September 12, 2019 Edition.
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It has been a rather quiet week or so with Trump – with the trade-war seemingly being cooling a little and causing the markets to rise a little. How long it will last who knows? The peace plans with the Taliban seem to have fallen to bits – we all wonder what come next. Additionally, in a shock move, Trump has fired the uber hawk John Bolton. Will be interesting to see what comes next!
Brexit is not able to be predicted at this point as it is total chaos and who knows what is happening from hour to hour. No update as late as Thursday!
Parliament is back this week and I am sure headlines will follow! The BIG fuss seems to be about the Chinese Member for Chisholm and her associations with China. Lots of xenophobia to go round it seems! Seems all a little hysterical to me - but I guess time will tell!
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Major Issues.
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'Strongest bidding since the peak of the boom'
Sep 1, 2019 — 1.40pm
Residential property sales in Sydney and Melbourne are rebounding to near boom-time peaks as buyers respond to record-low interest rates and cast aside concerns about a sluggish economy.
Sydney recorded a preliminary auction clearance rate of 80 per cent on Saturday and in Melbourne 76 per cent of properties sold under the hammer, in line with sale results recorded during the five-year housing boom that topped out in mid-2017.
It was a very different story this time last year when both markets were in the midst of a downturn and just 49 per cent of properties sold in Sydney and 54 per cent changed hands in Melbourne, according to Domain Group data.
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Universities’ free speech ‘crisis’: students
University students are preventing their peers from voicing opinions on controversial issues on campuses, according to more than half of those who took part in a free-speech survey.
In a new Institute of Public Affairs online survey of 500 Australian students, 59 per cent agreed that “sometimes students are prevented from voicing their opinions on controversial issues by other students”, while 31.4 per cent agreed they had been made to “feel uncomfortable” by a university teacher for expressing opinions.
At the same time, 69.2 per cent said their universities encouraged free speech.
Renee Gorman, national manager of IPA youth program Generation Liberty, said the research meant there was “a freedom of speech crisis” on Australian campuses that administrators were afraid to confront. “That 59 per cent of students who feel that they are prevented from speaking by other students is deeply concerning,” Mrs Gorman said.
Note: I reckon this is a hysterical beat-up
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Why Milton Friedman was right
The challenge is ensuring that the market 'rules of the game' are the right ones and align shareholder interests with social value.
Alan Schwartz
Sep 2, 2019 — 12.00am
Last week’s announcement by the US-based Business Roundtable that the purpose of business ought to shift from generating shareholder value to stakeholder value has been met with a mix of enthusiasm and scepticism. But whatever the intention behind it, it is little more than a distraction from the big problem: aligning profit with social value.
Shareholder capitalism, the brainchild of Milton Friedman, views the purpose of business as providing a return for shareholders alone. Stakeholder capitalism would expand the purview of executives to a range of actors beyond shareholders, with the Roundtable’s release specifying workers, customers, and the broader community.
In practice, however, stakeholder capitalism will inevitably still mostly serve shareholders. Profit will still determine business survival and expansion in the long run. Businesses that prioritise profit will still outcompete and buy out those that prioritise other goals.
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Labor is in a 'diabolical situation', Albanese says, following ICAC revelations
By Helen Pitt and Lisa Visentin
September 1, 2019 — 2.03pm
Federal Labor Leader Anthony Albanese says the party is in "a diabolical situation" and foreshadowed "comprehensive" structural reform of the NSW branch following damning allegations it had covered up illegal donations.
Mr Albanese said a review into NSW Labor would take place once the six-week inquiry by the NSW Independent Commission Against Corruption concluded, in case there are more revelations in coming weeks.
"I am not preempting legal processes. It will reveal what it will reveal," Mr Albanese said on Sunday.
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It was only ever going to end one way: How Richo sealed NSW ALP's fate
Sean Kelly
Columnist and former adviser to Labor prime ministers Kevin Rudd and Julia Gillard.
September 2, 2019 — 12.02am
About a month ago, close observers might have noticed that the phrase “deep dives” had begun to appear in dispatches from Canberra. Since the election, we read, the Prime Minister had started to arrange these sub-aqueous excursions into certain policy areas. This was part of the reason we were not hearing much from the government.
Well, good – both on the process and the quietness. For the first time in a long while, politics seems to have returned to a pitch at which reasonable discussion of less prominent but still important issues can take place. The recent talk of expanding the role of pharmacists while restricting their effective monopoly on selling medicines is a case in point.
But at the same time, this talk of “deep dives” should point us towards one fact, and one question. The fact is: we are three months into this term and the government is still playing for time. The question is: what the hell was happening in the first nine months of Scott Morrison’s prime ministership?
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Sydney and Melbourne house values rocket on lower rates
By Shane Wright and Eryk Bagshaw
The Reserve Bank's back-to-back interest rate cuts have super-charged the Sydney and Melbourne property markets with house values in the nation's two largest cities surging in August.
The monthly CoreLogic report on the national property market showed house values in Sydney lifted by 1.5 per cent last month. Over the past three months, values have climbed by 1.6 per cent.
There is a similar situation in Melbourne where house values increased by 1.3 per cent in August to be 1.6 per cent higher over the past three months.
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If you think surpluses are always good, prepare for great news
Ross Gittins
Economics Editor
September 2, 2019 — 12.00am
Don’t look now, but Australians’ economic dealings with the rest of the world have transformed while our attention has been elsewhere. Business economists are predicting that, on Tuesday, we’ll learn the usual deficit on the current account of the balance of payments has become a surplus.
If so, it will be the first quarterly surplus in 44 years. If not, we’ll come damn close.
You have to be old to appreciate what a remarkable transformation that is. Back in the 1980s we were so worried about the rise in the current account deficit and the foreign debt that it was a regular subject for radio shock jocks’ outrage. They knew nothing about what it meant, but they did know that “deficit” and “debt” were very bad words.
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Investors need to heed the warning from central banks
Monetary policymakers are warning lower rates are not enough to offset global risks. This message has not got through to shareholders.
Aug 27, 2019 — 10.25am
It probably wasn't the best weekend for central bankers to be talking about the limitations to monetary policy.
As markets are blown this way and that by Donald Trump's latest pronouncements on trade, the world's leading central bankers were taking in the fresh air at the ski resort of Jackson Hole in Wyoming and talking about the myriad challenges they face.
The main difficulty, it seems, is applying a monetary policy fix to political and structural problems assailing the world economy.
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RBA QE is a currency war tool
It is clear from recent remarks by governor Philip Lowe and deputy Guy Debelle that the RBA would contemplate QE if other central banks aggressively cut rates towards zero and the local economy faced a sharp downturn from the US-China trade war.
Sep 2, 2019 — 1.45pm
The Reserve Bank’s tip-toeing to acknowledge the possibility of near-zero interest rates and the deployment of unconventional monetary stimulus has led some critics to ask why the RBA would bother given borrowing rates are already extremely low.
The answer from the RBA, at least in part, is that even lower interest rates and buying government bonds (a form of quantitative easing) would put downward pressure on the Australian dollar.
Put more crudely, RBA QE would be a currency war tool.
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Banks warned on foreign exchange fees
Sep 2, 2019 — 6.19pm
The major banks have come under renewed pressure to slice foreign exchange fees, after the competition regulator found customers could have saved $150 million in fees last year if money was transferred overseas via lower-cost competitors to the big four.
Treasurer Josh Frydenberg said on Monday the government backed the Australian Competition and Consumer Commission's call for more competition in FX markets and lower transaction fees.
