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Best of the Blogs: Faulty Data Partly to Blame for Equity Markets' Bad Rap


Plus, the Windows 8 Tablet is not a good substitute for a laptop.

This column highlights the most interesting and useful business and financial commentary from around the Web each day.

The Big Picture
Link: Bonds for the Long Run

"We have, throughout this week, alluded to the recent Bill Gross criticism on the Death of the Cult of Equities (See this and this). Elsewhere, several references to Stocks for the Long Run have been made, including the "Siegel constant" – the concept pushed by Wharton professor Jeremy Siegel that equities have consistently produced returns, including reinvested dividends, of 6.6% after inflation.

"I want to suggest that these critics have it all wrong. Its not that 'The Siegel Constant' is history - as Gross and Eddy Elfenbein have suggested; rather, it is because Stocks for the Long Run (aka SFTLR) was a deeply flawed and erroneous book right from the start."

Link: Windows 8 Pro Tablets: Not a Good Laptop Replacement

"As a tablet enthusiast I am looking forward to the Windows 8 slates that will start appearing later this year. The Microsoft (MSFT) Surface tablets look like capable entrants to the field, along with the just-announced ThinkPad Tablet 2.

"The tablets that will run Windows 8 Pro have attracted a lot of attention from many I have corresponded with due to the ability to run not only the apps written for tablets but also legacy Windows apps. Many I have spoken to plan to get a Windows 8 Pro tablet for that legacy support.

"I am hearing from more and more people that they see these tablets as laptop replacements. The Surface tablets will have a keyboard cover to turn it into a pseudo laptop, and others are likely to have similar accessories."

Link: Analysts See Turnaround Under Way at HP, Stay Positive

"When Hewlett-Packard (HPQ) disclosed yesterday that it will take a combined $9 billion and change in restructuring charges and writedowns in its services unit, it triggered what will be the biggest single-quarter loss in the company's history: A loss of about $9 billion on a GAAP basis.

"The good news was that before accounting for those huge charges, HP's business is doing slightly better than expected. It raised its earnings outlook slightly for the quarter ended in July, saying it expects to earn about $1 per share, up from a range of 94 to 97 cents previously."

The Wall Street Journal: Deal Journal
Link: JPMorgan Buybacks Not Coming Until 2013

"That massive stock repurchase plan at JPMorgan (JPM) will remain in a holding pattern for a quarter longer than the bank expected last month as the cleanup of its London trading disaster continues.

"The bank has yet to resubmit its capital plan to the Federal Reserve and now hopes to restart its repurchases in the first quarter, subject to the completion of its review of the chief investment office.

"Just last month, CEO Jamie Dimon had said he'd hope to restart repurchases in the fourth quarter. He said he wanted to buy back stock, but talks with the Fed ruled that out until the CIO investigation is over."

Link: Marissa Mayer Brings a Little Google to Yahoo With Product Focus

"New Yahoo (YHOO) CEO Marissa Mayer, well-known for her obsessive dedication to products like Google's search and Gmail, isn't wasting time on shaking up Yahoo's complacent corporate attitude.

"The former Google (GOOG) executive is pushing Yahoo to focus more on its products and users, a big shift from the business focused chief executives like Scott Thompson and Ross Levinsohn, reports the Wall Street Journal.

"Mayer has previously said that she wouldn't reveal any grand plans to fix Yahoo until she reviewed all of its businesses. But judging from the Wall Street Journal's report, it sounds like Mayer hasn't wasted much time in putting her touch on Yahoo. The philosophical shift is also particularly impressive considering she's only been on the job for three weeks."

The New York Times: DealBook
Link: With Rates Low, Banks Increase Mortgage Profit

"Interest rates on mortgages and refinancing are at record lows, giving borrowers plenty to celebrate. But the bigger winners are the banks making the loans.

"Banks are making unusually large gains on mortgages because they are taking profits far higher than the historical norm, analysts say. That 3.55 percent rate for a 30-year mortgage could be closer to 3.05 percent if banks were satisfied with the profit margins of just a few years ago. The lower rate would save a borrower about $30,000 in interest payments over the life of a $300,000 mortgage.

"'The banks may say, 'We are offering you record low interest rates, so you should be as happy as a clam,' said Guy D. Cecala, publisher of Inside Mortgage Finance, a home loan publication. 'But borrowers could be getting them cheaper.'"

Twitter: @ChrisWitrak
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