Taken from: http://www.smh.com.au/business/markets-live/markets-live-banks-lead-asx-rise-20131115-2xkm4.html
The share market has closed higher, fuelled by optimism the US Federal Reserve won't start cutting stimulus anytime soon. The benchmark S&P/ASX200 index rose 46.3 points, or 0.9 per cent, to 5401.7, while the broader All Ords gained 44.2 points, or 0.8 per cent, to 5396.2. All sectors posted gains, with financials jumping 1. Related articles:
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Dick Smith’s astonishing turnaround from Woolworths’ $20 million discard to a listed company valued at more than $500 million has failed to convince some analysts. ‘‘I wouldn’t touch it,’’ Invast chief market analyst Peter Esho says. ‘‘There’s nothing compelling in it as an investment at all.’' Esho says the retailer has lifted its earnings through cost cutting, but it needs to spend a lot of money upgrading its stores. ‘‘There is going to have to be some significant reinvestment, it doesn’t really matter what the earnings base is,’’ he says. ‘‘In terms of free cash flow over the next five years I don’t think there will be much going to shareholders.’’ CMC chief market analyst Ric Spooner says Dick Smith is a ‘‘solid and easily recognisable brand’’, but the consumer electronics sector is unlikely to be a strong performer, even if consumer spending picks up next year. ‘‘It’s a space that would only interest me at the right price,’’ he says. ‘‘Given the growth outlook and risk profile I’d be looking for an attractive entry price for these sorts of stocks.’’ Dick Smith expects to list on the share market on December 12.
One for late Friday afternoon before you head to the pub: a Sydney brewery has apologised for using images of Hindu deities on its alcoholic ginger beer bottles after the labels provoked outrage from Hindu devotees. Brookvale Union Brewery's line of ginger beer carried a composite picture of the face of the Hindu deity Ganesh juxtaposed with the body of the goddess Lakshmi, while other religious motifs appear in the background. Rajan Zed, president of the Universal Society of Hinduism, said the labels were "highly inappropriate", and called for their immediate removal. "We're lovers, not fighters, we want to make it right," the brewery said in an apology. "With recent feedback brought to our attention, we will be looking at design options for our bottles." We hear Brookvale is staging a public competition for the new labels.
Shares in GrainCorp fell as much as 6.4 per cent after a media report said Prime Minister Tony Abbott will reject the $3.0 billion takeover by Archer Daniels Midland Co. GrainCorp shares hit a low of $11.41 a share, their lowest since April 22, after the West Australian said Abbott will reject the deal, citing unnamed sources within the Liberal Party. A spokesman for Treasurer Joe Hockey, however, said his office alone can rule on the GrainCorp takeover. "The Prime Minister does not have the power to veto the decision (on GrainCorp)," said Tony Ritchie, a spokesman for the Treasurer. GrainCorp, in a filing to ASX, noted the media speculation but said it was not aware of any material information that has not been previously been disclosed to the market. Shares are still down 4.1 per cent. "I think the market was assuming that it was likely (Hockey) would approve it because he generally is looked upon as a liberal as opposed to a conservative politician," said Ric Spooner, market strategist at CMC Markets. "But if the decision is made to prevent a foreign takeover then the Archer Daniels Midland will not proceed and that's why investors are obviously taking defensive action against that probability."
Some more on Janet Yellen's grilling by the US Senate overnight and worries about bubbles. Stock prices have risen pretty robustly, but I think if you look at traditional valuation measures, you would not see stock prices in territory that suggest bubble-like conditions. When you look at the equity risk premium, the difference between expected returns on stock and safe assets like bonds, that premium is somewhat elevated historically, which suggests valuations which are not in bubble territory. Meanwhile, Mike Johanns, the Republican senator for Nebraska, said he was seeing asset bubbles in real estate: We are now starting to see real estate bidding wars, just like the old days. ... We are now starting to see private equity firms, which I think are very good at looking where the economy is headed, and low and behold they are buying single-family houses. That was a shocker to me. ... And so Dr Yellen I kind of look at these factors and I must admit, what am I missing here? I see asset bubbles, and I think you are to announce today that over the next 24 months you are going to bring that balance sheet down from $4 trillion to zero or $1 trillion, I think if you said even over the next four years you are going to bring it down from $4 trillion to zero, I think we would see how big those asset bubbles are. Won't you agree with me on that? I think the economy has gotten used to the sugar you put out there and I just worry that we are on a sugar high. And that is a very dangerous thing for the little person out there who is just trying to pay the bills and maybe put a buck away for retirement.
