ASX at the close

ScreenHunter_31 Jun. 04 16.42 Chris Weston, Chief Market Strategist at IG Markets Central banks’ battle to control disinflationary pressures continues in earnest, with the Federal Reserve acknowledging lower inflation expectations. Expectations for a February rate cut in Australia have also dramatically increased. To be fair, the Fed statement was quite nuanced and, while inflation ‘declined further’ below the Committee’s longer-term objective, they were more upbeat on the labour market and economy, which is undergoing a more ‘solid’ pace of growth. The fact the Fed are now paying greater attention to...
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FMG to dig its hole deeper

images From The Australian: Just in case things weren’t clear enough after Fortescue’s (FMG) quarterly production report this morning, CEO Nev Power spells it out on the conference call: Fortescue has no intention of cutting mine production, has no intention of mandating banks for an asset sale, and its not actively pursuing the sale of stakes in any assets. Dig all the way to China for bailout! Not that anyone is listening to me...
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QLD revolution to behead Comrade Campbell?

imgres From Crikey's Pollbludger: With just two days to go to the election, Queensland politics appears to be headed into uncharted waters, with Premier Campbell Newman's grand gamble on his precarious inner-north Brisbane seat of Ashgrove looking increasingly like a busted flush. If a poll conducted the night before last by ReachTEL for the Seven Network is even a little bit right, the Premier of Queensland stands to be swept from Parliament by Labor candidate Kate Jones, whom the poll credits with a 54-46 lead in her bid to win back the seat she lost to Newman in 2012. For Newman, this is no ordinary...
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PC review could bring Coalition unstuck

ScreenHunter_5804 Jan. 29 13.09 Cross-posted from The Conversation. Australia’s federal government has made a major political error, possibly terminal, in asking the Productivity Commission (PC) to inquire into industrial relations. Before the 2013 election, the strategy of the Coalition appeared to be to say as little as possible, especially about industrial relations. It would then go to the 2016 election, bolstered by the “sophomore surge” of new members building their personal support, and seek a mandate for a bold plan, to get an otherwise “once in a generation” reform through the parliament. This would follow...
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Iron ore miner idiocy spreads soar!

2 It's all good today for the big miners as FMG ships ever increasing amounts of loss-making dirt. Say whaaaat? Yes, despite overnight pain for equities and more falls in iron ore and oil, everyone is cruising today, roughly flat for the two titans and roaring 6% upwards is the FMG black hole. I really must begin selling my backyard loam for less than it costs to shovel it out. I could float! Here are the indexes: The FMG sanity spread widened a touch today but will retrace soon enough. However, call the white coats for the majors:     The only dirt being shoveled in...
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Lib condemns “latte-sipping, keyboard warriors”

imgres I guess that means me and you lot. At least they're reading you. Though, for future reference, I hate coffee. The same genius, NSW Nationals MP Michael McCormack, reckons that Dead Duck "should visit a country pub to get an "honest appraisal" of how the government can improve." I'm not sure he'd come out again. Every die-hard Lib that I know has written Dead Duck off as a...
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Overseas born Aussies hit 120-year high

ScreenHunter_5798 Jan. 29 12.07 The Australian Bureau of Statistics (ABS) has today released its annual migration report, which reveals that the proportion of Australians born overseas hit an 120-year high of 28.1% (6.6 million people) - a level not seen since the gold rushes of the late-1880s. According to the ABS, this increase has been driven by people from India and China: "Overseas migration has been a large contributor to the total Australian population growth for several years - it has consistently been the main driver since 2005-06, contributing more than 50 per cent of population growth in Australia. "While the...
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Liberals rally to Credlin

mc_petacredlin_0081final_18en4pt-18en4q7 From The Australian: SENIOR Liberals are publicly vowing support for Tony Abbott’s chief-of-staff, Peta Credlin, cautioning the government’s supporters against further “extravagant” and “unhelpful” accusations against the top aide. The Ministers for Finance, Health, Education and Immigration have all rejected suggestions that Ms Credlin resign as a sacrificial offering to atone for political misjudgments emanating from the Prime Minister’s Office, including the awarding of a knighthood to Prince Philip. ...Ms Ley, when asked about Mr Murdoch’s comments, insisted the government...
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S&P gives Fortescue a second wind

