13 Dec 2013
• In local news, advertised jobs fell for the second consecutive month, with no clear signs of the labour market bouncing back in the coming months. The number of jobs advertised in November was 10% lower than a year ago. This follows the jobs losses (2,900) expected from Holden’s pull out from our shores.
• Business confidence is still much higher than business conditions, with employment conditions heavily impacting the measure.
• The US job market pushed higher adding 203,000 jobs in November, well above expectations, and a huge boost for the economy. The US unemployment rate now sits at 7% (versus 7.3% in October), its lowest level since November 2008.
• US consumer sentiment also rose strongly with a key indicator at the highest level since July.
• Chinese exports rose by 12.7% in the year to November with imports up 5.3%. Both are key indicators that world economies are on the right path.
• Chinese imports of iron ore rose to a record 77.84 million tonnes in November. This follows Indonesia’s ban on unprocessed mineral exports (nickel, coal, tin, and bauxite). Both are positive news for our mining industry.
• Chinese fixed asset investment (an indication of construction activity) was up 19.9% to the end of November. Slightly lower than the previous months reading, but still high, and extremely positive for the Australian resources sector.
• The Australian share market fell this week as the market correction continued, with shares falling for seven straight days.
• The selling was stoked by foreign investors, who have poured money into our equity market over the last 12 or so months. They’re expecting the Aussie dollar to fall (hurting their returns) and have been taking profits as a result.
• The local market was also not helped by the US market which also fell as a result of expectations that the US central bank may decide to pull back on its stimulus policies next week, earlier than expected.
• In stock news, whilst the banks fell, headlines surrounded QBE and Qantas as both stocks fell sharply.
• QBE came under pressure following the release of an internal review on their North American operations conducted by the company which resulted in write downs, increased provisioning, and near term guidance being revised downwards.
• Qantas fell following news that the federal government won’t provide immediate and ongoing support to Qantas nor would they make changes to the Qantas Sale Act. In addition, the credit rating agencies then downgraded the company’s corporate credit rating and their debt ratings.
• Brambles demerged its document management business, Recall, which listed on the ASX during the week.
• A bit of nostalgia this week on the Aussie dollar front with the 30 year anniversary of the Aussie first being floated. Ironically, the Aussie traded within 1 cent of where it was 30 years ago to the day.
• Governor Stevens of the RBA reminded everyone that Australia is not immune from the cycle of boom and bust even though we have had 22 years of uninterrupted growth that we now appear to have become accustomed to. He went on to say that if we are sensible and prudent, and just a bit lucky, we can have cyclical downturns that are not so deep.
• The strategic review of the NBN found that if the rollout had continued under Labor’s model, it would have needed $29bn more in funding than the $44bn forecast because of cost blowouts and revenue targets that were never achievable. In addition, the project would have missed its deadline by 3 years under the Labor’s plan. Hence, the importance of a cost/benefit analysis on every large piece of spending a government proposes (which was never done).
• Positive news from US politics (yes, don’t all fall over at once) with congressional negotiators reaching a deal in federal spending, which if passed by lawmakers, would avoid a repeat of the government shutdown.