Inflate: The Consumer Price Index is out tomorrow and most market guesses are for a quarterly figure of around 0.7% and annual of around 3.0%, down from 3.4% in the December quarter. Today the Australian Bureau of Statistics reported that producer prices were up a solid 1% in the March quarter at the final stage. That’s after rises of 1.0% at the preliminary stage and 1.2% at the intermediate level. Producer prices fell over the year to March by 0.1%. Seeing there was a fall of 0.4% in the December quarter in final stage prices (and one of 1.5% for the 12 months to December), there was a noticeable firming in price pressures at the producer level in the quarter.

Inflate 2: The ABS said the PPI rose “mainly due to price increases in building construction (+0.6%), petroleum refining (+8.1%) and electricity, gas and water supply (+3.3%)”. These were “partially offset by price decreases in commercial fishing (-12.2%) and other food product manufacturing (-1.6%).” The PPI has little relationship to movements in the CPI, except where government charges for water and electricity are involved. They impact not only producers but consumers in similar ways. Domestic costs rose 1.0% and imports, 1.4%. The ABS said imports were affected by price rises for industrial machinery and equipment manufacturing (+3.4%), petroleum refining (+7.3%) and other chemical product manufacturing (+3.2%). These increases were partially offset by price falls in photographic and scientific equipment manufacturing (–1.9%) and other food product manufacturing (–1.7%).”

Titanic’s deck chairs are still sliding: Another set of depressing circulation figures for US newspapers. The latest US Audit Bureau of Circulations daily average circulation figures for 602 newspapers showed a small improvement on the previous six months, but not on the corresponding six-month period ending March, 2009. In the October-to-March six months, circulations fell an average 8.7%, against the 10.6% fall in the six month to last September and a 7.1% fall in the six months to March 31, 2009. Over the year newspaper sales have fallen by more than 19%, which is dreadful. The loss in sales is better than the 27% drop in revenues from advertising and circulations in 2009, or the slight improvement to a 23.7% fall in the final quarter. Sunday circulations improved to be down 6.2% against 7.5% in the September six months, but worse than the 4.6% drop in the six months to March, 2009.

Murdoch’s good news. The Wall Street Journal, which launched its New York insert overnight to taken on the New York Times, saw an 0.5% rise in sales to 2.095 million. That was an extra 10,000 sales a day. But that is also misleading because the Wall Street Journal includes online subscriptions that are claimed by the paper to be more than one million. According to this story in November 2007, the paper said it had just over one million online subscriptions. Overall circulation at the Journal, comprising print and online, dropped 1.5% to 2.01 million during the six months ended September 30, 2007. So the Journal’s combined circulation is less than it was two-and-a-half years ago. If it has more than one million subscribers online, it has about a million actual newspaper sales.

Murdoch’s bad news: The New York Post, Col Allan’s black hole, is still dying, gradually; it lost another 5.94% in circulation in the six months to March 30. That’s another 33,100 copies on top of the 114,000 copies a day lost in the same six-month period of March 31, 2009. That was a loss of 20.55%. All up its lost total of 26% of its sales in the past year to 525,004 copies in the latest audit. There won’t be an exulting of that performance at News, or even any discussion in public. The Post is part of Murdoch’s Wall Street Journal assault on the New York Times with discounted ad rates for both papers for advertisers. The hated rival, The New York Daily News saw its circulation drop 11.25% to 535,059, so it still sells more than the Post.

New York Times and others: But the circulation news at other big US publishers was rotten. Daily sales of US Today, the Gannett Co national daily, fell 13.6% to 1.83 million as business travel remained depressed and hotels and airlines maintained cost cuts, which led to them eliminating one paper for guests and passengers. The New York Times dropped 8.5% to 951,063, remaining under the the one million copies a day mark weekdays. The NYT however, has the largest Sunday circulation, averaging 1.38 million, down 5.2%. The Tribune Co’s Los Angeles Times‘  circulation dropped 15% to 616,606 copies a day. The San Francisco Chronicle shed 22.68% to 241,330 and New Jersey’s Newark Star-Ledger slumped 17.8% to 236,017 copies a day. And figures out yesterday show that US magazines are doing it tough. Industry wide magazine ad revenue fell 3.9% in the first three months to $US4.05 billion on a 9.4% fall, according to the Publishers Information Bureau. Ad sales plunged 20% in the first three months of 2009 and 12% in the past three months of the same year, so the latest figures represent a considerable easing in the strain.

Poor Joe Hockey: As a man with an economics degree and experience in the private sector, Hockey is awfully ignorant as a politician about ripoffs and fairness for the biggest group of people, voters and investors, who are one and the same in these days of compulsory super and retirement. The federal government has finally responded to abuses such as  Storm, Opes Prime, Westpoint and a string of failures by companies with solid boards (Allco Financial Group, Babcock and Brown) with wholesale changes to the ways financial advisers charge their clients and what will and won’t be allowed, such as commissions of all types. Small investors and victims groups either cheered, or said the changes were just enough, and more could be done.

Poor, poor Joe: And what was Joe Hockey’s response to the change from the government? Well, according to this article in Monday’s Australian: “Opposition Treasury spokesman Joe Hockey last night described the proposal as “small-minded and populist”. “But it is also wrong,” Hockey told The Australian. “It will hurt small businesses.” Hockey said commissions allowed low-income earners to access financial advice because they paid through commissions, not upfront fees. Under Financial Services Minister Chris Bowen’s proposals, they would simply be unable to afford any advice, he said. The best that can be said that Joe is a politician, willing to say anything to gain the support of anyone. The worst that can be said, that he has willfully ignored the Storm, Opes Prime, Westpoint and other rorts, all of which happened under a financial regulation regime that his previous government left in place for too long and didn’t update.

And his leader? Well Tony Abbott was no better, echoing Hockey’s ignorant sentiments. Neither realise that financial advisers for the most part are despised, like journalists, real estate agents and politicians. Abbott vowed to block any ban on commissions. So now he thinks that the big banks, the financial planners own group and a host of others who support the ending of the commissions rip offs, are wrong. Not to mention all those investors who have had their savings destroyed or badly damaged by incompetent advice and high commissions. Abbott said the changes were unbalanced, just where that lack of balance occurred wasn’t made clear.

Squid still up to its old tricks; Someone isn’t worried about the fraud allegations in the US about Goldman Sachs. South Africa’s former central bank governor Tito Mboweni will join the Squid  as an international adviser, based at Goldman’s Johannesburg office and provide strategic advice to the US bank on business development opportunities, with a focus on South Africa and sub-Saharan Africa. Mboweni left the South African Reserve Bank in November after a 10-year stint. He was made chairman of AngloGold Ashanti, Africa’s biggest gold producer, in February and is chairman of a packaging company. The Squid and the US Senate’s Permanent Investigations Committee conducted a war of emails over the weekend ahead of the appearance of the Squid Seven (all current or former senior Goldman execs, including Fabrice Tourre) before the committee, tonight, our time. The Republicans voted to block discussion of the proposed new financial control legislation in the Senate a few hours ago. They want more changes.

Peter Fray

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