AT&T Gets Sued
by ilene - August 31st, 2011 9:04 pm
Courtesy of Karl Denninger, The Market Ticker
I’m shocked – shocked I tell you - that the DOJ actually did its job.
The Department of Justice filed an antitrust lawsuit on Wednesday to block AT&T’s (T: 28.46, -1.16, -3.92%) $39 billion planned takeover of T-Mobile USA due to fears the controversial marriage will cause consumers to pay higher prices and have fewer options.
This doesn’t necessarily kill the deal, but it sure ramps up the pressure. Among other things if the deal fails AT&T has to pay DT a break fee of about $3 billion, so this is by no means a "nothingburger" for them.
There’s a real issue identified here that finally got some attention: Pricing.
When the deal was announced, I said this:
There’s no chance that AT&T is going to get people to pay thirty to sixty percent more for the same service. Not a snowball’s chance in Hell, and especially not when they can jump to either Sprint or one of the MVNOs. It’s not worth moving to Sprint for me today only because I’m out of contract.
It’s rumored that AT&T intends to take the T-Mobile towers and use them for LTE. That’s a cute way to try to force migration to AT&Ts exorbitant pricing. See, on GSM/EDGE (2.5g) most modern phones will work on both the 1900 and 850 frequencies used in the US, so T-Mobile customers will be able to access AT&Ts towers (assuming, of course, they enable registration – at present in my area it is barred) and make calls, send texts, and use 2.5g (~150kbps) data speeds.
Apparently the DOJ saw it the same way I did.
To put some more color on this, readers probably remember that I recently ditched T-Mobile for Virgin Mobile (prepaid running on Sprint’s network) after T-Mobile decided to treat me to AT&T-style "customer disservice." Well, they’ve gotten aggressive trying to get me back, but they’re not going to succeed. Not only have I cut my bill in half for myself and my kid even given the incentives they’ve tried to lay on the table to get me to return but in addition the service I get is superior to what I had on T-Mobile and I have no contract commitment!
If T-Mobile wants me back, that is what they have to match or beat. Best-a-luck boys.
The media is of…
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DiggThe Ever Diminishing Returns Of Central Bank Intervention, Or QE As The Godfather Trilogy
by Zero Hedge - August 31st, 2011 8:54 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
To anyone who is still confused about why the Fed is on the fence about QE 3, the chart below, inspired by David Rosenberg’s daily note, should explain it all. While we have repeatedly shown that the intervention of central banks in the FX arena gets progressively weaker with each incremental incursion by central planning into formerly free and efficient markets, the same can be said for not only fiscal stimulus (today’s bankruptcy of Solyndra being merely the ironic cherry on top of the house of cards), the same is most certainly true about monetary intervention as well, in the form of LSAP or any other form of duration extension. And while many have already explained extensively why QE was a flop, here is Rosie with an angle we had not considered before: movie trilogies: “it’s not as if QE2 accomplished anything except a blip on the screen as far as the market was concerned, and it elicited no lasting benefit for the economy either. QE1 did work but that was when the system needed to be saved – the S&P rallied 74% on that program. QE2 was nothing more than a gimmick shrouded in deflation concerns [uhm, this coming from Rosie? we'll let it slide] that never materialized, and during this program the stock market ended up rising just 16%. And so what will QE3 bring except more in the way of diminishing returns and resource misallocation caused by central bankers attempting to play around with mother nature by manipulating asset prices? Call it the equivalent to the Godfather Triology: Godfather I was epic; Godfather II not quite as good but still fine; and Godfather III was a dud.” And as for the appropriate visual…
Obama Spent $535 Million on Solyndra Solar Energy Firm in 2010; Firm Went Bankrupt Today
by ilene - August 31st, 2011 8:42 pm
Pricetag $486,363 Per Job Saved for 18 Months
Courtesy of Mish
The federal government should get out of the business of picking technology and "green" winners. Government backing of alternate energy companies has been nothing short of disastrous.
A solar energy firm touted by the administration in 2010 as a as a "gleaming example of green technology" today announced bankruptcy. 1,100+ employees will be fired.
Please consider Solyndra Filing a Disaster for Obama
President Obama faces political catastrophe in the form of Solyndra — a San Francisco Bay area solar company that he touted as a gleaming example of green technology. It has announced it will declare Chapter 11 bankruptcy. More than 1,100 people will lose their jobs.
During a visit to the Fremont facility in spring of 2010, the President said the factory "is just a testament to American ingenuity and dynamism and the fact that we continue to have the best universities in the world, the best technology in the world, and most importantly the best workers in the world. "
It’s not his statements the administration will regret; it’s the loan guarantees. The President was celebrating $535 million in federal promises from the Department of Energy to the solar startup. The administration didn’t do its due diligence, says the Government Accountability Office. "There’s a consequence if you don’t follow a rigorous process that’s transparent," Franklin Rusco of GAO told the website iWatch News.
Seen and Unseen
The "seen" math is simple enough. $535 million divided by 1,100 is roughly $486,363 per job saved, now job lost.
