Here we go again. Chin up, here’s your headstart.
1. The rally in global bond markets is out of whack with reality. So says Westpac’s chief economist Bill Evans, who believes the recent uptick in volatility is consistent with what happened at the end of QE1 and QE2. Evans also doubles down on his call that by the end of 2016 the RBA cash rate will be back at 4.0% and the FED at 2.25% and he expects world growth to lift to 3.7% in 2015 and to an above average 4.5% in 2016. All of which points to a very different future to the one that the markets are currently pricing.
2. Markets are in a funk. ANZ, citing EPFR data, has highlighted that for the first time in almost 6 months there have been large outflows from emerging Asian markets. It’s the surest sign yet that market ructions are having a material impact on investor sentiment and psyche. “Emerging Asia fund flows registered their second consecutive week of outflows at USD1.8bn (modestly up from last week’s outflow of USD1.74bn),” ANZ noted Friday. “This is the largest weekly outflow in a month and takes the total outflows to USD4.0bn in the last one month.”
3. Looking back, Asian stocks were mixed on Friday with Shanghai down 0.66% to 2,341 after the miss in the MNI business sentiment survey which printed 51.7 against 52.2. Japanese stocks fell 1.39% to 14,533 but the yen’s weaker open this week might help a little in Tokyo today and no doubt the US moves will dominate. Solid closes to US and European markets saw ASX futures traders push the Aussie market sharply higher and it should be a very good open this morning. The SPI 200 December contract rallied 68 points to 5,305.
4. The Aussie dollar is building a very interesting technical pattern suggesting a big move coming. It sits at 0.8746 this morning. USDJPY is back up near 107 at 106.89, GBP is at 1.6088 and the Euro is sitting at 1.2758.
5. It’s fairly quiet on the data front today, with nothing in Australia, but RBA assistant governor Kent will talk at 10.30am. Tonight the German PPI will be interesting, but that’s about it until later in the week. Thursday is huge, with flash HSBC manufacturing PMI for China, a chat from RBA governor Stevens and the larger, quarterly NAB business survey. Here’s the ultimate guide to your week in data courtesy of Westpac.
6. New South Wales has taken top spot in Australia’s economic rankings, pushing aside the mining powerhouse Western Australia. It’s the first time since July 2011 that there’s been a new leader at the top of Australia’s economic performance rankings, according to CommSec’s quarterly State of States report. NSW has the fastest annual economic growth rate in the nation, up by 6.3% on a year ago, ahead of Western Australia with 3.3% and Victoria (1.7%). As mining fades, housing finance is the new economic driver and while WA still leads on that front, NSW’s population explosion and dwelling starts gives it the boost it needs.
7. An international still won the Caulfield Cup. Several overseas withdrawals gave local hopes a great chance of taking home the $3m Caulfield Cup, but they failed. Japanese owner Riichi Kondo celebrated as Zac Purton saluted aboard Admire Rakti, who’s now favourite for the big one, the Melbourne Cup on Tuesday, November 4. Kondo, however, says Admire Rakti won’t even start in the $6.2 million Melbourne Cup if he’s re-handicapped above his already allotted topweight of 58kg. The last horse to win a Melbourne Cup with 58.5 was Think Big in 1975. And of course, there were the frocks.
8. World’s First Shag. Note to kids – sex isn’t new. Your parents, grandparents and great-grandparents have been doing it for 385 million years. It took an Australian scientist to pin down the exact moment a couple of dinosaur tadpole-looking things named – teehee – Microbrachius dicki – grew the right extraneous bits to hold onto an copulate with each other. It’s been billed as “one of the biggest discoveries in the evolutionary history of sexual reproduction” and we have all the sordid detail here. (Includes NSFW picture of Microbrachius getting it on.)
9. Slow broadband is here. The first 140 suburbs to get Malcolm Turnbull’s fibre-to-the-node technology over the National Broadband Network have been announced. Happy days for more than 200,000 homes and businesses in parts of the Central Coast, Newcastle and Lake Macquarie regions in New South Wales and the Greater Brisbane, Moreton Bay and Wide Bay Burnett regions in Queensland. It will take about 12 months before they can opt-in to the NBN via their Telstra copper line, which will be slower and less reliable than Labor’s fibre-to-the-home option. But hey, cheaper.
10. The other big sports news – Ewen McKenzie quit as Wallabies coach. His record was 50-50 – 10 wins from 22 matches, and there were some horror shows such as the recent All Blacks mauling. But the signs were all there for a more competitive Wallabies outfit, particularly Saturday’s night impressive showing against the Kiwis where Australia went down in the final minutes, its first loss on home soil under McKenzie. But he’d had a gutful of Australian media which turned on him during another disciplinary saga involving Kurtley Beale. So the rugby union Boys’ Club wins yet again, the fans lose.
BONUS ITEM: Just checkin’ the swell mate. Photographer Rita Kluge has captured the moment a man climbed a 40-metre Norfolk Island Pine to see if it’s worth a paddle at South Avalon Beach, Sydney. We’re not sure how this works though. Does he spot incoming swell, then hail everyone on the beach to start waxing their boards? Or are there days when he just thinks to himself “Nah, she’s blown out today, I’m staying in for Pop Tarts and Point Break” and everyone else follows suit?
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