December 13, 2018 Edition.
Trump is at is again firing his Chief of Staff, which by my count, leaves only one adult in the room (Jim Mattis). This week we will see how the extradition from Canada of a ‘Chinese Princess’ will go – China is, of course, furious and so have grabbed a Canadian citizen. At least she is now out on bail. In parallel the trade issues with China seem to be a bit better in the last few days.
Brexit looked like it would come to a head this week, but May survived and the mess seems worse - . Angela Merkel also has a successor.
In OZ we have the pollies on holidays until Feb 12, 2019 after a chaotic end to Parliament this year. God what a mess we are in - with new Religious laws and a move of the Israeli capital to Jerusalem who can guess what will be next! Oh, and we are to get a federal ICAC.
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Major Issues.
- Dec 2 2018 at 2:28 PM
No bids, lack of demand sends home auction clearances into the red
Home auction markets in Sydney and Melbourne were pummelled over the weekend with clearance rates likely to end up in the mid 30 per cent range for Sydney and low 40 per cent for Melbourne.
With key Corelogic house price numbers due out on Monday morning, the lower volumes of listings and lower reported numbers of registered bidders indicate a further slide in prices with Sydney having dropped 7.4 per cent in the last 12 months - the biggest in a decade.
Only $129 million worth of homes sold in Sydney on the weekend - less than a quarter of what was sold the same week last year and the lowest level since the traditionally quieter winter months.
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- Dec 2 2018 at 1:19 PM
Consumer spending the key for economists in GDP figures
Economists are awaiting indications wage growth has ticked higher in the second half of the year, with consumer spending set to be the key focus when Australia's third quarter GDP figures are released on Wednesday.
GDP growth for the three-months ending September is set to be just slightly weaker than the previous quarter at 0.6 per cent according to market consensus, falling from 0.9 per cent in June. That figure is expected to take the annualised growth to 3.3 per cent, still well above the five-year average.
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- Dec 2 2018 at 12:13 PM
Australia's revolving door of Prime Ministers becomes a G20 oddity
Trump praises Morrison in G20 meeting
Buenos Aires |The absurdity of Australia's revolving door of prime ministers - five in five years - has finally permeated the international arena.
As Scott Morrison did the customary round of speed dating with fellow leaders on the sidelines of the G20 in Argentina over the weekend, it was clear that Australia was struggling to be taken seriously.
Donald Trump, not one for diplomatic niceties, asked Morrison directly what had happened to Malcolm Turnbull whom he hosted at the White House in February.
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- Updated Dec 2 2018 at 1:18 PM
Iron ore sell-off reflects weaker overall economic, credit growth in China
The price of iron ore has tumbled nearly 15 per cent in the past three weeks, and the outlook through 2019 isn't particularly bright.
The recent sell-off has been linked to an overall slowdown in economic growth in China, as evidenced by a now stalled manufacturing sector, and waning credit growth, which is expected to depress demand in the property sector ahead of a seasonal slackening of construction activity. And iron ore prices are reflecting last week's bear market correction for China's benchmark rebar steel contract.
The spot price for ore with 62 per cent iron content ended November at $US65.95 a tonne, according to Fastmarkets MB, down from a November 9 peak of $US77.20. Iron ore was quoted as low as $US64.25 last Wednesday, the lowest since mid-July. There seems little imminent chance of a rebound.
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- Updated Nov 30 2018 at 11:45 PM
China's spies come in from the cold, how the MSS hacked the world
As staff at the Melbourne office of Securecorp prepared to hand over the company to its new Chinese owners in 2016, they noticed an unusual delegation enter the building.
A group of Chinese government officials had arrived over the weekend to inspect one of Australia's largest security firms.
But rather than simply admiring the artwork and taking in a Powerpoint presentation, they detoured into the firm's data centre, a highly secure room which holds sensitive information about clients, including senior officials and business leaders, and which conducts remote monitoring of dozens of landmark sites around Australia.
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- Updated Dec 2 2018 at 11:00 PM
'Dangerous precedent': Energy industry takes a swing at Morrison's big stick
That a powerful cohort of Australian business lobbies has called on the federal government to abandon its sinister quest to secure divestment powers that target the electricity industry stands another critical pre-election tipping point for the Morrison government.
Ladies and gentlemen, enough is enough. Scott Morison's trite and destructive fatwa on big business has to stop and so should this conservative government's relentless drift to the dirigiste.
The move to invest the Federal Treasurer with the powers to order divestment and make other direct interventions in the way any particular power company might acquire and use electricity has now inspired collective outrage across a community of peak industry councils whose members include energy producers, distributors and industrial customers big and small.
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No, Prime Minister, an integrity commission is not a 'fringe issue'
By Tony Walker
2 December 2018 — 11:26pm
Sergei Magnitsky is unlikely to be a name that will resonate with many readers of this column. But it should, in acknowledgement of a courageous Russian lawyer who lost his life in pursuit of corrupt officials, and for reasons that are relevant in our own jurisdiction.
Commendably, Labor’s Michael Danby is planning to introduce a private member’s bill on Monday in Magnitsky’s name aimed at seeking redress against human rights-abusing individuals who have moved their ill-gotten gains offshore. It would allow the Australian government to ban them and their families from investing in or traveling to Australia.
While the Danby bill will not progress in the last days of a Coalition government, and therefore would die on the notice paper, it does serve the useful purpose of drawing attention to the need for an overhaul of Australia’s anti-corruption bodies.
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- Dec 3 2018 at 10:11 AM
Sydney property prices fall 9.5 per cent since their peak
Sydney property values have now fallen 9.5 per cent since they peaked in July last year and will likely surpass the largest downturn on record, according to CoreLogic's head of research Tim Lawless.
The slide in prices accelerated in November, with national dwelling values falling 0.7 per cent, the weakest monthly result since the global financial crisis, led by a 1.4 per cent decline in Sydney and a 1 per cent drop in Melbourne, CoreLogic's latest home value index showed.
"For Sydney, 1.4 per cent is the biggest monthly fall we've seen so far this downturn. The last time we saw a bigger monthly fall was back in 2004 but that was only one month and otherwise you'd have to go back to 1989 to see values falling faster than this," Mr Lawless said.
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Why I'm spending $100 million on 'the pursuit of truth'
By Judith Neilson
3 December 2018 — 12:05am
If I had any doubt that my investment in an institute to support “evidence-based journalism and the pursuit of truth” was a worthy ambition it has been swept away by the overwhelming positive response to the announcement.
I expected journalists, and the media industry generally, to welcome the initiative. But more heartening has been the reaction of the wider community. People from around Australia, and the world, have inundated my office with messages of thanks and support.
That tells us a lot about the state of the world at the moment. Many of us are concerned about the quality of our governance, the state of our media, and how we as citizens can make sense of an increasingly complicated world and communicate with each other in meaningful ways.
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Medical evacuations are essential to maintain basic human decency
By Catherine Stubberfield
3 December 2018 — 12:00am
Some lessons are learned too late. For refugee Hamid Khazaei, who died of sepsis contracted on Manus Island, belated reforms can no longer help. Reflecting on his death, the Queensland State Coroner earlier this year could not have been clearer in his findings. That bureaucrats and politicians should never be allowed to override a clinical decision made by a medical doctor. That Australia retains responsibility for those it has relocated under so-called “offshore processing” in Papua New Guinea and Nauru. That had he been evacuated to Australia within 24 hours of developing severe sepsis, Khazaei would have survived. He was 24 years old.
On Thursday, Parliament will rise for the year. It must first address this crisis.
