The Abbottalypse rolls over climate skeptics

2594090-3x2-940x627 Where's Maurice Newman when you need him? From the SMH comes sudden progress on the Renewable Energy Target: It has been more than 12 months since the Abbott government launched a review of the bipartisan target, which calls for 41,000 gigawatt hours of annual renewable energy production by 2020. Environment Minister Greg Hunt has resumed talks with the sector and both sides say momentum is now building toward a deal. ...It is understood a compromise could address the volume of surplus renewable energy certificates in the market, a problem that has arisen in part because of ongoing investment...
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RBA: Reactive, anachronistic, stuffed

web-about-header The Reserve Bank of Australia is the slowest reforming central bank on earth. It is staid, reactive and sees itself as James Joyce did in Portrait of the Artist as a Young Man, paring its fingernails while waiting for the economy to signal its needs. This was always something of a convenient fiction, used by central banks around the world to ignore asset bubbles and protect their independence. But the ruse serves as a very useful political foil so is not something that will be voluntarily cast aside in a nation where politics poisons everything. Other central banks abandoned this...
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FIRE sector party pushes Australian risk back to GFC eve

Capture By Leith van Onselen Yesterday's national accounts release for the December quarter confirmed that Australia's FIRE economy - Finance, Insurance and Rental, Hiring & Real Estate Services – continues to bath in sunshine, maintaining its record high 11.3% share of the Australian economy (see next chart). With finance and insurance doing especially well, hitting an all-time high 8.6% GDP share (see next chart). Since financial markets were first deregulated in the mid-1980s, the FIRE economy has grown at nearly twice the pace of the rest of the economy, sucking the life out of the...
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AFG: Mortgage demand explodes after rate cut

ScreenHunter_06 May. 13 11.32 By Leith van Onselen Australian Finance Group (AFG) has released its housing finance data for the month of February, which registered a massive increase in monthly mortgage applications, with both the number and value of applications also up strongly on the same time last year. The number of mortgage applications rocketed by 49.3% in February and were up 12.1% over the year to 9,799, whereas the value of applications jumped by 58.1% over the month and by 16.2% over the year to $4,368 million (see next chart). According to AFG: The $4.3 billion of mortgages processed in February included a...
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Living standards falling faster than any modern recession

ScreenHunter_28 Jun. 12 16.40 By Leith van Onselen To add some perspective on why MB believes the Australian economy is so fragile, and why living standards are falling, I have once again taken the time to deflate three measures of the domestic economy, as provided in the December quarter national accounts (released yesterday), by the ABS' population data, in order to ascertain the underlying strength of the economy in per capita trend terms. The three measures chosen are: National Disposable Income (NDI), which is "considered a good measure of progress for living standards because it is an indicator of Australians'...
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RIO job losses mushroom

url From The Australian: MORE than 1000 Rio Tinto jobs on the east and west coasts and many more around the globe could be in the firing line as chief executive Sam Walsh strengthens his cost-cutting drive by ­targeting duplication. Mr Walsh has given six of his eight executive committee members instructions to remove duplications in their businesses and to form plans to revise their structure in the coming weeks. And it is believed that one of the two direct reports who was not given the instructions in this round, iron ore boss Andrew Harding, is in the process of slashing 800 staff and...
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Daily iron ore price update (down she goes)

anvil-200x200-200x2001-200x200 Here are the iron ore charts for March 4, 2015: Uh oh. Paper markets just gave off a loud "crack" as the floor gave way. Singapore 12 month swaps broke to new post-GFC lows. Dalian six month futures were flogged late in the day and sit a few points above the same. Rebar average also gave way. Qingdao spot held up very well in the circumstances with minor falls. Also out are the Port Hedland shipping statistics for February (largely BHP and FMG) which showed firm demand with 35.7 million tonnes (mt) shipped, of which, 30.2mt went to China. The big volume ramp up has passed though...
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Daily LNG price update (overflow)

elephant-clipart-black-and-white-13285-cartoon-elephant-clip-art-design-200x200 The Brent oil price was pushed around by a number of forces last night but ended flat for the day at $60.39 as I write. On the upside for prices, there were attacks on oil infrastructure in Yemen and Iraq and the Saudi's declared the correction over, from CNBC: Saudi Arabia's oil minister said on Wednesday he expected oil prices, which hit a near six-year low in January, to stabilize, signalling cautious optimism about the market outlook. Giving a speech in the German capital, Ali al-Naimi also urged non-OPEC producers to help balance the oil market, saying it was not up to Saudi Arabia to...
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A Chinese anti-pollution tipping-point?

