Australia 01 (May 08 - Jan 11)

[millionairemind]

Maybe its blind confidence on RBA's end?? Similar to our LKY's call for THE GOLDEN YEARS back in 2007?

Feb 18, 2009
Australian recession looming

MELBOURNE - A MONTHLY economic index compiled by one of Australia's largest banks posted its second negative reading in December, suggesting the country may be headed for recession, economists said on Wednesday.

The monthly Westpac-Melbourne Institute leading index, which predicts the likely pace of economic activity three to nine months into the future, was -1.2 per cent in December, down from -0.4 per cent in November.

Westpac chief economist Matthew Hassan said the reading was well below its long-term trend of 3.5 per cent and had fallen sharply from the 4.5 per cent recorded last July.

Hassan said the fact that the index has stayed in negative territory for two consecutive months may be significant. 'In the past this has been a useful indication of a likely recession in Australia,' he said.

Hassan said the leading index has successfully predicted the last three recessions in Australia, in the mid-1970s, early 1980s and early 1990s.

He said the December reading would have been worse had the government not pumped some A$10.4 billion (S$10.15 billion ) into the economy through a stimulus package that boosted retail spending.

The government approved a second stimulus package worth A$42 billion last month, which is expected to take a few months to filter into the economy.

The package includes A$28.8 billion in spending on schools, housing and roads over four years, tax breaks for small businesses and cash handouts totalling 12.7 billion dollars to eligible workers, farmers and students.

The Treasury estimates the plan will boost economic growth by 0.5 percentage points in 2008-09 and 0.75-1.0 points in 2009-10, supporting up to 90,000 jobs. -- AFP

[kennynah]

I thought it was more Goodyears Tyres?

[iam802]

All these over leveraged stuffs...now having huge problems getting rid of assets or raising funds.

There are some similar counters on the US as well. I think, another one or two quarters, those counters will be facing even more pressure
---

Powerco sale on hold, Babcock Infrastructure shares in trading halt

http://www.nzherald.co.nz/business/news ... d=10558443

The sale of a half-stake in New Zealand electricity and gas distributor, Powerco has been put on hold.

Powerco is second largest electricity and gas distribution business with more than 400,000 customers across 39,000sq km in the North Island.

On November 4 last year, Babcock and Brown Infrastructure (BBI) said it was selling its 50 per cent stake in Powerco to Queensland Investment Corporation (QIC).

But today BBI - an offshoot of Babcock and Brown - told the ASX that "Issues have arisen which have created uncertainty relating to completion of the sale of an interest in the New Zealand business of Powerco.

"BBI is working to resolve the issues but is not yet in a position to provide details of any outcomes".

A conclusion is expected by 10am Thursday, it said. In the meantime, its shares are on a trading halt.

The deal when announced was a 25 per cent premium over the original 2004 acquisition price of $1.8b for Powerco, BBI said. It expected net proceeds from the sale in the order of $400 million, which would be used for debt repayment.

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Share prices for BBI have slumped 95 per cent over the past year and it has lined up asset sales to reduce its debt, including WestNet Rail and BBI Euroports.

The deal announced on this side of the Tasman put an enterprise value of $2.05 billion on the New Zealand business.

BBI has previously said that at the close of the deal, its own managers and the funds managed by QIC would share control of the asset.

QIC head of global infrastructure Ross Israel said late last year Powerco was a strategic regulated utility.

"We expect it to provide stable long-term returns," he said.

The sale was conditional on gaining required consents, including from the Overseas Investment Office, lender consents and other consents relating to the transfer of Powerco Tasmania, where BBI wants to retain a gas distribution business with a book enterprise value of $200 million.

On February 9, international credit ratings agency, Fitch Ratings, said a decision by the Commerce Commission in October last year - before the deal was announced - to impose authorisation on gas distribution prices charged by Powerco was unfavourable and would restrict cashflows.

- NZPA

[iam802]

Unemployment hits 5.2%

http://business.smh.com.au/business/une ... -8vto.html

Chris Zappone
March 12, 2009 - 2:15PM

Australia's unemployment rate has hit 5.2% after the economy suffered the biggest monthly drop in full-time jobs since 1991.

The jobless rate is now the worst it has been in four years, further proof the economic downturn is getting worse and adding to the case for another rate cut when the Reserve Bank board next meets early in April.

Data released today by the Australian Bureau of Statistics show that, in February, 53,800 positions were lopped out of the economy but 55,600 part-time positions were created, leaving a net increase of 1800, seasonally adjusted. That follows a downwardly revised gain of 300 jobs in January.

Economist Matt Robinson from Moody’s Economy.com said the plunge in full-time jobs suggested that "a lot of households are under mortgage stress and the second person in the household is being pushed back into the labour force to make ends meet".

The full-time drop will worry policy makers, he said, because "a lot of the stresses of a downward moving economy start to really present [themselves]".
Prime Minister Kevin Rudd and Employment Minister Julia Gillard, speaking after the data's release, said the job market would have weakened further if not for Government’s $52 billion worth of stimulus packages.

