Well done John
Howard. It takes a sensible politician to change course when he is shown to be
out of touch with the views of 80% of voters. It takes a good leader to allow
a conscience vote when his cabinet had said “nyet!” Potential therapies based
on stem cells science are far too important to be ignored. It would be foolish
to throw away Australia’s position of global
leadership because of scientific ignorance or the dogmatic religious beliefs of
a minority of influential politicians.

To international
economic news, the US Fed received some good news overnight with the release of
the latest Producer Price Index showing core which showed producer prices
excluding food and energy fell 0.3% last month, well below forecasts for
a slight increase. The lower than expected PPI data bodes well for the release
of tonight’s US consumer price data.

Henry says: Global
financial markets are still jumpy but US equities rose after better than
expected PPI data. Benchmark ten-year notes increased $5.00 for each $1,000
invested in price, while yields dropped to 4.92% from 5.00% late
on Monday.

This week’s ABC News/Washington Post Consumer Index shows that US consumer confidence has hit a
two-month low, losing three points to -15 on the scale from +100 to -100.
Although consumer confidence held stable for much of July, the measure has lost
five points over the last fortnight as petrol prices continue to surge and there
are growing signs that the economy is slowing.

With low
employment growth and slower than expected PPI data, if tonight’s CPI data shows
that inflation is on the wane, the Fed may well have engineered the soft landing
for the US economy – allowing them to pause
further over coming months.

Locally, wage
price data released by the ABS this morning shows that Australian wages are
rising slightly faster than expected. The index for all employee jobs in
Australia increased by 1.1% for the
June quarter, for an annual rate of 4.1%. Economists were
expecting a 1% rise in the June quarter, for an annual rate of 4%. Although not
a source of too much concern, Henry is sure the RBA would have preferred
wage growth to be lower.

Henry Thornton.

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