East West Link highlights need for FOI reform

ScreenHunter_5488 Dec. 16 10.03 Cross-posted from The Conversation: The disclosure of the full business case for the East West road link in Melbourne confirmed what many had suspected – the project is a dud. The release also unequivocally shows that the Victorian Freedom of Information (FOI) system failed on its most basic task – that is, to facilitate the disclosure of information that is in the utmost public interest. It is hard to conceive, apart from the reasons for bringing the country to war, of what could carry a higher public interest than how a government proposes to use A$5 billion in taxpayer money for a major...
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Bad, not high, taxes are holding Australia back

ScreenHunter_5581 Dec. 19 10.14 By Leith van Onselen John Roskam, executive director of the Institute of Public Affairs, has penned a piece in The AFR today debunking the "myth" that Australia is a low taxing country, and arguing that the only true tax reform is one that cuts taxes: It is a myth that Australia is a low-tax country, because we’re not... The claim that Australia is a “low-tax” country is based on data collected and presented by the Paris-based Organisation for Economic Co-operation and Development (OECD)... When the OECD calculates taxes in Australia, it includes taxes collected by local, state and...
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Daily iron ore price update (uptick)

iron ore cranes digging by Chris Becker An arrest in falls yesterday across the iron ore complex, saving rebar, as news that India will be adding to the seaborne supply glut in the near future. First the tables and charts: Texture on India from Mining Weekly: India’s steel ministry today said that state owned mining company National Mineral Development Corp will raise output to over 75 million tonnes per annum by the 2018-2019 financial year. The target for 2020-2021 is more than 100 million tonnes per year. That’s up from only 30 million in the current year. The production surge is required to push...
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Gerard Minack on why in 2015, Australia runs out of luck

ScreenHunter_5557 Dec. 18 18.22 By Gerard Minack, founder of Minack Advisors Australia’s once in a century commodity boom is (unsurprisingly) reversing. There is a serious risk – say, a 40% chance – that Australia has a recession in 2015. Recession would become my base case if leading indicators of employment deteriorate. Under almost any scenario the outlook is for a lower A$, lower interest rates and under-performing equities. If there is a recession expect sharp outright losses in equities, notably banks, and significant falls in house prices. The past decade saw a once-in-a-century boom in Australia’s commodity...
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Macro Morning (Santa is in town!)

marketmorning by Chris Becker Santa (or Janet depending on your spelling) has arrived! A stunning bounce in risk since the FOMC meeting with stocks soaring, bonds falling and oil going fa-la-la-la down down down. First off the coal in the stocking, with Treasuries having their worst sell off in nearly two years as capital rotated out of bonds and into stocks, with 10 year yields up 7 points to 2.21% and 30 years up 9 points to 2.82% A similar dynamic in European bonds, with UK Gilts up 10 points to 1.87% and German bunds up 2 points as the continent also swamped into stocks. In fact the hourly chart of DAX...
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Phat Dragon’s China real estate chart pack

ScreenHunter_18 Nov. 22 14.25 Below are some charts and commentary from Phat Dragon's latest China Real Estate Chart Pack: Prices remain under downward pressure, but some diversity first returned in October, and increased in November, after the oneway race to the bottom seen in Q3. The new market across every tier remains visibly weak. Developers continue to discount aggressively to clear their stock on hand and sellers are maintaining abundant supply in the secondary market in the vast majority of cities. As in October, Beijing saw gains month-on-month in secondary markets, while Shanghai edged slightly lower after a...
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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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