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Consumer confidence loses Budget bounce

By Leith van Onselen The ANZ-Roy Morgan Research consumer confidence index has retraced following last week’s post-Budget bounce, falling by 1.1 points to 113.5 in the week ended 24 May, to be tracking marginally above the long-run average of 113.2 (see next chart). According to chief economist, Warren Hogan, the employment outlook will be the

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FIRB: We failed on foreign property buyers

By Leith van Onselen The chairman of the Foreign Investment Review Board (FIRB), Brian Wilson, has all but admitted that FIRB has failed in policing foreign purchases of established homes, endorsing the transfer of surveillance and compliance functions to the Australian Taxation Office (ATO). From The Australian: …[Wilson] said the shift of the review of

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Bloomie: Australia prefers baristas to brains

From Bloomie’s Michael Heath: Australia is betting on plumbers and coffee- shop owners over scientists and researchers to drive the nation’s next wave of economic growth. The country that brought you refrigerators, black-box flight recorders, bionic ears and Wi-Fi will cut its research budget by 7 per cent over the next 12 months, and another

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Hockey taking “close look” at FMG and China

From Industry Minister Ian Macfarlane on China, Fortescue and FIRB: Mr Macfarlane said conflicts of interest in any transaction would be dealt with by the Foreign Investment Review Board, and he expected Treasurer Joe Hockey will be taking “a close look” at any deal. Any deal between China inc and FMG is a massive conflict of interest. Block it.

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UBS: MP tightening to benefit banks

This one goes under the no shit, Sherlock, category, from UBS: APRA steps up the pressure for banks to tighten lending standards During December APRA announced it had written to the banks to “reinforce sound lending standards”. Recently Wayne Byres, Chairman of APRA, released a speech with the results of a mortgage serviceability survey completed

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Abbott steals surplus from children

By Leith van Onselen Former Treasury Secretary, Dr Martin Parkinson’s, many warnings that Australians are facing inexorable rises in inefficient and inequitable income taxes through bracket creep have received backing from The Grattan Institute, who forecasts that the lion’s share of the projected narrowing of the Budget deficit – from $41 billion this financial year

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Daily iron ore price update (rocket!)

Here are the iron ore charts for May 25, 2015: Spot took off again with Tianjin benchmark up 2% to $61.10. Paper is playing catch up although Singapore is still muted. Dalian was up yesterday but poured it on overnight and is trading at 435 this morning. Rebar average continues its plod to Hell telling

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Macro Morning (US slumber)

By Chris Becker A quiet start to the week with UK markets closed and the US Memorial Day long weekend. The focus was therefore on Europe with continued negotiation between Greece and its creditors sending the Euro and stocks down especially in Spain where some the anti-austerity movement in the depressed country is gaining momentum.

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Hockey must block any Fortescue, China deal

The iron ore end game is upon us. The AFR is reporting that China inc is preparing to move on Fortescue Metals Group: Chinese-linked companies have applied to the Foreign Investment Review Board seeking permission for an investment involving Fortescue Metals Group. Australia’s third-largest iron ore producer has held discussions with China’s largest steel producer,

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Hockey claims super reform “inevitable”

By Leith van Onselen It seems Treasurer Joe Hockey was an unwilling participant in Tony Abbott’s “strategic” captain’s call not to touch Australia’s wasteful and inequitable superannuation concessions. Appearing on ABC’s Q&A program last night, Treasurer Hockey refused to rule-out reforming superannuation in the future, admitting that the system would need to be addressed eventually

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Can the RBA see itself in its crystal ball?

The RBA is doing some soul-searching, from the AFR: The Reserve Bank of Australia’s main economic forecast and analysis units – key drivers of official interest rate decisions – are bracing for the outcome of a closely held review of the central bank’s forecasting practices. …Conducted by two of the world’s leading experts in economic modelling – former Reserve Bank board member Adrian

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Daily LNG price update (iron oil)

The Brent oil price firmed a little overnight on not much news flow with US markets closed ending at $65.88. There is more evidence today that much of what we are seeing in oil price strength is technical, from Oilprice.com: Figure 1 below shows the relationship between U.S. crude oil storage inventory and WTI price.

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Links 26 May 2015

Global Macro / Markets / Investing: HSBC fears world recession with no lifeboats left – The Telegraph Has the technological revolution been greatly overhyped? – New York Times G7 finance ministers to address faltering global growth – Reuters The Retirement Crisis: Statistics Everyone Should See – Cheatsheet North America: Public-Sector Jobs Vanish, Hitting Blacks Hard

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ASX at the close

Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Asia off to a strong start A stronger greenback has worked a treat for Asian equities and seen the region get off to a positive start to the week. The US dollar was firmer against all the majors with a stronger than expected CPI

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Low interest rates aren’t spurring businesses

By Leith van Onselen Barclay’s chief economist for Australia, Kieran Davies, has argued that uncertainty about consumer spending and inflexible expectations of investment returns has made Australian companies less inclined to invest in response to reductions in interest rates. From The AFR: …the abundance of cash on companies’ balance sheets and high hurdle rates – the

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Westpac sees 73 cent Aussie this year

From Forexlive: The Australian dollar is likely to remain in a US78.50¢ to US80¢ trading range through next week, but Westpac continues to forecast further weakness in the currency as the year progresses We expect to see the Australian dollar trading down around US73¢ by year’s end This is close to MB’s 70 cents year

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BOQ joins macroprudential retreat

Cross-posted from Martin North’s DFA blog: Bank of Queensland Limited (Bank of Queensland) has improved its lending practices following ASIC’s concerns about the way it assessed applications for home loans. ASIC was concerned that Bank of Queensland was using a benchmark figure, the Henderson Poverty Index (HPI), to estimate the living expenses of consumers applying

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Yellen gives big iron a shove

It’s a good day for big iron with heavy buying in BHP and RIO both up well over 1% and FMG up 4%. There are a bunch of reasons, paramount being the suddenly falling Australian dollar on Janet Yellen hawkishness, but there is also the strangely large jump in the overnight spot price and firm

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McCrann guzzles kool-aid on super concessions

By Leith van Onselen The Australian’s Terry McCrann penned a curious piece over the weekend, supporting Tony Abbott’s claims that “there is a world of difference between taxpayer-funded benefits and people’s own savings [superannuation concessions]”: A tax expenditure is not the same thing as an actual expenditure… The critical intersection of all this is the

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Confessions of a Chinese steel mill

Some snapshots of interviews conducted by Morgan Stanley in China recently: Procurement manager of a larger steel mill Demand Seasonality will remain a big issue in the steel market. This year, June-July will be a tough period for the industry. There is the risk of a reduction in financing with banks pulling loans from smaller mills

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Westpac joins stampede behind APRA’s property investor line

Last week CBA, NAB and ANZ all capitulated to APRA on its 10% line on the sand for property loan portfolio growth. Today it’s a full house, from the AFR: Westpac is cutting the lucrative interest rate discounts offered to new housing investors, as lenders act to slow the rapid growth in lending to property investors by charging them more for credit.

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Capex cliff revisited

This week is the all important private capex update from the ABS and today Bloxo offers an orthodox take on where it’s headed: After driving growth for several years, mining investment has peaked and is declining significantly, in line with falling commodity prices. The rebalancing of growth away from mining investment is progressing, but only slowly. Low