That's all from us here at Markets Live, we'll see you bright and early tomorrow morning.
Suffering from PBBD (Post-Breaking Bad depression)? Well we've found an interesting article to scratch that itch.
Breaking Bad is one of the best studies available of the dynamics of modern business, says The Economist.
"The first lesson from “Breaking Bad” is that high-growth businesses come from unexpected places. Mr White uses his skills as a chemist to revolutionise the slapdash meth industry (he was a researcher before becoming a teacher). He is not alone. William Thorndike of Harvard Business School (HBS) studied eight bosses whose firms outperformed the S&P 500 index more than 20-fold over their business careers. He found that they were all outsiders who brought fresh perspectives on their industries. Clayton Christensen, also at HBS, argues that great entrepreneurs look at the world through a “marginal lens”. It so happens that Bill Gates, a university drop-out working in a then marginal bit of the computer industry, started Microsoft in Mr White’s home-town, Albuquerque, before moving to Seattle."
Them and us: Aaron Paul and Bryan Cranston in Breaking Bad.
Here's how the sectors looked:
- Consumer discretionary: -0.3%
- Consumer staples: -0.4%
- Energy: -0.5%
- Materials: -0.8%
- Telecommunications: -0.5%
- Industrials: +0.6%
After floating back and fourth between gains and losses, the market has slipped down. The benchmark S&PASX200 lost 12.1 points, or 0.2 per cent, to 5206.8. The broader All Ords fell 11.4 points, or 0.2 per cent, to 5206.3.
In a temporary win for the US jobs market, Amazon.com will hire 70,000 full-time seasonal workers in the US to meet holiday order demand.
The hiring plan represents a 40 per cent increase on last year, the Seattle-based company said in a statement today. Amazon converted ‘‘thousands’’ of seasonal workers recruited in 2012 into regular full-time staff and expects to do the same this year, it said.
Amazon is boosting warehouse investment to reduce the time it takes to get products to customers amid rising competition from EBay and Wal-Mart Stores. The hiring plan comes as US chains brace for a tough holiday season, with sales projected to rise 2.4 per cent, the smallest gain since 2009, according to ShopperTrak, a Chicago-based firm.
Seasonal workers at Amazon earn about 94 percent of the starting wages of fulfillment center employees and are eligible for health care benefits, the company said.
Here at Markets Live, we've done something a little different for today's RBA decision.
Recently we've noticed quite a bit of similarity in the central bank's statements from month to month, so we've done a nice little comparison.
Here's a niffy little interactive we've done that shows the changes in the cash rate since 1990:
The RBA's decision to keep rates on hold was widely expected, but as usual the devil is in the detail of the statement.
For all the central bank watchers, and other geeks, we've gone through this month's statement highlighting the changes from last month. There are a quite a few differences, some less subtle than others.
Billionaire miner Andrew Forrest has given Poseidon Nickel a further 12 months to repay an eight-million-dollar loan, as a close ally replaces him at the company.
Herbert Scruggs has been appointed Poseidon’s chairman, four days after Mr Forrest stepped down from the position.
Mr Scruggs is also a non-executive director on the board of Fortescue Metals Group, and Mr Forrest’s children’s charity Australian Childrens Trust.
Mr Forrest, the chairman and founder of Fortescue Metals, is Poseidon’s largest shareholder with a 30 per cent stake.
He stood down as Poseidon chairman last week, as his philanthropic duties were deemed incompatible with the company’s effort to get its mining operations up and running.
Poseidon shares are down 24.1 per cent to 11 cents.
Toll road owner Transurban is issuing its first euro-denominated debt in a move to diversify its funding sources.
Transurban is issuing 500-million-euros or 730-million-dollars of secured fixed-rate seven-year notes, which will rank equally with the company’s existing senior debt.
The proceeds will be used to repay existing short-term debts and to meet forthcoming securities.
Transurban chief financial officer Samantha Hogg says the issue of euro-denominated bonds would further diversify the company’s funding.
Warren Buffett's Berkshire Hathaway will receive Goldman Sachs Inc stock worth nearly $US2.15 billion today through warrants acquired as part of a deal originally signed during the depths of the 2008 financial crisis.
Buffett received the warrants five years ago when his investment in Goldman was seen as a vote of confidence in the bank, which was reeling from turmoil in the credit market.