On Monday, Kerryn Phelps will introduce the Urgent Medical Treatment Bill. It should be passed. The health of refugees and asylum-seekers under Australia’s so-called “offshore processing” has first gradually declined and then plummeted. With the passage of more than five years, an absence of solutions and a slow onset health emergency, Australians have become increasingly uncomfortable, confronted by facts that can no longer be ignored. Impartial medical advice has exposed the human implications of a policy that was always sold too simplistically in political and cynical terms. The issue is not a matter of politics, but of basic human treatment and decency.
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Once we were the laughing stock of the world, but now it's worse
By Michael Fullilove
3 December 2018 — 12:10am
In August, after yet another turn of Canberra’s revolving door, I argued in these pages that in order to have influence in the world, it is useful to present as a serious country with a functioning political system. I wrote that the world was laughing at us. The comedy show has since moved on to other venues. But now, the world might be reaching an even worse conclusion: that it can ignore us.
We have just come through summit season. The pace of regional diplomacy has picked up. Recently Japanese Prime Minister Shinzo Abe visited Chinese President Xi Jinping in Beijing. The very next day Abe hosted Indian Prime Minister Narendra Modi at his home near Tokyo. The big three of Asia were meeting, sizing each other up, playing the game.
US President Donald Trump has declared that things are 'so far so good' in his new relationship with Prime Minister Scott Morrison.
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Sydney housing downturn to eclipse 1989 recession
It’s the worst possible news for homeowners. New data shows a dramatic plunge in house prices amid warnings of a $200,000 wipe-out.
Sydney’s housing downturn is 0.1 percentage point away from being the worst on record.
CoreLogic figures released on Monday showed Sydney house prices fell 1.4 per cent in November, double the national average, bringing the annual decline to 8.1 per cent.
Sydney’s housing market is now down 9.5 per cent from its peak in July last year. CoreLogic believes the total peak-to-trough decline will be 15 per cent.
That means the downturn is on track to eclipse the previous record set during the last recession between 1989 and 1991 when prices fell 9.6 per cent, the worst since CoreLogic began collecting figures in 1980.
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- Updated Dec 3 2018 at 11:00 PM
How will corporate Australia deal with the public's anger and loss of trust?
by Sally Patten
For corporate Australia, the words "annus horribilis" might be the best way to describe the year that was. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry uncovered multiple cases of lying to the corporate regulator, fraud, privacy breaches, theft, overcharging and governance failures.
In May the prudential regulator slammed Commonwealth Bank's board, senior management and culture in a scathing 110-page report that lambasted the bank for widespread complacency, overconfidence, excessive complexity and insularity. Energy retailers came under constant attack from the federal government over high energy prices, and the #MeToo campaign extended its reach to Australian business.
"Corporate Australia is reeling from the public scrutiny and from the loss of trust," says Walter Jarvis, course director for UTS’ master of management degree and associate fellow of the Australian Institute of Management.
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- Updated Dec 3 2018 at 6:00 PM
Scott Morrison's Coalition could not be more vulnerable
Timing, timing, timing. Malcolm Turnbull appreciates the best moment to retaliate against the party that chucked him out last August. A few months on, the Liberals could not be more vulnerable, stuck fast in their own nightmare of increasingly bitter and public recriminations.
Despite Scott Morrison's attempts to bluff by boasting of Australia's strong economy, his return to the Coalition chamber of horrors in Parliament House this week merely re-enforces the image. Little wonder the Prime Minister wants to spend as little time as possible there between now and the election.
It's painfully clear Bill Shorten's jibes are almost immaterial given the extent of the self-inflicted damage wrought by a divided Liberal party full of angry egos and personal animosities.
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Property market falls tipped to dwarf 90s recession
By Jessica Irvine
3 December 2018 — 6:00pm
Sydney's property downturn is set to eclipse that of the early 1990s recession – and it's likely to claim that record before Christmas.
Sydney prices slumped 1.4 per cent last month, according to CoreLogic figures released on Monday, marking an acceleration in the pace of price falls from recent months.
This brings cumulative losses since the peak of Sydney’s property boom in July last year to 9.5 per cent – within a whisker of the 9.6 percent drop in values between 1989 and 1991.
Civilisation may 'collapse' if climate change ignored: Attenborough
By Catherine Macdonald
4 December 2018 — 7:20am
Katowice, Poland: Famed naturalist Sir David Attenborough says human civilisation may collapse unless the world takes action to curb climate change.
The British TV presenter of nature documentaries told leaders gathered for a UN climate summit Monday that "right now, we are facing a man-made disaster of global scale, our greatest threat in thousands of years."
Attenborough urged the delegates meeting in Katowice, Poland, until December 14 to make progress on efforts to implement the 2015 Paris accord fighting climate change.
The 92-year-old added that "if we don't take action, the collapse of our civilisations and the extinction of much of the natural world is on the horizon."
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Immigration and crowding concerns rise, but Australians still back multiculturalism: survey
By David Crowe
4 December 2018 — 12:05am
Australians have stepped up their concerns about immigration at the same time they have lost confidence in government, with 43 per cent of people declaring the migrant intake to be too high compared to 37 per cent one year ago.
A major new survey on social cohesion reveals a narrow majority support for the current intake, with 35 per cent saying the numbers are "about right" and 17 per cent wanting more arrivals.
But the Monash University study suggests the growing debate on the issue, including federal government plans to cut permanent migration, has taken opposition to the intake to the highest levels since the "big Australia" dispute of 2010.
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Denying climate change is evil
Climate denial is rooted in greed, opportunism and ego. Opposing action for those reasons is a sin.
By Paul Krugman
4 December 2018 — 12:02am
Donald Trump's administration is, it goes without saying, deeply anti-science. In fact, it is anti-objective reality. But its control of the government remains limited; it didn't extend far enough to prevent the release of the latest National Climate Assessment, which details current and expected future impacts of global warming on the United States.
True, the report was released on the day of Thanksgiving, clearly in the hope it would get lost in the shuffle. The good news is that the ploy didn't work.
The US government on Friday will issue a new report detailing the threat climate change poses to the economy, in what is expected to be a dire warning at odds with the Trump administration’s pro-fossil fuels agenda.
The assessment basically confirms, with a great deal of extra detail, what anyone following climate science already knew: Climate change poses a major threat to the US, and some of its adverse effects are already being felt. For example, the report, written before the disaster in California last month, highlights the growing risks of fire in the country's south-west; global warming, not failure to rake the leaves, is why the fires are getting ever bigger and more dangerous.
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'They need to deal with it': Victorian Liberal warns federal party of another wipeout
By Adam Carey
5 December 2018 — 12:16pm
Former Victorian attorney-general John Pesutto says time is running out for his federal colleagues to avoid the same election wipeout that cost the Coalition up to 12 seats last month, including his own.
Mr Pesutto suffered a 9.1 per cent swing in his once-safe Liberal seat of Hawthorn.
Previously considered a future party leader, the Liberal moderate was instead swept up in a wave of voter anger against the Coalition.
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Investors starting to price in US rate cuts in 2020
By Liz Capo McCormick and Edward Bolingbroke Updated 05 Dec 2018 — 7:05 AM, first published at 7:01 AM
New York | Treasuries surged as plunging stocks sparked a bout of risk aversion and traders started betting that the Federal Reserve will cut interest rates as soon as 2020.
Traders have been slashing the expected pace of rate hikes since the central bank's top brass flagged global headwinds to growth and opened the door to a change in the policy path. That move picked up Tuesday [Wednesday AEDT]. The swaps market has moved up the timing for when it sees the hiking cycle peaking, toward the end of 2019 or early 2020, a period when the Fed's own projections indicate tightening will still be under way.
The shift in the market's view gained speed this week. On Tuesday, the yield curve from 2 to 10 years came the closest to inversion that it's been since 2007. Risk aversion amid losses in stocks fuelled demand for Treasuries as scepticism emerged over the tariff deal that US President Donald Trump announced after his weekend meeting with Chinese leader Xi Jinping. Trade friction is seen as a drag on the US economy, which is already showing cracks, such as a slowing housing market.
