Swiss Central Bank goes Oddball on rates

77852_Oddball by Chris Becker The SNB (Swiss Central Bank) effectively lowered rates into the negative territory last night, imposing -0.25% on deposit balances and keeping its foot down on the Euro/Swiss Franc cross at 1.20 (via FT Alphaville): Unconventional in the extreme (Woof! woof!) and shows the SNB wants to hold its floor against the Euro at 1.20, which spiked nearly 100 pips on the surprise move. The SNB looks like a pre-emption against the all but decided QE program from the ECB that will see huge upward pressure on Swiss Franc as the smart/big money crowd seeks a safe haven. Note that the...
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RBA drinks kool aid on mining job losses

ScreenHunter_5566 Dec. 19 07.24 By Leith van Onselen The Reserve Bank of Australia (RBA) released its quarterly bulletin yesterday, which contained an article examining the impact of the mining investment boom on the Australian labour market. According to the RBA, on-site resource construction employment is estimated to have increased six-fold between the mid-2000s and 2013, from around 15,000 to 90,000 jobs. And the RBA's liaison-based estimates suggest that the labour required to operation these newly-built mines and LNG plants will be only around one-third of that required during the construction phase. As such, there is...
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Oil crunched as OPEC blinks

oil_pump by Chris Becker The oil complex continued its calamitous collapse overnight, with both major markets (WTI and Brent) off 3% as OPEC struggles with gaining support on cutting production in the face of rising supply and falling demand. The Saudi Arabian oil minister last night reiterated that it was "impossible" for an OPEC cut to reverse the fall in oil due to the supply surge. From CNBC: On Thursday, Naimi told Saudi state news agency SPA that OPEC sought last month, as on past occasions, cooperation from other non-OPEC oil producers but "those efforts were not successful." Russia has said...
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Mining leads nation’s job losses

ScreenHunter_01 Feb. 17 18.55 By Leith van Onselen The ABS yesterday released quarterly labour force data, which provides a breakdown of employment at the industry level. According to this data, which is presented below in trend terms, the mining extraction industry shed 14,600 jobs in the November quarter and 43,000 jobs over the year. At the other end of the spectrum, construction (which funnily enough includes resources projects) rose by 15,900 over the quarter and by 47,400 over the year. Science jobs (up 8,400 QoQ; 56,300 YoY) have also picked up strongly, whereas public sector (-31,000 YoY) and manufacturing (-21,100)...
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RBA audits our gold reserves

ScreenHunter_5570 Dec. 19 09.02 Cross-Posted from Bullion Baron Two years ago the news was publicly broken on this site that 99.9% of Australia's Gold reserves are stored by the Bank of England in the United Kingdom. Attempts by another blogger, interested in the whereabouts of Australia's Gold, had been rejected by the RBA only several months earlier, "The Bank does not publish the location of its gold reserves." Decisions like this don't happen in a black hole. Something changed the RBA's mind, between August 2012 and December 2012, on making the location of Australia's Gold reserves public.From my observation, the RBA tends to...
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Regional unemployment jumps

ScreenHunter_5544 Dec. 18 17.04 By Leith van Onselen The Australian Bureau of Statistics (ABS) yesterday released its detailed monthly labour force statistics, which includes breakdowns of employment and unemployment across Australia's capital cities and regions. According to this release, the unemployment rate in Australia's capital cities was 5.5% in November in raw terms, down 0.4% from October. By comparison, unemployment in Australia's rural and regional areas was 6.8% in November, which was up 0.2% from October. The below chart, which is presented on a rolling 12 month average basis to smooth volatility, illustrates...
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RP Data weekly Australian house price update

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen In the week ended 18 December 2014, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, rose by 0.27% (see next chart). Home prices rose in all major capitals (see next chart). So far in December, home values nationally have risen by 0.40%, with all capitals except Sydney rising (see next chart). Over the past 12 months, home values have risen by 8.51% at the 5-city level, again with all capitals rising in value (see next chart). The next chart plots the daily movements on a 14-day moving average,...
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Links 19 December 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Oil jumps three percent to $63 as energy firms slash investments – Reuters Bankers See $1 Trillion of Investments Stranded in the Oil Fields - Bloomberg The Conventional Wisdom On Oil Is Always Wrong - Five Thirty Eight Iron Ore Shipping Rates, Prices Slump to 5-Year Low on China – Bloomberg Economic Outlook - A Rising Tide Lifts Most Boats - PIMCO North America: The Blacklist That Rules Wall Street’s Loan Market - Bloomberg U.S. Must Defend U.S. Culture From North Korea - New York Mag Europe: Swiss franc hits two-year low as SNB...
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ASX at the close

