Weekend links, 6-7 February 2016

Australian Scapegoat, 1987, Arthur Boyd, Art Gallery of NSW China China’s central bank likely to usher in more currency depreciation after Lunar New Year – SCMP China’s foreign exchange reserves likely to record another massive fall in January, analysts predict – SCMP With poor job prospects for Chinese students, is it still worth investing in

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ASX at the close

Angus Nicholson for Chris Weston, Chief Market Strategist at IG Markets Superbowl and the Year of the Monkey will be ushered in on Sunday, but fans of FX volatility will also be welcoming important US and Chinese economic releases over the weekend. US Non-Farm Payrolls (NFP) will be released this evening (00:30 AEDT) and investors


Wolf: Central banks better prepare for recession

From the FT’s always excellent Martin Wolf on what central banks need to think through for the next recession (which may not be far away): One would be to do nothing. Many would call for the cleansing depression they believe the world needs. Personally, I find this idea crazy, given the damage it would do to


How policy success has driven the housing crisis

Cross-posted from The Conversation: To see Australia’s shortage of affordable housing as a failure of government is to misunderstand the politics that underpin housing. The vast proportion of government money spent on housing directly benefits the well-off at the expense of private renters and public housing tenants. Government policy has not, on the whole, failed.


Genworth chucks more money out the door

Genworth today released its full year 2015 accounts and chucked more money at shareholders: It’s been hosing shareholders with money when APRA should be raising its counter-cyclical buffers: Why? Because its delinquencies are currently at bottom of the cycle lows: But it has insurance in force of $320 billion: And a regulatory capital position of just $3.6


Bill Evans on the RBA’s SoMP

From Bill Evans: The Reserve Bank’s February 2016 Statement on Monetary Policy provided few surprises. The key growth and inflation forecasts for 2016 have remained the same as the November Statement. For 2017, there has been a modest reduction in forecast growth from 3.00-4.00%yr to 2.50-3.50%yr. The underlying inflation forecast of 2-3%yr is unchanged. The


Retail sales to add to Q4 GDP

By Leith van Onselen Today’s tepid retail sales are likely to make a slight positive contribution to Australia’s December quarter GDP when the national accounts are released early next month. As noted earlier, monthly sales values registered zero growth in December in seasonally adjusted terms and 4.2% growth over the year: However, in quarterly real


RBA SoMP asleep at the wheel

If you want read the RBA’s propaganda release in its February Statement on Monetary Policy then it is available here. The charts pretty much sum it up. No change to the outlook despite rising global volatility: GDP growth swinging seamlessly upwards and unemployment moving effortlessly downwards as we go off the combined residential construction, mining


US jobs preview

Tonight is the monthly US jobs report and obviously markets are going into it pretty loaded. A stronger than expected report will kill the bear market rally in risk but a weak report will give it another leg up. Calculated Risk offers a couple of previews: The consensus, according to Bloomberg, is for an increase


The big, red Chinese steel vomiting machine

From Macquarie: As if the global steel industry didn’t have enough problems, Chinese steel exports hitting almost 125mt on a crude steel equivalent basis over 2015 was a distinct surprise on the upside. The weakness in domestic demand was certainly a part of this, as material was diverted towards other demand centres. With a global


Turnbull gets compulsory super cut right

By Leith van Onselen The Australian reports today that the Turnbull Government is looking to permanently freeze scheduled increases is the superannuation guarantee, locking it at 9.5% rather than 12%: The government saved $2.6bn over three years by delaying the Labor plan but would recover far more if it were to halt the increase altogether,


China’s richest man downgraded

From the WSJ: China’s richest man, Wang Jianlin, has just signed a deal to buy U.S. Legendary Entertainment and boasts a raft of property projects abroad. But headwinds at home could put a dent in his ambitions. Two ratings firms in the past two days downgraded bonds issued by Dalian Wanda Commercial Properties Co. Ltd., the real estate


C’mon Robb. Let the PC review the TPP

By Leith van Onselen So, Trade Minister Andrew has formally signed the Trans-Pacific Partnership (TPP) trade deal, giving Australia and the other 11 member nations two years to ratify it. In doing so, Robb took a swing at opposition groups and deflected calls to have the agreement independently assessed before Parliament votes to bring the


CLSA: Residential boom gunna “collapse”

MB was there first but they’re flooding in now. Yesterday we saw Macquarie warn on the residential bubble going bust owing to conversion risks and today it is CLSA: Chinese FX crackdown could trigger apartment collapse Andrew Johnson thinks the apartment cycle is on the verge of a sharp decline due to the confluence of


Macro Morning (gold shines)

by Chris Becker A second day into the inevitable rebound in commodity prices as the USD remains in a weakening trend, although oil bucked the overall bullishness and whipsawed violently again. The Bank of England kept interest rates low again at its monthly interest rate meeting while in the US weekly initial jobless claims came in a little higher


Construction PMI fades away

From the AIG: The seasonally adjusted Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (Australian PCI®) fell by 0.5 points to 46.3 points in January. This indicated a broadly unchanged rate of contraction from December. § It is the second consecutive month that the Australian PCI® has been below the critical 50 points


Property Council threatens MPs over negative gearing

By Leith van Onselen You cannot keep a good rent seeker down. Just in case either side was considering reforming Australia’s negative gearing rules, Australia’s rent seeker-in-chief, the Property Council of Australia (PCA) – has launched a public scare campaign warning that any changes to negative gearing would be politically fraught by threatening both major


Professor McKibbin’s dystopia

Let’s recall Warwick McKibbin‘s vision for the Australian economy yesterday: Obsessed by weak commodity prices and volatility in global financial markets to the point of not thinking about the future? Don’t be, advises top economist and former Reserve Bank of Australia board member Warwick McKibbin. Australia is better placed than most countries to benefit from long-term