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Friday, 15 September

18:21

Equality demands all or nothing on marriage question Crispin Hull

MARRIAGE is like bankruptcy, childhood, insanity or being under sentence, and that is why I will be answering Yes in the absurd, unnecessary and costly statistical survey asking people whether they think people of the same sex should be able to marry. It is also why people of religious convictions whose religion holds that marriage is to be only between a man and a woman should do the same.

Let me explain. Being married, bankrupt, a child, insane or under sentence affects a persons legal status. The status makes them legally different from other people with different legal rights and obligations.

True, marriage is voluntary, whereas childhood, insanity and being under sentence are not. Bankruptcy often is not, though it can be.

But the important point is that changes in status happen through operation of law and events. The law should apply equally to all.

True, ministers of religion almost automatically get the power to solemnise marriages, but only if their religious denomination is recognised by the Marriage Act and they are on a register kept under the Act, and when they solemnise a marriage they must do so in accordance with the minimum requirements of the Act even if they add extra bits from their religion.

So all house-of-worship marriages in Australia are done by operation of law, not religion.

A minister may refuse to solemnise a marriage or make it conditional on the parties complying with religious tests (such as not being divorced), but it is always open to people who are refused a religious ceremony to have their marriage solemnised by a civil celebrant.

In France, the legal and religious are sensibly separated. You have to have a civil ceremony before a state official, however brief, before the law recognises you as married. After that you can have whatever religious ceremony you like.

When a person changes status from unmarried to married, a whole lot of legal rights and duties change, too those with respect to each other and those with respect to the couple and the world at large.

Many on the No side, such a Tony Abbott, have argued that there is no need for same-sex couples to get married because all the discriminatory legal provisions against unmarried couples (whether of the same or different sexes) have been removed.

These are things like access to a partners superannuation, their estate upon death, their financial support upon splitting up and so on. Lets call them couple right.

But the Abbott argument is not true. For a start, couple rights are creat...

17:25

Why are they selling? Pete Wargent Daily Blog

Two sides to a trade

There are two sides to a trade.

If you are buying an investment someone is selling it.

Ask yourself, then, a simple question: why are they selling?

It might be for personal reasons.

They could be selling some shares before financial year end to reduced a tax liability, for example. 

Or it might be for another genuine reason.

In the property markets, vendors often sell an apartment because they want to trade up and move into a house. 

Or, maybe, they don't like the investment as much as you think you do, and that's why they selling. 

Group think

Group think can be dangerous.

When everyone is piling into an asset class or certain investment, this may not be a great sign for future returns.

Try to become a contrary thinker. 

This is not necessarily a skill you are born with, but it can certainly become a learned habit over time.

Question everything - not to the point of inaction, or sleepless nights - but don't simply blindly trust widely held beliefs.

Try to think of counter-arguments your investment decision, or list potentially dissenting views.

Think of some worst case scenarios, and what you would do or feel if they played out.

Asymmetric information

Could the seller know more than you?

Real estate is an imperfect market which offers amazing opportunities to buy below market value or add value.

But asymmetric information is a common hurdle that needs to be overcome via thorough market research.

Almost by definition, the vendor of a property tends to know more about the potential problems and challenges than the buyer.

In the share market...

16:30

The Weekend Quiz September 16-17, 2017 Bill Mitchell billy blog

Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.

1. When a sovereign government issues debt to match its fiscal deficit the debt adds to the financial wealth of the non-government sector.



2. Ignoring any reserve requirements that might be imposed, if the central bank pays a positive interest rate on overnight reserves held by the commercial banks then it may still have to conduct open market operations as a means of ensuring that levels of bank reserves are consistent with its policy target rate of interest.



3. If participation rates are constant, percentage unemployment will not change as long as employment growth matches the pace of growth in the working age population (people above 15 years of age).


...

14:30

Australian Dollar and Bitcoin "IndyWatch Feed Crypto"

1.00 AUD = 0.0003 BTC
0.0010 BTC = 3.75 AUD
Converter

14:06

Climate inaction has cost Australia 'thousands of jobs and billions of dollars' "IndyWatch Feed Economics"

Taking action on climate change presents a huge opportunity to make society wealthier, healthier, and happier; but a failure by Australian politicians to lead on climate is costing the country, said experts at a recent event in Sydney.

