Good morning! It’s China GDP day. Here’s what you need to know…
1. The market’s expecting Chinese GDP at 7.4% annualised, with 1.8% for the quarter. A lot of Chinese data points – like last week’s inflation print – have been coming in broadly in line with expectations lately. It’s not just the overall economic output growth we get today from China though: there’s also industrial production, fixed investment, and retail sales data. Big day.
2. Yellen warns on tech stocks. Janet Yellen, in her report to Congress on US monetary policy, said this: “Valuation metrics in some sectors do appear substantially stretched — particularly those for smaller firms in the social media and biotechnology industries.” Facebook’s stock promptly fell more than 1%, and the overall market fell slightly too, despite a reassurance from Yellen that “valuation measures for the overall market in early July were generally at levels not far above their historical averages, suggesting that, in aggregate, investors are not excessively optimistic regarding equities.”
3. But there’s slack left in the US labour market, according to Yellen’s assessment. “Labour force participation appears weaker than one would expect based on the ageing of the population and the level of unemployment,” she said, and her overall message was that rates would remain lower for longer even as the economy normalises. It’s a reminder that wage growth is the critical indicator of the strength of the US recovery.
4. So at the close, US stocks were mixed, with the Dow gaining a tiny 0.03% but the S&P 500 falling 0.2% and the Nasdaq, home to many of those tech stocks Yellen warned about, down 0.5%. It follows a flat day on the ASX yesterday while stocks were up across Asia, with the Nikkei up 0.6% the Hang Seng was 0.5% higher and Shanghai up just over 0.1%. Futures are 6 points higher ahead of the open in Australia.
5. Qantas ownership deal. The Coalition has struck a deal with Labor to make changes to the rules governing Qantas share ownership, but it falls short of what the airline was looking for when it started its lobbying for regulatory changes last year. Under the deal, Qantas must remain 51% Australian-owned, but foreign airlines or investors can own up to 49%, as opposed to the current of of 35% ownership by a foreign airline or 25% for an individual investor. This is a long way from nuclear options being canvassed months ago, when it looked like Qantas might get some form of government debt guarantee – an idea aired by Joe Hockey but memorably torpedoed by Tony Abbott one day in Parliament – or a complete repeal of the ownership rules in Part 3 of the Qantas Sale Act. Now it just looks like changes to the Act which will allow foreign investors to own much greater chunks of the airline. It’s unclear at this point whether other cumbersome elements of Part 3 of the Qantas Sale act will remain, such as the requirement that two-thirds of the board members be Australian citizens, or that board meetings feature Vegemite sandwiches and the chair saying “Tell him he’s dreamin'” when deciding in the negative. (OK, that last bit’s made up.)
6. FOFA rollback goes ahead. The government struck a deal with Clive Palmer that allows it to keep its Future of Financial Advice changes, which wound back certain consumer protections in the Labor government’s reforms. Palmer claims to have secured concessions that will force financial planners to put clients’ interests over their own. But it’s a long way from his position early last week, when he told the AFR, when asked if he would be for turning on the issue: “They can stick it up their a***.”
7. Apple has announced a huge partnership with IBM, which will see IBM developing cloud services optimised for iOS and using its sales force to build new business with enterprises. Apple devices sold through the program will ship with IBM’s MobileFirst platform, which includes a range of productivity tools for big companies. Here’s Tim Cook’s memo to Apple staff about it.
8. Spare a thought for Chris Scott, who feels oddly violated after a seemingly random tweet he wrote last month appears to have gone massively viral and is now being wilfully plagiarised all over the internet. “Oh hi Becky who refused to kiss me during spin the bottle in 6th grade & now wants to play FarmVille,” he wrote, “looks like tables have f*cking turned.” Pretty good, eh? 20,000 retweets later, he was getting wrongfully accused of plagiarism himself by a TV comedian, and the joke has taken on a life of his own. Scott is philosophical – here’s his story.
9. Geoffrey and Gabi are getting married. Four days ago the Sydney Morning Herald called it “romance over”. Today it’s “Geoffrey Edelsten and Gabi Grecko to marry”. Apparently the deal was made in a coversation, not a proposal, according to Grecko, who’s now beginning Judaism lessons because that’s what Edelsten’s 91-year-old mum wants.
10. Barina for sale. Aussie ad man David Johns from digital agency Chimney put his talents to use in creating a viral campaign asking people to #BuyMyBarina. The YouTube video is slick, persuasive, has 280,000 views and cost $8000 to make – $6000 more than the car is worth. Here’s the ad.
Have a cracking day. I’m on Twitter: @colgo
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