The Distillery: Mellow markets

Jotters examine the market’s ambivalence over the US shutdown, while one sees a new factional trend in Labor's leadership vote.

As the shutdown in Washington pushes toward a third week, one commentator is compelled to query the lack of market concern. Another scribe, however, can see a reason to relax: if Wall Street crashes, the impasse will quickly end and all will be well with the world. Or something like that.

Back home, the domestic political landscape is looking pretty good by comparison. The country now has a majority government and a new Opposition leader. It is the latter that has drawn the interest of jotters this week, with one spotting something in Bill Shorten’s victory over Anthony Albanese that the press gallery may have missed.

In America, however, instability is the buzzword as the government shutdown lingers and the debt ceiling shadow lurks. The impasse and the disrupted flow of statistics leads The Australian Financial Review’s Philip Baker to ask: why is the Dow up 1 per cent this month?

“In theory financial markets right now should be hell for investment people who operate mainly on fundamentals and economic data, because there are none… Instead of looking forward and predicting where the economy will be, investors have taken as a fact of life that all will be well. Maybe that’s dangerous or, at best, a little too optimistic. Still, no news is good news.”

Fairfax’s Michael West, in contrast, believes investors have made the right call in largely ignoring the threat of economic Armageddon. West is confident a deal will come on Wednesday or Thursday and if it doesn’t, we are still not staring down GFC Mark II.

“Even if there is default, it represents no fatal blow to the world economy. The spectre of economic collapse would quickly bring an end to the political impasse. Let's not forget Wall Street banks fund the campaigns of Obama and Republican counterpart John Boehner, as well as a host of others on Capitol Hill.

Moving to local matters, the promotion of Shorten to the head of the ALP has largely caused a stir for his comparative low vote amongst ALP members. But, it is the near election of Anthony Albanese that should have been the bigger talking point, according to the Herald Sun’s Terry McCrann.

“If just four additional members of the caucus had voted for (Albanese) instead of Bill Shorten, he would have won. By such a slim margin, Labor arguably avoided a trainwreck, where a clear majority of the people sitting behind their leader in the house, would actually have voted for someone else. If Shorten had won the caucus vote by a still very decisive 51-35, he would have lost the leadership.”

The AFR’s chief political correspondent, Phillip Coorey, also saw some intriguing details emerge from the vote. For him, however, the victory for Shorten highlights a defection of the Left in caucus and a breaking down of factional bloc voting.

“If the Labor MPs and senators in caucus had voted along factional lines, Anthony Albanese, not Bill Shorten, would be opposition leader. Contrary to claims from aggrieved members of the rank-and-file, and some commentators, that machine politics had overruled the will of the membership, it was the continuing disintegration of factional bloc voting that carried Shorten over the line.”

In company news, The Australian’s Richard Gluyas mulls the likely shareholder reaction to AGL’s “tricky remuneration report”, while the AFR’s Chanticleer columnist Tony Boyd discusses Queensland Premier Campbell Newman’s new casino push. Is he rolling out the red carpet to James Packer’s Crown?

Finally, Fairfax’s Elizabeth Knight outlines the race to get new floats over the line before Christmas and The Australian’s Andrew Main examines the regulatory challenge of the Stronger Super package.