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Good morning. Welcome to business Today for Australia Fitzsimmons. Coging up - market rebound, US stocks snap

losses toward a Greece. Patriotic appeal - MPs to pass harsh au.z f economic priority - Britain

pushes ahead with trade economic priority - Britain

with pushes ahead with trade deal with China, despite human rights concern s. First, let's start markets. The local session will

on that start soon. We will have more

For more on the market

action I am joined by Michael McCarthy from CMC markets. The

local session will start soon.

What is the focus today? The

focus will be three things - eke look focus will be three things - we

and we will be watching Shanghai composite

the moment the long futures are

indicating a rise of 0.75% or 37 point on the index. Where we will go happens there will depends on what

rest of regional markets? In

Jap European Union we have some trade data released this morning at

Later in the day around 6 trade data in Hong Kong. Other than that, it's o'clock tonight we will have

day across day across the region see yesterday. I would expect to

and if we see commodity prices market move over to the US, rebound move over to the US, there was overnight. What was behind that? Clearly that? Clearly the headlines that? Clearly the were dominated by the European that? Clearly the headlines

debt

debt situation, the potential

for resolution there and that

markets globally. But we also is certainly a positive for

had some

in the States. I think it indicates how strongly in the States. I think it

sentiment can play a role in

the current market. The data

itself wasn't stonking but it

showed that personal incomes

had grown. We saw other had grown. We saw other stocks put in zr strong put in zr strong performances

to take the markets there by up

more than than 1%. In Europe in was a mixed session there. That decision? Yes, it was very is largely due to the Greece is largely

patchy there. Sentiment is

still nervous. We did see a

good fliez tu row which gave a

positive tone to the overall but it was definitiated

country by country. Until we

get through this 3-day debate

that the Greek Parliament is

going through. I don't think we

European markets. Before will have a clear direction in

European markets. Before we go,

let's just take a brief look at

currencies. How is the Australian dlor Australian dlor looking? The

Australian dollar is at 2-month low, trade ing around

continual pressure. While It appears to be under

continual pressure. While they

remain under pressure I think

the Australian dollar will too.

That's Michael McCarthy from CMC

from CMC market. Now let's take

a closer look at what's happening with currencies and

commodities.

The Greek Prime Minister The Greek Prime Minister

is rallying for support for his

austerity measures to be passed

in Parliament this week ahead in Parliament this

of an expected vote this Wednesday or Thursday. approved if the debt Australiaterity plans must be

count I have to receive the approved if the debt ridden

next instalment of loans from

its international bail-out plan its international bail-out plan

is rapidly approaching for the and avoid default. Crunch

Greek Government as the country's Prime Minister tries

to seal the deal of approval for his new, albeit unpopular,

austerity measures in the Greek

Parliament. Papandreou is all too aware of the consequences

should the presh - measures blocked it could mean Greece

will miss out on the next ib staultment of a crucial will miss out on the next ib

bail-out lean. There is still

the real risk that Greece could default on its he's calling it a patriotic

duty for united parliamentary

support to stave country and

vote in favour of his austerity plan. TRANSLATION: It is a condition

for us and the Greek for us and the Greek Parliament

to do our duty during these days. A absolutely necessary one.

Placing the country, Greece,

move everybody and - everything

and not our party political

interest. The Greek Prime continuing negotiations with Minister is also committed to

the International Monetary Fund

and the European Union on the

terms of the loan to Greece.

And on the details of the austerity measures.

TRANSLATION: We will negotiations, not in TRANSLATION: We will continue

Whether decision are taken not

on television, in difficult

decisions not in easy ones. By

persuade ing because without

per situation and without credibility you can't

difficult passage. As the negotiate. It's been a

country's main opposition

parties have so far intense European pressure parties have so far resisted

intense European pressure to

back the new austerity The main Opposition party back the new austerity bill.

leader believes there are flaws

in the thinking behind the austerity bill rates should be lowers rathered

than raised to stimulate the

economy in recession. He does,

however, support cost cutting

pressures and the - measure s

government assets in an the sale of some

voluntary privatisation plan. government assets in the

struggling to The country's economy is The country's economy

struggling to stay afloat a -

amid the crisis. Ratings agency

lost about agent pth of their Moodys says creek banks have

private sector customer deps

yits so far this year and there are warnings that institutions would face severe cash shortages if outflows of deposits increase. European bank verse deposits continued to

met this week to come up with their own plan their own plan to tackle the

problem. The French Government said France would said France would help Greece

by gives it 30 years to repay.