Additional scrutiny on FX costs at the major banks could support competitors like OFX, TransferWise, Travelex and Western Union.
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'Quiet Australians' shifted because of Shorten, not Morrison
Sep 3, 2019 — 12.00am
More than a quarter of Australians changed their mind about who they would vote for in the weeks leading up to the federal election and that level of volatility suggests Scott Morrison cannot rely on his "quiet Australians" turning out for the Coalition again.
New data from the Australian National University's long-running project on voter behaviour concluded the biggest drain on Labor's support stemmed from Bill Shorten's personal unpopularity rather than the Opposition's policies.
Labor was expected to win on May 18 but Mr Morrison pulled off what he labelled a "miracle" victory to form government with a one-seat majority in the House of Representatives.
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Economy facing toughest time since tech-wreck downturn
By Eryk Bagshaw and Shane Wright
September 2, 2019 — 7.30pm
The economy looks set to record its worst annual result in two decades as key economic indicators slump and pressure mounts on the Reserve Bank of Australia (RBA) and the federal government to pump out stimulus.
Prime Minister Scott Morrison said he expected national accounts data due on Wednesday to show the June quarter had been "very difficult".
The unusually pessimistic intervention follows mounting domestic and global headwinds that are expected to see economic growth stall at just above 1 per cent for the year to June 30, lower than during the depths of the global financial crisis.
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https://www.smh.com.au/politics/federal/productivity-marathon-off-to-slow-start-20190902-p52mzv.html
Productivity marathon off to slow start
Shane Wright
Senior economics correspondent
September 2, 2019 — 4.30pm
Running long distances, you mentally check off important milestones. It might be the first five kilometres, the first hour or the first drink station.
When it comes to the 46th Parliament, we've just gone through the 10 per cent mark.
And two speeches – one from Scott Morrison, one from Josh Frydenberg – suggest that this government is already huffing and puffing when it should be hitting its stride.
The addresses, by the Prime Minister to the nation's top public servants, and the Treasurer's words to the business community, revealed a government in search of an economic agenda.
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https://www.afr.com/markets/debt-markets/the-bond-market-s-workhorse-shows-its-worth-20190828-p52lso
The bond market's workhorse shows its worth
Chris Dickman
Sep 3, 2019 — 8.24am
Over the last decade, the US 10-year Treasury yield has been lower on only two brief occasions.
In July 2012, when the Federal Reserve's Operation Twist (buying huge amounts of long dated Treasuries and selling short US Treasuries) was being extended, and in July 2016, when the Brexit vote had investors piling into safe haven assets.
The yield and defensive elements of long-dated Australian bonds provides an important role, outperforming shorter-dated Australian bonds.
— Chris Dickman
It’s important to note the prevailing cash rates were negligibly above zero. That these are now near decade lows for the US 10-year and the US 30-year, while the cash rate is above 2 per cent, invites a different perspective.
Reflecting the near-zero cash rates for a large part of the last decade, the US Treasury 1 to 3 index has returned a little above 1.25 per cent a year. Most of that return has been generated after the Fed started increasing rates, from 2016.
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Buckle up to ride out the slump
More US tariffs this week add another twist to the complicated picture facing Philip Lowe at the Reserve Bank and Josh Frydenberg at Treasury.
Sep 3, 2019 — 4.45pm
Searching for gifts at the Rockmount Ranch Wear shop in Colorado, I rifle through colourful shirts featuring cowboys and yes, Indians, and lots and lots of silver studs. Maybe not. The beautiful leather belts seem the safest option to bring back to Australia, until I realise most were made in China. I eventually find one of black and white horsehair – genuinely made in the USA, just much more expensive.
And just like most Australian consumers, Americans have been increasingly less likely to take the dearer local option over cheaper imports from China.
As of this week, however, Donald Trump’s tariffs on Chinese goods are now hitting US retail stores that had previously been more sheltered. That means almost all clothing and many other consumer goods are now subject to 15 per cent tariff rates, for example.
Additional 15 per cent tariffs on $US156 billion ($232 billion) of Chinese-made phones, laptops, toys, video games and other products are due to come into effect in mid December.
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How's the Asian century turning out for you?
Matt Wade
Senior economics writer
September 4, 2019 — 12.00am
Remember the fanfare about the Asian century? It's seven years since the Gillard government’s much vaunted white paper on the topic predicted Asia’s increasingly wealthy middle class would create huge opportunities for Australia.
"As the global centre of gravity shifts to our region, the tyranny of distance is being replaced by the prospects of proximity,” it said.
"Australia is located in the right place at the right time—in the Asian region in the Asian century.”
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Take note of the calibre of the man who cried wolf
By Marcus Padley
September 4, 2019 — 12.02am
Is the sky falling? It depends on who you ask.
There is a video you should all watch. It's on a website called Livewire and you’ll find it in their top trending articles for a reason.
It is a video from a chap called Donald Amstad, head of investments specialists, Asia, at Aberdeen Standard Investments, a global fund manager that has more than $1 trillion in assets under management in 80 countries.
Mr Amstad does a great job of explaining what is wrong with the Western World.
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Retail slump continued in August: PSI
· Australian Associated Press
Retail sector activity contracted for the ninth month in a row in August as sales continued to fall, a survey of the Australian services industry suggests.
While the Ai Group's Performance of Services Index gained 7.5 points to 51.4, rising back above the 50-point mark separating expansion and contraction in activity, the contraction in the retail sector accelerated.
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The message in the economic numbers
Sep 5, 2019 — 12.00am
The first current account surplus since the 1970s and the slowest pace of GDP growth in a decade.
It's been a week of dizzying highs and, if not exactly terrifying, then troubling lows.
Growth in real GDP over the June quarter of 0.5 per cent met analysts' expectations. Nonetheless, the annual growth rate of 1.4 per cent was, as you will read everywhere, the weakest in a decade.
"The decline in annual growth over the past year is really remarkable," Felicity Emmett, a senior economist at ANZ, says.
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https://www.afr.com/policy/economy/frydenberg-wants-new-inflation-agreement-with-rba-20190904-p52nvv
Frydenberg wants new inflation deal with RBA
Sep 4, 2019 — 1.58pm
Reserve Bank governor Philip Lowe will be required to write to Treasurer Josh Frydenberg explaining why the central bank has missed its inflation target, a move likely to raise pressure to cut interest rates further.
Mr Frydenberg wants a new agreement with the RBA, which is likely to include a rule similar to that of the Bank of England, which requires it to explain why official inflation figures fall outside its inflation target band.
Inflation is now running at 1.6 per cent - below the RBA's 2 to 3 per cent inflation band.
Pressure to explain why it has missed the inflation target could mean the RBA will be more aggressive in cutting rates in order to stimulate consumption and push inflation back up to within its range.
"Yes, I am looking to have such an agreement and Treasury are currently engaged in a discussion with the Reserve Bank about that inflation target, which is 2 to 3 per cent," Mr Frydenberg said.
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Latest police raid not intimidation: Peter Dutton
Sep 5, 2019 — 4.03pm
Home Affairs Minister Peter Dutton has rejected criticism that a raid on the home of a spy agency employee is designed to intimidate whistleblowers into silence.
Mr Dutton and Prime Minister Scott Morrison echoed the Australian Federal Police in declining to confirm whether Wednesday's raid on Australian Signals Directorate employee Cameron Gill's Canberra home was connected to the investigation into leaked proposals for the spy agency to be given greater powers.
Investigators left with several plastic bags and hard cases of material for scrutiny.
