August 8, 2019
Edition.
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What on earth can the world do about Trump? He is utterly out of control with these destructive tariffs and is going to do both the US and the rest of the world economic harm. More we also have him pulling the US out of important Nuclear Weapons treaties. He has simply become a global menace. Oh, and we have had another really bad mass shooting in Texas! Sorry for all except the NRA and Trump and bribed and stupid legislators who won't sort the problem out!Worse he has ramped up the trade war and China has hit back during the week. It does not seem it will end well as far as I can see.
In the UK we have Boris flailing around and looking like he is about to blow up the UK.
In Australia parliament is resting again for a long winter break having worked hard to destroy public trust with data matching, robo-debt, metadata misuse, un-consented private data usage, encryption issues and so it goes on!
Further we seem to have chaos in both water and energy policy, some apparent corruption in some casinos and home units falling down all over!
It also seems some backbenchers are poking the Chinese dragon - that equally may not be such a good idea!
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Major Issues.
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Mortgage prisoners caught in a $4 billion trap
Jul 27, 2019 — 12.00am
More
than 300,000 buyers are trapped in expensive, higher-rate mortgages and could
be overpaying by $4 billion on their home loans, analysis shows.
A
typical owner-occupier borrower with a $1 million loan taken out in 2016 could
be paying 3.56 per cent, or more than 60 basis points, above current rates. A
three-year fixed rate for the same amount taken out around the same time is
about 30 basis points higher.
Around
25,000 borrowers are locked into uncompetitive fixed rates for up to five years
unless they agree to punitive penalties for breaking agreed terms, which will worsen if cash rates continue to fall.
Property
loan overpayments could total more than $4.2 billion a year, separate analysis
by CoreLogic and uno Home Loans, a digital mortgage broker backed by Westpac
Group, shows.
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Big tech must be treated like media: Sims
July 28, 2019
ACCC chair Rod Sims has described technology giants Facebook and
Google as publishers, who should be regulated in a similar way to traditional
media.
Following the release of the ACCC’s final report into the market
power of digital platforms, Mr Sims said Google and Facebook should be subject
to the same laws as publishers and broadcasters.
Mr Sims told Sky News Business Weekend a new code of
conduct regulating the relationship between digital platforms and traditional
media would have “real teeth”.
He said if implemented media companies would start to receiving
more revenue for their original content being used by the likes of Facebook and
Google to make money.
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Buying 'quality' stocks is no silver bullet
If the Merlon research shows us nothing else it’s that lazy
investment slogans – such as “always buy quality” – shouldn’t be followed
blindly
Jul 29, 2019 — 12.00am
It’s
the sort of investment mantra that no one can argue with: find high-quality
companies, invest for the long term and you won’t go wrong.
But
Joey Mui, a portfolio manager at fund manager and noted AMP
bull Merlon Capital, says putting your faith in “quality” companies
isn’t as foolproof as many might think, particularly during a time of low
interest rates.
His
research suggests some traits that are typically considered indicative of
quality companies – such as firms offering high growth and high returns, or
firms that demonstrate low earnings and share price volatility, can deliver
mixed performance over a full market cycle.
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ASIC calls time out on active exchange traded funds
Jul 29, 2019 — 12.00am
The
corporate watchdog has called for a pause in listings of exchange traded funds
that are actively managed and use so-called internal market makers to set
trading prices amid disclosure and conflict-of-interest concerns.
In
a notice to market participants on Thursday evening the Australian Securities
Exchange advised market participants, that the regulator had requested it
"cease admitting any non-transparent investment products with internal
market makers for the time being''.
"This
pause on new admissions of these products will remain in place while ASIC
considers the appropriate regulatory settings in this changed
environment," the ASX said in the notice.
There
are more than 20 active exchange traded funds using internal market makers that
are listed on the ASX with a value of $3.5 billion. That represents a small
portion of the $50 billion of the total exchange traded product market.
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Memo PM: Government goes better with a sharp public service
Ross Gittins
Economics Editor
July 29, 2019 —
12.00am
For
good or ill, much of the attitudes and strategies of the modern Liberal Party
have been shaped by its greatest leader since Menzies, newly turned
octogenarian John Howard.
After
Bob Hawke defeated Malcolm Fraser as prime minister in 1983, Howard, his
treasurer, reflected unhappily on how little the Fraser ministers had achieved
during their seven years in office. Why was that? Because, Howard concluded,
the public servants had kept talking them out of doing what they’d intended to
do.
So
when Howard became prime minister in 1996, he resolved not to let that happen
to his government. He began with a “night of the long knives” in which he
sacked the heads of six government departments.
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PM starts the week with Newspoll surge
Scott Morrison is leading Labor leader Anthony Albanese as
preferred prime minister in a Newspoll published in The Australian on Monday.
Australian
Associated Press July 29, 20199:27am
Prime Minister Scott Morrison has begun the final parliamentary
sitting week before the winter break with a new poll pointing to a lift in his
government's popularity.
But
Labor says the government has only gotten off to a good start because it has
failed to make any tough decisions.
The
coalition's primary vote has increased by 2.6 per cent since its May election
victory to 44 per cent, according to a Newspoll published by The Australian on
Monday.
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Top economist’s radical tax plan to help workers save for retirement
- 12:00AM July 30, 2019
A key architect of the nation’s $2.8 trillion superannuation
system has urged the federal government to stop taxing the savings of
Australians until they reach retirement.
Economist Vince FitzGerald, who led the landmark 1993 national
savings inquiry after the introduction of the super system, said the move would
allow workers to build bigger nest eggs during their working lives.
Instead of taxing savings and investment returns in the accumulation
phase, Dr FitzGerald argued that people should be taxed at marginal rates when
they were drawing money from their super funds in the pension phase.
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'Global environment has turned darker': Aussie bond yields hit record lows
By David Scutt
July 30, 2019 —
12.01am
As
the major indices for the Austalian sharemarket have hit or come agonisingly
close to all time highs, another key asset class is quietly breaking records.
And for less encouraging reasons.
The
yield on benchmark 10-year Australian government bonds (ACGB) fell to a
low of 1.192 per cent on Monday, according to data from Refinitiv, after
closing at a record low of 1.237 percent on Friday.
Three-year
yields, which are more sensitive to market expectations for monetary policy
settings from the Reserve Bank of Australia (RBA) - also hit a record low of
just 0.804 per cent during the session. Bond prices move inversely to yields.
It
comes after the All Ordinaries sharemarket index
last week hit new highs, and as the benchmark S&P
ASX/200 index ended just 3 points below its highest ever closing level on
Monday.
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What’s driving up stocks and bonds?
- 12:00AM July 30, 2019
Long-time readers of this column might recall my fascination with
the X-factors that often buffer investment markets. X-factors are the
unexpected influences on investment returns that come out of the woodwork, as
it were, and have strong effects.
Their key characteristic is the element of surprise; if the
influence was widely predicted or anticipated, or already built into market
pricing, it’s not an X-factor. Many X-factors affect investment markets each
year. Which one should we see as the dominant X-factor of the past 12 months?
In my view, it’s the enormous swings in the prevailing view in markets of what
the US central bank will do to its cash rate.
A year ago, average market expectations were for Fed to raise its
target for the US cash rate on three or four occasions by the end of 2019, each
of them adding a quarter of a percentage point. (In any country, expectations
for the cash rate at various times in the future can be derived from the
pricing of interest-bearing securities with different maturity dates).
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'Fundamentally undermine our effectiveness': AFP hits back at key demand from media chiefs
By Bevan Shields
July 31, 2019 — 10.38am
The
Australian Federal Police is urging federal MPs to reject a key change proposed
by major media companies to strengthen press freedom, in a rare public appeal
to retain its powers to investigate and prosecute journalists.
Already
under fire following recent raids on journalists in Sydney and Canberra, top
AFP officials have warned that any attempt to water down their right to examine
the behaviour of reporters would "fundamentally undermine" the
effectiveness of search warrants and even help foreign enemies obtain valuable
national security secrets.
Former NT Police chief Reece Kershaw
has weighed in on press freedom and the raids on a journalist's home and the
ABC Sydney offices.
