Barnett bailout a model for “economic reform”

It appears Colin Barnett’s ineptitude is to be rewarded, from the ABC: Treasurer Joe Hockey has given a strong indication that the formula for dividing GST revenue amongst the states will be changed. …”Clearly it is unfair to have one state receiving less than one-third of the GST paid by its citizens,” he said. “Its

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Australian bonds are cheap

After several weeks of curve steepening, the Australian bond curve is once again flattening, broadly thought to be indicative of weakening growth. Short and long yields have been rising but the short end more so as doubts grow around a May rate cut: The to 2/5 year slope is now just 11bps, only 2 points from


Fortescue versus the Banana Republic

From Barry Fitzgerald over the weekend: [Andrew] Forrest has drafted in veteran communications specialist John Hurst in the Sydney office of Cannings Corporate Communications to help “shine some light on the debate in the eastern states’’. But the drafting of Hurst does point to Forrest’s intent to make sure his complaints against the Rio and


China house price falls slow

China’s March new home price data for March is out and is still falling at a good clip but the second derivative has improved. The annual fall is now down to 6.1%:   But the pace of monthly falls has slowed a lot:   We are at least now back into a rate of decline similar


Read if you use Gmail for your MB daily wrap

After four years of supplying the MB daily email to readers that choose (and often pay) to receive it, the monopoly popularly known as Google has mysteriously recategorised your daily MB email into the “promotional” tab within your gmail account. To reverse this inconvenience please follow the steps below. Step one: Click on the “promotions tab” at the top


Weekend Links 18-19 April 2015

Now with added Gunnamatta … Global Macro / Markets / Investing: How The World Bank Broke Its Promise To Protect The Poor  – Huffington Post Oil slips below $64 as ample supplies weigh – Reuters Big-Bank Profit Engines Accelerate  – WSJ Why we need to rethink capitalism – TED Bonds beware as money catches fire


ASX at the close

Chris Weston, Chief Market Strategist at IG Markets Markets in Asia have closed the week on a mixed note, with China continuing to march on and Australia and Japan under pressure amid. Behind the scenes the VIX (or volatility index) index is trading at 12.6% and testing low levels thematic of complacency, so it’s worth


Mike Smith keeps services hopium alive

By Leith van Onselen ANZ chief, Mike Smith, has delivered more hopium on why services exports could save Australia from the commodities bust. From The AFR: Services exports from Australia have already overtaken the minerals trade and have greater potential for long-term growth, a new study shows, providing an optimistic outlook for the economy despite


Big iron melts

BHP is down marginally today as oil soars but RIO is down more solidly at 1.6% and FMG is reversing yesterday’s delight down 5%. All told markets continue to grotesquely misprice the iron ore war but I am getting the sense that RIO is under growing pressure. Perhaps after its own forthcoming good news cost-cutting


If only Bill English was in charge of Australia

By Leith van Onselen New Zealand Finance Minister, Bill English, gave an interesting interview to ABC’s The Business last night, which provided a welcome contrast to the political imbeciles running Australia. Some key points from the interview include: The New Zealand Dollar is too high, particularly relative to Australia. The RBNZ’s macro-prudential controls on high


How FTAs are ripping-off content users

By Leith van Onselen Peter Drahos, professor in law at the Australian National University’s Regulatory Institutions Network and Professor of Intellectual Property at Queen Mary, London University, has written a well reasoned post about the hidden costs of including intellectual property clauses in so-called free trade agreements (FTAs). From The Canberra Times: Today, multinational companies


Property rentier collects its spoils

By Leith van Onselen Hot on the heels of Prime Minister, Tony Abbott’s gutless announcement that he won’t reform negative gearing, prime spokesman for the property industry, the Property Council of Australia (PCA), has released the following statement: Executive Director, Nick Proud, said providing certainty on the future of this tax measure will benefit housing


Macro Morning: Glass ceiling

By Chris Becker Stock markets are trying to make new highs with the US and Europe catching up to the Chinese bubble, but last night worries over the ongoing Greek saga and poor earnings results, housing starts and jobless claims in the US sent both back to reality. Recapping yesterday’s Asian session, it was all


Abbott rules out negative gearing changes

By Leith van Onselen It seems the Government’s war on entitlements does not apply to wealthy tax shelters, with Prime Minister, Tony Abbott, last night ruling-out changes to negative gearing because he doesn’t want to raise taxes. From The SMH: Asked whether he would rule out changes to negative gearing, following an Australian Council of


RP Data weekly Australian house price update

By Leith van Onselen In the week ended 16 April 2015, the Core Logic-RP Data 5-city daily dwelling price index, which covers the five major capital city markets, rose by 0.47% – the eighth consecutive weekly rise (see next chart). Values rose across all major capitals except Brisbane (see next chart). So far in April,


Mr Rainbow slips the bridle

I’ve begged the RBA to muzzle its resident unicorn. But Mr Rainbow (John Edwards) is off the leash again. From the WSJ on yesterday’s employment report: “They are unambiguously good numbers,” he said. Still, Mr Edwards said he would not rely on a few months of employment data to judge that the economy has “turned


Youth employment climbs off the canvas

By Leith van Onselen Yesterday’s improved labour force data for March revealed slightly better news for Australia’s youth, with unemployment for those aged 15 to 24 years old falling to 13.7% – down 0.2% from the 17-year high of 13.9% recorded in October 2014. Unemployment for the rest of the labour market also declined to


Coalition’s car reforms don’t go far enough

By Leith van Onselen As reported in The Australian, the Abbott Government is considering allowing personal imports of overseas vehicles, provided they are less than a year old and have travelled under 4,000 kilometres: Assistant Infrastructure Minister Jamie Briggs, who has been consulting on changes to the Motor Vehicle Standards Act, said the government also


United states blow Cyclone Barnett back west

The natural disaster that is Colin Barnett has been blown back West by united states, from Dad’s Army: Every state and territory — bar Western Australia — last night took the unprecedented step of signing a joint letter opposing a compromise on the distrib­ution of GST revenue, forcing the issue back on the Abbott government.


Fortescue will wreck Australia

The iron ore war is moving fast and not in a good direction. I began this year with guesses of a $50 average for 2015 and $40 average for next year but events are moving swiftly beyond these numbers. The major factor is the extraordinary death throes of Fortescue Metals Group. FMG is moving very fast


Moody’s downgrades iron ore and FMG

From Moody’s: Moody‘s Investors Service has lowered its price sensitivities for iron ore and metallurgical (met) coal, the rating agency says in a new report. The changes come in response to slowing steel production in China and rampant oversupply, particularly of iron ore, which will keep prices low through at least next year. Moody‘s downside price sensitivities for


Daily iron ore price update (Goldies)

A bad day for Qingdao spot despite paper markets still chewing through shorts. Tianjin benchmark did better up 30 cents to $50. Rebar is becalmed. Dalian closed up two and is up one more this morning. Reuters has texture: Chinese iron ore futures edged higher on Thursday, but weak buying interest in top consumer China and