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ABC News 24: Business Today -

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Captioned Live. Good Business Today for Australian Network. I'm Whitney

liquidity boost, central banks Fitzsimmons. Coming up -

agree to

agree to ump US Europe's banking system to kee agree to ump US dollars in

credit flowing. A rogue trader may have cost UBS $2 may have cost UBS $2 million.

And the hurdles and delays to the NBN are the NBN are mounting but will

it pay off. Those stories

coming up shortly but first

let's take a quick let's take a quick look at the

what's happening around markets and we'll have more on

markets in a moment:

For I'm joined by Christine Ip from Bell Direct. Good morning.

Trade was solidly higher, is

that likely to continue today? Good morning, Whitney.

Well we are expected to follow Well we are expected

the overseas markets higher. We saw huge gains on overnight

markets and it will take some

very negative news to shake

that lead. There was strong

gains on the Australian share

market yesterday. Worth a

mention was Myer, shares up

after its net profit yesterday met expectations and help support other retailers

like JB Hi Fi which is up about

1.7%. Amongst the leaders were

the big banks with the big 4

Today's session is expected to banks making solid gains.

start on a positive note. SPY

futures is pointing to gains

over 1% so it should be a

positive end to the week

today. Elsewhere around the

region what will investors

region what will investors be

focussing on? Investors around

joint efrtss from the ECB and the region will be assured by

the Federal Reserve on

providing US dollar liquidity to euro banks. The news will

provide a much needed dose of

optimism in regional optimism in regional markets.

fears We've seen heavy sell offs on

fears Greece will default its debt obligations. Yesterday

Nicolas Sarkozy and Angela

Merkel commented the future of

Greece is well and truly within

the euro zone and

the euro zone and that's gone a

long way to relieve some of

those fears. Good news out of those fears. Good news out

China as well. We heard

has like lsh - comments that China's inflation

has like lsh - likely reached

a turning point. Let's move to

the US. Trade was higher there and employment data? That's despite that negative consumer

did rise by 11,000 last week right. Jobless claims in the US

and we did

and we did see an index

measuring manufacturing in the

empire state fall for the

fourth month in a row. That fourth month in a row. That did

little to dampen US stocks rose on a coordinated little to dampen US markets. US

plan by the central banks to banks. Analysts are predicting provide liquidity to the Europe this to be a short-term It doesn't solve the this to be a short-term bounce.

debt It doesn't solve the sovereign

debt crisis. But debt crisis. But it's still

very positive for markets and yesterday every single sector finished in positive territory. Strong performers were the

banks. A very positive session

on US markets last night. US

stocks are up for the 4th day in a row. In Europe shares

rallied on support for Greece? Huge gains in Europe.

We saw the FTSE up almost 2%. The DAX was up almost 3%. Great

news for the European banks The DAX was up almost 3%. Great

with the ECB announcing it will improve the liquidity for

European banks and that European banks and that did see PNB Paribas up 13% while Societe Generale baned 6%. European investors were seeing

a more unified approach by the

compral bank. Sear weing the

ECB, the Bank of j pan, Bank of

Bank England and the Swiss National

Bank all working together so

that's very positive. There was a spot of bad news though, UBS a spot

falling over 10% after a rogue

trader caused a $2 billion loss

in its investment banking unit. But aside from that there were gains across European markets surging gains across the board.

overnight on the back of overnight on the back of that coordinated effort by central banks. Briefly on coordinated effort by the

commodities, oil and are they looking? Gold has commodities, oil and gold, how

fallen on news that the credit

ease. Gold crunch for the euro banks will

ease. Gold has climbed almost 25% this year, but it's

currently weakened a little and

currently trading at about US

higher. Oil is up about 0.6%.

We're seeing more demand for

commodities as the euro zone

debt crisis ease. So oil

another high at $89.40 a barrel. We'll leave it there.