Parliament's
powerful intelligence and national security committee is considering whether
laws should change to better protect press freedom in the wake of police raids
in June on the Canberra home of News Corp reporter Annika Smethurst and the
Sydney headquarters of the ABC.
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'With super nothing is as it appears': The lowdown on super v payrises
Ross Gittins
Economics Editor
July 31, 2019 —
12.00am
Do
you have trouble understanding superannuation? Some government backbenchers are
urging Scott Morrison to abandon or at least postpone the plan to phase-up
the compulsory employer contribution from 9.5 per cent to 12 per cent
of salary over the four years to July 2025. Good idea, or another attempt to
cheat the worker?
One
new backbencher has proposed that, since many low income-earners have a lot of
demands on their budgets, super should be voluntary for everyone earning less
than $50,000 a year. Whaddaya reckon?
Liberal plans to scale back
contributions will cost workers $1000.
You
could be forgiven for being unsure. Super is complicated. You have to
understand how it's taxed and how it interacts with the age pension and its
income and assets tests. I sometimes think that, with super, nothing is as it
appears.
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Rising petrol costs lifts consumer price index
Senior Reporter, The Wall Street
Journal
- Dow Jones
- July 31, 2019
Australian consumer prices rose slightly more than expected in the
second quarter following a big jump in fuel prices, but further interest rate
cuts look likely as inflation stays well below target.
The consumer prices index rose by 0.6 per cent in the second
quarter and was up 1.6 per cent from a year earlier, the Australian Bureau of
Statistics said. Economists had expected the CPI to rise 0.5 per cent in the
quarter and 1.5 per cent from a year earlier.
One-off gains in petrol prices, which rose by 10.2 per cent in the
quarter, and travel costs boosted the inflation rate.
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Profoundly low interest rates are here to stay
Although interest rates touch almost every aspect of economic
life, the developed world remains deep in denial about the consequences. Here
are eight themes for investors and policymakers to ponder.
Robin Harding
Jul 31, 2019 — 10.18am
This
will be a discomforting, defining week for the global economy. That is not
because the US Federal Reserve is set to cut interest rates.
Rather it is because of the strikingly low level of rates from which the Fed
will start: a range of just 2.25 to 2.5 per cent.
After
more than a decade of economic expansion, and despite everything from tariffs
to tax cuts, it seems this is as high as US interest rates go. Meanwhile, the
European Central Bank is debating whether to reduce its negative rate still further.
Until
this month, it was possible to imagine that pre-financial crisis levels of 4 to
5 per cent might eventually return. No longer.
According
to their own projections, Fed officials believe rates will settle at 2.5 per
cent in the long run. Subtract their 2 per cent inflation target and the real
reward for capital is going to be a miserable 0.5 per cent.
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Sydney property developer Ralan collapses
Jul 31, 2019 — 1.48pm
One
of the country's biggest private developers, Sydney-based Ralan Group has
collapsed leaving billions of dollars of East Coast apartment projects and
hundreds of jobs in doubt.
Founded
and led by William O'Dwyer, the developer appointed Said Jahani, Phil-Campbell
Wilson and Graham Killer from Grant Thornton as voluntary administrators on
Tuesday.
Ralan
Group's pipeline of projects includes the $1.4 billion four-tower Ruby
Collection project on the Gold Coast with 1600 apartments and another big
project in Arncliffe in Sydney's southern suburbs, which is currently under
construction.
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Ralan buyers could lose their deposits
Aug 1, 2019 — 6.07pm
Hundreds
of buyers who bought apartments off-the-plan from failed
developer Ralan could lose deposits of as much as $70,000 or more, after they
were used by the collapsed group to pay expenses, including interest on
unsecured loans.
Joint
Ralan administrator Said Jahani from Grant Thornton said the
"majority" of purchasers of apartments in Ralan's $2 billion Ruby and
Sapphire projects on the Gold Coast and Sydney's The Orchid in Arncliffe had
entered into "side agreements" with two Ralan subsidiaries (controlled
by founder William O'Dwyer) where their deposits were released "either in
full or mostly in full" as unsecured loans to the developer.
The
future of all three projects is now uncertain, with the administrators warning
of a "significant deficiency owing to unsecured creditors and
purchasers".
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A recession is coming (eventually). Here’s where you’ll see it first.
Ben Casselman
Aug 1, 2019 — 8.35am
Last
week's report on second-quarter gross
domestic product showed that the economy slowed last spring. It also came exactly
10 years since the Great
Recession ended, making this officially the longest expansion in American
history. (Well, probably. More on that in a second.)
So
perhaps it's no surprise that forecasters, investors and ordinary people are
increasingly asking when the next downturn will arrive.
Economists
often say that "expansions don't die of old age". That is, recessions
are like coin flips - just because you get heads five times in a row doesn't
mean your next flip is more likely to come up tails.
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House prices stabilise as rate cuts start to help property market
By Shane Wright
August 1, 2019 —
10.03am
Sydney
and Melbourne house values have lifted on the back of interest rate cuts,
looser lending standards and the Morrison government's income tax cuts, but
most of the increase is going into top end properties.
CoreLogic's
closely watched monthly measure of property values showed a 0.1 per cent
increase across the nation's capital cities through July.
The
increase was driven by Sydney, where house values lifted by 0.2 per cent, and
Melbourne where they were up by 0.1 per cent. Values of apartments in the two
cities increased by 0.3 per cent and 0.4 per cent respectively.
It
was the second consecutive monthly lift in values for the nation's two largest
property markets.
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The residential construction party is over. And the hangover looks severe
Elizabeth Knight
Business
columnist
August 1, 2019 —
12.01am
Building
materials group Adelaide Brighton could be the canary in the coal mine,
revealing the toll of damages resulting from the turndown in residential
construction, and the risks such a decline may pose to employment.
The
company's profit downgrade for the 2019 financial year took the market by
surprise and infected other building materials companies - sending the share
prices of Boral and CSR spiralling.
Immediately
after the release of Adelaide Brighton’s revised earnings prospects its share
price tanked 19 percent, CSR tumbled 6 percent while Boral investors watched
the value of their holdings slump by 8 percent.
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Mercer says Grattan research is 'misleading'
Aug 1, 2019 — 11.06am
Calls
to abort scheduled superannuation rises
are based on flawed modelling that assumes people will retire richer than is
the case in reality, super administration and advice firm Mercer says.
Mercer
senior actuary David Knox is the latest to take a swipe at the Grattan
Institute for peddling what he describes as "misleading" research
about the adequacy of the 9.5 per cent compulsory super contribution rate.
Dr
Knox said one of the main problems with Grattan's work was that it inflated the
proportion of retirees receiving the full-rate age pension for singles.
"Grattan
assumes that we are single when we retire whereas 70 per cent of us have a
partner," he said.
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Business, conservatives no longer need each other
Business likes the Coalition's pro-growth policies -- but not the
social conservatism that seems out of step with their own work forces.
Aug 1, 2019 — 8.00pm
More
out of hope than expectation the business community thought that, just maybe,
the Morrison government would let slide its promise to introduce its so-called
big stick legislation.
That
all ended on Monday when Energy Minister Angus Taylor told Parliament:
"I'm pleased to say that we will be bringing forward later this year the
big stick legislation that those opposite have voted against 13 times.
"This
legislation is vital to ensuring that we have another tool in the toolkit to
maintain supply in the market and drive prices down.''
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Newstart doesn't work for over-55s
Aug 1, 2019 — 5.29pm
On
Wednesday, Jan French squeezed in a workshift between a medical appointment for
her 96 year-old mother in the morning and kinders day for her grandchildren in
the afternoon.
The
former aerobics instructor and antique dealer is now in her mid-60s and works
at the packing company The Finishing Touch, which has 200 employees who are all
women with an average age of 55.
Ms
French said she was grateful to have an understanding employer, but added that
the government needed to afford a "bit of slack" to older people who
were looking for work amid similarly demanding schedules.
"I
can understand the pressure they're under. It would not be good to be in that
position," she said.
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Greenland has massive ice melt after European heatwave
August 2, 2019 —
10.14am
Berlin:
A heatwave that smashed temperature records in five European countries a week
ago is now over Greenland, accelerating the melting of the island's ice sheet
and causing massive ice loss in the Arctic.
