10.3.14: Jobs, Leaks and Mobile Apps
Today and Tomorrow in Business
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Good, Yet Not Good Enough
In a powerful surge of hiring, U.S. employers added 248,000 jobs in September and a combined 69,000 more in July and August than previously estimated, driving down the unemployment rate to 5.9 percent from 6.1 percent. That's the lowest since July 2008. Even so, the Federal Reserve has two good reasons to keep interest rates near zero: Inflation is too low and wages aren't growing. Average hourly earnings are up 2 percent over the past 12 months, barely enough to keep ahead of inflation.
JPMorgan's Password Breach
Hackers pulled off one of the largest cyber-attacks ever by exploiting an employee password to crack JPMorgan Chase & Co. servers. The hackers accessed data on 76 million households (65 percent of all U.S. households) and 7 million small businesses from a financial institution that is supposed to have fortress-like barriers. The stolen data included names, addresses, phone numbers and email addresses, though only customers who use the websites Chase.com and JPMorganOnline and the apps ChaseMobile and JPMorgan Mobile were affected, the bank said. There's no evidence hackers obtained account numbers, passwords, Social Security numbers or dates of birth. The bank said it hasn't seen any unusual fraud since the attack, leading to speculation by law enforcement and security experts that the hackers are sponsored by the Russian government.
Green Light for WhatsApp
Facebook Inc. won European Union approval for its $19 billion acquisition of WhatsApp, the popular text-messaging service, in spite of an energetic opposition campaign by the telecoms industry. Telecoms lobbyists unsuccessfully argued that the deal would let Facebook control too much personal data and hand it advantages over heavily regulated phone companies. WhatsApp has 600 million users worldwide; the service costs 99 cents a year. Facebook separately said in a blog post yesterday that it's giving its researchers clearer guidelines to follow when studying sensitive topics, such as users' emotions.
The U.S.'s new rules discouraging tax-avoiding corporate mergers claimed their first victim Friday when Salix Pharmaceuticals Ltd. called off a $2.7 billion merger with Italy's Cosmo Pharmaceuticals SpA. The deal had been structured as an inversion, in which Salix would have moved its legal home from Raleigh, North Carolina, to Ireland, whose 12.5 percent corporate-tax rate is one of the world's lowest. Salix said it would pay Cosmo a $25 million breakup fee. Salix is now in talks to sell itself to Actavis Plc, having spurned an approach from Botox-maker Allergan Inc. The pharmaceutical industry's global chess game shows no signs of abating.
Bailout Postmortem Postmortems
If the U.S. government had rescued Lehman Brothers Holdings Inc., or had saved AIG on less onerous terms, would the course of world economic history have changed? The answers are unknowable, yet there's plenty of reason to think a Lehman rescue wouldn't have stopped the crisis from spreading or that a more-generous American International Group Inc. bailout would have had a calming effect. In a week that saw the start of a trial in which Maurice Greenberg, the man who built AIG, claims the U.S. rescue bilked him, several financial writers penned worthy postmortems, including this one from the New Yorker's John Cassidy and this one from Time's Michael Grunwald. But the best of the lot is by the NYT's Neil Irwin. His conclusion: The worst mistake policy makers made was not laying out a framework for who would be rescued and who wouldn't. The ambiguity "added to the uncertainty of a difficult time, and with hindsight some clearer sense of the rules of the game when the financial system is under stress might make the consequences less severe."
Arms to Vietnam
The U.S. and Vietnam have long since stopped being enemies, almost 40 years after their war ended. Trade between them has grown to more than $20 billion. And today, the U.S. partially lifted its embargo on lethal weapons sales to its former adversary, thus removing a major obstacle to full rapprochement. The U.S. decision is intended to boost the capacity of the Vietnamese navy, which is involved in a series of increasingly tense territorial disputes with Beijing in the South China Sea.
And Don't Forget
- Brazil's national election (first round) begins Sunday.
- New rules governing credit default swaps, a $17 trillion derivatives market, take effect Monday.
- The International Monetary Fund releases its World Economic Outlook Tuesday and its Global Financial Stability Report on Wednesday. The IMF and the World Bank hold their annual meetings in Washington starting Tuesday.
- The Bank of Japan on Tuesday announces its monetary policy decision at the end of a two-day meeting.
- Companies releasing third-quarter earnings next week include Alcoa Inc., Monsanto Co., PepsiCo Inc. and Samsung Electronics Co.
- The Nobel prizes will be awarded starting Wednesday and ending Oct. 10 with the peace prize.
At more than 1,300 feet long -- longer than the Eiffel Tower is high -- the Mary Maersk is hard to miss. It is part of the class of container ships known as the Triple-E's, Danny Hakim writes in the NYT. As companies look for more efficient ways to move freight from China to Europe, the ships, owned and operated by A. P. Moeller-Maersk of Denmark, have muscled their way into the $210 billion container industry. The Triple-E's can carry more than 18,000 containers, up from 5,000 in the late 1990s. But they can sail only between Europe and Asia because their hulls are too large to fit into U.S. ports or to slip through the Panama Canal. They have also gained a following: Hobbyist spotters watch for the Triple-E's and post pictures online, and Lego has created a mini-version with 1,516 bricks.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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