Latest posts

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Housing cannot grow without mining

From Miranda Maxwell at Dad’s Army: Economists I sounded out this week were in furious agreement: the importance of mining and China to Australia’s economic performance has been significantly overstated. …Mining makes up less than a fifth of Australia’s GDP, probably closer to 15 per cent as commodity prices decline. Consumer spending makes up almost

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Macro Morning (BTFD Europe)

By Chris Becker A solid session in Asia translated into a firm move for stocks coming into the European session but this turned into a damp squib a poorer than expected ZEW survey in Germany and then some disappointing earnings results for non-tech stocks in the US. The US dollar did not shake commodities or

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Greens under the beds!

Some carbon chickens coming home to roost today for the nation with the most to lose from climate change yet with the least effective policies. From The Australian: The Climate Change Authority is pressing the Abbott government to dramatically lift its 2020 emissions reduction target, as it recommended the nation take a 30 per cent cut

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Daily LNG price update (land of the giants)

Brent oil fell last night by more than 2% to roughly $63 as Saudi Arabia stopped bombing Yemen, claiming to have neutralised rebel heavy weapons. Iran was also bullish on restoring its production flow mid this year once sanctions are lifted. There are also moves afoot to free up more US oil exports, which would close

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Daily iron ore price update (steel sink)

Here are the iron ore charts for April 21, 2015: Spot fell and so did paper though Dalian rallied back to 389 overnight. Texture from Reuters: “Mills are trying to limit their raw material stocks to as low as possible. This way they can keep their cost at current market level and guarantee their small profit from

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The US is growing faster than China

From BNP via FTAlphaville: It has been a near unshakeable axiom that China’s economy is on a pre-determined flight path to overtake the US and quite quickly become the world’s biggest economy. But China’s rapid nominal compression combined with the end of RMB appreciation vs. the USD and the solid c.4% nominal GDP growth in

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China’s steel credit maelstrom

Cross-posted from Investing in Chinese Stocks. The PBOC slashed reserve requirements on Sunday and the reason for the cuts are evident in the following days. Kaisa defaulted on Monday and Tuesday, a state-owned subsidiary in Baoding, Hebei defaulted, Baoding Tianwei set to post China’s 3rd domestic bond default Tuesday: China’s Baoding Tianwei Baobian Electric Co Ltd

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Links 22 April 2015

Global Macro / Markets / Investing: El-Erian: The Biggest Risk for The Fed Is That They Are Too Successful – Bloomberg Is Government Debt Too Low? – Wall Street Journal How To Trade Like Stan Druckenmiller, George Soros And Jim Rogers – thefelderreport.com Bill Gross: German bunds are ’the short of a lifetime’ – CNBC

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ASX at the close

Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Equities rebound on stimulus expectations  The trading environment remains volatile and it didn’t take long for equities to erase some of the losses we saw on Friday. Chinese equities have sprung back to life while the Nikkei and ASX 200 are also enjoying some

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PIMCO says short Aussie with both hands

From the wise people at PIMCO: ​​After re-engaging policy support in February following an 18-month hiatus, the Reserve Bank of Australia (RBA) wrong-footed many in the market by keeping policy on hold in the two subsequent board meetings. So was February’s decision a “one-and-done” policy event or the start of a more aggressive easing cycle?

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How the retirement system benefits the rich

By Leith van Onselen ABC’s Fact Check has conducted an interesting examination of the extent to which Australia’s retirement system benefits different income earners and has found that wealthy Australians receive the lion’s share of taxpayer benefits. First, superannuation: …the top 10 per cent of income earners reap about 38 per cent of the government

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HIA: Land prices rocket as sales evaporate

By Leith van Onselen The Housing Industry Association (HIA) has released its land sales report for the December quarter of 2014, which revealed a widening divergence between vacant land prices, which continue to climb to record highs, and the number of land sales, which slumped again in the latest quarter and have fallen sharply over

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CS slams AEMO gas balance outlook

From Credit Suisse: A delicate balance? Last week, the Australian regulator AEMO published a report forecasting a balanced gas market in the near term. We would argue demand destruction forecasts of 150PJa really doesn’t count as “balance” but also that the number is too low. We don’t understand the underlying data – AEMO forecasts for Cooper production and Otway

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RBA exonerates self of rates leak

The Banana Republic rolls on. From the ABC: The Reserve Bank appears to have been cleared of an internal leak after unusual trading in the Australian dollar seconds before two key interest rate decisions earlier this year. The suspicious trading in February and March had been referred to the Australian Securities and Investments Commission (ASIC)

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Q&A’s TPP fail

By Leith van Onselen Last night’s Q&A program aired on The ABC was pathetic. Despite having Trade Minister, Andrew Robb, on the panel, and negotiations for the highly contentious Trans-Pacific Partnership (TPP) trade deal drawing to a close, chair Tony Jones failed to allow one question on the issue, despite assurances that there would be

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China business confidence in hard landing

Just in case you’re wondering why China has entered aggressive easing mode, from Forexlive: The MNI China Business Sentiment Indicator, a gauge of current business sentiment, fell for the fourth consecutive month to 48.8 in April from 52.2 in March, now at its lowest since the beginning of 2009. Confidence in contractionary territory for the

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RBA minutes go full dove

RBA minutes are out and it’s full dove action. Minutes of the Monetary Policy Meeting of the Reserve Bank Board Sydney – 7 April 2015 Members Present Glenn Stevens (Governor and Chair), Philip Lowe (Deputy Governor), John Akehurst, Roger Corbett AO, John Edwards, Kathryn Fagg, John Fraser (Secretary to the Treasury), Heather Ridout AO, Catherine

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How to abolish stamp duty

By Leith van Onselen The Property Council of Australia (PCA) has provided a submission to South Australia’s review of state taxation, which repeated its call to abolish stamp duty in exchange for a broad-based land tax. From The Canberra Times: Daniel Gannon, the executive director of the South Australian division of the Property Council says

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Gotti births Triguboffonomics

By Leith van Onselen Business Spectator’s Robert Gottliebsen (“Gotti”) has penned another piece of Triguboffonomics, arguing that Chinese property investment (immigration) is the key to the Melbourne economy’s future success: Melbourne has approved the construction of over 20,000 apartments in the central business district over the next four years, five times the ‘normal’ level of

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Consumer confidence at 8-month low

By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index has slumped to an 8-month low, falling by 1.0 points to 108.8 in the week ended 19 April to be tracking well below the long-run average of 113 (see next chart). The overall slump was driven by a deterioration in perceptions about the

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More heat on dividend imputation rort

By Leith van Onselen Following reports earlier this month that dividend imputation credits received by tax-free (mostly wealthy) superannuation holders over the age of 60 are costing the Budget some $6 billion a year in forgone revenue, The Australia Institute (TAI) has released a new study showing that Australia’s $29 billion system of franking credits