Mr Gill, who is married to Australia's ambassador to Iraq, Joanne Loundes, is a long-time Defence Department bureaucrat and joined the Australian Signals Directorate (ASD) in 2017. He also was seconded to the ministerial offices of Mal Brough and Dan Tehan when they were junior defence ministers.
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Labor in no rush to dump election policies
There's an emerging, if not risky, view in Labor that the policy agenda is salvageable so long as it is pared back and propagated by a more popular leader.
Sep 5, 2019 — 7.00pm
Last week, Mathias Cormann decided to prod Labor by reminding it why, in his view, it lost the election and why it could lose the next one.
Cormann cited Labor's embrace of economic "socialism" based on what he said was a false assertion that Australia had a major and growing inequality problem.
''Labor lost an election that many asserted was a foregone conclusion,'' the Finance Minister told the Sydney Institute.
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How Parliament learned to say 'no' to China
David Crowe
Chief political correspondent
September 5, 2019 — 11.37pm
The past few years have been so volatile in federal politics it is easy to forget the moment Australia stumbled toward a deal with China it would have deeply regretted.
Years of work went into an extradition treaty between Australia and China that came dangerously close to reality during the toxic transition from Tony Abbott to Malcolm Turnbull as prime minister.
Scott Morrison says the situation in Hong Kong is being closely assessed and he's urging protestors to be peaceful and for China to show restraint.
It is astonishing that Australia once contemplated the sort of law that has ignited protests in Hong Kong, triggered police brutality and prompted mainland Chinese forces to assemble at the border to potentially crush dissent.
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'What's going wrong with Australia?': RBA chief Philip Lowe fears the economy's time is up
He catches public transport to the office and if anyone asks, says he works in a bank. Reserve Bank governor Philip Lowe may be low-key by nature, but his calls for bosses to grant workers a decent pay rise have thrust him firmly into the spotlight.
September 6, 2019
Money today may be largely electronic, yet hidden vaults of vast treasure still exist. If you were put in charge of one stacked with billions of dollars in cash, would you feel just a tingle of excitement?
Philip Lowe holds the keys to not one but two of the richest vaults in the country. One is in the middle of Sydney, where thousands of city workers tread the pavements daily, oblivious to the billions below. The other, a supervault, is in the sleepy outer Melbourne suburb of Craigieburn, aboveground but anonymous, opposite an old orange juice factory. Robots manage the billions here. Red ones.
The idea of secret vaults of untold wealth has tantalised the human imagination for millennia. Real ones, from pharaohs’ tombs to Fort Knox, have been richly supplemented by the imaginary, from Ali Baba’s cave to Gringotts Wizarding Bank.
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As economies falter, markets grow wilder
Reporting season generated 'unprecedented' volatility as 35 per cent of listed firms recorded share price moves of over 5 per cent on the day of their results.
Sep 6, 2019 — 3.19pm
Economies are less dynamic and business cycles are squashed, yet financial market valuations have grown rich and increasingly prone to wild bouts of volatility. What gives? And how can an investor navigate these waters?
The developed world has entered into what one investor described to me as an environment of "lower-amplitude growth". For economies this means longer cycles with less variability, and interest rates trapped within a narrow and low range as worries about inflation being too weak trump traditional fears of overheating consumer prices.
The American economy is exhibit A. It is enjoying its longest-ever period without a recession. But the size of that expansion, in GDP terms, is the weakest since World War II.
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The chasm between political rhetoric and economic reality
Josh Frydenberg continues a long tradition of treasurers caught up up in the do-or-die politics of bad economic numbers.
Laura Tingle
Sep 6, 2019 — 4.56pm
The conspicuous exhilaration of the near-death escape turns up as regularly in politics as in spectator sport.
There are all those election victory speeches for starters. We’re not talking about the speeches by the leaders who felt chosen by fate to fulfil their destiny as our leaders. We’re talking about the ones in which the elected or returned leader quite obviously can’t believe they’ve actually won.
You can almost see them trying to process the win as they speak, wearing a telltale silly grin of disbelief, and turn it into a story of how their victory is an endorsement of everything they have been saying. (When it usually actually isn’t.)
The economy provides an equal share of such moments, often via the vehicle of the national accounts: the quarterly reading of whether the economy is growing or not; whether we're spending money in the shops; whether exports are adding to our national wealth; what, in general, is propping us all up.
In political terms, it is often seen as a report card on the government of the day.
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The curse of the inflation target
One of the searing lessons from the persistently high inflation of the 1970s was the importance of curbing the influence of politicians on monetary policy.
Sep 6, 2019 — 3.51pm
It's one of the cruel twists of history that the very instrument central bankers in the past used so successfully to assert their independence from governments – the inflation target – is now being used by politicians to bring them to heel.
One of the searing lessons from the persistently high inflation of the 1970s was the importance of curbing the influence of politicians on monetary policy, because they're almost invariably in favour of greater stimulus as a way to boost economic activity – and hence their own chances of re-election.
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Labor must stick to its policy guns
Sep 6, 2019 — 6.00pm
ALP president and former federal treasurer Wayne Swan has urged Labor not to discard all the tax increases and the philosophy of redistribution it took to the election, which he says was only narrowly lost.
"This is an agenda to be proud of, not resile from, after a narrow loss," Mr Swan said. "There is an old saying that has never lost its good sense: pay tax, buy civilisation."
With Labor still coming to grips over its future policy agenda, Mr Swan believes the opposition suffered at the election more because its campaign was poor; it tried to do too much at once; it was out-spent by Clive Palmer; and was opposed by the Murdoch media.
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The real reason Labor lost the election means Morrison got lucky
Peter Hartcher
Political and international editor for The Sydney Morning Herald
September 7, 2019 — 12.00am
Scott Morrison described his election win as a "miracle". It turns out that the miracle was not so much his shining brilliance as the depth of Bill Shorten's unelectability.
We always knew that the Labor leader was unloved. During the election campaign one Melbourne man in a focus group, a pharmaceutical manager named Stewart, said of Shorten that “he’s someone you’d like to punch in the head".
The economy has fallen to its slowest rate of growth since the global financial crisis but the Treasurer is optimistic for the second half of the year.
Another man in the same group agreed enthusiastically. And they were blokes inclined to vote Labor.
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This time is different. A slowing economy but no panic - yet
By Shane Wright and Eryk Bagshaw
September 7, 2019 — 12.00am
Australian economist Stephen Koukoulas had just taken up a position with TD Securities in London in 2007. The office overlooked a branch of Newcastle-based bank Northern Rock.
Around the middle of the year, one of TD's foreign exchange dealers couldn't contain his surprise as a queue hundreds of metres long formed out of the Northern Rock branch's door.
"What the fook!" he exclaimed in a heavy Geordie accent. Nervous deposit holders were trying to get their savings out.
Even though the terms "global financial crisis" and "great recession" were more than a year from being coined, events playing out at that bank branch were enough to convince Koukoulas that the world economy was in real trouble.
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No economic disaster, but we are stuck in low gear
Clancy Yeates
Banking reporter
September 7, 2019 — 12.00am
Prime Minister Scott Morrison's claim that this week's soft economic growth figures were "no surprise" is itself a bit, well, surprising.
If the government had such a strong inkling the Australian economy would endure a weak June quarter, why did it only really start softening up the public this week, in the days leading up to the national accounts?
Why didn't the April budget build more of this anticipated softness into its forecasts? And for that matter, if it was so well known that growth was trudging along at a sub-par pace of 1.4 per cent a year, why didn't the Reserve Bank of Australia foresee this weakness just last month?
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RBA bets the house on stimulus
If there’s one thing worse than monetary policy not working, it’s monetary policy working, and producing a new house price boom and more household debt.