Opposition Leader Malcolm Turnbull called the rising unemployment rate part of a "terrible trifecta" that included increased spending and more industrial disputes under the Labor Government.

Bad news for households

February's data shows the biggest drop in full-time positions since July 1991, when 79,400 full-time jobs were lost - and the nation was officially in recession.

The data show that, in New South Wales, the jobless rate climbed from 5.5% to 5.8%. In Victoria it jumped sharply, from 4.8% to 5.6%. In Queensland it was up by 0.1 percentage point to 4.5% and, in fellow mining state Western Australia, it rose from 3.3% to 4.2%.

The drop in full-time jobs "is bad in terms of household income because the composition of employment is shifting away from full time to part time", said ANZ economist Riki Polygenis. "Which means the average pay intake is going down."

This could affect consumer demand, which in turn would undermine economic growth, she said.

Economists agreed that the higher-then-expected unemployment rate, along with the collapse in full-time jobs, will be noted by the Reserve Bank as it considers another interest rate cut next month.

"Today's sharp increase in the unemployment rate supports the view that the pause in the RBA's interest rate cutting cycle may be short-lived," St George economist Amanda Tan said in a statement.

"We see the risk of a 50 basis point rate cut by the RBA next month."

Credit rate expectations remained steady after the data was released, with markets forecasting a 50 basis point cut to the 3.25% interest rate in April, according to Credit Suisse.

The dollar was largely unchanged, trading up slightly to 65.07 US cents, from 64.89 before the data was published.

The unemployment rate last month rose to 5.2%, compared with 4.8% at the end of January and more than the 5% forecast by analysts.

Economists had tipped 20,000 positions would be wiped out in February.

Job cuts gather pace
A number of companies have announced job cuts in the past few weeks, including clothing manufacturer Pacific Brands, which cut 1850 jobs.

Bank of Queensland said it would slash 150 positions, or 10% of its staff. Miner Anglo American let go of 650 people from coalmines in Queensland and New South Wales because of slumping demand.

Economists from JPMorgan expect the unemployment rate to rise as high as 9% by the end 2010, as the slowdown ripples through the economy, halting companies' expansion plans and triggering more retrenchments.

And Monash University professor Peter Dixon told a Senate inquiry last month that economic modelling suggests the nation could lose up to half a million jobs by the end of 2010.

Moody's Mr Robinson said the gap between full- and part-time employment means "more people have been involuntarily moved to part-time work because there isn’t enough work to justify the full-time position and employers are cutting back their hours".

"When you get a huge loss in full-time jobs it means you don’t see any bottom that is forming [in the weakening economy]," he said. "It means the economy is still deteriorating."

Participation rate rises

The participation rate grew to 65.5% in February from 65.1% in January, the ABS data showed, suggesting, "more people are entering - or staying in - the workforce to try and make financial ends meet", wrote JPMorgan economist Helen Kevans.

"In this recession, we suspect that labour force participation will be slow to decline, which will inflate the unemployment rate," she wrote, pointing to more skilled migrants and "older workers staying in the work force longer than they had planned to compensate for the fact that their retirement funds have dwindled".

Superannuation returns have been devastated by the plunges on the sharemarket, hitting retirees and workers near retirement age.

Forward indicators down

Forward looking indicators have painted a grim picture of the jobs market, with both the Department of Employment and Workplace Relations monthly leading indicator and the ANZ jobs ad gauge lower.

The DEEWR’s monthly leading indicator dipped for the 15th consecutive month, to -0.421 in March from -0.216 in February.

"The indicator continues to confirm a slowdown in the pace of employment growth below its long-term trend of 2.3% per annum," DEEWR said.

This week, the ANZ survey of combined print and online job ads dropped 10.4%, the most on record, as employers scale back hiring plans and cut staff.

[iam802]

No guarantee Aussie bank won't fail: APRA

http://business.smh.com.au/business/no- ... -92o5.html

The prudential regulator says Australia's financial system is strong but it can't guarantee that no local bank will fail due to the global financial crisis.

Australian Prudential Regulation Authority chairman John Laker says the regulator has worked hard to prepare the financial system for the difficult times presented by the crisis.

"We in APRA cannot guarantee that no Australian financial institution will fail on our watch," Dr Laker said in an interview published in the March edition of the University of Sydney alumni magazine of the faculty of economic and business.

"However, Australians can take comfort from the knowledge that we are firmly on guard and that our financial institutions have weathered the global financial turbulence well to date."

Dr Laker said it was a stressful time for APRA, which is responsible for supervising banks.

"It's a tough, stressful time for everyone at APRA as well as for many people working in the financial sector," he said.

"The adrenalin has certainly been pumping."

However, Dr Laker said a robust economy and "sound" macro-economic policies over a long period had bred strong local financial institutions.

"And through good risk management, they largely resisted the ill-fated ventures of many overseas counterparts into areas such as sub prime lending and complex structured products," he said.

Dr Laker said APRA had been criticised for taking a conservative approach to prudential regulation.

"We were criticised in some quarters when the `red tape' debate was at its noisiest, but those rules have stood us in good stead during the crisis."

