Good morning! Hope you enjoyed the long weekend. Let’s get started with some good news on the US recovery…
1. Goldman Sachs says it now believes, despite the 1% contraction over the winter quarter, that US GDP is now growing above trend. In a statement, the bank’s top economist Jan Hatzius said that its “current activity indicator (CAI), which grew at an annualized rate of 3.4% in May, similar to the average of the prior two months.” Hatzius says “the CAI is a far more reliable indicator of economic activity than real GDP because it is more timely, more broadly based, less noisy, and less subject to revision.”
2. But by comparison, Goldman’s CAI does not deliver as healthy an assessment for Australia. As we reported earlier this month, the GS Australia economic team says its CAI is showing “growth momentum has slowed materially” in the second quarter of this year, following the huge GDP print last week for Q1 at 3.5%. This is why Goldman is forecasting an RBA rate cut in September.
3. To the markets and US stocks overnight carved out record highs yet again. The Dow as up 0.1% to 16,943.10, the S&P 500 up 0.1% to 1,951.27, and the Nasdaq up 0.3%.
4. Japan roars. Revised Japanese Q1 GDP data yesterday showed an eye-popping annualised growth rate of 6.7%. The Nikkei rose only 0.3% with investors wary of the increasing likelihood of stimulus reduction. China’s decision to cut the reserve ratio for banks lending to the rural sector by 50 basis points helped lift the Hang Seng 0.7%, but Shanghai was up just 0.05%, possibly on the very specific nature of the stimulus. ASX futures are pointing to a solid rise on the open today.
5. Big data week. This morning in Australia we get the NAB business survey – always an important indicator on investment and employment – and tomorrow there’s the Westpac-MI Consumer Sentiment Survey, which showed a very sharp drop following the federal budget last month. Both will give an important read on the mood around the federal budget with at least some of the noise from the initial shock removed. On Thursday we get Australian employment, with the market expecting another 10,000 jobs added in May to add to the stellar run of job creation so far this year. That night we get US retail sales for May.
6. Budget problems. From Canada, where he’s on an official visit, Tony Abbott has had to remind some his partyroom that the Coalition took its paid parental leave scheme to two elections, after reports that Senators are prepared to help defeat the program in the Upper House.
7. Inactive bank account bonanza. The Australian government has claimed around $360 million from 80,000 inactive bank accounts in the year to May. It follows a change under the Labor government to the thresholds at which funds in idle accounts can be seized, making it much easier for the state to claim deposits. For comparison, only around $300 million was seized between 1959 and 2012. More here.
8. Rik is dead. British comedy actor Rik Mayall has died. He was best known for his roles as Rick, “the People’s Poet”, in The Young Ones, and as Richie in Bottom, which he worked on with Adrian Edmondson. In a statement, Edmondson said: “There were times when Rik and I were writing together when we almost died laughing… I feel privileged to have shared them with him. And now he’s died for real. Without me. Selfish b*****d.” Vale, Rik.
9. Outsource packing for camp. New York mums will pay you $1000 to pack their kids’ summer camp suitcases. Proving there is indeed a market for anything, Resourceful Consultants say the annual US kids’ pilgrimage can be very stressful for mums and has filled requests for French-milled soaps, scented candles as trunk necessities while charging $250 an hour for a four-hour packing session. They “want to duplicate the bedding that they have at home” says one consultant who clearly has no time for any authentic camp experience.
10. Scotchpocalypse. BoAML is out with a note looking at the potential impacts of a yes vote in the September referendum on Scottish independence. In short, it’s not good. Scotland could lose some of the aggressive protections around naming and counterfeiting that the EU provides. More here.
Bonus item: Here are 16 phrases that will help make you sound smart when talking about the World Cup. You’re welcome.
Have a great day. I’m on Twitter: @colgo
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