Australia’s trade deficit improved in August

ScreenHunter_18 Feb. 11 10.19 By Leith van Onselen The Australian Bureau of Statistics (ABS) has released trade data for the month of August, with Australia recording a seasonally-adjusted trade deficit of $787 million. The result narrowly beat analyst’s expectations, who had expected the trade deficit of $800 million. It was the fifth monthly trade deficit in a row and followed the $1075 million deficit recorded in July (revised down from $1,359 million) and the $1,654 million deficit recorded in June (revised up from $1,564 million). The next chart shows the monthly breakdown: In seasonally adjusted terms,...
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Post QE outlook on gold and silver

gold_ounce350_4dcc90a055e04 by Jordan Eliseo, Chief Economist ABC Bullion When Seasonality Fails Gold investors were looking forward to Q3 this year. After a solid start to 2014, with gold one of the best performing assets in the 6 months to June, more upside was expected. At the time, gold prices were sitting around the USD $1315oz mark, with many predicting a price in and around the USD $1400oz mark by now, based off 40 odd years of data, which highlighted that Q3 was typically a very strong quarter for the yellow metal. Alas – it was not to be, with the surging USD Dollar (the September monthly returns of which...
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Education is a public good not a commodity

School shoes Cross posted from The Conversation by Stewart Riddle, Lecturer in Literacies Education at University of Southern Queensland We are at an important juncture for education in Australia. With the government’s higher education reform agenda well underway and its school funding stasis, teacher education and Australian curriculum reviews, now is the time to be asking: what is education actually for and who does it benefit? Education tends to be argued about in terms of weighing up public and private benefit. At one end, you have the notion of education as a public good, where the benefits spread...
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Apartments drive dwelling approvals up in August

ScreenHunter_01 Mar. 03 22.48 By Leith van Onselen The Australian Bureau of Statistics (ABS) has released dwelling approvals data for the month of August. At the national level, the number of dwelling approvals rose by a seasonally adjusted 3.0% to 16,810. The overall increase was led by units & apartments, rose by 9.6%, whereas house approvals fell by 1.8%. The result beat analysts’ expectations, who had expected a 1% rise in approvals over the month. In the year to August 2014, dwelling approvals rose by a seasonally-adjusted 14.5%, with house approvals up by 12.2% and unit approvals up by 17.5%: A chart...
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Aussie on its way to 75c

800px-Car_off_cliff_sign by Chris Becker The Aussie dollar bears are coming out of the woodwork after the battlers decline from ca. 95c to just above 87c recently. A major fund has given more weight for more jawboning from the RBA Governor to help their own call. From Fairfax: Aussie dollar to go to 75c: That's the opinion of Thomas Clarke, a portfolio manager and asset allocation specialist based in the London office of $62 billion funds management house William Blair & Company. The efforts of Reserve Bank of Australia governor Glenn Stevens to "jawbone" the dollar lower are reassuring, the fund manager...
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The most watched trendline ever?

looking ahead by Chris Becker You may well think that technical analysis is up there in terms of whackery as say, tea leaf reading or astrology or modern economic dogma. But it seems every analyst in the world - and that includes pretty much all asset management funds - are watching the 2009-2014 trendline on US stocks: Theres a couple of interesting things, and some problems, with this analysis. First of all, the notion that the small stock and tech heavy indices, the Russell 2000 and NASDAQ respectively, usually lead the direction of the major bourses is not very robust, at least when you...
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Bridgewater warns on US downturn

bridge to nowhere by Chris Becker Not so much another bear that's hitting the airwaves as this broad market correction carries on, but one of the best foxes in the business. I'm a big fan of Ray Dalio at Bridgewater (manages around $160 billion) and when he talks, you should listen. The long upward march in asset values since the nadir of the GFC in 2009, due mainly to the Fed's nearly endless QE programs and record low interest rates mean future returns will be bleak indeed, according to Dalio - around 4% p.a. Some texture via ZH: This is a problem, he explains in this brief clip, as monetary policy...
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Robb: TPP trade deal could be done by year’s end