Christine Thanks for the update. That's

Christine Ip from Bell Direct

there. Let's take a closer look

at what's happening with

currencies and commodities:

The world's most powerful central banks have agreed to

act together to stem Europe's

growing liquidity crisis. growing liquidity crisis. The

to banks move will see US dollars loan

short of currency in the ongoing euro zone debt crisis. The move by the globe's

collectively biggest central banks will

collectively provide

commercial banks with 3 rounds

of loans in US dollars. To

stabilise Europe's financial system. The European Central

Bank will be joined by the US Federal Reserve. The Bank of

England, the Bank of Japan and England, the Bank of Japan

the Swiss National Bank in the

address a operation. The action will

dollars with held on lender

concerns about the region's government

crisis. Financial strains are government debt

rising and again a real risk that the major collective bold action there is

economies slip back instead of moving forward. Speaking from

Washington, IMF chief Christine

Lagarde encouraged major developed economies to developed economies to help

break the weak growth and high

debt cycle that shows no signs of

Commission has predicted euro

zone economic growth will come

to a virtual stand still in the

second half of 2011. Ms acknowledged the global economy had been made worse by

dysfunctional politics and the

debt crisis has now hit a

dangerous new economic phase. A

crisis of confidence has increased resulting in a

detrimental flow on effect of

detrimental flow on effect of restraining demand, investment

and employment. Overall growth is continuing to slow down. The advanced economies in

particular are facing a bumpy

recovery with unacceptably high levels of levels of unemployment. The

euro area debt crisis euro area debt crisis has

worsened. But it was not all

doom and gloom. Statements from

German chancellor Angela Merkel and French President Nicolas Sarkozy

Sarkozy have reassured Ms

Lagarde over the future of the

euro and of Greece's place in the European Union. It's a clear indication from

are the two clear leaders from

an economic point of view in that Eurozone of 17 that Eurozone of 17 members, that the future of Greece is within the TRANSLATION: within the Eurozone. TRANSLATION: A long story TRANSLATION: A long story short the euro provides economic

the euro provides economic

growth and jobs and it provides

wealth for Germany. As Europe's

biggest economy it has a duty

and responsibility to make its

contribution to securing the

euro's future. But there are still fears the Eurozone debt woes

in the developing world. The International Monetary Fund

will meet with world banks next

week for the next chapter of

this ongoing financial collapse

this ongoing financial collapse

saga. And to look at how this impacts currency markets I

spoke earlier to John Noonan,

senior currency strategist with Thomson Reuters. Welcome to the program. Good program. Good morning. Of course we're at the end of another busy week, let's start

with the euro. It received a

boost after that announcement by the banks, what can you tell us? Yes, well it's a very interesting situation that's developed there. Obviously

developed there. Obviously the

situation in Europe with the you're bean with the you're bean bank's ability to get US dollars ability to get US dollars in

the funding market had been frozen up completely. This frozen up completely. This is a

scary event. This is what led

to the GFC in 2008 was a

freezing of the interbank

lending markets. So the moves

by the central banks around by the central banks around the

world to come into provide

funding for those banks is certainly a

development. They've provided a

patch, if you

patch, if you like, but the

worry is A, the fact that it

got to that stage, but

really is just treating the

symptoms of what is a greater

disease and that's the European

sovereign debt crisis. It's

only temporary, so, you only temporary, so, you know,

it's good news for now but

certainly a lot more work has

to be done. So it's not

necessarily the best strategy

then that they could have taken

, it's really just sort of putting

putting another band aid on of another band aid on a gaping

wound? The central banks are in a different position than the

European leaders, the

governments. The governments -

it's really up to the governments to fix this problem

and to make moves for a fiscal

unity in Europe to get passed

the sovereign debt crisis. But

what the central banks did is

necessary. At least it has

stopped the freezing up of the interbank lending

interbank lending markets in

Europe for US dollars which was

a very worrying development. But again it's just patch. It's something that was

needed to be done and maybe it

buys time for the governments

to do more but that's all it

is. We are seeing a lot difficulties in coming to

agreement on policies across EU

nations. Why is that when nations. Why is that when they

have a common goal, when they

know they're in a dire

know they're in a dire situation, why are we seeing

this difficulty in coming to this difficulty in coming to an agreement? A lot of it is

cultural as well. You have cultural as well. You have a situation, you they are democracies and the German people, the German public, the German taxpayer is

very worried that the Government is - Government is throwing good

money after bad by supporting some of the countries in

southern Europe: So southern Europe: So they feel

that there's just a limit to

how much they're willing to

support. While the countries in southern Europe and other

peripheral countries in Europe,

they're very tired of Germany

dictating terms on how to run

their fiscal budgets so the austerity

burdened with, the people of

Greece and Ireland, is making

life very difficult for them.