14:02

When the Bankers Tremble at Artificial Intelligence Daily Reckoning Australia

Get used to hearing about machine learning and artificial intelligence. Theyre going to seep into everything.

Heres one example

Agricultural heavyweight Deere & Company is going to pay US$305 million to buy a tech company called Blue River Technology.

Apparently, Blue River has successfully applied machine learning to spraying equipment.

This means herbicides can be used in a more targeted way. One benefit is the reduced input costs for the farmer. Smart machines will help make decisions about every plant.

Blue River Tech happens to be based in Sunnyvale, California. House prices are skyrocketing there. If you think Sydney or Melbourne is going crazy, a place in Sunnyvale just sold for US$800,000 over the listing price.

Its nothing particularly flash, either.

But that whole part of California is so drenched in tech money that anything remotely near the offices and schools is pure gold for whoever owns the land.

And theres people out there who think the US economy is teetering.

Madness. The place is booming.

Anyway, more on machine learning

Artificial intelligence is coming to your workplace

The John Deere brand isnt alone investing in this space. Companies like Monsanto are teaching machines how to farm, according to The Wall Street Journal.

Apparently, computers helped choose corn plants growing in the US this year. These are the best strains in terms of yield and sturdiness. Algorthims are also analysing US weather data to anticipate crop threats.

Another handy tool is computers that can identify plant diseases early on, before they spread to the rest of a crop.

Its early days yet, but surely this can only get better.

Theres plenty happening right here in Australia, too. The Australian Financial Review says banks and law firms could save a fortune if they can teach algorithms to plough through all the paperwork they need to do.

Having said this, you have to stay wary of this kind of thing, too. A while back, investors were going nuts for companies involved in the cloud.

I cant help but feel that, very soon, every CEO will feel compelled to introduce some sort of AI strategy for their company, or will start spruiking it to give the share price a boost.

Investors will duly bid up the shares, probably understanding little about the underlying tech or business strategy.

Too cynical? Maybe.

But we have to pay attention at the very least, because AI might impact the big banks here

The biggest money market fund in the...

11:02

The opportunity cost of the Melbourne Grand Prix John Quiggin

Last Sunday, my wife Nancy and I had a great weekend in Mooloolaba, where I took part in the Ironman 70.3 event, along with a thousand or so other competitors from around Australia and the world as well as hundreds of spectators. As Nancy said, even though the Sunshine Coast isnt far from Brisbane, wed never get around to going if there werent an event like this, but the beautiful setting makes us keen to return.

While I was there, a friend mentioned that the Melbourne Ironman event had been cancelled because the date of the Grand Prix had changed, producing a clash. That got my mind away from transition times and back to economic policy.

The Grand Prix is subsidised to the tune of $60 million a year, a payment justified by the supposed benefits of tourism, estimated at 35 000 interstate and international visitors. Every serious economic analysis Ive seen suggests that the net benefits are nothing like $60 million.

But, although Im always banging on about opportunity cost, this particular example hadnt occurred to me. In addition to the subsidy cost, the Grand Prix costs Melbourne events that would otherwise attract visitors without any subsidy**. The last Melbourne Ironman attracted over 2000 entrants, of whom a large share would have been visitors with accompanying family. Its probably not the only event lost to Melbourne because of the Grand Prix. Add to that the potential visitors who choose an alternative destination to avoid the noise and congestion of the race, and youve cancelled much of the tourism benefit attributed to the Grand Prix.

* There are also nebulous benefits said to be gained from global TV viewers, who are supposed to be attracted to Melbourne by hours spent on the couch watching fast cars doing laps of Albert Park, interspersed with a promo clips/coffee break opportunities. Im dubious.

** Various tourist bodies are listed as event partners for Ironman, but as far as I can tell, the monetary value of their support is trivial.

06:18

Jobs explosion shatters forecasts Pete Wargent Daily Blog

Jobs explosion

Employment growth shattered expectations with an 11th consecutive monthly gain, tearing up by +54,200 in August, including another +40,100 surge in full-time employment. 

It's a case of choose your favourite statistic here: more than quarter a million jobs created in six months would have to be one of the most impressive, while annual full-time employment growth is now at a scorching +3.1 per cent. Golly!


Over the past year employment has lifted by +325,600 or +2.73 per cent, and if rising job advertisements prove to be a worthy indicator, then calendar 2017 could yet be Australia's greatest ever year for employment growth. 