Meanwhile, the people of are suffering.

TRANSLATION: I think the new

measures will be like the

previous once. It's like having someone down and you kick tem

in the face. Every kick makes things worse. The same thing 457ing. Greek unions are

preparing for a 48-hour strike

to protest the upcoming to protest the upcoming parliamentary vote. TRANSLATION: The measures TRANSLATION: The measures will create repetitive social explosion s that will explosion s that will be uncontrollable. We will all

experience a social clash and

no-one knows where it will be -

lead. It will be out of control. Without control. Without the bail-out

funds, Greece will run out of

money in mid-July and the first Eurozone country to

default on its default on its debts. Questions over China Questions over China ease human rights record hasn't stopped a raft of multibillion-dollar trade deals

between Beijing and Britain.

The zuk scrambling to catch up with its rivals France and

Germany in win ing trade deals with

with China. Marching bands, soldiers on parade and a man in

a feathered hat. a feathered hat. The Foreign Office Office this morning the Chinese

Premier was given all the ceremony that Britain can lay on for a visiting foreign leader. But after a sunny

welcome outside, some hard

diplomacy inside. An and a

warning from David Cameron that

China must do China must do more to respect human right tones stability and protion perity. We're - prosperity. We're different countries with

countries with different count

hi ris and we should show each

other respect but we are very clear clear that political and

economic development should go

hand in hand that one supports the

Mr Cameron raiseed specific case of human rights concerns

over lunch but Mr Wen over lunch but Mr Wen was

equally robust saying the equally robust saying the State sthait states should not

lecture each other. Our human right, China and right, China and the United Kingdom should respect Kingdom should respect each other, respect the facts, treat

each other

each other as equals. Engage in

more cooperation than finger

pointing. And resolve properly our differences our differences through dialogue. Sometimes diplomacy

needs to be decoded but not

today. Diplomats said that

Premier Wen's stern words about Britain not pointing Britain not pointing the finger at China over human rights

reflected a again union

irritation & at being

repeatedly stress pressed over

his country's record. The question is whether his

irritation got in the way of

the trade deals being hamerred

out in there. For no it appears not. Around the Cabinet table

they agreed 1.4 billion wounds

worth of new deals of businesses they lift add ban on

selling chickens to China and

they signed a swathe of new

trade commitments. All too address Britain's poor record of exporting goods

China. It appears France's

Christine Lagarde has sewnup

last-minute support for her to

get the top job at the International Monetary International Monetary Fund. # Dominique Strauss-Kahn

resigned more than a month ago

over sexual assault charges.

Europe widely support s Lagarde and the US has Lagarde and the US has not given given any indication it won't

support her. While Agustin Carstens has won the

endorsement of Latin

country ace long with Australia

and Canada, the voting system

favour s the choice of Europe and the United States. The 187 nation fund and emergency lender

lender is in the middle of

tense negotiations over

Greece's massive bail-out. A

decision on who will get the to

be job could come as be job could come as soon as today. Australian cattle producers are concerned

Indonesia won't permit them to

sell cattle there until

October. It's been October. It's been nearly three

weeks since live export s were

suspended over concerns over

live cattle exports. Cattle

yards in Darwin are bare at

what should be their busiest time

time of the year. A multibillion-dollar industry

has been brought to a halt by the Federal Government's ban on live cattle exports. While it

negotiates to resume the trade,

it's offer ing assistance it's offer ing assistance to people who are now out of work. I work. I can understand that people across the north are

doing it tough and that is why I've brought forward this I've brought forward this ak

package to assist those people who

who have lost their

employment. Employees and small business owners will business owners will be able to

access payments equivalent to

the dole, dated to the start of

the ban - backdated to the

start of the ban on June 7. This industry is 7. This industry is burning.

