This blog is totally independent, unpaid and has only three major objectives.
The first is to inform readers of news and happenings in the e-Health domain, both here in Australia and world-wide.
The second is to provide commentary on e-Health in Australia and to foster improvement where I can.
The third is to encourage discussion of the matters raised in the blog so hopefully readers can get a balanced view of what is really happening and what successes are being achieved.
Quote Of The Year
Timeless Quotes - Sadly The Late Paul Shetler - "Its not Your Health Record it's a Government Record Of Your Health Information"
or
H. L. Mencken - "For every complex problem there is an answer that is clear, simple, and wrong."
Thursday, September 05, 2019
The Macro View – Health, Economics, and Politics and the Big Picture. What I Am Watching Here And Abroad.
September 5, 2019 Edition.
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In the US we see Trump going on as usual with all sorts of changes of mind and inconsistency. The trade war is worsening and a global recession looms. Trump knows he must prevent a recession or loose the 2020 election – so we know he will be trying I believe. Trade talks are back on so markets are up again!
Boris is playing dangerous games with Parliament and the outcome is still unclear.With multiple losses in Parliament its not looking at all settled at present.
In OZ we have a draft religious freedom law and both sides do not like it – so it is probably about right. Otherwise we have come to a final settlement with East Timor on a border and support so that seems be some progress. Another raid by the AFP has us all wondering!
The pain being felt by value investors may only intensify if global growth "turns Japanese" according to Hyperion Asset Management.
Aug 25, 2019 — 2.47pm
If you needed yet another sign of how tough the environment is for value investors, you only had to look at Saturday’s edition of AFR Weekend.
There on page five was a prominent advertisement from Platinum Asset Management, the globally focused contrarian investor founded by billionaire Kerr Neilson, with a simple message that appeared to be aimed at existing investors.
“Now it’s time to hold the line,” the advertisement said, explaining that “when the storm clouds of uncertainty start to gather … sentiment tends to nervousness and fear, and prices can respond negatively.”
As if Scott Morrison didn’t have enough problems on his plate, we learnt last week that government-administered prices are rising much faster than prices charged by the private sector.
Last week my colleague Shane Wright dug out figures from the bowels of the consumer price index showing that, over the almost six years since the election of the Abbott government in September 2013, the prices of all the goods and services in the CPI basket have risen by just 10.4 per cent, whereas the government-administered prices in the basket rose by 26 per cent.
Reserve Bank of Australia Governor Philip Lowe has warned the trade war between China and the US is the biggest single threat to the global economy.
Some of those "administere" prices actually fell and others rose by less than prices overall. But let’s do what everyone does and focus on the really big increases. Behavioural economics tell us that people’s perceptions of the cost of living are exaggerated by a ubiquitous mental shortcut psychologists call "salience". We tend to remember the things that leapt out at us at the time and forget all the things that didn’t.
Australia, get ready to be disappointed at the next US election
By Professor Simon Jackman and Dr Shaun Ratcliff
August 27, 2019 — 12.00am
Like the rest of the world, Australians’ interest in American politics has spiked under the Trump presidency. Trump’s unconventional style garners no shortage of media attention, both in the United States and in Australia.
This attention is not merely driven by spectacle. The substantive direction of American foreign and economic policy during Trump administration is of enormous consequence for Australia. The US is Australia’s largest source of foreign investment, the largest destination for Australian investment abroad, and Australia’s most important ally.
For these reasons, Australia’s interest in US politics is not just the byproduct of another American cultural export. Although they cannot vote in the 2020 US election, Australians have "skin in the game". The turbulence of the Trump presidency reminds us that the decisions made by an American president can have profound consequences for Australia.
The Reserve Bank has warned the current threats to the global trading system are “a significant risk to both Australia and the world” and that the nation’s reliance on foreign capital would be significantly reduced if it were not for the heavy foreign ownership of the country’s biggest resources companies.
In an escalation of the RBA’s rhetoric over the growing trade war between China and the US, RBA deputy governor Guy Debelle told a conference in Canberra that the dangers are not just to Australia, but extend globally.
“Australia has clearly been a major beneficiary of that (trading) system. The current threats to the system are a significant risk to both Australia and the world,” he added.
