Aussie dollar falls on a rising share market

The Australian dollar continued to fall, but the local share market managed its third rise in a row.

Transcript

00:00Financial markets are betting that next week's election will see the return of inflation

00:05and a limit on further US rate cuts because both candidates plan to lift the budget deficit

00:10with spending and or tax cuts.

00:13So the US dollar is rising, and the Aussie dollar has dropped 5% in a month to 65.6 US

00:19cents today.

00:20Here's a chart of US government debt as a percentage of GDP since the War of Independence.

00:26Apart from World War II, it's the highest it's ever been.

00:29And here's what the Congressional Budget Office is predicting will happen based on

00:33existing policies, before the election promises increase it some more.

00:38The share market rose a third of 1% today, led by banks and miners, and Premier Investments,

00:43which is selling three of its retail businesses to Meyer.

00:46Guess which company investors think is doing better out of the deal?

00:50Premier is up 10%, Meyer down 1.6%.

00:54And here's a chart comparing the share prices of Meyer and Premier over the past 10 years.

00:59Meyer has halved, Premier has tripled.

01:02Its market value is now more than six times that of Meyer.

01:05And that's because Premier's profit margin is close to 10%, while Meyer's is 2.3%.

01:12Today's deal is complicated, but basically Meyer is issuing shares to Premier in return

01:15for Justine's, Dottie, JJ's and some cash.

01:19And Premier's Solomon Liu ends up with 26% of Meyer and goes on the board to teach them

01:24how to make a margin of 10%.

01:27They hope.

01:28Gross global markets went up today, apart from China's.

01:31Oil fell a bit more and the iron ore price jumped 2.5%.

01:34Oh, and tomorrow is quarterly CPI Day, which will decide if and when we get a rate cut.

01:41The RBA is looking for 3% headline, 3.5% core.

01:45If it's less, happy days.