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Summary of Weekly Review Articles
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06-Feb-06	Market on More Solid Foundations With the Australian stock market having appreciated by as much as 80% since early 2003, some of the normal fears about it being overvalued are emerging. However, there are some signs that this latest market cycle is more solidly based than ones we have seen before.
	George W Bush: Changing the Oil Price Landscape The announcement by George W Bush of fresh initiatives to develop oil replacement technologies could change the petrol price landscape - unless it is just another stick with which to beat his enemies.
13-Feb-06	Defining Corporate Social Responsibility: An Historical Perspective Politicians are always keen to find ways to dictate corporate behaviour. There are some interesting historical angles on their often forlorn attempts.
	The Role of Directors: Going Beyond Shareholders A parliamentary committee is currently enquiring into whether Australian laws should be changed to require greater corporate social responsibility. Recommended changes could affect company performance and investment returns should company directors be required to take greater account of non-financial matters in making business decisions. However, the committee might baulk at anything very radical.
	The Historical Evolution of Corporate Social Responsibility
20-Feb-06	Fear of an Inverse Yield Curve US financial markets have a well founded fear of inverse yield curves. They usually do presage economic weakness but this time could be different.
	US Capital Flows: How Investment Income is Helping Large US current account deficits potentially threatened the US dollar and national economic stability. However, compensating capital inflows have been strong and US investment income has been unexpectedly resilient.
	AGL: When in Doubt, Reorganize AGL has become the latest in a long line of Australian companies to adopt the motto of “when in doubt, reorganize”.
27-Feb-06	A Sham Tax Inquiry After ten years in government, the Treasurer has decided to have a look at what sort of tax systems other countries have. This is a sham enquiry unlikely to expose anything new but, as a tactical exercise, might prove helpful for the Treasurer in reasserting control over tax policy.
	More Than Enough Information There is already ample information about where taxes come from in other countries. One has to suspect more base motives for the Treasurer’s inquiry than a genuine pursuit of fresh knowledge.
	Tax Cuts versus Surpluses: Getting the Political Credit Making judgements about the rate of tax in other countries cannot be divorced from an understanding of government policies about the size of the public sector and its role in economic and social policy.
06-Mar-06	US Economic Conditions The momentum of growth in the USA has changed little over the past year as the US economy has stabilised around a more consistent growth path.
	Whatever Happened to the Money Supply? The money supply was once the centrepiece of economic policy making. This month the US Federal Reserve is scheduled to discontinue publishing M3 money supply statistics.
	Balance of Payments and Capital Markets The balance of payments provides the linkage between the real economy and the financial markets.
13-Mar-06	Adding Value for Shareholders Improved financial returns from Australian listed companies are delivering value for shareholders.
	Working Assets Harder The financial gains among Australia’s largest companies are continuing to come from working existing assets harder. Although there are some initial signs that managers are becoming more aggressive in pursuing growth opportunities, timidity generally prevails.
	What Does It Take to Restore a Tarnished Reputation? Australian companies frequently suffer tarnished reputations. Those that survive, as well as those that fail, have characteristics in common.
27-Mar-06	Exchange Rate Forecasting An array of economic variables may be affecting the level of the exchange rate at a point in time but relative inflation is one of the more important guideposts over a time period relevant to investors.
	Scrutinising CEO Pay checks: An Empirical Analysis of Media Impact Company CEOs are becoming used to their pay checks being scrutinized publicly. Some of the scrutiny appears trivial but could be worthwhile if it delivers better economic outcomes. We might never know without some empirical research.
03-Apr-06	Commodity Prices: What Impact on Investing? A US-based study suggests that there is a role for commodities in a portfolio to help diversify the risk characteristics which are faced by an investor.
	Corruption: Creating Opportunities The Australian political system has always seemed remarkably free from corruption. Recent events associated with the resignation of senior U.S. political leader Tom DeLay and the AWB bribery allegations, here in Australia, illustrate how freedom from corruption depends on maintaining the right balance among the decision making institutions.
10-Apr-06	Fallacy of Diversification Companies often seek to reduce their exposure to single geographical locations or single products arguing that diversification reduces risk. Adopting a new product or a new location for this reason may not always be in the interests of shareholders.
	Tax Report: No Surprises There was nothing surprising in the international tax comparison presented to the Treasurer by his committee of inquiry. That leaves us where we started: tax is political.