The comments come after RBA Governor Philip Lowe told the world’s central bankers at a meeting in Jackson Hole, Wyoming, over the weekend that political shocks are now becoming shocks to the global economy.
Tension between the United States and China could be the dominant theme affecting sentiment in financial markets for the next decade and the world could be witnessing the start of an economic cold war, warned UniSuper's chief investment officer John Pearce.
"I do believe this is potentially the start of an economic cold war, if not a military cold war," Mr Pearce said. "To get out of debt, central banks around the world have had to inflate - but the problem with trade wars is it makes their role so much harder."
British engineering group Rolls-Royce says it expects to be able to build a compact nuclear power plant in Australia that would underpin the electricity grid's shift to wind and solar power and cost only £1.5 billion ($2.7 billion).
Two Canadian nuclear companies also said they wanted to build a new generation of small reactors in Australia in response to the decision by the Morrison government to explore nuclear power.
"We can offer what Australia requires: sustainable power for many years at an affordable cost," said David Orr, the program director of the Rolls-Royce-led consortium into the so-called small modular reactor. "It fits into existing grid infrastructure because you can effectively replace a coal station."
Nuclear energy is banned in Australia, but as one of few remaining advanced economies that do not consume nuclear-generated electricity, international operators and developers see it as a promising expansion market in the coming decades.
Nearly three-quarters of superannuation funds plan to increase their offshore investments over the next two years to diversify their holdings and boost returns.
The trend is identified in a National Australia Bank survey of the currency hedging techniques used by 61 super funds with $1.82 trillion in assets under management.
The funds have an average of 41 per cent of their assets offshore at present but many are considering greater exposure to foreign private debt, unlisted infrastructure and unlisted real estate.
There are “encouraging, albeit tentative” signs that the government’s tax refunds are boosting disposable income and flowing through to retail spending, according to new Commonwealth Bank research.
The CBA analysis found a spike in Google search activity on “tax refunds” in July — the largest recorded in five years.
Tax offsets were a key plank in Scott Morrison $158bn income tax cut plan, legislated after his shock election win, and gave up to $1080 in immediate relief for low- to middle-income earners. CBA chief economist Michael Blythe said there were early signs the “long slide” in retail spending intentions was bottoming out based on his reading of spending data from more than 2.5 million CBA customer households. He said the household data was paired with separate internet search data from Google to identify spending intentions.
Given the ongoing trade war and slowing global growth, many investors are understandably concerned about the market outlook. While I feel a ‘doomsday’ scenario is unlikely anytime soon, this note nonetheless considers what investment options might be of interest to those investors who hold grave concerns – and are seeking portfolio hedges against negative market outcomes.
Diversification – a good idea in any market environment
One of the ‘free lunches’ in investment markets is portfolio diversification. By including a range of different exposures in one’s portfolio, that perform differently in different market environments, investors can improve risk-adjusted portfolio returns over time.
Even in bull markets, investors know they should spread their equity risk across a number of companies – and ideally industry sectors and countries/regions too.
For those wishing to reduce downside risk in the case of ‘doomsday’ scenarios, it’s a good idea to seek investments that may perform well when equities do badly.
Recession is on the way but will the Coalition have guts to act?
Australia’s long-term economic growth is not a given, and the Coalition does not have a plan to deal with the coming recession.
Kevin Rudd
Aug 29, 2019 — 12.00am
There is a great complacency emerging in our current economic policy settings. Complacency about the risk of recession. Complacency about long-term economic reform. Both are part of what in recent years has become the complacent country – as if our nation’s future is somehow written in the stars.
Global economic storm clouds are gathering. The US is already 10 years into its current growth cycle – the longest in modern economic history. Markets are anticipating a correction. The stimulatory impact of the Trump administration’s tax cuts has already washed through.
The Fed has historically low interest rates and there’s general consensus that the classical utility of monetary policy to further stimulate economies has been exhausted; and that the non-classical approach, through quantitative easing, used extensively by the US, Japan and Europe, has also run its course.
‘Big Short’ investor Michael Burry calls passive investing a 'bubble'
Ben Winck
Aug 29, 2019 — 8.46am
Key Points
Michael Burry's wager was heavily featured in Michael Lewis’ bestselling book “The Big Short” and Christian Bale portrayed Burry in the 2015 film adaptation.
Burry told Bloomberg he sees passive investment as a “bubble” that leaves smaller companies ignored.
