Economic Update

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

Support mounting for RBA rate cuts

– Popular Federal Budget

– United States (US) Federal Reserve maps out recovery phase

– China downgraded by Moody’s

We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact your Financial Adviser.

While most market commentators are predicting no rate changes for Australia in the rest of 2017, three major houses recently re-affirmed their call for cuts.

JP Morgan and Credit-Suisse are predicting two more cuts this year which would take the RBA rate to 1%. Macquarie re-affirmed its call for three more cuts to less than 1% in this ‘cycle’ – that is, in 2017 or early 2018.

We maintain our call for two more cuts. We first identified and reported a growing problem in our full-time employment creation in April 2016. While total employment has been growing steadily, part-time jobs have been replacing lost full-time jobs.

The May Federal Budget gave some long-term hope for our economy with the infrastructure spending announced over the next ten years. The proposed tax cuts for small businesses will also help. But the increased Medicare levy and the bank tax will work against growth.

Both Moody’s and S&P re-affirmed the country’s AAA rating after the Budget.

There is no doubt that the bank tax will be passed on. No company can absorb substantial taxes by cutting costs over an extended period. The only question is whether shareholders or bank customers will bear the brunt. First-year economics teachings lead us to believe the burden will be shared.

Since the big four banks plus Macquarie form the basis of many super funds – directly or indirectly – the Australian public will have less to spend even if the banks do not raise rates to cover the tax.

On top of the bank tax, Moody’s just downgraded 23 smaller banks. The impact of this change in the ratings will be to increase the cost of funding for smaller banks. Therefore, we expect pressure on the banks to lift rates – or not reduce them by as much as any cuts made by the RBA.

The US Federal Reserve mapped out a well-received plan to ‘shrink its balance sheet’. That is, the $4.5 trillion debt amassed in quantitative easing since the GFC is to be reduced in gentle stages starting this year.

The balance sheet is to be repaired by not buying sufficient new bonds to replace all of those naturally maturing – as the Fed has been doing for years. This ‘tapering’ will have the effect of raising long-term rates. Therefore, we continue to expect that there is probably only one more hike in the US likely this year. The market has placed around an 80% chance of a rate hike in June.

At the start of the year, the Fed predicted three hikes this year and then seemingly upped that to four as Trump talked up his expansionary plans. With only one hike so far this year, the Fed again has been overly optimistic about the strength of the US economy.

China reported some very strong trade data – both imports and exports – but Moody’s downgraded China in May!

On a very positive note, Nobel Laureate Robert Shiller has said that the US stock markets could go up by another 50% and most other markets could go with it. This statement is particularly strong as Shiller’s own ‘PE ratio’, measuring whether a market is expensive or not, has been used for a couple of years or so by others to say that the US market was overpriced and about to correct!

In conclusion, we see Australia and our major trading partners’ economies making gradual improvements and the stock markets unlikely to suffer more than the usual levels of volatility.

Australian Equities After three months of solid growth, the ASX 200 fell in a hole during May ( 3.4%). While there are many factors at work, the fact that we lagged behind the world indexes strongly suggests that the proposed bank tax was the major culprit. The financial sector is about 40% of the ASX 200 index.

While the ASX 200 reached a recent high of 5,957 during May – up from the 5,924 at the start – the index fell away into the close of the month. Stocks in Energy (+2.0%), Industrials (+4.7%) and Telcos (+3.4%) were up strongly in May. It was the  9.2% fall in Financials stocks that did the damage.

Of course the new bank tax might impair future dividends from the big banks but the damage should not be big enough to affect the super strategies in which many have invested.

In the coming weeks there may be some clarity on how the tax will be implemented and how the banks will deal with it. At that point we believe that bank stocks could rally because – in times of great uncertainty such as now – markets often ‘over sell’ the problem stocks.

Foreign Equities The VIX ‘fear’ index (which is considered by many to be a proxy for investors taking out insurance on downside risk in stock markets) reached twenty-year lows during May – only picking up to average levels when the Trump-FBI story peaked.

Wall Street hit new all-time highs in May with the S&P 500 breaking through the 2,400 barrier. Most other major indexes also performed very well in May.

