The Economic Week that Was

The July Reserve Bank of Australia Board, led by Governor P. Lowe, met on Tuesday and their decision to hit the pause button on rate rises was the key focus this week for local punters and financial markets.

However, by Friday night in Australia – after the benchmark shed over 1.5% during the week’s final session – the tide had turned and investors overseas threw what was left on the table into US Treasury bonds following some really terrific US jobs numbers.

The two-year Treasury yield, which moves with interest rate expectations, dropped, reversing Thursday’s rise to a 16-year high after strong private payrolls data.

The RBA Board’s call to leave the official cash rate (OCR) unchanged at 4.1% for July was in line with expectations.  Financial markets had priced in a moderate chance of a 25bp hike and the consensus of market economists surveyed by Bloomberg was split between an on‑hold and a hike decision.

Lot’s happening, pick a thread

Wall Street shares had a half-arsed show of attempting to rally post the weak-arse Friday June jobs report. That didn’t happen, US stocks were lower for the day and the week.

Not the start to 2H 2023 many bargained on.  But who’d be a jobless economist in the US?

A day earlier the ADP employment number was 2x Wall St estimates and sent stocks tumbling on that familiar ‘The Fed will keep raising’ tune.

Oil prices rebounded last week but nothing out past the breakers of circa US$70 a barrel since early May.

As Stockhead’s Maverick Master of Energy Bevis Yeo often tells me – watch these prices no matter how bored you get, because  every company across every industry is whacked by what happens in this space, and it’s probably even worse for consumers.

Rising energy costs do not have a hedge or a secret exit… and so the up and down of oil still hits everything and everyone from buying a plane ticket or a lithium stock, to the RBA’s choices on rates and how sensible it looks buying a handful of nuclear powered submarines for an underwater blue circa 2050 somewhere in the South China Sea.

No idle thread

Meta, via Instagram, came good on its threat to bring Threads to the world.

It’s another short-posting text app, designed to be a Twitter botherer, if not killer.

Meta (META) boss Mark Zuckerberg, it seems, wants to bring Enemy Boss  Elon Musk and his various interests including Twitter to heel. “Let’s do this,” The ‘Zuck Threaded and from thence the app secured 30 million downloads in a wink.

Musk’s response is to take the battle to a cage. 

“It is infinitely preferable to be attacked by strangers on Twitter, than indulge in the false happiness of hide-the-pain Instagram,” Elon then oddly retorted.

Then he threatened to sue Meta and everything it or Threads, or Insta or Mark stand for.

Finally, and I’m plucking this from relative obscurity…

The Brokers at Ord Minnett slapped a Buy recommendation on ultimate Aussie telco stock and national carrier Aussie Broadband (ASX:ABB), with a target price of $3.58 (vs last close of $2.99).

Our Cameron Drummond, sharp as a sharp tack or something equally stabby, noted that customer numbers rose by a net c25,000 during the March quarter, out of the c27,200 net growth in the broadband market.

Including customers on third-party networks, Ord Minnett believes the company remains on track to meet its FY23 new customer growth forecasts of c100K.

Aussie has recently acquired the customer base of Harbour ISP and Fuzenet from Uniti Group, which will provide the telco with up to 15,000 new customers.

On the NBN network, Aussie Broadband added 24,697 net subscribers during the March quarter, taking its market share to 7.19%.

I like Aussie, personally. I really like their CEO whose name leaves me just at this wrong moment. Nice chap. Great boss. Everyone says so.

 

The Economic Week Ahead

This week sees the start of – wait for it – US earnings season, which will dominate the agenda more than usual.

First up, as is customary – Wells Fargo and the big banks – coming clean on second-quarter earnings on Friday NY time. We’ll see just whose been teller-ing the truth, eh.

Back at home, the economic week is to be blighted again with more “second‑tier economic data out from the official statisticians”, CBA says, before naming its own CommBank Household Spending Intentions index for June as the showstopper for Tuesday.

Then there’s the WBC/Melbourne thingy consumer sentiment survey for July and then it’ll be the NAB Business Survey for June both rich and ready for some ultimately misdirected column inches.

There’s a PMI or two hanging about but more fun will be RBA Governor P. Lowe’s Wednesday speech – – –

‘The Reserve Bank Review and Monetary Policy’.

I’ll be exciting for sure.

Yet, snarky commentary aside, it’ll be more of a chance of moving or at least guiding markets, than a NAB survey about feelings.

Offshore, the usual focus will be fixated on US inflation, with the States’ June CPI number due on Wednesday.

The Cleveland Fed nowcast suggests a 0.4%/mth lift. Market pricing for a second FOMC rate hike has already lifted following the stronger‑than‑expected labour market data from the ADP private survey, just as June non-farm payrolls did not.