ScreenHunter_31 Jun. 04 16.42 Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Euphoric reaction to Fed meeting With a week to go to Christmas, Santa seems to have finally arrived for global equities. It is now clear just how nervous investors were heading into the December FOMC meeting and that overhang seems to have been removed for now. It was always important for the Fed to get the language right so as not to spook markets at such a fragile time and it seems it has done just that. While the Fed removed the ‘considerable time’ reference, it replaced this by saying it can be ‘patient’ – it...
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Some alternatives to Pyne’s uni reforms

ScreenHunter_26 Oct. 16 10.41 Cross-Posted from The Conversation: The government will introduce amended legislation for higher education reform into the Senate next year for further debate. But how do we keep higher education sustainable if the package is torpedoed again? Here are three practical measures that would fix past mistakes and make Australian higher education funding sustainable. Cap funded university places The Rudd-Gillard government’s removal of the cap on funded university places has made Australian higher education funding unsustainable. It resulted in a 20% increase in student numbers between 2008 and...
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Aussie stocks 2014: winners and losers

blogphoto-winners-and-losers-web by Chris Becker UBS has a note out today highlighting the winners and losers of Aussie stocks for this calendar year. The absolute return is around 1-2% (or a good day's upmove), if you included dividends and almost no movement in the index itself:   As UBS rightly point out that is a great deal of underperformance vs other stock markets around the world (US S&P500 up 11%, Nikkei up 7%, European stocks up 2%), but more so in USD terms. By theme or sector its no surprise that resources dragged but also consumer staples, with banks only performing on an absolute basis - i.e...
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Hockey shuns tax reform

ScreenHunter_4209 Sep. 15 14.37 By Leith van Onselen Treasurer Joe Hockey has this afternoon shunned raising the GST, arguing that there is not enough money in the Budget to provide the necessary compensation to middle and lower income earners. From The AFR: [Hockey] said the recommendation earlier this week by the OECD that the 10 per cent GST should be raised to between 15 per cent and 18 per cent could not be made in isolation. “They are not looking at the full picture. If you increase the GST, you need to compensate middle and low-income Australians with significant tax cuts,’’ he told Channel Seven. “We...
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Resources jobs resume their descent

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen DFP Recruitment has released its mining and resources jobs index for November, which registered a fall of 4.2% to 60.90, marking eight falls out of the past nine months. Year on year, the number of mining and resources job advertisements has fallen by 31.3% nationally, but by only 2.6% in the last quarter. Moreover, since January 2014, advertised permanent opportunities have declined by 33% and Contract and Temporary roles have fallen by 25%. (see next chart). According to DFP, "the principle hiring factor driving the reduction in advertised vacancies is the price of...
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Daily LNG price update (first export ready)

APLNG-reaches-key-milestones1 by Chris Becker Brent crude was up nearly 2% overnight and in futures trade today, giving a boost to the LNG contract price: There's news this morning that the first tanker is on its way to Gladstone to pickup its first shipment of LNG. From Bloomberg: The ship, the BG-owned Methane Rita Andrea, is heading for Gladstone, in Queensland state, according to data compiled by Bloomberg. BG expects the plant, the world’s first large-scale project to turn coal-bed methane into LNG, to begin by the end of the year, the company reiterated today. “The initial cargo from QCLNG will most...
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Population ponzi slows as mining unwinds

ScreenHunter_5522 Dec. 18 11.48 By Leith van Onselen The ABS has released its Australian demographic statistics for the June quarter of 2014, which revealed that Australia's population growth rate continues to fall, driven by declining growth in the two key mining states of Western Australia and Queensland. According to the ABS, Australia’s population grew by 1.58% in the year to June 2014 - the sixth consecutive quarterly decline in growth - albeit population growth remained well above the 30-year average of 1.4%. The growth in the number of persons in the year to June 2014 was 364,800, which was still 106,178 above...
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Daily iron ore price update ($60 floor)

its-all-good1 by Chris Becker Sell offs do not go much smoother than this and has given ample opportunity for the longs and shorts to step off and on, as iron ore hovers just above the five year low:   With the MYEFO forecast target of $60 in sight (down from $95 per tonne from only a year ago that "no one saw coming") BHP has confirmed such a drastic price target calling $USD65 a tonne an "appropriate" target. With a breakeven in the $30 range, of course its appropriate! More from BS: The latest investment bank to lower its forecast is Morgan Stanley, which cut its 2015 prediction by 9...
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Stamp duty delivers $555m Budget windfall to NSW

ScreenHunter_5521 Dec. 18 10.18 By Leith van Onselen The NSW Government has today released its Half-Yearly Review for 2014-15, which recorded a massive $555 million Budget turnaround on the back of the booming Sydney housing market (see next chart). As shown in the table below, the 2014-15 Budget had forecast a deficit of $283 million, which now has been revised to a surplus of $272 million, with larger surpluses forecast over the forward estimates: The reason for the massive upward revision was booming transfer (stamp) duties, which "are forecast to be markedly higher, driven by continuing strength in the property...
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Why Abbott is failing on infrastructure