ScreenHunter_3418 Jul. 23 10.44 By Leith van Onselen Federal Trade Minister, Andrew Robb, has today suggested that negotiations for the flawed Trans-Pacific Partnership (TPP) – the proposed regional trade agreement between 12 Pacific Rim countries, including Australia - could be finalised by the end of the year. From The AFR: “We are a very long way down the track. In fact I’d say that with the whole deal we are about 90 per cent of the way there,” Mr Robb said on Tuesday in the US capital. “I think we could conclude the basics of the [Trans-Pacific Partnership] agreement before the end of the year. It’s that...
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Charlie Aitken goes bearish

bear_market3 by Chris Becker One of the biggest permabulls out there, Bell Potters Charlie Aitken, has clanged the warning bell, from Livewire: I am increasingly concerned that cracks are appearing in US equities and Wall St itself will become the next trading victim of the resurgent US Dollar and an increase in volatility. On that basis I am going to issue a correction warning on US equities this morning. What will be the catalyst for this correction? My answer is consensus US earnings downgrades driven by the strong US dollar. When EPS downgrades come through in multi-nationals, large cap tech, and US...
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Macro Morning

marketmorning by Chris Becker We're at that stage in market psychology where even good(ish) news gets talked down and converted into a further excuse to sell, plus the usual scaremongering over terrorism, Ebola and wearing a burqa (niqab). Risk off is the meme of the moment, with US and European stock markets falling, the latter down almost 1% with the former taking bigger falls. There was also a race to bonds with US Treasury Notes (10 years) yields falling to 2.4% with similar moves in German Bunds and UK Gilts. As the QE go-go juice program nears its end, risk markets are looking decidely skittish, and...
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RBA: demand-side stimulus can’t fix housing affordability

ScreenHunter_92 Oct. 02 09.56 The Reserve Bank has this morning appeared before the parliamentary inquiry into housing affordability, and hosed-down demand-side measures aimed at improving housing affordability, noting that with Australia's constipated supply system, measures that add to demand will simply be capitalised into higher prices: ...housing prices and affordability are affected by the interaction of both supply and demand factors. The factors that I have mentioned so far, such as household incomes and the cost and availability of finance, primarily affect the demand side of the market. In the short to medium term,...
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Stock on market fell sharply in September

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen SQM Research has just released its stock on market figures for September, which revealed an unusual 2.4% decline in for sale listings over the month, with listing levels also down 1.1% over the year: As shown above, Sydney has led the charge, with listings there down a massive 6.9% in September and by 10.2% over the year. By contrast, listings in Darwin were up 0.2% over the month and by 25.4% over the year. According to SQM managing director, Louis Christopher: “The falls recorded in September are abnormal as listings normally rise at the start of spring. It...
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We’ve reached peak mining employment

Mountain_Climber_Scaling_Peak_10950000837 Cross posted from Peak Jobs Analysis by Shane Granger I am going to commence with a prediction. Australia reached its Peak Jobs Mining moment in May 2012 when the industry recorded a total workforce of 275,500. The more than 10% decrease in mining employment in the most recent ABS update to 237,400 gives the first clear indicator that the sector is looking to return to a >200,000 labour force, not seen since November 2010 and faster than previously expected. The month of September 2014 was a bad one with another 2,500 jobs lost. This is the third month, out of the previous four where more...
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Falling commodity prices to crunch national income

ScreenHunter_07 Nov. 26 16.13 By Leith van Onselen Yesterday evening, the RBA released its commodity price index for September, which registered a large 1.4% fall in Aussie dollar terms and larger a 2.4% decline in SDR (currency weighted) terms: Preliminary estimates for September indicate that the index declined by 2.4 per cent (on a monthly average basis) in SDR terms, after rising by 0.2 per cent in August (revised). The largest contributor to the decline in September was the price of iron ore. The base metals and rural commodities subindices declined during the month. In Australian dollar terms, the index declined by...
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Daily iron ore price update (BHP)

113px-BHP_Billiton.svg by Chris Becker Its National Day holiday in China with markets closed so no iron ore price data. Instead I'll update Houses and Holes so-called "idiocy spread" of the ASX listed iron ore miners, both senior and junior. First though, a quick look at weekly Chinese port inventories which remain stable and elevated: The relative performance of the junior miners vs the spot iron ore price: And the senior miners:   And the "idiot spread" where it looks like FMG still has some catching up to do:   Adding to RIO's bravado over expanding its iron ore operations...
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The pros and cons of foreign property investment

ScreenHunter_06 May. 06 09.27 By Leith van Onselen The chief of one of China's largest developers, Country Garden's Johnson Zhang, has played down concerns that Chinese investment into Australian housing is driving-up home prices and shutting-out locals, instead arguing that there is plenty of second hand stock available for locals. From The AFR: “I feel this debate has errors,” he said. “Remember, foreign investors including Asians can only buy new properties. There is a huge second-hand market with enough housing there for locals”... “We just don’t think there should be a fear of foreigners coming to...
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Renminbi selling on HK crisis