The investor said exchange-traded funds and index-based assets focus on larger companies and leave smaller-value stocks “orphaned” around the world.
His firm, Scion Asset Management, recently announced active investments in three small-cap companies in the US and South Korea.
Famed investor Michael Burry has told Bloomberg he sees passive investment strategies as a “bubble” that ignores small-cap stocks.
His comments are pegged to the fact that exchange-traded funds and index-based assets mostly focus more on bigger, more established companies. As investors find this passive investment increasingly appealing, smaller growth stocks are languishing in the background, Burry said.
On paper, there is no reason Australia's economy should be in big trouble.
The country has seen rapid, immigration-fuelled population growth, something many developed markets lack. It seems to be weathering the fallout from a domestic housing market cool-off, and while slow wage gains are weighing on consumer spending, pay increases have been lagging partly because workers are pouring into the job market and keeping competition for employees at bay. Crucially, the nation has little exposure to global manufacturing supply chains, a fact that insulates it from the early fallout of America's trade fight with China.
The Chinese economy risks hurtling towards a "hard landing" that could threaten more than half a million Australian jobs.
The China Matters forum, backed by mining giant Rio Tinto, Australian National University and Star Casino, will present research next week that warns a trade war, ongoing political violence in Hong Kong, a US recession or a collapse in the country's shadowy banking system, could see a fall in Chinese growth from 6.5 per cent to 3 per cent.
Such a plunge could induce a recession in Australia and put 550,000 Australian jobs at risk. That would push up unemployment from 5.2 per cent to 9.3 per cent, a level not seen in Australia in almost three decades.
A “hard landing” economic scenario in China — fuelled by the combined effect of the US trade war and growth slowdown — would put at risk Australian exports, mining royalties and foreign investment, PwC chief economist Jeremy Thorpe warns.
In a China Matters report to be released today, Mr Thorpe says Australia was “relatively more vulnerable” given its reliance on China as the nation’s largest trading partner.
The Reserve Bank and economists have outlined factors that would spark a major downturn in the Chinese economy, led by the ongoing trade war, a US recession, a debt meltdown, property market correction and political disruption.
Mr Thorpe says the “likelihood of a hard landing was exacerbated if the triggers” are released simultaneously. “Australia will not be able to avoid economic disruption in the event of a PRC ‘hard landing’. Analysis of potential scenarios for a hard landing tend to assume a one-off immediate decline in GDP growth of three to five percentage points (from the current annual growth rate of about 6 per cent).”
Education Minister Dan Tehan has moved to ease fears about the government's crackdown on university research collaborations with China, promising it will be "very different" to the hardline approach taken by the United States.
The Trump administration and American politicians have pursued strict measures around foreign scholars going into sensitive research areas and universities' ties to China. One bill before the US Congress calls on Australia and other security allies to collectively ban visas for students and academics linked to the Chinese military.
"The approach we're taking is a very different approach," Mr Tehan said when asked if Australia was looking at similarly severe action.
He said Australia's action would be more collaborative, delivering the conciliatory message as he announced a new foreign interference taskforce to tackle concerns about undue influence, cybersecurity and sensitive research collaborations.
Hats off to Australia’s self-managed fund movement. During the 2018-19 money rush from retail funds to industry funds, not only did the SMSF movement continue to grow, but a whole new generation of Australians decided it’s better to control your own money.
Given that the massive exodus from retail funds is continuing, in the next year or two industry funds will take over the mantle of the largest superannuation group of funds from the self-managed funds.
But the SMSF Association sets out how self-managed funds are transforming to adapt to the new era. In Australia, there is an incredible 590,000 self-managed funds, with around 1.1 million members.
The prudential regulator has highlighted the weaknesses of our biggest financial institutions as issues that need to be closely monitored as it sketched out its priorities in an update of its five-year plan.
The Australian Prudential Regulation Authority has again called out softness in the housing market and the banking system’s unique and long standing over-reliance on mortgages as the Achilles heel of an otherwise stable financial system.
“Declining house prices and subdued wage growth present some systemic risk and have the ability to impact stability within a banking system” the paper reads.
“Loans in ‘negative equity’, where loan value is greater than the encumbered asset value, are increasing although widespread loan losses are not evident and presently unlikely.”
