Australia is on to its 25th year without a recession

• David Scutt, Business Insider Australia
 

• 13h
• 909

Mark Dadswell/Getty

Australian economic growth accelerated in the September quarter of 2015, increasing 0.9% leaving the annual rate of growth at 2.5%. Markets has been expecting a quarterly increase of 0.8%, with the annual rate ticking up to 2.4%.

The increase extends Australia’s phenomenal economic record, having not experienced a technical recession – two consecutive quarters of negative economic growth – since the June quarter of 1991. 

That’s not a bad performance at at all – 24 years of continued economic growth through such events as the Asian and global financial crises.

Business Insider Australia

The largest contribution to economic growth during the quarter came from exports of goods and services, up 4.6%, contributing 1.0 percentage points to the final growth figure. Imports fell by 2.4%, contributing 0.5 percentage points to growth.

The ABS note that the increase in exports was concentrated in commodities, which reflected strong growth in mining activity having been impacted by adverse weather conditions during the June quarter.

Household final consumption expenditure, the largest part of the Australian economy, increased 0.7% which contributed 0.4 percentage points to the quarterly GDP increase. Government consumption expenditure rose by a similar margin, contributing 0.1 percentage points to growth. 

Gross fixed capital formation, both from the public and private sectors, partially offset the positive contributions to GDP listed above, largely due to weak mining and non-mining business investment and a reversal in government investment following a temporary boost military expenditure seen in the June quarter.

For the private sector, non dwelling construction dipped 5.3%, detracting 0.4 percentage points from growth, while machinery and equipment spending slid 4.6% in line with the weak business capital expenditure report released late last week. It detracted 0.2 percentage points from growth.

Public sector investment dropped 9.2% on the back of a fall in military spending, slicing 0.4 percentage points from the final GDP figure. 

Elsewhere inventories subtracted 0.1 percentage points.

The full breakdown of the GDP report in seasonally-adjusted expenditure chain terms can be found in the table below, supplied by the ABS. The contributions to the quarterly growth figure are highlighted on the far right.

Business Insider Australia

While an impressive headline result, as was the case in the June quarter where the economy grew by just 0.2%, temporary factors acted to amplify the quarterly figure. Net exports contributed a whopping 1.5 percentage points to growth, largely masking weakness from business investment. 

Still, final household private consumption expenditure outperformed expectations, rising 0.7% for the quarter and 2.7% for the year. This contributed 0.4 percentage points to quarterly growth – a good sign that household confidence may be improving in line with recent improvement in the domestic labour market.

However, with the household savings ratio coming in at 9.0%, down just 0.1% from the June quarter, it’s clear that elevated levels of household caution remain.

With the boost from trade likely to continue in the quarters ahead as Australian LNG exports ramp up, robust household spending may help to underpin reasonable levels of growth despite expected weakness from business investment and diminishing residential construction in the period ahead.

Read the original article on Business Insider Australia. Copyright 2015.

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Latin America's biggest economy is shrinking

• Adriana Gomez Licon, Associated Press

• 13h
• 1,178
 
• 1

AP Photo/Andre PennerA street vendor sells shoes and shirts in Sao Paulo's shopping district, Brazil, Tuesday, Dec. 1, 2015.

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Latin America's largest economy has shrunk even more than expected, increasing fears about the well-being of a nation hammered by falling commodity prices and a massive corruption scandal.

Gross domestic product fell by 4.5 percent in the third quarter compared with the same time frame last year, the country's statistics bureau reported on Tuesday.

The cumulative drop of 3.2 percent for the year so far is the worst since 1996, according to the Brazilian Institute of Geography and Statistics as the worst since 1996.

"The result is that Brazil's economy has now contracted for three straight quarters and is more than 5 percent smaller than it was at the start of 2014," said Neil Sharing, an economist at Capital Economics, a London-based firm. "There is a reasonable case to be made that Brazil is now enduring its worst recession since 1930-32."

A global plunge in commodity prices continues to hurt Brazil, with the agriculture sector generating 2.4 percent less income than in the previous three months. A corruption scandal involving politicians and the state-run oil company has ensnared the biggest names in construction in the country and therefore halted many projects. A collapse in domestic demand has also translated to a sharp slowdown in manufacturing activity.