People are mixed on whether the index can rise further since many have risen strong so far in this year. For example, the S&P 500 is up +7.7%; the London FTSE is up +5.3%; the German DAX is up 9.9%; and the Japanese Nikkei is up 2.8% (all figures year-to-date). The ASX 200 is only up
1.0% in the same time period.

For the moment we stand with Shiller in that we think markets can go higher from here.

The RBA did not change rates in May and it looks very unlikely to do so in June. There has been some swing towards acknowledging our weak labour forecast data by analysts and the RBA which might encourage the RBA to cut later in the year.

The US Fed released a particularly informative minutes from its recent FOMC meeting. It outlined a clear plan to start reducing the debt amassed during the quantitative easing programmes.

Such a programme would put upward pressure on longer bonds meaning that the Fed would be ill-advised to amplify that effect with hikes in the Fed funds rate. As a result, we think our view that the Fed only has one more hike in line for the economy this year is worth holding on to.

Other Assets Iron ore prices fell further in May – by  15.5% but oil, copper and gold finished fairly flat. The OPEC meeting on May 25 helped restore some stability in oil prices.

Australia The last two months have witnessed strong growth in full-time employment after more than a year languishing in negative growth territory. The key question is whether these latest data mark the start of a recovery or a statistical artefact. Unemployment remains stubbornly high at 5.8% and wages growth came in at +1.9% for the year – which is the lowest on record. Weak wages do not usually accompany strong labour markets.

Since the proposed Federal Budget infrastructure programme and company tax cuts will take some time to work their way through the economy, the RBA would do well to cut rates once or twice this year to kick start growth in 2017. GDP growth data are due out early in June and most expect a low number – and possibly even negative growth.

In contrast to the hard data, the soft data on confidence and conditions are quite reasonable. Westpac’s consumer sentiment read stands at 98 which is just below the ‘100 level’ that separates pessimism from optimism. NAB’s business confidence came in at the highest level since before the GFC and their business conditions index is the highest since 2010.

All in all, the economic scene is mixed but not bad. A lot depends on which parts of the budget the government can get through parliament. And an accommodative RBA is important.

China recorded impressive import and export data in May that beat consensus forecasts. The Purchasing Managers Indexes (PMI) for both manufacturing and non-manufacturing were strong. Nevertheless, there remain some commentators that persist in talking about China slowdowns.

China is talking up a big infrastructure initiative known as ‘One Belt, One Road’ which aims to link both ends of Eurasia and well as Oceania by land and sea. This programme, together with its stated desire to relocate 200 million more citizens from the country to the cities, could ensure continued strong growth for many years to come. Nevertheless Moody’s downgraded China debt for the first time in 26 years! China was not happy about that!

China’s retail sales again grew in double digits and industrial growth was solid at 6.5%, but slightly down on the previous month’s 7.1%.

The USA fell into a political hole when the debate about what Trump did and didn’t do with respect to the FBI chief and Russia got going. Cries of impeachment were heard from some corners but that is highly unlikely. Importantly, the airwaves cleared quickly as Trump set off on his first overseas trip as US President.

The response to Trump’s visits was mixed. He was well received in Saudi Arabia and Israel but he ruffled feathers in Europe and the NATO meetings.

The US nonfarm payrolls data (jobs growth) in May was particularly strong at 211,000 against an expected 190,000. The unemployment rate fell to a very low 4.4%. But, like in Australia and

elsewhere, wages growth is anaemic. After allowing for the modest levels of inflation, the so-called ‘real wage growth’ is all but zero.

The first quarter GDP growth reading was revised up from 0.7% to 1.2% (annualised). The first quarter results are often buffeted by weather factors so this result is not yet considered to be a problem. However, it will limit the Fed’s enthusiasm to hike rates or speed up the shrinking of its balance sheet.

Macron won the French presidency – as expected. That brought stability to markets in that region. The UK goes to the polls on June 8th in what PM, Theresa May, hopes will be a ticket for her to lead the exit from the EU. However, the early polling is not going well for May. The only real upside for her is that her opposite number, Jeremy Corbyn, does not have much support from Labour politicians. In the UK, the non-parliamentarian members of the Labour Party have a major say in who leads the party.

The Manchester bombing was yet another reminder of the constant source of instability terrorists can wreak on communities. After initially fearing further attacks from the same group, the security level in the UK has since been downgraded by one notch.

