Weekend reading 22-23 October 2016

Global Macro / Markets / Investing: The trade data gap: Mistake and malfeasance – VOX The sharing economy is creating a Dickensian world – MarketWatch Hedge Funds Hurt as Investors Remove $28 Billion in 3 Months – NY Times As hedge funds suffer, so do their imitators – MarketWatch Hedge fund assets hit record high despite huge redemptions – CNBC

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Macro Afternoon

by Chris Becker A lacklustre finish to the week for Asian markets as the muted overnight lead from US stocks has turned into scratch sessions across most bourses. Another lowering in the Yuan fix to a new six year level coupled with an ECB reluctant to give any guidance on its stimulus program is keeping


Collapse of car manufacturing will harm overall R&D

Cross-posted from The Conversation: By the end of next year, car manufacturers Mitsubishi, Ford, Holden and Toyota will all have largely exited Australian manufacturing, taking their assembly lines overseas where the cost of production is significantly lower. This will create a vacuum for 260 businesses that supply accessories and components to the Australian automotive sector.


Big Iron still firm as yuan sinks to new lows

The yuan is sinking to new lows again today as the US dollar charges on: Nobody cares for now with sentiment for the inflation trade still high. But make no mistake, the falling yuan is massively deflationary, not least for bulk commodities and, soon enough we’ll all see it. Dalian has opened flat. BHP is


Population ponzi overruns low paid workers

By Leith van Onselen Earlier this year, the Senate Education and Employment References Committee has released a scathing report entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, which documented the abuses of Australia’s temporary visa system for foreign workers. The most damning assessments from the Committee were regarding Australia’s Working Holiday Maker


The price of blocking China

From Domainfax: Australia just found out the price of blocking foreign investment. The NSW state government announced on Thursday it had sold a 50.4 per cent stake in Ausgrid to two local superannuation funds in a deal valuing the entire company, including debt, at about $20.8 billion. Two months earlier, the federal government barred NSW from accepting an offer


Captured APRA caught pants-down on mortgage fraud

By Leith van Onselen “Only when the tide goes out do you discover who’s been swimming naked.” – Warren Buffett, 2001 Exactly one year ago, Australian Prudential Regulatory Authority (APRA) head, Wayne Byres, gave testimony to the Senate Standing Committee on Economics in Canberra, whereby he admitted that APRA had acted too late in addressing


More on 2017 US recession risk

From Lombard Street: US recession fears were fairly widespread earlier in the year. With capex weak and manufacturing in decline, these concerns haven’t quite gone away. But leading indicators suggest short-term risks have diminished. This supports our view that the deceleration in the US economy over the past six months has been a ‘soft patch’,


Australia’s Kiwi exodus recession indicator hits new high

By Leith van Onselen Statistics New Zealand has released its permanent & long-term migration figures for September 2016, which revealed that net permanent and long-term migration into New Zealand continues to boom, hitting a record high annual net gain of 70,000 migrants: Migrant arrivals numbered 125,600 in the September 2016 year, setting a new annual record.


ABC attacks Salt-Kouk axis of evil

From Michael Janda at the ABC: The big controversy this week was whether Gen Ys should forgo some smashed avo to save up for a house. The commentariat took Bernard’s advice to millenials with more than a grain of salt — he was demolished on the statistical evidence by Greg Jericho and a raft of


Kouk commits credibility suicide on housing

By Leith van Onselen You think after being firmly debunked twice before (here and here) that Stephen Koukoulas (“the Kouk”) would have learned his lesson. But no, like some hideous singed moth drawn to the flame of its own incinerated credibility, yesterday he published another tirade spouting that millennials have nothing to complain about on


Reckoning of the Dumb Bubble

Macroeconomics is the business of knitting together the narratives of capital flows with investment-effective time frames. Of these two steps, mainstream market  economics is most challenged by the first, as evidenced by being wrong for the past eight years. The second part is simple for the plodders, just assume nothing will go wrong and you’ll mostly


Youth labour market continues to deteriorate

By Leith van Onselen Yesterday’s ABS labour force release for September revealed a further deterioration in trend unemployment for those aged 15 to 24 years old, with unemployment rising for the eighth consecutive month to 12.91%, versus 4.2% unemployment for the rest of the labour market (see next chart). As you can see in the


Mature males bear brunt of labour market adjustment

By Leith van Onselen Yesterday’s labour force data for September, released by the ABS, highlighted how male workers have borne the brunt of Australia’s labour market adjustment towards services. In the year to September 2016, male full-time employment declined by 0.7%, whereas part-time employment surged by 8.3%, taking total male jobs growth to an anaemic


Another CPI preview

From Westpac this time: • Westpac’s forecast for the headline CPI is 0.9%qtr which lifts the annual pace to 1.5%yr from 1.0%yr. • September is traditionally a stronger quarter (mostly due to the annual price resetting for administrated prices) with the ABS seasonal factor worth 0.3ppts. This results in the seasonally adjusted CPI rising a


World steel output resumes growth

Some good news here, from World Steel: World crude steel production for the 66 countries reporting to the World Steel Association (worldsteel) was 132.9 million tonnes (Mt) in September 2016, 2.0% up on September 2015. In the first nine months of 2016, Asia produced 825.9 Mt of crude steel, an increase of 0.6% over the