Sugar, Sugar #1 (cue Janet):. The Archies’ ’60s pop classic sums up the immediate impact of the two-day US Federal Reserve meeting: accommodating, and just loved by punters who had thought the current rebound was starting to run out of oomph. So instead of four rate rises this year as suggested by the Fed’s so-called “dot plot” in December (which helped frighten markets into a big sell-off), there’s now only two (the dot plot is where the members of the Fed think rates will be over the next two years or so). “Thanks!” yelled punters and speculators as they waded into markets upon reading that and sold off the dollar (the Aussie dollar jumped a cent in an hour to 75.40 US cents), up went gold more than US$30 an ounce, bond yields fell, copper rose as well, oil built on earlier gains and sharemarkets frothed. Well done, Fed!

Market pricing now has the next rate rise happening in September. But if there are to be two 0.25% rises this year, the second will have to happen by December, which is effectively an economy-stopping 0.5% rise in three months. Will the Fed deliberately flatten the US economy with two quick rate rises in a row? It won’t — not even if inflation were soaring — unless oil prices double in the next couple of months. And weak global growth, sluggish China and the big unknown of what happens if Britain votes to leave the EU, all mean the Fed will be conservatively dovish this year. In fact, early last year the “dot plot” signalled four possible rate rises in 2015, and there was only one — at the end of the year in December. Back a repeat this year. — Glenn Dyer

Sugar, Sugar #2 (hiding the UK black hole). The UK budget and the surprise 520 million-pound (around A$1 billion) sugar tax — slated to start in 2018 — attracted all the headlines this morning, diverting attention from what was a miserable admission of failure by Chancellor George Osborne. We told you earlier in the week that slowing UK inflation and nominal economic growth in 2015 had produced an 18 billion-pound black hole in the budget, which had to be filled. Hence the sugar tax, plus cuts to corporate and capital gains taxes (and other taxes on business are going up as well).

In the autumn budget statement last year, Britain’s Office for Budget Responsibility (but not accuracy) found an extra 27 billion pounds of growth and revenue for Osborne to spend between 2015 and 2020. In the budget overnight, the office estimated there is now a shortfall of 52 billion pounds. And because of higher spending in the next couple of years, the government will have to boost borrowings over the next few years — by an estimated 41 billion pounds. Osborne still reckons he will get a surplus of around 10 billion pounds by 2019-20 (he made a similar, failed forecast for 2014), but economists say to get that, on current indications, the government would have to find 31 billion pounds of extra tax revenue or spending cuts in 2019 — that is, on the eve of an election. — Glenn Dyer

Big coal no more. Memo all those dying coal bulls in the federal, Queensland and NSW governments: coal is dead. The fading fortunes of the Australian industry should be proof enough, but Canberra and Queensland (and the Baird government in NSW) persist in promoting coal mining — especially the increasingly dodgy Adani super mine in the Galilee Basin in central Queensland. The media and other supporters of coal mining refuse to take heed of the reality of what is being reported on their news wires. For example, Moody’s rating group this week downgraded the rating on the debt of the Adani Abbot Point terminal near Bowen to junk status, at Baa3. Why? Well, the rotten outlook for coal and coal miners such as the terminal’s two major customers: Anglo American, which is busy trying to sell its Australian mines, and Peabody, which is tottering on the edge of collapse. But don’t take my word for it; Peabody said overnight that it may not have “sufficient liquidity to sustain operations and to continue as a going concern” as it failed to make US$71 million of interest payments on US$1.6 billion of bonds (it has US$6.3 billion of debt). It now has 30 days to make those payments, but says its earnings before interest, tax, depreciation and amortisation could be too low to avoid breaching its debt limits at March 31, meaning chapter 11 bankruptcy looms.

Peabody lost US$2.04 billion last year on US$5.6 billion. Included in that loss was close to US$1 billion of impairments on its Australian coal mines. If bankruptcy happens, Peabody will join two dozen other US coal companies of all sizes that have collapsed in the past two years — but Peabody will be the largest. Peabody shares fell more than 45% overnight on Wall Street and are now down 95% in the past year. The shares are trading at US$2.19, but last year the company had a 15 to one consolidation, meaning the effective price is 14.6 cents! — Glenn Dyer