Good morning. Let’s start the week:
1. On the markets, US stocks rallied towards the end of the week with the Dow posting a gain of 0.25% to 16,776 on Friday. The Nasdaq and S&P 500 were both up up 0.3%. Asian markets had a stronger day, with the Nikkei 0.83% higher, the Hang Seng up 0.62% and Shanghai up 0.94% to 2,071. A continuing fall in the price of iron ore, however, is likely to continue to weigh on the Australian markets. ASX futures are flat for the start of trade.
2. The week ahead. It’s the usual quieter third week of the month, but there are some important pointers: Eurozone CPI tonight, the RBA minutes tomorrow in Australia, and the FOMC meeting on Wednesday night, where there might be some indication on the Fed’s response to the big dip in US GDP in Q1 from the harsh winter, and the ensuing recovery. There’s new car sales tomorrow in Australia and property prices from China on Wednesday.
3. Iraq is in a full-blown war against offshoot Islamic State of Iraq and ash-Sham (ISIS), which has now captured Iraq’s second largest city and have advanced within 60 miles of the capital. ISIS has posted photos online of mass executions (which you can see here, but a warning that they’re extremely graphic). This plays right into the hands of Iran, which has sent thousands of elite Revolutionary Guards forces and militiamen to Baghdad’s aid. Oil prices have been surging on the developments.
4. Australian demographics. The latest version of Australia’s HILDA survey, the Household Income and Labour Dynamics in Australia, which has tracked 12,000 Australians since 2001, shows there are less Australians on welfare than there were in the past. Associate Professor Roger Wilkins of the Melbourne Institute told the SMH that Australian’s were relying on welfare in the lowest total numbers since possibly the 1980’s. “I’m absolutely bewildered by Hockey’s obsession on welfare reliance in Australia,” he said. Yes, but Hockey has also been arguing that current levels of spending are not sustainable into the future given the passing of the mining boom and the changing structure of the population. We’ll have more on the HILDA report today on BI.
5. The consumer outlook. Growth in Australian retail spending shouldn’t be derailed too much by the damage done to consumer confidence by the federal budget, according to Deloitte. “How permanent that confidence slump is will be interesting to watch in the coming weeks,” they say in a note out today. “On the view that consumers will respond to actual influences on their ability to spend rather than perceived ones, the budget shouldn’t stop 2014-15 from being a strong year for retail.” This is critical politically: if what Goldman Sachs described as an “audible snap” in sentiment turns into a material drag on consumer spending the government will be in a world of pain.
6. On the other hand, the building of new homes in Australia is expected to reach its second-highest level on record this year. With home construction being the great multiplier – through job creation and retail spending as new home-owners hit the shops to fill their houses with stuff – the projections from the Housing Industry Association are an important part of the overall Australian economic picture right now, and could be the counterweight to any dip in consumer spending.
7. World cup week. If you feel like getting up at 2am for a couple of games this week, there’s Germany v Portugal tomorrow morning, and then Australia v The Netherlands on Thursday. Despite the Socceroos acquitting themselves well in the first game against Chile, fans will be awaiting Thursday’s game with a sense of dread after the 5-1 Dutch massacre of Spain. Park the bus. Meanwhile, here are 16 beautiful photographs from the tournament so far.
8. Tantrum topping. History hates a poor winner, and if anyone should know about that, it’s Heath Shaw, who once played for Collingwood. Now at fledgling AFL side Greater Western Sydney, he celebrated with teammates after their first away from home win on Saturday night – by ringing and threatening their hotel night manager nine times between 3am and 3.30am for not delivering five pizzas quick enough. You can take the boy out of Collingwood…
9. “The Radium Water Worked Fine Until His Jaw Came Off”. The 1932 Wall Street Journal headline is an all-time classic, and refers to Eben Byers, a well-known industrialist, who claimed to drink three bottles a day. Read about that and 10 other things we thought were great for our health, including heroin cough syrup and tapeworms. Tapeworms!
10. Australia has won the World Cup. Congratulations to our Kookaburras, who defended their title with a 6-1 demolition of The Netherlands. The game echoed The Netherlands’ defeat of Spain in the football version of the World Cup, where the loser went 1-0 up early before being buried. It was an especially good day for Australia’s five-time player-of-the-year Jamie Dwyer, who scored the last goal and equalled Jay Stacey’s record of 321 Kookaburra appearances.
Bonus item: a fake video of a guy diving off a cliff at Sydney’s Manly beach only to encounter a shark when he hits the waters has sparked copycat tributes. Here’s another that appeared a couple of days ago. Australia, the future video-editing hub of the world.
Have a great day. I’m on Twitter: @colgo
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