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All rights reserved. http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/financenews/air_index.html Australasian Investment Review en-us Sun, 8 Nov 2009 14:47:02 GMT http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091105/27/29loa.html Fri, 6 Nov 2009 08:13:00 GMT For the third time this year, Reserve Bank Governor, Glenn Stevens, has attempted to give Australia and Australians a sense of what has to be done to & quot;make sure that the road to recovery will connect to the road to prosperity, & quot; as he put it last night in a speech in Melbourne.His speech last night laid out the benefits that lie ahead if we get it right, but didn't try to avoid the considerable obstacles that we face.But he was optimistic, making the point that if we learned from the reasons why we were not (so far) badly damaged by the global crisis, we can succeed.Mr Stevens again mentioned his previously-stated fears that property and housing prices could become a problem, along with labour shortages, uneven development patterns in the economy and huge current account deficits.There was no mention of interest rates or the dollar, but both were there, in the background, especially when he discussed the challenges coming in the wider economy from a new resources surge.It was against that background that he & #160;last night gave the third of a trio of major speeches this year looking at our economic condition.They started & #160;in April with a look at The Road to Recovery, with & #160;the issue then & #160;was how to get onto that road:In late July, with the country's return to & #160;that & #160;road safely assumed, he spoke about & #160;The Challenges to Economic Policy, & #160;in Sydney, with some comments on property and housing that still resonate: & quot;A very real challenge in the near term is the following: how to ensure that the ready availability and low cost of housing finance is translated into more dwellings, not just higher prices. & quot;Given the circumstances & #160;- the economy moving to a position of less than full employment, with labour shortages lessening and reduced pressure on prices for raw material inputs - this ought to be the time when we can add to the dwelling stock without a major run-up in prices. & quot;If we fail to do that & #160;- if all we end up with is higher prices and not many more dwellings - then it will be very disappointing, indeed quite disturbing. & quot;Not only would it confirm that there are serious supply-side impediments to producing one of the things that previous generations of Australians have taken for granted, namely affordable shelter, it would also pose elevated risks of problems of over-leverage and asset price deflation down the track. & quot;That was construed as a warning that the RBA would not let a housing bubble develop: something Mr Stevens has pointed out was not the purpose of his comments. He was talking about the dangers to the wider community of allowing a property and housing price explosion to go & #160;for too long.And last night in the third of his major speeches, there was more in a similar vein: & #160; & quot;there is no such thing as effortless, or riskless, prosperity, & quot; he told his Melbourne audience. & quot;There is still a business cycle, and we do well to remember that even if we have been spared the worst of the recent downturn. & quot;We will need to continue investing in all the things that helped us get through the recent episode. & quot;And we will need to accept and manage various changes that will probably confront us over the years ahead. The road to prosperity will have some bumps, twists and turns. & quot;But it is the road to the right destination. & quot;But before we get there, he said & #160;had to have a good appreciation of what needs to be done in the wake of our surviving the GFC and Great Recession & quot;The key question is: having had a fairly shallow downturn, how do we make the upswing long and stable, and relatively free of serious imbalances? & quot; Mr Stevens asked. & quot;At least part of the answer is that we will need to re-invest in the same policy discipline, and the same careful private-sector management, that paid dividends in the recent episode. & quot;That means keeping tested frameworks in place, amended as necessary in the light of experience. & quot;It means unwinding temporary measures as appropriate. It means keeping a focus on flexibility. & quot;And perhaps most of all, it means resisting the temptation to assume prosperity is easily achieved, or easily managed. & quot;In that spirit, let me offer three observations. & quot;First, we start this upswing with less spare capacity than some previous ones. & quot;After a big recession, it usually takes some years for well-above-trend growth in demand to & #160;use up the spare capacity created by the recession. This time that process will not take as long. Most measures of capacity utilisation, unemployment and underemployment are much more like what we saw after the slowdown in 2001, than what we saw after the recession in the early 1990s. & quot;This is not a problem. In fact, it is good. It is a goal of macroeconomic policy to try to keep the economy not too far from full employment. & quot;And some spare capacity does exist, and will do so for a little while, which is why we think underlying inflation will probably come down a little more in the period ahead. & quot;But it does underline the importance of adding to supply, not just to demand, over the medium term, and of maximising the productivity of the factors of production that we have, if we are to have the sort of growth that genuinely brings prosperity. & quot;That echoes his comments on land and housing in the speech in late July, as do these comments: & #160; & quot;Second, and following on the theme of potential supply, others have noted that the rate of population growth at present is the highest since the 1960s. & quot;On one hand, this may help alleviate capacity constraints, insofar as certain types of labour are concerned. & quot;On the other hand, immigrants need to house themselves and need access to various goods and services as well. & quot;That is, they add to demand as well as to supply. & quot;It follows that the demand for additional dwellings, among other things, is likely to remain strong. Corresponding effects will flow on to urban infrastructure requirements and so on. & quot;So the question of whether enough is being done to make the supply side of the housing sector more responsive to these demands will remain on the agenda. & quot;Adequate financial resources will of course also be needed. & quot;In that regard, the current issue is not the cost of borrowing for end buyers, which remains low, but the availability and terms of credit for developers. & quot;Perceptions by lenders of the riskiness of development in some cases are probably overdone just at the moment, given the strength of the underlying fundamentals on the demand side for accommodation. & quot;That will probably not be a permanent problem though; the more persistent difficulties look like they may be in the areas of land supply, zoning and approval. & quot;Third, the likely build-up in resources sector investment over the years ahead carries significant implications for the medium-term performance and structure of the economy. & quot;Even if a number of the proposed projects do not go ahead, the ratio of mining investment to GDP for Australia, which is already very high, will probably go higher still over the next several years. & quot;A sizeable share of the physical input will be sourced from abroad (through imported equipment) but the domestic spend will still be significant. So, other things equal, the & #160;investments will be expansionary for the economy. & quot;The financial capital to fund this build-up will mostly come from abroad. & quot;That is to say, absent some offsetting changes elsewhere, Australia's current account deficit could be considerably larger for some years than the 4 to 5 per cent of GDP we have seen on average for the past generation, which itself was a good deal bigger than seen in the generation before that. & quot;Now of course the current account position we have had turns out, contrary to what most would have expected 25 years ago, to have been & #160;manageable and sustainable. & quot;A temporarily larger one would probably be so as well, provided it involved a relatively modest amount of currency mismatch, and a rise in investment as opposed to a reduction in saving - and that seems to be the likely shape of things. & quot;In fact a temporarily sizeable current account deficit, if characterised by equity-type capital inflow, may well be optimal, because it would mean that a good deal of the risk of the projects was being shared with foreign investors, and that makes sense. & quot;Why would Australians alone take on all the risk of these massive projects? & quot;It is probably more sensible to share the risks with global capital markets and global companies. & quot;But these trends will take some explaining, not least to foreign and international organisations, many of which have a more traditional view of current account positions. & quot;Our explanation to our own citizens will also be important and not just about capital flows. & quot;Over time, if the resources sector is to grow as a share of the economy, as seems likely, other areas will by definition shrink. & quot;This does not necessarily mean that they will shrink in absolute terms, particularly given the population is growing quickly, but certainly their growth prospects would be & #160;weaker than in an alternative state of the world in which the resources sector was to remain at its historical size. & quot;It & #160;follows that adjustment challenges will arise, with industrial and geographical implications. & quot;The 'two-speed economy' debate of a few years ago was really