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Weak GDP is another signal that the RBA is too optimistic
It wasn't the sort of economic news Scott Morrison or Treasurer Josh Frydenberg really wanted as they limp towards the parliamentary exit for the year.
Disappointing Australian national accounts figures for the September quarter put the constant political manoeuvring and mayhem in Canberra into even grimmer perspective.
Economic growth of 0.3 per cent in one quarter – although half the market's expectations – hardly signals an abrupt end to positive signs on unemployment. Nor does it dash the Reserve Bank's hopes of wages growth eventually heading higher.
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Trust and democracy in Australia: democratic decline and renewal
Report No.1
5 Dec 2018
Description
Over the past four years UC-IGPA and MoAD have conducted a range of quantitative surveys with the Social Research Institute at Ipsos on the relationship between trust in the political system and attitudes towards democracy. This report updates our findings from 2014 and 2016.
The research informing this report was conducted in July 2018 and includes a quantitative survey of a representative sample of 1021 Australians and 20 focus groups with various ‘slices of Australian life’: mainstream Australians (recruited at random, mix of age, gender, family and socio-economic status); older Australians (over 65, not working); young Australians (under 23); new Australians (migrants to Australia that became citizens within the past 10 years); rural and regional Australians (living outside metropolitan Australia); LGBTQI Australians; and, Australians with disability (and their carers).
Australians should rightly be proud of their hard won democratic traditions and freedoms and the achievement of stable government which has delivered social and economic wellbeing for its citizens. However, the findings presented in this report should give all democrats pause for thought. We continue to find compelling evidence of an increasing trust divide between government and citizen reflected in the decline of democratic satisfaction, receding trust in politicians, political parties and other key institutions (especially media) and lack of public confidence in the capacity of government to address public policy concerns. Australia is currently experiencing a culture shift from an allegiant to a divergent democratic culture (Dalton and Welzel, eds., 2014) with an increasing number of citizens searching for a new politics to represent their values and defend their material needs and aspirations for the future.
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New voter ID rules recommended for federal elections
Voters going to the polls in federal elections should be required to show a drivers' licence or a specially issued voter ID card, a new report has recommended.
Parliament's joint standing committee on electoral matters' final report into the 2016 election has called for the new ID requirements to be introduced for future elections and referendums, along with tougher registration requirements for political parties and a review of penalties for failing to vote.
Following allegations of Russian manipulation of the 2016 US presidential election, the cross-party committee called on the federal government to establish a permanent taskforce to prevent and combat cyber intrusion in Australia and to consider systemic privacy breaches.
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Weaponisation of economic policy becomes a nightmare for investors
Washington | Markets are succumbing to the fog of war.
In this case, a trade war in which the tools of economic policy are increasingly being weaponised as part of a broader conflict between the US and China many in the Trump administration believe is necessary to maintain American hegemony.
Such bombastic talk, common in the policy circles of Washington and increasingly on Wall Street - has collided with the arrest in Canada on December 1 of Huawei's chief financial officer.
The detaining of Meng Wanzhou, the daughter of Huawei's founder, has sparked fears China will retaliate against American companies , triggering another round of wild market swings.
The arrest reinforced the sense that last weekend's "truce" between US President Donald Trump and Chinese President Xi Jinping may only mark the end of the beginning of this conflict rather than the beginning of the end. The dinner certainty hasn't been the panacea some had hoped for.
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It's no wonder we no longer trust our institutions
By Waleed Aly
6 December 2018 — 11:15pm
I’ve been thinking about institutions a lot lately. About how if there is anything that characterises our current political moment of disillusionment, anger and a rampant, destructive cynicism, it is that we no longer seem to believe in any institutions at all.
Try to name one; it’s more difficult than you’d think. Our trust in politics – even in democracy itself – is at an all time low. Whatever belief we once had in the idea that business, for all its self-interest, was aligned with some trickle-down social interest has been blown up by whichever scandal takes your fancy: the banking royal commission; the rapacious practices that delivered the financial crisis; the Libor episode back in 2012, in which small numbers of people easily manipulated interest rates for their own gain.
The church? See the Royal Commission into child sex abuse. The media? It’s almost embarrassing to have to explain the level to which its trust has eroded. That we now have a US President in open war with journalistic accountability, who has weaponised “fake news” as a way of discrediting whatever very true news he doesn’t like, and that he only profits politically from this, says everything necessary about the media’s standing.
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Australia no longer isolated as 'Five Eyes' turn on Huawei
By John McDuling
7 December 2018 — 12:04am
When Chinese telecoms vendor Huawei was banned from supplying equipment for Australia's multi-billion dollar national broadband network in 2012, it was a viewed as highly controversial decision.
The (then Gillard) government had taken an unprecedented move, critics said, citing the fact that Huawei was a major supplier to telcos in the UK and New Zealand, which seemed to have no problem with it.
The Shenzen-based company's aggressively priced products were used by the likes of Vodafone and Optus in this country. Huawei had not even been banned in the United States, despite facing a torrent of criticism from politicians in Washington.
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Breakdown on national security a damning indictment of both sides
By David Wroe
6 December 2018 — 11:45pm
If the tradition of the major parties working together on national security for the greater good hasn’t broken down, it is certainly hanging together by a thread.
The Morrison government has clearly politicised the issue of encryption, all but daring Labor to oppose the new powers to police and security agencies and thereby risk looking weak on national security.
Labor, for its part, has wriggled and tacked so many times it has been hard to keep track of where they stand.
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Humans blazing similar path to cause of ancient mass extinction
By Seth Borenstein
7 December 2018 — 6:48am
Washington: Scientists think they've figured out the falling dominoes that led to Earth's largest mass extinction and worry that human-caused climate change puts the planet on a vaguely similar path.
Some 250 million years ago, about 90 per cent of sea life and 70 per cent of land life went extinct in what is now called the Great Dying. Scientists have long speculated that massive volcanic outbursts triggered the cataclysmic event, but how that worked was still a bit fuzzy. It wasn't the lava itself.
A new study in Thursday's journal Science used complex computer simulations to plot out what happened after the volcanoes blew: It led to ocean temperatures rising by about 11 degrees, which then starved the seawater of oxygen.
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Car dealers sing sombre economic tune
Australia's car dealers are a proven canary in a coalmine when it comes to economic conditions, and right now they are sounding a warning.
"We're concerned that the economy is peeling off at a faster rate than the people in Canberra realise," says David Blackhall, chief executive of the Australian Automotive Dealer Association, which oversees the interests of 1500 vehicle dealers. "Unfortunately the government operates off data which is lagging."
While national accounts data for the September quarter shocked by coming in well under forecast – GDP grew just 0.3 per cent, the weakest result in two years – anyone hoping it was a one-off is likely to be disappointed if new-car sales around the country are any guide.
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Scott Morrison pulls out the nuclear option five months from the election
Memory plays many funny tricks on us.
For example, when we talk in general terms about a government, we tend to say it was a good or bad government.
The finer points of history – that most governments start out pretty wobbly, hit a sweet spot then head for a gradual decline to political and/or policy ordinariness and eventual defeat – can be lost or forgotten.
The striking thing about the Abbott-Turnbull-Morrison government that has technically been in government – though not always able to govern itself let alone the rest of us – since 2013 is that it is hard to say exactly where its sweet spot was.
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Can the economy pull off a second great escape?
By Jessica Irvine
8 December 2018 — 12:00am
Do the following three statements sound right to you? First, households are being forced to dip into their savings.
Second, falling home prices are causing households to tighten their belts. And third, economic growth has come to a shuddering halt.
Sorry, folks. I hate to be the bearer of good news, but each one of those three statements is entirely false.
