Category: Stock Markets

By Houses and Holes:

From FT: When Liu Qibao, China’s propaganda minister, visited Sydney last month and signed a raft of deals with Australia’s top media companies, few paid much attention. But the fruits of that trip — a supplement produced by China Daily, the Communist party’s English-language mouthpiece, appearing in such bastions of free speech as the Sydney Morning Herald — lay bare the growing reach of China’s multibillion-dollar propaganda machine as it seeks to win hearts and minds across the globe. ….China Watch, the new monthly pullout in Fairfax Media newspapers, marked its inaugural issue with favourable coverage of China, including an article backing Beijing in its stand-off over contested waters in the South China Sea.
…..Controversy stoked in Australia by Beijing’s deals with Fairfax, Sky News Australia and several other local companies proves the point. Critics point to the harder edge of Beijing’s propaganda machine, with journalists imprisoned and many foreign media websites blocked at home. Some warn that publishing Chinese propaganda alongside other news could undermine their newspapers and hand Beijing commercial influence over the way Australian journalists report on China. ….Fairfax dismisses these concerns, saying China Watch is clearly labelled and no different to other advertising content. “Our commitment to providing independent, quality journalism — including on matters relating to China — remains absolute and unchanged,” it said.

Welcome to the whorehouse Downunder.

Media independence is subject to one overriding and unspoken rule: DON’T BITE THE HAND THAT FEEDS YOU. Advertisers with multi-million dollar budgets are not criticised. And journalists who ignore that rule will find themselves looking for a job. The silence of the media on health issues related to cigarette smoking, when tobacco giants were spending billions of $ on advertising, is the most obvious example but food giants like Monsanto still hold considerable sway over mainstream media. Would China be treated any differently?

Source: Australian media a China stooge | MacroBusiness

Good summary of Australia’s predicament from David Llewellyn-Smith:

…..A lot of this is to be expected in a post-mining boom environment. I mean, we seriously overdid it:

This is why I obsess over lowering the dollar. It absorbs an huge amount of the deflationary pain in repairing one’s competitiveness rather than doing it internally vis-a-vis Europe’s PIIGS.

That is also why authorities have made such a hash of the adjustment by at first denying the mining bust was happening and then inflating debt and asset prices to offset it when they found themselves behind the curve.

They thus levitated the dollar throughout, hammering tradable wages harder than otherwise and spilling it out more widely now. Worse, we now have the debt overhang to deal with and another adjustment to face in non-tradable sectors related to households once the post-mining boom adjustment abates.

Pity we didn’t listen to Prof. Warwick McKibbin in 2012 when he warned: “…the central bank should ‘lean against the wind’, that is intervene to slow down the extent of appreciation of the exchange rate.”

Source: How the RBA killed Australian wages – MacroBusiness

From Eddie van der Walt:

Crude oil and iron ore are two of the world’s most important industrial commodities, where supply and demand are tied to the fate of the global economy. Yet, they’re doing very different things right now.

Oil traded above $US50 a barrel for the first time this year while iron, moving in the opposite direction, fell below $US50 a ton on Thursday. It’s a slightly artificial comparison — there’s little physical equivalence between a barrel of oil and a ton of ore — but their differing paths tell us something about how the aftermath of the global commodities crash is playing out in different industries.

…Iron ore has been on a wild ride in 2016 following three years of losses spurred by rising low-cost production. A speculative trading frenzy in China helped to lift prices above $US70 last month from below $US40 in December, but they’ve fallen back on signs that global stockpiles are still building.

Port inventories in China increased 1.6 per cent to 100.45 million tons last week, the highest level since March 2015, according to data from Shanghai Steelhome Information Technology Co. They’re up 7.9 per cent this year.

Citigroup Inc. said in a report on Tuesday it remained bearish on iron ore, forecasting persistent oversupply on rising output from the top miners like Brazil’s Vale SA and BHP Billiton Ltd. as well as Gina Rinehart’s Roy Hill project in Australia.

“It takes a long time to turn output in mining on and off; the oil tap is arguably easier to open and close,” Robin Bhar, an analyst at Societe Generale SA in London, said by phone. “There was also a lot more to be done in metals, where demand collapsed. Oil hadn’t experienced a similar collapse.”

Source: A tale of two gluts: oil and iron ore cross $US50 on opposite paths

Hillary Clinton and Donald Trump disagree on a lot, if not most things. There is, however, one issue in which they seem in agreement….. both candidates have expressed support for increased infrastructure spending. This is good news for manufacturing and heavy industries.

…..Trump has supported rebuilding infrastructure from the beginning of his campaign.

“Rebuild the country’s infrastructure; nobody can do that like me, believe me,” he said in the speech announcing his candidacy.

“It will be done on time, on budget, way below costs, way below what anyone ever thought. I look at these roads being built all over the country and I say, ‘I could build these things for one third.’ We have to rebuild our infrastructure: our bridges, our roadways, our airports.”

…..Clinton, for her part, has said she would increase federal spending on infrastructure projects by $275 billion in the five years following her possible inauguration.

Monetary policy has been over-used and is not having the desired effect. Instead of new capital investment, low interest rates have encouraged speculative investment in stocks and real estate, driving up prices to unsustainable levels, and stock buybacks with similar results.

Infrastructure spending is absolutely essential to get the global economy back on track. It boosts employment and national income, saves government spending on welfare (unemployment) programs, and encourages new capital spending. Voters are rightly afraid of rising public debt but investment in productive infrastructure is a no-brainer.

Source: Donald Trump and Hillary Clinton agree on one huge thing — and Wall Street knows it | Business Insider

Hat tip to Steve L.