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Measuring the great Australian dumbening

The IMD World Competitiveness Index is out today and the story is poor for Australia.  From CEDA: Australia has dropped another place in world competitiveness rankings, falling further in economic performance and government efficiency rankings, raising concerns about our competitiveness as a smart economy. In releasing the Australian results of the IMD World Competitiveness Yearbook which

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The Salt of contradiction

By Leith van Onselen KPMG’s Bernard Salt is an interesting beast. For years he has been an “unabashed supporter of a bigger Australia”, producing reams of articles pushing rapid population growth and warning that to not follow this path would lead to an economic and fiscal catastrophe. Yet, over recent months, Salt has made contradictory

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Macro Morning (Greek gift)

By Chris Becker The USD paused its march higher overnight as possible rumors of a deal on Greek debt helped lift risk spirits across both sides of the Atlantic. The oil complex was not as happy though with both markers sold off and on the cusp of a breakdown while bonds were relatively steady, except

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Pressure builds on FIRB to police foreign buyers

By Leith van Onselen Several real estate insiders have spoken-out about illegal sales of Australian existing housing to foreign buyers, placing increasing pressure on the Foreign Investment Review Board (FIRB) to enforce the rules that preclude non-residents from buying-up pre-existing homes. From The Australian: Buyer’s advocate David Morell said there have been many illegal house

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Lombard Street does Oz property “super cycle”

From Lombard Street Research: A combination of ‘push’ and ‘pull’ factors lies behind surging Chinese demand for Australian property. With prices in China’s policy-driven real estate market retreating, the economy slowing and Beijing cracking down hard on corruption, capital has been increasingly looking to diversify abroad; not least as expectations of one-way CNY appreciation have been shaken to their

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Private capex preview

Today is the release of the ABS quarterly private capex numbers. As unreliable as this survey is it remains the most important guide to monetary policy movements that we have as the mining capex cliff vies with business investment in other sectors. Here is the Westpac preview.

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Mining capex cliff turns bottomless pit

Son of BREE released its biannual major projects update late yesterday and it does not make for happy reading. Even the pathological optimists at Department of Industry couldn’t hide the bottomless pit that is yawning before Australian mining in the next five years. Here’s the wrap: This release of the Resources and Energy Major Projects

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Australia blindsided by war on coal

From Politico: The war on coal is not just political rhetoric, or a paranoid fantasy concocted by rapacious polluters. It’s real and it’s relentless. Over the past five years, it has killed a coal-fired power plant every 10 days. It has quietly transformed the U.S. electric grid and the global climate debate. The industry and

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China keen on Fortescue

From The West Australian: …chief financial officer Stephen Pearce accused FMG’s multinational competitors of backgrounding the media on its Singapore investment company. “In doing so, they are trying to falsely insinuate that FMG is contemplating certain behaviour by multinationals that was the subject of the Senate inquiry and remains under the scrutiny of the ATO,”

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Daily LNG price update (whack)

The Brent oil price was hit hard again last night, down another 2% at $62.14 as I write. There was no obvious cause beyond a renewed bullish push by the US dollar. Another factor may be next week’s OPEC meeting given the last time the group met and did nothing the price of oil did

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China’s age of land finance is over

Cross-posted from Investing in Chinese Stocks. In the first quarter, land finance only made up 32% of government revenue (as Chinese media reports it), down from 60% in 2013. The 32% figure is equivalent to about 25% of total government revenues. This has serious implications for local government finances, since some local government debt is

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Links 28 May 2015

Global Macro / Markets / Investing: Pimco and Hedge Funds Are Still Fighting Over Subprime Scraps – Bloomberg Gross Calls Bet Against Bund Well-Timed, Poorly Executed – Bloomberg North America: US companies Send More Cash Back to Shareholders – Wall Street Journal The Mansions That Are Swallowing Suburban Homes – Bloomberg Federal Reserve Board issues

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ASX at the close

Chris Weston, Chief Market Strategist at IG Markets It looks as though the USD has found its mojo again and this once again is having clear ramifications for other asset classes. US data showed some signs of life yesterday and perhaps the best way to look at this is through the Citigroup economic surprise index

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It’s not yet time to buy gold

The AFR is reporting that UBS is pushing the local gold sector hard: Gold stocks are set to boom thanks to the gold price and merger activity, with UBS slapping a buy on its entire gold coverage list with the exception of Newcrest. UBS put out the note as the sector enjoys a boost from a wave of mergers

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Phil Lowe warns on rising housing risks

By Leith van Onselen In the Q&A session to today’s speech, RBA deputy Phil Lowe warned about rising housing risks, which has necessitated regulatory action to slow mortgage credit growth. From The AFR: “My subjective assessment would be the level of risk in bank mortgage portfolios has risen over the past couple of years”… “Household

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Big iron retraces

BHP is down 2.5% today as oil gives it whack. RIO is also down hard 1.5% and FMG is flat. To the indexes:   The idiocy spreads are flat again: Juniors too:         Dalian is off 3 points from this morning as we again pivot around the $60 point of control.

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David Leyonhjelm misses the point on taxes

By Leith van Onselen David Leyonhjelm, Liberal Democrat Senator for New South Wales, has penned a spirited piece in Online Opinion arguing that the level of taxation is far too high, both in a historical sense and when compared against other developed nations: The Coalition, Labor and the Greens will tell you that Australia’s tax

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Chinese consumer stuck in doldrums

From Westpac: The absolute level of the CSI indicates that Chinese consumers are still anxious about their personal financial wellbeing and the economy more broadly, despite the major shift in the policy stance since late last year. Note that the 100bp cut in the required reserve ratio (April 20) is fully captured by this survey,

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Construction tumbles down mining capex cliff

By Leith van Onselen The ABS has released data on the value of construction work done for the March quarter of 2015, which registered a seasonally-adjusted 2.4% fall in total construction activity over the quarter and an 8.8% decline over the year. The result disappointed analysts’ expectations of a 1.4% fall over the quarter. The

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Busted Pascometer throws pin at bubble

From the reformed Micheal Pascoe today: The reporting of banks being pulled into line on investor loans has concentrated on one part, re-establishing a differential between investor and owner-occupier rates without being able to spell out how big that differential might be. It won’t matter much anyway. But there is considerably more to APRA’s intentions than that, as

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Citi destroys long run iron ore forecasts

More today from Ivan Szpakowski of Citi, my new favourite analyst at Bloomie: “The next decade is shaping up to be a complete reversal of the past decade…Perhaps the greatest structural challenge facing the iron ore market is the rolling over of Chinese iron ore demand, driven by declining domestic steel demand and rising scrap availability…As