Euro unemployment remains high

5733482-ski-resort-in-the-high-mountains-with-ski-lift by Chris Becker Last night saw the release of monthly unemployment statistics for the EU, and specifically Germany and Italy alongside the monthly CPI print. Although there has been almost no monthly change the readings are still way too high (even for the Germans): German unemployment (September) at 6.7% (no change on last month) Italian unemployment (August) at 12.3% (down from 12.6% last month) Eurozone unemployment (August) at 11.5% (no change on last month) No surprise and no change because there still remains no effective action on solving the structural unemployment situation...
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Macro Morning

marketmorning by Chris Becker We're getting into the juicy part of the week when some significant data prints are ramping up volatility across the markets along with the usual end of month/end of quarter shakedown. Its still all about USD strength as this chart of monthly performance shows (via Forexlive): It all began with a Euro smackdown from just below 1.27 to below 1.26 on poor data with a Similar action from Sterling when after a false break (got caught in that, bugger) we saw a large selloff and a confirmation of inherent weakness in Cable following the post-referendum elation. Here's...
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Is the RBA to blame for housing speculation?

ScreenHunter_12 Sep. 23 12.54 By Leith van Onselen Former RBA board member, Professor Warwick McKibbin, has delivered the RBA a serve, blaming the central bank's ultra low interest rate settings for fuelling unprecedented investor housing speculation, and blowing a potential housing bubble. From The Australian: Professor McKibbin said the bank had made the wrong call to cut interest rates so low and was facing the consequences. “A surge in investor borrowing for assets in relatively fixed supply such as housing was inevitable; yet cutting rates was never going to do much to boost business loans or weaken the currency...
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Iron ore daily price update (India and Brazil weigh)

steel by Chris Becker Not much of a change on the iron ore complex yesterday, as China gears up for the National Day holiday amid the Hong Kong Occupy situation. Spot drifted down slightly, with 12 month swaps lifting the same, but still below $78USD per ton, while rebar was flat and Dalian futures fell slightly:   Here's spot in chart form: And rebar and Dalian futures: Looks like the Indians are about to add to the seaborne supply chain, with speculation the export duty on iron ore will be lifted soon: "A meeting on the issue is expected in the Finance Ministry soon....
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The Coalition’s Budget aspirations look doomed

ScreenHunter_73 Oct. 01 07.35 By Leith van Onselen The Abbott Government has reportedly all but conceded defeat on around $30 billion of Budget measures, choosing instead to devise an alternative path to savings, which will be revealed in the mid-year economic and fiscal outlook (MYEFO) in December. As reported in The AFR today, the Government's planned higher education reforms appear doomed, with the Palmer United Party (PUP) insisting that it would block the deregulation of university fees, raising the loan repayment interest rate, of the 20% funding cut from the Government. PUP will also oppose the GP co-payment, as...
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End of Globalization 2.0

citi-were-at-the-end-of-the-commodity-supercycle Cross posted from Investing in Chinese Stocks The first wave of globalization lasted from 1870 to 1914. It ended with a war, an interwar period, and a second war. The second wave began in 1945 and lasted until 2001 or 2008 or a date yet to be chosen by historians. Socionomics predicted the end of globalization with the social mood peak in the year 2000. The generational theory of Strauss & Howe predicts a 4th turning, a period of great upheaval. Economists see the limits of free trade. Even solar cycles predict a rise in warfare, if a solar minimum is on the way: Michael Pettis...
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Australia’s empty homes

ScreenHunter_71 Sep. 30 17.30 By Catherine Cashmore, a market analyst, journalist, and policy thinker, with extensive industry experience in all aspects relating to property. Follow Catherine on Twitter or via her Blog. “The home, built in 1857, had been unoccupied for years” said the report of a dilapidated Victorian-era mansion in Sydney’s Balmain East. Situated in an exclusive residential pocket next door to Balmain East ferry wharf, and sporting bayside views of Sydney’s Harbour Bridge, the 457 square metre block of land attracted 200 people to the auction, 18 registrations to bid, and sold $830,000 above the...
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Chinese land sales down 50% in the year

CHINA-FINANCE-ECONOMY-ASIA-TRADE Cross posted from Investing in Chinese Stocks From a CREIS report, nationally, land sales in Q3 were 415.9 billion yuan, about equal to Q2, down nearly 50% yoy. Residential sales are down more than commercial. September land sales are down 70% yoy. The chart from the report below shows cumulative homes sales through the end of Q3, 10 major cities. Yellow line shows the change from last year. On the bright side, the report also shows many cities have seen sales volume pick up in the last week, ahead of the National Day week-long holiday. Still down yoy, but way up from the previous...
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Links 1 October 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: We are experiencing the flipside of 1970s-style inflation - FT Alphaville Commodities Are Crashing Amid Stock-Bond Disconnect Deja Vu - Zero Hedge Surging US dollar threatens emerging markets’ carry trades - Financial Times Not all bonds ar created equal - Pragmatic Capitalism How much money investors have pulled from formerly Gross-managed Pimco funds - Bloomberg Bill Gross, Calpers and the End of the Investment Guru - New York Times North America: Could Lehman Brothers have been bailed out? - Dealbook US home prices are rising at an...
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ASX at the close

