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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

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How complacent are share markets?

From Deutsche on the S&P500: “…our PE/VIX market emotion indicator climbed to 1.3 on S&P trailing PE of 18 and 3m avg VIX of 14. A level between 1.2-1.5 signals complacency. There was similar complacency going into summer last year, with S&P trailing PE at 17.5 and a calm market kept VIX at 10-14. The

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Triguboffinomic panic 3.0

From old man Gotti at Dad’s Army today: All the ingredients are in place for a dramatic escalation in dwelling prices in both Sydney and Melbourne over the next 15 years. Few Australians have any concept of the dwelling price pressures that will start to build up in the next few years unless the supply of

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Mining juniors go to pot

From the FT: A downturn in the resources industry has prompted a growing number of struggling Australian miners to switch their focus to the booming medicinal marijuana market in an effort to stimulate investor interest. At least three resources companies are aiming to raise money on the Australian Securities Exchange in the coming weeks, swapping

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Get set for peak dividends

From Credit Suisse:  In this report we note that the current forecast market wide dividend pay-out ratio is at a 21-year extreme high having trended up significantly over the past four or so years as investor demand for yield has intensified over that period (see Figure 1). ■ We also note that sell-side analysts are forecasting a peak

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Macro Morning (inflationista)

By Chris Becker A solid inflation print, particularly core CPI plus a newly hawkish Fed Chair Janet Yellen’s comments took the mojo out of risk markets on Friday night. The US dollar soared higher on the enhanced hawkish stance that rates will rise sooner than expected, with undollar assets like oil, gold and the Aussie

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The five stages of iron ore grief

It’s not altogether easy to judge whether a large resources endowment makes a nation stupid, or being stupid leads a nation to rely heavily upon a large resources endowment. It’s probably both caught in a feedback loop. Either way, Australia is going through some kind of rude awakening when it comes to its iron ore dependency.

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China prepares to wreck iron ore market

From the AFR: Veteran political commentator Laurie Oakes, writing in News Corp tabloids at the weekend, said that “several” applications had recently been lodged with the Foreign Investment Review Board that would affect mining companies. The applications “raise the possibility of significant upheaval in the iron ore industry and ownership of sections of it over

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Australian dollar smacked on hawkish Yellen

Two points of interest from the US on Friday night hammered the Aussie dollar back to 78 cents (thank you Madometer). The first was US inflation which came in firm on the surface at 0.3% for the month and 3.1% year on year: According to the Federal Reserve Bank of Cleveland, the median Consumer Price

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Krugman warns again as TPP enters “end game”

By Leith van Onselen The Trans-Pacific Partmership (TPP) trade agreement moved one step closer to conclusion on Friday, with the US Senate passing so-called “Fast Track Authority”, which would allow the President to negotiate an agreement and have Congress pass it without amendment. The Fast Track bill will now move to the House of Representatives

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Red Book: Consumer firms but WA crashes

From Westpac’s consumer bible, the Red Book: ― The Westpac–Melbourne Institute Consumer Sentiment Index rose 6.4% in May from 96.2 in Apr to 102.4. This is a positive result and the highest reading since Jan last year. ― The two driving forces behind this month’s gain are the Budget and the RBA’s May rate cut. The survey detail suggests a

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RP Data weekly housing market update

Click to view Core Logic-RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 24 May 2015. This week’s report includes: Latest weekly dwelling value results; Auction results & clearance rates; Latest median house & unit prices; Average time on market & vendor discounts; Mortgage market activity;

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Auction clearances sealed in bubble

The national auction clearance rate rose over the weekend, continuing the strongest run of results for around six years. The preliminary national clearance rate was 78.4%, up from the 76.4% recorded last weekend, according to Core Logic-RP Data: Sydney’s clearance rate rose 1.4% to 86.9%, whereas Melbourne’s jumped by 5.7% to 80.0%. Clearances in Brisbane,

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Adani coal quango sets deadline

From Matthew Stevens, where there is coal there is life apparently: Australia’s Indian coal adventurer, Adani Group, has inked a September start date to begin off-site work on its controversial $US16 billion Carmichael coal mine project. …There are two core reasons for this determination to seize the moment. First, Adani’s four-year quest to get on

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Daily iron ore price update (boing)

Here are the iron ore charts for May 23, 2015: Qingdao spot took off without warning or paper support. Paper is still treading water. Dalian added one point Friday night to be at 421 this morning. Rebar average continues its slow bleed out. The restock rolls on. In steel, CISA mills’ average daily crude steel

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Daily LNG price update (browsing)

The Brent oil price fell back Friday night as data and a strong US dollar weighed. On the former, the US rig count fall is over, down just one to 885: So, what sort of recovery will we see? V-shaped? U-shaped? Rigs do follow price with a lag. In the GFC, the recovery was very

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The ghosts of Ordos return to haunt it

Cross-posted from Investing in Chinese Stocks. From iFeng: 土地市场跌至五年冰点 房企拿地热情不高: “Now to the inventory is still the top priority, we are very careful about second-tier cities, third- and fourth-tier cities we have all withdrawn and in the future will basically no longer purchase land in these areas.” A national housing prices president told reporters. …May 19,

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Mapping China’s glide slope

From SocGen’s Wei Yao via FTAlphaville: Three developments in the past two weeks suggest that Chinese policymakers are yielding to the pressure arising from economic deceleration and are easing the implementation of fiscal reform. These policy adjustments are being touted by many as a major retracement of reform and deleveraging efforts, but we do not entirely