Australian GDP 0.5%

imgres The Australian Bureau of Statistics has released June quarter National Accounts and the news is growth is well down on Q1 but has come in much better than feared only last week at 0.5% for the quarter and 3.1% for the year: JUNE KEY FIGURES Mar Qtr 2014 to Jun Qtr 2014 Jun Qtr 2013 to Jun Qtr 2014 % change % change GDP (Chain volume measure) Trend 0.7 3.2 Seasonally adjusted 0.5 3.1 Final consumption expenditure (Chain volume measure) Trend 0.5 2.2 Seasonally...
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China non-manufacturing PMI stable

images101-200x2001 Better PMI news today from China in a not worse non-manufacturing PMI at 54.4 versus 54.2 last month. Good news in that this PMI also covers construction.  The HSBC services PMI is out this...
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Why we pay too much for cars

ScreenHunter_3970 Sep. 03 09.56 By Leith van Onselen The Pascometre has written a timely piece explaining why Australian car buyers are ripped-off and demanding policy action: With manufacturing on the way out anyway, [the Productivity Commission has recommended] to drop the present stiff barriers on importing second-hand cars. ...if you have an existing fleet of vehicles, that is a potential disaster... The immediate response from the federal government, no doubt after a quiet word or a million with the Federal Chamber of Automotive Industries, is a great deal of wariness about letting consumers enjoy a free trade...
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India, Japan push for group LNG buying

dfwe From LNGworldnews: Japanese Prime Minister Shinzo Abe and his Indian counterpart Narendra Modi agreed to extend the cooperation between the two countries on a wide range of areas including LNG. With the goal of recognising the critical dependence of the economies on imported energy sources and the vulnerability to supply shocks, the two Prime Ministers affirmed their intention to further strengthen energy cooperation through the India-Japan energy dialogue by signing the Tokyo Declaration for global partnership. According to the declaration, ministers share the intention to explore a higher...
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MS: Time to dump banks

sdfq From Morgan Stanley today: We anticipate a change in market leadership away from Banks – but not necessarily all in favor of Resources. Such a rotation will have significant impact on the ASX Top 30 as a source of liquidity, and extension towards both cyclical and structural growth themes outside of that incumbency. We hold our rolling 12-month index target of 5,800: It implies limited 3.5% capital upside. We see both major sectors, Banks and Resources, struggling to outperform. Banks and the FSI – more capital and lower ROE: In their accompanying report, our Banks team has taken...
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Services PMI stuck in recession

yjut From the AIG: The seasonally adjusted Australian Industry Group Australian Performance of Services Index (Australian PSI®) was almost unchanged in August, at 49.4 points (49.3 points in July). This suggests conditions have been broadly stable within the services industries over the past two months (index readings below 50 points indicate contraction, with the distance from 50 points indicative of the strength of the contraction). The three-month moving average for the Australian PSI® was marginally lower this month, at 48.8 points. Encouragingly, both the sales and new orders sub-indexes...
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Palmer saves young unemployed

ScreenHunter_3946 Sep. 01 12.43 By Leith van Onselen Clive Palmer seems to have come to the rescue of young unemployed Australians, vowing to scuttle the Government's plan to deny under-30s access to unemployment benefits for six months. From The Australian: CLIVE Palmer may have given the kiss of death to the Abbott government’s apparent compromise on tough new dole rules for young unemployed people... “If we support those things, we have got to say are we in favour of increased youth suicide or are we in favour of increased crime,” Mr Palmer told reporters. Nor does the government have the backing of another key...
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Nobody should cry over pause in super lift

ScreenHunter_3969 Sep. 03 07.51 By Leith van Onselen The whingers are out in force today bemoaning the Government's decision yesterday, supported by the Palmer United Party (PUP), to delay the rise in compulsory superannuation by four years. Under the change, the superannuation guarantee - the amount that employers must contribute into employees' super accounts - will be frozen at 9.5% until 2021 before rising by 0.5% per year to 12%. As expected, the superannuation and funds management industry is furious, arguing that the nation has been short-changed. For example, the Financial Services Council, which represents the...
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Australia falls on WEF competitiveness index

sdfS From the AIG: "Australia’s competitiveness ranking has slipped further in the Global Competitiveness Report 2014-15 produced by the World Economic Forum (WEF), dropping one place from last year and continuing an annual downward trend since 2009-10 when we ranked 15th,” Australian Industry Group Chief Executive Innes Willox said today The Australian Industry Group is the WEF’s official research partner in Australia. "With Australia’s absolute Global Competitiveness Index (GCI) performance static this year, and broadly stable since 2010-11, more and more of our competitors are...
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S&P3000 as manufacturing booms!