Under that deal, Berkshire had the right to buy about 43.5 million Goldman shares - or a roughly 9 per cent stake then - at an exercise price of $US115 per share, for $US5 billion in total.
Goldman announced an amended deal in March that would give Berkshire a much smaller stake but would not require it to commit any capital to exercise the warrants.
Berkshire will convert the warrants into shares equal in value to the difference between the warrants' exercise price and the average closing price for Goldman shares in the 10 trading days up to October 1.
Based on the last 10-day share price average of $US164.38, Berkshire would be entitled to about 13.1 million Goldman shares, making it the sixth largest external investor in the bank, according to Thomson Reuters data.
Buffett's investment in 2008 cost Goldman dearly. In addition to the warrants, the bank had to give Berkshire preferred stock that paid dividends of $US500 million a year, or about $US15 a second. Goldman repurchased those shares from Buffett at a premium in March 2011.
At today's meeting, the Board judged that the setting of monetary policy remained appropriate. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target.
The Australian dollar has jumped to the day's high on the news, at 93.65 US cents.
The Reserve Bank has kept interest rates on hold for the second consecutive month, as improving data boosted hopes that previous cuts were lifting the economy.
The cash rate, which is already at a 60-year-low, remained at 2.5 per cent, matching economists and the market's expectations.
A bubble forming in the Japanese government bond market risks further expansion as central bank purchases shield the notes from a global rout, according to Bank of America Merrill Lynch and Mizuho Securities Co.
The Bloomberg Japan Sovereign Bond Index climbed 1.45 per cent in the quarter ended Sept. 30, the biggest gain among Group of 10 countries after the 1.54 per cent increase in Italy’s debt. Benchmark 10-year JGB yields were the lowest in the world at 0.67 per cent today and compared with 2.65 per cent for similar-maturity US Treasuries.
Bank of America forecasts 10-year JGB yields will fall to as low as 0.5 per cent in the first half of next year while Tokai Tokyo Securities Co. says they may touch a record low of 0.25 per cent as the Bank of Japan buys more than 7 trillion yen ($76.1 billion) of bonds a month to defeat deflation. A JGB bubble could set the stage for a gain in interest rates later if inflation accelerates in Japan or investors lose confidence in the nation’s fiscal health, according to Bank of America.
‘‘JGBs are in the midst of a bubble and because yields are suppressed by the BOJ’s powerful easing, they may start to climb when the stimulus is removed,’’ said Shuichi Ohsaki, a rates strategist in Tokyo at the US bank, which is one of the 23 primary dealers obliged to bid at Japanese government debt auctions. ‘‘We have quite a bullish view on the Japanese economy and expect the BOJ to end its zero rate policy around mid-2016.’’
The US government is now (since 2pm) officially in a partial shutdown, for the first time in 17 years, putting as many as 800,000 federal employees out of work today, closing national parks and halting some government services after Congress failed to break a partisan deadlock.
No further negotiations were immediately planned, raising concerns among some lawmakers that the shutdown could bleed into a fight economists consider even more consequential: how to raise the nation’s debt limit to avoid a first-ever default after October 17.
Chances of a last-minute deal - seen so often in past fiscal fights - evaporated shortly before midnight as the House stood firm on its call to delay major parts of President Barack Obama’s health-care law for a year. Senate Democrats were equally firm in refusing.
A partial federal government shutdown would cost the US at least $US300 million a day in lost economic output at the start, according to IHS Inc. That’s a fraction of the country’s $US15.7 trillion economy, and the impact is likely to grow over time as skittish consumers and businesses stay on the sidelines.
The US Labor Department won’t release its monthly employment report if the federal government is closed on Friday, the day of the scheduled release, Bloomberg reports, quoting an Obama administration official.
The official couldn’t say how the report might be affected if the government is shut down and re-opens before the end of the week.
The US government is poised at midnight for its first partial shutdown in 17 years. Republicans and Democrats remained at odds over whether to tie any changes to the 2010 Affordable Care Act to a short-term extension of government funding.
Tigerair Australia has hired British defence and aerospace giant BAE Systems to provide maintenance services for its fleet of A320 aircraft.
BAE Systems began providing maintenance support for Tigerair, formerly known as Tiger Airways, at its Melbourne International Airport hanger today.
The contractor will employ around 20 new full time staff to carry out the five year contract.
Tigerair Australia chief executive Rob Sharp said the contract was part of an effort to improve the operational performance of the airline.
