Townsville bust harbinger for Perth?

ScreenHunter_5816 Jan. 30 06.53 By Leith van Onselen The AFR is reporting today that Townsville's property market is being hammered by falling prices and rents as the mining bust takes hold, and a flood of subsidised housing pushes up vacancy rates: Townsville... is struggling to cope with an increase in subsidised housing and rising unemployment, which are driving up mortgage arrears and vacancies. ...“Rents are now falling and investors are unable to find tenants due to the oversupply,” [Domain Group's Dr Andrew Wilson said]... Defence Housing Authority projects had added to the problem... Last year house prices fell...
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Will house prices fall on rising supply?

ScreenHunter_01 Mar. 03 22.48 By Leith van Onselen Stephen Koukoulas (aka "The Kouk") has penned an interesting piece in The Adelaide Review arguing that Australian housing could face a 5% to 10% 'correction' over the next three or so years as strong dwelling supply outstrips falling population growth: During 2014, there has been an important change in the supply and demand fundamentals. Australia’s population growth is starting to slow... [Yet] the most recent building approvals data show a sharp lift in new dwelling construction... The annual pace of new dwelling approvals rose to above 190,000 in April 2014, and in...
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RP Data weekly Australian house price update

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen In the week ended 29 January 2015, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, rose by 0.46% (see next chart). Home prices rose in all major capitals (see next chart). So far in January, home values nationally have risen by 1.18%, with the three biggest capitals rising and Perth and Adelaide falling in value (see next chart). Over the past 12 months, home values have risen by 8.16% at the 5-city level, with all capitals rising in value (see next chart). The next chart plots the daily...
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Australian dollar enters free fall

imgres Interest rates don't affect the currency. The RBA has no control over the currency. Nobody can forecast currency movements. On the excuses ran for years and years of macro mismanagement and hollowing out of the local economy. Well, guess what, they were all bullshit and today we have the proof. As markets embrace imminent RBA rate cuts, supported by a commitment to macroprudential tightening, the Australian dollar is in free fall, down 2% last night to the low $77s. This is despite European QE, despite Fed "patience" on tightening, despite wholesale rate cuts worldwide. Here's the...
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Stuck with Dead Duck another six months

sda From the AFR: Tony Abbott has until the second half of this year to turn around the government’s fortunes or risk losing his job, his colleagues say. Under a contingency plan being actively discussed within senior ranks of the Coalition, ministers and ­backbenchers are willing Mr Abbott to succeed. If not he faces being replaced, possibly by Julie Bishop with ­Malcolm Turnbull as deputy leader and treasurer. “There’s deep concern among the backbench,’’ said a senior member of cabinet. “The question is ‘can Tony turn it around?’ How much more damage can he do in six...
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McCrann pwned

87-terry-mccrann Cross-posted from Forexlive's Adam Button: McCrann is the RBA watcher at the Australian Herald-Sun and he dropped a bomb earlier saying it’s “almost certain” the RBA will cut rates on Feb 3. That report is largely responsible for the plunge in the Australian dollar today. It’s been a see-saw in AUD/USD since the Bank of Canada surprise. The Aussie initially tumbled because suddenly it felt like everyone was going to cut and the OIS market went to pricing in a 40% chance of a cut from 10%. A day or two later, the market began to realize Australian and Canada are different countries and...
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Cross Kouk blames all but himself

Capture From our old friend the Kouk, who MB served up a shellacking for much of the last two years for his uber-aggressive bullishness, hawkish interest rate forecasting and surplus-drive budget ruminations: Kouk officially forecast four rate rises for last year. Here is another sample of his musing from only 10 months ago: The question now being discussed with gusto within the RBA is whether a 2.5 per cent cash rate is appropriate. The answer is obviously a resounding no given the facts that inflation is picking up, exports are booming, consumer spending is strong, dwelling construction is...
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Fortescue blusters and baffles

123 The press has gone FMG hog wild today following yesterday's Q4 production report but the following from the ABC captures much of the picture nicely: NEV POWER: Well there's a wide range of forecasts around where the iron ore price might go. We're in sort of Chinese new year holiday period at the moment, so it's traditionally a time of quite soft market, but there's usually a strong rebound after Chinese new year. So, I suspect we might see a bit of firming post-Chinese new year. SUE LANNIN: Do you blame the big miners like BHP Biliton and Rio Tinto for the current situation, prices that are at...
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Daily iron ore price update (shite steel)

imgres Here are the iron ore charts for January 29, 2015: An improved tone in paper markets on short covering. Note that Dalian did rise firmly but the data has not update this morning so I've left it blank. The same goes for rebar average. Spot firmed a touch. Texture from Reuters: "We see weakness going into the Chinese New Year and probably a bit of a lift afterwards. The Chinese steel mills and iron ore traders we just surveyed are looking to restock a bit," said Bart Jaworski, analyst at Davy Research. He added, however, the firm's survey found a "resounding bearishness" for iron...
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China’s state of debt deteriorates

China-slowdown From Soc Gen's Wei Yao via FTAlphaville: ...a look at the composition of borrowers and lenders reveals the secret behind this exceptional stability. Government bonds, local and central taken together, are barely more than 20% of GDP and households, with 80% of GDP deposits, account for another 20% of GDP debt. Corporates are the biggest borrowers, but two groups of government-related entities – local government financial vehicles (LGFVs, 30-35% of GDP) and state-owned enterprises (SOEs, 90-100% of GDP) – account for the lion’s share. Among lenders, nearly all aspects of China’s financial...
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Links January 30 2015

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Goldman Sachs stays ultra-bearish on gold long term - Mineweb Hasenstab Sees $3 Billion Vanish in Ukraine as One Big Bet Sours - Bloomberg...ouch... What will stop the infernal aluminum premium machine? – Reuters Shell to slash spending by $15bn after oil price collapse - Telegraph Americas: Who Doubts Yellen's Policies? Summers for One – Bloomberg Reality Trumps Theory as Fed Keeps Rates Low – Bloomberg Federal Reserve Won’t Raise Interest Rates Before June, at Earliest – NY Times 1 in 5 American kids rely on food stamps – CBS...
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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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