Capture More Goldilocks US data overnight. The ISM manufacturing is booming (charts from Calculated Risk): Economic activity in the manufacturing sector expanded in August for the 15th consecutive month, and the overall economy grew for the 63rd consecutive month, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®. "The August PMI® registered 59 percent, an increase of 1.9 percentage points from July's reading of 57.1 percent, indicating continued expansion in manufacturing. This month's PMI® reflects the highest reading since March 2011 when the index...
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ANZ Chairman warns housing fools

ScreenHunter_3966 Sep. 03 07.23 By Leith van Onselen ANZ Chairman, David Gonski, yesterday gave a speech to the Australian British Chamber of Commerce (watch here) warning that Australian housing will experience a correction sooner or later, and claimed that anyone that only believes housing is a one way bet is a "fool".  From The Australian: Mr Gonski said... that all the banks “are very aware of history”. “They know that you can have the growth in prices that we have had and over time and there will be a correction”... “I don’t know whether it is going to happen tomorrow, at five o’clock this afternoon...
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Daily iron ore price update (Anglo worry)

anvil Here are the iron ore price charts for September 2, 2014: Paper markets were mixed with Dalian rebounding but the 12 month flat. Rebar futures were smacked to new all time lows. Physical remains weak across the board and spot is sitting right on its post-2009 low. Texture from Reuters: "We don't see any bright spots right now - steel mills aren't making profit and I don't expect any new stimulus coming from the government any time soon," said a trader based in the major steel producing city of Tangshan in Hebei province. He said most traders have switched to exporting steel products,...
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The rise and rise of Australian groupthink

url From Wikipaedia: Groupthink is a psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome. Group members try to minimize conflict and reach a consensus decision without critical evaluation of alternative viewpoints, by actively suppressing dissenting viewpoints, and by isolating themselves from outside influences. Does anyone not recognise the Australian political economy here? Look at the Reserve Bank of Australia, the Treasury, the Government and the...
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Roy Morgan unemployment tumbles on lower participation

ScreenHunter_10 Mar. 29 12.46 By Leith van Onselen Roy Morgan Research (RMR) last night released its unemployment estimate for the month of August, which registered a massive fall in the unemployment rate to 8.7% from 10.2% in July (see next chart). The fall in the unemployment rate was caused primarily by a large contraction in the labour force participation rate, although there was also a small lift in the number of jobs. According to the release: 12,205,000 Australians are in the workforce; (the lowest since January 2013): (down 162,000 since last month July; down 172,000 since August last year); 11,141,000...
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AFG: First home buyers in heavy retreat

ScreenHunter_15 Apr. 24 14.56 By Leith van Onselen Australian Finance Group (AFG) has released its housing finance data for the month of August, which registered a small monthly decline in mortgage applications, although both the number and value of applications were up on the same time last year and a record for the month of August. The number of mortgage applications fell by 2% in August but were up 4% over the year to 9,087, whereas the value of applications fell by 4% over the month but were up by 10% over the year to $3,959 million (see next chart). Investors continue to drive new mortgage demand, with their...
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Time to own up to tax sabotage, Bartho