Right now, it’s working and not working. This week we learned that house prices in Sydney and Melbourne took off like a rocket in August, with median rises of 1.6 and 1.4 per cent respectively.
Up to the end of June, at least, the private domestic economy is in recession, after eight years — eight years! — of monetary policy easing, complete with 14 consecutive rate cuts.
Another way of putting that is that government spending, exports and population growth are keeping the economy afloat, and the only part of the domestic private economy that is responding to monetary policy is residential real estate. Maybe that will be enough, and it will get the rest moving again, but it brings other problems, such as housing affordability and more debt.
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Deferred commodity shipments point to fading demand
Sep 6, 2019 — 4.55pm
Foreign buyers of Australian coal have deferred shipments over the past two months, adding to evidence of fading demand for several export commodities.
Peabody Energy said its financial performance had "materially'' deteriorated since June 30 on the back of ''demand-driven deferrals'' of coal shipments, slumping coal prices and a slower than expected return to production at Queensland's Middlemount mine after safety incidents.
Peabody told AFR Weekend on Friday that its Australian coking coal and thermal coal exports were among those affected by the "demand-driven deferrals".
The deferrals add to mounting evidence that the resources boom that has fuelled Australia's strong recent trade performance is now in decline.
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Royal Commissions And The Like.
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Financial advisers win two-year extension
Sep 1, 2019 — 2.56pm
Financial advisers will be given up to an extra two years to upgrade their professional standards and qualifications under a concession announced by the Morrison government.
Existing financial planners will have until January 2022 to pass a financial advice exam and until January 2026 to graduate from a financial advice university or TAFE degree accredited by Financial Adviser Standards and Ethics Authority, Assistant Minister for Financial Services Jane Hume said.
Labor shadow minister for financial services Stephen Jones slammed the delay, arguing the reforms were being pushed back just months after the Hayne royal commission criticised a lack of professional standards as a major concern.
"The government are being negligent and dragging their feet on urgent reform," Mr Jones said.
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Banks still 'running scared': Aussie Home Loans
By Clancy Yeates
September 2, 2019 — 12.00am
Aussie Home Loans founder John Symond is urging the government to intervene to ease the pressure on banks over how stringently they must check customers' living expenses, saying the housing recovery is at risk because lenders are "running scared."
Mr Symond, who chairs the Commonwealth Bank-owned mortgage broker Aussie, said despite signs house prices were stabilising, banks were still denying a significant number of borrowers because they did not meet rigid guidelines on customer living expenses.
He said about a fifth of customers who would previously have been given loans were now being knocked back by banks that feared being pursued by more assertive regulators. This caution among banks represented a "huge threat" to the property market and a "brittle" economy, he said, pushing for regulators to take a more "realistic" approach to banks. The office of Treasurer Josh Frydenberg did not comment.
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National Budget Issues.
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Frydenberg's moment of economic truth
The government is working on a package of stimulus measures while insisting its energy policies will eventually produce greater supply and lower prices for consumers and businesses.
Sep 2, 2019 — 12.00am
The traditional August lull over the northern summer has proved anything but, thanks to rolling political crises creating constant market turbulence and worries about global growth.
The official end of summer and return to work this month will only ratchet up that level of risk and uncertainty - even if investors in the US keep trying to reassure themselves things will somehow work out in the end.
So American stockmarkets recovered some of their nerve last week, for example, papering over concerns about the US-China trade war with the recovery based on little more than slightly less confrontational rhetoric from Donald Trump.
That modest degree of reassurance is only likely to last about as long as another Trump tweet about his many “enemies” – domestic and international. Continued volatility is now the brightest prospect among far more threatening possible outcomes.
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Economy will pick-up after 'soft' GDP June quarter
Sep 3, 2019 — 12.00am
Treasurer Josh Frydenberg concedes the nation's economic growth for last financial year will be poor but believes activity will pick up in the September quarter because of cuts to income taxes and interest rates.
Fearing a growth number as low as 1.4 per cent for year ending June when GDP figures are released tomorrow, the Treasurer blamed several factors for what will be a sluggish quarter, including the election campaign.
“With the election falling in the middle of the June quarter and the ongoing impact of trade tensions abroad and devastating floods and drought at home we are expecting soft June quarter results on Wednesday,'' he said.
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https://www.afr.com/companies/agriculture/wool-out-in-the-cold-as-china-stops-buying-20190902-p52n1y
Wool out in the cold as China stops buying
Sep 3, 2019 — 12.00am
The price of wool is falling steeply as China’s textile industry feels the fallout from the trade war with the United States, and European economies weaken. with industry leaders bracing for worse to come.
Australian wool prices are back to 2016 levels with growers withdrawing bales from auctions after more price falls last week linked to reduced demand from Chinese consumers and Italian producers of woven cloth.
Australian Wool Innovation said pre-sale sentiment last week was abysmal with purchasing confidence eliminated by talk of more US tariffs on China and what it dubbed the Brexit shambles.
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Australia posts first current account surplus since 1975
Sep 3, 2019 — 11.40am
Australia has recorded its first current account surplus since 1975, posting a $5.8 billion surplus driven by booming exports of iron ore and coal.
Another record trade surplus of $19.8 billion turned the current account from a deficit of $2.9 billion in the March quarter to a surplus of $5.8 billion, a turnaround of $6.9 billion.
The result far exceeded the consensus of economists for a $1.5 billion surplus.
Figures released by the Australian Bureau of Statistics on Tuesday showed exports of goods and services rose $4.57 billion, up 4.8 per cent, while imports of goods and services fell $460 million or 0.6 per cent.
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'Precisely what you'd expect in an economic downturn': Retail sales tumble despite tax cuts
By Shane Wright and Eryk Bagshaw
September 3, 2019 — 12.46pm
The Morrison government's income tax cuts and lower interest rates have not been enough to get shoppers into the nation's malls with retail sales falling and damaging expectations of a post-election confidence boost.
The Australian Bureau of Statistics on Tuesday reported retail sales in July, which analysts and the government had expected to see lift on the back of tax cuts that started flowing into bank accounts from mid-July, fell by 0.1 per cent.
Scott Morrison has responded to concerns about the state of the economy as house prices in Sydney and Melbourne creep back up but forecasters predict economic activity for the year to June to be disappointing.
The Australian dollar dropped immediately after the release of the results, falling from 67.31 US cents to 67.18 US cents.
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GDP slides to 1.4pc, slowest in 10 years
Sep 4, 2019 — 11.42am
Treasurer Josh Frydenberg has downplayed the significance of slowing economic growth, saying today's numbers did not reflect the Morrison government's tax cuts or the full impact of recent reductions to interest rates by the Reserve Bank.
The economy posted its slowest annual growth in a decade, according to GDP numbers out on Wednesday, growing at 1.4 per cent, down from 1.8 per cent.
The Treasurer said the result, which was in line with economists' expectations, did not reflect the $14 billion of tax refunds that have since flowed into household accounts or the full effect of lower interest rates.
"The combination of these tax and interest rate cuts, the stabilisation of the housing market, continued high levels of spending on infrastructure and a more positive outlook for investment in the resources has led the RBA governor to say there are signs the economy may have reached a gentle turning point," Mr Frydenberg told reporters.
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Economy hits slowest rate of growth since global financial crisis
By Shane Wright and Eryk Bagshaw
September 4, 2019 — 12.22pm
The Australian economy has fallen to its slowest rate of growth in a decade, forcing the Morrison government to enact a plan to bring forward infrastructure spending to stimulate it out its slump.
