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FIRE sector pushes risk past GFC levels

By Leith van Onselen Wednesday’s national accounts release for the June quarter confirmed that Australia’s FIRE economy – Finance, Insurance and Rental, Hiring & Real Estate Services – continues to scorch the economy, increasing its share of the Australian economy to a record 11.7% (see next chart). Since financial markets were first deregulated in the mid-1980s,

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Household income holding up better than nation’s

By Leith van Onselen The Reserve Bank of Australia (RBA) yesterday released real household disposable income (HDI) data, derived from the June quarter national accounts (released Wednesday), which revealed that real per capita HDI rose by 0.1% over the quarter and was up by 0.7% over the past year (see next chart). As shown above,

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RP Data weekly Australian house price update

By Leith van Onselen In the week ended 3 September 2015, the Core Logic-RP Data 5-city daily dwelling price index, which covers the five major capital city markets, was basically flat (-0.01%), which followed last week’s 0.40% decline (see next chart). Home values rose in Sydney and Brisbane, but fell in Melbourne, Adelaide and Perth

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Links 4 September 2015

Global Macro/Markets THE FAILURE OF LOW-VOLATILITY ETFS – Pieria Leveraged bubbles – VoxEU…that 1880s Australian housing bubble is dwarfed by what we now have…. Greenspans bogus conundrum – FTAlphaville China poses threat to world growth says IMF – BBC Europe/Middle East Euro area recovery with only France as laggard – Bloomberg (oh really? what about

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ASX at the close

by Angus Nicholson, IG for Chris Weston Market pricing for a rate hike at the Fed’s 16-17 September meeting is steadily being unwound; it now sits at 30%. This may see an ebbing of strength in the US dollar as this repricing plays out, and after its big gains during the volatility around China’s ‘Black

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Professor badly mis-diagnoses Chinese buyers

By Leith van Onselen Hans Hendrischke, Professor of Chinese Business and Management at the University of Sydney, has produced some laughable “research” today in a bid to prove that Chinese nationals account for just 2% of Australian property sales, therefore, they are not helping to push up home prices. From Domain (my emphasis): Hans Hendrischke compared

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Social media is not yet the reason for idiocracy

  by Chris Becker I linked to an article at Politico in Morning Links this morning that claimed “Social Media is Ruining Politics“. Here are some key money quotes: Our political discourse is shrinking to fit our smartphone screens. The latest evidence came on Monday night, when Barack Obama turned himself into the country’s Instagrammer-in-Chief.

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Trade deficit improves in July

By Leith van Onselen The Australian Bureau of Statistics (ABS) today releasing trade data for the month of July, with Australia’s trade deficit improving to $2,460 million from $3,050 million in June (revised up from $2,933 million). The result easily beat analyst’s expectations, who had expected the trade deficit to widen to $3.16 billion. It

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60c? Why not 50c for the Aussie: Deutsche

by Chris Becker Following AMPs Shane Oliver call for a 60c AUDUSD by the end of 2016, Deutsche Banks Adam Boyton has beared up even further, calling for a sub-60c level. More from Fairfax: In early February 2014, when the Aussie traded at about US90¢, Mr Boyton warned a “benign collapse” sparked by falling commodity prices, declining

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Aussie dollar slumps on retail sales

by Chris Becker The Australian dollar was dumped straight down to 70 cents on the poor retail sales print this morning:   Stocks were shocked too with a 1% plus open now turning into a broad retreat, especially as Myers opened down over 25% on its huge capital raising. The ASX200 is now down almost

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Why trickle down economics doesn’t work

by Chris Becker From the chaps at The Renegade Economist, an interesting preview into why trickle down economics – Reagonomics or supply side or more plainly, bullshit economics – doesn’t work and why it has captured the political process. The IMF recently disproved the theory but like a lot of the stink arising from modern

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Adani hits another road block

By Leith van Onselen Following the CBA last month pulling out of its role as financial adviser, Adani’s controversial $16 billion Carmichael thermal coal mine has been dealt another blow, with one of its two big external customers – Korean giant LG – confirming that it will not purchase coal from the project. From Fairfax’s Michael

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Shane Oliver sees AUDUSD at 60c by 2016

by Chris Becker The bears are waking! Shane Oliver at AMP is out this morning doubling down on his bets the Aussie dollar is heading into the low 60’s region after yesterdays ‘shocking’ GDP print. More at SMH: The local currency has been sliding steadily for a year now, a trend that accelerated this year

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Is ALP throwing Canning to keep Abbott?

By Leith van Onselen A new opinion poll for the upcoming Canning by-election, conducted by Essential Research, has the Coalition leading Labor 51% to 49% on a two-party preferred basis, suggesting the Coalition will be returned, but with a big swing against it (the Liberals currently hold the seat with a 12% margin). According to

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Service sector grows again: AiG

by Chris Becker Following the good news about tourism, now some more on the services front as well today with the AIG PSI report for August expanding for the third consecutive month up to 55.6 points. The lower Aussie dollar is obviously paying off, and while the services sector is the biggest component of GDP,

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Which Aussie iron ore mine has the best dirt?

From Citi Research comes an interesting report looking at the average premium/discount to the Asian reference price received by the various major iron ore producers: According to Citi: “Rio Tinto has been the best placed in mirroring the benchmark price and arguably FMG’s iron ore has lagged due to quality discounts. FMG suffered highest discount

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Canada scuttles Australia’s TPP bid

By Leith van Onselen When final negotiations for the Trans-Pacific Partnership (TPP) trade agreement failed in Hawaii in late-July, proponents of the deal were hopeful that negotiators could come together and strike-up a deal by the end of August, prior to Canada going to the polls and before the US political system gears-up for next

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Aussie stocks to get reprieve today

by Chris Becker Thank Dog for Chinese markets closing down for two days for the 70th anniversary of the end of WW2, because it looks like Australian stocks will get a reprieve to end the week possibly in the black. And maybe an opportunity for the Pascoe Super Fund to start buying again? Overnight US

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Australia’s shoddily built high rise shoe boxes

By Leith van Onselen In late May, ABC’s 7.30 Report ran a segment on the cheap combustible cladding that has covered potentially thousands of buildings across Australia, that last November sent a Docklands building into a towering inferno: LEIGH SALES, PRESENTER: When a cigarette was left on a balcony table in Melbourne’s Docklands precinct last

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China’s capital outflow accelerates

Cross posted from Investing in Chinese Stocks Up until this point, outflows have mainly been driven by wealthy people moving assets out of China and into overseas real estate and investments. Financial reforms are opening up the world to smaller and less internationally savvy investors, and the recent dip in the yuan has spurred them

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Tourism is booming

by Chris Becker Some good news on the tourism front from the TRA (Tourism Research Australia) showing for the year ending June 2015: international visitor numbers increased 7% to a new high of 6.6 million visitors international visitor spend grew by 10% to a record $33.4 billion—or $3.2 billion more than the previous year. This is

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Charting the fall in Aussie living standards

By Leith van Onselen To add some perspective on why MB believes the Australian economy is so fragile, and why living standards are falling, I have once again taken the time to deflate three measures of the domestic economy, as provided in the June quarter national accounts (released yesterday), by the ABS’ population data, in order