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How Howard expanded the negative gearing “tax shelter”

By Leith van Onselen Following the release Monday of the Australian Treasury’s discussion paper on tax, there has been lots of calls for the Abbott Government remove the 50% discount on capital gains tax (CGT), which has overwhelmingly benefited the rich by creating a tax shelter via, among other things, negative gearing. Here’s an example

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How to generate a RIO “buy”

Big iron is again outperforming on the stockmarket today even as its business dissolves. Let’s take a look at how this magnificent fiction is achieved. Deutsche has just cut its iron ore prices to $51 for 2015 and $60 for next year and today recommended RIO as a buy (not picking on it especially): After

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Lateline hammers TPP trade sell-out

By Leith van Onselen Last night, ABC’s Lateline dedicated an entire program to the Trans-Pacific Partnership (TPP) – the US-led trade deal being negotiated between 12 Pacific Rim nations, including Australia. The first segment showed how interests within the US political system – particularly the Democratic Party and unions – are opposed to the TPP,

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Dad’s Army slams macroprudential

The new commentator at Dad’s Army, Miranda Maxwell, takes on macroprudential todayand gives it a panning: New Zealand’s experience with home loan limits is a cautionary tale. There, loan-to-value ratio ‘speed limits’ were introduced in October 2013 and dictate that banks limit residential mortgage lending at a LVR greater than 80 per cent to no more than 10

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Formatting troubles with new site?

I’ve had a number of inquiries asking for help on formatting problems with the new theme. We’re working through many of your kindly suggestions but if the posts are not updating on your screen or there the formatting is amiss then clear your browser cache. That will solve most problems.

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Competition review targets pharmacies, taxis, planning

By Leith van Onselen The final report of the Harper competition policy review has been released and urges the government to free-up rules preventing competition in the the pharmacy and taxi industries, as well as in the delivery of urban land supply. On pharmacies, the report recommends dumping pharmacy location and ownership rules: The current

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Macro Morning: Risk awf

By Chris Becker Risk markets flopped last night even as German unemployment went down, UK GDP surprised on the upside but EZ CPI indicated a further slip into deflation across the continent. The moves down were probably end of month and quarter repositioning with no macro or central bank talkfests catalysts providing an answer. To

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FMG, BHP apply for mine expansion permits

From The Australian: As iron ore prices threaten to slip below $US50 a tonne and Andrew “Twiggy” Forrest calls for production restraint, his Fortescue Metals Group and BHP ­Billiton have each applied for state government approval to boost iron ore output. In separate applications to the West Australian Environmental Protection Authority in recent weeks, the

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Manufacturing PMI booms!

April fool! The manufacturing recession rolls endlessly on and really is the butt of all jokes: The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) moved up by 0.9 points to 46.3 points in March (seasonally adjusted). This indicated a fourth consecutive month of contraction in activity (readings below 50 points indicate contraction) across the manufacturing sector

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Au revoir Australian dollar safe haven?

The IMF has released its Commitment of Foreign Reserves (COFER) update for Q4 2014 and it registered a big fall:   The 5.2% fall was the highest among all of the currencies tracked by the IMF but is roughly equal to the fall in value. I expect central banks to remain leery given the notion that

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SQM: No national housing bubble

By Leith van Onselen SQM Research’s managing director, Louis Christopher, released his weekly email newsletter last night, which once attempted to dispel the notion that Australia has a housing bubble: I’ve noticed increasing media chatter about a national housing bubble that we apparently have, here and now! Let me tell you it’s wrong to take

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Melbourne: Lord of the population ponzi

By Leith van Onselen The Australian Bureau of Statistics (ABS) yesterday released its Regional Population report for the 2013-14 financial year, which revealed that Melbourne remains king of the population ponzi, adding a whopping 95,700 people (an MCG’s worth) to its population in 2013-14, representing growth of 2.2%: The highest rate of growth, however, was

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RIO’s profits are being smoked

As iron ore plunges so too does RIO’s outlook whether markets are pricing it or not. On a spot price scenario, RIO’s iron ore margin is now down to mid teens:   Pre-tax profits are 35% below consensus for this year and below half in later years:   And the idiocy spread is as wide as

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Daily LNG price update (US boom)

The Brent oil price fell overnight to $55.30. The main driver is the wait for the outcome of the Iran deal. More on that is available here and here. I’ll be surprised if talks fail but we shall see. In other news, US shale is powering on, from the FT: US independent oil and gas companies have

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Chinese anti-corruption push turns on steel

From SCMP: A senior executive at one of China’s largest steel companies is being investigated on suspicion of corruption, as the Communist Party’s anti-graft watchdog shifts its focus to major state-owned enterprises. Cui Jian, 55, vice-president of the Shanghai-based Baosteel Group, was suspected of “serious disciplinary violations”, a euphemism for corruption, Shanghai disciplinary authorities said

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As one Chinese bubble falls, another rises

Cross-posted from Investing in Chinese Stocks. Liu Shan warns investors not to expect a quick turn in the housing market, iFeng: 第66期:房地产新政刺激了谁: But must not think that the real estate policy has turned to the real estate market will bounce back. Current policy is still deregulation, rather than strong stimulus. Prior to a series of real

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Links 1 April, 2015

Markets & Macro No End in Sight for Bond Rally as ECB Spigot Spills Across Globe – Bloomberg China lobbies US to include yuan in IMF’s reserve assets – SCMP Losing a job is always terrible. For workers over 50, it’s worse. – Washington Post The Monetarist Mistake – Project-Syndicate, DeLong The Coming Emerging-Market Debt

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ASX at the close

Chris Weston, Chief Market Strategist at IG Markets Equity bulls will be sad to see the end of the first quarter, with some outrageous gains in global markets, especially with the right hedging policy. The big consensus trades have been long Europe, Japan and China, while underweight US stocks exposed to a stronger USD. Short

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Brazilian woes weighing on Australia

From the FT: …the Brazilian real, which has depreciated almost 20 per cent against the US dollar since the start of the year, falling to an 11-year low…The real’s weakness is being felt by Brazilian farmers who have increased exports, as returns on dollar-denominated commodities rise in in local currency terms. …In the coffee market,