ASX at the close

ScreenHunter_31 Jun. 04 16.42 Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Cracks appear in US earnings The impact of global growth is slowly starting to be reflected in corporate earnings with an underwhelming reporting session in the US setting the tone for global markets. Apart from Apple which smashed estimates, the majority of reporting companies missed expectations. Key economic bellwethers such as Caterpillar and Microsoft disappointed with the stronger US dollar playing a role. Caterpillar is experiencing weaker demand from energy companies as oil and other commodities prices plunge and a...
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Australia to export flawed PPPs to the world?

ScreenHunter_06 Jun. 06 09.33 Cross-posted from The Conversation: While in Davos representing Australia at the World Economic Forum, Assistant Treasurer Josh Frydenberg has enthusiastically extolled the virtues of the Global Infrastructure Hub as a way of funding an infrastructure shortfall, particularly in developed nations. Frydenberg told the ABC: “There is a great deal of interest here at Davos in what Australia is doing because essentially this infrastructure hub is a knowledge sharing platform. It is about sharing best practice across the funding of infrastructure, the construction of infrastructure and the...
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China consumer confidence sinks

1 From Westpac: Four of the five components that go into the calculation of the Westpac MNI China CSI declined from the previous month. Current family finances, business conditions ‘one year ahead’ and ‘five years ahead’, and ‘time to buy a major household item’ all moved lower. Family finances ‘one year ahead’increased strongly though, presumably jointly reflecting the lower inflation and interest rate expectations reported elsewhere in the survey. Current business conditions (not a part of the headline composite, but tightly correlated with official industrial production...
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Abbott installs knighthoods filter on self

12905332-car-engine-air-filter-3d-render From The Australian: A REPENTANT Tony Abbott has conceded he derailed Campbell Newman’s re-election campaign by appointing Prince Philip a knight of Australia, vowing “considerably more consultation” on future appointments. ...Mr Abbott said he took the decision after consulting with Governor-General Sir Peter Cosgrove and Order of Australia Council chairman Sir Angus Houston. “I stand by the decision. I understand why some people don’t like it. I respect their right to be critical; that’s what you get in a democracy such as ours and I take it on the chin,” he said. Consultation...
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NSW gas prices to crash. What?

image-20150127-17557-1i95iyh Cross-posted from The Conversation. Gas developers have been ominously warning of impending gas shortages in New South Wales, with official forecasts from planning authorities pointing to steady or rising demand. Yet our analysis suggests that these forecasts are likely well off the mark, that gas demand in NSW will fall, and that in reality NSW is facing an inevitable price shock, not a gas shortage. With prices rising, consumers who reduce gas use and switch to alternatives might well weather the storm best, and that could mean a big drop in the demand for gas. Our analysis suggests that gas...
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Rental growth at decade low

ScreenHunter_07 Jul. 17 21.09 By Leith van Onselen The December quarter consumer price index (CPI) data, released today by the Australian Bureau of Statistics (ABS), revealed continued moderate rental growth at the national capital city level. According to the ABS, rents nationally grew by 0.5% over the December quarter of 2014 – the lowest quarterly growth since March 2005 – and was up by only 2.4% in the 2014 calendar year, with a clear downwards trend evident (see below charts). What's most interesting about the current moderate rental growth is that it is at odds with other housing-related indicators, such...
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Idiotic equity action as iron ore sinks

2 Whoa! Sometimes it really is fun watching equity mis-pricing in action. Today the major iron ore miners are up (or were) as iron ore is clearing its throat for a drop into the $50s. Go figure! FMG is demonstrating greater sanity, falling 4% back to $2. Here are the indexes: The FMG sanity spread is at its widest to date but the two majors have turned bonkers once more: ,  And the lunacy has spread to juniors today with most up. Not that it matters, death has settled on the couch and is waiting patiently for the day traders to give up their little bit of fun: Dalian is down another...
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Odey: Oz at centre of looming global crash

url From Crispin Odey, the $12 billion hedge fund manager, and his latest newsletter: The themes I have been outlining since the second quarter of 2014 are now establishing themselves: A faltering Chinese economy with growth ultimately slowing down to 3%. A hard landing for those countries plugged into China’s growth - especially Australia, South Africa and Brazil. A fall in commodity prices bringing with it pain to those heavily exposed. For oil this is the Middle East, Venezuela, Argentina, mid-west USA, Canada, Norway and Scotland. No one forecast how fast and how far those commodity markets...
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Rupert demands Peta Credlin resign

best-job-search-advice-youre-fired The drama intensifies around Dead Duck Tony: Firing squad...
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CPI in detail: Inflation remains in check