But when we focus solely on the economy, Europe continues to strengthen. It is now running ahead of trend growth!

Rest of the World

North Korea launched a missile that reached an altitude of 120 km! The US, and the rest of the world, is increasingly concerned about the proliferation of tests in that part of the world.

*Ron Bewley (PhD,FASSA) – Director, Woodhall Investment Research

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

Global conditions continue to improve

– French presidential elections spark markets

– Trump tax cuts as expected

– Surge in Australian employment

We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact your Financial Adviser.

The Big Picture

The big market rallies that started with Trump’s November election didn’t lose steam in March. But it took the first leg of the French presidential election to get us across the line in late April.

People were naturally worried that France could vote in a “Frexit” president. In round one, Macron and Le Pen made it to contest round two while side-lining the major parties. Macron is very much favoured so that, in a two horse race, he has an excellent (but not certain) chance of becoming president.

Markets surged on the news as they see Macron as steering a steady ship. The days of people expecting a rapidly disintegrating European Union are almost gone.

France is not without its problems. Its economic growth slipped to an unimpressive +0.3% in quarter 1 (Q1). Elsewhere in Europe, Greece celebrated its seventh anniversary of its debt bailout. The IMF (International Monetary Fund) now claims it was stretched by the size of the 2010 bailout.

In April the IMF increased its 2017 growth forecasts: for the UK to 2.0%; and the world to 3.0% from its previous 2.6% forecast. The IMF is not known for its positivity so these forecasts are indeed welcome signs of continued economic life.

The UK is doing quite well in every context. Its PM, Theresa May, called a snap election for June 8th to ensure that there would be ample time for the Brexit negotiations to be completed and digested before the next election. Had she not gone early, there would have been less than a year after the completion of Brexit – as it is expected to pan out. Of course, it helps that the opposition party is in complete disarray at the moment.The US produced mixed results. On an economic front, the results were not great. Employment (nonfarm payrolls) came in at about half of what was expected. However, unemployment came in very low at 4.5%.

US growth came in at +0.7% for Q1 (annualised), the slowest since the GFC. But warm weather arguably affected clothing and heating oil sales. One number is not a problem.

Housing in the US was another story. New home sales and house prices both surged over 5% for the month compared to the same month last year.

On a positive front, Trump announced his tax plan which involves big cuts and simplifications. It didn’t excite markets for two reasons; firstly, it was much as expected; and Secondly, he didn’t announce how he would pay for the cuts.

The biggest surprise of the month came from Australian jobs formation. A massive 75,000 jobs were supposedly created after a year (2016) when full-time jobs actually fell. Unemployment is stuck at 5.9% which is not good by normal standards.

The RBA (Reserve Bank of Australia) does not look like cutting rate. But J.P. Morgan and Macquarie predict two cuts – and we agree that we need these two predicted cuts in 2017. To top that, Scott Morrison at last looks like doing something sensible.

Morrison wants the May Budget to reflect the difference in “good” and “bad” debt. The personal equivalent is an affordable mortgage for your home is good but a loan for a holiday is bad. Does the debt generate something lasting and useful?

This distinction would allow the government to produce a fiscal stimulus without losing sensible management of bad (or recurrent) debt. Game on!

And while all of this has been going on, the VIX fear index and other market volatility measures have been well below average. The ‘old normal’ we have been waiting for since 2007 is here.

Asset Classes

Australian Equities

The ASX 200 had a decent April, up +1.2% to follow a wonderful March of 3.3% – both including dividends. Volatility was particularly low so the market is grinding up slowly. The way we like it!

The big dividend-paying stocks behaved at extremes. Financials stocks – like the big banks – powered ahead at +1.9%, Property at +2.2% and Utilities at +3.1% at one extreme while Telcos were savaged at  9.9%!

There are all sorts of problems going on in the Telco space that makes it unattractive at the moment. The big banks have limited growth prospects but their dividends look sustainable.

With, in our opinion, no property price bubble waiting to burst – risks in banking appear to be ‘as normal’.

Foreign Equities

Wall Street and the German DAX were up about the same as the ASX 200 in April. The London FTSE was down  1.6% on the month but that follows a string of quite good months.