17-Apr-06	IMF Calls for Policy Changes The International Monetary Fund appears to have stepped up the strength of its language in releasing its most recent economic review. It wants to precipitate more effective action by governments to enhance global economic performance.
	Messages From the IMF The IMF seemed more than usually aggressive in stating the dangers confronting the world economy as it released its latest economic forecasts.
	Corporate Savings Making Life Easier High corporate savings are averting the need for more awkward economic adjustments. The phenomenon is a worldwide one.
1-May-06	Sectoral Returns: Lessons from the Past Judgments about sectoral performance affect investment fund allocations but sectoral performance is prone to change and history might not be an adequate guide.
	Excess Capacity and Inflation Rising rates of capacity utilization are reckoned by economists to create inflationary pressures. That is one reason for nervousness about higher interest rates but companies have had ample warning about how much investment might be needed to meet capacity requirements.
8-May-06	The Budget: New L-A-W Tax Cuts There is a history in Australia of governments committing to tax cuts which prove unsustainable.
	Are Analysts Independent? Investors look to analysts to help them make investment decisions but there is evidence of analyst forecasts being neither accurate nor independent.
15-May-06	Company Research: Looking For Growth Equity markets tend to extrapolate historically strong performance and shun companies which have recently lagged - beyond what is reasonable.
	The Lottery Draw for Growth Stocks Despite the analytical resources dedicated to the search for outstanding growth stocks, the chances of finding one might be akin to a lottery draw.
	Oil Prices: No Reason for Higher Interest Rates A high oil price is one of the more bizarre reasons for raising interest rates.
5-Jun-06	Commodities: 150 Years Says "Watch Out" Increased commodity price volatility has thrown a scare into resource sector investors. Commodity market turning points are not for the faint hearted.
	Mining Sector Volatility v Commodity Prices Mining sector equities are less prone to volatility but move through their own cycles.
12-Jun-06	Commodity Markets: Taking on the Federal Reserve There is a tug-o-war going on between the US Federal Reserve and global commodity markets. There should not be much doubt about who will eventually win.
	What Does a Treasury Secretary Do? US Treasury Secretary John Snow has been replaced by Henry Paulson. Disappointingly, this seems to matter little.
	Consumer Prices: Getting the Maths Right Markets might have forgotten their maths amid rising tensions about inflation. There is a difference between high oil prices and rising oil prices.
19-Jun-06	US Economic Conditions In an otherwise strong growth performance, US consumers are one of the few signs of weakness.
	Seasonality in Mining Equities The worst times during the year for mining equities are June and October-November.
26-Jun-06	UK Airlines: Competition versus Rivalry Competition should mean no difference in prices - not persistent price differences.
	Market Integration is Better than Regulation Too often, politicians add layers of corporate and market regulation without understanding what they are trying to achieve. The effect of their decisions on the cost of capital might be one indicator that they are not helping.
03-Jul-06	Monetary Policy: The Continuing Tug-of-War In the tug-of-war between commodity markets and the U.S. Federal Reserve, the commodity markets have asserted their strength as the Fed seemed to hesitate. The game goes on.
	The Vanishing Resources Leaders More news this week highlighted a transformation among global raw materials producers and a changing landscape for investors.
17-Jul-06	A Shift in Resources Values Commodity prices might not be a good signal for the value in resource sector equities. After prices fall, value will remain surprisingly high.
	Corporate Regulation: Worthwhile or Not? Fresh evidence of the beneficial effect of corporate regulation has been published. Now, researchers are suggesting better investment returns after introduction of mandatory disclosure rules.
24-Jul-06	Data Democracy: An SEC Initiative The US SEC has flagged a radical change in the way investors can access investment information. The playing field is becoming more level than ever.
	Resources Industry: Production by Stealth Raw material supplies rose even while prices were at their least attractive. Without spectacular new projects, the resources industry has still been able to achieve near record rates of growth.
31-Jul-06	Oil Market: Down to the Refineries The fundamentals of the oil market still do not look as radically different as US$75.00+ prices might suggest.
	US Profits: How Cost Control is Still Helping Despite almost daily mood swings among commentators about the U.S. economy, business profitability there has remained remarkably robust.
07-Aug-06	Proxy Voting: Another Example of How Herding Can Hurt From being reluctant participants, institutional fund managers are embracing proxy voting. What might be good for one is not necessarily beneficial for the whole market when everyone decides to join the herd.