Greenland,
the world's largest island, is a semi-autonomous Danish territory between the
Atlantic and Arctic oceans that has 82 per cent of its surface covered in ice.
The
area of the Greenland ice sheet that is showing indications of melting has been
growing daily, and hit a record 56.5 per cent for this year on Wednesday, Ruth
Mottram, a climate scientist with the Danish Meteorological Institute, said.
She said that was expected to expand and peak on Thursday before cooler
temperatures slowed the pace of the melting.
More
than 10 billion tonnes of ice was lost to the oceans by surface melting on
Wednesday alone, creating a net mass ice loss of about 197 billion tonnes from Greenland
in July, she said.
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'Gut feel' not data guiding central banks amid pressure from populists
By Shane Wright
August 2, 2019 —
12.01am
Central
banks are relying more on "gut feel" than what official data is
telling them about the state of the global economy, one of the world's leading
experts in the field believes, with the Reserve Bank of Australia (RBA) leading
the way.
Professor
Eli Remolona, a former regional head for the Bank for International Settlements
who is developing the world's first master's degree in central banking, on
Thursday said the breakdown in key economic theories was making it more
difficult for those charged with setting official interest rates.
In
Australia to deliver a public address on central banking communication
strategies, Professor Remolona said the way inflation and wages had failed to
lift despite falling unemployment was now perplexing
almost every central bank.
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Magellan's Douglass sees lower growth for longer
Hamish
Douglass
Aug 2, 2019 — 10.27am
“The
value of every business, the value of a farm, the value of an apartment house,
the value of any economic asset, is 100 per cent sensitive to interest rates
because all you are doing in investing is transferring some money to somebody
now in exchange for what you expect the stream of money to be, to come in over
a period of time, and the higher interest rates are the less that present value
is going to be. So every business by its nature … its intrinsic valuation is
100 per cent sensitive to interest rates.” – Warren
Buffett – 1994 Berkshire Hathaway annual general meeting
“It
all comes down to interest rates. As an investor, all you’re doing is putting
up a lump sum payment for a future cash flow.” – Ray
Dalio, Founder Bridgewater Associates
In
our view, all true investors are value investors. To be an investor, you must
assess the intrinsic value of a business and compare that assessment to the
price at which that investment can be purchased. Any person who buys an
investment without first assessing the intrinsic value is a speculator, not an
investor.
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Aussie dollar tumbles to lowest level since GFC as trade war escalates
By David Scutt
August 2, 2019 —
11.42am
The
Australian dollar has tumbled in response to an escalation in trade tensions
between the United States and China, falling to the lowest level against the
greenback in a decade.
The
local currency traded at 68.06 US cents by early afternoon on Friday, breaking
the lows struck in January 2016 when the currency was hit by market concerns
about the strength of China's economy. It had fallen as low as 67.96 US cents
earlier in the session.
Excluding
a "flash crash" in early January this year, which saw the Aussie fall
over 3 per cent in a matter of minutes in holiday-impacted trade, it now sits
at levels not seen since March 2009, when markets were stuck in the depths of
the global financial crisis.
The
plunge was sparked by a series of tweets from US President Donald Trump that
said the United States will impose additional 10 per cent tariffs on $US300
billion ($440 billion) worth of Chinese imports entering the country from
September 1, adding to the 25 per cent tariffs on $US250 billion in imports
already in place.
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How to find the best returns in a low-rate world
Aug 3, 2019 — 12.00am
For
20 of the past 30 years of investing, there were some certainties. Investing in
equities would give you a higher rate of return coupled with a higher risk
premium, bonds were a steady and stable form of income, and cash, while
delivering only low returns, came with very little risk.
But
the global financial crisis just over 10 years ago threw the investing world
into crisis. Sluggish inflation, negative bond yields and record low interest
rates are the new normal and a stagnant global economy appears resistant to
central bank efforts to stimulate growth.
That
low-yielding world has funnelled investors toward equity markets,
with the promise of some reasonable returns worth the risk for many. Equities
showed sharp gains in reaction to dovish actions from central banks this year,
with US, Australian and international shares all receiving a kick from the
promise of more liquidity.
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Market record: The stocks doing the heavy lifting
CSL, miners, banks and infrastructure stocks have propelled the
equity market back to record highs in 2019.
Aug 2, 2019 — 7.16pm
The
stockmarket roared to new record highs this week, led by miners, banks,
infrastructure stocks, global biotech group CSL Ltd and telecommunications
group Telstra.
Miners
are benefiting from higher commodity prices, banks are in something of a relief
rally after being beaten up during 2018's banking royal commission, Telstra is
in a similar place and infrastructure stocks are attracting yield-starved
investors.
CSL,
the world's leading plasma products group, has benefited from a weaker
Australian dollar - which is trading at its lowest levels against the US dollar
in a decade - while Telstra investors like its cost-cutting plans, which include shedding thousands
of jobs.
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Ralan, Steller start of developer 'washout'
Aug 2, 2019 — 4.21pm
Highly
leveraged developers operating on thin margins could be the next casualties
from the "washout" occurring in the off-the-plan apartment
market following the implosions of
the Ralan and Steller groups, insolvency and restructuring
expert David Walter has warned.
"There
may well be other developers to follow [Steller and Ralan] of different shapes
and sizes," Mr Walter, a partner at law firm Baker McKenzie, told AFR Weekend.
"Why?
Because a lot of them are holding residual or unsold apartment stock, which
impacts on cash flows and their ability to repay debt and press on with other
new projects," he said.
In
a week in which Sydney-based Ralan Group collapsed with debts of $500 million, leaving
hundreds of apartment buyers at risk of losing their deposits,
Mr Walter warned second- and third-tier listed developers could be next. He
said spreading fallout from a wider market correction characterised by slowing
sales, falling valuations and rising construction costs could put such
developers under "a lot of financial pressure".
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NAB pressured to come clean on prohibited products
Aug 2, 2019 — 12.11pm
NAB
is under pressure to come clean and address claims it knew it was selling
prohibited financial products after an investigation by The Sydney
Morning Herald and The Age.
A lengthy report published on Friday morning alleges
NAB chairman and former treasury secretary Dr Ken Henry knew the bank was
selling products that would one day blow up in its face.
Dr
Henry is reported as giving the example of a self-managed super fund or SMSF "borrowing to invest in managed funds".
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Star pupil Philip Lowe gives tips on why inflation is so low
Ross Gittins
Economics Editor
August 3, 2019 —
12.00am
Reserve
Bank governor Philip Lowe started his study of economics at high school in
Wagga Wagga and finished it with a PhD from the Massachusetts Institute of
Technology. Much thanks to his teacher, Mrs King, whose teaching style
convinced him economics was interesting as well as important.
The
great attraction of high school economics is its emphasis on linking theory to
current events.
The head of the RBA has told the
government it's now up to them to prevent a dangerous economic slowdown.
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Why we’re power-poor but renewables-rich
- 12:00AM August 3, 2019
It’s an extraordinary twist of fate that despite all the argument
and uncertainty about energy policy over the past decade, Australia is now
leading the world in building renewable energy.
In fact, there is so much solar and wind power either being built
or about to be built that the grid can’t handle it. The head of network design
at the Australian Energy Market Operator, Alex Wonhas, told a seminar this
week: “It is nothing short of a revolution.”
I wasn’t there, and he spoke off the cuff, so I’m relying on Giles
Parkinson’s reporting for the website reneweconomy.com.au, but apparently Dr
Wonhas said that 18 gigawatts of new generation is in the feasibility stage and
another 78GW is in pre-feasibility — a total 96GW seeking AEMO’s approval.
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Low rates set growth on the up and up
- 12:00AM August 3, 2019
Amid elevated if not euphoric valuations in some corners of the
market it has been easy to say it’s all going to end in a spectacular pile of
losses. More challenging has been swimming against the rising tide of market
prices.
But more challenging again is an unbiased exploration of the
arguments in favour of a continuation of the present support for even
profitless companies.
An increasing frequency of commentary suggests low rates are now a
permanent feature of markets, as is the likelihood of central banks rescuing
investors from themselves through the perpetual deployment of unconventional
monetary policy tools.
It’s relatively easy to dismiss these claims as examples of “this
time it’s different” — I did that in my last column.