That is just the "seen" consequence. The "unseen" consequences are not directly calculable but by giving Solyndra money, other companies that the free market would have preferred have been harmed, perhaps permanently harmed.
Although Obama clearly rushed this pathetic company for a nice photo-op, this is not a simple case of the president failing to do his homework as the GAO implies. The government has no business promoting this kind of crap in the first place.
In this case, it is rather amazing how fast Solyndra wasted over half a billion US taxpayer dollars, so fast I suspect fraud.
In general, if companies cannot survive without government subsidies then they should not survive at all.
Solyndra could not survive even with massive government subsidies. The same happened to many ethanol companies as well. Speaking of…
Auxilium Pharmaceuticals and BioSpecifics Technologies Announce Plans to Develop Additional Indications using XIAFLEX
by Insider Scoop - August 31st, 2011 8:39 pm
Courtesy of Benzinga.
Auxilium Pharmaceuticals (NASDAQ: AUXL) and BioSpecifics Technologies (NASDAQ: BSTC), today announced that they have dismissed all pending litigation between the Companies and announced plans to move XIAFLEX forward in the clinic for cellulite and human and canine lipoma as well as to collaborate on the initiation of further studies for XIAFLEX for additional indications. Through an amendment and restatement of the Companies’ 2008 development and license agreement, the Companies have clarified the rights and responsibilities of the Joint Development Committee.
Auxilium has been granted the right to initiate studies for the treatment of edematous fibrosclerotic panniculopathy, more commonly known as cellulite, and expects to begin phase Ib clinical studies in early 2012. BioSpecifics will initiate studies for the treatment of human and canine lipomas and plans to initiate clinical studies for both human and canine lipomas shortly. Auxilium will continue to have the option to exclusively license these indications upon completion of BioSpecifics’ development work. Auxilium and BioSpecifics also plan to collaborate on identifying further indications for treatment with XIAFLEX.
Based on the terms of the amended agreement, Auxilium will pay BioSpecifics an opt-in fee at the time of completion by Auxilium of Stage I development of cellulite and will be responsible for all development costs associated with cellulite. Auxilium’s opt-in rights remain unchanged with respect to the two lipoma indications. In addition to the opt-in fees, BioSpecifics will continue to be entitled to regulatory milestones, low double digit royalties and a markup of cost of goods on all indications.
“We are pleased that we have reached a mutually beneficial settlement with our partner BioSpecifics, and we are excited to move forward with the development of XIAFLEX in cellulite,” said Armando Anido, Chief Executive Officer and President of Auxilium. “We look forward to a close collaboration with BioSpecifics on the development of additional indications that could result in new opportunities for XIAFLEX.”
“We are very happy to be collaborating with Auxilium as we explore promising new indications for XIAFLEX that could have significant potential benefit for patients,” commented Thomas L. Wegman, President of BioSpecifics. “We are very enthusiastic about the positive study results we have already seen for both human and canine lipoma and look forward to advancing these indications in the clinic as soon as possible.”
Brazil Central Bank Unexpectedly Cuts Its Overnight Rate To 12.0% From 12.5% Following Observations Of “Substantial Economic Deterioration”
by Zero Hedge - August 31st, 2011 8:11 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
In a shocking move, one which is sure to reverberate around the Developing and certainly Developed World, the Brazilian Central Bank just announced that it was cutting its Selic (overnight lending) rate from 12.5% to 12.0%, citing “substantial economic deterioration” – something that not one of the 62 analysts covering Brazil had anticipated. It seems that following over a year of small arms fire FX intervention sniping, Brazil has finally reevaluated its growth prospects, and instead of dealing with the inflow of capital on a piecemeal basis by buying dollars daily – a move which has not worked at all, has decided to cut off flows at the stem. This is most likely the first of many rate cuts by Brazil which is obviously anticipating a major growth contraction in China, and as a result we expect the the other BRICs will very soon reevaluate their stance vis-a-vis being the remaining target of global capital flows. Ironically, up until now it was mostly the developed (read bankrupt) world that was devaluing its currencies… Well, make way for the new kids on the block because this is about to get interesting.
Full translated statement from the BCB
Brasilia – The Committee decided to reduce the Selic rate to 12.00% pa, without bias, by five votes to two votes for the maintenance of the Selic rate at 12.50% pa Rethinking the international scene, the Committee considers that there has been substantial deterioration, reflected, for example, generalized reductions in the magnitude and growth projections for major economic blocs. The Committee believes that increased the chances that the restrictions which are now exposed several mature economies extending over a longer period of time than anticipated. Note that, in these economies, it seems limited scope for using monetary policy and a scenario prevails fiscal restraint. Thus, the Committee considers that the international disinflationary bias manifests relevant horizon.
For the Minutes, the transmission of external developments in the Brazilian economy can be realized through various channels, among others, reducing the flow of trade, moderating the flow of investment, tighter credit conditions and worsening in consumer and business sentiment . The Committee understands that the complexity surrounding the international environment will help to intensify and accelerate the ongoing process of moderation in domestic
…
Gold Is Still the Best Safe Haven We Have
by Insider Scoop - August 31st, 2011 7:48 pm
Courtesy of Benzinga.