only a preview of what we could see if the resources sector build-up goes ahead. & quot;A further implication is that the economy's trade patterns could end up becoming less diversified than they have been in recent years. & quot;Such concentration would not be & #160;unprecedented and may well be worth accepting if the returns from doing so were high enough, as it appears they might be. & quot;But we might also think about how to manage the risks associated with any concentration. & quot;The emergence of China and India is a benefit to Australia, but we stand to have a heightened exposure to anything going seriously wrong in those countries. & quot;The financial sector remains in pretty good shape. & quot;The Government does not own, and has not had to give direct support to, any financial institution. & quot;Australia, therefore, will be relatively free of the difficult governance and exit strategy challenges that such support is raising in some countries. & quot;Public finances remain in good shape, with a medium-term path for the budget back towards balance, and without the large debt burdens that will inevitably narrow the options available to governments in other countries. & quot;Sensible policy frameworks -both macroeconomic and microeconomic - remain in place, and they have worked. & quot;We remain open for trade and investment, with an exposure to Asia, which still has the most dynamic growth potential in the world over the next several decades. & quot;These advantages are already paying dividends. Properly exploited, they will pay many more. & quot; & #160; http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091105/27/29lo8.html Fri, 6 Nov 2009 08:11:00 GMT Transurban is like Oliver Twist in one respect.It likes what it sees in a bowl thrust its way yesterday by two big Canadian pension funds, but it would like them to sweeten the dish with a few million dollars more, preferably more than a few more.So the toll road operator & #160;rejected the & #160;takeover approach from the two Canadian & #160;funds, & #160;left the door open to a better offer, and sat back and watched its shares race up by almost 20%.They closed up 19.3% & #160;at & #36;5.24, a gain of 85c on the day.Last night there were suggestions from some big shareholders quoted in media reports that a & #36;5.80 offer price (or another 10%) might be enough to win a yes.That's around & #36;700 million, which would lift TCL's value to & #36;7.5 billion (less the 28% of the company the two funds already own).That would be equal to the 52 week high a year ago, just before the big fall in markets from November onwards.Transurban (TCL) rejected the & #160;(which is Australia's & #160;biggest toll road operator), the & #160;unsolicited & #36;6.8 billion & #160;takeover offer from Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan in this statement. That was revealed at 11.15 am.The pension funds offered & #36;5.25 a share, shares in the unlisted company once it is privatized (for capital gains tax rollover purposes for smaller shareholders), or a combination of both. The price offered was a & #160;20% premium to TCL price on Wednesday.At 4.27 pm the two funds issued a joint statement & #160;in which they confirmed the approach. & quot;Further to the announcement made by Transurban today, Canada Pension Plan Investment Board ( & quot;CPPIB & quot;) and Ontario Teachers' Pension Plan ( & quot;OTPP & quot;) confirm that on 27 October 2009 they submitted an indicative proposal to acquire 100% of Transurban securities by way of a scheme of arrangement ( & quot;the Proposal & quot;). & quot;CPPIB and OTPP believe the Proposal provides Transurban security holders with compelling value for their investment. & quot;The Proposal would allow Transurban security holders to choose between a cash price of A & #36;5.25 per security, an unlisted scrip rollover and top-up alternative or a combination of both. & quot;The cash price of A & #36;5.25 represents a premium of 20% to the Transurban security price at the close of trade on 4 November 2009 and a 25% premium to Transurban's Volume Weighted Average Price (VWAP) for the three months prior to that date. & quot;CPPIB and OTPP note Transurban's willingness to enter into constructive discussions on bona fide proposals and look forward to the opportunity to discuss the details of the Proposal with Transurban. & quot;TCL said the proposal was & quot;incomplete, highly conditional and non- binding. & quot;That's normal for an opening round in a big bucks takeover.With 28% the two Canadian funds have the whip hand, but must move carefully, otherwise they will alienate the board. The deal has to be an agreed, non-hostile offer.It is complicated by the big vote last week (for a second year) against the remuneration report put to TCL's AGM.During that meeting there were plenty of comments made critical of the board. & #160;Shareholder unhappiness was running at quite high levels, according to media reports, although with if a higher offer is made, it could convince smaller holders to accept.Transurban owns toll roads in Australia and offshore.They include the Pocahontas 895 road in Virginia in the USA and the Hills M2 in Sydney (which is being expanded at a cost of half a billion dollars over the next three years) and the Citylink in Melbourne.It also has half of the big M7 in Sydney which has been one of the better performing tollroads in the past couple of years.The Ontario Teachers' Fund sold a stake in the Macquarie Infrastructure Group last week, a move which raised eyebrows and set off rumours that TCL could be a target.The move marks the latest swoop on an Australian infrastructure group by Canada's pension funds and big investors.Brookfield Asset Management, a big private Canadian financial group, took over Multiplex at the start of 2008 and has been looking to grow by acquiring & #160;more assets.It is trying to buy a 40% stake in the troubled Babcock and Brown Infrastructure. & #160;The Canada Pension Plan Investment Board bought Macquarie Communications Infrastructure Fund in June for & #36;1.4 billion.Transurban is unlikely to be the last target for private funds looking for stable, long-term cash flows and investments. & #160;For instance, the about to split & #160;Macquarie Infrastructure could see the so-called & quot;good & quot; bit of the fund a target, once the changes are completed. & #160;It will have low debt and high cash flows.Infrastructure funds have abandoned the geared up, heavy borrowing approach pioneered by Macquarie (as have many real estate trusts) and gone to paying distributions out of operating earnings.That makes them all targets for big investors looking for stable investments. & #160; & #160; http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091105/27/29lo7.html Fri, 6 Nov 2009 08:10:00 GMT There's a sudden bloom in the car industry around the world, so much so that you'd be mistaken for wondering if the good times were back.Sales are up, with or without Government help, some battered names like Ford are doing better, as is the sluggish Japanese giant, Toyota.Even General Motors, the reborn US mini-giant, has found the courage to call off the sale of its Opel operation in Germany, and other plants in the UK, Spain and Belgium.It now sees that it can get more from continuing to own Opel than sell it off, which has upset the German Government, plus the Russians who were to partner Magna, the Canadian buyer.Car sales in some of the world's major & #160;car economies; the US, Japan, Germany, Italy, South Korea did much better last month.But China has been the star with car sales up over 70% so far this year (over 80% in some months), over 11 million units sold in unofficial figures for the first 10 months, and single-handedly helping some big companies, like Nissan, Toyota, GM and others to report better than expected upturns in September quarter and half financial results.And this upturn in China (which will naturally slow as 2010 goes on) has seen & #160;big Japanese manufacturers upgrade their outlooks from what were quite depressed levels a quarter ago.Late yesterday Toyota surprised with a September quarter profit and a smaller loss estimate for 2009-10.Toyota now expects & #160;a net loss of 200 billion yen ( & #36;US2.2 billion) for & #160;the year to March 31, compared with an earlier forecast of a loss of & #160;450 billion yen loss.It posted & #160; an unexpected second-quarter profit of 21.8 billion yen.For that Toyota can thank the stimulus spending programs in China, Japan and the US.The US was mixed, but sales were mostly higher than in September, with Ford actually boosting its sales above those in October, 2008.As expected Australian car sales rose last month on & #160;the same month of the previous year, the first time that has happened in 16 months.Figures yesterday from the Federated Chamber of Automotive Industries & #160;were the most encouraging since June, 2008, and confirm that thanks to the tax benefits in the Federal stimulus package, car sales will finish & #160;2009 above the levels of a year ago.The falls in November and December of 2008 will help ensure that happens, but it will be a far better way to & #160;end 2009 than & #160;it started with falls of 20% or more in the first few months.New car sales were up 2% in October as & #160;strong sales of small cars, sports cars and luxury four-wheel-drives drove the market higher last month.The Chamber's CEO, & #160;Andrew McKellar, said the October sales figures reflected a car market - and a wider economy - in recovery. & quot;It is certainly a positive indication that the industry is now in recovery mode. It's very encouraging, & quot; he said. & quot;We would expect to see further growth over the next couple of months as business buyers take advantage of the last couple of months of the tax breaks, & quot; he said.But there was a catch in the comparison: October this year was compared with a very weak October 2008 