Galah alert. So what do the noisy galahs in Paul Keating’s pet shop (as they urge the Reserve Bank to again cut interest rates) say now after the March jobs data from the Bureau of Statistics? Of course, the first move is to continue to cast suspicion on the reliability of the data, which is understandable given the many past problems. But other economists say the figures for March look credible.
If you look back over the past year (and accept the credibility problem), how do you explain the 231,600 new jobs added in the year to March, and more than 155,000 in the last five months (both figures are on the more accurate trend basis, not the more volatile seasonally adjusted)? The trend unemployment rate has shown no change for eight months at 6.2% (the trend series is supposed to take out the volatility from the monthly seasonally adjusted figures). The seasonally adjusted rate dropped to 6.1% last month with more than 37,000 new jobs created. But that surprisingly high figure was topped by the revised figures for February — 42,000, up from the originally reported 15,600. Of all the recent public and private economic reports about the economy, this one is the most positive, with the monthly jobs growth now above the normal growth in the labour market. That’s why unemployment has starting to ease lower. But let’s wait and watch the figures for another three months to see if the improvement is sustained. The dollar was up more than a cent this morning, having topped 78 US cents and then come back a tick. That’s the downside from the solid jobs report, the currency really should be at 70 US cents or lower. Next Wednesday, another figure for the galahs to cackle about: the March-quarter Consumer Price Index. Rate cut postponed, anyone? — Glenn Dyer
Greece D (for Default) alert. IMF head Christine Lagarde overnight squelched Greek hopes of postponing or extending the deadline for two payments approaching 1 billion euros Greece has to make to the fund in May. Showing how idiotic Greece’s stance is now, the Finance Minister Yanis Varoufakis denied making an approach, despite Lagarde openly confirming it during the IMF/World Bank meetings in Washington. A day earlier, Standard & Poor’s downgraded Greece’s credit rating deeper into junk territory, but the only rating that now counts is D for Default. And German’s finance minister Wolfgang Schaeuble all but ruled out a deal next week. “Nobody expects that there will be a solution,” Schaeuble said of next week’s meeting.
Yields on Greek bonds and Treasury notes blew out — two-year bond yields soared nearly four percentage points to a massive 27%, and the yield on the 10-year bond almost reached 13%. Greece’s latest reform plan apparently contains little detail and eurozone finance ministers are not very happy. The two May payments to the IMF are part of the 9 billion euros Greece has to repay to the IMF this year. Fat chance. — Glenn Dyer
Fortescue’s hypocrisy. Fortescue Metals continues to talk the good talk about its cost-cutting in the face of an oversupply of iron ore caused by those dastardly competitors over the hill at BHP, or down the coast (in the Pilbara) at Rio Tinto. But buried in the latest quarterly report from Twiggy Forrest’s iron ore company was the rather uncomfortable confirmation (yet again), that Fortescue has played a big part in that oversupply. The company said it shipped 40.4 million tonnes of iron ore in the March quarter, just down from the 41.1 million tonnes in the December quarter. Not highlighted was the fact that the March quarter figure was 28% higher than the figure for the March quarter in 2014 (the proper basis for comparison) of 31.5 million tonnes. That’s an extra 8.9 million tonnes in the past year — and that will rise to 10 million extra tonnes by June 30 to a new high of 165 million tonnes for this financial year. In terms of new capacity, the company has added more tonnes to the iron ore market in the past four years than any other company! So much for all that talk of a cap on production. — Glenn Dyer
The Great Oil Illusion. Global oil prices are now up 12% in the past six trading sessions, there are hopes the big US production surge is finally ending and stocks will show their first weekly fall in the next fortnight. The bull case for a rebound in oil prices is the ruling narrative. But don’t believe it — look at what Big Oil and its suppliers are doing; and its cut, hack and slash, day after day. Take the latest quarterly results from Schlumberger — it’s the world’s biggest oil services company (and its getting bigger by buying smaller rival Baker Hughes), but even giants are not immune from reality — which revealed overnight a 39% slump in first-quarter earnings, and cut another 11,000 jobs from its payroll around the world, on top of the 9000 jobs losses announced earlier this year. Schlumberger explained the new cuts were a “result of the severe fall in activity in North America” along with weaker activity overseas. — Glenn Dyer