ASX at the close

ScreenHunter_31 Jun. 04 16.42 Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Asian markets are off to a fairly good start to the week, despite some soft leads from US trade. While the economic calendar is relatively quiet today, it seems China has taken on the jump in industrial profits and run with it. There have also been some reports suggesting China is considering opening the capital account to allow access between the Shanghai Composite and Hang Seng in a plan labelled ‘Shanghai-Hong Kong Connect’. China released its June industrial profits data yesterday and the data showed a 17.9% jump...
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Adani’s monster coal project gets go-ahead

imgres The Guardian is reporting that: The Australian environment minister, Greg Hunt, has approved a $16.5bn resources project that will lead to the creation of the largest coal mine in Australia, and one of the largest in the world. Hunt has imposed 36 conditions, primarily aimed at protecting groundwater, on the Carmichael coal mine and rail project, which will dig up and transport about 60m tons of coal a year for export. The huge Carmichael project, overseen by the Indian mining company Adani, will consist of a network of open cut and underground mines in the Galilee Basin region of central...
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Pascometer burns red on neutral cash rate

imgres30 Weeoo, weeoo, weeoo. Well, it's confirmed now, interest rates aren't going to get anywhere near 4% in this cycle. The Pascometer today quotes Shane Oliver to argue that that's where they're headed: As you watch you may wish to recall Shane Oliver's strange bubble two-step. In 2011, we had the same dance, with Dr Oliver describing a bubble beautifully yet unable to use the term. In 2008, Dr Oliver reckoned it was a bubble, and the valuation is much the same today. When rates hit 3% and it starts to come apart it will no doubt be a bubble again! But enough truth. Let's just be...
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Build up or out? Auckland needs both

ScreenHunter_02 Jun. 14 21.43 By Leith van Onselen Hayden Duncan, the head of New Zealand's largest real estate company, Harcourts, has provided an interview to Interest.co.nz, in which he expressed alarm at Auckland's expensive home prices and urged the city to build up instead of out in order to cope with population growth and improve housing affordability: The average price of homes sold in Auckland by Harcourts last month was $721,553... "There's no doubt that's a frightening number," Duncan said. "It's not being driven by cheap money, it's not being driven by reckless borrowing, it's not speculation," he...
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Chanos, Garnaut: China anti-corruption serious

Jim-Chanos-inside-small From Bill Bishop at Sinocism today: Over the weekend John Garnaut, Fairfax Media's Asia Pacific editor and star China correspondent, posted interesting comments on Twitter in reaction to a recent Financial Times column arguing that Xi’s corruption crackdown would fail: Methinks the world is still under-estimating Xi Jinping's corruption purge bc Xi sees himself as clean http://on.ft.com/1tzxhQ8 And: under-estimating Xi's resolve, his own sense of moral standing and consensus that CCP was rotting to its core 25 months ago Bloomberg documented the wealth of Xi’s extended...
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Iron ore futures fly on stimulus hopes

logo Via Forexlive, China Securities Journal  reports on the price monitoring center of the National Development and Reform Commission: Chinese economy is expected to improve further in the second half of 2014 Inflation is seen stable – full year CPI growth estimated at around 2.3% Said the PBOC should not boost overall liquidity any more via monetary policy given the fast M2 growth at the end of June Said the government should look to gradually relax or totally lift housing purchase limits to prevent a sharp and overly-rapid fall in prices The Chinese press is reporting that as many as...
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Coalition to pull back military pork?

ScreenHunter_3500 Jul. 28 11.40 By Leith van Onselen I noted previously how the Coalition had flagged spending tens-of-billions of taxpayer dollars to local defence manufacturing, comprising locally built armoured vehicles, submarines and warships. Today, it has been revealed that a defence discussion paper to be released tomorrow by Defence Minister, David Johnston, will question the notion that Australia’s next fleet of submarines should be built at home. From The Canberra Times: “There is significant debate emerging about the future submarine and whether it should be built in Australia. This debate must consider the...
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Coalition declares war on the unemployed

ScreenHunter_3499 Jul. 28 09.49 By Leith van Onselen The Abbott Government is set to expand its controversial "Work for the Dole" program to include all job seekers between the ages of 18 and 49 years of age. Under the new program, which is set to begin from 1 July 2015, those aged 18 to 30 will be required to work 25 hours per week for six months out of 12, while people aged 31 to 49 will have to work 15 hours for six months out of 12. Those between 50 and 60 will be required to participate in an approved activity for 15 hours per week for six months every 12 months, but will have the option of participating in the Work...
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Has China shut the money laundering pipe?