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Central banks look to batten down for a global recession
- 12:00AM August 3, 2019
It would have been unthinkable a generation ago. The Australian
government is borrowing for free. The Treasury issued a bond worth $800 million
this week at what amounts to an interest rate of 1.09 per cent a year — far
below current and expected inflation.
Yet what might seem like a boon is born of mounting fears of a
global recession.
The US is in the longest economic expansion since World War II,
recently exceeding the golden run between 1991 and 2001. If you think that the
longer you stand at the bus stop, the more likely it is a bus will come long,
that’s not good news.
The Federal Reserve’s decision this week to cut interest rates,
for the first time since the global financial crisis, signals the central
bank’s models predict the expansion is going to end.
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Wages growth 'a long way off', say top economists
By Eryk Bagshaw and Shane Wright
August 4, 2019 —
12.01am
Workers
will need to wait for a mining-style boom to see any meaningful pick up in
their wages, as most of Australia's top economists describe Treasury's
forecasts as "optimistic," dashing hopes that pay packets will rise
before 2022.
The
unemployment rate will need to get close to 4 per cent, well above the
government's goal of creating another 1.25 million jobs, to generate pay
increases, according to The Sydney Morning Herald and The Age Scope survey
of 19 of Australia's leading economists.
The
RBA has cut interest rates to a historic low of one per cent.
AMP
Capital's Shane Oliver said wages growth will pick up again to decent levels
one day, but the economy probably needed to get unemployment and
underemployment a lot lower.
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Larger super balances hit by high administration fees
By John Collett
August 4, 2019 —
12.02am
People
with higher superannuation balances who are invested in one of their super
funds' "choice" options could be paying thousands of dollars a year
extra in administration fees, with some funds charging fees as a percentage of
account balances that are particularly high.
Fund
members who have built up a substantial balance and those in retirement, many
of whom are in the choice environment as they have selected a lower-risk
investment option, stand to lose the most from outsized percentage-based fees.
Figures
compiled for choice options by SuperRatings show while some not-for-profit
funds charge administration fees that can be as low as a couple of hundreds of
dollars on a super account balance of $450,000, retail funds, including those
run by major banks and insurers, are charging up to 10 times that amount.
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Royal Commissions And The Like.
-----
Government ramps up banking royal commission response
Jul 30, 2019 — 12.00am
The
Morrison government will accelerate its response to the Hayne royal commission
on Tuesday by releasing draft legislation to protect consumers against unfair
insurance contracts, and introducing into Parliament a bill to enact at least
one other recommendation.
After
stating previously that the legislative process would not be rushed and would
begin later this year, legislation for at least one recommendation will
be tabled in Parliament with the view to passing it through the House of
Representatives before the end of the week.
Cabinet
was set to sign off on the legislation on Monday night and it will be put to
the Coalition party room on Tuesday.
Treasurer
Josh Frydenberg will also release today a draft bill that will extend unfair
contracts terms to insurance contracts.
-----
Big four under siege
Jul 29, 2019 — 5.51pm
The
big four banks are being attacked on all sides with smaller rivals and global
giants all seeking to chip away at the cosy and profitable oligopoly that has
existed in Australia for decades.
While
smaller lenders are stealing a march on the
bigger banks by being nimble and more responsive, international banks are
undercutting them with cheaper wholesale funding.
The
most recent sign of heightened competition comes from a study of more than
2000 mortgages which shows challenger banks are offering bigger discounts
and approving loans more quickly than the big four.
-----
Carer of dementia sufferer had no support
Family carers have shared their stories with the aged care royal
commission, highlighting a lack of support and respite services.
Megan Neil
Australian
Associated Press July 29, 2019 6:07pm
Exhausted and devastated after another failed attempt at
short-term respite care for her husband with dementia, Rosemary Cameron felt
utterly alone.
Staff
at the aged care facility had threatened to call police unless she collected
him, saying he was "out of control".
Ms
Cameron found him with blood on his clothes from a gash on his hand, sitting at
the breakfast table with other residents.
She
was told nothing but to pack his things and leave.
-----
Grandfathered commissions face the chop
Jul 30, 2019 — 5.28pm
Treasurer
Josh Frydenberg is fast-tracking legislation to end the payment of
"grandfathered" commissions to financial advisers by 2021, rejecting
Labor's claims the government was dragging the chain on implementing the
banking royal commission's recommendations.
Mr
Frydenberg said the government was "going further" by forcing rebates to be paid to clients for
conflicted remuneration from January 2021 onwards – a move supported by
financial planners but criticised by industry superannuation funds as a
"back door" for commissions.
A
ban on grandfathered commissions would bring all existing financial advice
contracts in line with the 2013 ban on commissions under the Future of
Financial Advice reforms.
The
Future of Financial Advice laws banned billions of dollars in up-front and trailing commissions, but
a watering down allowed pre-2013 arrangements to continue under a
"grandfathering" arrangement.
-----
Life industry under siege
AMP is a microcosm of what can happen when an entire sector of the
financial services industry is hit with a triple whammy of negative forces.
Aug 1, 2019 — 12.00am
Australia’s
life insurance industry is at one of those rare inflection points that could
easily bamboozle the most accomplished chief executive and destroy billions of
dollars in shareholder value.
The
company at the centre of this is AMP, which is in the throes of trying to rescue the $3.3 billion
sale of its life business to Clive Cowdery, the founder of
Resolution Life.
Cowdery
would not discuss the AMP Life sale on Wednesday when Chanticleer caught up
with him over lunch. But you can rest assured he will not be paying top dollar
for an asset that is worth $700 million less than when he first agreed to buy
it a year ago.
That
is clear from his past experience. The most he has ever paid for a book of
in-force business is 90 per cent of embedded value. If that happens with AMP
Life then the price is coming down by at least $1 billion.
-----
Henry admitted NAB was still selling rip-offs while royal commission raged
By Adele Ferguson
August 1, 2019 —
7.22pm
National
Australia Bank chairman Ken Henry privately told consultants in the midst of
the Hayne royal commission he was “confident” the bank was selling products
that ripped off its customers and would eventually trigger compensation.
In
revelations that have immediately sparked calls for a parliamentary inquiry
into the relationship between the big banks and the nation’s largest accounting
firms, Dr Henry and dozens of other executives last year told NAB’s auditors EY
about serious shortcomings in its risk management.
NAB chairman chairman Dr Ken Henry is
questioned about executives’ bonuses during the banking royal commission.
-----
National Budget Issues.
-----
The RBA's new policy tool is having a big impact
In signalling rates will be lower for longer RBA governor Phil Lowe
has turned to the next phase of extreme monetary policy, known as 'forward
guidance'.
Jul 29, 2019 — 4.31pm
Last
week's speech by the Reserve Bank governor is likely to go down as a landmark
event for bond markets.
RBA boss
Philip Lowe flagged Australians should "expect an extended period of low
interest rates", as he forcefully defended the bank's inflation targeting regime.
The
chatter among financial economists turned to whether this constituted
"forward guidance", a tool used by the likes of American, European
and Japanese central banks as a way to bolster the effectiveness of monetary
policymaking as rates approached zero.
-----
Aussies no better off since GFC: household incomes stagnant for past decade
- 12:00AM July 30, 2019
Living standards have stagnated since the global financial crisis,
according to a major national survey that finds poverty is on the rise and
compulsory superannuation has failed to reduce dependence on the age pension.
In figures likely to reignite debate on the impact of bracket
creep, the typical household’s income, after tax, dropped $500 to just more
than $80,000 in 2017, compared with a year earlier.
“Over the eight-year period from 2009 to 2017, average household
income grew by only $3156, or 3.5 per cent, while the median in 2017 was $542
lower than 2009,” the report, which has tracked the circumstances of more than
17,500 Australians since 2001, finds.
-----
Household income goes backwards
Jul 30, 2019 — 12.14am
Household
incomes are stagnating after years of weak growth and are now worth less than
they were a decade ago.
Roger
Wilkins, of the University of Melbourne, says household incomes have not moved
since 2012. Supplied
The
latest Household, Income and Labour Dynamics Australia survey revealed the median household income in 2017 was $80,095, $542
less than 2009 adjusted for inflation.
Average
household incomes grew but by just 3.5 per cent, or $3156, over the entire
eight-year period to $93,734.
