A review of things you need to know before you sign off on Friday; TD rates slip as DCS gets closer, August REINZ data soft, PMI up but still contracting, bank settlement balances dive, swaps hold, NZD firms, & more

It is strange that Heartland Bank now has high rates for mortgages - I expect they will lose a lot of borrowers at renewal and be left with high risk car and Reverse equity loans, they must need the interest margins to fund Australia investments, they used to be sharp on rates, not any more unless something else is going on with them ?

In early Asian trade, gold is up +US$52 at US$2564/oz and a new record high.

Celebrated in silence at the water cooler so not to unbalance a generally gloomy sentiment. Behind the scenes, the algos will be working to not let the price get too frisky.

Solid day for miners ETF (GDX) up 4.6% on the ASX. Evolution howling at 7.9%. And don't forget silver. Up a solid 3.5%. 

Australian Gold and Copper (exploration) up a whopping 326.47% YTD. 

Shayne Elliot (aka Mr Burns) has put down the ANZ trading floor scandal and other issues being conflated into 'conspiracy theory' and reckons there's nothing to see. 

Almost anything these days can be dismissed as conspiracy theory and disinformation. 

https://www.afr.com/companies/financial-services/anz-boss-dismisses-tra…

Re. factory PMI

"But it is still contracting at a disarming pace, this is the 18th straight month of contraction."

That would be an alarming pace, rather than a disarming one, surely?

"This Misinformation Bill is something else. Fancy trying to censor criticism of the banking system and the financial markets. What’s so concerning is how on earth did that clause even get into the bill. Have the private banks and superannuation funds infiltrated the government to such an extent that they are now dictating what people can say."

https://x.com/SenatorRennick/status/1834455727764869593

Compulsory reading chaps.

"...Cigarette never far from his lips, Phillips began by fiddling around at the back of the array of Perspex pipes and tanks and starting up a pump that had been scavenged from a Lancaster bomber. The pink-dyed water began to squirt into a tank at the top of the machine, and from there flow down from one container to another. The sound of the pump screeched in the background like a kitchen blender as Phillips demonstrated what the machine could do. The professors were astounded. Perhaps they would have been less so had they known more about his unorthodox education — the differential equations he’d studied by correspondence course, the hydraulic engineering he’d learnt as an apprentice, the mechanical scavenging and repurposing he’d begun on the farm and perfected in the defence of Singapore. The machine worked perfectly. Within five minutes, the entire room was buzzing with excitement at what Phillips had created: the first-ever computer model of a country’s economy. The Moniac, or Monetary National Income Analogue Computer, is these days often just called The Phillips Machine.

It churned out solutions to equations, using hydraulics instead of differential calculus to calculate the answers. It was a simple computer, although not quite as simple as one might assume. It could solve nine differential equations simultaneously and within a few minutes — a feat that was impossible by hand.

...Days before Singapore surrendered, he found himself on the last convoy to flee the city, onboard the Empire Star. The cargo ship designed to carry 23 passengers had been packed with 2,000, many of them women and children. When the convoy was discovered and attacked by Japanese planes, Phillips found a new use for his talents as an engineer. He brought a machine gun up on deck and improvised a mounting for it. Then he stood there for hours, fending off the attackers as bombs fell around him.

This extraordinary performance earned him the MBE medal, but didn’t spare him from spending more than three years in a Japanese prisoner-of-war camp. Conditions were bad. Phillips later said that the small men survived and the taller men starved. He was one of the small ones. By the end of the war, he weighed just seven stone (45kg). To keep everyone cheerful and up to date on news from the outside world, Phillips continued with his engineering improvisations. He built concealed radio sets, one of which was tiny enough to be hidden from the guards in the heel of his shoe. He would have been tortured and killed had it been discovered. He also designed and built little immersion heaters, which the inmates used every evening to make hundreds of morale-boosting cups of tea. The guards never worked out why the camp lights flickered and dimmed each evening. Phillips made light of his prison-camp experiences, and it was not until many years later that the darkest episode was revealed. In the summer of 1945, he was one of thousands of men transferred to a death camp, where they watched their captors mount machine guns on the walls, pointing inwards, and were forced to dig their own mass graves. One of the other prisoners was the writer Laurens van der Post. In his memoir The Night of the New Moon, he describes the camp, and a daring escapade with a “young New Zealand officer” who was capable of performing “a near miracle” with his engineering. Phillips, van der Post and another officer broke into the commander’s office in search of spare parts for the tiny radio. Phillips repaired it just in time to hear the news: the Americans had dropped an apocalyptic bomb on Hiroshima. The end of the war was at hand. After a few tense days, the Japanese camp commander admitted defeat; the prisoners would be freed."

This essay is adapted from Tim Harford’s book, “The Undercover Economist Strikes Back” (Little Brown)

https://www.ft.com/content/6f28a534-7eae-4762-9ab9-abef0ff00525