HSBC money laundering Apparently HSBC has shut off its Chinese yuan exchange service: I can't find any external corroboration of this, nor any new news about the money laundering scandal in China so any shift in the environment around Chinese money flowing into Australian real estate is best treated as apocryphal at this...
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World wakes to APRA paralysis

imgres Bloomberg has a penetrating piece today hammering RBA/APRA complacency on house prices, which will be read far andwide in global markets (as well as MB is!): Central banks from Scandinavia to the U.K. to New Zealand are sounding the alarm about soaring mortgage debt and trying to curb risky lending. In Australia, where borrowing is surging, regulators are just watching. Australia has the third-most overvalued housing market on a price-to-income basis, after Belgium and Canada, according to the International Monetary Fund. The average home price in the nation’s eight major cities rose 16...
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Dump stamp duties to facilitate labour mobility (members)

ScreenHunter_3495 Jul. 28 08.37 By Leith van Onselen The Business Council of Australia (BCA) has urged the federal government to implement policies that facilitate workers relocating interstate or overseas to where they are needed. From The AFR: Members of the BCA said the government must invest in infrastructure and housing to make less developed states more attractive to workers. Companies should also pay incentives to encourage the labour force to move, they say. “Our fly-in, fly-out concept is very unique to Australia and reflects our cultural mindset that we are just not willing to move for work,” KPMG chairman...
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Australian Ebola a matter of time?

Guinea_Sierra_Leone_Ebola_Map_April_14_2014_png Bloomberg is reporting that to Americans have fallen victim to the awful Ebola virus: Two U.S. citizens are being treated for Ebola in Liberia, and Nigeria reported its first ever case, as the worst outbreak of the disease on record spread to Africa’s most populous nation and largest economy. Kent Brantly is in isolation and receiving treatment, North Carolina-based Samaritan’s Purse said in a statement on its website. Brantly, a doctor, is the medical director of the aid charity’s Ebola center in Monrovia, Liberia’s capital. Nancy Writebol, who works for the manager of the hospital...
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Cutting tax concessions a fairer path to surplus (members)

ScreenHunter_2531 May. 22 07.09 By Leith van Onselen Ross Gittins has posted a well-argued article today arguing that the Coalition's Budget repair job was ill-targeted and should have sought to cut Australia's myriad of tax concessions, rather than targeting important social programs: Joe Hockey and Tony Abbott are perfectly right in saying we need to get the budget back into surplus, we need to make a start now and that this will inevitably involve unpopular measures. But this makes it all the more puzzling that, lacking a majority in the Senate and being unable to claim a "mandate" for breaking many election promises,...
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Wayward estimates of the neutral cash rate

url MB is big fan of Westpac's Bill Evans but he's wrong today: Westpac is maintaining its call that the RBA will be raising rates from the September quarter next year. In that regard an important issue is how far rates might rise in the next tightening cycle. The best approach in making that assessment is to forecast the new "neutral" rate. The "neutral" rate is defined as that real rate which keeps GDP growth at its potential with inflation around the RBA's target. Rates above "neutral" will be constraining growth while those below "neutral" will be stimulatory for growth. The second...
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Auction clearances record broad-based falls

ScreenHunter_19 Mar. 13 13.12 By Leith van Onselen The national auction clearance rate declined over the weekend, with Sydney, Melbourne and Brisbane all recording falls. According to RP Data, the national weighted average preliminary auction clearance rate was 67.3% over the weekend, which was down 3.4% from the 70.7% preliminary clearance rate reported last weekend. Sydney’s clearance rate fell by 1.0% to 75.9%, whereas Melbourne’s fell to 66.1% (last weekend 69.6%). Brisbane, which typically only has a small number of auctions, experienced a sharp fall in its clearance rate to 44.2% from 54.1% the weekend before....
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RP Data weekend property market update (members)

ScreenHunter_18 Mar. 18 17.58 Click to view RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 27 July 2014. This week’s report includes: Latest weekly dwelling value results; Auction results & clearance rates; Latest median house & unit prices; Average time on market & vendor discounts; Mortgage market activity; and New listings...
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Daily iron ore price update (port draw) (members)

rtye Here are the iron ore charts for July 25, 2014: Paper markets bounced. So did spot. It appears largely to have have been driven by the news that port stocks saw a solid draw down on the week, 1.25 million tonnes, to be slightly less ridiculous. That may suggest that despite the destock that's underway that there is enough demand to draw on the port pile. If true it would mitigate against the argument that we're about to see materially deeper new lows. The steel and iron ore market remains weak overall with rebar average still falling and right on new post-GFC lows and the BDI cape...
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Why the big iron ore miners are stuffed too (members)