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Watch the 'spillover': housing downturn's ripples already being felt
By Patrick Hatch
8 December 2018 — 12:05am
Australia's house price slump has sent a chill through a swathe of the economy and threatens to inflict more damage if it prompts already cautious consumers to further cut down on spending.
With the prospect of the biggest fall in Sydney house prices since the 1990s, more than $9 billion has been wiped off the combined market values of seven of the country's largest building suppliers since June (from about $39 billion to $30 billion).
In that time CSR's shares have fallen about 40 per cent, Fletcher Building's 26 per cent, Adelaide Brighton's 30 per cent, and Dulux's 12 per cent. James Hardie, Boral and Reece Plumbing, despite having significant offshore ventures, are down 26 per cent, 21 per cent and 17 per cent respectively.
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The government Australia left behind
By Peter Hartcher
8 December 2018 — 12:00am
Australia is moving around and ahead of the Morrison government, leaving it as an historical artefact making angry arguments, a roaring dinosaur in primordial mud.
It's so irrelevant that one in four Australian voters don't event know that the federal government is, in fact, the Morrison government.
Nearly three months after Scott Morrison assumed the prime ministership, a quarter of voters weren't able to recognise his name, according to a poll conducted on November 18 for the Australia Institute.
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No climate consensus at ministers meeting
Environment minister Melissa Price met with her state counterparts and asked them to endorse a statement for a climate meeting in Poland. They refused.
Angus Livingston
Australian Associated Press December 7, 20184:31pm
Australia's state environment ministers are refusing to agree to a joint statement on climate change until the federal minister comes up with a plan to tackle it.
Melissa Price met with her state counterparts in Canberra on Friday and asked them to endorse a statement for her to take to a climate meeting in Katowice, Poland, on Saturday.
They refused because the government has no plan to tackle the problem.
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Investor strategies for volatile markets here to stay
It's the dilemma that just won't go away for investors – try to ride out the high and lows of increasingly volatile equity markets or find some shelter and wait for the storms to pass.
Volatility is getting more attention from investors when it comes to evaluating market strategies – not just for the next few months but the next few years.
Shareholders lurched from hope to despair over days and sometimes hours this week, buffeted on Thursday with the arrest of a high-profile Chinese executive just days after China and the US agreed to suspend trade hostilities for 90 days.
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Reserve Bank complacent on rapid housing decline
- 11:00PM December 7, 2018
Tuesday’s interest rate decision and statement from the Reserve Bank seemed unremarkable.
The markets glanced at it and moved on; there was a half-hearted attempt by some commentators to invoke a small increase in “dovishness” on the part of the governor, Philip Lowe, but it didn’t catch on and the story was soon overwhelmed by a 3 per cent drop on Wall Street that night, caused by a partial yield curve inversion in the US.
But actually, the RBA statement on Tuesday was astonishing, not for what it contained but for what it didn’t contain. Like the dog in the Sherlock Holmes story, Silver Blaze, the RBA didn’t bark.
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Government fears One Nation could wreak havoc on Nationals in NSW election
By Lisa Visentin
9 December 2018 — 12:00am
A rejuvenated One Nation threatens to swing the state election away from the Coalition government, with NSW leader Mark Latham pitching his party as the new voice of the bush.
Exclusive Herald polling revealed One Nation has a primary vote of 7.5 per cent statewide, while internal Coalition research indicates minor parties could secure as much as 20 per cent of the primary vote in some seats. One Nation alone is polling in the "low double digits" in some areas.
The Coalition needs to lose just six seats before it is plunged into minority government – a real possibility given it is defending six seats on margins of 3.2 per cent and under. Four of these seats are held by National MPs, making them particularly vulnerable to Mr Latham's rural push.
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Financial Services Royal Commission Issues.
- Updated Dec 3 2018 at 12:15 AM
Biggest business blunders of 2018: Drumstick Awards for dubious achievement
It was the year that corporate Australia was stripped bare.
A decade after the global financial crisis that Australia largely dodged, the sins of a class of directors and executives that became obsessed by profits and blind to community expectations were brutally exposed. And in the end, the takedown was an inside job.
First, a former High Court judge and Melbourne establishment figure, the Honourable Kenneth Hayne, AC, QC, placed the financial services sector under the unflinching gaze of his royal commission, exposing a decade of greed, hubris and dishonesty with the help of ferocious senior counsels assisting, Rowena Orr, QC, and Michael Hodge, QC. Within days of the commission's first round of hearings in March, the bodies started piling up – and the full scope of the damage might not be known for years.
Then, as the calendar turned to May, three business legends – John Laker, Jillian Broadbent and Graeme Samuel – released their report into the culture of the country's biggest financial institution, Commonwealth Bank. It immediately became required reading for Australian directors, a sort of what-not-to-do handbook for governance and oversight.
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Here’s hoping the Hayne royal commission’s final report will be an anticlimax
- 6:34AM December 3, 2018
The banking royal commission has been such a valuably gruesome process that it is earnestly to be hoped that it isn’t messed up by a final report that overreaches.
That’s especially so since the report will be released in the febrile lead up to a federal election, when both sides of politics are likely to fall over themselves to promise to implement every word of it, before reading it.
It’s fair to say that much of what the final report can possibly contain is already being feverishly implemented by the banks and their regulators. Which is not to suggest that the report will be redundant, but simply that much of its impact has already happened.
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APRA takes action to remove IOOF CEO Chris Kelaher, George Venardos and three executives
ANZ is considering its options after the prudential regulator sought to disqualify IOOF chief executive Chris Kelaher, chairman George Venardos and three other senior executives on the basis they did not act in the best interest of superannuation members.
The Australian Prudential Regulation Authority began a case in the Federal Court to disqualify five individuals were responsible persons of IOOF Investment Management and Questor Financial Services.
"Given the significance of APRA's action, we will assess the various options available to us while we seek urgent information from both IOOF and APRA," ANZ deputy chief executive Alexis George said.
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Banks and other big companies face billions in fines under Labor plan
By John Kehoe
Updated 06 Dec 2018 — 7:48 PM, first published at 9:59 AM
Banks and other big companies would face unprecedented fines of billions of dollars rather than a capped $210 million for civil offences, under changes that Labor wants to make to a federal bill.
Big business is alarmed that Labor's eleventh hour proposal would drive up their insurance costs even if they never cop a fine or do nothing wrong.
Business Council of Australia chief executive Jennifer Westacott said Labor's arbitrary increase in penalties for corporate offences was an "unnecessary regulatory overreach" and appeared to be "political expediency".
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APRA says IOOF rots from the head
The immediate futures of IOOF chief executive Chris Kelaher, chairman George Venardos and chief financial officer David Coulter must surely rest on a simple question.
How can three men who have been accused of failing to understand the central principle that underpins superannuation continue to run one of Australia's largest wealth managers?
The market provided one answer with its brutal response to the news the Australian Prudential Regulation Authority had launched Federal Court proceedings to disqualify Kelaher, Venardos, Coulter and two other executives from acting as superannuation trustees.
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National Budget Issues.
'Six panels a minute': Two million Australian homes now have solar
By Peter Hannam
3 December 2018 — 1:55pm
Surging power bills and the falling price of solar panels have pushed the number of households with photovoltaics on their roofs past the 2 million mark, according to analysis of Clean Energy Regulator data.
As of last week, there were panels on just over one-fifth of all Australian homes. Sunbelt states of South Australia and Queensland are nearing rates of one-third of total homes, or about twice that of NSW - where state support has largely been removed - and Victoria.
"It's a combination: panel prices [nationwide] have never been this low and electricity prices have never been this high," Warwick Johnston, managing director of consultancy SunWiz, said.
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- Dec 4 2018 at 11:55 AM
Australia's current account deficit narrows to $10.7b for the September quarter
by Tim Boyd
Australia's current account deficit narrowed in the September quarter to $10.7 billion from a $12.1 billion deficit recorded for the June quarter, official data shows.
