RefBan

Referral Banners

Yashi

Monday, January 27, 2014

Claman On Call: Apple's quarterly record iPhone sales not enough for Wall Street?

Having trouble viewing? See it in your browser.

logo Claman On Call

Daily Market Update with Liz Claman

forward

Featured Segment

Celebrity mug shots
Apple’s quarterly record iPhone sales not enough for Wall Street?

Claman on Call: FBN's Cheryl Casone with an after-hours web-exclusive on the markets, Apple's first-quarter results and Norwegian Cruise Line CEO on efforts to prevent outbreaks like the one on a Royal Caribbean ship.

On Our Radar: News We're Following

Apple Shares Drop on iPhone Sales Even as 1Q Results Top Views
Big Tech Firms Reach Info Sharing Deal With Government
U.S. Charges Bitcoin Exchangers Linked to Silk Road Drug Bazaar
subscribe
manage-subscriptions unsubscribe

©2013 Fox News Network, LLC. All Rights Reserved. Privacy Policy.

The Berkshire range

Warren Buffett’s Berkshire Hathaway, no stranger to exotic insurance risks, is insuring Quicken’s $1 billion prize for picking a perfect NCAA tournament bracket. The odds of picking the winner of all 63 basketball games are absurdly low: somewhere in the realm of 1 in 128 billion to 1 in 772 billion. Those odds raise the question of why Quicken is even looking for insurance in the first place. Maybe, as David Merkel points out, “those seeking insurance on unlikely events think the events are more likely than they actually are”.

Warren Buffett is very good at both the insurance business and the publicity business. A combination of those talents is presumably why Quicken is probably paying more than the $0.01 fair value (the payout multiplied by the odds, or $1 billion times 1/128 billion) for the policy. How much more Quicken is paying, however, isn’t clear, and there just may not be enough data to accurately price the policy.

Dan McCrum has a great look into more arcane but much larger bets made by Berkshire, which sold a series of “very large and very long dated put options... against stock indices in the US, UK, Europe and Japan between 2004 and 2008”. McCrum quotes business professor Pablo Triana, who has calculated that Buffett could lose between $14 billion and $20 billion if markets move against him. Here’s Triana on the implications of those derivatives:

The main point is not that those unfavorable things will unfailingly happen, and we certainly don’t even try to assign any specific probability to their occurrence. The point, rather, is to illustrate the myriad of exposures Berkshire got itself entangled with by deciding to sell the puts and how the firm could hurt badly both accounting-wise and cash-wise just if some things that have already happened (and not that long ago, actually) were to happen again.

The WSJ’s Ryan Tracy reports on just how big those exposures are: $31.4 billion in gross outstanding CDS, and $5.8 billion in derivatives. As a result of its risk exposure, the US Financial Stability Oversight Council is considering labelling Berkshire too big to fail and subjecting it to Fed oversight, Bloomberg reports.

Matt Levine points out that Berkshires is largely in the business of “taking financial risks away from other people”. And it does seem to be doing that: it has more outstanding CDS, on a net notional basis, than any too big to fail bank. The very luster that makes it seem like Buffett can’t fail, Levine writes, can actually be an argument that he is, in fact, too big too fail.  -- Ben Walsh

On to today’s links:

Investigations
Wage theft in Silicon Valley: Did top CEOs conspire to hold down wages for tech workers? - Mark Ames

Do Less
Keynes, TS Eliot and the economic case for working less - David Spencer
Hesitate more: Indecision is a cognitive feature, not a bug - Aeon

Right On
Why we can't afford to leave inequality to the economists - Justin Fox

Charts
The aging of the American workforce - BLS
2013 in media jobs: more journalists, fewer editors - South Mountain Economics

New Normal
Why is the American dream so much harder to achieve in the South? - Matthew O’Brien

Billionaire Whimsy
“Most well-known and beloved Chinese role model”: A tycoon's quest to buy the NYT - Jessica Pressler

Modern Problems
A Greenwich mansion broker reflects on the "aspirational schnooks" who are ruining his town - NYT

Wonks
What is money? Mostly credit, it turns out - FT

The Fed
The Fed's chief of staff: one of the most powerful women you've never heard of - WaPo

Revolving Door
One of the biggest critics of the revolving door joins the board of a big bank - Matt Zeitlin

Says Science
"Stop trying to take selfies on the frozen tundra": why your phone dies more quickly when it's frigid out - Drake Martinet

Tax Arcana
Tax-avoiding CEOs successfully avoid tax-avoidance tax - Matt Levine

Ugh
Banned from ethics and compliance conference for caring about ethics and compliance - Francine McKenna

Growth Industries
"Sex toys are definitely mainstream, but investors and banks are still too scared to join in" - Katie JM Baker
"Each year, startups' exit price grows 3x faster than inflation" - Tomasz Tunguz

Popular Myths
The young actually read more than the old - Pew

Trends
"Where have all the wrong people gone?" The decline of working-class pop heroes - Sean O’Hagan

Ipso Facto
Why are US corporate profits so high? Because wages are so low - Jamie McGeever

Alpha
When your hedges don't work - John Hempton

Likely Hyperbolic
"This generation may never really own a thing in their life" - Pando Daily

Follow Counterparties on Twitter. And, of course, there are many more links at Counterparties.

