Who’s going to the FIRB? In his weekly column in Saturday’s Daily Telegraph this week, press gallery doyen Laurie Oakes wrote this memorable line about the Prime Minister: “Tony Abbott’s unenviable reputation as a weather vane has been reinforced” (over the flip flopping on an inquiry into iron ore pricing). But the real story was even deeper in Oakes’ column, when he pointed out there was another reason for the about-face on the iron ore inquiry:

“I understand seven foreign investment applications that would potentially affect a number of mining companies were lodged with the Foreign Investment Review Board during the week, and quickly hit Hockey’s desk. They came out of left field and were seen by the Treasurer and PM as a game-changer. The applications, sources say, raise the possibility of significant upheaval in the iron ore industry and sections of it over the next 12 months.”

As Oakes went on to observe, an inquiry into iron ore pricing would have muddied the waters and “added to uncertainty”. But the question is about what? Is Glencore making its long-awaited assault on Rio Tinto, or is Glencore having a nibble at Fortescue Metals Group? Deals at this level would certainly be ultra sensitive. There was media talk this morning about Fortescue being eyed off in the market. Watch the shares today, they could tell us something is going on. — Glenn Dyer

UK taking its leave? The Bank of England has accidentally revealed it’s preparing for the consequences of a British exit from the European Union, according to a report in The Guardian at the weekend. The paper said a reporter had received emails inadvertently sent from the central bank, quoting Jon Cunliffe, the deputy director for financial stability, who is leading the examination into the consequences of a so-called Brexit. With shades of “need to know” and a whiff of James Bond and cloak-and-dagger stuff, The Guardian said the memo said the press and most staff in the Bank of England must be kept in the dark about the work underway, which has been dubbed Project Bookend. The review is a political bombshell as UK Prime Minister David Cameron attempts to renegotiate the UK’s membership of the EU started at a leaders’ summit in Riga, Latvia, on Friday, and his campaign got the cold shoulder, from all reports.

There are many Eurosceptics who will see the Bank of England’s move as part of a “plot” by the Europhiles in the government and business and political establishments to force the UK to remain in the EU. — Glenn Dyer

US update: rate rise definitely looms. All those economists, analysts, traders and others who were confidently forecasting no rate rise for the US economy this year after a slew of weak data last week had better think again. Fed chair Janet Yellen made it clear on Friday that a rate rise will almost certainly come in 2015. In a speech she said she suspected that much of the contradictory data so far this year was “statistical noise”. “For this reason, if the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target, and begin normalizing monetary policy,” she said.

This Friday night the markets will again question that view (stupidly) when the second estimate for March-quarter GDP growth will be issued and it is likely to be a fall, not a rise — with estimates ranging around -0.6% to -0.9%, compared with the first estimate of a rise of 0.2% (all annual figures). But for the angst that will cause, much of it will be a waste of time because there’s a growing body of evidence that first-quarter GDP in the US has been lower than it should be — for perhaps much of the past 30 years — with the impact of winter over-emphasised through faults in the seasonal adjustment techniques used by the Bureau of Economic Analysis (BEA). The San Francisco Fed said in its weekly research note that it had crunched the GDP figures, readjusting for the errors found in the original analysis from the BEA, and found growth was really 1.8% instead of the 0.2% annual rate reported. The bureau says it is recrunching the data, along with other reports and will have more to say in its annual revision to GDP figures in July.  — Glenn Dyer

Peter Fray

Save 50% on a year of Crikey and The Atlantic.

The US election is in a little over a month. It seems that there’s a ridiculous twist in the story, almost every day.

Luckily for new Crikey subscribers, we’ve teamed up with one of America’s best publications, The Atlantic for the election race. Subscribe now to make sense of it all, and you’ll get a year of Crikey (usually $199) and a year’s digital subscription to The Atlantic (usually $70AUD), BOTH for just $129.

Peter Fray
Editor-in-chief of Crikey

JOIN NOW