” Virgin Galactic noted in a press release. The company anticipates that commercial flights on the LauncherOne will begin in 2016.
Another British spacecraft, the Skylon, also got a bit of the limelight at the Farnborough Airshow, when UK Science minister announced that the government would be looking into using the craft. Reaction Engines, a private company, has been testing a new engine inside the Skylon, which aims to cut down cross-continental flight time and also power the craft’s space adventures.
Android Game Console OUYA Raises $2.5 Million On Kickstarter
Unusual new gaming console OUYA, a tiny peripheral based on Android and targeted at a $99 launch price, has now raised over $2.5 million on Kickstarter at the time of writing and still has 28 days of funding yet. Speaking to VentureBeat, founder Julia Uhrman said that she and her team hadn't anticipated such a runaway success, and now has enough extra development cash to think about enhancing the gaming experience before the product launches in March 2013. OUYA enters a crowded gaming console market, but offers a significantly cheaper price and may be able to leverage the thousands of existing Android apps available for smartphones and tablets. Apple, with a similarly compact $99 TV device that as yet does not play games, has long been rumored to enter the same space.
Amidst this flurry of additions and improvements one long running Twitter feature has suddenly gone missing - the embeddable widgets. Twitter is now redirecting users from its widgets pages to its logo and brand page.
While the existing widgets embedded by users on their blogs and websites are still functional, Twitter isn't currently allowing creation of new widgets. Twitter allowed users to create widgets for profiles, search, lists and favorites.
Even the page for the much used Twitter buttons has also been redirected. The widgets and the buttons pages were accessible till Tuesday.
Has Twitter shut down its embeddable widgets or is it only in the process of giving it a makeover, quite like much else on the site? Seems unlikely, more so for the very popular Twitter buttons that have become ubiquitous across the Web.
Nielsen’s Global Consumer Confidence Survey on investment attitudes shows 48 percent of consumers in the Asia Pacific region said they were invested in the markets or used investment services. That compares to just 27 percent in North America, 21 percent in the Middle East and Africa, 16 percent in Europe and 13 percent in Latin America.
Asia’s appetite for risk is also seen in investors’ ability to withstand market volatility. Oliver Rust, the Managing Director of Nielsen says Asian investors tend to trade more aggressively and more frequently than their European counterparts.
More than half (57 percent) of Asia Pacific consumers say they’re willing to accept fluctuations of more than 10 percent. Only half of investors in the U.S. will stomach those swings and just 45 percent in Europe.
Rust says Asian investors tend to have a higher proportion of disposable income allowing them to take more risks.
Disposable incomes in Asia are higher because a growing working population has led to more households with singles, or couples without children in Asia, according to a report by Euromonitor. In fact, it says disposable income per household from 1995 to 2010 grew 13.2 percent in the U.S., while in China it surged 230 percent.
Mark Konyn, Chief Executive of Cathay Conning Asset Management says Asia's risk-taking also has to do with attitudes. “In a Western context, taking risk is often viewed as speculation, rather than investment. In Asia’s high growth economies, investors typically look for higher return opportunities and tend to have shorter time horizons.”
Shan Han, a sales trader at IND-X securities adds that inflation is another factor. He says “higher inflation has also meant that hoarding cash has not been a good strategy for savings because of negative real deposit rates,” prompting Asian consumers to seek higher returns.
Han cites Hong Kong as an example. During most of the 1990s, annual inflation averaged 8.5 percent, while 12-month bank deposit rates averaged 6 percent. That means investors who stashed their cash in the banks were losing 2.5 percent of their savings each year.
Within Asia, Hong Kong consumers tend to be the biggest risk takers. 55 percent of Hong Kong consumers are financial investors, outweighing the global average of 33 percent.
Rust says that has to do with “new money”. “First generation wealth holders tend to focus on capital growth, whereas second or third generation wealth holders tend to focus more on capital preservation,” he says.
That explains why a larger number of Asian consumers pick stocks as opposed to other asset classes such as precious metals and bonds. Almost three-quarters of respondents in Asia picked equities, even though they’re often seen as the riskiest assets class. In North America, only two-thirds picked stocks, and in Europe, less than half did.
( CNBC )
The Bad Date Rescue app, which was launched by the dating website eHarmony.com this week, lets users arrange for a call to appear on their iPhone to graciously allow them to bow out if a date isn't going well.
The free app includes several ways to set up a rescue. Users can pick a number from their address book for the call, for example from their mother or a friend. It the person's picture is stored on the app it will appear on the screen when the call comes through.
Scripts are available giving the reason for the call, such as a neighbour calling about a leaky pipe; a mother informing that a sister just had a baby; or a boss saying he needs help immediately.
The free app can be pre-set before the date to call at a specific time and there is a quick rescue that can be triggered on the spot to ring in a few seconds or minutes.