Talking about some minutia is

calling for the Prime Minister

and the Foreign Minister to go

to Indonesia for urgent

talks. It's outrageous. It talks. It's outrageous. It

needs to be fixed and fixed fast. They're putting all

their focus and energy into putting people in job on to welfare. What everyone wants is

to take up the cudgel s on behalf Government says they've given

Indonesia guidelines for Indonesia guidelines for the humane slaughter of humane slaughter of animals. I want to get this industry want to get this industry up and running for and running for the longer term. Cattle term. Cattle men say they're

grateful there's been good rain

across the north. If we didn't

have that, who knows have that, who knows we would

have been shooting cattle. The

Federal Government is still negotiating with Meat and

Livestock Australia to provide

$5 million to help produce ers

through the through the hiatus. Wool commodity markets have suffered massive volatility over the

last couple of week, particularly the oil sector which has had an unex etch expected slump. I spoke earlier

to Jonathan Barratt. Welcome to Business

Today. Morning. Now, what is

behind this unexpected drop in predicting much higher

prices? I guess it prices? I guess it all comes

down to what the IEA came out

with. This is where the with. This is where the markets

really decided to have a rethink. It also comes at a time when Bernanke has come out

and said, hey, in is the end end of the stimulus. So. There's a lot of crude coming

on to the market. So you have

to see the price slump. It's good

good news for Ben, whether or

don't know. We will get to that

in a moment. But I want to ask you what

you what is behind the

ing the reserves? This is the third time but is it third time but is it an emergency? Is it an emergency? This is I think of the key his lists. Whether

we don't know what's happening

in the rest of the world in the rest of the world or in

America and Greece, it could ban

ban pan out to be an emergency and

and they've pre-empted it. But

when I look at it there is no

emergency at the moment. You're

an export. Obviously you hear a lot of Murray ing s in the

field. No murmuring leading up

to the decision in No, this was

a surprise movement. That's why we saw we saw that effect on the crude price where it suddenly dropped

across cross the board. Now

the market is looking at it as the market is looking at it as

a tool that the Western

economies or those economies which aren't performing they

will use to alleviate pressure

on the economies. A 10% drop in

the price of crude as a result

of more supply will feed

through these ailing economy, particularly the US. And Europe. So at the end of the

day this becomes a good thing.

It's also good because it means

the Fed are not spending any more money. So we look at it as

like a Q E3 but it's the like a Q E3 but it's the IEA 3,

in a funny bay Way. That brings

me to my next point. I wanted

to look at that in more detail. You saying that the United You saying that the United

States is using these strategic

reserves as a way to stimulate and we think. We feel it's a change

of direction in using toil

tools that are used. It's tools that are used. It's a global fool tool. If you think

that OPEC happened to that OPEC happened to manage

the supply of crude on to the

world market, now we're seeing

the IEA is a world of force.

Not just for emergencies but for emergencies in the for emergencies in the economic sense. So this in my mind

becomes a tool which will always overhang the activity in the currencies always overhang the market. So I see this as

I see this as a new tool that the world economic leaders are going to use to say, if aoh peck do this, we will do that

th. So given that Q E3 has th. So given that Q E3 has been

so inpalable and I think Ben Bernanke was pretty sure that he would have a tough job

trying to sell that. Do you

think he had anything to do with this IEA decision then? I

would like to be a fly on would like to be a fly on the wall but if anything wall but if anything I feel

sold the correct way. This is

being sold as a global 28

members all got together and

said there's an issue. So let's

solve it. Let's solve it. Let's lowter costs of inputs so if we lower the inputs so if we lower the cost of inputs that will help the economy. I think the Fed has

something to do with it

because, as you suggested, Q E3 would not work. People would just not buy it. So they have been to

been to be smartiner ow hay use

it and do things. This is one

tool they will use to perform. I wonder what other

tools they have up their sleeves limit be interesting to see. The interesting point,

