14 Feb 2014
• David Jones chairman and 2 non-executive directors have agreed to resign over the bungled merger proposal from Myer and inappropriate share trading by the 2 directors that was swept under the carpet. Shareholders aren’t happy.
• The Aussie share market rose for the week on the back of some positive results from company reporting season. The lift in business conditions and stronger than expected trade data from China also helped.
• Markets globally were also higher buoyed by the Chinese data and stronger than expected results from US company reporting season.
• In stock news, company reporting season is well and truly underway. There were positive results from the banks (CBA, ANZ) and the ASX, in-line results from CSL, Telstra and Boral, and a poor result from Cochlear.
• The banks reported strongly off the back of better than expected loan growth and falling provisions for bad and doubtful debts.
• US reporting season is moving into its latter stages with 68% of companies beating expectations. This number is higher than was expected leading into reporting season.
• Stronger than expected Chinese trade data pushed the Aussie dollar above 90 cents against the US dollar. The dollar has since settled to 89 cents.
• The gold price has been steadily rising of late breaking through the $1,300 USD per ounce market overnight. Some lower than expected US economic data has helped.
• Our unemployment rate rose to 6% in January, the highest level since July 2003. Full time employment fell yet again, with part-time employment (which has been growing strongly) only recorded a small increase. Telstra have also announced that they are likely to send another 1000 jobs offshore.
• Business conditions lifted in January nearing 3 year highs whilst business confidence also rose. Manufacturing recorded a surprisingly strong turnaround.
• In contrast, a key consumer sentiment survey fell strong in February after a large fall in January.
• The demand for home loans fell against expectations of a rise in December. Even accounting for usual low activity in December, demand was lower. Housing market taking a slight breather.
• The US economy added 113,000 jobs in January, well below the 189,000 expected. Many are ascribing the low number to the inclement weather. The unemployment rate fell to 6.6%, a 5 year low.
• The new US central bank chairwoman gave her first testimony to US Congress. The script was largely unchanged (expected) but she did emphasise that it was important to consider more than the unemployment rate when evaluating the conditions in the labour market. She was referring to those longer-term unemployed and those who are under-employed.
• The US Federal Government ran a $10.4 billion budget deficit in January against expectations of $27.5 billion deficit. Goes to show how quick the US economy can turn around.
• Both the Bank of England and the German government revised their 2014 growth forecasts upward, with the UK especially higher.
• The US debt ceiling issue raised its ugly head again with reports earlier in the week that the use of “extraordinary measures” to skirt the ceiling will be exhausted by late February / early March. With lessons learned, sense prevailed and the Republicans agreed to remove any obstacles which should get them through until 2015.
• With Toyota announcing their intention to leave the Australian market, the politicisation of the announcement was front page of the news for most of the week. The opposition blaming the Government for their lack of action, whilst the Government blamed the unions and the opposition. No politicisation was really necessary – we simply can’t compete on the massive world stage of car production given our high Australian dollar and high wages. The unions didn’t help the matter.