22 Nov 2019
ScoMo accelerates infrastructure plans
Markets
- Local and global equity markets were weaker this week on concerns that a phase 1 trade deal might be pushed out to 2020.
- In local stock news, Westpac shares fells after regulatory body Austrac accused the bank of breaching anti-money laundering and counter-terrorism financing laws. The same charges were previously levied at CBA. Likely the regulatory body will do the rounds with the other 2 banks at some stage. Calls for the resignation of Westpac’s CEO are silly, whilst the Prime Minister would be better off focusing his efforts on our very weak economy.
- Aristocrat Leisure shares rose after the global gambling giant lifted its full year profit almost 30%.
- Woodside Petroleum announced plans to deliver 6% growth in annual production out until 2028 as part of a plan to nearly double production over the next decade.
Economics
- PM Scott Morrison has announced plans to push $1.78bn into the economy over the next 18 months through spending more on roads and rail projects. Some of the funding isn’t new, but rather an acceleration of previously budgeted funds. A good start, but not enough given the current economic backdrop.
- Minutes from the US central bank’s October meeting failed to provide any guidance on future stimulus. Hardly surprising given the bank signalled they were done easing for now, but stand ready at any point to adjust their position as necessary. Markets were looking for greater detail.
- Concerns arose regarding the state of the US consumer after 2 large US retailers slashed their sales forecasts and reported weaker sales. The results may be telling sign that US economic growth might be weaker than expected. However, 2 other larger retailers raised their profit forecasts.
- US retail sales rebounded in October, coming in better than expected, and reversing September’s decline. Industrial production dropped in October, with the largest decline since May. It was the 3rd decline in the last 4 months and a steeper drop than expected.
- US home sales increased more than expected in October, with house prices rising at the fastest pace in more than 2 years, assisted by lower mortgage rates and supply shortages.
- China’s central bank cut rates twice to slow the current economic slowdown, with further stimulus firming as likely.
- Hong Kong has sunk into recession for the 1st time in a decade in the 3rd quarter as the economy continues to be cut-off from much needed Chinese and foreign tourism whilst business activity grinds to halt with protests continuing.
Politics
- Trade war rhetoric was mixed this week following reports that the mood in Beijing regarding a deal was pessimistic due to President Trump’s refusal to roll back tariffs. The US administration issued a new 90 day extension allowing US companies to continue doing business with China’s Huawei. President Trump then applied pressure by threatening to escalate the trade war if no deal is reached.
- US foreign policy, or lack thereof, did its best to put a phase 1 trade deal at risk after the US senate unanimously passed a bill aimed at protecting human rights in Hong Kong, drawing condemnation from Beijing. Considering Trump’s foreign policy agenda has been one focused on withdrawal (not our problem), maybe the Senate is sending a bipartisan message. Bad timing either way.
- The US impeachment inquiry heated up taking a turn for the worst for President Trump. At this stage, impeachment remains unlikely, but it’s still early days in the inquiry.
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