1. Joe Hockey’s big day. The Mid-Year Economic and Fiscal Outlook (MYEFO) is out today and all the focus will be on how far behind Hockey’s budget has fallen as he tries to bring it back into surplus. One report from The Australian says the blowout could be up to $100 billion. Hockey will blame the biggest decline in terms of trade since records were first kept in 1959, falling iron ore and wheat prices and Labor’s budget-blocking measures. He’ll pin his hopes on a slight strengthening in growth and housing and job creation.
2. On that iron ore price problem, Westpac’s head of market research Rob Rennie says that might be a bit simplistic. Obviously, there’s an impact when a big chunk of your tax receipts rely on an ore price of $120 a tonne and it’s suddenly $63, but Rennie notes that volumes have never been higher. Port Hedland saw November exports up a whopping 22% versus the same month last year and 23.7% up over the past three months. Money is still being made.
3. To the markets, and Friday’s close saw Asia mixed, with Shanghai up after China added more cash to the system. The Nikkei was also higher on the back of the reversal of fortune for the yen. Today’s action will be caught in the cross current of a general sell-off in European and US markets and what could be Abenomics-induced yen weakness. At Friday’s close, the Nikkei was up 0.66% to 17,372, the Hang Seng down 0.27% to 23,249 and the Shanghai Composite up 0.42% to 2,938.
4. With markets down across the board in Europe and the US, there was more weakness in the ASX futures trade on Friday night with the March SPI 200 contract off 59 points to 5110. The dollar followed oil prices lower after the International Energy Agency cut its oil-demand forecast for 2015. This morning it was trading at 82.36 US cents, down from 82.72 cents on Friday.
5. On the data front, things are slowing down for Christmas. But it’s a big day for Joe Hockey today, with the release of his MYEFO and a clearer indication of where the budget’s at. The other biggie is the end-of-year FOMC meeting in the US. Locally, we get motor vehicles, RBA minutes and a speech from Guy Debelle of note on the week. Here Westpac’s excellent weekly diary.
6. Australians are started to worry about their money. The CHOICE national Consumer Pulse Report for the first week of December found that nearly one in three Australians rated the economy as poor, up from 25% in September. They’re starting to keep their cash for bills rather than items, with particularly strong concern for the price of electricity (79%) and food and groceries (78%). We’re saving our money by cutting entertainment, clothing and holiday expenses.
7. It’s not just because Christmas is approaching either. Although he summarised the wallet-tightening as “Grinched”, Westpac’s chief economist Bill Evans has an outlook that tells him there’s at least a six-month slowdown in train. Last week’s consumer sentiment survey saw a fall of 5.7%. Now Evans’s composite indicator of spending six months ahead, the CSI, is showing him a heavy fall during the month of 5.6% to 88.4, “well below the long run average of 103.3”.
8. Maybe that’s why there’s only old magazines in the doctor’s waiting room. One Kiwi doctor got so fed up with complaints about the lack of new magazines that he began investigating the phenomenon. He tracked the weekly whereabouts of 82 magazines, 47 of which were less than two months old. After a month, he found that 41 of the 87 magazines had been stolen. Most of the missing ones were new editions and gossipy mags were 14 times more likely to disappear. He even charted it:
9. Manchester United aren’t dead. The Premier League juggernaut turned it on last night with an imposing 3-0 win over traditional rivals Liverpool. The hero was United’s Spanish ‘keeper David De Gea, who pulled off a couple of point blank saves. Rooney opened the account for United and suddenly, after 16 games, they’re back in the top three. They won’t be back on the pitch until Boxing Day, where they kick off a trio of winnable ties against Aston Villa, Newcastle and Tottenham.
10. Curtains for Clarke? The Australian cricket captain missed half of the amazing last day’s play against India on Saturday after tearing his right hamstring while in the field. “There’s certainly a chance I could never play again,” Clarke said during a post-match interview. He’s at least very unlikely to play any more Tests this Australian summer, and not looking great for the World Cup ODI series in Perth in February. Nathan Lyon spun the Indians out in a very special performance, when they were looking at one stage like embarrassing the home side with an unlikely win.
BONUS ITEM: The Eye of Sauron is finally watching over Moscow. The controversial project was axed last week after outcry from the Russian Orthodox Church, which said sure, install an Eye of Sauron on a skyscraper, but don’t come running to us when evil things come of it. It’s there now – but well-hidden.
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