Morgan Stanley: ASX past peak earnings

From Morgan Stanley: What’s Puzzling You? Peak multiples and arguably peak earnings for the ASX 200 leave us cautious on the outlook for Australian Equities. Our Index Target remains below current levels but we acknowledge that the benchmark could trade above this in the short term whilst Yield compression buffers the reality of negative earnings momentum. Index Target Update: We update

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Inside Strongman Iron’s meltdown

The Sauce may be a grab bag of disaffected student nut-jobs but they are much better at analysing iron ore dynamics than the MSM. Take this: Strongman Iron, Australia’s fourth largest iron ore producer, will mothball its entire Pilbara operations this week, as iron ore prices continue to tumble around the globe. Strongman is the


NSW government still loving the Sydney bubble

By Leith van Onselen The spectacular investor-driven Sydney property bubble is a frequent theme this blog, with home prices there rising by around 35% since June 2013, according to RP Data (see next chart). This rapid lift in housing prices has, of course, been driven by an unprecedented orgy of investor speculation, whose share of


Macro Morning (records)

By Chris Becker A weakish US durable goods order, nearly unanimous resolve in Europe to screw the Greeks plus a rebounding oil price sent the USD falling and risk markets mainly up on Friday night. Crude rose on the ongoing crisis in Yemen while the falling USD brought gold down but industrial metals and iron


Negative gearing is a tax shelter for fat cats

By Leith van Onselen After demolishing Treasurer Joe Hockey’s claim on Friday that unwinding negative would cause a significant increase in rents, The AFR quoted my work in an article entitled: Negative gearing: what’s true and what’s not? This AFR article also contained analysis from the Property Council of Australia (PCA), which claimed that Australia’s


Auction clearances highest on record

The national auction clearance rate set an all time record over the weekend, although volumes were low on account of Anzac Day. The preliminary national clearance rate was an unprecedented 84.3%, up from the 79.2% recorded last weekend, according to Core Logic-RP Data, from RP Data: Sydney’s clearance rate surged 2.8% to 91.1%, whereas Melbourne’s


RP Data weekly housing market update

Click to view Core Logic-RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 26 April 2015. This week’s report includes: Latest weekly dwelling value results; Auction results & clearance rates; Latest median house & unit prices; Average time on market & vendor discounts; Mortgage market activity;


Five drivers threaten Aussie dollar breakout

It’s not really the news that the RBA wants to hear but in the short term the Australian dollar is threatening to move higher according to MB’s five drivers model of valuation. The five drivers are: interest rate differentials; global and Australian growth (more recently this has become more nuanced for the Aussie to be


Gina: Nobody saw iron ore crash coming

It had to be said, I guess, from the SMH: “None of us predicted it would be as bad as this,” Mrs Rinehart, chairman of Hancock Prospecting, said on Friday at a mining industry lunch in Sydney. “Nobody was predicting – even the most conservative ones – the ore price crash.” Of course it’s not even remotely


Daily iron ore price update (melt-up)

Here are the iron ore charts for April 24, 2015: Now that’s a melt-up. Qingdao spot went through the roof and Tianjin benchmark surged 5.9% to $57. Paper markets have gone berserk with Singapore 12 month swaps playing catch-up while Dalian jumped solidly but then hit the nitrous oxide Friday night ending up another 5%


Daily LNG price update (stockpile)

Brent oil rallied to a new high of $65.40 Friday. The main causes were some short term supply disruptions in Libya and further declines in the US rig count down 22 to 932: The falls are definitely beginning to flatten out but the US shale production peak is also in sight.  But for how long? With


Cracks widen in the Chinese land and debt ponzi

A look back at recent initiatives by China to get its local government debt market moving from UBS via FTAlphaville: This is NOT a Chinese “QE”, but a debt restructuring and asset securitization. Contrary to some news report and comments, the RMB 1 trillion local debt swap does not mean the central government “bailing out”


Links 27 April 2015

Global Macro / Markets / Investing: The Most Important Decision When Selecting a Value Investing Fund – Alpha Architect Why risk is hard to measure – VOX Europe’s Top Asset Manager Says Stock-Market Crash Possible – Bloomberg How Low Can Bund Yields Go? – PIMCO Blog ECB Said to Start Buying Covered Bonds With Negative


Weekend Links 25-26th April 2015

Global Macro / Markets / Investing: Need for better commodity regulation deepens – FT Opec Oil Supply/Demand balance charted – @MauroIppolito Africa and commodity prices – no longer the kiss of death – The Economist Trader Tied to Flash Crash Says He Simply Changed His Mind a Lot – Bloomie Google Caps Costs as Growth


ASX at the close

Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Commodities drive Asia Commodities have been the driving force behind gains in Asia today with commodity stocks and related currencies enjoying a day in the sun. The ASX 200 has managed to dig itself out of the hole it’s been in all week and


Saul Eslake: May rate cut is go

Given Mr Eslake recently described the RBA as “insane” for cutting rates, and his central position on the scurrilously hawkish Shadow RBA, this followingis perhaps singificant from SAul today: The minutes earlier in the week stressed that the RBA was wanting to assess the data flow further before making any decision whether to ease policy


BofAML on why the Budget needs fixing

From Alex Joiner and Saul Eslake at BofAML: One of the key economic challenges Australia faces both now and over the medium term is that of restoring the nation’s finances to a sustainable position. We emphasize that this is not because we think budget deficits, or public debt, are inherently bad. Indeed we have some


LVO cuts through on NG at AFR

Congratulations to the AFR for headlining LVO’s demolition of Joe Hockey’s negative gearing lies this afternoon: Economist Leith van Onselen disputed both Mr Hockey’s claim about rents and Mr Morrison’s argument that negative gearing helped build housing supply. Renters would be turned into owner-occupiers, thereby reducing demand for rental properties and leaving the rental supply-demand balance


Iron ore short squeeze screams higher

We’ve got ourselves a fair dinkum short squeeze going now in iron ore. Given how hot futures markets have turned, BHP and RIO are lagging a little at 2.5% rises. FMG is hotter at 5.3%. To the indexes: After a few brief days of closing, the idiocy spreads are off the races again: A measure


Citi: China property bifurcation deepening

From Citi: Best of times vs. worst of times: In a stabilized but polarized overall property market, we see the “best of times” ahead for quality names as consolidators that are progressing well with their business model transformations (asset-light with high turnover, best city exposures and/or diversified income streams). By contrast, the “worst of times”