imgres A new Chinese internet video called Under the Dome is suddenly making huge waves. The film is by journalist Chai Jing and covers China's incredible  pollution problems in the style of Al Gore's Inconvenient Truth: The video has been viewed by 160 million Chinese and via BeyondBrics comes Deutsche Bank: We believe this video may have macro implications… The video addresses a sensitive issue which the official media seldom covers. The video has triggered an intensive discussion on the internet. To our knowledge, this is the first time a video by an independent journalist has been allowed...
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Links 5 March, 2015

ScreenHunter_01 Apr. 02 06.19 Macro & Markets Saudi Arabia ups official oil prices amid signs of stronger demand - Reuters It's no JK: Oil spread blow-out portends new price slump – Reuters March Economic Update – The Short Side of Long The Price of Oil Is About to Blow a Hole in Corporate Accounting – Bloomberg Only mass default will end the world's addiction to debt – Telegraph   Asia China services sector picks up in February, new orders at three-month high – SCMP India’s infrastructure push could be envy of West – Reuters India surprises with second interest rate cut - BBC As...
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ASX at the close

ScreenHunter_31 Jun. 04 16.42 Chris Weston, Chief Market Strategist at IG Markets We have seen some shaky price action in Europe yesterday with the DAX at the centre of this, although our opening calls suggest a more positive open today. Worryingly, the German market printed a bearish outside day reversal at the trend high and this could be the start of something more pronounced, especially with the January uptrend being tested. A move higher in European peripheral bond yields (by way of example, the Italian ten-year bond pushed six basis points higher) has given traders reason to take profit in these markets it seems. On a...
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Who’s regulating the financial regulators?

ScreenHunter_6368 Mar. 04 14.56 Cross-posted from The Conversation: ­ Scandals involving Australia’s financial advice sector and the regulation of it have continued into another month, the latest chapter of which has involved NAB’s financial advice division. But this is not the first time NAB has attracted attention for its behaviour and the oversight of it. There was the time when the Australian Investments and Securities Commission (ASIC) allowed NAB to review and massage ASIC’s own media statement about NAB malfeasance. And the controversy when it was discovered senior lawyers from NAB had been allowed into ASIC,...
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Don’t like McMansions? Blame government policy

ScreenHunter_03 Apr. 02 11.00 By Leith van Onselen Jane Goffman, principal of consultancy firm Active Planning, has penned a piece in The Canberra Times this afternoon lamenting the increasing popularity of McMansions across the nation's capital - a trend also present in other jurisdictions around Australia: ...recent inquiries show all that is changing and increasingly the one-size-fits-all approach to planning that the ACT has borrowed from other cities produces XL homes crowded into small, medium and large blocks of land... The appetite for extremely large new houses on blocks large, medium and small is putting pressure...
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Iron ore miners hit as dollar rallies

3 The major iron ore miners are getting a bit of a caning today as the RBA failed to deliver and the Aussie firms up (and valuations trigger profit-taking). BHP and RIO are both down 1% and FMG is down 4%. To the indexes: The idiocy spreads are slowly turning: Nothing new to report on juniors: Dalian up...
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Abbott delivers danger bonus for military

2594090-3x2-940x627 From The Australian: TONY Abbott has retreated from his below inflation defence force pay rise of 1.5 per cent per year, unveiling a larger pay deal for the nation’s 57,000 full time uniformed personnel. The Prime Minister today revealed the government would increase the pay offer from 1.5 per cent to 2 per cent per annum over the next three years. ...Speaking just outside the ACT, Mr Abbott said he had received advice that the move would cost about $200 million over the next four years.   Only fair given the plan to invade Ukraine, Nigeria and...
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GDP in detail: Stuck in the slow lane

ScreenHunter_13 Jul. 15 15.13 By Leith van Onselen As summarised earlier, the Australian Bureau of Statistics (ABS) today released the national accounts for the December quarter, which registered a 0.5% increase in real GDP over the quarter and a 2.5% rise over the year. The result just missed market expectations of 0.6% growth over the quarter and 2.5% growth over the year. On a per capita basis, real GDP rose by just 0.2% and was up by only 1.1% over the year. More importantly for living standards, real national disposable income per capita was unchanged over the quarter and was down 0.9% over the year. According to the...
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GDP remains weak

imgres The Australian Bureau of Statistics has released December quarter GDP and the news is more weakness with a close to consensus 0.5% quarter-on-quarter and 2.5% year-on-year: DECEMBER KEY FIGURES Sep Qtr 2014 to Dec Qtr 2014 Dec Qtr 2013 to Dec Qtr 2014 % change % change GDP (Chain volume measure) Trend 0.4 2.3 Seasonally adjusted 0.5 2.5 Final consumption expenditure (Chain volume measure) Trend 0.7 2.5 Seasonally adjusted 0.8 2.6 Gross fixed capital formation (Chain volume...
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RBA to investigate rates leak

