Soft: More evidence that there could be softening in demand  and activity in the economy. After the weaker than expected retail sales figures and building approvals for February, data today showed a sharpish fall in manufacturing. the Performance of Manufacturing Index (PMI) showed a drop of 3.6 in March to 50.2, which is just above the line that divides expansion (above) from contraction (below). Similar surveys will be released over the rest of today for China, the US, parts of Europe and the US.

Trade: And in yet another surprise, February’s trade deficit was much larger than expected by the market. the deficit hit $1.92 billion for the month, up more than 60% from January’s $1.1 billion. The Australian Bureau of Statistics said exports fell 1% to $19.2 billion, while imports jumped 2% to $21.8 billion. the market had been looking for a deficit of $1.3 billion. So market economists dipped out here by a big margin as they did yesterday in forecasting a 0.3% rise in retail sales against the 1.4% fall.

Resources the real bubble, not property Do two multibillion dollar takeover offers mean the Australian resources sector has suddenly gone from buoyant to bubble? In 24 hours, two leading Australian mining companies, one in coal, the other in gold, have been on the end of unsolicited offers totalling $12.5 billion, at current market prices. Coming in the week of record iron ore price settlements, a big iron ore deal with a Chinese company and record LNG contracts from Queensland, the resources sector has started bubbling over. The bids, the expected surge in export income, our terms of trade and the growing investment boom in the sector, will make the Reserve Bank increasingly nervous that this area, and not property, is the real bubble in the Australian economy. The coal bid has foreign investment rules ramifications, but is not from China, but the US. The other is an attempt to rationalise the top end of the Australian listed gold sector. Yesterday directors of Brisbane-based Macarthur Coal company rejected a “cheap” $3.3 billion “non-binding” offer from Peabody Coal, America’s biggest. This morning directors of Lihir Gold revealed that they had rejected a $9.2 billion unsolicited offer from rival local miner Newcrest, the  second- largest gold mining company on the ASX after Newcrest. Lihir said Newcrest offered one of its shares for every nine Lihir shares plus 22.5 cents cash a share. Directors rejected the offer, saying bid undervalued the company. Macarthur directors rejected the offer proposal and said shareholders would go ahead with a meeting on April 12 that could deliver a dominant 24.6% stake in the company to the growing Asian trading house, Noble Group.

Cynical: Sigma Pharmaceuticals certainly needs a good monstering from shareholders and ASIC about its appalling results. The company’s $389 million loss, impairment write-downs of $424 million and slump in trading profits, has put its survival in jeopardy, but do shareholders really want a class action that could add another set of unwanted costs to its already broken finances?  Law firm Slater & Gordon dashed off the mark yesterday (it’s now a listed company) claiming that it was finalising a “detailed investigation” into disclosures made by Sigma relating to its 2010 financial result. This report quoted Ben Phi, a senior litigation lawyer from Slater & Gordon’s commercial and project litigation group as saying “on the basis of what we’ve seen to date, shareholders of Sigma Pharmaceuticals appear to have every right to feel aggrieved today”.

The smell of blood and fees is in the water: And no doubt litigation funder IMF Australia or someone else will pop up with some shareholders in tow and reveal it’s prepared to finance a class action. Excuse me for being cynical, but don’t Slater and Gordon’s comments yesterday seem very well timed, rehearsed and a bit cynical? Legitimate questions need to be asked of the board, and changes need to be made. No doubt the capital raising in September 2009 will get a lot of attention. But it’s all about who has the biggest capacity to pay. The law firm and others will check to see who has the deepest pockets, the insurers for the auditors, PricewaterhouseCoopers; or the insurers for the board. Regulators (i.e. ASIC), should look at claims of “channel stuffing” by the company to get customers to order goods into the 2009-10 financial year to make those figures look good.

Café society: Australia is still a society of lattes, beers, burgers, fish and chips, kebabs, Asian and anything to be had in a takeaway, coffee shop, café or restaurant, bistro or whatever, judging by the retail sales figures for February. The 1.8% increase from January was solid and the sector’s sales were also up 12.2% from February last year, a rise of more than a quarter of a billion dollars, which is pretty impressive. That strong yearly rise compares with more modest rises of 5.2% for department stores (David Jones and Myer shareholders would be better off investing in burgers), while food retailing was up a mere 1.27%. So much for the defensive qualities of Woolies, Metcash and Wesfarmer’s Coles supermarkets.

When Irish banks are bleeding: The sorry tale of the Irish banking system continues. First it was a bad bank with 81 billion euros of dud loans, then a shock loss estimated at between 37% and 45% of that figure for all of those loans, many of them made to high-profile Irish business people in property and finance whose businesses are or have collapsed. Yesterday, the biggest player in the good times, Anglo Irish Bank, reported a pretax loss of 12.7 billion euros for the 15 months to end of December 2009 after writing off 15.1 billion in bad loans. The losses are the worst for any company in Irish history. The write-offs included 10.1 billion euros on 35.6 billion euros transferred to the government’s bad bank. That’s a loss of 28% before they are assessed by the bad bank.

Bleeding Irish banks: In contrast, a “better” result for the nine months to December from the Bank of Ireland, the country’s biggest and the one most likely to escape majority control by the government. It had a pre-tax loss of €1.8 billion, with underlying losses soaring to €2.9 billion as impairment charges jumped. The bank expects to transfer €12.2 billion in loans to the government bad bank. It will need time to raise new capital, but it and the four other banks and building societies in Ireland will need at least €22 billion of fresh capital and Anglo Irish could need €10 billion more on top of that later on if loan losses are bigger than expected.

Tea Party finances: Money makes us do strange things at times, and there’s no better an example around at the moment of this than in the US where there’s a growing push for more and more American states to legalise marijuana, so they can then tax it (as a drug of addiction, no doubt, like tobacco), thereby helping fill the holes blown in their budgets by the GFC, credit crunch and recession. According to this Reuters report, California is closest to going down this route because of a $US20 billion budget deficit and the reputation, like, man, so coool, for a laid-back lifestyle, this is serious sh-t. California has put an initiative on its November ballot to legalise it and similar efforts are under way in Washington State, Oregon (there’s the West Coast gone to the dogs, man) for this year’s ballot and in Nevada for the 2012 ballot. “New Hampshire, Massachusetts and Rhode Island are all considering legislation to legalise and regulate the drug, and states as conservative as Virginia and South Dakota are debating decriminalisation.” Savings on law and order (enforcement, testing, jail, court actions, etc, are being touted as ways of freeing up police and court time and resources for other crimes. So if a state legalises and taxes it, will it then have to enforce the taxation by law and enforcement (as they do with illegal tobacco and selling to minors). What would the current Republican-driven Tea Party movement think of this trend, mannnn?

Qantas, it’s a dog’s life: Be careful when considering taking you pet with you if you happen to be deeply attached and are being sent overseas, emigrating or re-emigrating. Kiwi friends of mine are returning home this week for at least a year after more than 10 years working here. They are deeply attached to their dog, so it goes with them to retirement. The couple are flying Qantas to NZ for about $300 each (one way); a discount fare. The dog is costing $1400. At that price it should have a seat next to the pilot and French champagne and gourmet meaty bites. But no, it’s a cage in the cargo hold and no doubt some medication.