Most of the jobs have been created in New South Wales (+71,600 over the year to August 2017) and Victoria (+95,500) until lately. But after a protracted lull, Queensland is now the surprise package (+95,400), albeit largely driven by part-time employment. 


The detailed figures will confirm in due course, but infrastructure has been a likely creator of jobs, along with the tourism and education boom, and healthcare.&...

04:35

Making Money With Cryptocurrencies "IndyWatch Feed Crypto"

Making Money With Cryptocurrencies

Dear Reader,

Yesterday, I attended a blockchain conference in Houston, Texas. Its focus was on how to implement blockchain technology into energy businesses.

I heard from data scientists and engineers from Exxon Mobile, Chevron, BHP Billiton, Halliburton, and Microsoft.

In 2012, we profiled Bitcoin at $13. I remember attending a few conferences that year. At the time, it was a bunch of geeks and libertarians, and here I was in 2017, surrounded by Fortune 500 companies talking about Bitcoin and Ethereum.

By the way, I should take a moment to address this Jamie Dimon (JP Morgan) comment yesterday. Him calling Bitcoin a fraud was hilarious to me, and it shows you just how ignorant the mainstream media is about this entire space.

Jamie Dimon has been hating on Bitcoin since it was $50 its now $4,000.

His company, JP Morgan, is one of the principal investors in Ethereum, so what you really have here is a competitor of Bitcoin doing some trash talking.

The blockchain is the most certain investment Ive ever been a part of, and people like Jamie Dimon know it, which is why they are heavily investing into it both through blockchain implementation and Ethereum.

As of June 2017, there is now more money heading into this space than there is venture capital thats invested in other non-blockchain tech companies.

The U.S. Department of Defense is planning to use blockchain technology for secure communications.

Homeland Security even helped seed four security companies that will be using blockchain technology.

In Australia, Japan, Germany, Canada, and even here in the U.S. with the NASDAQ, all are either running prototypes or trial runs to do commodity and stock trading using blockchain technology.

The blockchain reduces costs, self-validates, is unhackable, secure, and eliminates settlement risk.

Here is a screenshot of some of the companies that are using the Ethereum blockchain platform.

...

01:07

Billy liar Pete Wargent Daily Blog

Liar loans bounce

I noted earlier in the week that, for all the outlandish headlines, the "liar loans" report seemed to lack any real 'oomph'.

The market seemingly thinks so too.

Commonwealth Bank shares (ASX: CBA) opened the week at $73.50.

Upon the release of the report in question the share price promptly zoomed +4.53 per cent higher to $76.83. 


The trust of the innocent, or the plunge protection team in action?

Thursday, 14 September

18:18

Hobart vacancies crash Pete Wargent Daily Blog

Chronic rental shortage

Hobart has the lowest vacancy rate on record for any Aussie capital city on SQM Research's index.


Prices/rents/everything booming in the Tasmanian capital.

17:02

Trumps Five Biggest Moves Yet Daily Reckoning Australia

The next six months will be the biggest of Trumps presidency.

He will have to make five decisions that determine the economic future of the global currency system, let alone Americas economy.

Australias wealth is driven by exports priced in dollars and on American markets.

The price of iron ore, coal, agricultural commodities and much more depend as much on the fate of the US dollar as their own supply and demand. Not to mention the profitability of our exporting companies swing with currencies too.

But what are these decisions Trump will make?

Prolific author Jim Rickards, of our own Strategic Intelligence newsletter, explains the situation below.

In short, there is an enormous personnel change coming up at the worlds most powerful institution.

The majority of control is up for grabs.

And Trump decides who gets nominated to what post

Trump Owns the Fed

Jim Rickards

Donald Trump has the opportunity to appoint a higher percentage of the Board of Governors of the Federal Reserve System at one time than any president since Woodrow Wilson.

President Wilson signed the Federal Reserve Act during the creation of the Fed in 1913 when it had a vacant board. At that time, the law said the Secretary of the Treasury and the Comptroller of the Currency were automatically on the Feds Board of Governors.

But besides that, President Wilson selected all five of the other participating members.

Now Trump has the opportunity to fill more seats on the Feds Board of Governors than any president since then.

Thats pretty amazing when you think about it.