ItsATRAAAAAAAAAAP Eureka Report's Tim Treadgold gives me a serve today for being bearish on iron ore: If the iron ore price has fallen by more than 40% over the past two years why are the biggest producers of the steel-making material continuing to expand production? ...Managers in most other industries can only dream about producing a product for around $45 a ton and selling it for $94 a tonne. Misunderstanding the margins available to the world’s major producers of iron ore is one of the common mistakes when analyzing the biggest miners of the stuff. Another mistake is to image that somehow the world is...
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China’s evolving QE

U468P886T1D125925F12DT20140724101634 Cross posted from Investing in Chinese Stocks. This  headline is deceptive, China sees more capital inflows in H2, uncertainties linger: "The renminbi (yuan) exchange is now near equilibrium and two-way cross-border capital flows have become a new norm," he said. ......China was under pressures from capital inflows in the first quarter, but the tide turned in the second quarter as volatility in the yuan fuelled outflows, Guan said. ......China's central bank and commercial banks sold 88.3 billion yuan ($14.3 billion) worth of foreign exchange on a net basis in June, according to a Reuters...
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Chinese provincial growth rates pick up

images17 Cross-posted from Investing in Chinese Stocks. This first chart shows the GDP growth rates for each province through the first half. The provinces way off, such as Gansu and Yunnan, are less important economically than Zhejiang, which is off by 10% (7.2% versus 8% target). Hebei province picked up considerably from it's first quarter growth rate of 4.2%——its first half growth rate climbed to 5.8%, which implies a roughly 7.4% growth rate in the second quarter. The second chart below has the first quarter GDP growth rate (right column) and the first half growth rate, but Hebei and Shanxi are cut...
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Canada and China sign LNG MOU

imgres I don't see this kind of stuff happening here. Everywhere but here perhaps: The Province of British Columbia and the National Energy Administration of the People’s Republic of China signed a Memorandum of Understanding (MOU) on Thursday to strengthen energy trade and investment. “The continued growth of our economies depends on foresight and partnership,”said Premier Christy Clark. “With our dependable, abundant supply of natural gas and China’s need for new sources of energy, we have an opportunity like never before to work together and develop a strong, competitive LNG...
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Links 28 July 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Draghi Safety Net Becomes Blindfold to Risk as Bonds Soar - Bloomberg Corporatism not capitalism is to blame for inequality - Financial Times Greenspan says bubbles can’t be stopped without ‘crunch’ - MarketWatch A house is a horrible investment - Brian Lund Has the Fed doomed buy-and-hold? - Pension Partners Why buy-and-hold investing is impossible - Chuck Jaffe Does the small cap premium exist? - Monevator Amateurs and professionals think about investment risk very differently - Blackrock Blog The financial crisis turned off a whole...
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Weekend Links – July 26th-27th 2014

reynard Global Macro / Markets: Signs of things to come - Economist I.M.F. Reduces Its Forecast For Global Growth in 2014 - AP Don’t Tell Anybody About This Story on HFT Power Jump Trading - Bloomberg Greenspan says bubbles can’t be stopped without ‘crunch’ - Market Watch Corporatism not capitalism is to blame for inequality - FT Amazon’s Ambitious Bets Pile Up, and Its Losses Swell - NYT Amazon remains great for customers, not for shareholders - TechCrunch Americas: Obama Seeks to Close Loophole That Firms Use to Shield Profits Abroad - NYT Comments on the New Home...
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ASX at the close

ScreenHunter_31 Jun. 04 16.42 Chris Weston, Chief Market Strategist at IG Markets It’s been a fairly quiet day’s trade in Asia today and this is perhaps a good time for money managers and strategists to touch base with clients ahead of what could be key week for capital markets. Geo-politics is never far away; while the tensions have failed to really shake confidence for any great length of time, developments will be watched closely. This means shying away from Russian assets, despite a view that markets here offer good value. The US accusing Russia of planning to arm the separatist movement could keep risk assets...
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AMA warns on risks lurking in TPP trade deal

ScreenHunter_3418 Jul. 23 10.44 By Leith van Onselen The Australian Medical Association (AMA) has urged the Australian government to reject provisions in the Trans Pacific Partnership agreement (TPP) that “could undermine the Pharmaceutical Benefits Scheme and compromise the ability of governments to improve public health”: The AMA Federal Council has called on the Federal Government to reject “any provisions in trade agreements that could reduce Australia’s right to develop health policy and programs according to need”. The Association said it was concerned that aspects of the proposed TPP could be used to...
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