Market consensus expected to see a slightly larger narrowing in the deficit to $10.2 billion in seasonally adjusted terms. The Australian Bureau of Statistics data credited bigger exports for the positive result, which also saw the June quarter deficit revised lower from the $13.5 billion previously reported.
Economist Sarah Hunter from BIS Oxford Economics said the most positive takeaway from Tuesday's numbers was the contribution of trade to gross domestic product had increased to 0.4 per cent this quarter.
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- Dec 4 2018 at 2:30 PM
Reserve Bank of Australia keeps cash rate on hold at 1.5pc
The Reserve Bank of Australia extended its record-breaking run of inaction on rates, keeping the official cash rate on hold for a 28th consecutive month.
Following its December meeting on Tuesday, the RBA kept the official cash rate at 1.5 per cent but was slightly more positive on the labour market citing a pick-up in wages growth last month.
"The outlook for the labour market remains positive. The unemployment rate is 5 per cent, the lowest in six years," said RBA Governor Philip Lowe in his statement.
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Boom, crash: our economic paradox
- 11:00PM December 4, 2018
Can an economy have a housing crash and a boom at the same time?
Today’s national accounts will shed further light on this question, but the Reserve Bank’s optimism, coupled with the increasingly sharp falls in house prices in our two biggest cities, suggests it’s a possibility. It would be an unusual mix given the economic havoc that housing crashes typically wreak.
When the Reserve Bank left the cash rate on hold yesterday at 1.5 per cent for the 28th consecutive month, the governor’s monthly statement was peppered with the usual optimism. The jobless rate is the lowest level in six years and “likely” to fall further. “The stronger labour market has led to some pick-up in wages growth, which is a welcome development,” Governor Philip Lowe said, having recourse to the official magnifying glass.
Wage growth aside, it’s hard to corroborate the doom and gloom on the front page with the objective economic statistics.
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Safety fears raised about Australia's latest $3b warships
By David Wroe
4 December 2018 — 11:45pm
Defence is investigating whether there are design problems with its latest multi-billion dollar warships after a sister Norwegian vessel foundered badly following a collision last month, prompting an urgent warning from Norway’s safety authorities.
Norwegian naval frigate the Helge Ingstad collided a month ago with an oil tanker and half-sank. In an interim investigation report published this week, the Accident Investigation Board Norway said it had “identified some safety-critical issues that require immediate attention” regarding the ship’s watertight compartments, designed to keep it afloat if the hull is breached.
The board’s report stated that “it cannot be excluded that the same applies to vessels of a similar design delivered by [Spanish shipbuilder] Navantia”.
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Australia's planned defence inventory already looks obsolete
By Nicholas Stuart
4 December 2018 — 11:00pm
Nearly the end of another year – and one in which the military have done pretty well, in terms of equipment anyway. Airforce has just received its first pair of an eventual 72 Joint Strike Fighters. An extra squadron’s expected, meaning we’ll have nearly 100 by the time the buying spree is over. A contract will see BAE construct nine future frigates from 2020 and (probably) a contract with France’s Naval Group is ready for detailed design work on a dozen new submarines. The fleet will end up with 55 new vessels. The Army? Well, it’s getting 211 Rheinmetall armoured reconnaissance vehicles with another 600 infantry fighting vehicles to be ordered. It’s a massive transformation for the forces.
Our military is changing as fast as it can and as speedily as the taxpayer dollars can be spent. In stark contrast to the extended period of stasis when Julia Gillard was prime minister and Stephen Smith defence minister, Christopher Pyne doesn’t appear to allow a recommendation to buy equipment to hit his desk without actioning it.
The question is, are the recommendations coming from the services good enough?
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Government's big stick energy policy now small twig
By Elizabeth Knight
4 December 2018 — 3:19pm
The federal government has lost its ‘big stick’ - the one it was threatening to bludgeon energy companies with if they misbehaved on power pricing.
It’s better described now as a limp stick or small twig after the government abandoned the part of the policy that would allow it to force energy companies to divest assets.
The government has proposed a default energy price and a new financing mechanism for baseload power generation.
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Economic growth weaker than expected in third quarter as annual growth slow to 2.8pc
- December 5, 2018
Australia’s economy grew 2.8 per cent over the year through September, a sharp slowing from the 3.4 per cent recorded over the year through June amid broad weakness in construction, retail and the farm sector, according to the Australian Bureau of Statistics.
The local dollar dived from US73.51 cents to US72.95c on the weaker-than-exected growth numbers.
The ABS on Wednesday revealed the nation’s gross domestic product increased by 0.3 per cent over the September quarter — half the rate expected by economists, leaving the annual growth rate also below the 3.3 per cent rate that had been expected.
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How this housing correction differs
03:04pm November 30 2018
Many people have become conditioned to believe that Australian house prices rarely fall.
In the 1970s and 1980s, high inflation often disguised material house price corrections in real, inflation adjusted terms. Through most of the 1990s and early 2000s, the move to low inflation and an associated rise in household leverage meant prices saw a long period of robust nominal gains.
While the decade since the global financial crisis has challenged the notion with more regular periods of price declines, the strong gains in Sydney and Melbourne between 2012 and 2017 may have revived the idea that prices rarely fall. For those that bought in, the price correction over the last year may be coming as a rude shock.
However, the reality is that house price corrections are reasonably common in Australia.
In the 1970s and 1980s, high inflation often disguised material house price corrections in real, inflation adjusted terms. Through most of the 1990s and early 2000s, the move to low inflation and an associated rise in household leverage meant prices saw a long period of robust nominal gains.
While the decade since the global financial crisis has challenged the notion with more regular periods of price declines, the strong gains in Sydney and Melbourne between 2012 and 2017 may have revived the idea that prices rarely fall. For those that bought in, the price correction over the last year may be coming as a rude shock.
However, the reality is that house price corrections are reasonably common in Australia.
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Not safe as houses but it’s no disaster
- 11:00PM December 4, 2018
Now comes the fallout from the residential downturn. Most of the discussion centres around the extent of the price falls.
How bad will it be?
And we have the usual line-up of doom and gloom merchants who have been forecasting a price collapse since the beginning of the recovery. I’m less concerned about prices. There will be damage — but it will be contained. This is just another cycle.
I’ve heard some discussion of the impact on the economy, focusing largely on the wealth effect.
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Reserve Bank paves way for further cuts in official interest rates
- 11:27PM December 6, 2018
The Reserve Bank has paved the way for further cuts to the official interest rate and could even resort to quantitative easing — “printing money” to buy government bonds — to ward off a potential downturn.
In a major speech last night, RBA deputy governor Guy Debelle declared the central bank was prepared to “go fast, go hard and not die wondering” by stimulating the economy — a nod to the Rudd government’s $52 billion cash injection to insulate against the global financial crisis.
He also warned that a lending slowdown could hurt the economy, in a sign the bank is fretting about the potential fallout from an emerging slump in house prices. “There is a risk that a reduced appetite to lend will overly curtail borrowing with consequent effects for the Australian economy,” Dr Debelle said.
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Health Issues.
3 December 2018
Four codes for compassion and survival in medicine
Authored by Jonathan Page
I AM an oncologist. I’m 67. The end is in sight, and I’m comfortable with that. In October last year, together with my many battle-weary coevals, I “celebrated” 40 years of medical practice. I’ve thus been reflecting even more intensively than usual, on those dimly-lit decades and, inevitably, the student years that preceded that graduation.
It’s been a struggle. In this I’m not alone. At least, I imagine this is the case, but of course we in medicine rarely talk of deeply personal matters. I was ill-prepared to be a medical student. I was a kind, bright and vigorous 18-year-old who eventually survived this trial by fire, but only just.