when car sales fell 11% from September as the & #160;slump accelerated.Both Ford and Toyota recorded increases in sales of their locally-built vehicles, which is good news because both have struggled this year.Relatively stable fuel prices have sparked a revival in four-wheel-drive sales, which jumped by almost 10% against the 2% rise in the overall market in the month.In an analysis, Fusion Strategy of Sydney said the October figure continued the & quot;quite positive trend since July. & quot;And even though October 2008 was weak October & #160;was & quot;growth month regardless, and in all but Heavy & #160;Vehicles. & quot; & quot;Compared to September the trend is a near 6 point improvement, so if anything, picking up pace; SUVs were & #160;the strongest major sector up nearly 10%, & quot; Fusion said in a research note.Year-to-date 762,787 new vehicles have been sold, down 11.7% compared to the same period last year and almost half the rate in the first four or five months of the year.In Japan & #160;Nissan & #160;moved back & #160;into the black in the September & #160;quarter and forecast a smaller yearly loss thanks to the better than expected sales in China.Honda, Suzuki & #160;and Subaru's maker, Fuji Heavy Industries, & #160;have also upgraded their outlooks. & #160;Toyota's upgrade was also a surprise and perhaps a sign that the world's biggest car maker is over the worst.But the results confirm & #160;the growing importance of emerging markets like China, where massive government stimulus measures have lifted & #160;demand.But there is a downside.As good as the lift in sales has been in many markets (including Australia) it's the makers of small cars that have been really benefitting, especially in Europe and in the US.These are fuel efficient vehicles and US buyers in particular has sought out these smaller cars (especially the Toyota Corolla, the Honda range and the Ford Focus).(And that's a good thing).Companies without small, fuel efficient (and relatively cheap) models have been hit, such as BMW, the big German luxury maker.BMW saw a 9% fall in its deliveries in the September quarter, despite the solid increases in car sales in Germany (up 24% in October) and France, up 20% as well (two of its biggest markets).The downturn in Russia and the US isn't helping either. & #160;But come 2010 when the bloom wears off car sales and buyers seem exhausted, will the rebound (which hopefully becomes a recovery) see a rise in demand for cars like BMWs and Mercedes, which send a message, & quot;I survived. & quot; & #160; http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091105/27/29lvr.html Fri, 6 Nov 2009 08:008:00 GMT Warren Buffett did it again this week, launching his biggest ever takeover & #160;which defines his optimism in America's future and & #160;makes an emphatic statement about the financial strength of his Berkshire Hathaway company.And, I suppose, there's the added bonus of showing up all the naysayers & #160;who were whispering & #160;a year ago that he was 'under pressure' and could be badly damaged by the financial crunch and recession.There may be a financial cost: a ratings agency has warned that it may downgrade the credit standing of Berkshire Hathaway, his master company and the one that launched this week's & #36;US44 billion (total value) deal for the Burlington and Northern Santa Fe Railroad.That's because the takeover will chew up a large chunk of the & #36;US20 or billion so dollars left in his cash pile after he's spent around & #36;US20 billion in the past year making some very smart investments.Anyway, we will get an updated view of Berkshire's financial health tonight when it reports third quarter earnings in the US.But already the takeover offer for Burlington reveals the thinking that has made Buffett an investment legend and his long term view of the attractiveness of the US economy.And & #160;the long term means well after the 78 year old has gone from this world.A year ago and in the early months of 2009, many in the markets were wondering if Buffett has met his match.Berkshire shares were down sharply (but not as much as the market was down, it must be said) and some had concerns about the potential damage a series of financial derivatives (bets against the US stockmarket) might do to his reputation and the financial strength of the group.Well he was & #160;so badly damaged that he has emerged as the biggest winner so far from the crunch.He and Berkshire offered vital financial support to, and potentially & #160;helped to save Goldman Sachs and General Electric in the depths of the crunch. He also bought debt from Harley Davidson and Tiffany's.Interestingly, he has sold down his large holding & #160;in Moody's, the credit rating group, in recent months. Berkshire remains Moody's biggest shareholder at the moment.But it's the Burlington deal that seems to have restored him to the top of the smart money tree.Berkshire is & #160;spending & #36;US26.6 billion to buy the 77%-78% it doesn't own of Burlington, America's second biggest railroad.It's & #160;a deal that is an out and out bet on the future of coal as America's major & #160;source of electrical power for decades to come and a bet that the American economy will recover to something approaching its pre-crunch glory. It values the total rail group, including debt at & #36;US44 billion. & quot;It's an all-in wager on the economic future of the United States, & quot; Buffett said in a statement, adding railroads will benefit in a recovery. & quot;I love these bets. & quot; & quot;Our country's future prosperity depends on its having an efficient and well-maintained rail system, & quot; Buffett said in a statement. & #160; & #160;The Financial Times Lex column was a bit more restrained, saying. & quot;Taking a long-term view on an industry, company and management is Mr Buffett's classic strategy. & quot;The capex-heavy rail sector enjoys the kind of defensive, competitive advantages - or, in his parlance, & quot;moats & quot; - that Mr Buffett seeks out. & quot;In spite of weaker operating trends this year, it has recently thrown off cash over the cycle. & quot;The rate at which Burlington converts its profits into cash has fallen from a peak of more than 80 per cent to 55 per cent this year, estimates Davenport & #38; Company. & quot;But the company should still generate & #36;870m in free cash flow this year, after capital expenditure of more than & #36;2.5bn. & quot;So, cash heavy, a strategic position, and some added benefits of huge property holdings and part of what will become a more vital piece of infrastructure in the US as it slowly becomes greener and more carbon conscious.It could be one of those deals that helps lift America's flagging confidence because of Buffett's wide appeal to Americans of all types as a great American hero. (He's not a banker).It is also a bet that Australia will find encouraging, with our heavy dependence on carbon in our exports and economy.Some US commentators have claimed it is also a punt on new clean coal technologies coming to the fore in the next decade (Buffett may not be around to see that). It & #160;also gives defacto support for some sort of emissions/carbon trading and control system.For a country the size of the US, it is also a punt on rail becoming a dominant mode of transport when compared to road which has a higher carbon use and footprint.It is also & #160;a bet that, & #160;whatever system of carbon control and reduction America adopts, & #160;the cost of carbon will rise, making trucking more and more expensive, and in turn helping rail to become more attractive as a transport mode, especially over shorter distances.So even if coal carriage falls as less is consumed, more general cargo, grain etc, will be carried on Burlington.But & #160;Burlington will still be carrying lots of coal every year for years to come, plus some oil and other products.It is also a huge grain carrier (food), as well as cars and other consumer and industrial goods. & #160;More than a quarter & #160;of its & #36;US10.7 billion & #160;in revenues in the first nine months of this year comes from coal transported from the huge Powder River Basin coal mining complex in Wyoming and Montana to power stations across the middle, south and west of the country.And with coal powering for just over half America's electricity, it is not going to go away quickly, no matter what the greens and others think or claim.According to Burlington's Web site, the coal it hauls generates more than 10% of America's & #160;electricity, with 50 of the most efficient and lowest polluting stations on top of that list.And Burlington has other assets: & #160;its & #160;track networks and rights of way are & #160;positioned to benefit from any & #160;expansion of US coal-fired electricity generation in the next 20 years, coupled with clean coal technology to help curb & #160;CO2-dioxide emissions.Power stations could be built next to its rail networks, so long as multi-state distribution systems can be built, which has been a big restriction in recent years.That might be all well and good, but for greens and others, it's coal, full stop. But it is the reality in the US.The deal is Buffett's biggest ever takeover & #160;and involves cash and shares in Berkshire Hathaway worth & #36;US100 for each Burlington shareIt's the first time in a decade Buffett has offered shares in a takeover; his many other deals have been all cash, so he will have more shareholders to accommodate in Omaha at next May's annual meeting.It is also the latest in a string of deals done during the current recession and crisis that has seen him lock up some enormous gains:He owns billions of dollars of debt (paying 10% or more) and shares in some of the following groups, Wrigley, Dow Chemical, Goldman Sachs, General Electric, Harley Davidson and Tiffany's the luxury jewellery group (Buffet's Berkshire is actually America's biggest jewellers).In some respects Buffett was