though, too is that now that

weave seen the price come off

the boil across the globe,

we're yet to see petrol prices

follow. Why is that? That will

be a lagged effect. Is that

always the case, though? It's

always the case. You will hopefully find that we will hopefully find that we will get less pressure at the less pressure at the bousiner the coming months. Remember,

there's a lot of taxes involved

in the price that we receive levels. But at the end of the

day, if the global price comes down it will come down. At the

end of the day it also end of the day it also works on

what we purchase and how much

we purchase at what price. So

that will feed through. Earlier

in the year, Libya was slay

Playing a major role in the oil price in the Middle price in the Middle East of course. What roll is it course. What roll is it playing now? This is intriguing. This decision was made at when the economy was slowing decision was made at a time

down and the rebels in Libya

hand. Just recently Gaddafi now were getting the upper

is a war criminal. So you have

to start to think more about it

because the coalition will come

in and do something. We might

see an exit of gad in some way

releases a further 1.4 million and all of a sudden that

barrels on to the market which is the market starting to discount or are they just

waiting? That in itself will

also weigh heavily on the price

of crude to trade higher. So these elements and the low slowing

slowing in the US economy slowing in the US economy which

obviously would mean slowing in

demand, does that indicate that

we will sit around the $90 US we will sit around the $90 US a barrel? Our yearly predictions were for the price of crude to barrel? Our yearly predictions

remained around US remained around US $100. We are

below that but we feel that the

price, if it stays around $90

and $85, represent s solid

buying opportunities for hedges

and investor s because we feel

that three-quarter we should

see a pick-up and strength will

come from Asia and the US because we feel that thing come from Asia and the US

that it will start to pick start to pick up. So we feel

towards the quarter four, so towards the quarter four,

gravitate higher around that oil price also start to

time. On another subject, wheat

- we've seen a massive slide

over June, it's really the

biggest monthly fall since 2008

what is happening? We had a lot

of the food agencies come on

and talk about food inflation. and talk about food inflation. That coincided with the harvest

period in the States. We've had

good weather ven, so a lot of a series of dry weather,

that crop is now coming off.

The yield yields are OK but at

the end of the Kay the

important thing is that the

harvest is going well. There's

45% complete, that's more than

6% at the same time last year.

When we see the northern hemisphere harvest, the farmers hemisphere harvest, the farmers

sell it at whatever they can

make because they are at good

levels so they will sell these

spot price for wheat rather

than hold back. So is why are seeing than hold back. So is why we just an anomaly? It's a normal

event that occurs - what we

would normally think is we

would come back into the wheat market because it is a terrific

wheat dip. We know the trend is for

wheat to trade higher., wheat to trade higher., with

Asia continue ing to go towards

wheat. This is an opportunity

for farm Force look at wheat -

- for investors to look at wheat as an opportunity.

Corporate watchdog ASIC

says a cowl ruling directors of shopping centre eight current and former

directors of shopping centre

owner Centro sends a warning to board members of all company.

The Federal court found the

ing billions of dollars of members guilty of not disclose

short-term short-term debt. Held by sent

classifying them as Centro Properties Group by

or long-term lights. ASIC classifying them as non-current

chairman Greg or long-term lights. ASIC

judgment hments the danger of

board members just relying on

the advice of management or

auditors and the delegating of

duties. Holden has renewed its

push for greater government

support to help secure of

future of Australia's car

industry. Holden managing director Mike Deveraux says uncertainty about Government's decision to scrap the green car assistance program program has threatened manufacturing investment.

billion fund was expected to manufacturing investment. $1.3

inject millions local industry but two-thirds inject millions of dollars into

of it was withdrawn to help

rebuild Queensland after the

floods. There has to be some

type of co investment poll

which is the Government in this

country to be able to attract the hundreds and hundreds the hundreds and hundreds of

millions of dollars of capital

investment. The Australian says it fears Adelaide's says it fears Adelaide's Holden

plant could miss out on

contract s without contract s without government

money. The central Industry Minister Kim wrar Carr says the Minister Kim wrar

Governmentsy is aware of the importance importance

importance importance of

sectornd and is committed to

attracting international

investment. We at the start of the year we asked five experts

to look into their crystal balls and predict how key

elements of the Australian

economy would perform in 2011. We're halfway through now and

the end of the financial year is

they're Alex to our experts to see how

their predictions for the share they're Alex Ferguson. Here is

market which has had a dismal

six months and is heading for a 7.8% loss for the

7.8% loss for the quarter.