ScreenHunter_5488 Dec. 16 10.03 By Leith van Onselen Back in July, Prime Minister Tony Abbott gave an address to the 2014 Economic and Social Outlook Conference Dinner, arguing that Australia needs to invest heavily in infrastructure and outlining why he wants to be known as the "infrastructure Prime Minister" [my emphasis]: An essential part of our Economic Action Strategy is record investment in infrastructure. We need it to address the end of the investment phase of the resources boom. We need it to improve our country’s long-term competitiveness and productivity. And we need it if there is, indeed, to be an...
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NZ leads Australia in economic growth

Air_New_Zealand_737_ZK-NGH_Dunedin_Airport by Chris Becker New Zealand's economic growth in the third quarter of 2014 was slightly higher than expected at 1% versus 0.7% but annualised dipped to 3.2% from 3.9% in the last quarter: While a very good result (one Australian Treasury officials would love to have) it might forestall PM John Key's planned return to surplus this financial year, which recently had been pushed out by a year. This is of course a political goal not an economic one as the Kiwis have the same delusional focus on "surpluses forever" as the Australian economic/political quango when both nations need to be...
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PS redundancy costs pass $1 billion

ScreenHunter_07 Oct. 11 11.09 By Leith van Onselen The Canberra Times is running an article today claiming that the taxpayer bill for federal public sector redundancies has passed $1 billion: The redundancy bill for departing public servants and other government workers will be more than $1.1 billion in just three years, the latest government data shows. But the real cost of Commonwealth golden handshakes under Labor and Liberal governments since 2012 might be much higher, with the Treasury unable to shake its habit of vastly underestimating the cost of taxpayer-funded redundancy payouts... Monday's Mid-Year Economic...
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Macro Morning (Fed bounce)

marketmorning by Chris Becker Thank you Janet Yellen shouted most traders overnight as the FOMC meeting and press conference wrapped up, sending stocks bouncing and risk doubling down again. Buy the dip works! (until it doesn't....) US stocks were the main beneficiaries, with the S&P500 up over 40 points or 2% in a beautiful upswing: I'm looking at the 2030 level on the daily chart and positive momentum before calling this a Santa rally but the DAX daily chart below shows the potential. European cash markets were in the green before closing, but post close futures have rallied alongside the...
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Why not offset oil price fall by raising fuel excise?

ScreenHunter_04 Sep. 23 15.14 By Leith van Onselen The Pascometer, Michael Pascoe, was on point yesterday afternoon, recommending that the Abbott Government should offset falls in oil/petrol prices by raising fuel, and in the process undo the Budget damage caused by the Howard Government's decision to freeze the fuel excise in 2001. From The SMH: [The Government should] seize the opportunity of crashing oil prices now to recoup all the indexation that has been forgone. Yep, I'm saying increase the price of petrol by about 12 cents a litre... Hey presto, around $5 billion a year would disappear from Joe's troublesome...
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White Paper to urge GST, superannuation tax rises

ScreenHunter_4198 Sep. 15 07.19 By Leith van Onselen The AFR has leaked some details of the upcoming White Paper on tax reform, which is scheduled to be released by the Abbott Government early next year. According to the article, the White Paper will recommend shifting the tax base away from personal income and company taxes by, among other things, raising the GST and increasing taxes on superannuation: The economy’s reliance on income and company taxes has barely shifted since the tax system was conceived after World War II, highlighting an urgent need for reform, the federal ­government’s tax white paper says... The...
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US heading down the path of deflation?

downwardspiral by Chris Becker Last night saw the release of the US consumer price index prints for November just before the FOMC meeting and painting a picture of a potential push into deflation for the worlds biggest (2nd?) economy. The headline inflation rate came in at 1.3% annualised, and 1.7% excluding food and energy, with dropping oil prices obviously helping: The monthly change was actually negative at -0.3%, and up 0.1% on the food/energy exclusion. The lack of inflation in an economy that has been juiced by successive rounds of monetary expansion with QE3 finishing last month is telling,...
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US Fed stays the course

keep calm stay on target by Chris Becker Last night saw the end of the two day FOMC Meeting by the US Federal Reserve, which released its statement and had Chairman Janet Yellen give a press conference early this morning, Australian time. The key takeaways included: removal of "considerable time" language for keeping zero bound interest rates at current level, but with a hedge, so no real change no change in 2015 and 2016 GDP forecasts (strange given impact of oil prices both globally and China's slowdown) uptick in 2014 GDP growth forecast small reduction in unemployment forecasts to below 6%for this year,...
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