BAE Systems Australia aerospace director Steve Drury said the deal with TigerAir Australia, which is controlled by Virgin Australia, was its first major commercial aircraft maintenance contract.
Here's a bit more information on the Gina Rinehart saga:
Her lawyers told the Supreme Court in Sydney today that the bitter family dispute with two of her children was "effectively over", with Mrs Rinehart wishing to be discharged as trustee.
She has proposed a mediation session to find a new trustee which, she said, should be a family member with "specific characteristics" – such as impartiality, sensibility and experience in the mining industry.
Bruce McClintock, a lawyer for Mrs Rinehart, said the two-year legal battle between Mrs Rinehart and her children, John Hancock and Bianca Hope Rinehart, had placed huge pressure on his client and created "untenable risk" of damage to Hancock Prospecting Group, the mining company which Mrs Rinehart runs.
"The increased demands on her time in dealing with the ... plaintiff's issues has taken valuable time away from her responsibilities," he said.
If mediation fails to find a new trustee, Mr McClintock asked that a judge be appointed to do so.
For the AFL fans out there, Greater Western Sydney have withdrawn their multimillion-dollar offer for Lance Franklin in the belief the Hawthorn superstar will join the Sydney Swans.
In a sensational development, the 2012 premiers have emerged as favourites for securing the out-of-contract Hawk after launching a stunning 11th hour bid under the noses of their cross-town rival.
“The GIANTS have withdrawn their offer to Buddy Franklin based on advice that he will accept an offer from the Swans,” the club tweeted on Tuesday.
The retirements of premiership trio Jude Bolton, Marty Mattner and Mitch Morton have helped clear space in the Swans’ salary cap for their offer on Franklin.
Any move by Franklin to the Swans will have ramifications on the future of ruckman Shane Mumford, who is out of contract.
So what should the Reserve Bank make of the house prices and manufacturing data out today?
Citi economists say the central bank, would have likely to have been advised of the results in advance, could use them to reinforce their neutral bias in their board meeting statement this afternoon.
"Gains in activity data at the end of [the second-quarter] and the beginning of [the third-quarter] show that the extreme low in official interest rates is working to support more areas of the economy," write economists Paul Brennan and Joshua Williamson in a note.
They point out that while house prices rose in Sydney, Melbourne and Adelaide rose in September, they were down in other capital cities for the month.
"With price growth concentrated in the geographical south-east and housing credit growth remaining soft, we take the view that price growth is not yet at a level that should cause alarm for policy-makers," they noted.
Retail sales are up for August in seasonally adjusted terms, but the trend growth still remains stagnant, notes Westpac senior economist Matthew Hassan.
- The broad picture though is of stagnant sales growth consistent with consumer restraint - despite the monthly gain, trend sales growth is now dead flat.
- Department store sales dropped an outsized 7.9 per cent in July that looked to us like a seasonality issue relating to the timing of sales. That was confirmed by a bounce in August, the segment up 6.4 per cent.
- Household goods retail sales were notably stronger in July, up 1.8 per cent but also reversed in August, down 0.6 per cent.
- Note that the RBA cut interest rates by 25 basis points in August, giving a significant lift to consumer sentiment.
- "The retail report suggests little immediate flow through to spending although we may see more in September given the lags between interest rate changes and actual changes in mortgage repayments and a further solid gain in sentiment in the month," Hassan writes in an economic note.
Australian housing prices are lifting strongly as today’s data shows, prompting HSBC to call it the beginning of a boom in a note:
- The RBA's monetary policy setting is getting traction in the housing market. Housing prices rose at their fastest pace in over three years in Q3 and the timeliest of the housing price data suggested that housing prices have reached a new record high in Australia.
- The housing market is being supported by low interest rates, with the RBA's cash rate already at its lowest level in over 53 years and mortgage rates also around record lows.
- The lift in the housing market is occurring despite weak employment growth in recent months and the drift upwards in the unemployment rate. A rising housing market is likely to be one factor contributing to a recent lift in consumer confidence.
House price rise, average price in $'000
Things are getting interesting in the US:
Tonight! Say goodbye to the government, it's going to a nice farm upstate where it can run around.— The Daily Show (@TheDailyShow) October 1, 2013
Billionaire mining magnate Gina Rinehart wishes to relinquish her role as the trustee of her family’s multibillion-dollar trust, a Sydney court has heard.