The VIX ‘fear’ index (which is considered by many to be a proxy for investors taking out insurance on downside risk in stock markets) has been consistently low for some time. Even as Trump lobbed missiles into Syria, and North Korea tried to lob theirs further than the launch pad, the fear index was contained. This rally is one that investors are comfortable with.

Bonds and Interest Rates

The RBA did not change rates in April and looks very unlikely to do so in May. J.P. Morgan reiterated its prediction for two cuts for 2017. We agree that the cuts are necessary but the inflation and employment data posted in April might give the RBA a false signal that things are OK here.

The US 

Federal Reserve (Fed) did not alter rates but it did state that it seems the right time to start running down the $4.5 trillion debt built up during the GFC. It is likely that they will just let some short term debt mature without buying more to cancel out maturation as they have been doing. It looks like this process will take a very long time to complete.

Other Assets Iron ore prices fell further – by  17% in April. However, the current price is reasonable for our miners and our export data.

Oil prices slipped about  2% and our dollar matched that fall.

Regional Analysis

Australia The unemployment rate stayed at 5.9% for March and retail sales fell by  0.1%. These are poor data.

In the last couple of years our labour market has been subdued. So the March creation of 75,000 new jobs stands out as an anomaly. These data do have a wide margin of error, coming as they do from small sample surveys. We do not see this number as heralding a new surge in continued job creation.

Inflation jumped up to 2.1% making it lie in the comfort zone of the RBA at 2% – 3%. However, there were extremely big increases in petrol and electricity prices that seem unlikely to be repeated.

We see both inflation and jobs as giving false hope. However, Australia is far from being in dire straits. But someone needs to do something.

The Treasurer has the opportunity to do something useful in the May budget. It looks like he is positioning himself to deliver an infrastructure investment package. That would be great but, given the opposition and cross-benchers, getting bills passed is another matter.

China

China continues to produce strong economic statistics. But what we need from China now is some form of co-ordinated effort to keep North Korea in check.

U.S.A.

The jobs data unexpectedly fell to only 98,000 new jobs from around the 180,000 expected. But unemployment at 4.5% is really quite low meaning that less new jobs are needed compared to when unemployment was recently in double digits.

That GDP growth also came in low, which makes it less likely that the Fed will hike again soon. We think there will be at most one more hike this year – say around August.

US Consumer Confidence fell to 124 – which is a very high number in itself. The previous number was a 16-year high! Americans are happy.

Europe

The French voted as expected for the first round of the presidency election. It seems like Macron will win round two against the left leaning anti-Euro Le Pen.

The problems in Europe continue to recede.

Rest of the World

North Korea launched a couple of missiles that fortunately exploded before they left the test site. The US seems ready and able to deal with North Korea if it continues its belligerent attitude.

On the other hand, the US successfully lobbed 59 missiles from ships in the Mediterranean at Syria. While all forms of warfare have unintended consequences, it does seem that this display of strength not only helps control the terrorist group, ISIS, but also is a demonstration to North Korea of what the US can do.

The US also dropped the largest ever non-nuclear bomb on a remote part of Afghanistan. This too seems to be more of a demonstration of strength to North Korea than an end in itself.

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

Global conditions continue to improve

– The “Fed” hikes rates but markets liked it

– China continues to impress

– The United Kingdom (UK) manages Brexit well

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

– Trump rally continues on Wall Street. But are equities over-valued?

– China is back in style

– Australian economy struggles

We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact your Financial Adviser.

The Big Picture The Dow Jones just completed its longest run of consecutive daily gains in about 30 years. But is that good news? Some fear a correction, but there are always some in that camp.

Robert Shiller was awarded the 2013 Nobel Prize for his work on irrational exuberance, or mispricing, in markets – amongst other contributions. So it comes with more force when Shiller wonders whether it is time to take some profits as he voiced in late February.

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

– Trump has hit the ground running

– Australian economy is struggling

– China may again save us!

We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact your Financial Adviser.

A fascinating economic experiment is taking place. The only major economy that can reasonably be described as performing strongly is China. The US, UK and a few others are growing modestly. We are certainly in the ‘could do better’ basket for our report card.

Within this month’s update, we share with you a snapshot of economic occurrences both nationally and from around the globe.

Will the Fed trump Donald?