a lender of first and last resort for these companies who needed to money to make a deal work (Dow and Wrigley), or just needed the money and his name when times were tough (GE and Goldman Sachs).Unlike those deals, where Buffett was sought out by the companies involves, this & #160;was an approach from Buffett himself to Burlington management, so it's an aggressive move from that respect, not reactive. & #160;The deal makes Berkshire an & #160;industrial giant, adding to the & #160;existing interest in power generation, manufacturing, building materials, housing and real estate, besides the huge insurance businesses based on General Re and Geico.Plus his huge investment portfolio where Burlington first appeared around two years ago. & #160; http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091105/27/29lo6.html Fri, 6 Nov 2009 08:008:00 GMT Shares and other listed growth assets have hit an air pocket in the last two weeks - with most share markets down between & #160;5 to 7%.AMP Capital Investor's chief economist and market strategist, Dr Shane Oliver, says it's & #160;too early to say that pull back is over, but & #160;doubts the cyclical bull market in shares and other listed growth assets that started in March is over.He said it's possible & #160;that shares are transitioning from a P/E driven rally to one which is more dependent on earnings growth and more constrained returns going forward. http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091104/27/29kyz.html Thu, 5 Nov 2009 08:11:00 GMT This is good news for Australia: China will grow faster next year than many forecasters think, according to the World Bank, and this will drag up growth levels elsewhere in the Asian region.As Australia is on Asia's doorstep, its the most important destination for our exports.We are a major supplier of commodities, mineral and rural, so it's encouraging news, even as many exporters face margin pressures from falling returns because of the stronger Australian dollar, which in turn will put further pressure on our terms of trade and national income.According to the World Bank, China's 2009 growth & #160;will end up higher than forecast and its 2010 growth, while less than this year's (at this stage of the forecasting cycle), will be higher than estimated earlier this year.The World Bank & #160;lifted & #160;China's economic growth forecast for this year to 8.4% from 7.2% and 6.5% earlier this year, thanks to the & #36;US585 billion stimulus package revealed a year ago, and the associated record & #36;US1.27 trillion in bank lending in the nine months to September. & quot;With projected growth of 8.4 percent in China this year and the country's domestic demand racing ahead of global demand, countries exporting consumer durables, electronic components and raw materials to China have felt the positive flow-on effects. & quot;As a result, the World Bank is projecting growth of 6.7% in 2009 for developing East Asia and the Pacific and 7.8% for & #160;next year, & quot; the bank forecast.The bank said that & #160; & quot;East Asia's rebound from the economic downturn has been surprisingly swift and very welcome. & quot;A year ago, exports and industrial production fell sharply across the region, layoffs were on the rise, and capital flowed out weakening asset prices and currencies. & quot;A vigorous and timely fiscal and monetary stimulus in most countries in East Asia led by China and Korea, along with decisive measures in developed economies to prevent a financial meltdown after the collapse of Lehman Brothers, have stopped the decline in activity and set in motion the regional rebound. & quot;The shift to inventory restocking since mid-2009 has also helped boost growth. & quot;These factors have led us to revise our projection for real GDP growth in developing East Asia up by 1.3 percentage points since the previous forecast in April. & quot;All in all, real GDP growth is set to slow to 6.7 percent in 2009 from 8 percent in 2008, & #160;or much more moderately than after the 1997-98 Asian financial crisis. & quot;Developments in East Asia remain strongly influenced by China. Take China out of the equation, and the rest of the region is recovering with less vigor. & quot;For 2009 as a whole, output is projected to contract in Cambodia, Malaysia and Thailand and barely grow in Mongolia and some of the Pacific islands. & quot;Even with solid growth in Indonesia and Vietnam, developing East Asia excluding China is projected to grow more slowly in 2009 than South Asia, the Middle East and North Africa, and only modestly faster than Sub-Saharan Africa. & quot;China's & #160;third quarter growth hit an annual 8.9% rate in the third quarter. & #160;The World Bank said the economy will grow 8.7% next year, more than an earlier estimate of 7.7%.It said that recovering & #160;housing construction and a turnaround for exports will help the economy pick up next year even as overall growth in investment falls by about half. & quot;More policy measures will be needed to rebalance growth in China, & quot; the World Bank said. & quot;Structural reforms to unleash more growth and competition in the service sector and stimulate more successful, permanent migration would be particularly welcome. & quot;The bank forecast exports to turn positive in 2010 (in fact some domestic analysts in government think tanks say exports will turn positive this quarter, possibly from November and December onwards because of the sharp falls experienced at the end of last year).That rise in exports next year & #160;may boost growth by & #160;0.4% & #160;after slicing an estimated 3.4 percentage & #160;points off this year's expansion.Domestic demand will contribute about 8.2 percentage points to growth next year, down from 11.9 percentage points this year. & quot;China's export growth is likely to resume, helped by strong fundamental competitiveness and the recent depreciation of the nominal effective exchange rate, & quot; the report said.The current account surplus is estimated to shrink to 5.5% of GDP this year and 4.1% in 2010 from 9.8% in 2008.But while there's a concern for possible asset bubbles in the World Bank update, there's no need for an immediate & #160;move by China.The Bank's & #160;senior China-based economist Louis Kuijis says & #160;the central bank will & quot;eventually & quot; have to rein in credit to ensure resources are properly allocated and & #160;the & #160;bank's & #160;chief economist for the East Asia & #38; Pacific region, Vikram Nehru warned that risks to a sustainable recovery remain. & quot;Some governments in the region will have the fiscal space to sustain fiscal stimulus until recovery is on a firmer footing, & quot; he said. & #160; & quot;The time to begin removing monetary accommodation may come earlier however, especially given concerns about asset price bubbles, & quot; he was quoted as saying in a release from the World Bank. & quot;Risks of asset-price bubbles and misallocation of resources amidst abundant liquidity need to be addressed, & quot; Mr Kuijs said, adding that while there's currently no need for a & quot;major tightening, & quot; the costs of sustaining the current expansionary policy stance & quot;will increase over time, & quot; he said.The bank warns that the rebound has yet to become a recovery. & quot;That is why the authorities in the region are mindful of the risks of a premature withdrawal of stimulus, given the large output gaps and concerns that developed countries are converging to a slower-growth equilibrium. & quot;Some governments in the region will have the fiscal space to sustain fiscal stimulus until recovery is on a firmer footing and private investment has been restarted. Others will be more restrained because of limited & #160;fiscal space. & quot;Overall, governments are aware that fiscal and monetary stimulus alone cannot sustain domestic demand for an extended period of time, especially if investors are not reassured that the authorities will have viable exit strategies in place and will bring government debt to levels that will not jeopardize long-term debt sustainability. & quot;And if the rebound in developed economies stalls or takes longer to become a recovery, the World Bank also warns that there are & quot;limits, moreover, to what fiscal and monetary policies can accomplish if recovery in the developed countries, notably the U.S., remains weak for a longer period than currently deemed likely. & quot; & #160; http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091104/27/29kyy.html Thu, 5 Nov 2009 08:10:00 GMT The US Federal Reserve has moved to make sure the markets fully understand that there will be no change in American monetary policy.There's been a rising tide of disquiet about a possible change in policy, signalled by the wording in the post-meeting statement which was made just after 6.15 am, Sydney time, today.Specifically this & #160;sentence: & quot;The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. & quot; & #160;That's considered to be the key statement on the current monetary policy stance.In fact the Fed not only maintained the existing wording, but extended it to make very clear there was no reason why anyone should think rates should rise. & quot;The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. & quot;So if anyone thinks that a blip up in production, a jump in sales, or a rise in inflation in a month or three, will produce a rise in rates, then they should take a bex, have a lie down and re-read this sentence.No danger from inflation and the still large output gap (plus high unemployment) means no need for a rate rise for & quot;an extended period of time & quot;.Some hawks in the commintariat claim this means the Fed has 'fiddled with the statement' as they said it would and given a clear list of factors that would influence a rate rise.But inflation trends and expectations have always driven Fed rate decisions: every statement mentions them when rate