234325 From S&P: Standard & Poor's Ratings Services said today that its ratings on Australian mining company Fortescue Metals Group Ltd. (BB+/Stable/--) are unaffected following its revised assumptions for benchmark iron ore prices. On Jan. 20, 2014, Standard & Poor's lowered its assumptions for benchmark iron ore prices (based on Platts' benchmark for 62% iron [Fe] content including costs and freight [CFR] to China) to US$65 per ton for the rest of 2015, and for 2016 (see article titled, "Standard & Poor's Makes Significant Downward Revisions To Its 2015-2017 Metals Price Assumptions,"...
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Australia’s terms-of-trade to fall further

ScreenHunter_05 Mar. 12 11.39 By Leith van Onselen The Australian Bureau of Statistics (ABS) released export and import prices for the December quarter, which portends a smaller than expected fall in Australia's terms-of-trade when the national accounts are released in early March. According to the ABS, export prices were dead flat in the December quarter but were down by 9.1% over the year. By contrast, import prices rose by 0.9% over the December quarter and by 0.3% over the year (see below table). As you can see, the falling oil price has significantly depressed import prices, helping to offset some of the pain from...
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Resources job vacancies down 34% in 2014

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen DFP Recruitment has released its mining and resources jobs index for December, which registered a seasonally adjusted fall of 2% to 67.27, marking nine falls out of the past ten months. Year on year, the number of mining and resources job advertisements has fallen by 34.3% nationally, but by only 4.9% in the last quarter. December saw a 1.2% fall in permanent demand and a 3.0% fall in temporary and contract job advertisements (see next chart). According to DFP, "the principal factor driving demand or the reduction in demand, is the price of commodities... we have...
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D-Day looms for Coalition’s university reforms

ScreenHunter_26 Oct. 16 10.41 By Leith van Onselen The AFR is reporting today that the Abbott Government will dump its controversial university reforms if it is unable to gain passage through the Senate by the end of March. The Senate blocked the university reforms before Christmas, defeating the measure 33 against to 31 for, with Labor, The Greens, South Australian senator Nick Xenophon and Palmer United Party (PUP) senators Zhenya Wang and Glenn Lazarus among those that voted against the Bill. Already, the Government has agreed to a range of compromise measures, including pegging the interest rate on student loan...
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Fortescue howls new suicide threat

url The much awaited FMG December production report is out and is impressive for the feeble-minded: Looks good! Lot's of dirt, though no improvement from previous forecasts. Costs down sharply on oil and set to tumble even further, down a full $10wmt from the September quarter on an annualised basis, taking the all-in breakeven to around $60dmt or even a bit lower. Even the discounting has diminished from September QTR's astonishing 21% to benchmark to a slightly less horrifying 15%. However, none of it matters. This is really just a long suicide note as the more FMG pumps product the worse...
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Daily LNG price update (bear roar)

1 Oil took a caning last night and this morning. WTI is at new lows though Brent is holding up better, down 2% at 48.61. It seems only a matter of time before we go lower. That's the view of Barclays, from the AFR: Barclays slashed its 2015 Brent crude oil price forecast to $US44 a barrel from $US72, while Goldman said it expected prices for West Texas Intermediate crude to trade close to $40 per barrel for most of the first half of 2015. They see a low of $30 for WTI. Worse than analysts, US oil stockpiles are going through the roof as shale producers pump like mad to makeup for price falls, from...
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Former rates bellwether, McCrann sees cut

imgres From Terry McCrann: AFTER 18 months of keeping its official interest rate unchanged, the Reserve Bank will almost certainly cut the rate at its first meeting back for the year next Tuesday. What is absolutely certain is that the key language in RBA governor Glenn Stevens’s post-meeting statement will change. That would obviously be the case if he’s announcing a 25-point cut, but it would change to “signalling a future cut” even in the now unlikely case the rate was left unchanged. ...Now of course the last official word from Stevens, after the last RBA meeting in December, was still that...
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Macro Morning (bearish turn)

marketmorning By Chris Becker A night of de-risking as the US FOMC Meeting produced a not wanted, but warranted "patient wait and see" mode on interest rates and further easing, which did not go down well with US stocks. The S&P500 broke through support on the four hourly charts and on the futures is below 2000 points: Even a stellar earnings result from Apple could not save this fall with the pre-Christmas low of 1968 points the next downside target and if broken, we're in full correction mode down to 1800 points. European stocks were a bit mixed with the FTSE and DAX eking out some minor gains...
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ACOSS charts fairer path to Budget surplus

