Good morning! Here’s what’s happening.
1. Australian federal treasurer Joe Hockey is laying the groundwork for the year in which he needs to turn things around. He got some stick yesterday for supposedly saying that Australians are going to live to 150 years of age (he didn’t, just that there are people being born today likely to live that long), but he also pointed out that when his five-year-old had some hospital treatment for a broken leg over the holidays, he only ended up paying $40. “That is wrong,” he said. Hockey also talked about how high income earners work six months of the year for the government because half their income goes in tax. This is a furphy based on equating marginal tax rates to effective tax rates, but it does indicate Hockey is not going to let up in laying out some of the grim fiscal realities of public entitlements while the government is losing friends seemingly by the hour.
2. Stocks in Shanghai were annihilated yesterday, down 7.7% at the close. Here’s the chart in its full horror:
The fall was driven by an intervention by the Chinese government, which banned three brokers from issuing new margin lending for three months. The ASX shed strong early gains and finished 0.3% up for the session; the Nikkei rose 0.9% but the Hang Seng fell 1.5%. The US was out for a holiday.
3. It’s China GDP day and the market’s expecting 1.7% for the quarter and 7.2% for the year. Anything either side of that will reverberate in around the world in markets that are twitchy about the global growth picture. ANZ is optimistic about China hitting its numbers, saying in its Morning Focus note today increases in services contributions are likely to lift the overall result. “The contribution of service industries to GDP growth rose to around 50% in the first three quarters of 2014, compared to about 38% in 2010. Therefore, we need to give more weight to services. In light of this, we forecast China’s economy grew 7.5% y/y (market: 7.2%) in Q4 2014, bringing the whole-year growth to 7.5%.” We get the data at 2pm GMT / 1pm AEDT.
4. “The global economy has entered a deflationary vortex” is the assessment of Soc Gen’s global head of economics Michala Marcussen in a new note which argues that the coming QE program in Europe is unlikely to be able to kick-start global growth, despite low rates and the fall in oil. She outlines eight reasons conventional price multipliers are currently subdued, including tighter financial regulation and businesses protecting balance sheets. Details here.
5. You’ll need to sit down for these stats on Uber. One of the big criticisms of the huge valuation the taxi booking and ride-sharing app gets in the marketplace is that it’s being valued at bigger than the entire taxi market. Business Insider founder and editor-in-chief Henry Blodget heard Uber CEO Travis Kalanick speak at the DLD conference in Munich yesterday. Kalanick outlined that in San Francisco, Uber is now doing an eye-watering $US500 million in revenue a year while the city’s taxi market is estimated at $US140 million. And Uber’s revenue in SF, according to Kalanick, is growing at 200% a year.
Just take a second to read that again. The full post is here, if you want more.
6. A former UBS banker has a useful-looking startup called Fiestafy. Australian 25-year-old Kevin Jochelson spent time with UBS in Hong Kong and was frustrated by not being able to find events to go to on a platform in English. Fiestafy is his solution, which has now struck deals with Ticketmaster in Britain and the MCA in Sydney for promotions. The goal is to make it the Expedia for major events. The proposition’s simple: it’s easy to find the classic experiences in any city, but harder to find what’s hot in a town you’re visiting. Jochelson launched the pretty good-looking brand last month in beta and is now working on deals with other providers. Alex Heber has the details.
7. Google is about to make a major investment in Elon Musk’s SpaceX, contributing funding for Musk’s plan to bring the internet to space.
8. Mining giant Rio Tinto’s production results are out and it shipped 302.6 million tonnes of iron ore for the year, 17% up on the previous year. More details here.
9. A guy claims to have live-blogged the breakdown of his marriage on Reddit. There are plenty of reasons to be suspicious – the lack of details, mainly – but it’s still an incredible read that people have been following over the past couple of days. Start here.
10. The locals are off to a great start at the Australian Open, with Nick Kyrgios, Marinko Matosevic, and Jarmila Gajdosova all through in their first-round matches. The big achievement, though, was Aussie teenager Thanasi Kokkinakis taking out world No.13 Ernests Gulbis of Latvia in a five-hour epic. Hats off.
Bonus item: If you’re still reeling from that Soc Gen analyis here’s something to cheer you up – a dashcam clip of a cop in Dover, Delaware singing Taylor Swift’s Shake It Off. Highlight: around three minutes, right after the “this sick beat” break, he hits some open road and guns the car while singing along. Here’s the link for reference. Enjoy:
Have a great day. I’m on Twitter: @colgo.
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