Good morning! It’s Friday, and there’s huge economic news out of the US, so let’s start there…
1. America is back. The US economy added 288,000 jobs in June, blowing away expectations of a 215,000 increase in non-farm payrolls. The unemployment rate also fell to 6.1%, the lowest reading since September 2008 – when 6.3% was expected. This comes amid increasing signs in recent weeks that there has been a big upswing in US economy activity in recent months, following a shock negative first quarter for US GDP. Goldman’s Jan Hatzius described the report as “stronger than expected across the board”; while Chris Rupkey at Bank of Tokyo Mitsubish said: “Kaboom!” Happy Independence Day.
2. Markets rose on the news, with the Dow breaking 17,000 for the first time to finish up 0.5% at 17,062. The S&P 500 was also up 0.5% and the Nasdaq rose 0.6%, while European markets surged after the monthly ECB statement and press conference by Mario Draghi, confirming no change in key Eurozone interests. The DAX and the CAC were both up more than 1%. SPI futures for the ASX are pointing to a rise, with the September contract up 27 points.
3. But back in Australia, the economic news hasn’t been as good. Retail sales fell 0.5% in May when economists were expecting the number to be flat. The fall in consumer spending coincided with the big fall in consumer sentiment that started back in April when Australians started getting nervous about the depth of public spending cuts coming in the May federal budget. But it also conincided with an unusually warm month of weather, which may have kept people at the beach instead of at Westfield. So the big question is now whether the fall is the start of a material change in economic activity, or a weather-induced blip.
4. The Aussie dollar got smoked, falling a full cent in 24 hours. The started with an intervention from RBA governor Glenn Stevens, who used a speech in Tasmania yesterday to warn that “investors are under-estimating the likelihood of a significant fall in the Australian dollar at some point”. The fall was already underway when the US jobs report was released overnight, sending the US dollar surging against the Aussie and other currencies. This morning the battler was at US0.9348, long way from this week’s high of 0.9505.
5. Google is erasing history. You might remember the recent European Court ruling that people had “a right to be forgotten”, meaning Google can be asked to remove certain articles that are returned in searches. The requests are now coming in thick, and it’s not just ordinary folk. Google has removed a BBC article about Stan O’Neal, the former Merrill Lynch CEO, who was running the bank in the mid-2000s when it became dangerously exposed to the looming mortgage market collapse. It’s also emerged articles about a man convicted of possession child sexual abuse imagery have been removed. The trouble is, the process isn’t transparent (for example, it’s not clear O’Neal was behind the changes on his search results) so we don’t know how or why Google’s search results are being manipulated in the relevant jurisdictions.
6. Federal Budget, Plan B?. Treasurer Joe Hockey has called on the crossbench senators who now hold the balance of power in Australia’s Upper House to outline their core values and help clarify what measures from the federal budget are likely to get their support. “If they declare what they believe in, as I think a number of Palmer United and also a number of the other independents in the Senate have started to do,” Hockey said, “then we will get greater clarity about what in the Budget is going to pass.” Tony Abbott, meanwhile, used a speech in Melbourne last night to promise to see it through. “Eventually — if not at the ﬁrst attempt or even the second — this budget will pass, because no one has put up a credible alternative,” Abbott said.
7. PUP leader Clive Palmer, meanwhile, is installing all his own computers in his parliamentary offices because he believes everything is bugged by ASIO.
8. 10,000-hour rule destroyed. A Princeton study has blown a big hole in the theory from Malcolm Gladwell’s book Outliers that 10,000 hours of practice is required to become world-class in any field. The new study says practice accounts for only 12% difference in performance. “There is no doubt that deliberate practice is important, from both a statistical and a theoretical perspective. It is just less important than has been argued,” the study’s lead author wrote. “For scientists, the important question now is, what else matters?”
9. Lara Bingle is the ultimate survivor. Say what you will about the Where The Bloody Hell Are Ya girl from the Shire, she just keeps the media’s attention. This week in Bingle News, she’s brought back the bob. Bingle Instagrammed the new haircut she “braved” for a mag cover and with it in tow, she’s a surprisingly compelling TV ambassador for bowel cancer awareness.
10. Andy Murray’s mysterious, stormy exit from Wimbledon. The defending champ bowed out in three sets to Grigor Dimitrov. UK media noted several blowups which seemed aimed at his box in the crowd, including “Shut the f**k up!” and yelled “five minutes before the f**king match!”. The UK Telegraph said Murray’s girlfriend left the match looking “visibly upset”. The best quote came from Murray’s “friend and confidant”, perennial Wimbledon loser Tim Henman, who spoke to Team Murray and tried to get to the bottom of it all for the media. The best he could come up with was “He was a bit flat. It’s happened to me.”
Bonus item: Everyone knows the frustration of toasters not quite toasting to the level you expect. Set the dial to 4 and you get either 3 or 5 toast, never 4. But science has fixed it. Dualit worked with Imperial College on an algorithm that “calculates each variable in the toaster, from room and toaster temperature to how many slices it has toasted or how long it has to cool”. Perfect toast, every time. Science: is there anything it can’t do?
Have a cracking weekend. I’m on Twitter: @colgo
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