rises have changed.It's the mention of & quot;low rates of resource uiltization' that is new in this context and the more important factor; which means it is the one to watch. So industrial production capacity utilisation, factory orders, inventories and above all, unemployment, will all bear watching. & #160;As the World Bank remarked yesterday in a report on China and much of Asia's prospects, 'the rebound has yet become a recovery', despite some claiming to see signs to the contrary.US car sales improved last month, joining those in Japan, South Korea and parts of Europe, thanks mostly to the tax and other support from government stimulus spending.In America's case there seems to have been some market & #160;growth, although many of the sales represent vehicles being delivered under the cash for clunkers scheme.US car sales hit an annual rate of a touch under 10.5 million units a year, a rate not seen for a year except in the clash for clunker boom months of July and August.US factory orders rose a stronger-than-expected 0.9% in September, and inventories continued to shrink, improving prospects for a sustained economic recovery.It was the fifth month out of the past six American manufacturers saw orders rise.However Reuters reported that because the factory orders report showed a sharper cut in inventories than the Commerce Department had reported last week, analysts said it could mean third quarter growth was weaker than the first reading of a 3.5% annual rate, implied.The Commerce Department said last week that a slowdown in the rate at which businesses were liquidating inventories in the second quarter added nearly a percentage point to the increase in US gross domestic product.Reuters said that based on Tuesday's factory data, JPMorgan Securities Global Economic Research said it cut its estimate for third-quarter growth to 3.1%.But Asian economies are doing better than expected, and Europe is now expecting stronger growth in 2010 (0.7%, instead of a slight contraction), according to the & #160;latest forecasts from the European Commission.But this won't be enough to force the European Central Bank to change rate policy tonight, our time, nor the Bank of England, which also meets around the same time. & #160;The US economy has struggled out of recession and there's been a continuing flow of good data from manufacturing and the service sector: but consumer spending remains very weak and that, along with the weakened banking system, are the main drags on the economy getting stronger faster.Housing is doing well, but judgment should be withheld until we see a couple of months without any support from home buying tax breaks. It could be a very different story.Governments in China, Europe, and even Australia would agree given that the US financial markets remain the key to global confidence.A senior Fed official & #160;Jon Greenlee, associate director of the Fed's Division of Banking Supervision and Regulation, warned this week that & #160;America's banks face the rising risk of & #160;sizeable new loan losses, particularly on commercial property, and & #160;some banks may not have enough & #160;capital to fully protect themselves against losses.As most of the 116 banks to have failed in the US this year have been taken down by unsustainable losses on commercial or home mortgage lending, his comments, have a & #160;loud ring of certainty. & quot;Credit losses at banking organizations continued to rise, and banks face risks of sizable additional credit losses given the outlook for production and employment, & quot; he said in his opening remarks & #160;to a Congressional Committee. & quot;Poor loan quality, subpar earnings, and uncertainty about future conditions raise questions about capital adequacy for some institutions. & quot;In this environment, borrowing by businesses and households has remained weak. The available data suggest that household and nonfinancial business debt likely decreased in the third quarter after having contracted in the first half of the year. & quot;For households, residential mortgage debt and consumer credit fell sharply in the first half of the year, and the decline in consumer credit continued in July and August. & quot;Nonfinancial business debt also decreased modestly in the first half of 2009 and appears to have contracted further in the third quarter as net decreases in commercial paper outstanding and bank loans more than offset solid net issuance of corporate bonds. & quot;Loans outstanding at depository institutions fell in the second quarter of 2009. In addition, the Federal Reserve's weekly bank credit data suggest that bank loans to households and to nonfinancial businesses contracted sharply in the third quarter as well. & quot;This confirms US banks remain too weak to finance a recovery and that it will be down to the Fed and the Obama Administration to do just that.Read the Fed statement and then read these comments: the US economy remains very, very weak and interest rates are not going to rise any time soon, perhaps for the best part of a year. & #160; & #160; http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091104/27/29kyx.html Thu, 5 Nov 2009 08:10:00 GMT Westpac yesterday completed the September 30 balancing bank profit reports with yet another example of how financially strong our big four are.The Commonwealth at June 30 started the trend with a rise in interest margins and strong rises in revenue and bank lending for home mortgages, plus a jump in interest income and the National, the ANZ and now Westpac have continued the trend.All had big rises in bad and doubtful debts thanks to poor and doubtful lending decisions; & #160;all grew & #160;revenues faster than costs (except the ANZ which is financing a move into Asia), all have built on their dominance of the local economy and all fattened their interest margins for the first time in years.So the latest news on higher bad and doubtful debt charges, a move that did frighten markets in May when the interim reports were issued, have this time been shrugged off as analysts and investors now wonder about the size of the coming rise in earnings.A New Zealand tax judgment remains a concern for all four: collectively it's around & #36;1.9 billion.Westpac has appealed its adverse funding and the possible huge payouts have been provided for and won't have an impact on the earnings of the banks, except in an accounting sense.All the banks have cut dividends and not given any real lead to shareholders about when they can expect their payments to be returned to former levels, except for Westpac, which has lifted its final (compared to its interim) in a sign that it might be a bit more confident than it seems from its commentary.Underlying earnings were strong (that is profits before the impact of write-downs and bad loan provisions) & #160;over the year.Westpac saw & #160;net profit down 11% to & #36;3.4 billion.But the real story can be seen from the following bald stats: & quot;Pro forma core earnings of & #36;10.015 billion, up 19%, Pro-forma revenue of & #36;16.755 billion was up 13%, Expense growth moderated over the year to 5%. & quot;The cost to income ration fell to 43.3 cents in every dollar from around 47 cents because revenues grew much faster than costs.Westpac lifted its net interest margin 0.31%, the best of the big three September 30 banks, up from 2.07% to 2.38%.That 0.31% margin topped the ANZ's 0.28% and the ANZ's rise of 0.17%.That means both Westpac and the ANZ managed to lift their margins by more than a normal Reserve Bank interest rate movement of 0.25%.A & #36;2 billion rise over the 12 months to September 30 took the amount set aside for, and doubtful debts for the full year, to & #36;3.29 billion.Westpac's total provisioning & #160;now stands at & #36;4.7 billion of which & #36;500 million covers for the possibility of a general decline in its customers' short-term ability to repay their loans (economic overlay is the jargon). & #160;Cash earnings & #160;fell, down 8% to & #36;4.6 billion.Final dividend was fixed at 60 cents a share, making the total pay-out for the year of & #36;1.16 a share.That's down 18% from the corresponding period a year ago. & #160;However, the group & #160;lifted its normal pay-out ratio as a share of net profits from 70% & #160;to 73%.And there hangs another story.A year ago Westpac actually lifted the final dividend 2 cents to 72 cents, after the collapse of Lehman Brothers and as the Australian and global economies slowed. The other banks were not as adventurous.Yesterday & #160;Westpac & #160;announced a 60-cent final dividend - down 17% from last year's final, but up 4 cents (7%), from the interim.That increase was not justified by the second-half results & #160;with cash earnings effectively in line with the first half, so & #160;an increase in the payout ratio was required to make it.But that tells us something about how the Westpac management and board view the outlook (and remember Westpac is more of a 'stay at home bank' compared with the NAB, ANZ and even the CBA with its small interests in Asia).They & #160;are & #160;more than a bit confident the coming year will turn out to justify the increased payout level (and so must regulators, which like to be consulted at the moment on capital payments and dividend levels).So as with the other big banks, the worst & #160;is & #160;behind Westpac & #160;and & #160;there are increasing profits to be had & #160;lending. & #160;As with & #160;the NAB and ANZ results, Westpac's & #160;story for 2009-10 is not about bad debt & #160;provisions and write-offs & #160;and & #160;lower profits.It's all about riding an economy that will be growing 2% faster than the federal government believed in May, and possibly more. http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091104/27/29kyw.html Thu, 5 Nov 2009 08:008:00 GMT The surprise fall in September's retail sales & #160;took some in the market by surprise and seems to have taken some of