Good morning! Let’s start the week…
1. The highlight of the Jackson Hole conference in the US wasn’t, as many expected, the contribution of Janet Yellen, whose speech contained little by way of surprises. Instead, the talking point was ECB president Mario Draghi’s dour assessment of the Eurozone, a picture of a sick economy that is running out of options for repair. One of Draghi’s major suggestions was better co-ordination of government budgets. He emphasised the importance of austerity – the severe spending cuts by governments – in helping with the recovery. Joe Weisenthal looks at the speech in-depth here – and it contains some thought-provoking assessments of the drag that austerity imposes, including for Australia where deep cuts in spending are in the pipeline, though nothing as savage as what we’ve seen in Europe – itself a good reminder of the bullet Australia has dodged.
2. Parliament returns this week and government ministers have been saying tax increases remain an option if the Senate continues to obstruct key savings measures in the federal budget. Mark Textor, the Liberal pollster and Tony Abbott’s strategic advisor, has an assessment in the AFR this morning on the public’s state of mind: that in an uncertain time, voters have been “nesting”, and have suddenly become less tolerant of excessive behaviour. “Disorganisation and ideological indulgence at the political level is now given zero tolerance,” he writes, adding that “big business profits and tax brakes – tolerated in the good times – become in their eyes, their… money lost.” Tax advantages for businesses are more likely to be seen as coming at the cost of households in this environment. The full column, which could be read as a warning to certain quarters of political and business circles, is here.
3. To the markets, and a mixed day around the world in the Friday session has ASX futures pointing to a lower start to the week in Australia. The Dow lost 0.2% and the S&P 500 lost four points, while the Nasdaq was up almost 0.2% after a mixed day in Asia. We’re at the tail end of reporting season but there will be major national attention on Qantas when it reports on Thursday. We also get Virgin and Woolies on Friday. On the local data front, we get private capex for Q2 on Thursday. Globally the markets will be focused on the Q2 GDP revision for the US on Thursday, while we get EU CPI on Friday. Greg McKenna has a detailed look ahead here.
4. Iron ore is down, down. And probably staying down given the re-acceleration in the pace of the drop last week which saw the September 62% Fe contract at $90 a tonne – just $1.37 above the low for this year. But while BHP Billiton chief executive Andrew Mackenzie says prices are unlikely to climb back above $US100 a tonne, his company is still ready to spend $3.5 billion on a bigger-than-expected expansion of its West Australian mines.
5. The Sydney apartment boom has years to run, in the absence of negative news, according to a report from BIS Shrapnel out this morning. But there’s a warning: the record level of completions for units has the potential to tip the market into oversupply. While Sydney is currently playing catch-up after a long period of low price growth and “the current surge in off-the-plan demand is likely to see the market get ahead of itself again as pre-sold new apartment projects commence and progressively work their way through to completion.”
6. San Francisco’s Bay Area has been rattled by a 6.0 magnitude earthquake, injuring dozens of people, starting some fires and and damaging some historic buildings. It certainly wasn’t “The Big One” that locals in San Fran talk about coming some day. The Napa Valley wine region was hardest hit, with huge damage done to stocks in the vineyards as bottles got rattled out of their storage. The horror.
7. What it was like to work with Bill Gates. There’s a saturation of stories about Steve Jobs’ brilliant but tyrannical leadership style, but what about the former head of Microsoft? Gates has transformed himself from obnoxious whiz kid to beloved – and approachable – philanthropist in the 39 years since Microsoft was founded. Here’s four great examples of things his former employees remember him for, including the time he chucked a wobbly and locked himself in the bathroom.
8. British actor and director Richard Attenborough has died in London. He was 90.
9. Foxtel is about to go on the offensive. The joint venture between Telstra and News Corp is reportedly about to aggressively lower its prices, go on an advertising drive, and upgrade its platforms, in a move to shore up its market dominance in the face of threats from streaming services like Netflix whose launch in Australia is considered close to inevitable.
10. Daniel Ricciardo wins again. It’s turned into a spectacular year for the Australian F1 driver, who last night notched up his third win of the season by fending off world championship leader Nico Rosberg in Belgium. Sebastian Vettel’s disastrous season continued, after he finished fifth. With seven races remaining, Ricciardo is third on the overall standings on 166 points and closing the gap on Mercedes drivers Lewis Hamilton (191) and Rosberg(220).
And finally: WIN News anchor Lincoln Humphries has faced some attacks from some quarters for dumping on the ice bucket challenge, which has been an incredible success in raising the profile of Motor Neurone Disease around the world. Here’s his spot, which has been surprisingly polarising.
Enjoy your Monday. I’m on Twitter: @colgo
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