We will have more as it comes to hand, but in the meantime, here is a bit of background on the long-running saga.
So what's driving the lift in retail sales in August to a stronger-than-expected 0.4 per cent?
Sales in department stores, the Bureau of Statistics data shows.
As you can see from the graph, sales rose in August to $1.49 billion after a dip in July to $1.4 billion.
Japan's Nikkei 225 index was up a handy 82.29 points at 14,538.09 points as investors shrugged off the negative lead from Wall Street, opting to take heart from the latest Bank of Japan Tankan survey of business conditions.
The survey showed corporate sentiment at the highest level since the global financial crisis.
More importantly, it may pave the way for the scrapping of the special surcharge on corporate taxes to part fund the reconstruction of north eastern Japan following the earthquake and tsunami which led to the Fukushima nuclear incident in 2009. The surcharge raises around Y900 billion a year.
Prime Minister Shinzo Abe indicated late on Monday that a firm Tankan outcome could see the scrapping of this levy brought forward by a year.
This would form part of a series of measures aimed at preventing the economy from stalling as the government moves to raise the consumption tax from the present 5 per cent to 8 per cent.
Monthly growth in retail sales was weighed down by a decline in sales of household goods and other retailing, which includes newspapers and books, and pharmaceutical and cosmetic goods.
"Consumers have started to get their groove back," Moody's Analytics associate economist Katrina Ell said.
"The warming property market is lifting confidence and encouraging higher discretionary spending given the family home is typically a household’s largest asset."
One of the biggest fallers so far today is specialty cancer treatment outfit Sirtex, off a hard 5.5 per cent at $12.86.
Late yesterday it disclosed that first quarter unit sales will be weak, which set the scene for this morning's sell-off, and the size of the fall was not a surprise given the shares were trading at all-time highs of $13.96 late last week.
"There will be some fluctuation in the percentage growth rate of dose sales quarter on quarter," it said late yesterday. "This was the case in the first quarter when we experienced subdued dose sales growth."
Home values rose to a record high last month led by strong growth in Sydney and Melbourne, according to new housing data.
Figures released today by RP Data Rismark show capital city values peaked during September above the previous high set during the 2010 property boom.
The spike in values is likely to prompt further concern Australia’s housing market may be heading towards a property bubble as historic low interest rates prompt borrowers, particularly investors, to surge back into the market.
Check out the house affordability graphic we put together last week below.
The market has hardly reacted, with the benchmark S&P/ASX200 still trading flat at 5220.2.
It looks like all eyes are on the US and the looming shutdown deadline.
The Australian dollar jumped about a tenth of a cent on the retail numbers, up to 93.32 US cents.
Retail sales for August have come in above expectations up 0.4 per cent. Economists had predicted a rise of 0.3 per cent.
An interesting tweet coming out of the US now:
While we wait for the August retail sales trade data to be released at 11.30am - which economists expect to grow by 0.3 per cent - let us look at the previous month.
In July, retail sales rose by a seasonally adjusted 0.1 per cent. It followed an unchanged level of sales in June and a small rise of 0.2 per cent in May. Retail sales have remained subdued since two strong months of growth in January and February.
Yesterday, we found out that internet spending slipped a seasonally adjusted 0.1 per cent in August, according to the National Australia Bank’s online sales index.
Online sales were up 9.6 per cent to $14.2 billion over the past year, the index showed.
Well it looks to be a stalemate over in the US congress. House Republicans have pushed through a continuing resolution that approves spending - with a one-year delay of heath care law.
There is no chance senate Democrats will allow any changes to Obamacare.
The New York Times have put together a great info-graphic showing how the vote went down.
Seven senior employees in Elders’ live cattle trading division have resigned as the agribusiness investigates discrepancies surrounding livestock values.
Among those who have resigned is the general manager of the company’s cattle export trading division.
‘‘Elders announces that its senior group management and board have identified certain discrepancies and issues in relation to the reporting and recognition of livestock values in its live cattle export division,’’ Elders said in a statement.
The company is still assessing the matter to determine any effect on the company’s financial results for the year to September 30.
Currently, it does not believe the issue will have a material impact on the group’s outlook for future financial periods.
Elders said the employees would work their notice periods to ensure an orderly transition to a new management team.
Elders shares are flat at 11 cents.
Ahead of the Reserve Bank's meeting today, we take a look at some economists' views on what they expect from the board. One factor they all agree on is that the RBA will keep rates at 2.5 per cent this month.