100Yuan Cross posted from Investing in Chinese Stocks The offshore yuan market is heading lower once more. Keep an eye on the Asian Dollar Index. The yuan is by far the largest component. It isn't a volatile index, but it also isn't far from the major support level of the past 4 years or so. If ADXY breaks, the equilibrium will be broken. The US Dollar Index is very close to a post 2008 high as well and the euro down at 1.25 isn't in good shape either: I'm not pressing the panic button, but a chill wind is blowing. There was a recent discussion of the offshore and onshore renminbi and how...
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Links 2 October 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: ’Dr. Doom’ Roubini reveals his black swan scenarios - CNBC IMF calls for shake-up of bank executive pay - Financial Times High yield bonds are falling - Business Insider A poor end to a bad investing month - Bespoke Will rising rates hurt REITS? - A Wealth of Common Sense Expectations for the rise in rates pummels REITS - Wall Street Journal Why is volatility a proxy for risk? - StreetEye When bond kings manage too much money - SSRN North America: ISM Manufacturing survey declines, but shows continued growth - Calculated Risk U.S....
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ASX at the close

ASX_logo by Chris Weston, IG   It’s been a strange day in Asia, with traders having to deal with a barrage of Asian economic numbers, as well as preparing for key upcoming events. The market was keen to look at the Japanese Q3 TANKAN report and, while the headlines will state that corporate Japan is happy to increase capital expenditure plans by 8.6%, there are some concerning numbers to focus on too. Some confidence was seen in large manufacturing but the same can’t be said for the outlook, with those surveyed painting a less rosy picture. The fact that we saw household spending (released...
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Governments must work together to solve housing supply

ScreenHunter_18 Jul. 05 10.22 Cross-posted from The Conversation: Is there a national housing supply problem? No, but there is a problem of access to affordable housing in certain regions. Last month, Reserve Bank Governor, Glenn Stevens commented on the need for “animal spirits” to respond to the exceptionally accommodative monetary policy setting and boost the supply of housing. More than 12 months have passed since the RBA last adjusted the cash rate to the current record low of 2.5%. This has stimulated investor demand, particularly in metropolitan Sydney and (to a lesser extent) Melbourne. Yesterday’s Reserve...
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Watch out for the super gouger “savings” meme

definitely no super for you by Chris Becker Uh Oh. Get your antennae up when the super-duper fund managers start using the "need to put more savings into super" meme to increase their ticket clipping activities. From news.com.au:   The head of the country's largest wealth manager has warned Australians will end up poorer and paying more tax to fund pensions if something isn't done to boost superannuation savings. AMP chief executive Craig Meller says a lack of savings will leave Australia with a fiscal challenge far more serious than the budget shortfall currently facing the Abbott government. "We...
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Australia’s “low” mortgage growth is still a big problem

ScreenHunter_86 Oct. 01 12.52 By Leith van Onselen Business Spectator's Alan Kohler has continued his schizophrenic take on Australia's housing market, today arguing that concerns about excessive speculative activity in the housing market are not warranted because credit growth is so low: There’s talk of macroprudential policies to limit investment lending, but no one is rushing into this, and for good reason: there isn’t really a problem. There were three booms in property investment during the 1990s, when investor housing credit grew at between 25 and 30 per cent per annum. The current growth rate is anaemic by...
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Aussie cracks 87 again to near four year low

cracked dollar by Chris Becker The anemic retail sales figures this morning which followed a good Chinese manufacturing PMI print has cracked the Aussie below 87 cents vs the USD again: Its now sitting on crucial support - just above the January lows of this year and near its four year low. Given the RBA meets on Tuesday next week, we could be at a critical juncture but I would caution theres a bit too much bearishness in the air (I'm going to cover my intraday short soon as its way oversold, but leave longer term positions open). Most funds would be happy with this level and not any further...
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Engineering construction hits mining cliff

ScreenHunter_08 Nov. 07 08.52 By Leith van Onselen The ABS has released engineering construction data for the June quarter of 2014, which revealed a 2.0% seasonally adjusted fall in the value of work done over the quarter, and a reduction in the construction pipeline. According to the ABS, the total value of engineering construction in real seasonally-adjusted terms fell by 2.0% in the June quarter and was down by 3.8% over the year, with both the private (-1.6%) and public (-3.5%) sectors falling over the quarter (see below chart). You can see the big uplift in activity from 2003 as the commodity price boom...
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Rio gambles on the long run

australia gambling luck dice by Chris Becker You've got to give Rio Tinto the gong for chutzpah, with reports this morning that in the middle of a price crash and a burgeoning supply glut, its looking to add to supply by opening a new iron ore site in the Pilbara. After its magnificent efforts in destroying the MRRT alongside its foreign owned allies like BHP, I'm sure they must make the urinals at their Perth offices low to the ground. From The Australian: In a move that will sustain pressure on smaller producers and the iron ore price, Rio has sought permission from federal regulators in recent days to build a new...
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