At 19, I found myself in a room with 20 cadavers, some headless – the first of the terrible sights. I think my tutor felt this was an ordinary day, but it wasn’t for me. I did not tell my family. The secrets and the desensitisation had begun.
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Summit to focus on suicide prevention
Mental health groups are meeting in Canberra to tackle suicide prevention following an alarming jump in Australians taking their own lives.
Updated December 2, 2018
An alarming spike in the number of Australians taking their own lives last year has prompted the government to call an emergency mental health summit.
More than 3000 people died as a result of suicide in 2017 - a 9.1 per cent increase from a year earlier.
Due to a large drop in 2016, the 3128 figure is still less than it was three years ago, but Health Minister Greg Hunt says the "deeply concerning" numbers forced him to act.
"Suicide is a national tragedy and one life lost to suicide is one too many," Mr Hunt said.
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3 December 2018
Why climate change is a serious health issue
Extreme heat affects the mental health of Australians to the same degree as unemployment, yet Australia’s policy action on climate change lags behind other high-income countries such as Germany and the United Kingdom.
As Australia enters another summer, we face the inevitability of deadly heatwaves. Our report published last week in the Medical Journal of Australia concludes that policy inaction, particularly at the federal level, is putting Australian lives at risk.
The report, The MJA–Lancet Countdown on health and climate change: Australian policy inaction threatens lives, builds on an earlier publication in The Lancet medical journal, which concluded climate change is the biggest global health threat of the 21st century.
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Cancer patients to save more than$100,000 after Greg Hunt lists new drugs on PBS
- 1:05PM November 30, 2018
Australians with advanced melanoma will now have access to a government subsidised combination immuno-oncology treatment, saving patients more than $100,000.
Health Minister Greg Hunt today announced today that the treatment, Opdivo in combination with Yervoy, would be available on the Pharmaceutical Benefits Scheme from tomorrow.
It is the first time a combination immuno-oncology treatment, which use the body’s immune system to fight cancers, has been reimbursed by the Federal Government.
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Patients pay to repair hospital finance woes
- 11:00PM December 3, 2018
Corporate advisory and restructuring group KordaMentha has flagged increases to dental costs, private patient charges, radiation oncology fees and parking as it seeks to fix serious financial mismanagement within a key health agency responsible for the $2.4 billion Royal Adelaide Hospital, the opposition says.
Labor yesterday seized on a section of a KordaMentha diagnostic report that said “revenue strategies — increased revenue from dental fees, private patients radiation oncology and car parking” could raise a “target benefit” of $16.2 million.
The Marshall government last week appointed KordaMentha to lead the first stage of a “turnaround” plan to find more than $270m in savings over the next three years in the Central Adelaide Local Health Network.
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Preventing medication-related harm in the elderly
By Dr Natalie Soulsby*
Monday, 03 December, 2018
Monday, 03 December, 2018
Did you know that each year 230,000 people are admitted to hospital, and many more people experience reduced quality of life, as a result of adverse drug reactions (side effects) from medicines?
As we get older, the chances are we will be started on medications for our various ailments. Although these medications can be beneficial, we also know that the more medicines we take, the more likely we are to experience one or more side effects from them. It can be difficult to identify the culprit, as we don’t always experience problems from the first time we take our medicines, or even realise that it is the medication that is the problem.
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Queensland researchers develop ten minute cancer test
- AAP
- December 5, 2018
Queensland scientists have developed a test they hope could be “the holy grail” for diagnosing cancer.
The test has been developed by University of Queensland researchers who have discovered a unique DNA nanostructure that appears to be common to all cancers.
Researcher Professor Matt Trau says this has enabled an entirely new non-invasive approach to detect cancer in any tissue type including blood, and led to the creation of inexpensive and portable detection devices. These could eventually be used as a diagnostic tool, possibly with a mobile phone, he said.
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'Very positive': Immunisation coverage rates in children hit record high
By Josh Dye
6 December 2018 — 12:00am
In numbers
- 94.5% - of five-year-olds and
- 93.8% - of one-year-olds are up to date with their vaccinations
The number of children in Australia with full immunisation coverage has spiked, hitting a record high, according to new data.
In a significant milestone, the rate of vaccination among Indigenous children has also reached its highest-ever level, according to official data from the National Centre for Immunisation Research and Surveillance (NCIRS).
The proportion of fully immunised five-year-olds reached 94.5 per cent, and 93.8 per cent of one-year-olds had also received all the vaccinations on the National Immunisation Program (NIP), the report released on Thursday showed.
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Hospital wait times grow by two days a year
- 11:00PM December 5, 2018
Waiting times for elective surgery in public hospitals are increasing at a rate of two days a year, and emergency department treatment is also taking longer, according to the Australian Institute of Health and Welfare.
In a report released today, the institute highlights how longer waiting times have come despite slower overall growth in the number of patients being added to waiting lists, but with hospital admissions remaining steady or even declining on a per-capita basis.
In 2017-18, the overall median waiting time for admission for elective surgery in Australia was 40 days, up from 38 days the previous year and 36 days in 2013-14. The median wait varied from 23 days in the Northern Territory to 55 days in NSW, while on a per-capita basis the rate of admissions declined in all states and territories except NSW.
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Government’s $240m booster shot for medical research
- 11:00PM December 5, 2018
The
Morrison government will today begin accepting applications for a $240
million program it describes as an “Australian-first” for medical
research.
Health
Minister Greg Hunt said the Frontier Health and Medical Research
program filled a gap in the research sector by providing government
funding for early innovative projects and ideas that traditionally would
not have received funding at this stage: “This program will confirm
Australia as a leading source of innovation and discovery and will help
bring about the next big medical breakthrough.
“This
investment has the potential to transform healthcare and stimulate
growth in the Australian medical technologies, biomedical and
pharmaceutical sector, which is a vital part of the innovation economy.”
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COAG to consider suicide prevention system
- By Oliver Caffrey
- Australian Associated Press
- December 6, 2018
A national suicide and self-harm monitoring system could be established in the aftermath of an emergency mental health summit.
An
alarming 9.1 per cent increase in Australians taking their own lives
last year prompted federal Health Minister Greg Hunt to call the meeting
held this week. Some 3128 people died in Australia in 2017, figures
show.
Developing a system to help communities respond to potential mental health issues was a key recommendation from the summit.
Suicide
prevention will also be raised as a priority at the next Council of
Australian Governments meeting and elevated to a whole-of-government
issue.
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Long waits push surgeries onto private health insurance list
- 11:00PM December 6, 2018
The long wait for hip and knee replacements and cataract surgery in the public hospital system is being used to justify those procedures being available only in top- level insurance policies, given patients already have a strong incentive to go private.
Under planned gold, silver, bronze and basic categories of insurance, to be introduced from April, tens of thousands of policies will be reorganised into comparable tiers, promising members greater transparency and the ability to shop around.
However, assigning clinical services to categories proved difficult and took longer than the federal government expected. With hospital coverage falling, and concerns over rising premiums, stakeholders have also had to predict how members and prospective members will react to the changes.
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Rise in health premiums likely to be lowest in decades
- 11:00PM December 7, 2018
Health fund members are being promised the lowest average premium rise in almost two decades.
However, the introduction of gold, silver, bronze and basic categories of insurance may compel some members to pay even higher premiums or dump their policies.
Health Minister Greg Hunt told The Weekend Australian he expected to approve an industry average below the 3.95 per cent announced this year. That would be the lowest since 2001, when insurers agreed not to raise premiums in exchange for government reforms.
Mr Hunt is due to make a decision on insurers’ 2019 premium applications by early February. The increases will come into effect in April, when insurers will also start rolling out the new categories.