The economy would have struggled to stay out of recession without historically high levels of immigration, with economic growth per person - gross domestic product per capita - negative over the past 12 months, the worst performance since the global financial crisis.
Overall, the economy grew by 0.5 per cent in the three months to June, a mild improvement from the 0.1 result recorded between September and December last year.
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Reeling fundies pray Frydenberg is right
The lowest GDP growth rate in a decade marries with the ugly results from reporting season. Investors hope Josh Frydenberg is right about better times ahead.
Sep 4, 2019 — 4.32pm
There’s a neat symmetry between the parlous economic growth numbers released on Wednesday and the post-mortems being conducted on the brutal reporting season that ended last week.
The national accounts showed that GDP is growing at just 1.4 per cent on an annual basis, the slowest rate since 2009, in the dark days of the GFC.
Meanwhile, a review of reporting season compiled by JPMorgan shows that August saw a 1.9 per cent cut in earnings estimates for the benchmark ASX 200 for the 2018-19 year. It was the biggest earnings season reduction in EPS growth since – you guessed it – 2009.
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Spending growth in NSW hits zero as Australia's economy slumps to GFC levels
By Eryk Bagshaw, Shane Wright and Matt Wade
September 5, 2019 — 12.15am
A key indicator of NSW’s economic performance slumped to zero in the last quarter as Australia recorded its weakest annual growth in a decade.
The economy has fallen to its slowest rate of growth since the global financial crisis but the Treasurer is optimistic for the second half of the year.
State final demand, a broad measure of spending across the NSW economy, stalled in the three months to June 30 after being dragged lower by weak consumer spending and the effects of Sydney’s house price slump.
Treasurer Dominic Perrottet said the downturn in the housing market had obviously had a flow-on effect.
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Cash rate tipped to drop to 0.25% amid claims RBA's job is getting tougher
By Shane Wright
September 5, 2019 — 4.46pm
Labor has accused the Morrison government of making the Reserve Bank's job of boosting the economy even tougher as economists predict official interest rates could be driven down to 0.25 per cent by next year's federal budget.
As Prime Minister Scott Morrison said infrastructure spending was starting to hit its "head on the ceiling", the ANZ said the RBA may have to take rates to extraordinarily low levels and leave them for an extended period of time.
The June quarter national accounts released on Wednesday showed the economy growing at its slowest annual rate since the global financial crisis at 1.4 per cent, with net exports and the public sector keeping the economy afloat.
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Health Issues.
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Push for blood cancer breakthrough
· Australian Associated Press
Blood cancer kills 20 Australians each day on average, with death rates due to double by 2035 unless something is done.
The federal government has announced a $150,000 task force aimed at increasing survival rates for leukaemia, lymphoma and myeloma.
It will seek to make Australia the first country in the world where blood cancer is a chronic condition and not a fatal one, Health Minister Greg Hunt says.
New research by the Leukaemia Foundation predicts 186,000 Australians will die from blood cancer by 2035.
"Every day, 41 Australian children, adults, parents and grandparents will be told they have blood cancer and unfortunately 20 people will lose their life," the foundation's chief executive Bill Petch said.
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The key to reducing soaring paracetamol overdose numbers: doctor
By Ben Weir
September 2, 2019 — 5.49am
A leading health professional is calling for smaller paracetamol packets after a study found a 44 per cent increase in the number of Australians who have overdosed on the drug in the past decade.
The lead researcher, Dr Rose Cairns from the University of Sydney, said reducing packet sizes should be considered to curb this "growing problem".
"In Australia, you can get 20 tablets in supermarkets, and in pharmacies you can get a hundred. There are no legal restrictions on how many packets you can buy," Dr Cairns said.
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Medibank accused by ACCC of rejecting surgery claims to members who were covered
By Patrick Hatch
September 3, 2019 — 9.51am
The consumer watchdog is suing Medibank for allegedly telling customers they could not make claims for certain types of surgery even though their policies covered those procedures.
The Australian Competition and Consumer Commission launched the court action on Tuesday alleging Medibank's subsiduary brand ahm Health Insurance told members making claims or inquiries they were not covered for joint investigations or reconstruction surgery.
In fact, those members with "lite" or "boost" policies were entitled to make claims.
“We will allege that Medibank incorrectly rejected claims or eligibility enquiries from over 800 members for benefits that they were entitled to and were paying for,” ACCC Chair Rod Sims said.
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Doctors declare climate change 'emergency'
The Australian Medical Association has joined other international medical groups in recognising climate change as a health emergency.
Finbar O'Mallon
Australian Associated Press September 3, 20199:33am
Australia's top medical body has declared climate change a health emergency.
The Australian Medical Association has warned climate change could have severe health consequences for vulnerable people in Australia and the Pacific.
"These effects are already being observed internationally and in Australia. There is no doubt that climate change is a health emergency," association president Tony Bartone said on Tuesday.
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$320 a night to stay in a public hospital after two funds slash rebate
By Dana McCauley
September 4, 2019 — 12.05am
Australians insured with HCF face hundreds of dollars per night in out-of-pocket fees if they are admitted to NSW public hospitals as private patients in a private room after the health fund became the latest to slash benefits.
HCF, the nation's largest non-profit fund, advised members on Monday it was clawing back higher fees charged by public hospitals in NSW and the ACT, leaving members there with out-of-pocket expenses of $320 per night.
Private Healthcare Australia says NSW and ACT public hospitals charge $752 per night for private patients in their own rooms, compared with an average $432 in other states.
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More than half pay top dollar for health insurance
More than half of all health fund members now have the most extensive — and expensive — cover, with the introduction of new insurance categories compelling many to upgrade.
Before the much-vaunted launch of gold, silver, bronze and basic categories in April, it was thought that 45 per cent of members had gold-equivalent policies and 45 per cent had the lowest level of cover, with the rest falling somewhere in between.
The new categories were part of a package of reforms that Health Minister Greg Hunt heralded as the most significant in a decade, “making insurance simpler and more affordable”.
Data obtained by The Australian shows that by the end of June, and with three-quarters of policies moved over to the new categories, 55 per cent of members were in gold, 21 per cent in silver and 10 per cent in bronze.
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$3200 to have a baby as private obstetricians' out-of-pocket costs rise
By Dana McCauley
September 5, 2019 — 12.05am
Obstetricians are demanding an urgent review of Medicare rebates after the out-of-pocket fee for women giving birth in the private system spiked by 9 per cent in 12 months to more than $3200, an analysis of the latest data reveals.
Royal Australian and New Zealand College of Obstetricians and Gynaecologists president Vijay Roach said rebates must be lifted "to stem the haemorrhage from private obstetrics into the over-burdened public health system".
Patients who saw a private obstetrician paid an average $272 out-of-pocket every time their obstetrician billed Medicare in 2018-19, official data released on Wednesday revealed, up from $250 the previous year.
With obstetricians billing patients 12 times throughout a typical pregnancy, it means the average cost of having a baby in the private system is now $3264.
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Nursing home a 'sentence' for young man
· Australian Associated Press
James Nutt, 35, views his years in a nursing home as a "sentence".
Lisa Corcoran, 43, hates living in aged care and wishes she could leave.
Life in residential aged care for people under 65 can be soul destroying, the aged care royal commission has been told.
A number of younger people who are living, or have lived, in residential aged care will tell the royal commission about their experiences during a hearing in Melbourne next week.
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International Issues.
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The Anatomy of the Coming Recession
Unlike the 2008 global financial crisis, which was mostly a large negative aggregate demand shock, the next recession is likely to be caused by permanent negative supply shocks from the Sino-American trade and technology war. And trying to undo the damage through never-ending monetary and fiscal stimulus will not be an option.
