The Economy: Water, energy and Cossie

The geopolitical
risks seem to have receded a bit overnight, at least as judged by global market
participants. The price of oil fell, US bond yields ended a volatile night
flat and equities were only down a bit. This may of course
just represent acceptance of the current heightened levels of risk, as there was
little in the news to suggest any great easing of the carnage or overall level
of tension in the Middle
East. Metals prices
fell, which may well lead the Aussie resource stocks lower today, as it did
their North American competitors overnight.

John Howard’s water
and energy plans were greeted with general acclamation yesterday. The notion of
Australia as a potential “energy
superpower” will resonate with the voters, who according to the
polls
have already echoed the Liberal party room in supporting the continuation of
current management.

Henry’s informants
say that BHP may be about to announce a second railway line in the Pilbara. If
Fortesque also builds one it would mean three sets of iron ore trains taking
material to the coast for shipping to China, India, Japan and who knows where
else, provided of course that the WA Government can do its bit, a possibly
important caveat.

Steve
Lewis’
advice for Peter Costello is better than the stuff his staff must have been
dishing up: “He has to put shoulder to the wheel and prove to his many doubters
that he has emerged from this a better politician.”