ScreenHunter_01 Jun. 08 23.33 By Leith van Onselen As noted briefly by Houses & Holes, the Australian Bureau of Statistics (ABS) has released the Consumer Price Index (CPI) data for the December quarter 0f 2014, which registered a modest quarterly increase in headline inflation, but with underlying inflation rising well ahead of expectations (although well contained in annual terms). According to the ABS, headline CPI rose by a modest 0.2% in the December quarter, which follows September's 0.5% rise (see next chart). On an annual basis, headline CPI growth fell to 1.7% from 2.3% in the September quarter, which is...
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CPI comes in high

CPI_logo The Australian Bureau of Statistics (ABS) has released the Consumer Price Index for the December quarter and it was soft at 0.2% on the quarter and 1.7% on the year in the headline figures but the analytical series were well ahead of forecast at 0.7% versus 0.5% expected: DECEMBER KEY FIGURES Sep Qtr 2014 to Dec Qtr 2014 Dec Qtr 2013 to Dec Qtr 2014 Weighted average of eight capital cities % change % change All groups CPI 0.2 1.7 Food and non-alcoholic beverages 0.1 2.0 Alcohol and tobacco 1.7 7.4 Clothing and...
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Coalition to compromise on university funding

ScreenHunter_26 Oct. 16 10.41 By Leith van Onselen The Australian is reporting today that the Abbott Government will compromise on its university reform package in a bid to gain passage through the hostile Senate. The Government has reportedly flagged that it will abandon its proposed 20% cut to university funding provided the Senate allows universities to set their own course fees - a move that would likely blow another $2 billion hole in the Budget. The compromise is designed to gain the support of South Australian senator Nick Xenophon and Palmer United Party senators Zhenya Wang and Glenn Lazarus, who voted against the...
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DEEWR job vacancies fade

2 The DEEWR job vacancy report for December is out and fell 0.9% on the month: The trend measures are rolling over after a very poor recovery:   Weakness was focused in NSW, WA and the ACT: Skilled positions were weak:   A fairly dour...
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Leading index slips

1 From Westpac: The six month annualised deviation from trend growth rate of the Westpac Melbourne Institute Leading Index which indicates the likely pace of economic growth three to nine months into the future declined from –0.49% in November to –0.61% in December. The Leading Index has now registered below trend growth in eleven of the last twelve months. Official figures show GDP growth recorded a lacklustre 2.5% pace in the first nine months of2014. Based on the Leading Index, the Australian economy looks set to continue recording below trend growth well into 2015. The Leading...
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PVO declares Abbott a dead duck

red-dead-rubber-duck-hi From Peter van Onselen, Murdoch star (and cousin to LVO): How about making it to next...
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ANZ-RM consumer confidence eases

ScreenHunter_20 Apr. 10 19.28 By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index fell by 0.4 points (-0.35%) in the week ended 25 January 113.2, to be tracking in line with the long-run average (see next chart). In light of the lacklustre consumer mood, which has drifted sideways for five months, ANZ chief economist is now calling on the RBA to cut interest rates to boost sentiment: "It appears that the impetus from continuing asset price gains and lower petrol prices is being outweighed by concerns about job security, weak wages growth, a lower Australian dollar and concerns about the...
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How to save an iron ore junior

img-thing From Bloomie: Things are so bad for mining projects in Brazil that startup All Ore Mineracao SA (AORE3) is changing its line of business for something more glamorous: cosmetics. All Ore, whose 2009 listing made it the last iron-ore company to start trading on the Sao Paulo stock exchange, said it’s abandoning commodities to focus instead in the beauty and health-care market. The company, which hadn’t yet started operations at iron-ore and gold projects in northern Brazil, will buy a cosmetic producer and change its corporate purpose, it said in a regulatory filing Tuesday. Investors...
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Macro Morning (US roll)

marketmorning By Chris Becker The closely watched US durable goods order printed a new four month low, contracting 3.4% in December and weighing on confidence, sending US stocks down nearly 2% amid some mixed earnings results. The blizzard in NY was a near no show, but the cold weather extended to risk taking, as the Caterpillar earnings results showed the stronger USD is starting to weigh on US corporates. The S&P500 closed down 28 points or 1.4% on the cash market: The trend is still weak with an inability to break through overhead resistance on the daily chart at 2067 points indicating that this...
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Hockey launches minimum wage suicide mission