The federal government’s productivity commission review of the auto sector will spell the death of Australia’s car manufacturing industry, South Australian Premier Jay Weatherill says. Mr Weatherill says the Commonwealth’s approach to the industry, including embattled car producer Holden, is reckless. The premier has told a meeting of component producers in Melbourne that Holden has made it clear the federal government’s timeline for deciding on future financial assistance is not consistent with the company’s own plans. But he says the government has decided to press ahead with the review regardless. ‘‘We know what the risks are, we know what is at stake and we know what needs to be done,’’ Mr Weatherill said. ‘‘It is incredibly reckless for the federal government to continue with this approach. ‘‘The productivity commission report will end up being a coroner’s report into the death of Australia’s car industry.’’ Mr Weatherill said the South Australian government wanted to turn auto manufacturing into an advanced manufacturing sector with a secure and viable future.
In light of Fed chairman nominee Janet Yellen's bubble comments overnight - here's a question: what can central bankers really do if there are asset bubbles? Not much, says Platypus Asset Management chief investment officer Don Williams. "All the Fed and other central bankers can do is beat their chest and warn about bubbles. There's actually nothing they can do about it. They're not going to change their monetary policy settings because they are getting an asset bubble in an asset class," Williams says. Williams says the US is still a long way from having bubbles in most assets. He adds that while cheap money has giving a boost to stock market, when the tapering of the Fed's massive bond-buying program does actually start, the markets would be prepared and not collapse. "Tapering is expected by the market. So we would argue that if the economic data is reasonable and improving, the Fed can start to taper and it will have a minimal impact on the market. "Investors will focus more on the improvement in the economy and what that means for earnings than the fact that some of the monetary stimulus is being withdrawn"
So how do you go about gaining a casino licence from an increasingly dodgy government? Very carefully, no doubt, writes BusinessDay's Michael Pascoe. No, not New South Wales, but Sri Lanka and the Philippines, countries where James Packer’s Crown either wants to or is building a casino. Packer officially launched his $400 million Sri Lankan ambition overnight on the eve of the Commonwealth Heads of Government meeting with a pitch similar to the story that had the NSW government in his pocket as soon as Barry O’Farrell heard it – a promise of untold wealth flowing from international tourism. In Sri Lanka, it’s supposed to be millions of rich Indians wanting to fly in to give Crown money, while Sydney has been promised squadrons of Chinese whales. The model is Macau where Chinese gamblers pour across the border, an interesting percentage of them corrupt officials laundering money in some of the city’s many casinos. Last weekend’s Economist magazine left Packer’s name out of it while detailing Sri Lanka’s problems ahead of “In a building near the beach, a casino operator sinks into a monstrous armchair and gushes about Colombo’s gambling potential. His planned venture with an Australian investor includes a 450-room “five-star-plus” hotel to lure high-rollers from China, India and the Gulf. For now, blank-eyed tourists make do in dreary halls, playing roulette under fluorescent lights. But he, like all the ruling elite, is in a rush.”
Here at blog central, we've been keeping an eye on all things bubbly. Overnight, Fed chairman nominee Janet Yellen was asked about asset bubbles and QE's impact at her confirmation hearing with US lawmakers. Here's her response to a question about the Fed and how it could fight asset bubbles: Senator, I think it is important for the Fed, hard as it is, to attempt to detect asset bubbles when they are forming. We devote a good deal of time and attention to monitoring asset prices in different sectors, whether it is house prices or equity prices or farmland prices to try to see if there is evidence of price misalignments that are developing. By and large, I would say that I don't see evidence at this point in major sectors of asset price misalignments, at least of a level that would threat financial stability. But if we were to detect such misalignments or other threats to financial stability, in my view I would like as a first line of defence - we have a variety of supervisory tools, micro and macroprudential, we can use to attempt to limit the behaviour that is giving rise to those asset price misalignments. I would not rule out using monetary policy as a tool to address asset price misalignments but because it is a blunt tool and because Congress has asked us to use those tools to achieve the goals of maximum employment and price stability, which are very important goals in their own right, I would like to see monetary policy first and foremost directed towards achieving those goals Congress has given us and to use other tools in the first instance to try to address potential financial stability threats. But in an environment of low interest rates, it can induce risky behaviour and I will not rule out monetary policy conceivably having to play a role.
