10 Things You Need To Know This Morning In Australia

Most Powerful and Influential. Picture: Getty Images

Good morning – it’s PMI and RBA day. Here’s what you need to know…

1. Countries around the world release their Purchasing Managers’ Index throughout the day. The big number is China’s, out 11am AEST, with a Reuters poll of economists forecasting a result of 51, edging higher from last month’s 50.8. An increase will be another sign that the selective stimulus from Chinese policymakers has been working. We also get Australia’s at 9.30am AEST from AiG.

2. The RBA board meets this morning and we get the statement at 2.30pm AEST. Nobody is expecting any change in the target cash rate, but the markets will be watching the governor’s statement carefully for clues on the board’s thinking on the progress of the Australian economy and the strength of the dollar, which might indicate the future direction of rates. Soc Gen wrote in its Asia Morning Call this morning that the strong GDP growth at the start of the year was no grounds for abandoning caution. “Australia’s Q1 growth positively surprised not merely in terms of the magnitude of growth, but in ‘quality’ as well… Nevertheless, while this may sway the RBA to be a little more positive about growth, we doubt its view of growth remaining below trend over the coming year or so will be substantially altered. Two of its three main arguments for slow growth, the practical certainty of declining resource investment and below-average growth in public demand, remain in place – and we agree with them.”

3. To the markets and the US session was flat with the Dow down 0.2%, the S&P 500 down 0.06%, and the Nasdaq gaining 0.2%. News that Chinese authorities are likely to ease rules on loan to deposit ratios spurred a rally in Shanghai, which was up 0.56%. The Nikkei also rose, up 0.44%. With the regional PMIs out today and the Tankan out in Japan, it’s a big day ahead for Asian markets. ASX futures are pointing to a rise on the open following yesterday’s 0.9% fall, but iron ore prices fell again overnight so this will weigh on the miners.

4. Australia’s new Senate starts today, and the balance of power is shifting from the Greens to a rainbow crossbench of minor parties, with the main bloc being Clive Palmer’s PUP. “Colourful” is one adjective that will be often used to describe them; “unpredictable” is a better way to think about it. The PUP bloc is: former rugby league player Glenn Lazarus, Tasmania’s Jacqui Lambie, former Australian Resources MD Dio Wang, and the Motoring Enthusiast Party’s Ricky Muir. The other crossbenchers are Family First’s Bob Day, the NSW Liberal Democrats’ David Leyonhjelm, the DLP’s John Madigan, and veteran SA independent Senator Nick Xenophon. The Senate is already holding up important budget measures, including the carbon tax, so the government will be eager to start working with the new Upper House.

5. Speaking of Clive Palmer, he has some questions to answer about his use of Chinese state money. Citic Pacific, the China state-owned investment company whose relationship with Palmer soured, is trying to establish what happened to some of its cash – more than $12 million of it. The question is whether some was used to help pay for Palmer’s election campaigns, and The Australian reports this morning that some $2.1 million was paid to a media agency just five days before the election last September.

5. Taxes are up today in Australia. The start of the new financial year means the Medicare Levy rises from 1.5% to 2% to pay for the national disability insurance scheme, while the deficit levy kicks in for people earning over $180,000 – an extra 1c in the dollar. Employers also must increase the minimum superannuation payments for employees to 9.5%, from 9.25%.

6. The case for a crash. After a warning from central bankers yesterday about euphoria in the stock market, Business Insider editor-in-chief Henry Blodget has a column explaining why he thinks a day of reckoning is coming. In summary, there’s three points: stocks are very expensive (at a PE ratio of 26X, far above the long-term average of 15X); corporate profit margins are still near record highs; and the Fed is now tightening. You can read it here.

7. Rolf Harris faces jail. The Australian entertainer was convicted on 12 counts of indecent assault overnight. He will be sentenced on Friday and faces up to 24 years in prison.

8. Business news from robots. The Associated Press will soon have artificial intelligence churning out 4,400 earnings reports per quarter, a time-frame in which human reporters could could write up just 300. No reporters are getting laid off; they’ll just have more time to write better stories that explain what the results mean.

9. A much better-looking Most Powerful list. Hot on the heels of BRW’s Rich List comes the photogenic version from Forbes – their 100 Most Powerful Celebrities. And the winner is… Beyonce, who played 95 shows this year, bringing in a staggering average of $US2.4 million per stop. Oh, and her husband was sixth. Here’s the Top 10.

10. World Cup stars are sorry, really. As France as Germany limped to unconvincing wins this morning, two players have come clean on the most controversial part of the 2014 tournament – sportmanship, or lack of it. Luis Suarez dropped the “he fell on my teeth” act and apologised for biting Italian defender Giorgio Chiellini. Sort of. And Dutch captain Arjen Robben admitted he flopped in the game that saw Mexico knocked out of the Cup. Sort of.

Bonus item: One of the year’s best weeks of TV, Shark Week, kicks off soon and to celebrate, the Discovery Channel created this strangely epic 30-second spot. The ad features a man riding on two sharks as he throws chum from his satchel-like bucket into the air. There’s a mermaid resting seductively at his feet and a slew of jumping sharks. What more could you possibly want? This year’s Shark Week begins August 10.

Have a good one. I’m on Twitter: @colgo

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