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Medicare help to treat eating disorders
7:39am Dec 9, 2018
Australians with severe eating disorders will for the first time have access to a comprehensive treatment plan under Medicare.
"It is $110 million investment but above all else it is about providing the services for each person when they need it, where they need it for the first time on any scale such as this," federal Health Minister Greg Hunt told Nine on Sunday.
Patients will be able to access up to 40 psychological services and 20 dietetic services each year, under Medicare, from November next year.
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International Issues.
https://www.afr.com/news/politics/world/what-the-looming-us-recession-means-for-asia-20181201-h18lwx
- Updated Dec 2 2018 at 12:29 PM
What the looming US recession means for Asia
by Adam Triggs
Signals that predict US recessions are far from perfect. But what is striking is just how many of them are now flashing red. A US recession is a question of when, not if.
Across the indicators, a recession around 2020 is more likely than not. This will have big implications for Asian economies. They'd best get ready now.
In 1966, Paul Samuelson mocked that the stock market had forecast "nine of the last five recessions". Not much has changed since then. Economists still disagree on what drives the boom-bust business cycle in the US economy. Many more rule-of-thumb recession predictors have been identified as a result.
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Britain could go to the polls if Theresa May fails to win Brexit vote
3 December 2018 — 3:45am
London: Britain's opposition Labour Party ramped up the pressure on Prime Minister Theresa May on Sunday, saying it would call a no-confidence vote if the British Parliament rejected her Brexit deal on December 11.
May is battling to persuade skeptical British lawmakers to back the deal her government and the European Union reached last month. Rejecting it would leave the UK facing a messy, economically damaging 'no-deal' Brexit on March 29.
The British Prime Minister is hoping to win over her critics who have threatened to vote against Brexit in parliament.
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- Updated Dec 4 2018 at 8:26 AM
Australia is about to feel the power of the Chinese state
by Adrian Blundell-Wignall
Just over a year ago I was asked to brief a top honcho of economics from a very large country who was visiting the OECD in Paris. I told him that I would like to run through our work on the Belt and Road Initiative (BRI). He looked at me and said: "What's that?" He wasn't pulling my leg.
This weekend I watched from afar as the world leaders milled around at the G20. I was grateful to be out of that process. The leaders all smiles, shaking hands, and all aware of the presence of the elephant in the room: China's long-term strategy based on the role of the state.
The G20 works when there is a common crisis to solve. There is no basis for a common strategy today. Two different visions of growth and development are present: the market-based OECD/Washington Consensus, versus the state control of banking and industrial policies. There is nothing one can do when disputes arise between the two, and once state-controlled groups assert sovereign immunity and ignore international rules and conventions.
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Democrats must get past 'one big now' in order to save the US
By Chris Zappone
3 December 2018 — 11:58pm
The Democratic Party's ability to win back control of the House of Representatives is being credited to a focus on healthcare in this recent campaign cycle.
While healthcare in its current form may be a winning issue in the US, the Democratic Party would be wise to look past a one-term talking point to a much broader sustaining story.
In fact, Democrats are in need of a broader, more universalised language of politics that can transcend the hourly or weekly flow of events, to frame a larger journey for the party and, in fact, for the US. Finding this galvanising understanding of the politics of the era won’t be a luxury for the party. Rather, it will derive from the emergency American democracy finds itself in today.
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China buys time for little cost as Trump claims 'incredible' victory
By Stephen Bartholomeusz
3 December 2018 — 3:45pm
The two big volatility-inducing negative influences on financial markets over the past two months have been trade and the Federal Reserve. Both took a breather late last week.
The major talking point over the weekend was the "incredible’’ deal Donald Trump did over dinner (grilled sirloin washed down with Malbec, apparently) with China’s Xi Jinping in Buenos Aires on Saturday.
China and the United States have agreed to a ceasefire in their bitter trade war after high-stakes talks in Argentina between US President Donald Trump and Chinese President Xi Jinping.
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https://www.afr.com/markets/equity-markets/nine-reasons-for-the-selloff-in-us-stocks-20181205-h18qk2
Nine reasons for the sell-off in US stocks
By Brad Olesen Updated 05 Dec 2018 — 6:42 AM, first published at 6:36 AM
New York | There was no single headline, no one trigger that sent US stocks into a free-fall Tuesday afternoon [Wednesday AEDT]. Instead, the rout that lopped more than 800 points off the Dow Jones Industrial Average had no shortage of explanations among Wall Street traders.
Among the culprits cited:
A trader works on the floor of the New York Stock Exchange. Michael Nagle
- The supposed trade truce between China and the US began to look more like a vague agreement to do nothing concrete. A Sunday night rally in S&P 500 futures that topped 2 per cent got wiped out by midday Tuesday.
- The first inversion of any portion of the Treasury yield curve in more than a decade awoke the spectre of a recession, while the relentless flattening of the slope elsewhere sent financial shares careening to the worst day since February. Earlier Tuesday, JPMorgan Asset Management said cash will likely outperform equities.
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UK PM Theresa May suffers damaging blow against Brexit deal in Parliament
By Elizabeth Piper and Kylie MacLellan Updated 05 Dec 2018 — 7:35 AM, first published at 4:41 AM
London | British Prime Minister Theresa May suffered a damaging setback on Tuesday, when her government lost a vote and was found in contempt of parliament at the start of five days of debate over her plans to leave the European Union.
May wants to secure parliament's approval for her deal to keep close ties with the EU after leaving in March, but opposition from lawmakers is fierce, with Brexit supporters and critics alike wanting to thwart her plan.
The strength of that opposition was felt before the debate even began, when lawmakers found the government in contempt of parliament for refusing to release its full legal advice on Britain's exit. The government said it would now comply.
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Ray Dalio, founder of world's largest hedge fund, on the next financial meltdown
By Joe Ciolli Updated 05 Dec 2018 — 8:31 AM, first published at 8:29 AM
That's because Dalio – the founder and co-chief investment officer of Bridgewater Associates – has proved prescient in the past.
This was never truer than when he repeatedly sounded the alarm on the credit collapse that tanked markets a decade ago, a proclamation many investors ignored at their own peril.
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Huawei CFO arrested in Canada on suspicion of violating US sanctions on Iran
Updated 06 Dec 2018 — 10:03 AM, first published at 9:31 AM
Toronto | Canada has arrested Huawei's global chief financial officer in Vancouver, where she is facing extradition to the US on suspicion she violated American sanctions against Iran, the Globe and Mail newspaper reported.
Meng Wanzhou, daughter of company founder Ren Zhenfei and one of the vice chairs on the board of the Chinese technology company, which is now the second-biggest such telco in the world.
"Wanzhou Meng was arrested in Vancouver on December 1. She is sought for extradition by the United States, and a bail hearing has been set for Friday," the Globe and Mail reported a Justice department official as saying.
"As there is a publication ban in effect, we cannot provide any further detail at this time. The ban was sought by Ms. Meng," the newspaper said.
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The US must prepare itself for China as number one
By Lawrence H. Summers
Updated 05 Dec 2018 — 12:43 PM, first published at 9:45 AM
Presidents Donald Trump and Xi Jinping reached an agreement over the weekend at the Group of 20 meeting in Argentina on a framework for trade dialogue that will delay the imposition of new US tariffs. While surely better than the alternative, this step does not address any of the fundamental tensions in the economic relationship between the US and China.
Few observers doubt that China needs to make significant changes in areas such as intellectual property, the rights of foreign investors and subsidies to state-owned companies if it is to meet international norms. Antipathy toward Chinese economic practices is hardly confined to Trump. Recent months have witnessed attacks on the existing economic relationship from members of previous US administrations, noted China experts and the American business community. Indeed, it can be fairly said there are no China accommodationists left in Washington. When foreign governments get past their frustrations with the Trump administration, they acknowledge that they, too, are frustrated with Chinese commercial practices.