Forecasters are more divided on the outlook for Australia’s dollar than any other major currency as they weigh a boost from a recovery in China against a looming reduction in US monetary stimulus, a Bloomberg has found. The gap between the highest and lowest estimates for the Aussie through mid-2014 is the widest relative to the mean among 16 Group-of-10 currency pairs Bloomberg tracks, ranging between a rally to US dollar parity and a slump to 80 US cents. After falling to a three-year nadir of 88.48 US cents in August, the currency has rebounded as reports showed an economic resurgence in China. It's currently trading at 93.13 US cents. The bears say the gains should reverse as the Federal Reserve reduces the $US85 billion it pumps into the economy each month early next year, money that weighed on America’s currency by boosting the supply of greenbacks. ‘‘There are definitely diverging forces on the Aussie dollar,’’ says Mitul Kotecha, the head of foreign-exchange strategy at Credit Agricole. ‘‘There are concerns over Federal Reserve tapering,’’ though ‘‘I do think that the Aussie is one of the better-placed currencies to withstand that.’’ The median estimate in a Bloomberg survey of more than 40 analysts predicts a decline to 90 US cents.
To promote its standing in China, JPMorgan Chase turned to a seemingly obscure consulting firm run by a 32-year-old executive named Lily Chang. Ms Chang’s firm, which received a $75,000-a-month contract from JPMorgan, appeared to have only two employees. And on the surface, Ms Chang lacked the influence and public name recognition needed to unlock business for the bank. But what was known to JPMorgan executives in Hong Kong, and some executives at other major companies, was that “Lily Chang” was not her real name. It was an alias for Wen Ruchun, the only daughter of Wen Jiabao, who at the time was China’s prime minister, with oversight of the economy and its financial institutions. JPMorgan’s link to Ms Wen — which came during a time when the bank also invested in companies tied to the Wen family — has not been previously reported. Yet a review by The New York Times of confidential documents, Chinese public records and interviews with people briefed on the contract shows that the relationship pointed to a broader strategy for accumulating influence in China: Put the relatives of the nation’s ruling elite on the payroll.
The share market has closed higher, fuelled by optimism the US Federal Reserve won't start cutting stimulus anytime soon. The benchmark S&P/ASX200 index rose 46.3 points, or 0.9 per cent, to 5401.7, while the broader All Ords gained 44.2 points, or 0.8 per cent, to 5396.2. All sectors posted gains, with financials jumping 1. Related articles:
Location: 331 8th St.,
Downers Grove, IL, 60515
Contact: 888-215-5457
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- roll off dumpsters in St. Peters
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Dick Smith’s astonishing turnaround from Woolworths’ $20 million discard to a listed company valued at more than $500 million has failed to convince some analysts. ‘‘I wouldn’t touch it,’’ Invast chief market analyst Peter Esho says. ‘‘There’s nothing compelling in it as an investment at all.’' Esho says the retailer has lifted its earnings through cost cutting, but it needs to spend a lot of money upgrading its stores. ‘‘There is going to have to be some significant reinvestment, it doesn’t really matter what the earnings base is,’’ he says. ‘‘In terms of free cash flow over the next five years I don’t think there will be much going to shareholders.’’ CMC chief market analyst Ric Spooner says Dick Smith is a ‘‘solid and easily recognisable brand’’, but the consumer electronics sector is unlikely to be a strong performer, even if consumer spending picks up next year. ‘‘It’s a space that would only interest me at the right price,’’ he says. ‘‘Given the growth outlook and risk profile I’d be looking for an attractive entry price for these sorts of stocks.’’ Dick Smith expects to list on the share market on December 12.
One for late Friday afternoon before you head to the pub: a Sydney brewery has apologised for using images of Hindu deities on its alcoholic ginger beer bottles after the labels provoked outrage from Hindu devotees. Brookvale Union Brewery's line of ginger beer carried a composite picture of the face of the Hindu deity Ganesh juxtaposed with the body of the goddess Lakshmi, while other religious motifs appear in the background. Rajan Zed, president of the Universal Society of Hinduism, said the labels were "highly inappropriate", and called for their immediate removal. "We're lovers, not fighters, we want to make it right," the brewery said in an apology. "With recent feedback brought to our attention, we will be looking at design options for our bottles." We hear Brookvale is staging a public competition for the new labels.
