Link in trading halt

Link Administration has been placed in a trading halt pending an announcement relating to an update on the scheme of arrangement with Dye & Durham.

Dye & Durham said it was still trying to “attempt to engage” with takeover target Link Group on Thursday about a buyout deal that looks increasingly rocky as it runs up against a hard deadline of the end of September.

Link’s British subsidiary was hit with an extra £50 million ($85 million) fine by the British financial regulator on Wednesday after already being asked to set aside $519 million in funds before the regulator, the Financial Conduct Authority, would give clearance for a $2.5 billion buyout deal of Link.

Link securities will remain in a trading halt until the earlier of the commencement of normal trading on September 27, 2022 or when the announcement is released to the market.

Taming global inflation will require a two-year battle: Goldman

Global central bankers will be kept busy with persistent inflation “over the next two years”, according to the latest revised forecast from Goldman Sachs’ economics team.

Fed chairman Jerome Powell made clear this week that checking inflation is his top priority. AP

“We expect the global inflation surge to peak in the coming months, and think the combination of a moderation in demand growth, improvements in goods supply, and tighter monetary policy will be sufficient to bring inflation back toward [developed market] central banks’ targets over the next two years,” the team led by Jan Hatzius said.

More immediately, Goldman is forecasting a fourth consecutive 0.75 per cent interest rate increase by the US Federal Reserve when its policymakers meet for their next scheduled review on November 1-2. Fed chairman Jerome Powell signalled as much this week.

Goldman expects a 0.5 per cent rate rise in December and a 0.25 per cent increase in February, for a peak funds rate of 4.5-4.75 per cent, “though we see risk that a higher peak rate will be needed to reverse overheating enough to bring inflation down”, it said.

“We expect core PCE inflation to decline to 4.3 per cent by end-2022, although further supply chain disruptions, stronger wage growth, or firmer shelter inflation could keep inflation somewhat higher for longer.”

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Evan Metcalf elevated to Global X Australia CEO

Evan Metcalf has been appointed chief executive officer of Global X Australia in the same week the exchange-traded fund issuer rebranded from ETF Securities.

Metcalf first joined ETF Securities in 2015 as its head of product.

“We have the utmost confidence that Evan’s previous success and expertise in this market will help to advance our goals here in Australia as we look to create opportunities for our clients and expand our offering, creating an Australian ETF powerhouse,” Luis Berruga, Global X CEO said.

Global X umbrella group Mirae Assets acquired ETF Securities in June.

Global X operates in 95 countries, with the ETF Securities rebrand part of Mirae Asset’s focus on the Australian market, said founder Hyeon-joo Park.

Food inflation sends the American Diner Index soaring 13pc

The cost of preparing a classic lunch at an American diner has shot up by almost 13 per cent in a year.

Food costs in the US are up 11.4pc from a year ago, the most since 1979, and are a key driver behind the nation’s 8.3pc overall inflation rate.  William Meppen

To track inflation’s effect on a beloved menu choice, Bloomberg created an American Diner Index that includes ingredients for the toothpicked club sandwich, as well as the accompanying potato chips, ice cream and soda.

Although restaurant owners don’t necessarily pass all rising expenses onto their customers, the gauge provides an insight into how much more expensive it’s become to assemble a basic meal.

Prices for lettuce and bread have surged 33 per cent and 20 per cent in the past year, respectively, contributing to the surge in the index, which is based on consumer-price data published monthly by the US Bureau of Labor Statistics.

Two other key ingredients in the club sandwich, turkey and ham, also soared by more than 10 per cent. And a half gallon of ice cream now costs about $US5.64, up from $US4.92 a year ago.

The burden is likely falling more on restaurant owners who are concerned that raising prices may lose them customers.

Boeing pays $200m to settle SEC charges over 737 Max

Boeing will pay $US200 million to settle charges that the company and its former CEO misled investors about the safety of its 737 Max after two of the airliners crashed, killing 346 people.

Boeing said it has made “broad and deep changes across our company in response to those accidents” to improve safety and quality. AP

The Securities and Exchange Commission said Thursday that it charged the aircraft maker and former CEO Dennis Muilenburg with making significant misleading public statements about the plane and an automated flight-control system that was implicated in the crashes in Indonesia and Ethiopia.

Neither Boeing nor Muilenburg admitted wrongdoing, but they offered to settle and pay penalties, including $1 million to be paid by Muilenburg, who was ousted in December 2019, nine months after the second crash.

The SEC said Boeing and Muilenburg knew that the flight system, known as MCAS, posed a safety issue but promised the public that the plane was safe. The SEC said they also falsely claimed that there had been no gaps in the process of certifying the plane in the first place.

