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Fraser Jack, Roland Houghton
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Good morning. It’s Monday, the fifth of July, and I’m rolling from Milford. for inflation watchers out there. There was a bunch of relevant data out last week. In the US the isn manufacturing index was released within which was some really interesting data points. The prices index, which measures how fast manufacturers input prices are increasing came in at 92.1%, which is the highest index reading since July 1979. The employment index component of the survey contracted as companies are really struggling to attract and retain labor. Another one that’s easy to miss was a report released by the US Department of Agriculture. This showed that acreage planted for corn and soybean was materially below expectations. This is coupled with already tight inventory levels, leading to a strong rally in the price of these soft commodities. Finally, you had the US job data out on Friday, which had a little something for the inflation and the deflation as they added over 1 million jobs. However, it was adjusted down to 850,000 for seasonal purposes, which was still well ahead of consensus and addition, wages grew point 3% month a month, and annualizing 4%. Despite this deflation is pointing to the higher unemployment rate in the US as a sign the Fed will not taper sooner than their previous meaning suggest. With dubious reverse as inflation pressures are clearly mounting. Turning to Australia, job vacancies for the quarter to me were up 23% quarter on quarter. This series continues to sit new records. Interestingly, there are the fewest number of unemployed people per vacant job ever on record. house prices also continue this stellar run in Australia increasing 1.9% month on month, taking the annual growth rate to 13 and a half percent. The monthly pace of growth is easing but that’s still very strong and eventually conversations around macro Prudential measures will increase. Turn to equity news. IDP education, acquired British councils Indian operations making IDP the sole English language testing company in India. IDP believe the transaction will be 13% of creative However, this is before synergies, and also before the pricing power company has when they become a monopoly which which they now are, therefore the actual accretion is likely much higher. Telstra sold a 49% stake in telco which owns and operates the mobile towers. They sold this minority stake for a punchy 28 times EBIT da multiple which was really impressive and was well above what the market was expecting. Given the company’s trading on eight times ebit.us it really highlights the value in these Telstra assets. Looking forward, we’ve got an interesting week ahead. The RBA meeting on Tuesday will be very closely watch as it’s clear the economic recovery has been very sharp domestically, with the unemployment rate almost touching the magic 5% number, which is a number the RBA quote is nearing full employment. Despite this, they’ve been quite dovish. So you’d have to think they begin taking a more hawkish stance and begin to bring forward the tapering timetable. Finally, OPEC discussions were delayed again with a decision on the level of production for the next six months expected tonight. That’ll have implications for the oil price, which is run pretty hard over the past quarter. So watch out for news on this tomorrow morning. Thanks for listening. We’ll see you next week.
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