NEW YORK – There are three negative supply shocks that could trigger a global recession by 2020. All of them reflect political factors affecting international relations, two involve China, and the United States is at the center of each. Moreover, none of them is amenable to the traditional tools of countercyclical macroeconomic policy.
The first potential shock stems from the Sino-American trade and currency war, which escalated earlier this month when US President Donald Trump’s administration threatened additional tariffs on Chinese exports, and formally labeled China a currency manipulator. The second concerns the slow-brewing cold war between the US and China over technology. In a rivalry that has all the hallmarks of a “Thucydides Trap,” China and America are vying for dominance over the industries of the future: artificial intelligence (AI), robotics, 5G, and so forth. The US has placed the Chinese telecom giant Huawei on an “entity list” reserved for foreign companies deemed to pose a national-security threat. And although Huawei has received temporary exemptions allowing it to continue using US components, the Trump administration this week announced that it was adding an additional 46 Huawei affiliates to the list.
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Crunch time for Apple in trade war
By James Titcomb
September 1, 2019 — 11.59am
Apple's Mac Pro, a supercharged high-end computer designed for professional filmmakers and graphics designers, is not one of the tech giant's more important products.
It costs more than $6,500 for the most powerful model, and is seen within Apple as an engineering hobby rather than key to its bottom line. But in recent years, the computer has carried a significance that its better selling gadgets have not.
Stamped on the underside of the computer are the words: "Assembled in the USA". Since 2013, the Mac Pro has been put together at a factory in Texas, making it unique among Apple's major products. "We've been working for years on doing more and more in the United States," Tim Cook, Apple's chief, said at the time.
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Westminster shutdown: is Britain facing a coup?
The government stands accused of undermining democracy by proroguing parliament. Five experts assess a momentous political decision
Sun 1 Sep 2019 15.02 AEST
Robert Saunders
Historian and political commentator
The British constitution is unlike any other in the world. You cannot find it in a bookshop or read it online. It has no manual or handbook. Instead, it is a delicate assemblage of laws, practices and institutions, built over centuries and held together by a fragile tissue of customs, conventions and understandings. It relies on trust and on a common commitment to its unwritten rules. That has allowed it to adapt and evolve, but leaves it dangerously vulnerable to the abuse of power.
Boris Johnson’s predecessors were often careless with the constitution, but none showed such contempt for its core principles. The United Kingdom is a parliamentary democracy, in which “the will of the people” flows through our elected representatives. Our claim to be democratically governed rests on this slender foundation: that a government must command the confidence of the elected chamber. By wielding the royal prerogative to silence parliament, Johnson has struck at the foundations of our democracy.
Johnson is perhaps the first prime minister in British history who does not recognise parliament, or a parliamentary election, as the source of his authority. He was placed in No 10 by 90,000 party activists – not much larger than a single constituency – whom he courted through his column in the Daily Telegraph. He appointed Dominic Cummings to the heart of government: a man who months earlier had been found to be in contempt of parliament. Once, that would have disbarred him from office. Today, it is a programme for government.
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Method behind the madness of Boris' Brexit gamble
Sep 1, 2019 — 10.05am
London | British Prime Minister Boris Johnson’s decision to lob a constitutional hand grenade into the already febrile and chaotic Brexit battlefield last week has prompted many pundits to jack up the probability that Britain will quit the European Union without a Brexit deal on October 31.
But look again. Parliament doesn’t sit much in September, so by proroguing parliament from the end of this week (or early the week after), Johnson has stripped out only about half a dozen sitting days, plus he's closed off the option of MPs cancelling their three-week parliamentary recess.
So anti-Brexit MPs still have enough time to act to bind Johnson’s hands against a no-deal Brexit, as Conservative rebel ringleader Oliver Letwin conceded on Friday.
“There probably is time. Whether we can get the required majority in the House of Commons is altogether another matter,” the Tory MP told the BBC.
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Iran confronts Royal Navy ship 115 times
· The Times
A British Royal Navy warship has faced 115 confrontations with the Iranian Revolutionary Guards Corps in the Gulf since the start of July, its captain has disclosed.
Commander Will King, 41, said the Iranian military had “heavily” tested HMS Montrose almost daily with fast attack craft and drones deployed as close as 200 metres to “intimidate” his ship. Tehran harboured “a continuous intent to disrupt or interfere with UK interests in the area”, he said.
Iranian personnel have directed aggressive messages over the radio to their British naval counterparts and mocked the Type 23 frigate after she failed to prevent the seizing of the UK-flagged Stena Impero six weeks ago.
The seriousness of the Iranians’ intent, after their humiliating withdrawal from an attempt to snatch another British tanker nine days earlier, became clear as they fired up their coastal defence systems and targeted cruise missiles in the direction of HMS Montrose, it can now be disclosed.
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Four lessons from a world out of control
Sep 2, 2019 — 9.26am
Well, that escalated quickly.
Bookended by the Federal Reserve's baffling "mid-cycle adjustment" rate cut narrative and Donald Trump's escalation of trade hostilities at the start of the month, and ending with UK Prime Minister Boris Johnson's suspension of the UK parliament, it's little wonder investors flipped the switch to "risk off" in August and kept it there as economic, financial and geopolitical risks fueled renewed volatility and a flight to safety.
While Australian fund managers had their heads down dealing with earnings season, the world beyond our shores was spinning out of control.
August marked the month when the US-China trade war went hot, the yuan fell 4 per cent to post its biggest fall since 1994, the US yield curve inverted, the Australian 10-year yield tumbled below 1 per cent and gold marched to its highest point since 2013.
It was a month that contrasted sharply with the bullishness that had propelled markets to new highs earlier in the year, jolting investors out of their complacency. So what are the key takeaways?
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Europeans mark 80th year of outbreak of World War II against Nazis
Jill Colvin
Sep 2, 2019 — 9.10am
Warsaw | Germany's president expressed deep remorse for the suffering his nation inflicted on Poland and the rest of Europe during World War II, warning of the dangers of nationalism as world leaders gathered on Sunday in the country where the war started at incalculable costs.
"This war was a German crime," President Frank-Walter Steinmeier told Poland's top leaders, German Chancellor Angela Merkel, US Vice President Mike Pence, and other world leaders at a 80th anniversary ceremony marking World's War II's outbreak.
Also in attendance were elderly Polish war veterans wearing military uniforms and a Holocaust survivor wearing a yellow Star of David and the striped clothes that prisoners wore at Nazi German death camps.
Steinmeier expressed his sorrow over the mass killings Adolf Hitler's regime committed in Poland, which paid a huge price for being the place war began on Sept. 1, 1939. The German president expressed gratitude to Poles for the gestures of forgiveness Poland has bestowed in return.
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What the UK economy would look like under Jeremy Corbyn
Jim Pickard and Robert Shrimsley
Updated Sep 2, 2019 — 2.11pm, first published at 2.07pm
“They looked like they were meeting the Gremlins”, is how one of Labour’s Treasury team remembers a meeting with senior UK civil servants ahead of the 2017 election. Jeremy Corbyn’s party was yet to surge in the polls and expected to take a thorough beating.
For the officials, required to meet the opposition ahead of an election, this was a matter of going through the motions.
Two years on with UK politics scrambled by Brexit, the landscape is unrecognisable. A Corbyn government is no longer a remote prospect.
