Industry slams proposed new foreign property laws

ScreenHunter_4329 Sep. 23 07.27 By Leith van Onselen Industry groups representing accountants and real estate agents have slammed a proposal outlined last week by Liberal MP, Kelly O'Dwyer, to extend the penalty regime for illegal foreign investment in Australian residential property to those that aid and abet such purchases, such as accountants, lawyers and real estate agents. From The Australian: Real Estate Institute of Victoria chief executive Enzo Raimondo questioned the need for change. “If you put in a system where you are fining accounts, lawyers and agents in an attempt to stop foreign investment or people skirting...
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Macro Morning

marketmorning by Chris Becker Monday nights with no real data releases are always fun on macro markets - not. But at least last night we saw the broad return of volatility, with a relatively big slide in the S&P500 down 17 points to below 2000 at 1993. This "slump" (I love how the negativity on reporting on stocks goes to the moon in a bull market - it was only a minor pullback) was on the back of a few things, namely poor existing US home sales, some comments by Mario Draghi on the "sluggish" Eurozone recovery (ha!) and some broader risk aversion throughout the FX and commodity complex mainly because...
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Bob Day is wrong on negative gearing

ScreenHunter_4036 Sep. 05 09.01 By Leith van Onselen Over the past year, I have heaped praise on Family First senator for South Australia and former HIA president, Bob Day, for continually advocating for affordable housing and lobbying for much-needed fundamental reforms to Australia's constipated urban planning system, which has precluded affordable housing from being built in response to rising demand. Not today. The AFR this morning features an article with Day backing the HIA's warnings that limiting negative gearing would worsen Australia's housing supply situation and somehow make homes less affordable: ...negative...
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Charting Australia’s population ponzi

ScreenHunter_4324 Sep. 22 14.19 By Leith van Onselen Late last week, the Australian Bureau of Statistics (ABS) released data on Australia's historical population growth, which revealed some interesting truths about Australia's turbo-charged immigration system. The key chart pertaining to the release is shown below, which shows the historically high level of population growth in Australia since the mid-2000s: As shown above, Australia's population has grown on average by 172,000 per annum since 1900. It also grew by 219,000 on average between 1949 and 2004. However, between 2005 and 2013, Australia's population grew...
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Credit bubble collapses in Handan

China-Bubble-300x200 Cross posted from Investing in Chinese Stocks Handan's housing crisis is centered on illegal fundraising. Earlier this year, banks that used illegal fundraising collapsed, and now developers are going down. Ten of thousands of residents and roughly ¥10 billion is at stake. The local government has formed work groups to deal with the situation, with at least 13 companies already in trouble. One person who helped raise the money said 10% of Handan households may be involved, and in the case of one developer alone, there are more than 10,000 lenders. Investors were offered high interest rates...
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Links 23 September 2014

reynard Global Macro / Markets / Investing: They do ring a bell at the top - Alibaba IPO proves the rule - Zero Hedge Is there an Obama Doctrine? The Diplomat Dr Doom warns on 20% drop in AUD - The Age (h/t Gunnamatta) Bubble in US bonds to end in bad way - Bloomberg (like Japan?) Volatility finally raises its head - CNN Would a 1987 style crash really be that bad? PragCap (would be great for some, bad for most) Iron ore at five year low - is this a bottom? FT Video America: Existing home sales in August unexpectedly drop - Calculated Risk Textbook case of price gouging - The...
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ASX at the close

ASX_logo by Chris Weston It will be an interesting week for short-term-focused traders, with a number of markets that have recently seen better trending conditions exerting clearly overbought or oversold conditions. The sell-off that has materialised in the US bond market of late is coming at a time when we have seen some fairly bearish dynamics in other economies and, as a result, we’ve seen some strong trends in AUD/USD, EUR/USD and USD/JPY. These trends have led to some one-sided positioning, with the 14-day RSI on USD/JPY at the highest level since 2001. We seem to have got to a point where we could...
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How banks’ housing obsession is starving SMEs of credit