“Boeing and Muilenburg put profits over people by misleading investors about the safety of the 737 Max all in an effort to rehabilitate Boeing’s image” after the crashes, said Gurbir Grewal, director of the SEC’s enforcement division.

PointsBet expands US footprint

ASX-listed bookmaker PointsBet is adding to its US footprint after receiving regulatory approval to launch in Louisiana.

The launch brings the company’s online operations in the US to 12 states including New York, Iowa, Indiana and Illinois.

PointsBet has been operational in the US market since 2019, hoping to capture the booming sports betting market which was heavily regulated but is undergoing an expansion phase as states begin legalising sports betting.

PointsBet comes up against three major players with about 80 per cent market share between them – FanDuel owned by Flutter Entertainment, DraftKings and BetMGM, owned by UK-based Entain.

New Wesfarmers health boss plans for growth

Emily Amos’ first stab at a career was to become a young economist at what was then Pacific Power – the NSW-owned monopoly power generator.

Emily Amos is the new MD of Wesfarmers’ health division, where she is in charge of integrating API – the owner of Priceline Pharmacy. Louie Douvis

It wasn’t long before it dawned on her that was not the right path.

Fast-forward 25 years and she appears to have found her groove quickly at Western Australia-based Wesfarmers. The conglomerate feels “relatively familiar”, she says, just five months into the job of bedding down its latest $774 million buy – major drug wholesaler Australian Pharmaceutical Industries (API).

In her first in-depth interview, Amos says that after chatting with Wesfarmers boss Rob Scott, she could see this was a perfect role for her. It married the skills she had honed over many years – at supermarkets giant Woolworths for over a decade, and more recently as the head of Australia’s second-largest private health insurer, Bupa.

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Bond yields surge as post-Fed hangover hits stocks

Treasury yields surged to multi-year highs and stocks fell after a parade of central banks joined the Federal Reserve in boosting rates to curb scorching levels of inflation at the expense of economic growth.

The superlatives kept piling across Wall Street as sell-off in the world’s biggest bond market sent the 10-year yield to 3.7 per cent, its highest since 2011. The two-year rate climbed for an 11th straight session – the longest up streak in over three decades. The moves weighed on the tech space, with the S&P 500 failing to sustain a late-day rebound and moving closer to its June bottom.

The dollar remained at record levels, fuelled by hawkish Fed policy and investors in search of haven. The Swiss franc slumped as a central bank hike proved not enough to satisfy expectations, while the yen gained as Japan propped up the currency for the first time since 1998.

The Fed gave its clearest signal yet that it’s willing to tolerate a recession as the necessary trade-off for regaining control of inflation, with officials forecasting a further 1.25 percentage points of tightening before year-end. Norway, Britain and South Africa also followed with hikes of their own as officials rush to get to grips with rampant price increases.

Today’s agenda

Local: Suncorp AGM, Aug manufacturing PMI

Overseas data: Markit manufacturing and services September preliminary PMIs for Eurozone, the UK and the US

ECB’s Isabel Schnabel sees price pressures across the eurozone

Upward pressure on consumer pressures has spread from energy to engulf the whole euro-zone economy, according to European Central Bank Executive Board member Isabel Schnabel.

“What we are seeing is that the inflationary pressures have become much more broad-based,” Schnabel said on Thursday evening in Luxembourg. “They have somehow crept into all parts of the economy.”

Soaring consumer prices have prompted Schnabel and her colleagues to lift interest rates more rapidly than many expected at their last two meetings — despite a worsening economic backdrop.

Officials are walking what Vice President Luis de Guindos on Wednesday called a “fine line” in trying to balance the assault on prices with deteriorating growth prospects. Deutsche Bank this week downgraded the euro area’s outlook, seeing a much deeper recession than previously after Russia slashed energy supplies in retaliation for sanctions over its war in Ukraine.

Coming from a very low level of interest rates, “at the moment, we are not in a situation where the normalisation of monetary policy harms the economy”, Schnabel said. “It’s more like we have to remove the accommodation that we still have in the system.”

In an interview with German website t-online published earlier on Thursday, she said inflation — already the fastest since the euro was introduced and almost five times the ECB’s 2 per cent target — may not have peaked.

The comments come hot on the heels of the latest hike by the Federal Reserve, which raised borrowing costs by 75 basis points for a third straight meeting on Wednesday. Money markets show investors betting on the ECB to lift rates to 3 per cent by May from 0.75 per cent at present.

With five weeks still to go, policymakers at the Frankfurt-based institution are reluctant to reveal their preference for October’s increase.

“I’m expecting that the ECB’s Governing Council will continue to increase interest rates at its next meeting,” Schnabel told t-online. “What I cannot say is how big this hike will be or at what level we will stop increasing rates. We are deciding meeting by meeting, based on an assessment of all the economic and inflation data.”

Australian Financial Review

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