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Secret recording reveals Hong Kong leader would quit if she had a choice
By Greg Torode, James Pomfret and Anne Marie Roantree
September 3, 2019 — 1.53am
Hong Kong: Embattled Hong Kong leader Carrie Lam said she has caused "unforgivable havoc" by igniting the political crisis engulfing the city and would quit if she had a choice, according to an audio recording of remarks she made last week to a group of businesspeople.
At the closed-door meeting, Lam told the group that she now has "very limited" room to resolve the crisis because the unrest has become a national security and sovereignty issue for China amid rising tensions with the United States.
"If I have a choice," she said, speaking in English, "the first thing is to quit, having made a deep apology."
Lam's dramatic and at times anguished remarks offer the clearest view yet into the thinking of the Chinese leadership as it navigates the unrest in Hong Kong, the biggest political crisis to grip the country since the Tiananmen Square protests of 1989.
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A message to Hong Kong's protesters: there's only one way you can win
Peter Hartcher
Political and international editor for The Sydney Morning Herald
September 3, 2019 — 12.05am
Protesters of Hong Kong, I think I can safely say that I am one among many millions of people around the world who admire your bravery. And support your cause of preserving liberty, even extending it to full electoral democracy.
But I fear that the tactics of the most aggressive among you are going to doom your entire movement and seal Hong Kong's fate.
When the inevitable crackdown comes, there is only one way that you can win this struggle. If the Beijing authorities decide to use force to end the protests and restore calm, they will not hesitate to crush 5000 radicals on the streets. Or even 50,000.
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Shenzhen will never be Hong Kong, but Singapore might
The Lex Column
Sep 3, 2019 — 10.18am
What happens when you cannot fly out of a transport hub? This is what protesters wanted China to ponder as they blocked roads to Hong Kong’s airport over the weekend.
Three months of violent protests are hurting the city’s status as Asia’s key financial centre. China wants to hedge its reliance on Hong Kong for global market access by offering Shenzhen as an alternative. A shift is unlikely.
The only obvious switch is in a surge in air passengers at Shenzhen, a 15-minute train ride away from Hong Kong, as flights were cancelled in the city. Shares of Shenzhen Airport Company have gained 35 per cent this year. Those of Guangzhou Baiyun International Airport, 45 minutes away, are up 90 per cent.
The government wants Shenzhen to be more than a detour on the way to Hong Kong’s Central business district. It hopes to attract Asia-Pacific headquarters of multinationals and investment funds on three fronts: with free trade zones, relaxed visa requirements and pledges to reform regulations to match international standards. The “Greater Bay Area” initiative aims to link Hong Kong, Macau, Shenzhen and other cities into one business hub.
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Election looms as Boris suffers crucial blow
Updated Sep 4, 2019 — 8.00am, first published at 7.20am
London | British MPs will on Wednesday (Thursday AEST) try to ram through a law preventing a no-deal Brexit on October 31, and will also wrangle over whether Prime Minister Boris Johnson can call a snap election, after opposition parties and rebel Conservative MPs seized control of the parliamentary agenda from the beleaguered government.
The move, in a 328-301 vote late on Tuesday night (Wednesday morning AEST) plunges Britain further into profound Brexit uncertainty, and quite possibly facing a destabilising election on October 14.
Mr Johnson has been determined to leave the European Union with or without a deal on October 31, but the so-called "rebel alliance" of opposition and Conservative MPs has been equally determined to force him into another "Brextension".
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'Undeniable' cracks open in US economy as trade war slams factories
Sep 4, 2019 — 4.27am
Washington | Damage from the worsening US-China trade war is beginning to weigh on the world's biggest economy, with American manufacturing joining a spreading contraction that has already hit 70 per cent of the world's factories.
Amid a dearth of signs Washington and Beijing are set to resume stalled talks and days after the latest round of US tariff hikes hit exports from China, data showed US manufacturing shrank last month for the first time in three years.
Closely watched ISM gauges deteriorated for US production, new orders and - in a potential political body blow for President Donald Trump - employment, which remains the shining light of the American economy.
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Hong Kong leader fully withdraws extradition bill
Shibani Mahtani and Timothy McLaughlin
Sep 5, 2019 — 3.43am
Hong Kong | After months of standing firm, Hong Kong leader Carrie Lam announced she will formally withdraw a bill allowing extradition to mainland China - a move quickly rejected by protesters, moderates and even some pro-government officials as too little and too late amid the territory's worst political crisis since its handover to China 22 years ago.
The end of the bill, which sparked months of sometimes violent protest in the semiautonomous city, means Lam has addressed one - and perhaps the easiest - of five demands put forward by protesters.
Lam now hopes to kick-start a dialogue after months of increasingly violent demonstrations.
Lam, however, stopped short of announcing a fully independent investigation into the upheaval including the police's response and use of force, a key issue playing out night after night on city streets.
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A tough day at the office for Boris, but don't write him off
The UK PM is at a fork in what is a rocky road. If you're British, it's probably already too late to put on your seat belt.
Updated Sep 5, 2019 — 9.46am, first published at 9.38am
London | It didn't take British Prime Minister Boris Johnson long to taste the ignominy of defeat on the floor of parliament, much like Theresa May before him. Only six weeks in Downing Street and his face is already an echo of hers, with tightly drawn mouth and darkly circled eyes.
But although he's had a rough couple of days, things might not be as bad as they seem for Johnson.
He's at a fork in the road. Down the gloomy side of the fork, he fails to secure an election when he wants it, fails to nail a deal with the European Union and is forced to break the one unbreakable pledge he has made: to deliver Brexit by October 31. Credibility shot, stuck back in Theresa May's rut, his days would surely be numbered.
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Bank of England scales back estimate for worst-case Brexit GDP hit
William Schomberg
Sep 5, 2019 — 3.02am
London | A worst-case no-deal Brexit would inflict less severe damage on Britain's economy than previously thought because of preparations undertaken since the end of last year, Bank of England governor Mark Carney said on Wednesday.
Carney also said there was almost no chance of the BoE reversing its hands-off stance on sterling by intervening in foreign exchange markets to support the pound if it fell sharply after Brexit.
With Britain approaching its October 31 deadline for leaving the European Union, Carney said the BoE now estimated the economy would shrink by 5.5 per cent in the event of a chaotic Brexit involving border chaos and a flight from British assets.
That was less steep than the 8 per cent hit seen in a set of scenarios published in November, but would still represent a major blow to the world's fifth-biggest economy and Carney repeated his call for a transition deal to smooth Brexit.
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What I meant when I said 'don't enable Trump'
By Bill Dudley
September 5, 2019 — 5.38am
My opinion article from last week elicited an intense and often critical reaction. To provide context and address any misunderstanding, I believe some further explanation is warranted. Here are answers to what I see as the most relevant questions.
What motivated you to write this article?
Two developments were important. First, President Trump's trade war with China was increasing uncertainty about how global trading rules would evolve, what tariffs would be imposed, what changes firms might need to make to their global supply chains, and what the downside risks might be for the US economy. Just a few days before the article was published, the president ordered US firms to pull out of China.
Second, the president continued to attack the Federal Reserve and push it to ease monetary policy further. He emphasised that the Fed, not the White House or its trade war with China, should be blamed if the economy faltered. His attacks on the Fed included characterising Chairman Jerome Powell as an "enemy" - on par, in his view, with President Xi Jinping of China.
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House of Lords passes Commons’ Brexit delay bill
Boris Johnson suffers crucial blow as MPs reject early election
The British Prime Minister has suffered another crucial blow after failing to secure enough support to send the country ...
Britain’s House of Lords has passed the Brexit delay bill after the Commons passed the legislation earlier on Thursday (AEST).