The prospects are not encouraging. With rising inflation and unemployment, and high interest rates, consumer confidence is down. Families cut spending by 4.5 percent compared to the same quarter last year. Investment and exports also fell.

President Dilma Rousseff on Tuesday pressed leaders of the House and the Senate to push through unpopular austerity measures to bring some relief to the nation. Congress is slated to meet late Tuesday to discuss the bill.

"Statistics are saying that employers are discouraged from investing in this year of intense political turmoil and disorder in public finances," said economics columnist Beth Cataldo in the G1 news portal.

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More: Associated Press Brazil Latin America Brazilian economy

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Volkswagen is getting a $21 billion loan to help shoulder the costs of the emissions scandal

• Reuters

• 5h
• 734

REUTERS/Ina FassbenderVolkswagen CEO Matthias Mueller makes a statement, following a meeting ahead of deadline to inform U.S. regulators on plans to comply with standards, at the VW factory in Wolfsburg, Germany November 20, 2015.

FRANKFURT (Reuters) - Volkswagen has reached an agreement with banks on the terms of a planned 20 billion-euro ($21.2 billion) bridge loan to help it shoulder the costs of its emissions scandal, three people familiar with the matter said.

Europe's largest automaker is under pressure to shore up its finances as it faces multi-billion-euro costs of regulatory fines, lawsuits and refits of about 11 million diesel vehicles.

Thirteen banks are offering credit portions of either 1.5 billion euros or 2.5 billion euros each, or a total of 29 billion euros, two of the people told Reuters, declining to be named because the matter is confidential.

One of the people said credit portions would be assigned to banks on Friday. Another person said that would happen in the coming days, without being more specific.

A spokesman for Wolfsburg, Germany-based VW declined comment.

Volkswagen has set aside 6.7 billion euros for the initial costs of the diesel emissions scandal and has said it expects additional expenses of at least 2 billion euros for falsifying certification of carbon dioxide (CO2) emissions.

Analysts have said securing funding from banks in the wake of the scandals, which have wiped billions off the group's market value, would help signal investors that the VW remains a robust borrower.

Standard & Poor's on Tuesday downgraded VW's credit rating to 'BBB+' from 'A-', the latest demotion of the carmaker's credit worthiness following similar moves by peers Fitch and Moody's.

($1 = 0.9423 euros) 

(Reporting by Arno Schuetze; Additional reporting by Andreas Cremer; Editing by Maria Sheahan)

Read the original article on Reuters. Copyright 2015. Follow Reuters on Twitter.

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Manufacturing is in recession

• Akin Oyedele
 
•  

• Dec. 1, 2015, 9:33 AM
• 7,671
 
• 19

Boeing

Manufacturing is in recession.

Data on manufacturing activity in November was released on Tuesday morning, and it did not look good.

The Institute of Supply Management's manufacturing index was a big miss, at 48.6, the lowest since June 2009.

It had been expected at 50.5, versus 50.1 prior. (A level below 50 indicates contraction; above 50, expansion.)

"Today's report doesn't tell us much more than we already knew: the manufacturing sector is being hit hard by both low oil prices and a stronger dollar — as evident by the contraction in manufacturing output in five of the first ten months of the year," wrote BNP Paribas' Bricklin Dwyer to clients.

Deutsche Bank's Jim Reid wrote on Tuesday that the firm's below-consensus ISM forecast of 49 was "based on the recent weakness in the NY and Philadelphia Fed surveys," which were "consistent with a decline in factory activity but not the overall economy (for the overall economy to be contracting, the level of the manufacturing ISM would have to be near 43)."

Manufacturing makes up just 12% of the economy, and so it would be a misstep to read the data as a broad indicator. Ten out of 18 manufacturing industries reported contraction last month.

Markit Economics separately released its manufacturing purchasing manager's index (PMI), which was 52.8, the lowest level in 25 months. The index was held down mostly by softer new business growth last month, and business conditions improved at the slowest pace in two years.

Demand for exports was weak, and new work from abroad fell for the first time since August. Employers became less willing to hire workers because they were less upbeat about demand in the near term, according to Markit. (The employment component of ISM's index improved, however.)