-----
Proposal to scale back super would cost workers thousands
By David Crowe and Shane Wright
July 29, 2019 —
11.45pm
Workers
would lose $1000 a year under a divisive proposal to scale back compulsory
superannuation, according to new findings that escalate a policy clash over the
best way to save for retirement.
From July 1, 2019 there will be major
changes to superannuation aimed at lowering insurance fees.
The
analysis shows workers on lower incomes will end up paying more tax and saving
less money if they drop out of super in the way put forward by a determined
group within the government party room.
-----
Property sales tumble leading to prediction of '100,000 job losses'
By Shane Wright
July 30, 2019 —
2.15pm
The
economy and jobs market is facing a testing few months with fresh evidence the
residential construction sector is still struggling, with warnings 100,000
construction workers could lose their jobs.
The
Australian Bureau of Statistics on Tuesday reported a 1.2 per cent drop in
building approvals across the country last month, led by a 5.4 per cent fall in
NSW.
While
there was a small lift in approvals for houses, up by 0.4 per cent in June to
be down by 14.8 per cent over the past 12 months, approvals of units and
apartments slumped 6.5 per cent in the month.
-----
Building approvals slump to six-year low
Jul 30, 2019 — 11.59am
New
housing approvals slumped to a six-year low in the year to June as tighter
curbs on lending and falling prices hit development activity and prompted
economists to warn of risks to the wider economy and jobs from a sector that
was likely to keep shrinking.
Total
approvals dropped one-fifth to 187,515 in the financial 2019 year, nearly
one-fifth below the 232,915 total a year earlier, as approvals of both attached
homes - apartments, townhouses and semi-detached dwellings - and of standalone
houses also fell to a six-year low.
"The annual rates of change in building approvals still look
ugly"
— JP Morgan economist Ben Jarman
Attached
dwellings dropped 30 per cent in total from 2018 to 76,584 in seasonally
adjusted terms. But the biggest retreat came in high-rise apartments - units in
a building of four storeys or more - which sank more than 37 per cent
year-on-year - the fastest rate of annual decline in 22 years - to
41,715.
-----
Health Issues.
------
'What makes a father?': the sperm donor who asked the courts to answer this question tells his story
It was a landmark legal ruling with potentially dramatic
ramifications for sperm donors, and the women who use them to have children.
The man behind this case tells why he took his battle to the High Court.
By
Greg Callaghan
July 28, 2019
The
school pick-up on that bright, sticky February afternoon in 2014 began like so
many others before it, with no hint it would be the prologue to a chain of
events that would reverberate through Robert Masson's* life and far beyond.
Events that would over the next five years entangle some of the sharpest legal
minds in the country, cost Robert more than $1 million in legal fees, draw the
intervention of the federal Attorney-General, Christian Porter, and crest in a
landmark High Court ruling that would flash across TV news bulletins in the US,
the UK and Australia.
Behind
the headlines around Robert's fight for paternity ("High Court Rules Sperm
Donor Is Father") would quietly hover a single question:
-----
Health insurance: Death spiral or minor headwind?
Jul 29, 2019 — 12.00am
You
would think the Grattan Institute's alarming declaration earlier this month
that the private health insurance (PHI) industry is in a "death spiral" would be ringing in the ears of
investors.
But
the opposite appears to be true. Medibank and NIB, Australia's two largest
ASX-listed PHIs, are enjoying record share prices. And according to industry
research house IBISWorld, the industry is on track to see revenues and profits
grow over the next five years. So what is going on?
The
statistics are clear: Australians are abandoning private health insurance in
alarming numbers. The Australian Prudential Regulation Authority's latest figures
show the total percentage of people with health insurance at the end of 2018
fell by 1 percentage point year-on-year to 44.6 per cent, its lowest level
since 2006. That was a continuation of a four-year trend.
-----
'It can kill, it nearly did': researchers uncover clue to deadly flu in healthy people
By Rachel Clun
July 31, 2019 —
7.05pm
Despite
being a fit and healthy 32-year-old, Amanda Nix said she is lucky a bout of
influenza did not kill her.
“I
generally don't get sick very often at all,” she said. “I’m still in shock
actually, I had no idea it could happen like that to someone like me.”
Associate
Professor Benjamin Tang, an intensive care specialist at Nepean Hospital, has
spent the past 10 years researching why some otherwise healthy people develop
severe complications when they get influenza.
His
latest research, published on Wednesday in Nature Communications, has found a particular immune
cell could be to blame.
-----
Wealthy live eight years longer than remote children
- 12:00AM August 2, 2019
Children born in affluent and well-serviced city suburbs could
expect to live three years longer than the national average, while kids in
remote communities might end up dying five years earlier, according to the Australian
Institute of Health and Welfare.
At its most extreme, this regional life expectancy gap is 8.1
years, ranging from 85.9 years in North Sydney to 77.6 years in the Northern
Territory, based on areas defined by primary health networks of doctors.
The institute, in a report released today, has distributed life
expectancy for those born between 2015 and 2017. Its findings shed new light on
the underlying variations behind the headline national life expectancy of 82.5
years, or 80.5 years for males and 84.6 years for females, which ranks among
the best in the world.
-----
How to avoid financial stress when moving to aged care
Aug 1, 2019 — 11.09am
Harrowing
personal stories of neglect and terrible food have so far been a big focus of
the royal commission into aged care quality and
safety. But in a system riddled with inconsistencies, the stress of the journey
into aged
care can start well before someone even walks in the door.
For
example, the Centrelink "calculation of your cost of care" or
"income and assets assessment" is necessary to work out your
contribution towards residential care. A request for information from
Centrelink on behalf of an elderly parent who is in hospital and suffering
dementia is a potential minefield.
Information
on a father’s superannuation was sought by a son, who has enduring power of
attorney to act on behalf of his father. The same superannuation information is
sent biannually to account holders. However, as part of its information
gathering, Centrelink requires it in a different format.
-----
Blood test to detect Alzheimer’s disease
- By Tom Whipple
- The Times
- 2:10AM August 3, 2019
A simple blood test that can detect the onset of Alzheimer’s has
been developed by scientists in a breakthrough for combating the disease.
The test could speed up diagnosis in GP surgeries and boost the
development of drugs to tackle the condition. At present there is no effective
treatment.
The illness affects more than 400,000 Australians, a number
estimated to reach 1 million by 2050 as the population ages.
Researchers showed that the test had more than 90 per cent
accuracy in spotting toxic proteins in the brain that can be an early indication
of the disease. This could enable doctors to identify the illness before memory
loss or mental decline.
-----
Doctors' rights to object to abortion should be protected
By Joanna Howe and Suzanne Le Mire
August 4, 2019 —
12.05am
All
Australians should be concerned when a law forces other Australians to act in a
way that they believe is gravely wrong.
Freedom
of conscience is a foundational principle of a diverse, pluralist democracy
like Australia. It protects individuals who hold moral or religious views from
compulsion. Forcing doctors to refer for abortion – whether directly or indirectly –
undermines our hard-won and precious values of tolerance and freedom of belief
and religion.
like Australia. It protects individuals who hold moral or religious views from
compulsion. Forcing doctors to refer for abortion – whether directly or indirectly –
undermines our hard-won and precious values of tolerance and freedom of belief
and religion.
This
is why it is so concerning that the proposed
NSW abortion laws force any doctor with a conscientious objection to abortion to
refer patients to a doctor who will perform one.
Those
who argue that forcing doctors to refer for abortion is merely about providing
access to healthcare fail to understand that the act of referral is no trifling
matter for a doctor who believes abortion involves taking an innocent life.
-----
Anti-vaxxers live in an online bubble this scientist wants to burst
By Liam Mannix
August 4, 2019 —
12.00am
Last
month, Catherine Hughes opened her phone and began to compose a tweet.
“Our
son Riley died from #whoopingcough before he was old enough to be vaccinated,”
she wrote.
“Pregnancy
vaccination (not available to us at the time) could have saved his life. Please
RT to raise awareness about the importance of #pregnancy vaccination!”
It
was a powerful message. Ms Hughes’s tweet got 684 retweets. She felt like she
was making a difference.
-----
International Issues.