So you have that push and pull

all the time and that's why

you're seeing the steps so hesitant. I think the worse

hesitant. I think the worse

that it gets the more - the

closer the feet get to the fire

the more likely you're going to

see some solid action which is fiscal union but it's going to

be a very difficult process and there's still there's still hurdles to

cover. It's interesting, isn't

it, because it's not defaults. So if Greece defaults

or when it defaults, will

or when it defaults, will that

be then the tipping point? Will that provide the impetus for people to people to say OK, we've

actually seen a default, we need to do something serious now? Well, hopefully they do something before that happens but you're right. The way the

markets are pricing it, it's not a question of if, it's a question

question of when. There were some fears it would happen next week. I don't think that's

going to happen. The EU going to happen. The EU meets on the weekend

on the weekend and then the

troika go into Athens on Monday

to decide whether to give Greece the which is part of their which is part of their package.

If they don't give it to them

then Greece will default because they're out of money. I

think they will think they will give it to

them. There's a lot of noise

coming out of Germany that they better meet all their requirements but even if they

don't I think they will get the

money so it will be avoided

next week. It's how well this

default is managed and that's number one. But number 2 is

will there be containon -

contagion. Will they look to

Spain or Italy or Ireland and

say they're next which is what happened to the banking crisis in 2008. There's many in 2008. There's many hurdles ahead it's hard to see this

situation working out in situation working out in a

smooth, happy ending. You

mentioned Italy, the other interesting story was this prediction that China was going to come to the party and the

rescue really there and rescue really there and then that didn't happen. What do make of that? Riding in like the cavalry. That's right, they're going to save the world. China's one of the few

places in the world, one of

few countries in the world that have any money left have any money left to do anything. That was really just

a bit of a false hope. China's

not stupid. They're not going not stupid. They're not going

to go in and buy debt of

European countries when Europe

is under so much stress at the moment, where they could lose

quite a bit of money on it. quite a bit of money on it. I think China will give think China will give these pledges of still believe in Europe, we will still buy their debt but

only on their terms when suits

only on their terms when it

suits them. So yes, I think

that was a passing feeling that went away

quickly. Italy is going to be quickly. Italy is going to be very interesting because the

EFSS which is the European

stability fund that is going to

be decided on this weekend or

in the coming week as if that's going to be built up or not because the ECB has because the ECB has been

supporting the Italian bond

market. If they stop supporting

it and pass over the ESFS and

they don't have enough funds we

could start seeing itall yn

yields move up again and a new phase of this phase of this debt other interesting flow on

effect is that Asian currency s

have been sold off. This has

weighed on the Australian

dollar. Others are saying it

could trade below parity in the

short term. Why firstly Asian

currency sell off? Very

interesting. There's two

reasons for that. One is this

dollar shortage in Europe, when the the European banks couldn't get

US dollars. It create asspill on effect. Hedge on effect. Hedge funds,

leveraged funds, real money

funds who are very, very funds who are very, very long Asian currencies because

been the only place to put your

money, it's where the growth

area has been for the last 2

years, they suddenly need US

dollars so they'd have to get

out of there what they call high positions, sell those

currencies get US dollars, because everyone's looking to

horde dollars. We've seen big moves

moves this week in hedge funds moves this week in hedge funds and real money

out of Asian currencies. Which Asian currencies are suffering

the most? The South Korean the most? The South Korean Wan for instance in the last for instance in the last couple

of weeks has fallen 3.5, to of weeks has fallen 3.5, to 4%, despite the

Korean central bank has been

intervening trying to slow that

move down in their currency.

What happens, the Australian

dollar is a proxy for investors

looking to invest in emerging

markets in Asia so the Australian Australian dollar benefitted

when those currencies were the

absolute hot item on the

shelves, no that they're liquidating down with it. We'll have to

leave it there but thanks for

joining our program today. Thank you, Whitney. Police in London have

arrested a suspected rogue

trader alleged to have

trader alleged to have lost

banking giant UBS $2 billion.