the steam out of the 'rate rise for Christmas' clamour that was around yesterday.The & #160;Aussie dollar dropped half a cent, falling back under 90 US cents when the figures were issued as traders saw the fall as lessening the need for a rate rise in December.The dollar then recovered the 90 cent level in afternoon trading and overnight ahead of the Fed's decision.. & #160;The ABS said Australian retail trade at current prices fell 0.2% in September to a seasonally adjusted & #36;19.719 billion from & #36;19.753 billion in August.That was after a rise of 0.7% in August (which was revised down from the first reported 0.9% increase).Over the September quarter, retail turnover & #160;fell by 0.4 % to & #36;56.959 billion in seasonally adjusted volume terms.That was after the 1.9% rise in the June quarter.But the ABS did point out & #160;that in volume terms, & #160;retail sales turnover rose 1.4% in the September quarter, which tells us that we have now had four consecutive quarters of rising retail sales volume growth, which again emphasises the slightness of our slowdown, compared to the US and Europe where retail spending remains at or below the levels of a year ago. & quot;The ABS said that & quot;sales fell, in seasonally adjusted terms, for Department Stores (-2.9%), Clothing, Footwear & #38; Other Personal Accessory Retailing (-0.8%) and Household Goods Retailing (-0.7%). & quot;However, Australian's are still enjoying eating out with sales rising in September for Cafes, Restaurants & #38; Takeaway Food Services (1.0%). & quot;The Northern Territory (-0.7%) recorded the largest drop in sales, followed by Queensland (-0.6%), South Australia (-0.6%) and Western Australia (-0.6%), the ACT (-0.5%) and NSW (-0.1%). Sales rose in Victoria (0.4%) in September and in Tasmania remained unchanged. & quot;Building approvals were more of what we have seen in recent months: private housing up and a rise & #160;in non-private approvals.The way approvals have gone, the non-private dwelling sector could see another downturn in October: it fluctuates according to finance and council approvalsThe ABS said & quot;The number of private sector house approvals rose for the eighth consecutive month, with a gain of 0.3% nationally. Both Western Australia (3.2%) and Victoria (2.4%) showed good growth in private sector house approvals, with Queensland (-5.4%) showing the largest fall. & quot;The seasonally adjusted estimate for total dwelling units approved rose 2.7% following a fall in the previous month. & quot;The seasonally adjusted estimate for private sector houses approved rose 0.3% and has risen for nine months. The seasonally adjusted estimate for private sector other dwellings approved rose 14.6% following a fall last month. & quot;Compared with September a year ago, private dwelling approvals are up 18.6% (and help explain the strong home lending going on, thanks to the first home buyers scheme).But & #160;private dwelling approvals were down 11.3% in the year to September, thanks to the slowdown in lending to investors and developers, which is only now starting to improve. & #160;The seasonally adjusted estimate for the value of total building approved fell 22.4% in September, the ABS said. & quot;The seasonally adjusted estimate for the value of new residential building approved rose 0.8% while the value of alterations and additions approved fell 1.0%. The seasonally adjusted estimate for the value of non-residential building fell 37.1%, & quot; the ABS explained yesterday.And & #160;the performance of services & #160;index was up in October to its highest level in 19 months.The index rose 5.5 points to 54.8, & #160;Commonwealth Bank of Australia and the Australian Industry Group said yesterday. & #160;The rise followed the Performance of Manufacturing Index for October which showed a slowing in the rate of expansion in the sector.Activity was still positive for the a third consecutive month in October, but the rate of growth fell 0.3 to 51.7 from 52 in October, indicating a slower pace of expansion.Falling employment and soft exports put pressure on the sector, according to the PMI from & #160;the Australian Industry Group/PricewaterhouseCoopers.(As with these surveys, any reading above the 50 point level separates expansion from contraction.) & #160; http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091104/27/29kyv.html Thu, 5 Nov 2009 08:008:00 GMT Naturally Telstra's chairman and chief executive were called upon by shareholders at yesterday's AGM in Sydney to & #160;fight the federal government's plans to force a break up of & #160;the company.Media reports said chairman, Catherine Livingstone and CEO David Thodey took dozens of questions from shareholders at & #160;AGM on the break up, on former CEO, Sol Trujillo's huge payout, and on that old bugbear, poor service.Both maintained the company line, that they were negotiating and would come back to shareholders for approval.They argued that remuneration is in line with industry standards, but incentive policies have since been tightened; and of course, customer service is paramount to the company, and is constantly being improved.(So why do the complaints keep coming?)But it's the break up idea that is generating the heat. The & #160;current newish board and management should thank the federal government. Without the break up issue, shareholders might have gotten even more upset at Mr Trujillo's multi million departure payout and by service questions.A look at the 57 page transcript & #160;of the AGM shows the dominant issues.Some shareholders were all bravado, calling for threats of High Court action (and if the High Court upholds the government and Telstra hasn't negotiated a deal, what happens then?) & #160;CEO, David Thodey maintained a construction line was important, as was good faith negotiating, and the need for shareholder involvement: & quot;We remain positively and constructively engaged with the Government on the issues of NBN; positively and constructively engaged, but I want to be very clear, we're under no illusions about the challenges that we face and this company faces, & quot; he said in his speech. & quot;We are absolutely committed to acting in the best interest of our shareholders. While we are negotiating with the Government, the ACCC and NBN Co, we have shareholders at the forefront of our mind at everything we do. & quot;We all want certainty as we come out of this process. We want a solution that satisfies the & #160;disparate requirements of each of the stakeholders as we work through this and that at the end of the day we will have greater certainty about how we run this business going forward. & quot;It is critically important that we do that. Everything that we do must be in the interests of our shareholders and that will be the only thing that we do, and of course, customers and employees. & quot;This is an extremely complex negotiation as it covers so many different aspects of our business. & quot;He added: & quot;Can I promise that a mutually acceptable agreement will be reached? No. & quot;Do I think there is a pathway to such an agreement? Yes. & quot;What I can assure you is that the board and management will not agree to any proposals on the NBN ... or separation ... unless we are convinced that it will deliver fair value for you the shareholders of this company. & quot;In our submission on the bill ( to the Senate inquiry) we said that we opposed the bill in its current form. It is very important to be clear about this. & quot;While we do agree with the NBN vision, we do not agree with the bill in its current form. We believe that the legislation is unnecessary and not helpful at this time for very specific reasons. & #160; & quot;We are not opposed to the bill in its entirety. Of course we'd prefer it never to have happened, but now it is there, we have to take a position on the bill. & quot;Mr Thodey reassured investors that whatever the outcome of its talks with the government, Telstra had the core asset to & quot;win in the market & quot;.Mr Thodey also emphasised the issue of customer service. & quot;Customer service is very important for us ... and while we have many areas where we can improve ... we are committed to making the necessary changes, & quot; he said.The smartest & #160;move Telstra made yesterday was scrapping the absurd & #36;2.20 administration fee for people paying their bills over the counter or by mail less than two months after it was introduced on September 14. & quot;We tried to impose this change without first listening to the people it would affect, & quot; Mr Thodey said.That's an understatement because Telstra spokespeople argued for it in numerous media situations (interviews on radio, TV and in newspapers). Now it's gone. & quot;That is not consistent with my commitment to put customers at the heart of everything we do, & quot; Mr Thodey said.But he & #160;said Telstra & #160;still wanted to encourage customers to use electronic payment methods. & quot;That being said, I still believe electronic payment is the right way to go ... and we do intend to introduce some electronic-only plans in the future ... & #160;it will be your choice if you want to use them, & quot; he said.Mr Thodey also reiterated the company's guidance to post low single digit growth in revenue, earnings before interest, tax, depreciation and amortisation (EBITDA) and EBIT in the current financial year.Telstra shares rose one cent to & #36;3.23, still in the same range as it was before the NBN/Separation proposal was made public.And that is something to remember. The big money guys will sell Telstra if there's a bad deal. & #160;Some big shareholders don't like it, but they are a minority and mostly linked to one or two groups of fund managers.Most mainline analysts have holds on Telstra while they sensibly await the details of the deal the company and the government are trying to achieve. & #160; http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091007/27/293lj.html