To review, the Federal Reserves Board of Governors is made up of seven appointees. That means they can make a majority decision with four votes. If youre reading about the Fed, you might also see reference to regional reserve bank presidents. These are roles within the Federal Reserve System, but the real power is found on the seven-member Board of Governors.

Heres the remarkable part:

As of last week, four of the seven Fed board seats are now vacant.

In fact, Im describing a 72-hour span last week as the most momentous three-day period in the entire history of the Federal Reserve (see below for all the details).

Trump will own the Fed. Meaning, whatever the president wants monetary policy to be, hell get.

In other words, Donald Trump will be able to shape the Feds majority.

But the tricky part is figuring out how he plans to shape it

Dur...

14:30

Australian Dollar and Bitcoin "IndyWatch Feed Crypto"

1.00 AUD = 0.0002 BTC
0.0010 BTC = 4.10 AUD
Converter

13:33

Australian labour market a relatively stronger result for August 2017 Bill Mitchell billy blog

The latest labour force data released today by the Australian Bureau of Statistics Labour Force data for August 2017 shows that total employment growth was relatively robust (up 54,200) with full-time employment growth accounting for much of that increase. Unlike recent months, where if full-time growth was positive, part-time growth was negative (and vice versa), both components of employment rose. Further, the participation rate rose by 0.2 points as job opportunities expanded. Labour underutilisation overall (underemployment and unemployment) was at 14.1 per cent summing to 1,842.8 thousand persons. The teenage labour market showed further improvement but remains in a poor state. Overall, my assessment of the Australian labour market is that it still to early to conclude that the uncertainty of the last few years is giving way to sustained growth.

The summary ABS Labour Force (seasonally adjusted) estimates for August 2017 are:

  • Employment increased by 54,200 (0.5 per cent) full-time employment increased 40,100 and part-time employment increased 14,100.
  • Unemployment decreased 1,100 to 727,500.
  • The official unemployment rate remained steady at 5.6 per cent.
  • The participation rate increased by 0.2 pts to 65.3 per cent. It still remains below its December 2010 peak (recent) of 65.8 per cent.
  • Aggregate monthly hours worked increased 6.1 million hours (0.4 per cent).
  • Using the seasonally-unadjusted quarterly data, the total labour underutilisation rate (unemployment plus underemployment) was 14.1 per cent (1,812.6 thousand workers). Underemployment was 8.5 per cent and there were 1,101.3 thousand persons underemployed.

Employment growth stronger in August

Employment increased by 54,200 (0.5 per cent) full-time employment increased 40,100 and part-time employment increased 14,100.

This is a relatively strong result.

We have observed a zig-zag pattern in total employment growth over the last 36 months or so where the employment estimates have been switching back and forth regularly between negative employment growth and positive growth with the occasional spikes.

This month, the pattern where full-time or part-time would alternative with negative and positive growth changed with both recording positive movements.

The following graph shows the month by month growth in full-time (blue columns), part-time (grey columns) and total employment (green line) for the 24 months to August 2017 using seasonally adjusted data.

It gives you a good impression of just how flat employment growth has been over the last 2 years. The positive note is that there has been four stronger full-time employment outcomes in the last eight months.

...

02:09

Pearls of wisdom Pete Wargent Daily Blog

Podcast

Subscribe here for free, and you can hear me chatting with Michael on the latest episode.

We discuss the pension timebomb, while Michael delivers another mindset lesson.

To subscribe, click here, or click on the image below.

01:12

Rich get richer Pete Wargent Daily Blog

KISS

The ABS released its household incomes and wealth figures for the 2016 financial year.

I'm going to keep this post very simple today - you could spend hours torturing these numbers to fit a preconceived viewpoint, and, alas, I've got better things to do.

Instead, just three observations.

Firstly, mean gross household incomes, after surging very hard through the mining boom, pulled back a bit last year. 

This has become a bit of a familiar theme in recent Aussie data. 


Income inequality generally trended a little higher through the mining boom too, but also fell last financial year, as higher income earners took a hit. 


And thirdly, mean household net worth, having been obliterated by the share market crash, has surged to a record high of just over $929,000.

If people are feeling that inequality is rising, it is - for wealth - if only marginally since 2009-10.

Household net worth increased by $94,000 since the 2014 financial year, with property and financial assets up by $78,000 and $45,000 respectively, and liabilities up by just $19,000.

...

IndyWatch Australian Economic News Feed Archiver

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