 

- 3 Times Square New York, NY 10036 USA © Copyright 2012 Thomson Reuters
Ensure delivery of Reuters Newsmails, add mail@nl.reuters.com to your address book. Details
Subscribe to other Reuters newsletters.
Unsubscribe from this newsletter.
Follow us on Twitter facebook Friend us on Facebook Forward this newsletter to a friend Forward to a friend
 

 

Business Today: Apple's iPhone sales lag Wall Street expectations

Click to View in Browser
01/27/2014
Reuters Election 2012 Daily round-up of the day's top news from the campaign trail, the White House and all the politics in between
Apple's iPhone sales lag Wall Street expectations
(Reuters) - Apple Inc sold fewer new iPhones than expected over the holidays, reflecting intense competition from arch-foe Samsung Electronics during the crucial period.
Wall Street closes lower on Fed concerns
NEW YORK (Reuters) - Stocks fell on Monday, with the Dow down for a fifth straight session and the S&P 500 off for a third on concern about the Federal Reserve's plans for withdrawing stimulus.
Caterpillar tops estimate, sees gains in 2014; stock up
(Reuters) - Caterpillar Inc posted a stronger-than-expected quarterly profit on Monday as cost cuts and an uptick in demand for its building equipment offset continued weak sales to the mining industry.
New home sales fall, but private sector expands
WASHINGTON (Reuters) - Sales of new U.S. single-family homes fell more than expected in December, but lean inventories and steady price gains suggested the housing market recovery remained intact.
AT&T rules out Vodafone bid for now
LONDON (Reuters) - AT&T on Monday ruled out a bid for Britain's Vodafone after Britain's takeover watchdog asked the U.S. phone company to clarify its position following reports that it had sounded out European regulators on the prospects of a merger.
Two bitcoin exchange operators charged in money laundering scheme
NEW YORK (Reuters) - Two men who operate bitcoin exchange businesses have been charged with money laundering for helping drug merchants exchange $1 million in cash for bitcoins, the digital currency, U.S. prosecutors said on Monday.
Analysis: Emerging markets as vulnerable to contagion as ever
LONDON/NEW YORK/SINGAPORE (Reuters) - Emerging markets may be unrecognizable from the small and fragile economies that fell like dominoes 15 years ago, but they are just as vulnerable today to the same sort of indiscriminate selling when investor panic sets in.
Comcast, Charter near pact on Time Warner Cable deal: report
NEW YORK (Reuters) - Charter Communications Inc has agreed in principle to sell Time Warner Cable Inc's New York, North Caroline and New England assets to Comcast Corp , if it succeeds in buying Time Warner Cable, according to a Bloomberg report on Monday.
SAC's Cohen wins partial dismissal of ex-wife's fraud lawsuit
NEW YORK (Reuters) - Steven A. Cohen's ex-wife, who accused the billionaire hedge fund founder of hiding $5.5 million during their 1990 divorce, can pursue fraud claims against him but cannot go after him for racketeering, a federal judge ruled on Monday.
Nasdaq cancels trades in erroneous transactions
NEW YORK (Reuters) - Nasdaq MarketWatch said on Monday it was cancelling some trades in 11 securities that occurred within the first minute of trading on Monday.
Related Video
The Virtualizer takes gaming to next level
Stakes raised in embattled Ukraine
Economic News
New home sales fall, but private sector expands
Ukraine borrows $2 billion from Moscow, signals bailout on track
SUBSCRIBE TO OTHER REUTERS NEWSLETTERS
Counterparties
A daily digest of breaking business news, coverage of the US economy, major corporate news and the financial markets. Register Today  
 Money
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day. Register Today  
» MORE NEWSLETTERS
- 3 Times Square New York, NY 10036 USA © Copyright 2010 Thomson Reuters
Ensure delivery of Reuters Newsmails, add mail@nl.reuters.com to your address book. Details
Subscribe to other Reuters newsletters.
Unsubscribe from this newsletter.
Follow us on Twitter facebook Friend us on Facebook Forward this newsletter to a friend Forward to a friend

Yashi

Chitika