Gold may not be the perfect safe haven but it’s sure the best one we have and we can use all of the confidence we can muster.
Consumer confidence in the U.S. fell this month to the lowest level since March of 2009. Just to refresh your memory that was when the Dow was at 6400, the S&P was at 667 and the NASDAQ was trading at 1265.
You may argue that since consumer views are usually wrong the contrarian view is actually positive for stocks. Sadly I don’t share this contrarian view. What I see happening is that we will stage a nice “head fake” rally in September and then at the end of September the market will bounce around and consolidate. In October the market will sell off with a vengeance. We will see the S&P at 1040 before it’s done.
Gold continued its rise this week as it rose in New York, capping the biggest monthly gain since November 2009, on speculation that the Federal Reserve will take more action to spur growth. This will only fuel the fire that is already burning out of control in gold. Gold prices have moved too far and too fast. When this happens increased volatility is the normal result. Healthy stocks in an uptrend like to move at a 45 degree angle. When a stock goes up in a straight line it is never really sustainable. Despite pullbacks, I believe that gold’s position as a safe haven is intact. I believe prices will eventually trend higher because of these for secular trends.
1) The law of supply and demand is a pivotal factor in supporting the eventual rise in gold prices. From 2005 to 2009, the gold industry received 59% of its supply from mining production, 31% from recycled or scrap gold and 10% from central bank sales. Well central banks are no longer selling their gold. The amount of scrap gold is falling as investors hoard the metal, which leaves mines to fill the gap. I will add here that while we have seen the gold miners ETF, GDX put in a tremendous show of strength lately and I believe we will see the GDX start to put in a strong showing…
Harbinger Group Acquires Additional Securities of North American Energy Partners
by Insider Scoop - August 31st, 2011 7:23 pm
Courtesy of Benzinga.
Harbinger Group (NYSE: HRG) announced that it acquired in open market purchases on the New York Stock Exchange on August 31, 2011, an aggregate of 62,000 common shares of North American Energy Partners (NYSE: NOA) at a price of $6.18 per Share. These 62,000 Shares represented approximately 0.17% of the outstanding Shares. Together with the Shares previously acquired by the Company, the Company holds an aggregate of 5,197,720 Shares, representing approximately 14.34% of the outstanding Shares. All Shares owned by the Company are held in the name of HGI Funding, a Delaware limited liability company and a direct wholly-owned subsidiary of the Company.
The Ibero-America Fund Announces Results of Special Meeting of Stockholders
by Insider Scoop - August 31st, 2011 7:12 pm
Courtesy of Benzinga.
The Ibero-America Fund (NYSE: SNF) announced that stockholders of the Fund approved the proposed plan of liquidation and dissolution of the Fund at the Fund’s Special Meeting of Stockholders held today. In connection with the Liquidation, the Fund will close its books and records at the close of business today. The proportionate interests of stockholders in the Fund’s assets will be fixed on the basis of their respective shareholdings at the close of business today. The Fund expects that the Fund’s shares will cease to be traded on the New York Stock Exchange on September 1, 2011.
It is anticipated that the liquidating distributions will take place by approximately the end of September 2011. The Fund expects to make one or more liquidating distributions to stockholders.
The Fund is a closed-end U.S.-registered management investment company advised by AllianceBernstein L.P. with total net assets of $59,237,118.81 as of August 30, 2011.
Stock Market Powder Keg: ETF News Alert
by ilene - August 31st, 2011 7:04 pm
Courtesy of John Nyaradi
Stock markets look like a powder keg as we enter the notoriously dangerous month of September.
September is the stock market’s worst month by far and September starts tomorrow.
Beyond that, tomorrow comes the all important August Institute of Supply Manufacturing Report (ISM) regarding the current state of the economy.
Top analysts at iShares offer insight into what to expect from tomorrow’s ISM.
And my friend Jeffrey Hirsch of Stock Traders Almanac was on vacation in the Carolinas during Hurricane Irene but found time to offer some very interesting reading regarding bad Augusts and bad Septembers and a very insightful look at the Dow Jones Industrials at neckline resistance and the 3 Peaks Domed House Pattern currently in play in this major index.
Stock Market Update
DJIA: (DIA) +53.5%; +0.5%
NASDAQ (QQQ) +3.3; +0.13%
S&P 500 (SPY) +5.9; +0.49%
Russell 2000 (IWM) -1.3; -0.8%
Tomorrow come all important economic reports including new and continuing unemployment claims, August ISM, July Construction Spending, and August Motor Vehicle Sales.
Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector
Facebook Plans to Launch its Own Music Service Next Month?
by Insider Scoop - August 31st, 2011 6:50 pm
Courtesy of Benzinga.
According to a CNBC report, Facebook is planning to launch its own music service at its f8 conference in San Francisco on September 22. The report cites a “source with knowledge” and states that the service will rely on third parties (such as Spotify and Pandora) to provide music to the social network’s 750 million+ users.
A Facebook music platform has been rumored for quite some time now, but nothing has come to fruition. Launching this sort of platform would also put Facebook in competition with other companies like Apple and Google.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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