Here's my summary of the key news overnight in 90 seconds at 9 am, including news that Fairfax is selling its controlling interest in Trade Me. According to Australian reports, Fairfax decided to sell on Saturday morning, and later that day investment bank UBS was offering parcels to investment houses at A$3.05 per share, a 17c discount to its last trade. The sale will allow Fairfax to pay down debt, but will also remove some of the strongest earnings the Fairfax Group has. It paid NZ$750 million for Trade Me in 2006, and has now sold out in three steps for about NZ$1.4 billion.
In a new report, the OECD says the Reserve Bank of Australia may need to cut its benchmark interest rate further as their dollar’s resilience impedes economic growth, which it said will slow to 3% in 2013 from 3.7% this year. The OECD urged the government to abandon efforts to prop up industries such as carmakers that are struggling to adjust.
Early reports and estimates out of the US indicate consumer spending probably rose in November as Americans set aside the threat of higher taxes next year while shopping for the holidays. Sales of cars, electronics, and clothing all rose. Sales of existing homes in November are expected to show the fastest growth in three years when the data is release later this week. Sales of new home construction probably plateaued last month, but has been rising steadily all year.
The Kiwi and Aussie dollars rose at the end of last week, erasing earlier losses, after the 'flash' unofficial HSBC PMI showed Chinese manufacturing expanding at a faster pace, boosting trade prospects. And Japan has elected a new government promising to double its QE program, the goal being to try and get inflation up to 2%. Our currency starts this week 84.6 USc and 80.1 AUc; the TWI is at 75.4 holding the five-year high levels it reached last week.
This week we get three important reports on the local economy. Tomorrow we get the September current account, quickly followed the same day by Treasury releasing its half-year Economic and Fiscal update. And on Thursday we get GDP data for the September quarter. There are an interestingly wide range of opinions about this data, from 0% to 0.6% quarterly growth from the June quarter.
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9 Comments
Pricing can always be dropped, however yes, whomever has bought will need a better return, hence bigger %s....
I wonder if they have pumped up the %s for the last year or so just to make the returns look good enough to maximise their sell off....
Weedle seems to have been hacked? and still isnt back. Sella, not much there at all. As a buyer the %s dont bother me as such as long as the costs beat retail shops or other online places by a decent margin, if not I dont bid.
regards
The U.S. budget standoff has “probably contributed to the Aussie coming off a little,” said Greg Gibbs, a Singapore-based senior currency strategist at Royal Bank of Scotland Group Plc. “I’m not overly convinced that both currencies are going to continue moving up against the U.S. dollar.”
Why on earth they allow these currency strategists to make comment , and then include it as a newsworthy piece......read it again, and you should say, what...?
I'm not overly convinced.....so your convinced they will move up but not to excess ?, or your not convinced, but only mildly ,because your convinced to a point where they might continue to move up,allowing that any downward movement would then leave you unconvinced of any upward movement...?
Geesus H....is that not a prime example of the gibberish trotted out by the currency boys as informed comment..?
Apologies David , just couldn't help myself, it's the kind of rhetoric you get from Key, but I don't think anybody really examines what he has to say either.
The Trademe sale raises a few questions:-
1. It was the only division of Fairfax to make a profit in the last year. Its EBITA was $600 million in the year, just under the amount they get from the one-off sale. So they realise a one-off lump sum and then lose a really profitable business?
2. And they are selling their one online business, so they can concentrate on, um, expanding their online presence...?
3. If you were Sam Morgan and the other early investors, wouldn't you wish you'd held out for another 6 years and doubled the value of your investment? Yeah $250 mil isn't a bad return for your first website, but it's not as good as $500 mil a few years later...
And another thing: The Trademe sale is also supported by Gina Reinhart, so you know it's a bad idea. Ms Reinhart has lost $150 million on her media investments so far. In fact every business she has been involved in (apart from Hancock Prospecting which her dad set up and left her to "manage" i.e. do nothing and make a fortune on rising commodity prices) has lost money.
And yet she has the chutzpah to write a book on Australias route to economic prosperity!
Fairfax is doomed.
Actually they would probably print it on one of the brand spanking new multimillion dollar printing presses they bought in... 2004 (how prescient!).
I've been having a chuckle at this http://www.businessweek.com/articles/2012-12-13/the-worst-ceos-of-2012 especially #2!
Perhaps Greg Hywood should be in there somewhere as well...
On the OECD telling Oz govt to stop subsidising Holden and Ford:
Unfortunately due the extreme crapness of both political parties in Australia, a large proportion of the poplace is undecided on who to vote for right up to the election, hence a lot of the incumbent party's financial spending in an election year is used to buy votes (although a little splurging in between elections is not unheard of either - hence AUD$1.5 billion to Queensland for "flood relief " aka buying popularity in an area known to be hostile to Labor).
Consequently the hundreds of millions spent to keep Holden and Ford afloat is small change compared to the irreparable damage to any parties future election hopes ever if they let Holden die on their watch.
The bogan voter is a swing voter. Upset them at your peril.
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