Yet it is also easy to sympathise with Chinese leaders who insist that China's political system is for it to choose, and that economic negotiations should focus on the pragmatic identification of win-win opportunities, rather than on questions of ideology. At the same time, it is hard to see how anyone with a modicum of historical knowledge could fail to be concerned by a combination of increased domestic repression, centralisation of power in one man, rapidly increased military spending and rhetoric about enlarging China's role in the world.
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Federal Reserve's reading of US economy is wrong: Karl W Smith
By Karl W. Smith Updated 06 Dec 2018 — 8:14 AM, first published at 7:40 AM
By one measure, the yield curve inverted on Monday: The interest rate on five-year Treasury bonds slipped below the rate on three-year bonds. That's a worrying sign because rates on longer-term bonds are typically higher than those on shorter-term bonds, and such inversions are associated with recessions.
So far, however, I would consider the yield curve only "partially" inverted. A full inversion would be when interest rates on two-year Treasury bonds rise higher than rates on 10-year bonds. In the last 40 years, each time this has happened, the US economy has entered a recession soon afterwards.
This makes an inverted yield curve the most reliable indicator macroeconomists have for predicting a recession. The last two times the yield curve inverted, in 1998 and 2008, the debate among economists was whether this time would be different. In both cases, it wasn't.
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Global warming will set fire to American leadership
By Stephen Walt Updated 06 Dec 2018 — 11:06 AM, first published at 11:00 AM
Donald Trump has said, "I don't believe" climate change is real. Guess what? The global environment doesn't care. The condition of the planet will be determined by the laws of physics and chemistry, not by Trump's tweets, denials, bluster, or relentlessly head-in-the-sand approach to a rapidly warming planet. Trump will no longer be with us by the time the worst effects are realised, of course; it is future generations who will suffer the consequences.
And make no mistake: Those consequences are going to be significant. As reported last month, the latest US government National Climate Assessment report makes it abundantly clear that rising average temperatures are going to have far-reaching and damaging effects. The report was a collaborative effort by 13 federal agencies, and it offers a sobering portrait of our likely future. Storms will be more intense and dangerous. Agricultural productivity will decline. Certain diseases and pests will be more numerous and bothersome, and heat-related deaths will increase significantly. Trump may not believe it, but what he does or does not believe is irrelevant, except as it affects what we do (or don't do) today and thus how serious the problem is down the road.
The direct consequences of climate change will be harmful enough – even if we respond to them more energetically than we have to date – but I believe it will also have profound effects on US foreign policy. Some of the consequences have already been catalogued – including in a landmark US Defence Department study in 2015 – but the long-term impact could be even more far-reaching. To be deliberately provocative: Climate change could do more to limit America's global ambitions than all the books, articles, op-eds, and other advocacy undertaken by apostles of restraint.
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Huawei's Western assault: cyber threat or competitive advantage?
By Jeremy Warner
6 December 2018 — 10:43am
Within the sometimes nerdy world of telecoms, it was soon nicknamed the Great Wall of China.
I refer to the exhibition stand at the annual Mobile World Congress in Barcelona where Huawei - a previously relatively obscure Chinese telecoms equipment manufacturer whose name even industry insiders still struggled to pronounce - first unambiguously hoisted its flag on the Western scene.
Seemingly, it had bought up around a third of the exhibition centre's entire available floor space. Huawei had well and truly arrived.
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Global emissions to hit historic high despite renewables surge
- 4:00AM December 6, 2018
Global carbon dioxide emissions were accelerating and expected to hit a new high this year, with strong growth in China, the US and India despite billions of dollars spent on renewable energy and other measures.
A major report by the Global Carbon Project has found emissions were expected to rise by 2.7 per cent following a rise of 1.6 per cent last year after a three-year hiatus.
The report, published in the journals Nature, Earth System Science Data and Environmental Research Letters, says emissions remain a long way from peaking, with coal use in China locked in for decades to come.
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UK stocks wipe out index gains of the last 18 years
By Ksenia Galouchko 07 Dec 2018 — 2:51 AM
London | UK stock investors can wave goodbye to index gains of the last 18 years.
The FTSE 100 on Wednesday closed below the level seen at the end of 1999, and extended its declines on Thursday. The benchmark gauge today fell as much as 2.9 per cent, the worst drop on a closing basis since June 24, 2016, the day after the Brexit referendum.
The renewed sell-off in global equities is piling additional pressure on UK stocks, already rocked by concerns about UK Prime Minister Theresa May's ability to get her Brexit deal through Parliament. The latest bout of market carnage is being blamed on renewed US-China trade concerns, but its magnitude has surprised investors.
"Unfortunately, the current global sell-off, and investor nervousness, have coincided with a continued lack of visibility on Brexit, which has undoubtedly affected investor sentiment," said Marcus Morris-Eyton, a portfolio manager at Allianz Global Investors. "This, combined with the unfavorable sector composition of the FTSE 100, is contributing to structural outflows out of the UK equity market."
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Donald Trump has seized a Chinese princess
By Hamish McDonald
7 December 2018 — 7:30pm
When Donald Trump emerged from his dinner with Xi Jinping last Saturday − announcing a 90 day pause in their tit-for-tat tariff war, some fence-mending Chinese imports of American soybeans, cars and petroleum and that their "very strong and personal relationship" remained intact − world leaders and financial markets were greatly relieved.
It quickly proved a very short Munich moment. On Tuesday, Trump tweeted he remained a “tariff man”. On Thursday came an even bigger shock. As Trump had sat down with Xi, Canada was arresting Chinese telecom executive, Meng Wanzhou, on an extradition request by the US for allegedly violating its sanctions against Iran.
It has refocused attention on the main game behind the tariff exchanges: the US battle to retain supremacy in the highest realms of technology, against Chinese technology theft, forced transfers of trade secrets by foreign investors in China, and concerted cyber espionage.
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Trump announces his Chief of Staff John Kelly will step down
9 December 2018 — 6:21am
White House Chief of Staff John Kelly will step down toward the end of the year, removing a key force for West Wing discipline from President Donald Trump's inner circle.
White House aides believes that Nick Ayers, Vice President Mike Pence's chief of staff, will be named acting chief of staff, two aides said.
Ayers has emerged as a favorite to replace Kelly; Trump has recently taken the unusual step of inviting Ayers to accompany him on Air Force One, even without Pence present, people familiar with the situation said.
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'Mini-Merkel': new leader chosen to replace Germany's Angela Merkel
By Nick Miller
8 December 2018 — 3:09am
A woman dubbed "mini-Merkel" has defeated a man nicknamed the "anti-Merkel" in the race to succeed German chancellor Angela Merkel as the leader of the country's ruling party.
The victory of Annegret Kramp-Karrenbauer (widely known as AKK), an ally of Merkel who is currently the party’s general secretary, is likely to ensure a longer and more seamless transition of power in Germany.
She narrowly defeated Friedrich Merz, a prominent critic of Merkel who had told the party it was time for a “fresh start” for the centre-right Christian Democrats (CDU).
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Theresa May’s Brexit mess trumps rest of West’s woes
- 11:00PM December 7, 2018
Theresa May faces the possibility of political death next Tuesday when the House of Commons is set to vote on her Brexit deal. Assuming she goes ahead with the vote, she is likely to suffer humiliating defeat. That will have huge consequences for Britain and for Brexit, but one of the worst potential consequences could be Jeremy Corbyn at the head of a Labour government.
May’s crisis, which has become a general crisis of British democracy and society, can play out in many ways. No one in British politics — no one — knows what’s going to happen.
May’s crisis is just one part of a broader crisis across the Western alliance that makes the global strategic environment more fluid, more uncertain, potentially more dangerous, than at any time since at least the end of the Cold War.
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I look forward to comments on all this!
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David.
