1. Miners go nuts. Global mining shares have staged a spectacular rally on markets in the past 24 hours, with the huge gains on the ASX yesterday for BHP and Rio continuing into London trade. The FTSE Mining 350 index was up more than 11% on Thursday, with BHP was 10.8% higher while Rio Tinto ended the day up 10.3%, setting up further gains for them on the ASX today. Glencore — one of the firms most affected by the slump that has seen the price of raw materials fall by more than 60% since 2011 — saw its shares pop 16%. Part of this is the recent recovery in oil and the iron ore price, which has been surging in recent days, with the spot price fixing at $US45.52.
2. And on the rest of the markets, it was a choppy night as traders settle in for the US January jobs report, out tonight AEST. The Aussie popped back above US72c as investors start readjusting their outlook for Fed interest rate movements – increasingly, it’s looking less like the Fed will continue to jack up rates because the data on the American economy has started to look scratchy. Greg McKenna has more in his daily note, including a rant about central bankers.
3. Don’t count on your super getting fattened up automatically. The Turnbull government is reportedly considering ditching the planned increases to superannuation contributions. It’s currently at 9.5% of your salary and scheduled to rise to 12%. Deferring or ditching the increases could save billions for the federal budget, but set the scene for an almighty standoff with the ALP as we head towards an election. More here.
4. Meanwhile, China is running out of money to prop up its currency, something that could trigger a wave of financial destabilisation this year, according to Societe Generale’s bear-in-residence Albert Edwards. He argues that the renminbi’s fall last year, which saw it weaken from around 6.2 per dollar to around 6.55, has been correlated with the continuing slide in foreign money being held by China. We get an update on China’s FX reserves this weekend, and the market’s expecting it to have dwindled again to $US3.2 trillion. This sounds like a lot, but the IMF has a lower bound of $US2.8 trillion as a benchmark. Dipping below that could smash the convential market believe that the PBoC can manage its exchange rate, and Edwards believes Beijing will have no choice but to let the renminbi trade freely, potentially unleashing a wave of Chinese-exported deflation across the global economy.
5. Part of China’s currency problem is so much money leaving the country. Chinese people with cash have been looking for places to put it beyond the nation’s borders, and Sydney’s property market has been one of the beneficiaries. If you think Sydney’s house prices are nuts, though, look what’s happened in Vancouver, another of the popular investing markets for Chinese buyers:
Do not adjust your monitor: that’s an average price for a detached house of $C1.8 million, which is almost exactly the same amount in Aussie dollars.
6. Everybody loves blockchain. Banks all around the world – with Australia’s CBA being a notable local example – have been investing in the technology that allows for rapid, transparent settlement of transactions. Hasn’t the Bitcoin star faded somewhat? Yes, because the blockchain – or the structure that drives the transaction system – that runs it is starting to show signs of technology strain. Banks, however, will be creating their own blockchains. “In a public blockchain, you’re trying to get everyone all over the world to agree to changes at the same time,” explains Chad Cascarilla, CEO of New York-based blockchain and bitcoin company itBit. “In a private one, you’re not. You’re really just saying you trust everybody that’s on that network because you’ve all agreed to join it. You don’t have these same computational issues that you do when it’s public.”
7. Wearables! The next revolution! Or not:
Gartner expects consumers to buy about 180 million wearables in 2017, six years after Fitbit arrived and four years after Apple entered the market with the watch. In 2013, six years after the iPhone launched, people bought more than 967 million smartphones.
8. The F-35 is still a lemon. The trillion-project to build the project continues to be beset with problems, while Australia is shelling out $17 billion on the things. It can’t dogfight, the ejection seat doesn’t work, it’s vulnerable to lightning strikes. The list goes on – BI’s Jeremy Bender has set it out here.
9. 3.75 degrees of separation. Facebook, which knows more about the connections between people than anyone else, thinks the popular – and widely-accepted – theory that any two people on the planet are separated by a maximum of six connections is wrong. They believe it’s much smaller, at an average of 3.75 worldwide, and 3.57 in the US.
10. You probably haven’t missed it, but just in case: Freelancer CEO Matt Barrie has posted an astonishing attack on the lockout laws that he believes have robbed Sydney of its soul. It’s generated a lot of debate and the post, first published on LinkedIn, has had almost three-quarters of a million views as of this morning.
Bonus item: Japan has a wombat at Satsukiyama Zoo in Osaka, and they need to try find a mate for it. So what do they do? Being Japan, they started a girl pop band, of course. Introducing Keeper Girls, whose mission is to find a mate for Fuku the lonely wombat.
Have a great weekend. Avoid bagged salad. And you can register to get 10 things delivered to your inbox each morning using the box below.
I’m on Twitter: @colgo.
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