– The United States (US) Federal Reserve doesn’t seem to be learning

– Aussies save AAA rating

– Our economic agenda at home is pointing the wrong way

We hope you find this month’s Economic Update as informative as always. If you have any feedback or would like to discuss any aspect of this report, please contact your Financial Adviser.

Perhaps the biggest problem facing global markets, as we start 2017, is that people are possibly too optimistic about the ‘Trump effect’. The Federal Reserve – the US Central Bank – started 2015 asking us to be patient about expecting rate hikes. We had to wait until December of 2015 to get the first hike in nine years – but they then pencilled in four hikes for 2016. But they only gave us one in December 2016.

As we start 2017, the Fed has just upped the ante for the number of 2017 hikes from two to three – and then three for each of 2018 and 2019.

Much of the Fed’s (and private) optimism is about Trump cutting taxes and boosting growth through infrastructure spending, etc. He has pledged that, but there isn’t yet even a ‘back-of-the-envelope’ policy. There isn’t even yet a Cabinet sworn in. There is nothing but optimism! The US Consumer Confidence index hit a 13-year high in December!

We think Trump will deliver a much better future than the US and the rest of the world now enjoy – but such a change in attitudes and behaviour takes time. Markets anticipate growth. Perhaps they, and the Fed, are getting a little bit ahead of themselves.

If the Fed starts hiking rates in anticipation of Trump – and Trump takes a little longer to deliver – markets may not like it. The Fed should be patient as they implored us to be at the start of 2015.

We will learn a lot in the next two months. There will be two more US labour market data reports and a Fed statement. Trump will be sworn in on January 20th. But the next two months are even more critical for Australia.

Our labour force data was dismal in 2016 and the so-called MYEFO (budget update) in December did nothing to inspire. But we held on to our AAA credit rating.

Our Reserve Bank needs to act quickly but they are on holiday until February – shades of Nero playing the fiddle while Rome burnt. They don’t seem to have the mindset to do anything just yet.

But is our economy in desperate straits? Part-time jobs are replacing full-time and the last economic growth figure was  0.5%. In all probability, that  0.5% was a blip but the average over the last two quarters was as close to zero as you can get without getting there. Desperate, no; weak, yes!

The problem is that the Opposition for close to a decade has acted as though it was in power and it blocks not just bills – but the construction of good ideas – with rhetoric. We need a ‘Trump’ in Australia to shake things up. We have had it so good for so long, the so-called leaders are living off their track records like ageing boxers going into the winter of their careers.

As long as China and the rest of the world do well – as we think they will – we won’t likely do badly. But to do well at home requires a new approach. Our market posted double digit returns (including dividends) in 2017 but we are still well below our 2015 high – let alone our all-time high. Wall Street – and other markets – keep posting new all-time highs. Our investments have delivered a lot more than Canberra!

But one thing to reflect on as we make our personal New Year’s resolutions is that we, as a country, are not keeping up with the new world order. The global mantra has become tax cuts and infrastructure spending to get the world economy moving again. But at home we are imposing tax hikes on super and balancing budgets at all costs. New thinking – or, at least, energy – is needed and soon.

Australian Equities The ASX 200 delivered capital gains in December of +4.1% to add to the +2.3% of November in a very nice ‘Santa rally’. Over the year of 2016, the ASX 200 produced a total return (including re-invested dividends) of +11.8% but that figure masks the sharp swings in sectoral returns over the year. Materials delivered a massive total return of +42.9% while Telecommunications returned  7.1%. That is, Telcos had a capital loss which wiped out not only all of the dividends, but a further  7.1% to boot.

Stocks in the high-yield sectors lost heavily to the other sectors over 2016 by a hefty  10.7%. But over the last quarter these aggregate sectors swung in the opposite direction with high-yield sectors winning by +7.5% in only three months.

Our market has not been kind to the set-and-forget type of investor. In fact, a keen eye was needed to pick up new trends and the ends of old ones.

On top of that, there was an unusually large number of sharp sell-offs in only one day from stocks in the top 200! Indeed, 25 different stocks fell by 15% or more in a single day in a year where the broader index was up strongly.

Moderately-sized companies had their share prices pummelled on bad news or even just so-so news. On top of that, there was a knock-on effect to similar companies even though they did not report any problems.