Shares in GrainCorp fell as much as 6.4 per cent after a media report said Prime Minister Tony Abbott will reject the $3.0 billion takeover by Archer Daniels Midland Co. GrainCorp shares hit a low of $11.41 a share, their lowest since April 22, after the West Australian said Abbott will reject the deal, citing unnamed sources within the Liberal Party. A spokesman for Treasurer Joe Hockey, however, said his office alone can rule on the GrainCorp takeover. "The Prime Minister does not have the power to veto the decision (on GrainCorp)," said Tony Ritchie, a spokesman for the Treasurer. GrainCorp, in a filing to ASX, noted the media speculation but said it was not aware of any material information that has not been previously been disclosed to the market. Shares are still down 4.1 per cent. "I think the market was assuming that it was likely (Hockey) would approve it because he generally is looked upon as a liberal as opposed to a conservative politician," said Ric Spooner, market strategist at CMC Markets. "But if the decision is made to prevent a foreign takeover then the Archer Daniels Midland will not proceed and that's why investors are obviously taking defensive action against that probability."
Some more on Janet Yellen's grilling by the US Senate overnight and worries about bubbles. Stock prices have risen pretty robustly, but I think if you look at traditional valuation measures, you would not see stock prices in territory that suggest bubble-like conditions. When you look at the equity risk premium, the difference between expected returns on stock and safe assets like bonds, that premium is somewhat elevated historically, which suggests valuations which are not in bubble territory. Meanwhile, Mike Johanns, the Republican senator for Nebraska, said he was seeing asset bubbles in real estate: We are now starting to see real estate bidding wars, just like the old days. ... We are now starting to see private equity firms, which I think are very good at looking where the economy is headed, and low and behold they are buying single-family houses. That was a shocker to me. ... And so Dr Yellen I kind of look at these factors and I must admit, what am I missing here? I see asset bubbles, and I think you are to announce today that over the next 24 months you are going to bring that balance sheet down from $4 trillion to zero or $1 trillion, I think if you said even over the next four years you are going to bring it down from $4 trillion to zero, I think we would see how big those asset bubbles are. Won't you agree with me on that? I think the economy has gotten used to the sugar you put out there and I just worry that we are on a sugar high. And that is a very dangerous thing for the little person out there who is just trying to pay the bills and maybe put a buck away for retirement.
The federal government’s productivity commission review of the auto sector will spell the death of Australia’s car manufacturing industry, South Australian Premier Jay Weatherill says. Mr Weatherill says the Commonwealth’s approach to the industry, including embattled car producer Holden, is reckless. The premier has told a meeting of component producers in Melbourne that Holden has made it clear the federal government’s timeline for deciding on future financial assistance is not consistent with the company’s own plans. But he says the government has decided to press ahead with the review regardless. ‘‘We know what the risks are, we know what is at stake and we know what needs to be done,’’ Mr Weatherill said. ‘‘It is incredibly reckless for the federal government to continue with this approach. ‘‘The productivity commission report will end up being a coroner’s report into the death of Australia’s car industry.’’ Mr Weatherill said the South Australian government wanted to turn auto manufacturing into an advanced manufacturing sector with a secure and viable future.
In light of Fed chairman nominee Janet Yellen's bubble comments overnight - here's a question: what can central bankers really do if there are asset bubbles? Not much, says Platypus Asset Management chief investment officer Don Williams. "All the Fed and other central bankers can do is beat their chest and warn about bubbles. There's actually nothing they can do about it. They're not going to change their monetary policy settings because they are getting an asset bubble in an asset class," Williams says. Williams says the US is still a long way from having bubbles in most assets. He adds that while cheap money has giving a boost to stock market, when the tapering of the Fed's massive bond-buying program does actually start, the markets would be prepared and not collapse. "Tapering is expected by the market. So we would argue that if the economic data is reasonable and improving, the Fed can start to taper and it will have a minimal impact on the market. "Investors will focus more on the improvement in the economy and what that means for earnings than the fact that some of the monetary stimulus is being withdrawn"
So how do you go about gaining a casino licence from an increasingly dodgy government? Very carefully, no doubt, writes BusinessDay's Michael Pascoe. No, not New South Wales, but Sri Lanka and the Philippines, countries where James Packer’s Crown either wants to or is building a casino. Packer officially launched his $400 million Sri Lankan ambition overnight on the eve of the Commonwealth Heads of Government meeting with a pitch similar to the story that had the NSW government in his pocket as soon as Barry O’Farrell heard it – a promise of untold wealth flowing from international tourism. In Sri Lanka, it’s supposed to be millions of rich Indians wanting to fly in to give Crown money, while Sydney has been promised squadrons of Chinese whales. The model is Macau where Chinese gamblers pour across the border, an interesting percentage of them corrupt officials laundering money in some of the city’s many casinos. Last weekend’s Economist magazine left Packer’s name out of it while detailing Sri Lanka’s problems ahead of “In a building near the beach, a casino operator sinks into a monstrous armchair and gushes about Colombo’s gambling potential. His planned venture with an Australian investor includes a 450-room “five-star-plus” hotel to lure high-rollers from China, India and the Gulf. For now, blank-eyed tourists make do in dreary halls, playing roulette under fluorescent lights. But he, like all the ruling elite, is in a rush.”
