THE DISTILLERY: DJs debacle?

David Jones might emerge from a trading halt this morning to tell the market what it already knew. In this morning's edition of Distillery, The Sydney Morning Herald's Elizabeth Knight recounts the history of the American Express agreement that's underscored the DJs trading halt, while The Australian's Bryan Frith points out that this was all known to investors and the necessity of a trading halt was questionable. Is this a symptom of the crackdown on Leighton Holdings? Elsewhere, the legacy of outgoing Transurban chief executive Chris Lynch will be aided by the equity selldown of some shareholders in particular, while we've also got some long-term interest rate speculation this morning.

The Sydney Morning Herald's Elizabeth Knight gives the most comprehensive preview of what's ahead for David Jones and the likely announcement about its credit card business, starting with the American Express 10-year alliance deal struck in 2008.

"Back then David Jones handed over its store card business to Amex. The return was akin to instalment payments that bolstered earnings rather than reflected the trading profits from the card business. But it was never painted in this light. Investors didn't ask too many questions in 2008 about what happened after this initial period expired. They didn't query whether earnings were being propped up over the first five years, or whether, in 2014, the credit card earnings could fall in a hole. It was classic investment market shortermism. Back then there was probably an assumption that in 2014 financial services would be rosy and retailing would also. In hindsight this was wildly optimistic.”

However, The Australian's Bryan Frith says there's an argument to be had about whether DJs is jumping at shadows over the media report that ‘revealed' these problems.

"DJs' action surprised because the media report said nothing that hadn't already been said by a number of analysts and expectations of a sharp fall in credit earnings had almost certainly already been factored into the share price. The company itself said it didn't believe there had been any leak of confidential information and the speculation was based on ‘publicly available information'. So why obtain a trading halt? DJs said it considered the trading halt was ‘appropriate in the circumstances', but many would consider that the company over-reacted and that its caution may have been triggered by the $300,000 ‘on the spot' fines imposed by ASIC on Leighton Holdings for alleged breaches of the ASX continuous disclosure requirements, and the corporate watchdog's warning that it intends to take a tougher approach in the future.”

The Australian's John Durie says the outgoing Chris Lynch is leaving Transurban in a good state, thanks to hard work through cost cutting and a bit of good luck through the effective departure of British University Superannuation Scheme and ATP of Denmark from the register.

"The British and Danish shareholders have clearly decided they are overweight Australian roads and want to look for other opportunities. For Transurban, the selldown is a sharp contrast from two years ago, when Lynch faced three investors controlling 40 per cent of the company who wanted to take it private or at least gain more control over its spending. Pending details of who picked up new shares from the bookbuild, there are now no shareholders with more than 5 per cent of the company. There are some with just under 5 per cent, including the Future Fund-backed Rare Infrastructure and Peter Cooper's Cooper Investments.”

The Age's Tim Colebatch stumbles across some quite stark forecasts.

"Australia will slowly move into a broad-based economic recovery in 2012-13 – but Victoria is in danger of missing out, leading forecaster Frank Gelber of BIS Shrapnel predicts. Unveiling new forecasts in Melbourne yesterday, Dr Gelber predicted that Australia's growth rate would slowly accelerate from 2.2 per cent in 2011 to 3.5 per cent in the 2012-13 financial year. If realised, that would be its best performance for five years. But there would be two downsides. Interest rates would start rising again, with the Reserve Bank likely to deliver seven rate rises in the next 15 months. And apart from NSW, the south-east of the country will continue to struggle.”

Seven rate hikes in 15 months! When you factor in the January holiday for the Reserve Bank that's a rate hike every two months for five quarters. Just imagine the amount of fodder that will create for our business commentators. The Sydney Morning Herald's Michael Pascoe says the latest minutes from the Reserve Bank addressing the need for a restructuring of the Australian economy makes a lot of sense, particularly when read in concert with a speech delivered by Governor Glenn Stevens yesterday.

In other economic matters, The Sydney Morning Herald's Ross Gittins tries to peer into the future – 2050, to be exact – through the Environmental Outlook from the Organisation for Economic Co-operation and Development (OPEC). The Australian Financial Review's Alan Mitchell finds the local car industry getting a big wake up call.

Meanwhile, in company news, The Age's Michael West asks if billionaires Clive Palmer and Gina Rinehart can't comply with their account reporting obligations, what point is there for the rest of us to obey the law. The Australian Financial Review's Chanticleer columnist Michael Smith weighs in on the cleaner Transurban register, while The Australian's Tim Boreham looks at Intrepid Mining and Core Exploration in his Criterion column.

And finally, Fairfax's Insider columnist Ian McIlwraith looks at the likely delisting of paint tin maker National Can Industries.