RATE REACTION AS GLOBAL MARKETS CALM
As expected the Reserve Bank of Australia (RBA) decided to hold interest rates at 4.35% yesterday, but the revelation from governor Michele Bullock that the board seriously considered a rate hike during its meeting this week, as well as her suggestion there may not be a rate cut for six months, has caused a fair amount of reaction overnight.
The Australian describes yesterday’s update, which included the bank increasing its underlying inflation forecasts, as “a blow to [Treasurer] Jim Chalmers’ claim his budget strategy was making the RBA’s job easier”. Chalmers obviously thought otherwise, saying the decision to hold rates was a recognition of “the progress we’ve made on underlying inflation”. An AFR editorial reflected “the ‘higher for longer’ rate scenario set out by the Labor-appointed governor and a board, also including Labor appointees, may frustrate the government’s political timetable”.
During her press conference yesterday, Bullock revealed “a near-term reduction in the cash rate doesn’t align with the board’s current thinking”, going on to define near-term as “by the end of the year, in the next six months”. The AAP said this morning the stalling progress on inflation has put the RBA on “high alert”, quoting Moody’s Analytics economist Harry Murphy Cruise as saying there was “growing angst within the bank that inflation is digging in its heels”. Meanwhile, the BBC said an “uneasy calm” returned to global markets on Tuesday after the sharp falls of the last few days.
The fallout from the government’s reported meeting with betting, sport and media firms about its gambling advertising reforms is continuing, with Guardian Australia claiming this morning that anti-gambling advocacy group, the Alliance for Gambling Reform, refused to sign a non-disclosure agreement (NDA) in order to attend a briefing.
It was reported at the weekend the government is planning a cap on television betting ads, rather than issuing a blanket ban. The alliance reportedly wrote to Communications Minister Michelle Rowland asking why groups were finding out about the reforms from the press and in response received an invitation to a briefing and the NDA, chief advocate Tim Costello claimed. “I’ve been working in gambling reform for 30 years … never once have I been asked to sign an NDA,” he said. Crikey’s new series “Punted”, in which we’re mapping the gambling industry’s capture of Australia, can be found here.
In state politics news, the ABC and many others wrote up former NSW premier Dominic Perrottet’s valedictory speech on Tuesday. Perrottet is finishing up on Friday and heading to Washington D.C. to work as mining company BHP’s US head of corporate and external affairs. In his final speech yesterday he said it was a mistake to force people in NSW to be vaccinated during the COVID-19 pandemic. “Vaccines saved lives, but ultimately, mandates were wrong. People’s personal choices shouldn’t have cost them their jobs,” he declared.
IT’S WALZ
US Vice President Kamala Harris has named Minnesota Governor and former high school teacher Tim Walz as her running mate. Harris, now officially the Democratic nominee, posted on X: “As a governor, a coach, a teacher, and a veteran, he’s delivered for working families like his. It’s great to have him on the team.” Walz, 60, responded with a post of his own, declaring: “It is the honour of a lifetime to join @kamalaharris in this campaign. I’m all in. Vice President Harris is showing us the politics of what’s possible. It reminds me a bit of the first day of school. So, let’s get this done, folks!”
The New York Times reports Walz leap-frogged better-known candidates to secure the nomination in part because Harris saw him as “an everyman figure from Minnesota whose Midwestern-dad-vibe balanced out her Bay Area background”. The paper also said he jumped to the top of Harris’s list following recent appearances on cable news channels in which he called Republicans “weird”.
The Washington Post reports Harris had gone for “broad appeal over swing-state appeal” in picking a running mate not solely on their ability to help win a crucial state. In a piece reflecting on his “stunning two-week rise”, the paper also highlighted the viral “weird” attack line Walz spawned during an appearance on MSNBC’s Morning Joe show last month. The Hill and Axios also highlighted it in catapulting his profile into the mainstream in recent weeks, with the latter also admitting that Walz had been “steadily growing his national profile for several years”.
The Associated Press recalls Walz won six terms in Congress from a mostly rural southern Minnesota district, during which time he championed veterans issues, having served 24 years in the Army National Guard. AP also has the rather less serious update that trademark lawyer Jeremy Green Eche, who purchased HarrisWalz.com for $8.99 in 2020, sold the domain and others linked to Harris for $15,000 on Tuesday.
At the Olympics, 14-year-old Australian Arisa Trew stole the day, and maybe the games, after winning gold in skateboarding. The ABC said Trew became Australia’s youngest Olympic gold medallist by winning the women’s park final. She said afterwards: “I got told by a few people that I’m Australia’s youngest gold medallist, which is, like, pretty insane. And really cool, because that’s who I’m representing and it’s just amazing. It’s just, super cool that I have won the gold medal because it has been like a dream. I’m just so excited.” Elsewhere, the men’s basketball team blew a 24-point lead in their quarter-final game against Serbia to lose in overtime.
ON A LIGHTER NOTE…
Today’s Lighter Note is a sombre affair, but a story worth highlighting involving a viral post on X revealing the scale of melting glaciers in the Swiss Alps.
Software developer Duncan Porter posted on the social media platform, formerly known as Twitter, photos of the Rhône glacier taken in August 2009 and then again, in the exact same spot, in August 2024.