ANZ: The Bank continues to signal that it has a bias to ease but that incoming economic data and the path of the Australian dollar will be important considerations for monetary policy. Meanwhile, retail sales are expected to have risen in August.
Westpac: The RBA Board will have to balance potential "bubble" risks, for which there is little evidence after 21 months, with the obvious advantage lower rates imply for a lower Australian dollar and a boost to domestic activity. We think they are likely to opt for another cut in November.
Citi: The influence of higher house prices on durables consumption and confidence raises the hurdle for the currency to be a trigger for another rate cut. [The] policy statement from the RBA is likely to remain neutral in tone and conclude with view that the current setting of monetary policy remains appropriate.
TD Securities: While we remain of the view that the RBA is unlikely to actually lower the cash rate from here, it is even further way from increasing it. The last private capex report was nothing short of alarming, with investment intentions for 2013/14 slashed across the board. Another under-reported issue was that a decline in the participation rate offset consecutive falls in employment.
UBS: We expect the RBA to hold, as they likely remain in ‘data watch’ mode in the next few months. Credit may continue an improving trend, statistical vagaries should drive a lift in retail sales & the trade balance may improve modestly, but resi approvals may partly unwind a strong rise.
It looks like the market is treading water ahead of the cut off for a US government shutdown.
The sectors have opened mixed today:
- Consumer discretionary: +0.1%
- Consumer staples: -0.2%
- Energy: -0.2%
- Financials: flat
- Gold: -0.2%
- Materials: -0.2%
The market has opened flat, with the benchmark S&P/ASX200 adding just 5.3 points, or 0.1 per cent, to 5224.2. The broader All Ords rose 4.5 points, or 0.1 per cent, to 5222.2.
One of Australia's better known M&A Lawyers in the mining space, Justin Mannolini, has jumped into the fray as a non-executive director of Jindalee Resources.
Mr Mannolini has worked for Macquarie and Gresham partners in Perth and Sydney.
Jindalee is an explorer with exposure to gold and other resources in WA.
Macquarie Group has made a bid for Lloyds Banking Group’s Australian assets, Bloomberg reports quoting a person with knowledge of the matter.
Final binding offers for the close to $9 billion in assets including leasing and other loans were due yesterday, people with knowledge of the transaction said last month. The sale includes Lloyds’s Capital Finance unit and corporate loans valued at more than $2 billion, they said.
ANZ dropped out of bidding for the Lloyds assets, according to reports. Initial offers valued Lloyds’s commercial-lending and asset-finance units in Australia at more than $1 billion, the Wall Street Journal reported last week.
The budget impasse continues to weigh on Wall Street, with stocks falling overnight.
We will have some answers by 2pm Australian EST, which is when the clock hits midnight in the US Eastern timezone. In the meantime, we will keep you updated as news comes to hand.
Without a compromise, the US government will partially shut down for the first time in 17 years.
In a televised statement, Barack Obama has implored Congress (and particularly House Republicans) to cut a deal, saying it would be the 'height of irresponsibility' to allow the government to shut down.
The Australian market looks set to open slightly higher despite falls on Wall Street as a partial US government shutdown loomed due to Washington political gridlock over a new budget.
What you need2know:
- SPI futures up 7 points to 5,230.
- AUD fetching 93.29 US cents, 91.69 yen, 68.96 euro cents, 57.63 pence
- On Wall St, Nasdaq -0.3%, Dow Jones -0.8%, S&P500 -0.7%
- In Europe, Eurostoxx -0.9%, FTSE100 -0.8%, CAC -1%, DAX -0.8%
- Spot gold falls 0.6% to $US1328.40 an ounce
- Brent oil drops 0.4% to $US108.15 per barrel
- Iron ore slips 0.4% to $US131.40 per tonne
Making news today
In economic news today:
- The Reserve Bank of Australia holds its monthly board meeting and makes its interest rate decision. It also releases the index of commodity prices for September.
- The Australian Bureau of Statistics (ABS) is due to release retail trade for August.
- The Australian Industry Group performance of manufacturing (PMI) index for September is due out.
- Also due out is the RP Data Rismark Home Value Index for August.
- The HIA New home sales data for August.
- The Dun and Bradstreet business expectations survey
- The Westpac-Melbourne Institute Leading Indexes of Economic Activity report is due out.
No major equities news is expected.