-----
White House currency row sends a clear message to Jerome Powell
Jul 28, 2019 — 11.30am
Washington
| We’re headed through the looking glass folks.
Let
this sink in: Donald Trump and his top White House officials held a
tension-inducing debate last week in which they seriously discussed
manipulating global currency markets to drive down the US dollar.
Two
things leap out about this.
The
first is how disruptive and unconventional this is, even if it doesn’t seem
that way because everyone has become numb to the disruptive and unconventional
ways of this President.
-----
Why Boris Johnson must succeed
Love or loathe Boris and Brexit, the consequences of both of them
failing would flow far beyond the British Isles.
Bret Stephens
Jul 26, 2019 — 9.36am
Boris
Johnson has been Britain's prime minister for not quite a day, and the reviews
are in. He's a disaster! A fraud! A Trumpy toff
and shameless showman whose ego is inversely correlated to his merit and whose tenure
of office won't just be bad for the United Kingdom, but very possibly the death
of it.
Johnson
might be half-inclined to agree. As he once said of himself: "You can't
rule out the possibility that beneath the elaborately constructed veneer of a
blithering idiot, there lurks a blithering idiot."
I've
always had a vague distaste for Johnson, based mainly on his history as a
journalistic fabulist, as well as the unflattering testimony of friends who've
dealt with him personally. Also, I opposed Brexit, which Johnson recklessly
championed in 2016 and which he now promises to see through, one way or
another, by the end of October.
-----
Boris Johnson's first few days as PM: seductive with a hint of menace
Camilla
Cavendish
Jul 28, 2019 — 3.46pm
Boris
Johnson’s first few days as prime minister have been an onslaught of sunshine:
seductive, yet with a hint of menace. His shock-and-awe cabinet reshuffle echoed Margaret Thatcher’s 1981
purge of the “wets”. Back then, she asked, “Are you one of us?” Tory moderates
now face the same question — with the sweetener that if they stick together, Mr
Johnson argues, he can beat Jeremy Corbyn.
The
UK now has a foreign secretary and home secretary more consistently hardline in
their views on the EU than Mr Johnson has been. Those of us with misgivings
about the coming death-dance worry that this is so clearly a government for the
October 31 deadline. Yet it was right to shake up a stale cabinet. It is also
logical to bring in ministers and advisers who will drive through the prime
minister’s central priority. Mr Johnson knows how difficult it is to deliver in
government — let alone at speed.
How
will he operate? The prime minister’s power derives from four main sources.
First, the power of patronage. Second, executive powers over defence and
intelligence. Third, the ability to pass laws and command parliament, and
finally the power of the bully pulpit — which even prime ministers with big
majorities find they need. Tony Blair used a broadcast interview to outwit his
chancellor and announce an increase in health spending; David Cameron used
speeches to enforce a definition of Islamist extremism that his home secretary
and her mandarins were resisting.
-----
Ireland warns hard brexit could break up the UK
Jul 28, 2019 — 3.16pm
Irish
prime minister Leo Varadkar has warned that a hard Brexit could threaten the
place of Northern Ireland and Scotland in the UK as Boris Johnson told EU leaders that Britain will leave the bloc
without a deal unless they drop the so-called Irish backstop.
In
a highly unusual intervention on internal British politics, Mr Varadkar said
that if there were a no-deal Brexit on October 31, “more and more people in
Northern Ireland will come to question the union”.
He
added: “One of the things that ironically could really undermine the union of
the UK is a hard Brexit, both for Northern Ireland and for Scotland, and that
is a problem they are going to have to face.”
-----
West must play it cool until Moscow’s love for China starts to fade
The Economist
- 12:00AM July 29, 2019
It is the love triangle of global politics. Since World War II,
China, Russia and the US have repeatedly swapped partners. The collapse of the
Sino-Soviet pact after the death of Joseph Stalin was followed by Richard
Nixon’s visit to China in 1972 and Mikhail Gorbachev’s detente with China 30
years ago. Today’s pairing, between Vladimir Putin and Xi Jinping, was cemented
in 2014 after Russia annexed Crimea. In each case the country that was left on
its own has always seemed to pay a price, by being stretched militarily and
diplomatically.
This time is different. Though the US is out in the cold, the
price is falling chiefly on Russia. China dominates every aspect of the two
countries’ partnership. Its economy is six times larger and its power is
growing, even as Russia’s fades. What seemed a brilliant way for Putin to turn
his back on the West and magnify Russia’s influence is looking like a trap that
his country will find hard to escape. Far from being an equal partner, Russia
is evolving into a Chinese tributary.
That may seem a harsh judgment. Russia is still a nuclear-weapons
state with a permanent seat on the UN Security Council. It has modernised its
armed forces and, as in Syria, is not afraid to use them. Last week, Russian
and Chinese warplanes conducted what appeared to be a joint air patrol for the
first time, causing alarm when South Korea said a Russian plane had intruded
into its airspace.
-----
Trump's top spy resigns after clashing on Iran, North Korea
Zeke Miller
and Eric Tucker
Jul 29, 2019 — 8.23am
Washington
| Director of National Intelligence Dan Coats is leaving his job next month,
ending a two-year tenure marked by President Donald Trump's clashes with
intelligence officials.
Trump
announced the departure on August 15 in a tweet that thanked Coats for his
service. He said he would nominate Representative John Ratcliffe of Texas to
the post and name an acting official in the coming days. Ratcliffe is a
frequent Trump defender who fiercely questioned former special counsel Robert Mueller
last week during a House Judiciary Committee hearing.
Coats
often appeared out of step with Trump and disclosed to prosecutors how he was
urged by the president to publicly deny any link between Russia and the Trump
campaign. The frayed relationship reflected broader divisions between the
president and the government's intelligence agencies.
-----
The home of ultra-low rates has a warning for the world
By Min Jeong Lee and Masaki Kondo
July 30, 2019 —
8.31am
As
the world sinks into an era of ever-lower interest rates and a chasm of negative-yielding
bonds, Japan's experience offers investors an invaluable precedent.
It's
two decades since the nation pioneered zero rates and more than six years into
central bank chief Haruhiko Kuroda's record stimulus. The money managers who've
witnessed it all provide unique insights into strategies to survive such a
regime.
One
legacy of Japan's ultra-low interest-rate regime is that it has spurred massive
investment into overseas assets. But even more telling is the extremes that
Japanese investors have gone to in the hunt for yield. They've pushed deeper
into stocks and real estate, amassed bonds from Europe's periphery to emerging
markets, and loaded up on opaque securities that bundle together hundreds of
loans.
-----
Boris Johnson's Brexit strategy is 'doomed to fail', says Scottish leader
By Nick Miller
July 30, 2019 —
6.19am
British
Prime Minister Boris Johnson has insisted he is “very confident” he can strike
a fresh Brexit deal with Brussels before the end of October, as he spent a day
north of Hadrian’s Wall trying to quell a potential Brexit rebellion.
Johnson
headed to Scotland on Monday as a new report from a respected Whitehall think
tank predicted the Union would come under “unprecedented pressure” in the
months following a no-deal Brexit.
The
Institute for Government report anticipated a fresh, heightened campaign for
Scottish independence in 2020.
-----
Hong Kong is a flashpoint in the new cold war
Updated Jul 30, 2019 — 10.24am, first published at 10.20am
Hong
Kong has played a central role in the two great stories of our era — the rise
of China and the globalisation of the world economy. More than 30 years ago,
China’s emergence as the workshop of the world began just across the border
from Hong Kong, powered by the territory’s money, expertise and international
connections.
Today,
Hong Kong continues to serve as a crucial gateway between China and the West.
But
the world is now entering a post-globalisation era characterised by populist
unrest and rising tensions between the US and China. And once again Hong Kong
is central to the story.
For
almost two months, the territory of 7.4 million people has been hit by a wave of demonstrations.
This began as a protest against a proposal to allow suspects to be extradited to mainland China.
But it has now spiralled into broader complaints against police violence and
demands for fully democratic elections.
-----
An emboldened Donald Trump's guardrails fall away
By Jonathan Lemire and Zeke Miller
July 30, 2019 —
12.59pm
Washington:
An unrepentant President Donald Trump has been testing the limits of the
nation's tolerance from the day he took office. Now he has cast off one of the
few remaining voices trying to curtail his at times mercurial impulses.