$(KGrHqFHJEQFGS!1YvwyBRn5OYB4nw~~60_35 By Leith van Onselen The media is abuzz today with claims that the Howard Government's dreaded "Work Choices" policies are set to be reincarnated by the Abbott Government, which has tasked the Productivity Commission with investigating the effectiveness of penalty rates and examining whether increasing the minimum wage costs jobs. The left fears that the minimum wage is under direct attack, as are penalty rates and laws protecting workers from unfair dismissal. For its part, the right, represented enthusiastically by the Institute of Public Affairs (IPA), claims that the minimum wage creates...
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Unelectable turns unsustainable

unnamed Just last week I forecast that Tony Abbott would hang on this year. That was before the baffling decision to deliver Prince Phillip a knighthood, which appears to have crystallized global Abbott ridicule. The Left press at the Fairfax dailies and the Right press at The Oz are now hammering our adrift PM with equal ferocity. Even the Financial Times is having a good laugh: Australia Day is typically when prime ministers attract positive headlines by doling out honours to people promoting good causes. But Tony Abbott, the gaffe-prone holder of the office, provoked a storm of controversy on...
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Abundant skills contradict Abbott foreign worker drive

Job-Queue By Leith van Onselen The Abbott Government's sweeping changes to the 457 'temporary' work visa program, which will make it much easier for Australian businesses to import so-called skilled foreign workers, has been dealt another credibility blow, with the release of the Department of Employment's latest Skill Shortages Statistical Summary revealing that "the availability of skilled workers is greater than it has been since the current series began in 2007, and fewer occupations are in shortage". According to the report: There are generally large fields of applicants vying for skilled jobs and...
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CFOs say “no” to recovery

aef From Deloitte's quarterly CFO survey today: CFOs entered 2014 full of optimism but the position is far more subdued as we move into 2015. Whilst there are modest signs of positive growth, genuine momentum and confidence are in short supply. The year ended with a greater sense of caution for Australian CFOs. With just over a quarter of CFOs thinking now is a good time to take greater risk onto their balance sheets, they appear to be preparing for an uncertain future. Decisions on pursuing growth strategies are focused around safe choices such as organic expansion and introducing new products...
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ANZ CEO: Australia is “different”

imgres From the AFR: The Reserve Bank of Australia should resist calls to cut official interest rates, according to ANZ Banking Group chief executive Mike Smith, who argues ­Australia can weather falling commodity prices and a global currency war. In a position at odds with the forecasts of his own bank’s economists for two rate cuts over the next five months, Mr Smith said he was optimistic about Australia’s outlook – particularly with a falling dollar making exporters more competitive. “If I was the central bank I would wait and see how this plays out because if the currency can take most...
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Caterpillar goes hungry as mining busts

CAT Dec 2014 region_0 Here's a story for those prognosticators calling the bottom for mining services firms, from Caterpillar: We expect world economic growth to only improve modestly in 2015.  The relatively slow growth in the world economy and continued weakness in commodity prices—particularly oil, copper, coal and iron ore—are expected to be negative for our sales.  We expect sales and revenues in 2015 to be about $50 billion.  To provide a better understanding of our expectations for 2015 profit, we are providing our outlook with and without anticipated restructuring costs.  Over the past two years, we have...
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Goldman burns the two coals

imgres I noted yesterday that Goldies have shattered their long term iron ore outlook but they've also beared-up on the wider bulks. On coking coal: Production costs are falling as mining productivity starts to improve. Meanwhile, the gradual displacement of marginal capacity (mine closures since 2013 are equivalent to 10% of current seaborne supply) is gradually flattening the industry cost curve; extending these trends into the future, we estimate that marginal production costs for premium hard coking coal could drop to US$130/t by the end of our forecast period. At the moment, coal prices have...
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