Weekend Links 4-5 July, 2015

  China China’s stocks hit critical low despite government lifelines – SCMP Nearly quarter of Chinese investors ‘suffer over 50 per cent losses’ as stock market slumps, survey suggests – SCMP Gov’t Once Again Tries to Pull Stock Market out of Nosedive – Caixin Share Price Tumble Puts Tycoon Linked to Fallen Officials, Businessmen in

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ASX at the close

Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Calm before the storm As we head into the referendum, it seems investors are growing increasingly nervous and this is being reflected in the price action. US markets are closed on Friday and focus was mainly on the US non-farm payrolls report, which came


When will the US begin normalising rates?

From Westpac’s Elliot Clarke: As the pivotal September FOMC meeting draws ever closer, the magnitude and quality of job gains becomes all the more important. Key from the June post FOMC meeting press conference of Chair Yellen was: (1) her strong belief that labour market conditions had improved markedly in recent years; (2) equally that


Australian dollar smoked into 75s

Along with iron ore and Shanghai, the Australian dollar is getting smoked to mid-April lows in the 75.70s: That chart is one hideous bearish descending triangle. The intra-day low was in early April at $75.29 but we’re already below the lowest closing low for the entire great sell off. Just in time to rub it


BHP, RIO, FMG tank with futures

It’s awwn. BHP is down 2.5% and vectoring for more. RIO is down 1.5% and vectoring for more. FMG is down 6% and vectoring for more. To the indexes: The big iron idiocy spreads are closing again. FMG is soaring towards sanity: Juniors are serene in death:   Dalian is getting smoked with rebar futures


UBS: Fortescue is the marginal producer

From the AFR: UBS mining analyst Glyn Lawcock told The Australian Financial Review that “the concern the market has is that the all-in cash delivered price that FMG needs to be cash neutral is ultimately going to be the dictator of where the long-term price settles”. “As more low-cost supply comes on, and high-cost supply is pushed off, ultimately the


Australia’s TPP plans come under more pressure

By Leith van Onselen Former head of the Australian Industry Group, Heather Ridout, is the latest to warn against signing the Trans-Pacific Partnership (TPP) trade agreement, claiming Australia would “regret” signing away sovereignty over government policy. From The AFR: “I’m probably the outlier here but mark my words, we will regret it, if we sign


MS: Four headwinds for banks

From Morgan Stanley: We have a negative stance on Australian banks given the prospect of worse than expected capital requirements, an unbalanced housing market, a challenging operating environment, flat dividends and full trading multiples. NAB (EW) is our preferred major bank, while we have UW ratings on WBC and ANZ. Key Issue #1: New Capital


China services PMI slows sharply

From HSBC: HSBC China Composite PMI™ data (which covers both manufacturing and services) pointed to a further rise in total business activity in China during June. However, the rate of expansion eased to a marginal pace that was the slowest recorded since May 2014. This was signalled by the HSBC Composite Index posting only slightly


Iron ore comedy turns to tragedy for Colin Barnett

By Leith van Onselen The situation has gone from bad to worse for the Western Australian Government, and its leader Colin Barnett. After delusionally forecasting high iron ore prices as far as the eye can see in the 2014-15 Western Australian State Budget, along with surging royalty revenues: The 2015-16 Budget announced a horror $2.7


Services sector expands but jobs slide

The Australian Industry Group (AIG) has released its Performance of Services Index (PSI) for June, which reveals that Australia’s services sector finished the year in expansion mode, recording a reading of 51.2, up 1.6 points from May: The services sector expanded in June 2015 after two months of broadly stable conditions. The seasonally-adjusted Australian Industry


How much money is laundered through Aussie homes?

By Leith van Onselen Back in April, the Paris-Based Financial Action Task Force (FATF) on money laundering released its report on Australia, which found that Australian residential property is a haven for international money laundering, particularly from China. The report also recommended that Australia implement counter-measures to ensure that real estate agents, lawyers and accountants


Grattan debunks property lobby’s negative gearing lies

By Leith van Onselen John Daley and Danielle Wood from The Grattan Institute have written an excellent article debunking the Property Council’s and the Real Estate Institute of Australia‘s latest report, prepared on its behalf by ACIL Allen Consulting, defending Australia’s negative gearing and capital gains tax (CGT) discount (debunked by me last week), rubbishing


Coalition to further tighten foreign investor rules

By Leith van Onselen As reported in The Australian this morning, the Abbott Government is set to further strengthen Australia’s foreign investment rules by banning sales to non-residents for the purchase and knock-down of an established dwelling, as well as extending penalties to migration agents marketing Australian temporary residency so that foreigners can buy established


Is Australia still a developed country?

By Alpha Beta Strategy and Economics, republished with permission Resource exports still tanking Australia’s trade data released yesterday shows that our resources exports are in serious trouble. The news coverage has positively reported that our ‘trade deficit shrank in May’. But the lift in our exports this month was less than 1% and a blip


US jobs decent but no cigar

The June US jobs report is out and was decent: Total nonfarm payroll employment increased by 223,000 in June, and the unemployment rate declined to 5.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, retail trade, financial activities, and in transportation and warehousing. …


Daily iron ore price update (crash)

Here are the iron ore charts for June 2, 2015: Do not adjust your television set. Spot iron ore crashed yesterday. Benchmark Tianjin fell $3.10 to $55.80 and Qingdao spot fell $3.57, or 6.03%, to $55.63 a tonne. That’s a nice head and shoulders top in place with a busted neckline suggesting (on technicals) much more downside. Singapore