It's a blow to switland's

biggest bank which is trying to build its reputation after build its reputation after the global financial crisis. It supposed to be a thing of the past. The Swiss Government had

to bail out the massive bank

during the global financial crisis, tight new regulations

were supposed to prevent what's alleged to have in London. UBS trader Kweku Adoboli is accused of Adoboli is accused of running

up $2 billion in debts. At 1am

this morning the city of London

police were contacted by UBS

about an allegation of fraud by

one of their employees and at

3:30am detectives from our force arrested the

man on suspicion of fraud by abuse of position. It's abuse of position. It's not just the immediate losses that

are likely to hurt but the damage to the giant's reputation after made of reform and

restructures. The problem is if

you're employeeing intelligent people and they want to around these systems there is chance they around these systems there is a

chance they will find a way.

That is why what's needside a

moral compass from the top of

the organisation so that the organisation so that people

know what's right, know what's wrong and they of doing these sort of things in the first place. If the

losses are as reported, it's still doesn't put still doesn't put this case on top of the rogue trader's league. That league. That dishonour belongs to Jerome Kerviel who to Jerome Kerviel who was

arrested in 2008 after running up losses of more than $6 billion while working for

Societe Generale. And perhaps

the most famous of all Nick

Leeson who broken Barings Bank

back in 1995. That was supposed to be bad practice dies bad practice dies hard. Unless

you separate out that wild west

casino operation from the world

of banking inhabit ed by

ordinary men and women in high street and ordinary

businesses, we're in real trouble. The British Government

says it is going to split the risky investment arms of banks

from their retail sections but that's years away and in the

meantime it's clear rogue

traders can still cause chaos.

A conference in Beijing A conference in Beijing is bringing

spot light. China is imposing

tougher export restrictions tougher export restrictions on the highly prized minerals. Foreign governments and consumers alike are crying foul over the move which cuts off supplies and is anticipated to

drive up global prices. We may hear little about them but

they're crucial ingreed in products that make in products that make our

modern life possible. Rare

earth minerals are used to earth minerals are used to make fibre optic cable as well as

goods such as smart phones. world's supply and the country's efforts to country's efforts to limit production citing resource depletion and depletion and environmental degradation have alarmed its

overseas customers. Japan is some of the company some of the company already transfer their production in

China inside and at the same

time the Government trying to

develop ing new consumers including the EU, the

US and Japan are joining forces

to search for mineral

substitutes seeking to cut down

their dependence their dependence on China's

rare earth and many believe rare earth and many believe that China has other motives in

imposing export quotas. What

they're doing is requesting the people literally make their people literally make their end

use products here in China and

they're requesting companies

that want to come to China to

actually transfer valuable

technology to other Chinese

producers can benefit from that knowledge. Earlier this year the World Trade the World Trade Organisation rejected rejected China's claims that

its export quotas

protect its environment. But

the battle for rare the battle for rare earths seem set to continue. In Australia the debate is

continuing over the benefits of a national broadband network.

Is it a massive waste of money

or an essential and much needed

piece of infrastructure piece of infrastructure which

will give the country an

advantage in global market places? places? The $43 billion network

is now well under is now well under construction

with Armidale in NSW the next town scheduled to be town scheduled to be connected. It's Labor's great nation

building plan. 100 megabits per

second of high-speed internet

to 93% of the population by 2020

2020 with a bill of $40 billion

to go with it. It's a Rolls-Royce fibre to Rolls-Royce fibre to the home

model and some who have studied whether it will ever pay for

itself. The company's aiming to

get around a $33 average

revenue within 2 years and

that's a good 30% or so above the best benchmark paid by

broad pand access seekers at

the moment. It's a pretty tall ask. Getting the NBN ask. Getting the NBN built

though is the biggest issue at

the moment and one of the keys to minimising the huge cost is

access to Telstra's existing

network. The Government and

Telstra have agreed to billion deal, the competition

regulator though is taking time to be convinced. People expecting that Telstra and the ACCC would be closer

So at least in my view we are

looking at a potential delay of

the shareholder vote which the shareholder vote which is

scheduled for October. If that

is the case things might sort of move back into next year. Even without year. Even without the Telstra vote the project behind schedule but at this stage Teo Mask is not

concerned. Tnkts 10-year roll out schedule is academic in the sense that we need to get over

that first bump in terms of the

next election because we have

very Different views between

the incoming Government and the Coalition on the other

side. All the people we spoke

to for this report mentioned the next election as one of the

biggest risks to the NBN

because of that

because of that policy difference between the sides. However, Independent tele communications analyst