We're still comfortable with

our forecast a lot our forecast a lot has happened

in the past six months. A market has been through of optimism and pessimism so market has been through waves

far this year:

at the bottom of a cycle of

pessimism. When we look at the

the Australian market was fundamentals we didn't think

fundamentally over value at the

beginning of the year and we were growth across were looking for earnings

growth across corporate

year. We still think that is Australia of around 10% this

year. We still think that is

the likely outcome and that is consistent with the market

ending the year at just over

5,000. Obviously we had set

backstroke at the start of year both domestically with backstroke at the start of this cyclones and floods, internationally with

with long names an even longer tails. That set the world economy back. We've also had a

little bit of a dip in confidence out of confidence out of the US and the numbers coming the numbers coming out of there. And the Greek sent situation in Europe has reared

its ugly head again. All of that has affected international

confidence and that is holding

the market Bah back. That said, on a diffend basis the market

looks like an excellent value

and will be looking for a 10% rise over

rise over the rest of the year look ing to break the 5,000 barrier o-I bithe end of the year. You would have to say the

balance of risks is to the

downside of where the market is today. We do think by the end

of this year the RBA will be getting towards the top of getting towards the top of its tightening cycle. The upward

trend in the Aussie dollar probably would have run its

course. To get up there you

would have to see expectations an given an given where things now we probably think that is a

lower proenlt than we thought

at the start of the year. Overall we still think the market

market will trend towards by the end of the year but I

think it will struggle to break

through that, unless we get

that big upswing in

earnings. We continue to have

a positive out look for the Australian market share market but less so than at the start

of this year. We now think the Australian share market might Australian share market might

end the year closer to the 4800 mark. There have been a mark. There have been a number of negatives that in recent months. And these neg

NIFS the global economy mean

that there's a that there's a less favouritable global backdrop

for equities. They include the increasing worries about the

Greek debt crisis and what it

means for Europe and the means for Europe and the loss

of momentum. In the US economy.

Back home, the Australian share market should still continue market should still continue to

get support from a pick-up

expected in economic activity expected in economic activity

as we move through this year. I

am expecting the US will have more positive news or less of the negative news in the second

half. I don't think Europe matters that much. And

commodity prices have been

holding up, holding up, which is a pretty

good indicator really of the overall state of the world. At present, yields in Australia present, yields in Australia and the US are and the US are pretty

attractive, so I think we could

easily see a significant move

back up. So back in that sort

of direction where I was

forecasting. Now let's look

at what is making headlines

turnaround region. The wreath journal says China's National Audit Office said local more than governments owe debt equal to governments owe

more than a quarter of the

country's economic output.

'Financial Times' reports

British drinks droup Diagoeeo

is about to acquire one of the

bition liquor makers. Britain's Prime Minister and

Wen Jiabao signed a trade edition of Business Today. If

you would like to look back

please over any of our interview,

please visit our website. We look forward baevenlth I'm Whitney

Fitzsimmons. Thanks for joining

me. Enjoy your day. Closed Captions by CSI

This morning - Julia

Gillard loses her edge on Tony Gillard loses her edge

Abbott in the polls and Abbott in the polls and expects it could get worse with the carbon tax. It could

carbon tax. It could get even

tougher before it gets But I am absolutely determined

to get it done. Live. This Program is Captioned

Muammar Gaddafi now

officially a wanted man, but

charges in the criminal will he ever actually face

court? And the coming of age of Bernard Tomic, the Aussie 18-year-old through to Wimbledon 18-year-old through to the

next challenge - Wimbledon quarterfinals, the

next challenge - Novak

Djokovic. I never thought I

would be here in the second

week, nepz the

quarterfinals. What a feeling

and what a tourn.

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