Still, Markit chief economist Chris Williamson said the pace of manufacturing "remains encouragingly resilient, which is all the more impressive once headwinds such as the strength of the dollar and malaise in overseas markets are taken into account."

Markit's PMI had been expected to stay unchanged from the previous month, at 52.6, according to Bloomberg.

Markit Economics

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Mark Zuckerberg says he's giving away 99% of his Facebook shares — worth $45 billion today

• Biz Carson
 
•   

• 18h
• 273,534
 
• 59

Rick Wilking/ReutersMark Zuckerberg and his wife, Priscilla Chan.

Mark Zuckerberg announced Tuesday that he's giving away 99% of his Facebook shares — valued at $45 billion today —during his lifetime.

The Facebook CEO announced the news in a letter to his newborn daughter, Max.

Zuckerberg and his wife, Priscilla Chan, created the Chan Zuckerberg Initiative. Its mission mimics much of what Zuckerberg and Chan's donations have focused on in the past: personalized learning, curing diseases, and connecting people.

The move is not surprising given that five years ago Zuckerberg signed the "Giving Pledge" — along with other tech billionaires such as Bill Gates — to give away the majority of his wealth.

Zuckerberg will retain control of the majority of Facebook voting rights for the foreseeable future, and has limited himself to giving away no more than $1 billion in Facebook stock each year for the next three years, according to an SEC filing.

Because of Facebook's unique dual-class structure, where he owns special super voting shares, Zuckerberg can give away ordinary shares of stock while still maintaining majority control of the social network he founded in 2004.

The Facebook CEO announced his donation in a letter to his newborn daughter, Max.

Today your mother and I are committing to spend our lives doing our small part to help solve these challenges. I will continue to serve as Facebook's CEO for many, many years to come, but these issues are too important to wait until you or we are older to begin this work. By starting at a young age, we hope to see compounding benefits throughout our lives.

As you begin the next generation of the Chan Zuckerberg family, we also begin the Chan Zuckerberg Initiative to join people across the world to advance human potential and promote equality for all children in the next generation. Our initial areas of focus will be personalized learning, curing disease, connecting people and building strong communities.

We will give 99% of our Facebook shares -- currently about $45 billion -- during our lives to advance this mission. We know this is a small contribution compared to all the resources and talents of those already working on these issues. But we want to do what we can, working alongside many others.

Chan and Zuckerberg made a video before Max was born about their new project.

'Wow'

With the announcement, philanthropists such as Bill Gates and Bono congratulated the young couple on giving away the majority of their money.

Bill and Melinda Gates wrote in a press release:

As for your decision to give back so generously, and to deepen your commitment now, the first word that comes to mind is: Wow. The example you’re setting today is an inspiration to us and the world. We can be confident of this: Max and every child born today will grow up in a world that is better than the one we know now. As you say, 'seeds planted now will grow.' Your work will bear fruit for many decades to come.

Zuckerberg and Chan have already donated more than $1.6 billion to charity in the past decade, including a $100 million gift to the Newark Public School System, a $25 million donation to the CDC to stop the spread of Ebola, and a $120 million commitment to education in the Bay Area.

Bono, the lead singer of U2, said:

In these troubled times, Mark and Priscilla’s announcement today is life-affirming and will be life-changing for tens of millions of people. The scope of their commitment will be stunning to many, but to their friends it is not surprising. This is who they are. Community for Mark and Priscilla isn’t just a word, it’s a core value. I can’t wait to see what they achieve, not just with their wealth, but by their example and with their ingenuity, creativity and vision applied to some of the biggest challenges — and opportunities — of our time.

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More: Facebook Mark Zuckerberg Chan Zuckerberg Initiative

Yahoo's board will consider selling its core internet business

• Alexei Oreskovic
 
•  

• 15h
• 15,595
 
• 17

REUTERS/Ruben SprichYahoo CEO Marissa Mayer.

Yahoo's board will consider a potential sale of its internet business when it meets later this week, according to a Wall Street Journal report citing anonymous sources.

Yahoo shares are up roughly 7% at $36.09 in after-hours trading on Tuesday.

The discussion to sell Yahoo's core business comes as investors have grown increasingly impatient with CEO Marissa Mayer's efforts to revitalize the internet company, and as opposition mounts to Yahoo's plan to spin off a lucrative stake in its Asian investments.

