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Weekend Reading 30-31 July 2016

Broken Mountain, Russell Drysdale, 1950 National Gallery of Victoria China Didi Chuxing and Uber, Popular in China, Are Now Legal, Too– NY Times China’s SOE Reform—The Wrong Path– PIIE ‘Old China’ bad, ‘New China’ good: Growing divergence in Chinese corporate health – Bruegel Beyond Structural Reform in China – Project-Syndicate The Overwhelming Case for a

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9

Macro Afternoon

by Chris Becker It was the Bank of Japan’s turn to churn markets with another round of stimulus, but this one failed to detonate as no helicopter money was forthcoming, as deflation continues to take hold in the island nation. Household expenditure is sinking at more than 2% contraction annually, confirmed by retail sales slumping

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Threats emerging for education exports

Cross-posted from The Conversation: A university education is a highly valued commodity in Asia. Australia has benefited from this in terms of the economic advantages international education has brought. In 2015, there were 272,095 higher education international students in Australia who contributed almost A$12.5 billion to the economy. The vast majority were from Asia. They

10

No Japanese helicopter

Not even a whirring blade: *BANK OF JAPAN TAKES ADDITIONAL ACTION *BOJ EXPANDS PURCHASES OF ETFS TO 6T YEN *BOJ DOUBLES USD LENDING PROGRAM TO $24B *BOJ MAINTAINS POLICY BALANCE RATE AT MINUS 0.100% *BOJ MAINTAINS MONETARY BASE TARGET AT 80T YEN *BOJ BOARD VOTES 7-2 TO KEEP NEG RATE UNCHANGED *KURODA ORDERS ASSESSMENT OF

1

Westpac jobs index lifts

Here ’tis: • The latest update of the Westpac Jobs Index paints a picture of an improving labour market. • There are many business surveys out there and most have questions that are applicable to the labour market. To generate a broad and deep labour market indicator, Westpac compiles all the relevant indicators from these

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Loons win against Rudd, Straya loses

From the AFR: Prime Minister Malcolm Turnbull has over ruled Foreign Minister Julie Bishop and overturned decades of precedent by rejecting Kevin Rudd’s request that he be nominated as a candidate for United Nations Secretary-General. Following a bitter and protracted process that threatened to degenerate into farce, the Prime Minster announced on Friday that the government would not be

8

Big iron hiccups as Banana Man focuses on fruit

The Big Iron bubble is off the boil today as Dalian has lost last night’s gains this morning. BHP is -0.8%, RIO -1.4% and FMG is off a sharper -3%: There’s good reason for FMG to fall. It’s 58% iron ore has barely budged during this rally and the discount to spot is now -19.4%:

6

Public investment boom unleashed!

From UBS, comes more on the well-timed and much needed surge in public investment: Reiterating our view of stronger public spending supporting GDP ahead We recently highlighted (Public spending surprises…capex boost ahead) that there has been a long-awaited – but stronger than expected – rebound in government spending (or public demand). Real public spending has lifted

0

BHP’s Samarco pincer

From Macqurie: Event  BHP announced that it will recognise a US$1.1–1.3bn provision in relation to the November 2015 Samarco tailings dam failure. The company will also record direct costs of ~US$100m (post-tax) in 2H CY16. Impact  Provision equal to BHP’s 50% share under Framework Agreement: BHP’s US$1.1–1.3bn provision announcement reflects the company’s 50%

8

Time for APRA to target macroprudential at Sydney and Melbourne?

APRA has released its June banking statistics and the mystery of why house prices are still rising at all deepens as investor lending continues to slow well below APRA’s macroprudential thresholds. System growth for the year to end of June fell to 3.1%: And month on month was only a little higher at 0.3%: The

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Beware Coalition’s welfare crackdown

By Leith van Onselen Earlier this week, the Turnbull Government announced a new wave of welfare reform that would use data analysis to crack down on long-term welfare dependence, which is based upon a system implemented in New Zealand in 2012. Now, a group of experts has emerged to attack the proposal, claiming that the

0

Daily oil and LNG price update (dooown)

The Brent oil slide rolls on down another 2% to $43.17. Henry Hub rebounded strongly to $2.85mmBtu: Oil was down again despite more rumblings in Libya and Nigeria. Goldman issued a cautious note, from CNBC: “The improvement in oil fundamentals remains fragile and continues to feature large offsetting forces: wildfires have helped offset surprisingly strong