	International Accounting Standards: Do They Matter? Since June 2005, all reporting entities under Australia’s Corporations Act have had to prepare financial statements according to International Accounting Board standards.
14-Aug-06	Coles Myer: Yet Another Reorganisation The new Coles is behaving much like the old one: depending on the smart financial rearrangement to solve a business problem rather than genuine operational improvements. There seems little reason to prevent it passing, icon or not, to a foreign manager.
	International Accounting Standards: Markets Make the Difference For investment markets, adoption of international accounting standards might be of little consequence. Markets might have already moved to effectively eliminate informational differences.
21-Aug-06	US Investment Cycle: More Support for Raw Materials The US investment cycle shows some sign of turning but remains very subdued by historical standards. Even so, an increasingly positive contribution might give more support to raw material markets.
	International Accounting Standards: Some Challenges for Advisers The push toward international accounting standards presents at least five challenges for brokers and analysts.
28-Aug-06	Leading Economic Indicators: Some Signals for Commodity Markets Leading indicators suggest weakening global economic activity during the balance of this year.
	Do Markets Anticipate Takeovers? Despite laws against insider trading, company takeover bids are frequently signalled by early buying. This might simply be markets doing what they are good at rather than any wrongdoing.
04-Sep-06	US Profits: Not Enough Credit for Performance The strength of U.S. corporate profitability suggests equity market conditions should eventually be stronger.
	Do Markets Anticipate Takeovers - Some Evidence Smart people backing their views are more likely to be the sources of pre bid price rises not insiders taking advantage of privileged access to information.
11-Sep-06	Private Equity: Not In Everyone's Best Interest The expanding influence of private equity firms could be at the expense of ordinary Australians who have entrusted their savings to professional managers.
	Why Only Rely on Directors? In querying an unusual rise in the Terramin share price, the ASX recently highlighted one of the shortcomings in its regulatory approach.
02-Oct-06	Commodity Prices: Not Much Change Makes A Big Difference Anticipated metal market balances for the year ahead show how risky commodity price forecasting can be at this point in the cycle. Small inventory variances can lead to radically different conclusions about potential outcomes.
	What to Pay for Medibank Private? Medibank’s 2005/06 profit suggests that recently mooted selling prices might represent a good deal for the government's budget but not for investors.
	Market Volatility: Why The Australian Market Is More Attractive Bolstered by a rejuvenated macroeconomic environment, the Australian equity market has become less risky.
	Misusing the Consumer Price Index The consumer price index must be one of the most misused official statistics. Perhaps users should have to be licensed so that, as for financial advice, the CPI can be offered only by qualified practitioners.
23/10	Capital Raisings: Is The Playing Field Level? The idea of a level playing field underpins many of the rules for how investors are treated. But the principle is not always applied well in capital raisings.
	T3: The Government as Role Model for Financial Advisers The ubiquitous T3 advertising campaign shows how the government might behave if it was a full time financial adviser. It is a pity it cannot take the opportunity to be a good role model.
6/11	Market Booms: What Causes Them? Market booms are a combination of real macroeconomic phenomena, policy changes and regulatory conditions.
	Africa: China Looking After Its Own Interests The first Sino African summit could be a turning point for world development. Despite being driven entirely by self interest, the Chinese could be doing the world a favour.
27/11	After Switkowski: Still Confused? Despite having the Switkowski report on nuclear fuel usage in Australia, the decision on whether to opt for nuclear power or stay with fossil fuels still depends on pretty much the same judgments as it did before.
	Mining Remuneration: Rewarding Executives for Nothing? Executive pay policies are even more confused among smaller resource companies than in the broader market.
11/12	2006 Reviewed: Valuation This article looks back at some of the market valuation topics covered during 2006 with an eye on how they are standing the test of time.
	2006 Reviewed: Governance This article looks back at some of the topics covered during 2006 with a particular emphasis on corporate governance.
	2006 Reviewed: The Return of the Mining Giants A mining world dominated by a few giants is a reversion to days gone by. Then, their size was a worry. Now, few are concerned despite the absence of a compelling economic case for the new combinations.
	2006 Reviewed: Struggling with Business Ethics By the end of 2006, companies were still struggling to find a way of bringing ethics into their decision-making. AWB was just the clearest (and most extreme) illustration of the problem.

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