The Yahoo board of directors will meet Wednesday through Friday to consider a variety of options, including whether to proceed with plans to spin off its stake in Chinese e-commerce giant Alibaba, whether to sell the core Yahoo internet business, or both, The WSJ said.

Among the potential buyers expected to take a look at Yahoo's business are private-equity shops, according to the report.

Activist shareholder Starboard wrote a letter to Yahoo last month urging it to halt its plan to spin off its 15% stake in Alibaba through a complex tax-free spinoff that Yahoo hopes to complete by January. Starboard said the risk of incurring taxes on the deal, especially after the IRS refused to bless the transaction ahead of time, was too great.

Instead, Starboard said Yahoo should sell its core internet search and ad business.

It's not clear what price Yahoo's core business could fetch, given that Wall Street currently gives it a value of less than zero. Yahoo's stake in Alibaba is worth roughly $32 billion, which exceeds Yahoo's $31.8 billion market cap.

Yahoo's online properties remain some of the most visited in the world, with hundreds of millions of monthly visitors. But the company remains far behind web rivals such as Google and Facebook in terms of user engagement and advertiser budgets.

Pressure is mounting on Mayer, a former Google executive, more than three years into a turnaround effort that has so far shown little progress. Yahoo's revenue remains stagnant and the company has failed to create any new mobile apps or services that have been big consumer hits.

A string of Yahoo executives have recently jumped ship, and Yahoo has reportedly hired consulting firm McKinsey and Co. to help craft a companywide reorganization. Mayer said in October that the company would "narrow" its focus and strategy going forward.

A Yahoo representative told Business Insider that it would not comment on the report.

SEE ALSO: The inside story of why Marissa Mayer's most trusted executives have given up on Yahoo

China: Stocks end sharply up as investors switch to blue chips

China stocks posted their biggest one-day per centage rise in a month on Wednesday, as investors rotated out of small caps into blue chips, with property shares surging for the second day on speculation of more government stimulus. 

PHOTO: REUTERS

DEC 2, 20153:19 PM

[SHANGHAI] China stocks posted their biggest one-day per centage rise in a month on Wednesday, as investors rotated out of small caps into blue chips, with property shares surging for the second day on speculation of more government stimulus.

The CSI300 index of China's largest listed companies rose 3.6 per cent, to 3,721.95, while the Shanghai Composite Index gained 2.3 per cent, to 3,536.91 points.

Both indexes had their best one-day performance since Nov. 4.

Investment flowed from more speculative small caps into relatively cheap blue chips, with a 2.2 per cent slide in Shenzhen's start-up board ChiNext, and a simultaneous surge in banking and real estate stocks .

Property giants such as China Vanke Co and Poly Real Estate Group Co jumped their 10-per cent daily limit for the second day, on market talk that China will unveil tax incentives to encourage more home purchases.

The sector was also aided by expectations that China's home prices would rise slightly in the coming year on the back of Beijing's support, thus relieving some pressure on the slowing economy. "The logic of the mainland market is very simple. On the dark side, there're too few good companies to invest in, as corporate profit and ROE (return on equity) are both heading south," said Liu Haiying, Chairman of Haiying (Shanghai) Investment Consulting Co. "On the bright side, there's too much liquidity. So the key question is whether fresh money is flowing into stocks, which I don't think is the case at the moment." Despite strong gains in the key indexes, 1,669 stocks fell on Wednesday, outnumbering gainers, which totalled 868.

REUTERS

    
 

China top economic planning agency loosens control over some corporate bonds

China's National Development and Reform Commission (NDRC) said it will loosen control over corporate bond issuance in the part of the debt market it regulates. 

PHOTO: REUTERS

DEC 2, 201510:36 AM

[HONG KONG] China's National Development and Reform Commission (NDRC) said it will loosen control over corporate bond issuance in the part of the debt market it regulates.

In a statement posted on its website on Wednesday, the NDRC said it will streamline onshore bond issuance procedures, remove limits on issuances by corporates rated AA and above, and encourage insurers to develop bond default insurance and default swaps.

It also said that the proceeds from bond issuances cannot be reinvested in stocks.

China's bond market is fragmented and bond issuers are governed by three different regulators depending on their ownership structure and on where the bonds are traded.

REUTERS