Fund managers are sceptical that a recession is around the corner in Australia but, should one arrive, investors would do well to remember there are a few key rules to protect portfolios in times of turmoil.
Recession fears were back in focus on Thursday after Australia's former prime minister flagged up to a one-in-three chance that there will be a contraction in Australia next year after 28 years of continuous growth.
Kevin Rudd opined that Australia's policymakers are complacent about the risk of recession as storm clouds gather. That includes a US recession, the potential inability of central banks to further stimulate economic growth and growing geopolitical risks.
A corruption inquiry, new university rules, an internet cable under the Pacific. The government can't even separate its domestic economic agenda from China.
If Australia could not help, China or somebody else would, said PNG's Prime Minister James Marape.
As these events unfolded to our north, back home the hierarchy of the NSW branch of the Labor Party was disintegrating as the Independent Commission Against Corruption heard sensational evidence about a $100,000 cash-in-a-bag "donation'' in 2015 from billionaire and Beijing influence peddler Huang Xiangmo. (Huang has since had his permanent residency torn up on national security grounds.)
Australia's greenhouse gas emissions have risen to the highest annual rate since the 2012-13 financial year, driven higher by surging gas production that has made the country the world's biggest exporter of the fossil fuel.
Greenhouse gas figures for the March quarter of 2019, released by the Morrison government on Friday, show emissions rose 0.6 per cent on the previous 12 months to 538.9 million tonnes of carbon dioxide-equivalent.
Emissions related to LNG exports jumped 18.8 per cent, eclipsing a drop from the electricity sector as renewable energy's 28 per cent leap curbed coal- and gas-fired power output. Carbon pollution from electricity generation eased 2.1 per cent from a year earlier.
New genetic links to same-sex sexuality found in largest study of its kind
·By Brianna Abbott
·The Wall Street Journal
·August 30, 2019
Same-sex sexual behaviour has genetic underpinnings but no single gene is associated with it, according to a broad study of more than 470,000 people.
An international team of researchers found five genetic markers linked to whether someone has ever engaged in sexual behaviour with a person of the same sex, according to the paper published in the journal Science.
But the markers, which can be found across a range of genes, can’t be used to predict a person’s sexual orientation, researchers say, as sexual orientation and behaviour, like most human traits, are influenced by an array of genetic and environmental factors.
“Complicated behaviour, such as same-sex sexual behaviour, is a compilation of genetics and the social environment. It’s not just one or the other,” said Melinda Mills, a professor of sociology and demography at the University of Oxford who wasn’t involved in the work. “They’re starting the conversation in a very strong, empirical way.”
Former Productivity Commission chairman Gary Banks has finally got what he always wanted - a debate about how to get Australia's business and government productive again.
Speaking from Lima, Peru where he is consulting on trade, Banks says it is about time this issue became top of mind for corporate leaders and politicians. "It’s great to see productivity in lights again."
As the country nervously awaits next week's June quarter GDP figures, there's a sense it's time to do some heavy lifting. We have 28 years of unbroken growth behind us but the resources boom and rocketing housing market that have propped up this modern economic miracle are fading or gone.
Prices are rising fast again in Sydney and Melbourne at an annualised pace north of 6 per cent, but the RBA has much more heavy lifting to do to get inflation up and the jobless rate down.
Pity the perma-bears, because the great Aussie housing boom is back. As we predicted in April 2019 when prices were still in free fall, the value of bricks and mortar has started rising quickly following the first two Reserve Bank of Australia rate cuts.
In Sydney, home values have surged an incredible 1.3 per cent in August (the biggest jump since March 2017), according to CoreLogic. And Melbourne prices are appreciating almost as rapidly, climbing 1.2 per cent in August, the best result since May 2017.
Even the subdued Brisbane market has recorded two consecutive months of capital gains. Across Australia’s five largest capital cities, home values inflated more than 0.8 per cent in August after a 0.1 per cent gain in July. That makes August the strongest month nationally since April 2017.
Imagine you could go to your local TAB or a sports betting agency to make a $100 bet and were told you have to pony up 50 cents and pay the rest only if you lose.
Well, that same principle applies in the world of high finance, with hundreds of thousands of Australians effectively punting their hard-earned cash "on the nod" each day with a host of brokers who trade financial products called "contracts for difference" (CFDs).
