Good morning! Let’s start the week.
1. Joe Hockey goes the mining giants. In an interview given just hours before Atlas Iron made its grim decision to shut production on Friday night, the federal Treasurer revealed to the AFR his problems with the decisions of Rio Tinto and BHP to keep ramping up iron ore production. “I’m reluctant to tell people how to run their companies. Not that it stops them from telling us how to run the country,” he said. “I find it very difficult to step into the heads of chief executives because a number of them are quite short-term in their thinking,” he said. The backdrop here is the supply increases have contributed to the falling iron ore price which is putting mounting pressure on the federal budget bottom line. Hockey also said Australia could now face having to deal with an iron ore price as low as $US35.
2. This could be the week – again – for the ASX to hit 6000. The ASX200 closed on Friday just a bit over 30 points short of the barrier it hasn’t crossed since 2007. All the preconditions are there for the bourse to take out resistance and break through. Credit Suisse’s Hasan Tevfik says the environment this time is different. “Valuations are more attractive, balance sheets are stronger and the RBA is cutting rates, not raising them, Tevfik says. He shares this chart:
Global markets had a strong finish to the week on Friday and ASX futures are pointing to a positive open.
3. It’s a huge week for economic data in Australia, with the Westpac consumer sentiment survey out on Wednesday and the employment numbers for March out on Thursday. Economists are expecting 15,000 jobs added for the month and the unemployment rate steady at 6.3%, which would be a strong number if it eventuates and would suggest the RBA was right to hold off cutting the official cash rate this month. Today we get China trade data, and tomorrow we get the NAB business survey, too – possibly one of the best monitors of the state of the economy in terms of business performance and the trajectory of employment and investment. Greg McKenna takes a look at the week ahead here.
4. All the brouhaha over financial technology startups isn’t just talk: banks are taking the threat of disruption deadly seriously. JP Morgan chairman and CEO Jamie Dimon has warned shareholders that “Silicon Valley is coming” after Wall Street. “There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking,” Dimon wrote in a letter to shareholders. “The ones you read about most are in the lending business, whereby the firms can lend to individuals and small businesses very quickly and — these entities believe — effectively by using Big Data to enhance credit underwriting. They are very good at reducing the ‘pain points’ in that they can make loans in minutes, which might take banks weeks. We are going to work hard to make our services as seamless and competitive as theirs.”
5. And Goldman Sachs is increasingly a tech company. Of the investment bank’s 33,000 full-time employees, around 9000 are working as developers and programmers – that’s more than Facebook, which has just over 9000 staff in total including people from functions like marketing and sales. And the Goldies tech staffing levels dwarf the workforces of big digital names like LinkedIn and Twitter. According to executives in other parts of the banking industry, this makes Goldman’s tech team by far the biggest of the banks. There’s more here.
6. Sure, we’ll pay more for everything. Australians are increasingly supportive of an increase in the rate of the GST, a tax change advocated by many economists as a way of helping rebalance the nation’s finances. Only 12% were in favour of an increase in 2012 but the Ipsos poll in Fairfax Media today says 37% of voters are now in favour, up from 30% a year ago. With momentum like that it’s surely in play to be taken to the next election. And it’s also reassuring that Australians can tune in to sensible arguments about the need for tax reform.
7. Game of Thrones is back – and a bunch of episodes from Season 5 have already leaked online.
8. The economics of the Iron Throne. Business Insider’s Sara Silverstein has pieced together the fiscal position of the seven kingdoms at this point in the Game of Thrones story, based on the information available in the books. The Iron Throne, it turns out, has a range of problems, many of which will be familiar to Australians: spending has been running ahead of revenue, none of the investments have been in long-term growth, immigration to King’s Landing is complicating the outlook, and there are structural problems with the tax base. And there may be a hint to how it all unwinds in the saying “a Lannister always pays his debts”. It’s summed up in this video.
9. Hillary Clinton is running for president, she confirmed this morning, Australian time. And the attacks are underway already. Jeb Bush immediately had a note out to supporters saying: “Moments ago Hillary Clinton officially announced her White House bid – and it’s up to us to stop her… 8 years of Democrat control has already done untold damage, 4 more years of Clinton control will only make it worse.” There’s more here.
10. The final round of the US Masters is underway, and at time of writing Jordan Spieth was tearing away from the pack with a five-shot lead over Justin Rose and Phil Mickelson. Rory McIlroy looks out of contention. Tiger Woods was back tied for 17th after 11 holes, but appeared to have injured himself clipping some tree root in a shot out of the rough.
Have a cracking day. I’m on Twitter.
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