Wed, 4 Nov 2009 11:55:00 GMT The market is down 115. & #160; The SFE Future were down 118 this morning.Wall St. had a shocker on Friday closing down 250. It broke even at best and was down 278 at worst. It has its largest intraday fall since July 2. All ten major sectors closed down. Metals fell in London and both the oil and gold price finished lower, 3.59% and 0.64% respectively. The Aussie dollar also fell to 89.72c versus 91.47c. Economic data released was broadly in line with expectations but failed to excite.Making the news today...Myer floats today at 12pm. They could not have had a more unfortunate run up to the listing - the market fell 4% last week and we are down another 2% today.Rio Tinto (RIO) is hosting an investor presentation this morning in Sydney. No real surprises. It wants to improve its relationship with China, its biggest customer. Balance sheet is starting to look a lot healthier and expects to complete its iron ore JV with BHP by mid next year. RIO down 3% to 6184c.Woodside Petroleum (WPL) has sold its 51.55% stake in Otway natural gas project in Australia's Victoria state and permits to a unit of Origin Energy (ORG) for & #36;712.5m. It wants to focus on major projects such as its multibillion dollar Pluto and Browse liquefied natural gas terminals in WA. WPL down 87c to 4683c.AGL Energy (AGK) says it hasn't ruled out bidding for NSW Energy Assets despite media speculation suggesting it was no longer a consideration. & #160; AGK down 12c to 1375c.Energy Developments (ENE) has decided to knock back a takeover offer from private equity form, Pacific Equity Partners, after an independent expert labeled the offer inadequate. It is holding out for a higher bid. PEP has offered 265c a share for 100% of the company. They point out that the report says the offer is & quot;neither fair nor reasonable and is not in the best interests of Energy Developments shareholders taken as a whole & quot;. ENE down 1c to 239c.Programmed Maintenance (PRG) has successfully completed its Institutional entitlement offer. PRG down 1.5% to 415c.Australian PMI fell 0.3 points to 51.7 in October. Still a good result considering an index reading of above the 50-point mark indicates expansion in activityTreasurer Wayne Swan releases the government's mid-year economic and fiscal outlook today. It is likely to include improved economic growth and labor market forecasts. The expected unemployment rate is also expected to come down to single digits.Stockland Group (SGP) appoints Tim Foster as its new CFO. SGP up 1c to 378c.Qantas Airways (QAN) said its passenger numbers increased 6.6% to 3.42m in September, up from 3.21m a year ago. QAN down 8c to 271c.The Dow Futures were up 20 at 11:40am & #160;For a free 5 day obligation free trial of the MARCUS TODAY newsletter (and no we won't ask for a credit card number) click here or go to www.marcustoday.com.au http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091103/27/29k77.html Wed, 4 Nov 2009 08:41:00 GMT While the & #160;Reserve Bank & #160;followed form and lifted its key interest rate by 0.25% to 3.50% yesterday, there's a tip of another kind from the post meeting statement: watch the impact of the Australian dollar.The stronger dollar is already causing pain to exporters, tourism operators, some importers and others, but stands to cause more with the bank suggesting the 90-plus US cent valuation is here for a while.The bank said in its post-meeting statement & quot;The Board noted that the rise in the exchange rate is likely to constrain output in the tradeables sector and dampen price pressures. & quot;In other words resource companies and other exporters (and companies receiving dividends and other payments from offshore) will find it much tougher, while those domestic businesses who ride the dollar down (retailers, cars etc) will gain, or rather, have to watch their pricing and margins as the currency's strength exerts continuing downward pressure on prices. & #160;It's a tip for investors to watch.Already quite a few companies (CSL comes to mind immediately) have warned of the impact of the dollar in lowering offshore revenues and earnings; while Harvey Norman's Gerry Harvey says his group is already finding it hard to maintain margins as the currency and cheaper pricing of tech products force prices downwards.The fall in income in the tradeables sector will add to the already substantial fall in our terms of trade that has occurred.In fact the terms of trade could end up down a bit more than the 30% estimate earlier in the year from many forecasters.That will be like an interest rate increase.But despite the undoubted inflation-limiting pressure, the RBA saw the need to lift interest rates by another quarter of a per cent yesterday.The decision was revealed in a statement & #160;after the bank's board met in the & #160;morning.In fact it was more of the same from the central bank and it left open the possibility of a further rate rise in December, or one in February or whenever.The senior economist at AMP Capital Advisors, Robert Cuneen said: & quot;Another 0.25% is likely at the next December's RBA Board meeting, with further incremental policy tightenings to be expected over the course of 2010. & quot;AMP Capital Investors expects that the RBA will progressively raise Australian nominal interest rates towards 5.0% over the next year, taking Australia real cash rate back toward a more normal setting of circa 2.5%. & quot;Rory Robertson, the interest rate strategist from Macquarie had a similar view. & quot;The 50bp hike that was all the rage in markets a week or two ago never really was a goer, for the simple reason that the RBA is not trying to slow the economy at this early stage, not trying to nip Australia's hard-fought economic recovery in the bud. & #160; & #160; & quot;The RBA right now is much keener on a higher cash rate than it is on a slower economy. & #160; & quot;Its objective simply is to edge up its policy rate to more-normal levels, for starters from an emergency 3% towards a still-very-low 4%, while doing as little damage to the economy as possible. & quot; & #160;It is clear from the statement that the Bank is now back to 'situation normal' in its monetary policy deliberations. The urgency and sense of emergency has well passed.Now for the economy on a more regularised footing.So a rate rise could happen next month & #160;and tomorrow's September retail sales and building approvals and next week's jobless figures for October, will go some way to sorting out that question.The wording in the bank's final paragraph was again changed from the September meeting, to push the GFC further into the recent past.Despite the currency's strength, the RBA said that: & #160; & #160; & quot;Growth is likely to be close to trend over the year ahead and inflation close to target. & quot;With the risk of serious economic contraction in Australia now having passed, the Board's view is that it is prudent to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker. & quot;The adjustments at the October and November meetings will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead. & quot; & quot;Inflation has been declining for the past year. In underlying terms, inflation should continue to moderate in the near term, but now will probably not fall as far as earlier thought. & quot;Headline CPI inflation on a year-ended basis has been unusually low because of temporary factors, and will probably rise somewhat over the coming year. Both CPI and underlying inflation are expected to be consistent with the target in 2010. & quot;Housing credit growth has been solid and dwelling prices have risen appreciably this year. & quot;Business borrowing has been declining as companies have sought to reduce leverage in an environment of tighter lending standards. & quot;For many business borrowers, increases in risk margins are still coming through. & quot;The decline in credit has been concentrated among large firms, which have had good access to equity capital and, more recently, to debt markets. Share markets have recovered significant ground. & quot;So the GFC is dead, long live the past, as the Federal Government told us yesterday in its upgraded mid-year financial outlook.The Federal Government forecast growth of 1.5% in the current 2009-10 year, up from a forecast of a 0.5% contraction made in the May budget.The Government also slashed its projections for the unemployment rate, which is now expected to be 6.75% by & #160;next June, down from & #160;8.25% in 2011. & #160;The jobless rate is currently at 5.7%.RBA Governor Glenn Stevens speaks in Melbourne Thursday evening, and the RBA will produce its new forecasts for 2011 and beyond in its 4th Monetary Policy State for the year on Friday. & #160; http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091103/27/29k76.html Wed, 4 Nov 2009 08:40:00 GMT Tough times continue in the media sector, despite the market lifting share prices for major players in anticipating of a return to the good old days.The Kerry Stokes-dominated West Australian newspapers (WAN) saw its shares rise by more almost 3%, or 21 cents to & #36;7.51 after it reported & #160;an after tax profit of & #36;22.9 million for the 3 months to 30 September 2009, down 22.9% on the & #36;29.6 million for the same three months of & #160;2008.The shares did better than the market which was down a fraction on the day.The result was after a 14.4% fall in group revenue for the quarter to & #36;99.3 million from & #36;116.0 million.Group profit was off 22.2% at & #36;36.5 million (from & #36;46.9 million a year ago). The fall in the West Australian's contribution was a much bigger 27.9% over the three months.Investors picked up on the comments from CEO, Chris Wharton (a former Seven executive) that the & #160;result reflects an improvement of 18.6% on the average of & #36;19.3 million recorded in the previous two quarters. & #160; & quot;We are seeing positive