Here at blog central, we've been keeping an eye on all things bubbly. Overnight, Fed chairman nominee Janet Yellen was asked about asset bubbles and QE's impact at her confirmation hearing with US lawmakers. Here's her response to a question about the Fed and how it could fight asset bubbles: Senator, I think it is important for the Fed, hard as it is, to attempt to detect asset bubbles when they are forming. We devote a good deal of time and attention to monitoring asset prices in different sectors, whether it is house prices or equity prices or farmland prices to try to see if there is evidence of price misalignments that are developing. By and large, I would say that I don't see evidence at this point in major sectors of asset price misalignments, at least of a level that would threat financial stability. But if we were to detect such misalignments or other threats to financial stability, in my view I would like as a first line of defence - we have a variety of supervisory tools, micro and macroprudential, we can use to attempt to limit the behaviour that is giving rise to those asset price misalignments. I would not rule out using monetary policy as a tool to address asset price misalignments but because it is a blunt tool and because Congress has asked us to use those tools to achieve the goals of maximum employment and price stability, which are very important goals in their own right, I would like to see monetary policy first and foremost directed towards achieving those goals Congress has given us and to use other tools in the first instance to try to address potential financial stability threats. But in an environment of low interest rates, it can induce risky behaviour and I will not rule out monetary policy conceivably having to play a role.
Forecasters are more divided on the outlook for Australia’s dollar than any other major currency as they weigh a boost from a recovery in China against a looming reduction in US monetary stimulus, a Bloomberg has found. The gap between the highest and lowest estimates for the Aussie through mid-2014 is the widest relative to the mean among 16 Group-of-10 currency pairs Bloomberg tracks, ranging between a rally to US dollar parity and a slump to 80 US cents. After falling to a three-year nadir of 88.48 US cents in August, the currency has rebounded as reports showed an economic resurgence in China. It's currently trading at 93.13 US cents. The bears say the gains should reverse as the Federal Reserve reduces the $US85 billion it pumps into the economy each month early next year, money that weighed on America’s currency by boosting the supply of greenbacks. ‘‘There are definitely diverging forces on the Aussie dollar,’’ says Mitul Kotecha, the head of foreign-exchange strategy at Credit Agricole. ‘‘There are concerns over Federal Reserve tapering,’’ though ‘‘I do think that the Aussie is one of the better-placed currencies to withstand that.’’ The median estimate in a Bloomberg survey of more than 40 analysts predicts a decline to 90 US cents.
To promote its standing in China, JPMorgan Chase turned to a seemingly obscure consulting firm run by a 32-year-old executive named Lily Chang. Ms Chang’s firm, which received a $75,000-a-month contract from JPMorgan, appeared to have only two employees. And on the surface, Ms Chang lacked the influence and public name recognition needed to unlock business for the bank. But what was known to JPMorgan executives in Hong Kong, and some executives at other major companies, was that “Lily Chang” was not her real name. It was an alias for Wen Ruchun, the only daughter of Wen Jiabao, who at the time was China’s prime minister, with oversight of the economy and its financial institutions. JPMorgan’s link to Ms Wen — which came during a time when the bank also invested in companies tied to the Wen family — has not been previously reported. Yet a review by The New York Times of confidential documents, Chinese public records and interviews with people briefed on the contract shows that the relationship pointed to a broader strategy for accumulating influence in China: Put the relatives of the nation’s ruling elite on the payroll.