ScreenHunter_4319 Sep. 22 13.02 Cross-posted from The Conversation Since the global financial crisis, credit growth in Australia has returned. But while growth in home lending between 2008 and 2014 was relatively strong (0.49% per month), it was actually negative for business lending (-0.04% per month). This pattern of weaker business credit for corporates and small to medium enterprises is not unique to Australia but has been reflected around the globe due to long-term factors, such as the consolidation of banks and the centralisation of credit assessment. The issue has been accelerated by shorter term cyclical factors,...
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Retail needs lower costs not more hours

retail-therapy-girls-with-shopping-bags by Chris Becker It's hard not to be skeptical about the findings from any inquiry into competition in Australia's business sector. One always suspects either a dogmatic economic answer (i.e free markets always good, government interference always bad) or a reinforcement of a status quo of a monopoly or oligopoly - the latter supported in kind and method by the Abbott government as "how it is" or "how it should be". Sometimes you get both and it seems that way with today's release of the study into the retail sector, from Fairfax: Bans on retail trading hours should be scrapped, according...
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Lower rates can’t stop the stress

bill_stress by Chris Becker It seems the RBA's intent to goose the Australian economy in the great hand-off from mining to [insert] something else, while accidentally blowing a housing bubble, is paying off in one area: stress! Dun and Bradstreet are out today with a new forecast of higher stress, amid a backdrop of growing unemployment, low wage rises and elephant in the room consumer debt levels: Despite easing to 18.4 points in the June quarter, from 19.7 points last year, Dun & Bradstreet's Consumer Financial Stress Index is forecast to hit 25.3 points by the end of this month, the...
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Competition review targets rent-seeking pharmacies, taxis

ScreenHunter_4322 Sep. 22 13.44 By Leith van Onselen The draft report of the Harper competition policy review has urged the government to free-up rules preventing competition in the the pharmacy and taxi industries. From Business Spectator: Current restrictions on the location of pharmacies and a rule that only pharmacists can own a pharmacy do not ensure the quality of advice provided to a consumer and should be scrapped... The draft report... recommended that restrictions on ownership and location of pharmacies be removed "in the long-term interests of consumers"... "Such restrictions limit the ability of consumers to...
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HIA continues negative gearing subterfuge

ScreenHunter_43 Jan. 24 08.38 By Leith van Onselen The brainiacks at the Housing Industry Association (HIA) have produced another piece of self-interested "analysis" warning against changes to negative gearing and lobbying to remove stamp duties. From The SMH: Cutting back tax deductions for property investors would erode housing affordability, reduce housing supply and bump up rents, a new report says... ...reducing negative gearing would diminish the incentive to invest in housing and exacerbate current undersupply, pushing rents almost one per cent higher... "Under current housing policy settings, discounting...
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Fortescue heading to $3? UPDATE

vertical-crack-foundation by Chris Becker UPDATE at 230pm: FMG is down nearly 7%: So, following the new five year low in spot iron ore, Fortescue Metals (FMG) is down 2% this morning on the open, with the broader market off half a percent. Not exactly a bearish day as that particular stock can rally or fall multiples of that figure no problem. But before Houses and Holes went on his break last week I mentioned to him that the weekly chart candlestick for Fortescue (FMG) was ominous. I don't use candle analysis on its own (although to be fair, any type of analysis, including random picks can work if your...
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Off-the-plan apartment values slump in Melbourne, Sydney

ScreenHunter_06 May. 06 09.27 By Leith van Onselen The AFR published another report over the weekend warning of an impending oversupply of apartments in the major capitals, with the value of some apartments in Sydney and Melbourne reportedly declining by 20% between purchasing off-the-plan and receiving the keys: Nearly 44 per cent of apartment ­purchases in the most populous cities are below the sale price at the time of completion, and units in mushrooming high-rises in major capital cities are the hardest hit, according to WBP Property Group. ...the negative equity appeared to be worst for ­two-bedroom apartments...
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Mortgage war highlights regulatory failure

ScreenHunter_4312 Sep. 22 09.19 By Leith van Onselen Fairfax has today reported that mortgage competition is heating-up, with NAB offering new mortgage customers $1,000 to take-out a home loan from the bank in a bid to boost it's market share: Australia's big banks have tried to entice borrowers with cash payments worth $1000 or more in the past 12 months in effort to grow market share. But NAB says its latest strategy is different because it is not a rebate... Instead, it will give customers $1000 on an eftpos card to spend however they choose... It comes after NAB tried to poach customers from its competitors last...
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Trading Week

trading week globe world by Chris Becker Its a solid week ahead for local and global markets so let's take a technical look where they are at the moment and analyse the risks and opportunities available. This report is one I compile each week for my own trading decisions, and does not constitute investment advice. I may have positions, long or short, on multiple timeframes (intraday, daily or longer term) in any or all of the markets discussed below. Please seek independent investment advice from a licensed advisor before considering any investment decisions. First, a quick look at bonds with the US 10 year...
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The Australian continues negative gearing defence

