Echo Entertainment is preparing to name the chief executive that it hopes will help resurrect its fortunes that have been so damaged by own goals and advances from billionaire James Packer. The Australian’s John Durie brings us the story.
Also in this morning’s edition of The Distillery, confusing signals from the Australian economy and the role of central banks in coping with asset bubbles are up for discussion.
The Australian’s John Durie goes first this morning with an inside word on who’s taking over at Echo Entertainment. Remember, Echo has lost a few hands – and thrown some away – in the battle with billionaire James Packer for Sydney’s gambling aficionados .
"Next month, Echo will unveil its $870 million event centre at The Star casino around the corner in Pyrmont, and, more to the point, today he will announce that Echo non-executive director John Redmond will be the new chief executive of the casino group. Redmond is described as a ‘safe pair of hands’ and ‘an ideal person to run a public company’, but that will be tested when the market sees what he does. Echo is selling itself as an integrated resort, in contrast to the high-roller niche offering proposed by James Packer at Barangaroo just down the way from Darling Harbour… As events transpire tomorrow, the Echo board meets on the same day that the NSW gaming regulators are due to meet and potentially clear Packer to build on his 10 per cent stake in Echo. It is not known if the Packer clearance is on the agenda, but it is certainly long overdue.”
In economics, Fairfax’s Malcolm Maiden has a go at explaining the poor NAB business survey for November, which took a few headlines, with the recent sharemarket rally, which has also taken some headlines.
"The economy is weak: that points to lower corporate earnings. But the question for investors is: in this low-return environment, does an average earnings yield of 5.65 per cent on the ASX 200 Index actually look that bad? The economy is struggling, as the NAB survey makes abundantly clear. Business conditions were unchanged and ‘very weak’ in November in the construction, retail, manufacturing and wholesale sectors. Business confidence deteriorated in all the states to be the lowest it has been since April 2009, and fell in all sectors except construction, where it was unchanged, but low. NAB says it doesn't see a pre-Christmas bounce, and says that its survey points to a slowdown in economic growth, from 3.1 per cent in the year to September, as revealed in the national accounts last week, to something more like 2.25 per cent in the year to the end of December.”
And Business Spectator’s Stephen Bartholomeusz revisits the debate about the role central banks should play in relation to asset bubbles, picking it up after the release of a speech that Reserve Bank Governor Glenn Stevens made earlier this year.
"While there has been a lot of argument about the role of monetary policy in creating and managing asset bubbles there is little doubt that the most important factor in limiting the damage they can do to the real economy is the quality of prudential supervision. If a banking system emerges from a burst bubble relatively unscathed so should the real economy. The other point Stevens made was that regulators and central banks need good data in order to measure asset price movements and he indicated that the RBA had imperfect property market data to work with, albeit that the information it now had was better than had been previously available. That admission leaves the fierce debate about whether there is an Australian housing market bubble open, at least until hindsight becomes available.”
In company news, The Australian’s Bryan Frith points out that GPT’s offer for a slew of Australand assets will have to pass via a scheme of arrangement with the target board’s recommendation if it’s going to get up. This is because the proposal excludes Australand’s residential assets.
Fairfax’s Eli Greenblat reports that the "Loose Change” menu at McDonald’s is proving popular with thrifty Australian consumers.
And finally, The Australian Financial Review’s Chanticleer columnist Tony Boyd has a big crack at Australian chief executives for not being active in the Twitterverse.