Trump
nudged out national intelligence director Dan Coats, a rare cautionary
influence in his foreign policy apparatus, while he escalated his attacks on
minority members of Congress and went so far as to call a majority-black US
city of 600,000 a "disgusting, rat and rodent infested mess" on
Twitter. Both moves underscored Trump's longstanding belief that he is his own
best political strategist.
The
president's volatile management style has shocked the nation before. But the
drumbeat of provocation emanating from the White House has grown undeniably
louder in recent months. Trump aides such as economic adviser Gary Cohn, who
blocked impulsive actions by going so far as to remove rogue paperwork from the
Resolute Desk, are gone.
The
president has rid himself of many of the aides who once challenged him, either
by attrition or replacement, and in doing so illustrated his preference for
loyalty over know-how. He's inflamed racial tensions, betting that such
divisions will help ease his path to victory in 2020. And he's replaced gut
instinct and tweets for the sober analysis of professionals on matters of war
and peace.
-----
North Korea again fires projectiles offshore, South Korea says
Eric Beech and Davdi Brunnstrom
Jul 31, 2019 — 7.56am
Seoul
| North Korea fired multiple unidentified projectiles early on Wednesday, less than a week after firing two new short-range ballistic
missiles, the South Korean military's Joint Chiefs of Staff (JCS) said.
The
latest launches were from the Hodo peninsula on North Korea's east coast, the
same area from where last week's were conducted, the JCS said in a statement.
It said it was monitoring the situation in case of additional launches and
maintaining a readiness posture.
North
Korea test-fired two new short-range ballistic missiles on July 25, its first
missile tests since President
Donald Trump and North Korean dictator Kim Jong-un
met in late June and agreed to revive stalled denuclearisation talks.
The
White House, the Pentagon and the US State Department did not immediately
respond to requests for comment.
-----
Irish PM clashes with Boris Johnson, intent on no-deal Brexit
Siobhán
O'Grady
Jul 31, 2019 — 7.48am
Dublin
| In his first address to lawmakers as the newly appointed prime minister of
Britain last week, Boris Johnson made one thing clear: He does not support the idea of
an Irish backstop, a measure that would maintain a soft border between Ireland and
Northern Ireland, as part of the Brexit deal.
"No
country that values its independence and indeed its self-respect could agree to
a treaty which signed away our economic independence and self-government as
this backstop does," Johnson said.
"If
an agreement is to be reached, it must be clearly understood that the way to
the deal goes by way of the abolition of the backstop."
The
comments provoked disbelief in Ireland and elsewhere in the European Union,
where leaders see maintaining the backstop as nonnegotiable.
-----
Fed cuts interest rates for first time since GFC
Updated Aug 1, 2019 — 8.04am, first published at 4.07am
Washington
| The US Federal Reserve has cut its official cash rate for the first time
since 2008, citing mounting concerns about the global economy and trade
disputes, but it left investors on tenterhooks over whether there would be
follow-up reductions.
After
a sustained period of demands by President Donald Trump
for looser monetary policy, the central bank delivered one of the most divisive
decisions in its recent history by lowering the benchmark rate by 0.25 of a
percentage point to a range of 2 per cent to 2.25 per cent.
It's
an "insurance" cut, according to Jerome Powell. Bloomberg
There
were two dissenting members of the policy board who voted for no change.
-----
Powell in knots trying to explain the inexplicable
Aug 1, 2019 — 9.24am
Washington
| Well that didn't really go according plan.
When
Jerome Powell took over as Fed chairman early last year, he was lauded for
bringing a refreshing style to the central bank's communications. It was noted
for its openness and clarity.
The US Federal Reserve delivers its first rate cut in over a
decade, but Fed Chief Jerome Powell declined whether to say the cut is one and
done or if there are more cuts to come.
After
Wednesday's press conference, some of that gloss has worn off.
The
reason? Powell had to justify a rate cut that by its very nature defies open
and clear explanation.
-----
Markets reconsider the 'Fed Put' after underwhelming cut
Aug 1, 2019 — 9.29am
The
US share market was clearly underwhelmed with Federal Reserve’s 25 basis
point reduction in policy rates, its justification that it was a
mid-cycle adjustment and the lack of assurance that this was the first of more
to come.
The
Dow Jones took a 300 point plunge the US dollar rose to near three-year highs
while credit spreads widened – effectively tightening financial conditions.
The
Fed is not prepared to give the market its full assurance that it has its
back. Bloomberg
But
the Fed’s stance and the market’s reaction is a reminder of the conundrum long
term investors face in a world where "good is bad and bad is good."
-----
Boris envoy heads to Brussels with a 'We're out of here' message
Jill Lawless
and Elizabeth Piper
Aug 1, 2019 — 8.36am
London
| Prime Minister Boris Johnson's Europe adviser travelled to Brussels to pass
on his message that the country is going to leave the European Union on Oct. 31
"whatever the circumstances", a government spokesman said.
David
Frost was having introductory meetings on Wednesday (Thursday AEST) with key
officials and to relay the Johnson's message in person that "the UK is
leaving the EU on Oct. 31 whatever the circumstances", the spokesman said.
"We
will work energetically for a deal but the backstop must be abolished. If we
are not able to reach an agreement then we will of course have to leave the EU
without a deal," the spokesman said.
-----
Confusion reigns as the Fed cuts rates for the first time in a decade
Stephen Bartholomeusz
Senior business
columnist
August 1, 2019 —
10.50am
Jerome
Powell seemed confused in discussing the US Federal Reserve Board’s first rate
cut in more than a decade. Financial markets were confused, too - and
disappointed.
The
markets expected the cut, but also anticipated that it would be the first of
several more to come, rather than a one-off.
After
all, why would the Fed cut rates – and end its balance sheet shrinkage program
two months ahead of schedule – unless it was in response to a material threat
to US economic growth that required a cycle of rate cuts, not what has been
described as an "insurance" cut?
-----
Welcome to the latest round of global currency wars
It's the competition no self-respecting central banker wants, but
which not one feels is avoidable. Welcome to the latest round in the global
currency wars.
Aug 1, 2019 — 12.45pm
He
could either gratify financial markets and appease President Donald Trump with
an aggressive half-percentage-point cut in US interest rates and an indication
that further monetary easing lay ahead.
Or
he could try to ease tensions in the global
currency war by opting for a more modest quarter-percentage-point rate cut, and
dampen investor hopes for future rate cuts.
-----
South Korea warns Japan trade move could hurt security ties
Isabel
Reynolds and Jihye Lee
Aug 1, 2019 — 4.33pm
Tokyo/Seoul
| Japan's plan to remove South Korea from a list of trusted export destinations
would have a grave impact that could hurt security ties between the two US
allies, Seoul's top diplomat said.
South
Korean Foreign Minister Kang Kyung-wha spoke on Thursday after meeting her
Japanese counterpart Taro Kono for their first face-to-face talks since Tokyo
announced last month it was tightening monitoring of exports of three specialty
materials vital to its Asian neighbour's technology sector.
Japan
also soon plans to introduce stricter checks on a far wider range of exports.
"We
cannot help but see this as affecting the framework of security cooperation
between South Korea and Japan," Kang told reporters in Bangkok after the
meeting on the sidelines of a regional forum. Kono told Kang he wanted South
Korea to change its stance on a separate dispute over compensation for
conscripted Korean labourers during the colonial period, Kyodo News reported.
-----
Trump slaps 10pc tariff on $US300b of Chinese goods
Paul Wiseman
and Kevin Freking
Aug 2, 2019 — 4.17am
Washington
|President Donald Trump has intensified pressure on China to
reach a trade deal by saying he will impose 10 per cent tariffs Sept. 1 on the
remaining $US300 billion ($441 billion) in Chinese imports he hasn't already
taxed. The move immediately sent stock prices sinking.
The
president has already imposed 25 per cent tariffs on $US250 billion in Chinese
products, and Beijing has retaliated by taxing $US110 billion in US goods.
US
consumers are likely to feel the pain if Trump proceeds with the new tariffs.
Trump's earlier tariffs had been designed to minimize the impact on ordinary
Americans by focusing on industrial goods. The new tariffs will hit a vast
range of consumer products from cellphones to silk scarves.
