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ASX at the close

Chris Weston, Chief Market Strategist at IG Markets Tide turns for the greenback Bond market weakness has been a key theme across the US and European markets. This has now clearly started having an impact on equities with confidence being sapped out of the market. Janet Yellen’s comments warning that long-term rates are very low

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Scutt exposes ABS jobs numberwang

From David Scutt: We applied monthly movements in the Australian jobs report over the past five years but adjusted them to reflect the size of the US labour force. The relative stability of the non-farm payrolls number — reported in grey — is about as far-removed from the volatility found in the Australian jobs equivalent

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RBA selfie backfire

by Chris Becker The RBA just released this “snapshot” of the Australian economy, I guess as a preview of its SOMP (Statement on Monetary Policy) to be released on Friday. Snapshots are great for the low attention span crowd, but even they could do the math quickly and note the average house price to earnings

10

Infrastructure by media

Victoria’s tunneling for pork takes another turn today, from the ABC: A proposed road tunnel through Melbourne’s west appears to be in line for federal funding after Prime Minister Tony Abbott indicated he supported the idea “if it stacks up”. …Victorian Premier Daniel Andrews said he was “delighted” by the Prime Minister’s comments, after doubts

3

IMF: Australian banks need capital and macroprudential

From the IMF’s new Regional Economic Outlook: Asynchronous monetary policies in major advanced economies in response to divergent cyclical conditions have contributed to large and rapid exchange rate realignments. Robust growth and the prospect of higher interest rates in the United States, coupled with the start of quantitative easing in the euro area and further

0

Big iron sells with everything else

Big iron ore is down today with BHP leading the way at minus 1.5%, RIO is down 0.7% and FMG is up slightly. The indexes: The idiocy spreads are closing once more, except for FMG: The juniors: Dalian is down 7 points at 435, right on cue as we passed over $60. We will be under it tomorrow.

5

RIO hoses down Forrest

From the Canbarra Times comes Sam Walsh who confirmed RIO will proceed with its looming expansion: Responding to recent criticism from Fortescue chairman Andrew Forrest and WA premier Colin Barnett, Mr Walsh said Rio’s growth strategy and market share had scaresely changed over the past decade. “A decade ago when I led the iron ore group,

3

RM business confidence sinks to new low

From RM: Roy Morgan Research’s Business Confidence results in April dropped by 7.3 points (down 6.5% to 105.1) from March. This is the lowest level since August 2011 (101.8) and continues the underlying downward trend seen since the peak of 136.3 in October 2013. It is also well below the five-year average of 117.3. These

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On China’s falling iron ore output

From UBS: China’s domestic raw iron ore production is falling, latest data is 105.1Mt/mth for Mar-15 vs 120.9Mt pcp. This measure we do not see as particularly timely nor reliable, but the direction is as we expect with prices under pressure. We believe that most of the shuts required from here in the iron ore market will need to

13

Jobs miss

The ABS has released the April labour market survey and it’s a dud: TREND ESTIMATES (MONTHLY CHANGE) Employment increased to 11,725,000. Unemployment decreased to 767,500. Unemployment rate decreased less than 0.1 pts to 6.1%. Participation rate remained steady at 64.8%. Aggregate monthly hours worked increased 6.9 million hours to 1,643.7 million hours. SEASONALLY ADJUSTED ESTIMATES

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How high can the China stock bubble go?

by Chris Becker Financial theory tells us that stock market bubbles and their demise are hard, if not impossible to predict and furthermore, history does not repeat itself or make “patterns”. Of course there’s a big difference when it comes to the practical side of finance, where human behaviour behind the bubbles and the busts

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Are markets forcing rate hikes on Australia?

That’s what Gotti argues today at Dad’s Army: Overseas investors hammered the Australian bond market last night sending prices lower and yields higher which will have dramatic ramifications for Australian shares, property, banks, interest rates and the broader Australian economy. A key driver in the bond sell off is that, as a result of long

7

Ugly start on the ASX200

by Chris Becker Its an ugly start today on the local share market, with the ASX200 down nearly 1.5% on the open, with financials leading the way after NAB’s shock $5.5billion rights issue. The technical position here is dire if we close today or this week in the red, with 5500 points the next target:

8

Construction PMI back in recession

From the AIG: Australian PCI®– Key Findings for April: •The Ai Group/HIA Australian Performance of Construction Index (Australian PCI®) slipped into contraction in April, declining by 3.1 points to 47.0. •The new orders sub-index shed half of last month’s solid gains and fell back into negative territory, dropping 6.2 points to 44.6. •Construction activity declined

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Ken Henry joins the oligarchs

Apparently Ken Henry is to succeed Michael Chaney as NAB chairman at the end of this year. I’m a bit torn by this. On the one hand, Henry is a sensible policy-maker with a strong sense of the public good, and may be well placed to help NAB navigate the very difficult times ahead. On

7

NAB shocks

by Chris Becker The last cab off the rank in the banking oligopoly, National Australia Bank (NAB), which routinely has been the worst performer, has surprised the market this morning on two fronts. First, it announced a $5.5 billion capital raising getting ahead of its peers in terms of shoring up a paper thin capital

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Macro Morning (sell, sell, sell)

By Chris Becker As the bond market selloff deepens some surprisingly dour words from Fed Chair Janet Yellen last night sent risk into a tizzy, as she opined that: I would highlight that equity market valuations at this point generally are quite high. Not so high when you compare returns on equity to returns on safe

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The RBA’s real own goal

The AFR has a bunch of quotes today suggesting that the RBA is going to reinstate its easing bias today: Alan Oster, the chief economist at NAB, questioned the Reserve Bank’s decision to cut the cash rate while simultaneously dropping the easing bias and highlighting positive signs across the economy. …”If you want to boost confidence, I’m not sure

0

Retail sales to detract from March quarter GDP

By Leith van Onselen Yesterday’s tepid retail sales, which disappointed analyst’s expectations, are likely to make a negative contribution to Australia’s March quarter GDP when the national accounts are released early next month. As reported yesterday, monthly sales values registered 0.3% growth in March on a seasonally-adjusted basis, which was below analyst’s expectations of 0.4%