ScreenHunter_01 Jun. 08 23.33 As I mentioned yesterday, there was some pretty weird dollar action pre-announcement from the RBA, and now: The Reserve Bank has confirmed that an investigation is under way into a price spike in the Australian dollar one minute ahead of yesterday's decision to hold the cash rate at 2.25 per cent. "The Reserve Bank has verified that the monetary policy decision was published at exactly 2.30pm and according to the appropriate procedures. ...“We were sitting here, the Aussie just jumped and we’re wondering what’s going on,” said Annette Beacher, head of Asia-Pacific research at TD...
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WA knocked off top mining perch

1dfvwf From the AFR: The Fraser Institute annual survey of mining companies showed Western Australia slipped to No. 5 last year from being the world leader in 2013, replaced by Finland as the most desirable mining jurisdiction based on investment attractiveness, factoring in perceptions of policies and geological potential. Saskatchewan, Nevada and Manitoba placed ahead of Western Australia. Queensland placed No. 27 on the list, behind the African nations of Namibia and Botswana. ...The impact of royalty payments on miners' bottom lines last year was a likely reason that Australia was seen as a...
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ASX valuations charted

3 From Morgan Stanley: Consensus forward Price to Earnings multiples continue to re-rate, will all Macro Sectors trading at or above +1 std to long-term average. On the back of stronger market returns and flat earnings profile, the ASX 200 is trading at 16.2x, ~21% above LT average of 14.1x. Stripping out resources and financials the Industrial ex Financials has moved higher to 18.5x with Resources now trading at 5 year highs of 16.1x. •Consensus aggregate earnings growth forecasts for FY15 and FY16 have moved lower through reporting season. The market is now forecasting flat earnings growth...
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The great grey gouge of the West

ScreenHunter_6346 Mar. 04 10.06 By Leith van Onselen There's an inter-generational war going on in the UK, which is also being played-out across most developed nations, whereby older generations are 'making out like bandits' at the expense of their children and grandchildren. Here's the Financial Times: Average twentysomethings have seen their living standards slip from a position of comparative affluence to well below par over the past 35 years as average pensioners have enjoyed a rapid rise up the national league tables of incomes... They come as David Cameron intensifies his efforts to woo older voters, pledging to...
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Macro Morning: Fade

marketmorning-200x200 By Chris Becker Apologies for lateness today. The weak session in Asia yesterday, which saw the Nikkei flat but the ASX200 lose nearly 0.5% and Chinese stock markets down around 2%, translated into falls on the European and American bourses overnight. Although a solid retail sales print in Germany should have helped the bulls, it was a case of sideline action with the DAX retreating 1.1% but still well on trend: The FTSE was off 0.75%, continuing to meet resistance overhead on the dailies, with another bearish rising wedge pattern forming amid worrying falling daily volatility: One...
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Stock on market surges in Perth, Darwin

ScreenHunter_03 Jan. 30 13.18 From SQM Research comes their stock-on-market data for February, which registered a 0.1% rise over the month and a 1.6% increase over the year: As shown above, there is significant divergence between capital cities, with stock levels down over the year in the frothy markets of Sydney and Melbourne, but up massively in the mining-heavy jurisdictions of Perth and Darwin. According to SQM: While property listings were mostly steady over the month, in Perth and Darwin they were much higher from a year earlier, reflecting weakness in those property markets given the mining downturn. Sydney...
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Bank boom pushes services PMI up

2 From the AIG: The services sector expanded for the first time in 12 months in February, following generally stable conditions in January. The seasonally-adjusted Australian Industry Group Australian Performance of Services Index (Australian PSI®) improved again by 1.8 points to 51.7 points in February. Much of this growth was concentrated in the health and community and financial and insurance services sub-sectors. • The three-month moving average for the Australian PSI® also increased to 49.7 points this month. Recent results from the Australian PSI® suggest growth in Australian...
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Bears roar!

hqdefault The AFR goes all bear porn today: Highly regarded Australian Ethical Investment portfolio manager Mason Willoughby-Thomas warns "the risk of capital loss once monetary conditions eventually normalise could be significant as investors rush for the door en masse." ...Baillieu Holst equity analyst and author of market newsletter Sunset Strip Mathan Somasundaram is also comparing current stock market conditions to what happened prior to the 1987 stock market crash and GFC, which saw the stock market nearly halve in value. ...Pete Wargent, property buyer and co-founder of AllenWargent property...
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