It means Boris Johnson will be forced to ask Brussels for a three month extension to the Brexit deadline if he fails to reach a deal with the EU by October 19.
Tory peers had tabled 100 amendments in an attempt at a filibuster that could have prevented the legislation getting onto the statute book before parliament is suspended on Monday.
However they lifted the filibuster after 10 hours, with a commitment that the EU bill would pass by 5pm Friday local time (2am Saturday AEST).
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The end of Hong Kong as we know it
China's inept response to the Hong Kong protests is driven not by reality on the streets but by elite political power struggles in Beijing.
Sep 5, 2019 — 12.54pm
Tragically, the turmoil in Hong Kong can only end badly. No good outcomes are available to the participants. Whatever happens, Hong Kong will never be the same again. The year 2046, the last of the 50-year transition, will begin once the streets are cleared, however that is achieved. Hong Kong could well become a black swan event that changes the region and the world beyond.
Three months into continual rioting, mass demonstrations and escalating violence, Beijing remains intransigent. At the beginning, Beijing could have taken the steam out of the protests had it allowed Carrie Lam, the Chief Executive, to scrap unambiguously the extradition bill – the spark that lit the bonfire – and establish a genuinely independent commission of inquiry to examine police behaviour, and then sacked her for incompetence and replaced her with a more politically attuned chief executive who had a degree of support across various groups.
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Corbyn takes aim at shareholder capitalism
Under the radical left-wing leadership of Jeremy Corbyn, Labour would nationalise swaths of the UK economy and create employee-owned co-operatives.
Jonathan Ford
Sep 5, 2019 — 5.15pm
London | It might not have been his intention, but Julian Richer recently became a socialist hero. In May this year, the owner of the hi-fi and TV retail chain Richer Sounds did something that does not happen very often. He transferred his controlling stake in the business with its 53 stores to a trust for the benefit of its 530 staff.
It was not a political gesture. Richer, 60, has no children and simply wanted to ensure that the company he built up over 41 years had a stable succession. “My father dropped down dead at 60, so I was keen for this to happen in my lifetime,” he explains.
Creating an employee trust a bit like John Lewis Partnership, the famous UK retailer, wasn’t an easy choice. It cost Richer the chance to sell for the highest price to private equity or a trade buyer. Instead he flogged the shares to the trust at concessionary rates.
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Let's cool it on the anti-China hysteria
By Kevin Rudd
September 6, 2019 — 12.00am
The most important thing about Australia having a national China strategy is to have one. At present, we do not. What we have instead is a government with a series of attitudes about China, rather than a coherent policy for dealing with China.
We seem to have a government more interested in fanning public hysteria over ‘‘reds under the beds’’, almost a new yellow peril, all suddenly requiring the Australian people to stand up against the Chinese hordes. It has taken what is a three-out-of-10 challenge to Australian national interests and values and turned it into a nine-out-of-10 existential threat.
Moreover, it’s an approach driven primarily by the Liberals' domestic political agenda of trying to define the Labor Party as soft on China – rather than a calm, clear-headed, rational analysis of both the challenges and the opportunities we face with China’s rise, America’s response and a region increasingly finding itself in the strategic cross-hairs.
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US economy added 130,000 jobs in August, missing expectations
Heather Long
Sep 7, 2019 — 4.19am
Washington | The US economy added a disappointing 130,000 jobs in August, the Labor Department said Friday, heightening fears that President Donald Trump's trade war is starting to bite.
The jobs report has taken on greater significance as concerns grow that the US economy has entered a rough patch. Economists had predicted 160,000 job gains in August, but anaemic hiring in manufacturing, mining, truck driving and retail - industries that are most directly affected by the trade war - helped drag employment gains down this summer.
The slowdown in hiring comes as broader economic growth has cooled this year. The manufacturing sector is in a recession, and businesses have stopped spending, largely as a result of headwinds from abroad and Trump's trade battles. But the US economy is driven primarily by consumer spending, and so far, that remains strong as workers continue to get pay raises and see "we're hiring" signs in front of many businesses.
The unemployment rate remained at 3.7 per cent in August, the lowest in nearly half a century, and business leaders complain frequently that they are struggling to find enough workers.
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'Where did I find this guy Jerome?': With a boss like Trump, you have to feel sorry for the Fed chief
By Brian Chappatta
September 7, 2019 — 9.37am
Even if you're not the biggest fan of the Federal Reserve, you have to feel a little sorry for Chair Jerome Powell. As everyone involved in financial markets is acutely aware, he and the central bank have been a favourite target of President Donald Trump's ire for months now.
And yet, the latest Twitter jab on Friday (US time), ahead of the August jobs report and Powell's remarks on the economy in Zurich, seemed especially demeaning:
The answer, of course, is that Trump "found" Powell already among the Fed's board of governors when he was making his pick in late 2017. He won out over other candidates that the president reportedly spoke with about the position, including incumbent Janet Yellen, former Fed Governor Kevin Warsh and former National Economic Council Director Gary Cohn. At the time, Powell was seen as largely following Yellen's blueprint of steady, gradual interest-rate increases until the fed funds rate returned to a more neutral level. He delivered on that promise through the end of 2018.
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Fed chairman Powell says he doesn't expect recession
By Martin Crutsinger
September 7, 2019 — 7.30am
Federal Reserve Chairman Jerome Powell said Friday that the Fed is not expecting a US or global recession. But it is monitoring a number of uncertainties, including trade conflicts, and will "act as appropriate to sustain the expansion."
Powell gave an upbeat view of the US economy during an appearance with Swiss National Bank Chairman Thomas Jordan in Switzerland. Powell said that trade policy is causing "some uncertainty" but that the US consumer is in good shape.
"I would not see a recession as the most likely outcome for the United States or the global economy," Powell said.
Powell was speaking at a conference sponsored by the Swiss Institute of International Studies at the University of Zurich in Switzerland.
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'Waiting and hoping ... is a gamble we cannot take': prepping for a post-Brexit world
By Shawn Pogatchnik, Michael Birnbaum, Pamela Rolfe, Loveday Morris and Rick Noack
September 6, 2019 — 8.00pm
The British Parliament is trying to avert a no-deal Brexit on October 31. But these countries are bracing for the economic worst-case scenario of a no-deal departure.
Ireland
To measure Ireland's profound vulnerability to a no-deal Brexit, just go to any slaughterhouse or supermarket in this nation - and ask who eats that beef, or how that bread, milk and beer reached the shelf. Take Guinness. It's brewed in Dublin, bottled and canned in Belfast, sent back for distribution from Dublin, then often heads back north or across the Irish Sea to Britain for three border crossings before it reaches the consumer. The same goes for milk, which is shipped back and forth for processing and sale in both jurisdictions. Similarly fluid trade applies for cattle, pigs and sheep.
Then there is Ireland's dependence on Britain for critical goods and services: prescription and over-the-counter drugs, electricity and natural gas.
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From liberator to oppressor: Mugabe dies at 95
· Reuters
Robert Mugabe, the former prime minister and president of Zimbabwe whose rule was mired in accusations of human rights abuses and corruption, has died aged 95.
Mugabe’s 40-year leadership of the former British colony was marked with bloodshed, persecution of political opponents and vote-rigging on a large scale.
His death was announced on Friday by his successor Emmerson Mnangagwa, who called Mugabe a “pan-Africanist who dedicated his life to the emancipation and empowerment of his people”.
“Comrade Mugabe was an icon of liberation,’’ Mr Mnangagwa said. “His contribution to the history of our nation and continent will never be forgotten. May his soul rest in eternal peace.”
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I look forward to comments on all this!
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David.
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