ScreenHunter_5789 Jan. 29 08.05 By Leith van Onselen The Australian Council of Social Service (ACOSS) has released its pre-Budget submission, which charts a fairer path back to Budget surplus by unwinding inefficient and inequitable tax and welfare arrangements, rather than through direct spending cuts. ACOSS claims that it has identified "more than $13 billion of potential savings in the next financial year, rising to over $18 billion in 2016-17, through measures which it says restore the integrity of Australia's progressive tax system... When two thirds of the structural budget deficit is due to declining revenues, we need a...
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More on the consequences of Fed patience

1 Good wrap from Chris...
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Domain: House price growth continues to slow

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen Domain Group (previously known as Australian Property Monitors) has released its December quarter house and unit price results (below), which recorded a 2.1% increase in house prices over the quarter at the national capital city level, and a 1.7% rise in national capital city unit prices. In the year to December 2014, APM recorded an 7.1% increase in national capital city house prices and a 6.0% rise in unit values - a deceleration from the 9.4% (houses) and 6.8% (units) annual growth reported in the September quarter release. Looking at the capital city breakdown, you can...
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QLD politicians’ $91 million property holdings

ScreenHunter_5775 Jan. 29 06.41 By Paul Egan, Philip Soos & Lindsay David Introduction Following our analysis of Federal and Victorian Parliamentarians’ real estate holdings, attention turns to Queensland, where Premier Campbell Newman has called a snap early election for 31st January, 2015. Australia, including Queensland, is facing a chronic housing affordability crisis. Housing price inflation has outstripped both rents and household incomes since 1996, leading to a residential property market that is unaffordable by both historic and international comparison. Queensland’s elected representatives, like their...
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Polls quack for Dead Duck Tony

sda A couple of polls late yesterday painted a bleak picture for Dead Duck Tony: And from Roy Morgan: ALP support rose to 56.5% (up 2%) on Australia Day weekend, well ahead of the L-NP 43.5% (down 2%) on a two-party preferred basis.  If a Federal Election were held now the ALP would win easily according to this week’s Morgan Poll on voting intention conducted with an Australia-wide cross-section of 2,057 Australian electors aged 18+. Primary support for the ALP rose to 39.5% (up 1%) now ahead of the L-NP 37.5% (down 1%). Support for the other parties shows The Greens at 12% (up 2.5%),...
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RBA rate hawks screech into abyss

images It's been a while since the hawkish minded have had a moment. But yesterday's CPI gave them the brief platform they needed to re-screech their case. From COMMSEC, via Bloomie: “Australia is far different from some other parts of the globe,” said Savanth Sebastian, an economist at a unit of Commonwealth Bank of Australia. “The euro zone continues to worry about the deflationary threat from sluggish growth and sliding oil prices, while inflation remains below the Fed’s target rate in the U.S. But here in Australia inflation is holding at the low end of the Reserve Bank’s...
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Australian bonds give rate hawks the bird

2 So far the bond market is concerned, RBA rate cuts got more likely overnight not less. It's been a wild ride for bond over the past 24 hours as the knee jerk reaction to yesterday's CPI gave bears a moments in the sun, only for clouds to quickly close over and a renewed deluge of buying drove yields to new record lows. Here's the chart: Yes, the 2 year bond is now pricing two full cuts, asap, with yields at record lows. Most of the damage occurred before the RBNZ doved-up and the icing was ladled on after. And the curve flattening continued with the 2/5 year slope closing to as little as...
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RBNZ doves hammer Aussie dollar

imgres The RBNZ is never caught on the hop, from Westpac: The RBNZ’s OCR Review this morning kept the OCR unchanged at 3.50% as expected, but shifted from an explicit tightening bias to an explicit neutral bias with an allowance for rate cuts – a dovish market surprise. The most important change, from the market’s point of view, was a rewording of the policy outlook paragraph, which is the final one in the press release. The sentence “Some further increase in the OCR is expected to be required at a later stage.” was dropped, and effectively replaced by “In the current circumstances, we expect...
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Chep Index shows slowing retail

1 From Deloitte: The sixteenth edition of the AFGC CHEP Retail Index indicates that a slowdown will be seen in year-on-year growth in retail sales. The Index was 4.5 per cent higher in December 2014 compared to December 2013, a slightly higher rate of growth from 4.2 per cent in September 2014. On a quarterly basis, the Index was 4.4 per cent higher in the December quarter 2014 compared to the December quarter 2013. Growth in the Index is expected to slow over the first few months of 2015, to 2.5 per cent over the 12 months to February 2015 and 2.4 per cent over the 12 months to the March...
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