Good morning and welcome to Wednesday.
Before we start, vale, Shirley Temple. Here’s your run-down.
- There are competing views amongst economists, politicians, and unions on the actual impact of the end of Australia’s car industry. Most estimates of the job losses are around the 40,000 mark but there are some more catastrophic scenarios, and unions have been warning that it could tip the eastern states into recession. NAB chief economist Alan Oster says warnings that it will lead to a recession are drawing a long bow as the economy will continue rotate towards the services sector. Expect to hear more on this over the coming weeks.
- Incoming Federal Reserve chair Janet Yellen was before the US Congress House Financial Services Committee overnight, emphasising there would be “continuity” in Fed policy. Stocks rose, with all the major US indices up more than 1% and the Dow scratching 16,000.
- Airline wars update: Richard Branson says Qantas is in “deep shit” because it has been so determined to maintain its 65% market share in Australia. “Suggesting that Qantas should change its strategy so that Virgin can simply take our customers to reduce their financial losses is ridiculous,” a spokesman for the Australian airline told Fairfax in response. “As we’ve said many times, Qantas is not asking the government for money. This is in contrast to Virgin, which has been cap in hand to the three foreign-government owned airlines to fund their loss-making strategy.” This round goes to the Qantas spinners.
- The federal government has engaged consultants for a communications strategy around the privatisation of Medibank Private – worth an estimated $4 billion – although the government says no decision has been made on whether to proceed.
- SocGen has looked at the global impact of a hard landing scenario in China, whose economic performance is so closely tied to Australia’s. SocGen estimates a hard landing would lead to annual China GDP growth falling to 2% (down from its central case of 6.9%) at the peak of the crisis and that the economy could contract for two quarters. There’s a chart showing the likely impact on various other parts of the global economy.
- The trial of Daniel Morcombe’s alleged killer, Brett Peter Cowan, continues today. The court has heard fascinating details of the lengthy and complex police sting, which involved undercover police convincing Cowan they were part of a criminal gang who could fix problems. Cowan, 44, denies the charges.
- The Australian reports that Clive Palmer’s nickel refinery in Queensland poses a serious environmental risk, with extremely high nitrogen concentrations posing a risk to the Great Barrier Reef.
- The Fin has more on the changing face of third-level education, today reporting the number of Australian students going into accounting has fallen drastically and that foreign students now outnumber Australian graduates.
- Australia plays South Africa in the first Test in Centurion tonight. After demolishing a calamitous England in the Ashes series it will be interesting to see how they go against the world’s best team. South Africa have only lost one Test at Centurion, too. You can watch it on Fox Sports, with the action starting at a civilised 7.30pm AEDT.
- The incomparable GS Elevator is back with The Unofficial Goldman Sachs Guide To Surviving Valentine’s Day. A sample: “Prix fixe menus are bulls–t. If I wanted a complimentary glass of champagne, I’d board my Virgin Atlantic flights 5 minutes earlier.”
Bonus item: Lots of people in the finance industry are passing around this scary chart comparing the stock market gains ahead of the 1929 crash. Stay calm, though: Business Insider’s Matthew Boesler explains the logical flaw behind the chart here.
Have a great day. I’m on Twitter: @colgo
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