imgres From Stephen Bartholomeusz: Someone needs to tell Wayne Swan that the commodities boom ended a couple of years ago. They might also point out to him that the Minerals Resource Rent Tax whose passing he laments, was almost certainly costing more to comply with, administer and collect than it raised. The former Treasurer was tweeting away today in response to the repeal of the tax in the Senate. ...The MRRT was a tax on the profit generated by iron ore and coal, replacing the even less-well-conceived Resources Super Profits Tax...The problem with a profit-based tax like the MRRT in the current...
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Links 3 September 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Financial reforms will make the next crisis even messier - Financial Times Three practices that will kill your trading - TraderFeed Don’t try to force returns - Clear Eyes Investing Charlie Munger’s principles of investing - A Wealth of Common Sense Why private equity isn’t worth the risk - Larry Swedroe Why active fund management is broken - Monevator North America: Infrastructure Cracks as Los Angeles Defers Repairs - New York Times How political science conquered Washington - VOX FHFA Plans to Kick REITs Out of Home Loan System...
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ASX at the close

ScreenHunter_31-Jun.-04-16.423-200x200 Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Asia has managed to edge higher despite limited leads from overnight trade, with the US closed and Europe mostly sidelined. The Nikkei has taken off in Asian trade in a move triggered by a USD/JPY breakout. USD/JPY traded through August highs and seems to be heading towards January highs. The pair topped out at 105.44 in January and traders are likely to be eyeing this level in the near term. This move in USD/JPY seems to have triggered greenback strength across the board as risk currencies are also losing ground to the USD. With...
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A perfectly useless gas debate

imgres Former Labor stalwarts Greg Combet and Craig Emerson appear at Gina's Financial Review today to mount another empty argument about gas: Without urgent new coal seam gas development in NSW the state’s industrial gas users will face uncertain supply and price volatility during peak usage periods from 2016. Gas-intensive manufacturing is already migrating from Australia to the United States to take advantage of cheap American shale gas. Supply uncertainty in NSW, combined with sharp price rises associated with the development of LNG export facilities at Gladstone, would cause plant closures and...
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Bill Evans on the RBA

SMARTI INVESTOR 6TH August 2013  photo by louise kennerley Bill Evans Wespac As expected the Reserve Bank Board decided to leave the cash rate unchanged at 2.50%. In the Governor’s statement he retained the key sentence “on present indications, the most prudent course is likely to be a period of stability in interest rates”. Surprisingly they changed the wording around the Australian dollar although the sentiment remains the same. Instead of describing the AUD as “high by historical standards” it is now described as “remains above most estimates of its fundamental value”. This description sits better with those of us who have observed the sharp fall in iron...
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Joye bashes bubble again

image005 Nothing new but here you...
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Terms of trade hammered

dgeq From today's Balance of Payments release, the terms of trade fell 4% in the June quarter: Nominal growth is likely to be negative in Q2 national accounts. Income will be very interesting given wages were surprisingly firm yesterday but the ToT got whacked. This will hurt the Budget by year...
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RBA holds

images No surprises: At its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent. Growth in the global economy is continuing at a moderate pace. China's growth remains generally in line with policymakers' objectives, with weakening property markets a challenge in the near term. Commodity prices in historical terms remain high, but some of those important to Australia have declined this year. Financial conditions overall remain very accommodative. Long-term interest rates and risk spreads remain very low. Volatility in many financial prices is currently unusually low....
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Mining tax goes, Budget hit

imgres From Gina's iron ore newsletter, the mining tax is gone courtesy of Clive Palmer: As a compromise, it will slow down dramatically the phasing up of the superannuation guarantee towards 12 per cent...It will keep the school-kids bonus until December 31, 2016 – although means-tested at a threshold of $100,000 – the income support bonus until the same date, and the low-income super contribution until June 30, 2017. The other five measures will be abolished immediately. These are axing loss-carry back provisions for small business, reducing the instant asset write-off threshold from $5,000 to...
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More sell side iron ore myopia

imgres From Gina's iron ore newsletter today: JPMorgan argues the focus on this deal risks over-shadowing one of the mining giant’s most important recent developments, its expanded iron ore production in Western Australia. ...Although JPMorgan has not lifted its rating on the stock, it has outlined a bullish scenario for the company’s WA iron ore business, calculating total export volumes could soar to 310 million tonnes per annum (Mtpa). ...The bank is also impressed by the potential returns from the US$3.2 billion expansion, pointing out that the internal rate of return (IRR) is likely to rise...
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