Other global dataflow include Chinese inflation and some British labour market and activity data.

The CBA thinks Chinese consumer inflation likely fell back to 0.1%/yr in June as non‑food prices have weakened. Chinese business inflation, as measured by the PPI, likely fell into negative territory at ‑5.2%/yr, deepening because of weaker commodity prices. In the UK, expectations are for a softening in employment growth after some solid gains of late. Economic activity, as measured by monthly GDP, likely ticked up modestly.

In other key macro events, the Bank of Canada will meet. With headline inflation down in May, but core inflation still toppy, the broader expectation is for the BoC to deliver a 25bp hike, with a hint of a pause. ‘Cos it’s best to have it both ways.

 

ASX reported upcoming ASX IPO listings in July

All dates are sourced from the ASX website. They could change without notice, usually do, I get a little miffed covering it.

Chilwa Minerals (ASX:CHW)

Expected listing: July 5
IPO: $8m at $0.20

Chilwa was formed for the purpose of acquiring the Lake Chilwa Heavy Mineral Sands Project in Malawi, Africa, from Luso Global Mining BV.

The acquisition meant that Chilwa has an advanced stage heavy mineral sands exploration project in the eastern Zomba district in Malawi near the border of Mozambique.

The project has an inferred category JORC compliant (2012) Mineral Resource estimate, completed concept studies and key mineralogical and metallurgical test work.

 

Ashby Mining (ASX:AMG)

Expected listing: July 14
IPO: $15m at $0.20

AMG is developing a gold production business in the Charters Towers region in Northern Queensland and has secured rights to a land package covering over 600km2 containing historical mines, mineral resources, highly prospective exploration potential and a gold processing plant.

The 340Ktpa Blackjack Processing Plant is a conventional Carbon in Pulp (CIP) plant, located 15 minutes from Charters Towers.

The Far Fanning gold project lies on a permitted Mining Lease with historical production of 47,200oz gold from 664,000t of ore at average 2.2g/t gold. The main historical open pit is only 30m deep and last operated in 2005.

The JORC (2012) resource was updated in 2021 to 2.55Mt at 1.8g/t for 147,000oz gold.

The company is presently undertaking programs to improve the confidence in the Far Fanning resource estimate through verification and infill drilling which will support a further resource update, feasibility study and commencement of mining operations.

 

The Australian Economic Calendar
Monday July 10 – Friday July 14

All sources from Commsec, Trading Economics, S&P Global Research, AMP, Westpac

MONDAY
Building Permits MAY
Private House Approvals MAY

TUESDAY
Westpac/MI Consumer Confidence (Jul)
NAB Business Confidence (Jul)

WEDNESDAY
RBA Gov P. Lowe Speech

THURSDAY
AU Consumer Inflation Expectations (Jul)

FRIDAY
Nope

The Everyone Else Economic Calendar
Monday July 10 – Friday July 14

MONDAY
China mainland CPI inflation and PPI (Jun)
Japan trade balance (May)
Japan bank lending (Jun)
Canada building permits (May)
US wholesale inventories (May)
US consumer credit (May)
US Fedspeak: Vice Chair Michael Barr

TUESDAY
US NFIB Small Business Index (June)
German CPI inflation (Jun)
Germany ZEW survey (Jul)
UK labour market report (Apr-Jun)
Brazil CPI (Jun)
S&P Global Investment Manager Index (Jul)

WEDNESDAY
US Consumer price index (June)
US CPI inflation (Jun)
S Korea unemployment (Jun)
Japan PPI (Jun)
Japan machinery orders (Jun)
India industrial production (May)
India CPI inflation (Jun)
Mexico industrial production (May)
Canada BoC interest rate decision

THURSDAY
US Initial jobless claims (week ended July 8)
US Producer price index (June)
US weekly jobless claims
US monthly budget (Jun)
China balance of trade (Jun)
S Korea interest rate decision
UK monthly GDP inc. manufacturing, services and construction output (May)
UK trade balance (May)
France CPI (Jun)
EU industrial production (May)
ECB monetary policy meeting accounts

FRIDAY
US University of Michigan consumer confidence prelim (Jul)
US Import/export prices (June)
US Consumer sentiment (July preliminary)
Japan industrial production (May)
EU balance of trade (May)
Brazil retail sales (May)
India balance of trade (Jun)

US Earnings

Thursday
PepsiCo, Conagra, Cintas, Delta Air Lines, Fastenal

Friday
BlackRock, UnitedHealth, JPMorgan Chase, Wells Fargo, Citigroup, State Street

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