Perhaps more than normal, do-it-yourself stock pickers might have lagged behind the index in 2016 – and they might be facing a similar experience in 2017.

We think the market is fairly priced and returns in 2017 might be around the same order of magnitude as those we got in 2016.

While our market languished at times in 2016, all four major Wall Street indexes made new highs near the end of 2016. Indeed, the Dow nearly broke through 20,000 in the last week of December.

For the year, the ASX 200 gained +7.0% (excluding dividends) while the S&P 500 recorded +9.5%. Our higher dividend payouts account for most of the difference. The London FTSE gained +14.4% despite having had ‘Brexit wobbles’ mid-year. The German DAX posted +6.9% but the Tokyo Nikkei was flat at +0.4%.

The Shanghai Composite went backwards with  12.3% but it might be recalled much of the angst in January was due to that market not coping with new measures to control daily market volatility.

Our modelling has the S&P facing a much brighter future than the ASX 200.

It took twelve months of waiting with baited breath but the Fed finally hiked its main rate by one quarter of one per cent in December. Our central bank did not change its rate.

After a decade of gloom surrounding rates, there is now a real push that world rates will rise on the back of economic growth promises. The trouble is, at home, we kept our rate too high for too long and we are now in the cross-fire.

Commodity prices are, in general, so much higher than most were predicting in the early-2016 slump. Our dollar moved around a little. Gold has been on the way down. OPEC agreed to oil supply restrictions, but will they work? They started on January 1st 2017 so we will soon know if they are working.

At this point in time our best forecast is that commodity prices are likely to be stable and possibly rise a little – but not too much. If oil prices go up much further US shale oil producers will open the floodgates. Since China does not seem likely to pump prime economic stimulus in 2017, its growth increases are more likely to be gentle with commodity price increases to match.

Our economic growth for quarter three 2016, came in at  0.5% which was much worse than the worst analyst expectations. Many suggested it was largely a blip and that the next number will be positive. While that might be the case, our labour force data is not stepping up to the plate.

We just recorded the eleventh consecutive month of falls in full-time employment using the official trend data. Part-time jobs have increased but they amount to about half of the hours worked per person on average.

Westpac’s consumer confidence index slumped by a big  3.9% to a level that now shows there are more pessimists than optimists. NAB’s business confidence index also fell and to levels not seen since April 2015 – but the NAB’s business conditions index held.

While the world is now starting to talk about ‘fiscal expansion’, or government spending to promote economic growth, our government is still locked in an austerity mindset. And the Reserve Bank is doing nothing on monetary policy. So we are totally at the mercy of world growth to support commodity prices and our exports.

China recorded a two year high in its monthly manufacturing index on December 1st. It then backed up with double digit growth in retail sales and strong industrial output mid-month.

China’s inflation jumped up +1.3% after a series of negative reads. That is very encouraging.

The US is really getting behind the Trump bandwagon. He has toned down some of his outlandish rhetoric and policies. People also seem to be starting to forget they don’t like him. What they do seem to like is a person with a policy to improve things and just get things done.

Consumer confidence just hit a 13-year high in December! Their labour force data came in at +178,000 new jobs for the month and that was very close to the monthly average for 2016. It was a good result but nowhere near strong enough for the Fed to act to cool things down.

There is a danger that, in a few months, people might realise that they jumped the gun on growth expectations and a small bout of volatility could follow. But the US economy is looking really great for the year after (2018) and beyond!

The German economy is expected to finish 2016 strongly. Spain is even considering getting rid of the siesta in return for an earlier close to the working day to improve productivity. Perhaps they have installed air conditioning!

Although, sadly, terrorist attacks keep occurring across Europe, the rest of the economy is stabilising.

Christine Lagarde – the then French Finance Minister and now Managing Director of the IMF – was found guilty of negligence with regard to $400m of fraud perpetrated on her watch. However, she was not penalised because the court determined that ‘she was distracted by the GFC’ at the time. Some people get all of the breaks. And what happened to the old excuse, ‘the dog ate my homework’?

Japan’s central bank made a very optimistic statement about its economy but that country is plagued by falling population levels. Prime Minister Abe made a good fist of trying to pump prime the economy, but sadly it did not do any better to stop – or slow-down – the slide. It just recorded the ninth successive month of negative inflation reads.