ScreenHunter_01 Jun. 28 09.52 By Leith van Onselen What is it with The Australian newspaper? With regularity it trots-out articles defending negative gearing and warning against policy changes to the scared cow. Today's effort comes from Sydney Journalist, Kylar Loussikian, who has written a piece arguing that negative gearing is not the domain of Australia's elite, but rather that of the good old Aussie battler who's simply trying to save for their own retirement and take pressure off the Aged Pension: THE vast majority of property investors taking advantage of negative gearing are “mum and dads” earning less than...
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Hockey scores win in global tax avoidance crackdown

ScreenHunter_4311 Sep. 22 07.25 By Leith van Onselen One of the good news stories coming out of the G20 central bankers and finance ministers meeting in Cairns over the weekend was the global agreement to share information on tax avoidance by large multinational companies. On Saturday, Treasurer Joe Hockey introduced a detailed set of OECD recommendations to counter tax base erosion and profit shifting practices by multinationals and high net worth individuals. Along with the measures, Hockey proclaimed: “Our government is absolutely determined that Australian tax is paid on profits earned in Australia... We are...
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Iron ore price update: capitulation

billpaxtongameoveraliens by Chris Becker Your regular iron ore specialist - DLS - took a sweet time to have a break, as the iron ore complex looks like folding in on itself! Spot iron ore hit a new five year low just below $82, revisiting the September 2012 low and dragging its dead cat bounce into the other markers: Recent price action is classic capitulation: And the post-GFC landscape is easily discernible with one picture: For those with a even longer term view on the iron ore price, the quarterly average is dragging along, about to broach $USD90: Rebar is getting slogged as the Chinese real...
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A stomping win for National in NZ general election

ScreenHunter_4310 Sep. 22 06.36 By Leith van Onselen As you may have already heard, the New Zealand general election was held over the weekend, which delivered the incumbent National Government, led by Prime Minister John Key, an emphatic victory and its third term, with National scoring the biggest vote since the mixed-member proportional (MMP) electoral system was introduced in 1996. National captured a massive 48.06% of the vote – not just its highest ever share under the MMP voting system but also the highest since the 1951 New Zealand general election, when it captured a record 53.99% of the vote. By contrast, Labour...
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Hockey, IMF back macro-prudential

ScreenHunter_69 Sep. 20 16.34 By Leith van Onselen The International Monetary Fund (IMF) has dealt the RBA/APRA another credibility blow, endorsing macro-prudential controls on high risk mortgage lending in its communique to the G20: To mitigate financial stability risks from a prolonged period of low interest rates and prevent premature monetary tightening, macro-prudential tools should be the first line of defense... Macro-prudential policies are an important first line of defense to address potential financial stability threats associated with too low for too long rates... Financial stability risks related to a...
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Comedy relief from the ECB

stand up comedy by Chris Becker You know, there's no shortage of derision on tap when it comes to central bankers these days - and the European flavour does not disappoint this morning, following the G20 finance minister/central banking wow-pow in Cairns this weekend. From Bloomberg: “We will judge the combined effects of the measures, the measures of June and the measures of September, and then we’ll see if this is enough,” Coeure told reporters in Cairns, Australia. “In case it would not be enough, the Governing Council is ready to do more. But it’s way too early to tell.” Oh really? This is an...
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China dampers perma-stimulus bulls hope

bull_elk_frozen_in_the_lamar_river_yellowstone_national_park_003 by Chris Becker In news over the weekend that is sure to make the China perma-bulls a bit nervous, Finance Minister Lou Jiwei confirmed their resolve at long term restructuring by reiterating that the country cannot rely upon continual government spending for infrastructure investment. From Reuters, via Yahoo Finance: China will not dramatically alter its economic policy because of any one economic indicator, Finance Minister Lou Jiwei said on Sunday, in remarks that came days after many economists lowered growth forecasts having seen the latest set of weak data. "China will not make major...
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Auction clearances retrace some more

ScreenHunter_19 Mar. 13 13.12 The national auction clearance rate slid further over the weekend on the back of declines in Sydney, Melbourne and Brisbane. According to RP Data, the national weighted average preliminary auction clearance rate was 69.2% over the weekend, which was down 1.6% from the 70.8% preliminary clearance rate reported last weekend. Sydney’s clearance rate fell by 1.4% to 76.9%, whereas Melbourne’s fell to 69.3% (last weekend 70.5%). Brisbane, which typically only has a small number of auctions, experienced an 8% decline in its clearance rate to 41.4%. However, overall auction volumes (2,536) were up...
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RP Data weekend property market update

ScreenHunter_18 Mar. 18 17.58 Click to view RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 21 September 2014. 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; and New listings...
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