-----
Former Trump adviser Gary Cohn says trade war hurting US economy
Aug 2, 2019 — 1.06am
Washington
DC | The White House's trade war with China
is hurting the US economy, President Donald Trump's former top economic adviser
said.
Gary
Cohn, who left the administration last year amid an internal clash over Mr
Trump's protectionist trade policies, told the BBC in a video that the trade
battle was having a "dramatic impact" on American manufacturing and
that it offered a "convenient excuse" for China to slow down its
economy. Mr Cohn said the Chinese economy "is driven by credit and credit availability," which is
determined by the central government.
"They
can turn credit on and they can turn credit off," Mr Cohn said. "They
needed to slow down an overheated economy where prices and real estate prices
and everything were getting out of hand. I think President Trump provided that
excuse for the Chinese."
A
former president of Goldman Sachs, Mr Cohn spent much of his time as director
of the National Economic Council pushing back against Mr Trump on global trade
and his influence gradually eroded. Mr Cohn embraced economic internationalism,
while Mr Trump, who planned to impose tariffs on steel and aluminum imports at
the time of Mr Cohn's departure, doubled down on economic nationalism.
Since
leaving the White House, Mr Cohn hasn't been shy about criticising Mr Trump's
policies. In January, he called the partial government shutdown
"completely wrong" and said he was "confused as to what the
White House's strategy is on this."
-----
Trump, the Fed and the case for investing in gold
Aug 2, 2019 — 3.42pm
It
was 1:26pm, Thursday, on a New York afternoon when everything went suddenly
sour.
It
was then – in the wee hours of Friday morning in Australia – that the leader of
the free world hit Twitter to launch his latest salvos in
the US-China trade dispute: a 10 per cent tariff on the remaining around $US300
billion ($440 billion) of Chinese imports which have thus far escaped higher
imposts.
Stocks on
Wall Street flipped from a 1 per cent gain to a 1 per cent loss. Investors snapped up
bonds, pushing the yield on 10-year US bonds way down to 1.88 per cent and the
Aussie dollar below US68¢, its weakest since the GFC.
Donald
Trump's latest round of tariffs could hit US consumers particularly hard.
In
a series of four tweets Trump said this week's trade talks had been
"constructive". Alas, China "agreed to buy agricultural products
from the US in large quantities but did not do so".
-----
Trump charts course to chaos
Buckle up for a wild ride. A capricious and campaigning US
president is in the mood for a currency war.
Aug 2, 2019 — 9.55pm
Washington
| It look fewer than 24 hours for Donald Trump to burn through any short-term
benefit that might have been gained from Jay Powell’s inexplicable
interest rate cut this week.
That
must be some kind of record.
Stocks
began on Thursday in positive territory with the Dow Jones enjoying a healthy
300-point rise.
For
investors left shaken by the post Fed rate cut slump it looked like a
reasonable start. After all few were convinced the move wasn’t really about assuaging a
bellicose White House rather than sound monetary policy.
But
as the day wore on and as investors began to relax into the asset-market
soothing benefits of Powell’s “mid-cycle adjustment”, Trump did a belly flop
straight into the punchbowl.
-----
Does America want to be Number One?
Washington could easily decide that it neither longer wants nor
needs to be the leading power in the Asia-Pacific region.
Sam Roggeveen
Aug 2, 2019 — 3.48pm
When
Foreign Minister Marise Payne and Defence Minister Linda Reynolds face their
American counterparts at the annual AUSMIN
ministerial talks this weekend, they should look Mike Pompeo and
Mark Esper in the eyes for clues that will help them answer one core question
about our great ally: how badly does America want this?
With
the notable exception of the President himself, America’s senior officials
regularly proclaim America’s absolute commitment to Asia. We have even seen
tangible evidence of it in recent weeks with reports of new investment in port
facilities just outside Darwin that will reinforce the US Marine presence in
northern Australia.
Yet
all American assurances need to be tested against the "how badly do you
want this?" question.
-----
'Security trumps prosperity': Australia will choose US over China
'If you take the long view, Australia has never been able to sit
on the fence when there was a threat in East Asia.'
Aug 2, 2019 — 10.32am
One
of America's most provocative thinkers on geopolitics is going to deliver a
strong message for Australia next week – one that some policymakers and business
executives might not want to hear.
Influential
realist academic John Mearsheimer – author of five books and a professor at the
University of Chicago – says Australia will have no choice but to ultimately
align with the United States over China.
Both the national security establishment and the high tech
community are interested in working overtime to contain China.
— John Mearsheimer
-----
Australia ramps up pressure on China with backing of US and Japan
By Bevan Shields
August 2, 2019 —
11.59pm
The
Morrison government has joined with the United States and Japan to issue a
pointed condemnation of China's increasingly aggressive behaviour in waters to
Australia's north.
As
Australia reportedly considers a request by Washington to contribute military
assets to an international effort to protect oil
tankers from attacks by Iranian forces, Foreign Minister Marise Payne,
US Secretary of State Mike Pompeo and Japan Foreign Minister Taro Kono ramped
up pressure on China over its military build-up in South East Asia.
The
ministers expressed "serious concern" over "credible reports of
disruptive activities in relation to long-standing oil and gas projects"
in the South China Sea - a coded reference to Chinese vessels harassing Vietnamese
ships trying to access key oil rigs.
-----
China signals US trade war could undermine North Korea talks
By David Wainer
August 3, 2019 —
11.11am
New
York: China's ambassador to the United Nations signalled that an
escalating trade war with the US could undermine efforts to reach one of
President Donald Trump's top foreign policy priorities: a nuclear deal with
North Korea.
"We
should also remind ourselves that if we want to cooperate, we have to
demonstrate to your partner the spirit of cooperation," Ambassador Zhang
Jun, who arrived in New York less than a week ago, told reporters at the UN on
Friday.
"It
will be hard to imagine that on the one hand you're seeking the cooperation from
your partner but on the other hand you're hurting the interest of your
partner.''
The
comments came a day after Trump abruptly announced that he will impose a 10 per
cent tariff on a further $US300 billion ($441 billion) in Chinese imports
starting September 1. That followed a shortened visit to Beijing by US trade
negotiators, with the two sides agreeing to meet again in September.
-----
Fed rate cut dissenters speak out
Steve
Matthews
Aug 3, 2019 — 10.29am
Atlanta
| Two Federal Reserve regional bank presidents said they dissented
against cutting interest rates this week because US
economic data remain solid and risks from a global slowdown and trade tensions
hadn't yet altered that outlook.
Federal
Reserve Bank of Boston President Eric Rosengren said Friday the case for
cutting interest rates had not been "compelling" at the July 30-31
meeting. Kansas City Fed chief Esther George said no change was needed
"with moderate growth, record low unemployment, and a benign inflation
outlook,'' though she acknowledged risks from trade uncertainty.
"Should
incoming data point to a weakening economy, I would be prepared to adjust
policy," she said in a statement.
Mr
Rosengren didn't mention the trade tensions in his statement issued earlier on
Friday that also highlighted financial stability concerns "given
near-record equity prices and corporate leverage."
-----
'Far more than a trade war': Obama's Asia adviser sounds ominous warning to Australia on China
By Michael Koziol
August 3, 2019 —
11.45pm
Former
president Barack Obama's top adviser on east Asia and the Pacific says
Australia should "link arms" with the US to form a united front
against China's economic "sins" and combat the increasingly serious
damage wrought by the rising power's bad behaviour.
But
he also warned against using tariffs to compel China to act more fairly,
arguing Donald Trump's efforts had failed to achieve their objectives and
instead started a "dangerous downward spiral in the US-China
relationship" that was "far more than a trade war".
Daniel
Russel - Mr Obama's assistant secretary of state for east Asian and Pacific
affairs - sounded the ominous note in an interview with The
Sun-Herald and The Sunday Age ahead of US secretary of state Mike
Pompeo's arrival for talks with Foreign Minister Marise Payne on Sunday.
It
was in Australia's long-term interests to stand shoulder-to-shoulder with the
US against "the unfair and predatory economic and commercial practices
that we have seen for so long by the Chinese", such as intellectual
property theft and lack of reciprocity in trade, he said.
-----
I
look forward to comments on all this!
-----
David.