And it's not only shares on which punters can speculate. Almost anything that has a futures market has a matching CFD, including multiple denominations of currency, gold, commodities and a host of major stock market indices from around the world.
The Australian Securities and Investments Commission this week proposed to use its new product intervention powers to curtail the explosive growth of trading in those products, claiming they were causing "significant detriment" to retail investors, most of whom lose money.
The beginning of economic wisdom is to understand that the advanced economies – including ours – have stopped working the way they used to and won’t be returning to the old normal.
Second in the getting of wisdom is to understand that economists are still debating why the economy is behaving so differently – so poorly - and what we can do about it.
Last week Reserve Bank governor Dr Philip Lowe gave a speech to a conference of central bankers in Wyoming revealing his acceptance that, as he put it, the economic managers are having to “navigate when the stars are shifting”.
And Treasurer Josh Frydenberg gave a speech on Australia’s productivity challenge, which offered the Morrison government’s first acknowledgement that maybe not everything in Australia’s economic garden is rosy.
Political and international editor for The Sydney Morning Herald
August 31, 2019 — 12.00am
How much does it cost to compromise an entire country? In particular, Australia? The answer that we learnt this week: far, far, less than we’d ever imagined. It turns out that you could probably get a grip on the place for about the price of a suburban home. Maybe less.
We used to think that for foreigners to take over our country, they’d be spending tens of billions acquiring large tracts of acreage, farmland, mines, whole city blocks full of offices and apartment complexes. Lots of foreigners did, but we didn’t lose control of the place. They can’t take the real estate with them, after all.
Former ALP senator Sam Dastyari arrived on a share bike to give evidence at the ICAC probe into suspect donations to NSW Labor.
Consumers are using tax and interest rate cuts to pay down record levels of household debt rather than splurge on consumer goods and services, worsening the retail downturn and limiting any economic boost, according to analysis by global investment bank Morgan Stanley.
More than half the $7.5 billion tax cut is estimated to have been paid out but there are few signs of a significant consumer pickup, with some companies such as retailer David Jones posting a full-year 42 per cent fall in operating profit.
Other retailers are reporting similar conditions, with Harvey Norman’s Australian franchise down more than 12 per cent due to soft retail conditions.
“A deleveraging consumer may limit pass-through,” its analysis concludes about how households are responding to the extra cash from tax cuts expected to flow through to an estimated 10 million houses.
When federal parliament finally voted on same-sex marriage in December 2017, fourteen MPs abstained from the vote in the House of Representatives along with eight in the Senate.
Just four MPs voted against the bill in the House. But many of those who abstained had been vocal critics of the legislation, including our now Prime Minister Scott Morrison.
Amid heated debate about whether ministers of religion would be forced to marry same-sex couples – against their teaching of their faith - a proposal was born for amendments that would entrench religious freedom in law.
(The same sex marriage legislation did ultimately contain provisions which meant religious celebrants were not obliged to perform marriage services.)
A huge rise in older Australians with mortgage debt is damaging the mental health of those who struggle to make loan repayments.
Researchers at Curtin University and RMIT University found older Australians who experience mortgage stress show significant declines in their mental health, and the problem is worse for women than men.
The mental health effects are “comparable to those resulting from long-term health conditions,” said the report’s lead author, Rachel ViforJ, professor of economics at Curtin University.
Future Fund chairman Peter Costello has warned the $162 billion fund's stellar annual returns may be harder to replicate as the world economy slows and interest rates slump to historic lows.
In releasing its full year results, Mr Costello said the sovereign wealth fund, which posted an annual return of 11.5 per cent in the year to June 30 – easily eclipsing its target of the Consumer Price Index plus 4 per cent – would continue to invest on a conservative basis.
"We still see very big risks the years ahead and we think it's going to be harder to make returns," he said. "Accordingly, we think it is right to position this fund much more lower risk, lower volatility."
In a world of misinformation, spin and lies, good journalism is more vital than ever, and this week revealed just how important it remains for journalists to look past the spin and let the facts and data lead the way.
This week, my colleague Paul Karp broke a rather stunning story that when the Bureau of Statistics released the two-year survey of household incomes and wealth in July it had changed references to wealth inequality in its media release in order to craft a “good media story”.
In effect the ABS media releases sought to downplay the reality of growing inequality.
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