“Fifteen years minus one day between these photos. Taken at the Rhone glacier in Switzerland today. Not gonna lie, it made me cry,” Porter wrote in his post on Sunday. The Guardian said the images showed the white ice that had filled the background in the original picture in 2009 had withdrawn significantly in 15 years to reveal just grey rock. “A once-small pool at the bottom, out of sight in the original, has turned into a vast green lake,” it added.
While many users on X reacted with horror at the scale of the melting, the post also attracted climate-denying accounts, euronews reported, adding Porter was choosing to focus on the “really kind comments”.
Say What?
I like my fish and people are finding worms in the fish. It’s just not good enough.
Adam Peaty
The Team GB swimmer was not at all complimentary about the quantity and quality of the food at the Paris Olympics. Speaking to The i paper, the three-time Olympic gold medalist claimed: “The catering isn’t good enough for the level the athletes are expected to perform. We need to give the best we possibly can.”
CRIKEY RECAP
But then this is not a story about gambling. It’s about the media. If there’s intense division among the gambling industry, there’s none within Australia’s corporate media: they all oppose a ban on broadcast gambling advertising — though they would be perfectly happy with a ban on social media advertising, thank you.
The primary argument from the broadcasters is that they desperately need advertising revenue, which has collapsed over the past 15 years and is now just a fraction of what it was before social media appeared. This is not like banning tobacco advertising or tobacco sponsorship, which occurred in the analog era when the networks had a lock on eyeballs and ad revenue. Now, Ten is a basket case; Seven is trading at just 17 cents; Nine is limping along at a post-pandemic low; all of them, and News Corp, have been serially shedding staff including journalists. Removing the $200 million in gambling ad revenue is another kick in the guts for an industry on life support.
You might spot the sleight-of-hand here — the big media companies are conflating two different issues: the collapse of their defunct broadcast advertising-based business model and their resulting inability to fund journalism, and the toxic social impact of ready access to online gambling on sports. The corporate media argument is basically “let us do a little damage to society because it will enable us to do some good for society via journalism”.
The data that is being blamed for the big US sharemarket sell-off — a weak reading on American manufacturing activity and a weak jobs report for July — were normal variables in the world’s biggest economy. The activity survey for US manufacturing did contract for a fourth month in July to a reading of 46.8 — but manufacturing, despite the efforts of Donald Trump and particularly Joe Biden to expand it, still only accounts for just over 10% of America’s economy. The US economy, like most Western economies, is dominated by services. The services sector survey released overnight showed the huge US services sector bouncing back from a low of 48.8 in June to a strong 51.4 in July, above forecasts.
In fact the business activity sub-index saw a surge to a boom-like 54.5 from a reading of just over 49 in June. That confirms that the US economy is chugging along nicely, whatever the chooks might say.
So why the big Wall St sell-off? The answer’s simple: the yen carry trade. That’s where investors borrow at ultra-low interest rates in Japan — where interest rates have been negative since 2007 — to invest elsewhere in sharemarket giants like Nvidia or Apple, or even our own Commonwealth Bank.
Now that US Vice President Kamala Harris has sewn up the Democratic presidential nomination, she has a busy few weeks ahead of her. After she announces her vice-presidential running mate, the pair will campaign in seven swing states in four days. Then comes the Democratic National Convention in Chicago, starting on August 19.
With her campaign revving up, many are starting to wonder what a possible Harris presidency could mean for the world if she beats Republican Donald Trump in November. And how might it differ from President Joe Biden’s time in office?
READ ALL ABOUT IT
The last survivors of an atomic bomb have a story to tell (The New York Times)
Musk’s X sues brands and trade group over advertising boycott (The Financial Times)
China moon samples reveal water molecules in groundbreaking discovery, scientists say (CNN)
More than $1m worth of cocaine washes up on Florida beach after Hurricane Debby (The Guardian)
Hamas names Yahya Sinwar as new overall leader (BBC)
As Trump fumes, Republicans wince at ‘public nervous breakdown’ (Politico)
THE COMMENTARIAT
Rise in interest rates only narrowly avoided — John Kehoe (Australian Financial Review): Although the RBA’s forecasts were finalised on Thursday and do not incorporate the financial market turmoil, they are still based on a technical assumption of one full 0.25 of a percentage point rate cut by early next year.
After Bullock spoke, money markets had by Tuesday night pushed out the first expected RBA rate cut from November to December.
But unless the world economy goes to hell in a handbasket because of a US recession or war in the Middle East, a rate cut this year looks like a bad bet and higher-for-longer rates seem more probable.
Elon Musk has gone too far — the UK has laws which can stop him – James Ball (The i paper): Traditionally, the next step for a delinquent social network might be to check its compliance with legal obligations and issue fines, or some other sanction. Some are calling for more radical actions like shutting down X in the UK — but this risks backfiring, as well as being outright wrong. Shutting down the legitimate free expression of millions of UK users to stop a select few is not compatible with UK values or human rights.
The government and authorities should instead look to Musk himself, who just last year shared a stage with then-prime minister Rishi Sunak in an interview that was such a softball it looked as if Sunak was auditioning for a job.
Musk has crossed the Rubicon, and the government should make that clear. If he is fanning domestic unrest, we have laws relating to that and powers allowing it to take action. These range from travel bans, to sanctions, or possibly even criminal prosecution. Musk might be the world’s richest man, but he is still just a man. Perhaps it’s time for the UK authorities to remind him of that.
