10 things you need to know this morning in Australia

110 years ago, this bloke published the theory of special relativity. (Photo by Topical Press Agency/Getty Images)

Good morning! Happy Friday, especially to everyone who doesn’t have large shareholdings in Slater and Gordon.

What should we talk about first? We could go for Scott Morrison, or Slater and Gordon?

1. Surprise! We’re starting with Slater and Gordon, the law firm whose stock was down more than 50% yesterday. About 16% of the company, or $100 million in stock value, was in short positions as of November 19th. So that’s a rough $50 million profit made yesterday alone by traders backing a fall in the price. But the stock is down 70% for the year: this is the trade that buys houses, Mercs, fancy school educations, comfortable retirements, and bragging rights for a decade. Meanwhile, the people who lost most money were the geese at institutional banks who bought in on the IPO (at $1, for a share now worth less than that).

Here’s my favourite comment on the whole matter, by the AFR’s Angus Grigg:

Let’s clear up a few things. Slater and Gordon could rebuild. Many investors may see value in the low price. It has serious operations in Australia that are not affected by the news from the UK. But the management has lost credibility with the market and, as has been observed by many of my colleagues in the media industry over the years about legal firms in general: it couldn’t happen to a nicer bunch.

2. Scott Morrison still has the training wheels on. He’ll be taking them off in the mid-year budget statement, due in the next few weeks. Apparently today, according to a report in the AFR which is basically headlined “government comes after rich people“, Morrison will “reiterate… that superannuation should do no more than provide an adequate retirement and that its use for wealth creation [undermines] public confidence in the system.”

Does it really? This sounds like a policy idea, but as the GST discussion has shown, the Coalition is perfectly willing to put things on the table, let you look at them and, if you grimace a bit, take it right back and pretend it never happened.

Meanwhile, the terror alert or threat level has changed from “high” to “probable” under a new rating system. Consider yourself advised, and mildly confused.

3. To the banks, which have eight “problem areas” involving their loan books, according to bank executives themselves, as reported by Morgan Stanley’s equities team after a round of meetings recently in Singapore. They are:

  • mining towns
  • mining services
  • NZ dairy
  • drought-affected agriculture
  • high-rise apartments in Melbourne
  • commercial property in Perth
  • high-street retail
  • restructured industries.

Long list? We thought so too. Details here.

4. Stocks go pink. In another reminder of how the US stock market drives the world, trade in everything except seems to have dried up, Slater and Gordon excepted. Look for zero volume on the ASX today and traders talking about the pink ball in the Test at the Adelaide Oval. As Greg McKenna notes in his morning trader’s update, the trend lines are all pointing to a breakout of chatter about the pink ball. Line on off stump, medium length, please.

5. No qualifications needed whatsoever to analyse this chart of business investment in Australia going back almost three decades. It is the worst:

Via Deutsche Bank

Note: If you’re talking about capex, don’t call it “crapex”, which is a lame joke that stopped being funny two quarters ago. Instead, to be smart you can say it missed expectations this time, but the series is highly volatile, and while it’s not a good outlook right now, future intentions are heading in the right direction.

6. Would you like to own this car?

Picture: RM Sotheby’s

Not your thing? Wait, wait. How about this one:

Picture: RM Sotheby’s

You can buy them in an auction coming up. Peter Farquhar, who writes this column daily much better than I do, has the details.

7. The debate in the global investment community with the biggest stakes is around the rate of growth for Chinese demand, and what is making up that growth. Mark Mobius from Franklin Templeton has been on the ground in China and here is what he thinks (summary: cosmetics and karaoke are growing).

8. 100 years ago this week, Albert Einstein published his theory of general relativity. When you’re trying to find the bar you’re supposed to be at this evening, take a split second to think about the fact that the clock on the satellites talking to your phone are running slightly slower than the clock on your smartphone, because Einstein said so. A century later, there are still people – the 2015 version of flat-earthers – who think he was wrong.

9. In other science news, double-dipping really is disgusting. Thanks, science. And George, for first posting this important problem.

10. Because it’s Friday, here’s Adele with Jimmy Fallon doing “Hello”, with school instruments. It went up two days ago and has had 7.3 million deserved views. (Adele’s original video for “Hello” is just about to crack half a billion on YouTube.)

Enjoy the weekend – and if you’d like to get this column delivered to your inbox every morning, sign up below.

I’m on Twitter: @Colgo.

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