Paul Buddha who focuses on the

technical side rather than the

finances say those building the

NBN are determined to see NBN are determined to see it

finished. I haven't come across

one single vendor who is saying

let's try and delay it and something else will happen after the next election. Paul

Budde is critical of the way the Government is selling the NBN to the electorate. He

believes it's focussing on the looking at cost benefits, $30 billion could be saved in health care, you know, if you have have an NBN,

smart - that es where you talk about the social and economic benefits are. There has been

too much emphasis on high-speed broadband in telecommunication

services and there's much more

in it than that. The jury is still out on the growth still out on the growth of

wireless communication and its

impact on the network. As he launched Optus's 4 G network chief executive

with the NBN. We think people

will certainly use the NBN at

home and in the office where they can get access to they can get access to for fairly heavy band width

requirements. But as they requirements. But as they go

out and about they will want to

get the benefits of a lot of applications and content and for that they will use the

wireless networks. RBS's Ian

Martin though isn't so sure. He thinks wireless take up will be

a lot higher than those building the building the NBN are estimates. The fixed

about 3% last year and that's

the third year of decline.

Largely because the moor

valuable traffic are voice and

even more valuable is moving across from fixed

loan to mobile. Just who is right should become clearer right should become clearer as

the NBN is progressive turned

on. Retailer Myer says it has weathered the worst consumer environment it has seen in

years. The department store

managed to post a solid net

profit of nearly $160 million been achieved by cutting

costs. Myer had many excuses to

deliver a poor result for the year. The impacts of floods year. The impacts of floods and cyclones certainly been thrown

at us, not only to mention a high degree of instability in

the political scene but our the political scene but our

strategy is on track strategy is on track despite the worst conditions I've seen

in 30 years. CEO Bernie Brooks

says people simply aren't

spending. The highest spending. The highest saving

rate that we've seen since 1983

at above 13%. And that's reflected in Myer's sales

figures which are down 3.8%. We're actually seeing

people deleverage and consumers

actually deleveraging and paying off paying off debts, paying off

the home, just getting that bit

of a step ahead of a step ahead because they

all got spooked really at the

GFC. Despite the gloom Myer

managed to post a net profit of

$159.7 million for the year. It's more than double

last year's profit but that

mainly because of the one-off

cost Myer had in floating the company on the

in late 2009. Leaving aside those costs, the profits are marginally lower this marginally lower this year. In the current trading environment the current trading environment we think that's a we think that's a solid result. But retail analyst Rob

Lake says the strong result has

come at a cost. Anyone who

shops there can see that shops there can see that the service levels are service levels are not what

they used to be and that

they're falling further and

that Myer are doing this to

save money but they do it at

their peril. Have jobs been

lost or have they expanded and not put people on? They've

shaved hours and they've not

replaced people so that the

number of heads on the floor has

has fallen. Myer says that's not the case, not the case, that while it has restructured staff including

reducing numbers in its head

office it's working on

improving customer service.

Myer is also looking to revamp

what even it admits is an average website and it's reducing ranges that reducing ranges that aren't performing well such as electrical the 2012 outlook isn't looking

that promising. We forecast our

profit could be up to 10% profit could be up to 10% down.

From a point of view a number

of head winds. We've got $48

million worth of additional

costs this year. For retailers

it's looking to be a very

mediocre Christmas. And now

let's take a look at what's

making headlines around the

region. The Standard looks at a

survey from the People's Bank

of China which shows expectations of further rises

in food and housing prices. The 'Financial Times' reports

Brazil's largest independent investment

investment bank is looking to

strengthen its foothold in Asia. And the 'Wall Street

Journal' says Morgan Stanley's

chairman and former CEO John

Mack will step down from the company's board at the end of

the year. That's all for this

edition of Business Today. I'm

Whitney Fitzsimmons. Thanks for joining me, enjoy your

day. Closed Captions by CSI

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Live. This morning chemical

inferno, thick, black smoke

rises above Canberra as fire

fighters battle a massive fire. The Prime Minister Julia Gillard to outline future

reforms for Labor this morning.

this morning. The step mother

of Australian girl Zahra Baker

pleads guilty to her murder. And a shock move in the AFL coach Ross Lyon abandons St Kilda and moves to Fremantle. A very good morning, you're watching ABC News 24, I'm watching ABC News 24, I'm Jane

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