ASX_logo by Stan Shamu, IG It’s been a fairly busy day on the economic calendar in Asia, with some key releases out of Japan and China. The risk-off tone in global markets has continued as investors focused on unrest in Ukraine, Hong Kong and data from the US for direction. As a result, not only are markets risk-off at the moment, but constant repricing of rate hike expectations are also at play. Emerging markets are the worst hit at the moment and the trend is likely to continue in the near term. Fed members have been growing increasingly hawkish and even some of the traditional doves have said they see...
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It’s Raine-ing elderly property investors

200236712-001 By David Collyer, cross-posted from Prosper Australia: Angus Raine of RE agents Raine & Horne burst into song about property taxes in a letter on page 55 of the Australian Financial Review today- and what a nice cartoon, Clement! Angus wants Stamp Duty tax breaks for empty nesters – people trapped in inappropriate housing by bad taxes. He wants capital gains concessions for real estate investors over the age of 60, saying, “tax constraints are making it very difficult for them to access the capital tied up in these assets.” The Raine & Horne agents will be walking tall today,...
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US inflation moderates as Europe deflates

deflated balloon by Chris Becker Last night saw the release of two key important metrics in the ongoing fight against deflation in the Northern Hemisphere by the ECB and the Fed. First, following some very lacklustre Euro-wide consumer confidence figures (something that's been repeated worldwide), the very closely watched German CPI print for September came in as dead flat - no change, with the yearly figure remaining at a paltry 0.8% Up next was the Federal Reserves preferred inflation gauge, the price index for personal consumption expenditures (PCE), which is up only 1.5% over the year to August, in a...
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Cormann rules-out housing super fix

ScreenHunter_282 Nov. 14 14.15 By Leith van Onselen Finance Minister, Mathias Cormann, has ruled-out allowing first-time home buyers to access their superannuation to pay a house deposit, arguing that such a move would merely inflate house prices further. From The Australian: Senator Cormann said the idea would probably put pressure on house prices at a time when people were concerned about housing affordability... Senator Cormann countered the idea by suggesting it would only increase further. “The purpose of superannuation is to provide an income stream in retirement,” he told ABC News24. “There is a sole...
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Forecasting the failure of economics

B747BulkheadFail by Chris Becker A very dry article via CBS popped up in the Twittersphere today that tried but failed to explain the inability of economics - as a profession - to forecast: The Queen of England famously asked why economists failed to foresee the financial crisis in 2008. "Why did nobody notice it?" was her question when she visited the London School of Economics that year. Economists' failure to accurately predict the economy's course isn't limited to the financial crisis and the Great Recession that followed. Macroeconomic computer models also aren't very useful for predicting how variables...
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China PMI moderates

Flatline by Chris Becker Straight from Markit, more to follow: “The HSBC China Manufacturing PMI was revised down  slightly to 50.2 in the final reading for September from the flash reading of 50.5, and unchanged from the August reading. Output and new orders were both revised down. Meanwhile, the employment and price sub-indices were revised up, although both remain at relatively low levels. The new export orders sub-index rose to its highest reading since March 2010. Overall, the data in September suggest that manufacturing activity continues to expand at a slow pace. We think risks to...
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Investors still hog wild for mortgages

ScreenHunter_05 Apr. 15 22.08 By Leith van Onselen The Reserve Bank of Australia (RBA) today released its private sector credit aggregates data for the month of August: A chart showing the long-run breakdown in the components is provided below: Personal credit growth (0.2% MoM; 1.1% QoQ; 1.1% YoY) and business credit growth (0.0% MoM; 1.2% QoQ; 3.2% YoY) continue to grow at a modest pace in annual terms, whereas housing credit growth (0.6% MoM; 1.7% QoQ; 6.7% YoY) is stronger, but remains at fairly subdued levels relative to its long-run average growth rate; although it is still growing more than twice as...
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Asia’s industrial production shocker

chinatoyfactory01 by Chris Becker Some more troubling news on the export front for Australia as an Asian regional slowdown seems underway, with Japan and South Korea reporting some woeful stats this morning. The August print for Japanese industrial production came in well under expectations at -2.9% year on year and coupled with a core CPI read that is hovering just above 1%, it pays to ask the question if Abenomics is actually working. More from David Scutt at Marketscuttlebutt: South Korea logged a monthly decline of 3.8%, the sharpest contraction seen since December 2008, with the annual rate sliding...
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ANZ-RM consumer confidence rises above average