Dr Laker said the global crisis clearly has some way to run and Australia's financial institutions will "need to remain alert and sharply focussed."

Dr Laker graduated with a first class honours degree in economics from Sydney University in 1972.

[iam802]

Surprise rise in trade surplus

http://business.smh.com.au/business/sur ... -9kcd.html

The trade surplus widened to $2.1 billion in February, driven by a rise in gold exports, data from the Australian Bureau of Statistics show.

Economists had expected the trade surplus to narrow to $700 million amid slowing global demand for Australian resources and falling commodities prices. January's surplus was revised to $926 million.

Exports of goods and services, rose 4%, seasonally adjusted, to $24.9 billion, the ABS said. However, other goods, including gold, rose 49% to $816 million, while rural goods edged up $150 million, or 6%.

"The rise in other goods was largely driven by the non-monetary gold component, which rose to $784 million, or 55%" the ABS said.

Flight to gold

Mr Robinson said the flight to gold as safe haven investment had "mucked around'' with the trade balance numbers.

The dollar rose slightly to 69.95 US cents from 69.77 US cents after the data was released.

February's trade surplus marked the seventh consecutive month when the values of goods and services exports outweighed the value of imports into the country.

[winston]

Australia avoided a technical recession.

So does this mean that the global slowdown is over ?

[millionairemind]

Published July 27, 2009

Rudd warns Australians of more financial hardship ahead
Rising growth will up rates; exports will spur inflation

(SYDNEY) Prime Minister Kevin Rudd has warned Australians to expect more financial hardship as the country emerges from the global downturn, forecasting rising unemployment and inflation.

Mr Rudd also projected that, over the next 18 months, rising growth would inevitably cause interest rates to rise. He added that rising commodity prices would generate exports for Australia, but also contribute to inflation.

Australia is due to go to the polls by late 2010, and Mr Rudd's economic forecast could stoke speculation that the centre-left government could opt for an early election.

In recent weeks, Australian media have reported that Mr Rudd, who is enjoying high opinion poll ratings, may be tempted to go to the polls early to exploit divisions in the opposition coalition.

Mr Rudd has previously said that he would complete a full term.

Australia has so far escaped the worst of the economic slump and technically has not yet slipped into recession. But it has come at a high price, through expensive government economic stimulus measures that have wiped out a once substantial budget surplus.

In an essay in the Sydney Morning Herald, Mr Rudd said that recovery would bring its own share of problems for ordinary Australians, while controlling public spending and returning the budget to surplus would be government priorities.

'Australia will need to work smarter and harder to achieve better national growth in a weaker global environment,' he said. 'Australia's future prosperity will rely on our willingness to make tough decisions, to tighten our belt as the economy recovers and to build our global competitiveness.

'Economic crises contain a paradox of recovery. As growth returns, the economic conditions facing many families will deteriorate. Unemployment will continue to rise even after growth returns.'

With gross domestic product growth in the first quarter of 2009 coming in at 0.4 per cent, Australia thus technically avoided a recession.

However, the government's economic stimulus measures have cost A$52 billion (S$61.3 billion) since last October, and turned a large budget surplus inherited from the previous conservative government into a deficit.

Australia's government has forecast GDP to contract by 0.5 per cent in the year to June 30, 2010, grow 2.25 per cent in 2010-11 and 4.5 per cent in 2011-12.

The Organisation for Economic Cooperation and Development has said that Australia's GDP is likely to decline by 0.5 per cent in calendar 2009 and grow by only 1.25 per cent in calendar 2010.

The International Monetary Fund has forecast growth of 1.1 per cent in calendar 2010. -- Reuters

[winston]

Australia’s Stock Index Set for ‘Nasty’ Dip: Technical Analysis By Shani Raja

Aug. 3 (Bloomberg) -- Australia’s benchmark S&P/ASX 200 Index is poised to plunge as much as 19 percent within three months, based on technical analysis by Chart Partners Group Ltd.

The equities index may peak at 4,300, about 1 percent higher than the last close, then fall as low as 3,500 by October, said Thomas Schroeder, managing director at Chart Partners in Bangkok. The forecasts are based the 13-day relative-strength index, a measure of how rapidly prices have advanced or declined, and an indicator known as moving average convergence/divergence.

“We’ve seen classic bear divergence,” Schroeder said in a telephone interview. “I’m expecting a fairly nasty decline into September, but that doesn’t mean it’s going to be the end of the world. From October I’ll be looking to turn bullish again for a rally into January.”

Australia’s benchmark index has gained 35 percent from a five-year low on March 6, spurred by expectations government stimulus measures will help the nation avoid a recession. The Australian government has distributed A$12 billion ($10 billion) to low- and middle-income households this year and will spend A$22 billion on roads, railways, ports and schools to cushion the economy.

“The S&P/ASX 200 has done what we call a swing pattern, a sort of rising zigzag,” Schroeder said. “There is less momentum, less volume, less buying going on as you’re making those highs. More of the defensive stocks are starting to rise, and that means you’re in the last part of the rally.”

[LenaHuat]

If U can afford the time, read 2day's IHT article : "Tom Price Journal - Where Boom Times slow but Never End".