trends and, almost without exception, we have seen week-on- week growth since August, & quot; he said in a statement to the ASX. & quot;We are encouraged by the results for the quarter and remain optimistic that the Western Australian economy will continue to strengthen and that the Group is well placed to benefit from this growth. & quot;We have made progress by focusing on the basics of quality content, circulation, advertising and effective cost management. & quot;We have not, and will not, lose focus on their importance to the long term sustainability of the business. & quot;Despite the improving performance, relative to the past two quarters, our results continue to be below those of the boom revenue levels that prevailed during the corresponding period last year, and this is likely to continue for the remainder of the calendar year. & quot;But & #160;despite this & #160;positive trend in & #160;the last two quarters, results remain down on the corresponding period last year.In fact much of the improvement in earnings came from the negative side of the paper's recent business history: savings from staff cuts and lower paper usage, which reflects the sharp, 20% & #160;fall in classified and display advertising.The company said earnings before interest and tax & #160;for the West Australian, the major money spinner, were off almost 28% at & #36;30.1 million from & #36;41.8 million a year ago. & quot;Total revenue was down 17.2% to & #36;73.2 million. Net advertising revenue down 21.0% to & #36;53.9 million and circulation revenue down 5.2% to & #36;16.8 million. & quot;Total gross advertising in The West Australian was down 20.7% on the corresponding quarter last year, with a 14% decrease in volume and a 7% reduction in the average advertising rate per column centimetre, due to a change in the mix of business. & quot;Net Circulation revenue in The West Australian was down by 5.2% on the corresponding quarter last year. Several factors contributed to the decline, including increased Distributor remuneration and reduced Saturday circulation. & quot;Circulation numbers have remained strong, relative to the same quarter last year, noting that last year's numbers inflated by the Olympics. & quot;Expenses in The West Australian for the three months ended 30 September 2009 were 7.7% lower than for the corresponding period last year. & quot;Total personnel costs fell 4.0% to & #36;18.5 million, as some of the savings from the voluntary redundancy program were realised in this first quarter. As expected, the full extent of the savings will not be achieved until the third quarter of this financial year. & quot;Newsprint expenses declined 16.7% to & #36;9.2 million, assisted by a 9.6% drop in paging. & quot;Distribution expenses fell 7.5% to & #36;3.8 million, as a result of optimisation of road freight arrangements. & quot;Other expenses fell 9.3% to & #36;7.1 million, reflecting ongoing tight management of costs. & quot;WAN holds its AGM in Perth later today. http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091103/27/29k75.html Wed, 4 Nov 2009 08:39:00 GMT The prospect & #160;of Leighton Holdings making a move on Macmahon Holdings & #160;has risen after the two contractors extended their memorandum of understanding covering & #160;their partnering on large infrastructure projects.The extension of the agreement was confirmed by announcements to the ASX yesterdayThe two companies & #160;have dropped a requirement in the original agreement that Leighton had to obtain Macmahon's written consent before extending its shareholding in the latter beyond 19.9%.That was the standstill section of the agreement that halted Leighton's attempt to built a substantial, but dominant stake in its rival.Leighton now holds 19% of Macmahon and has been widely tipped to be aiming to extend the stake to 30%, which was the aim of Leighton when it originally moved on Macmahon two years ago.Macmahon said the new MOU was effective from November 2, with no termination date.Macmahon said the original MOU, signed in November 2007, had improved Macmahon's ability to win large infrastructure projects both domestically and offshore.Macmahon's chief executive, Nick Bowen, said both companies benefited from the relationship.He & #160;said that the agreement allows Macmahon to continue to increase its ability to win additional large infrastructure projects in the domestic and international markets. & quot;By joint venturing on construction projects with companies owned by Leighton Holdings, we will add to our skill set and further develop our expertise, particularly in relation to large scale and technically complex projects. & quot;The renewal of this agreement is a positive step and shows that both Leighton and Macmahon are benefiting from the MOU. This continuation displays the commitment to work together on an ongoing basis to achieve excellent outcomes and add value to both companies. & quot;Furthermore, a bigger, stronger and expanding Macmahon is not only beneficial for our shareholders but is also a positive for Leighton's shareholders, & quot; Mr Bowen said.Leighton shares were up just over 1% yesterday to & #36;34.84, while Macmahon shares rose more than 6% or 4 c to 57.5c in anticipating that Leighton would resume buying.And, still in the same sector, engineering and maintenance company United Group Ltd has officially changed its name UGL Ltd, following shareholder approval at last week's AGM. & quot;The renaming of the company to a single recognised umbrella brand is important for a business which incorporates so many well known but diversified trading entities assembled through an aggressive growth and acquisition strategy these past 10 years, & quot; chief executive Richard Leupen said in a statement. & #160; http://au.rd.yahoo.com/finance/news/rss/air/*http://au.biz.yahoo.com/091103/27/29k74.html Wed, 4 Nov 2009 08:38:00 GMT Lend Lease's & #160;acquisition of the rest of Lend Lease Primelife Group (LLP) & #160;it doesn't already own, has received the support of Primelife's independent directors and an independent valuation report..Lend Lease last week entered into a scheme of arrangement for the acquisition of the remainder of Primelife's issued stock for 31 cents per security.Lend Lease currently owns 43.2% of Primelife, a retirement homes and seniors accommodation provider known formerly as Babcock & #38; Brown Communities Group.The total capital outlay associated with the acquisition is about & #36;170 million, which Lend Lease has said would be funded from existing cash reserves and debt facilities.Primelife yesterday lodged the scheme booklet with the Australian Securities and Investments Commission (ASIC), which includes supporting statements from the independent directors and independent expert Deloitte Corporate Finance.Deloitte concluded that the share scheme and the terms of the unit scheme were fair and reasonable and in the best interests of Primelife security holders and Primelife's independent directors unanimously recommended security holders vote in favour of the proposal at meetings scheduled for December 8.In fact the independent expert's report gave ample reasons why shareholders in Primelife should take the money and run.It argued that without takeover the company would find it harder to reduce gearing to the target range of 20%-25%There was & quot;the & #160;requirement of LLP's banks for LLP to reduce bank debt by approximately & #36;100 million to a facility limit of & #36;350m by June 2010; and & #160;the need to renegotiate the remainder of the bank facility by 18 December 2010. & quot;As well, the company's & #160;net debt (comprising bank debt and convertible notes) & quot;as at 30 June 2009 is equivalent to a 44% gearing ratio. & quot;If the Proposal is not approved, the LLP Board's view is that the appropriate amount of additional capital to raise is not less than & #36;300 million, through a combination of an equity raising and assets sales, in order to achieve the target level of gearing. & quot;Compared to the & #36;0.31 cash in the hand offered under the Proposal, the LLP Board has identified & #160;in the Booklet a number of concerns about the potential of equity raising and assets sales that will otherwise have to be undertaken if the Proposal is not approved and implemented. & quot;These concerns include: & quot;Equity raising: The risks and uncertainties associated with a highly dilutive equity raising that would need to be priced at a substantial discount to the market price of LLP Securities and would likely result in a material reduction to LLP's NTA and NAV. & quot;Further there is no assurance that LLP would be able to successfully complete a significant equity raising given the risk that a highly dilutive equity raising may not be broadly supported by securityholders, including LLC. & quot;Asset sales: LLP may be required to sell high cashflow yielding assets. The LLP Board is reluctant to initiate large scale asset sales in the current environment because of the potential impact this would have on the LLP business model and future cashflows and gearing. & quot; & quot;LLP Independent Chairman, Andrew Love said, & quot;The Proposal offers LLP Securityholders the certainty of cash payment for their stapled securities at a premium to the recent trading price for LLP securities, it & #160; exceeds the net tangible asset backing of an LLP security and it is unanimously recommended by the LLP Independent Directors in the absence of a superior proposal. & quot; & quot;The Proposal represents a compelling alternative when considered against the uncertainty and risks associated with a highly dilutive equity raising and the sale of assets in a weak market, which the LLP Board will need to implement if the Proposal does not proceed & quot; Mr Love said. & quot;Lend Lease shares were up 6 cents at & #36;9.28 then fell & #160;in the afternoon to be down 11 cents at & #36;9.11. LLP securities were steady on 30 cents. & #160;