ScreenHunter_15 Mar. 18 16.24 By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index rose in the week ended 28 September, up 0.8 points (0.7%) to 113.7, taking it just above its long-run average reading of 113.2 (see next chart). As usual, ANZ chief economist, Warren Hogan, talked-up the result, saying that the ANZ still believed “household spending will grow moderately this year", seemingly summoning the confidence fairy and wealth effect from rising housing prices, even though wages are falling in real (inflation-adjusted) terms. The below chart plots the most recent Westpac-Melbourne...
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MB Members’ Report: Sydney housing loses its safe haven status

ScreenHunter_01 Oct. 04 00.04 For several years now, I have argued that Sydney housing offers relatively good value from an investment perspective. This was based upon the view that Sydney housing was relatively undervalued following an extended period of under-performance over the second half of the 2000s, as well as tighter supply and generally stronger fundamentals than the other major capitals. The situation has changed materially over the past 18 months, however, following the 22% surge in Sydney house prices over that period, driven by unprecedented demand from property investors. This has seen Sydney's price premium...
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RP Data: Home prices up marginally in September

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen RP Data's price results are in for September, with the daily index recording a 0.10% rise over the month at the 5-city level, with values rising in Sydney, Brisbane and Adelaide, but falling in Melbourne and Perth (see next chart). It was the fourth consecutive monthly increase in values, with values also up by 2.83% over the quarter (see next chart). Home values have now increased by 6.31% since the start of the year at the 5-city level and by 9.4% over the past 12 months, driven by strong growth in Sydney and Melbourne (see below charts). however,...
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Hong Kong crisis due to property bubble?

FrRxIiM by Chris Becker Are the burgeoning protests in downtown Hong Kong - where the financial district is the next target of Occupy Central - about greater democracy under the tightening "one country, two systems" crackdown by Beijing, or something as banal as property prices and high-end consumer goods? From FT Alphaville is this fascinating chart of the Hang Seng bourse vs the Centa-City house price index showing a very frothy mix indeed: Using the pegged HKD has been a blessing for asset prices, but maybe it underlies some tensions within the youth-based movement seeking further freedoms...
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Kelly O’Dwyer talks foreign investment, negative gearing

ScreenHunter_06 May. 06 09.27 By Leith van Onselen Liberal MP, Kelly O'Dwyer, appeared on ABC Lateline last night to discuss foreign investment in Australian real estate, as well as negative gearing (amongst other things). The full transcript can be viewed here, On foreign investment, O'Dwyer once again slammed the Foreign Investment Review Board's (FIRB) monitoring and enforcement of foreign ownership rules, in particular the requirement that non-residents cannot purchase pre-existing dwellings and the requirement that temporary residents sell their pre-existing homes within three months of departing Australia: KELLY...
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Macro Morning

marketmorning by Chris Becker Last nights action on markets was interesting to say the least, and fun for this little black duck (although lack of sleep is hurting this morning). Monday nights in Europe and the US session seem to have a greater sense of volatility about them and last night was no different, as the complex reacted to the Occupy movement in Hong Kong and absorbed two significant data points. First in Europe, deflation seems to be the base case as even Germany came in at dead flat for the month, up only 0.8% for the year. This perversely sent the Euro up intra-session on overbought USD...
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Kohler flip-flops on Australian housing

ScreenHunter_4409 Sep. 30 07.48 By Leith van Onselen Watching Business Spectator's Alan Kohler take contradictory positions on Australian housing over the past two weeks has been a sight to behold. On 17 September, Kohler declared that Australia's high house prices are not a problem and are the result of a well-functioning market: The point is that it’s not entirely clear that expensive housing is a bad thing, although I am talking my book, of course, as a home-owning, empty-nest baby boomer (with frustrated, renting children). It is true that a bubble followed by a crash would be undesirable, to say the least, but is...
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Why Chris Pyne is wrong on youth unemployment

ScreenHunter_29 Aug. 22 11.42 By Leith van Onselen Education Minister, Christopher Pyne, appeared on the ABC's Q&A program last night and showed why he is out-of-touch on the issue of youth unemployment, declaring that there is "no crisis". From The Age: Q&A host Tony Jones asked whether the Coalition should place youth unemployment on a "crisis agenda to try and fix this?" "There isn't a crisis. There certainly is an emphasis from the Coalition on young people either learning or earning so when they leave school – and happily more people are finishing year 12 which gives them a better chance of getting a job...
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