The five stages of iron ore grief

It’s not altogether easy to judge whether a large resources endowment makes a nation stupid, or being stupid leads a nation to rely heavily upon a large resources endowment. It’s probably both caught in a feedback loop. Either way, Australia is going through some kind of rude awakening when it comes to its iron ore dependency.

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Australian dollar smacked on hawkish Yellen

Two points of interest from the US on Friday night hammered the Aussie dollar back to 78 cents (thank you Madometer). The first was US inflation which came in firm on the surface at 0.3% for the month and 3.1% year on year: According to the Federal Reserve Bank of Cleveland, the median Consumer Price


Red Book: Consumer firms but WA crashes

From Westpac’s consumer bible, the Red Book: ― The Westpac–Melbourne Institute Consumer Sentiment Index rose 6.4% in May from 96.2 in Apr to 102.4. This is a positive result and the highest reading since Jan last year. ― The two driving forces behind this month’s gain are the Budget and the RBA’s May rate cut. The survey detail suggests a


RP Data weekly housing market update

Click to view Core Logic-RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 24 May 2015. 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;


Auction clearances locked in bubble

The national auction clearance rate rose over the weekend, continuing the strongest run of results for around six years. The preliminary national clearance rate was 78.4%, up from the 76.4% recorded last weekend, according to Core Logic-RP Data: Sydney’s clearance rate rose 1.4% to 86.9%, whereas Melbourne’s jumped by 5.7% to 80.0%. Clearances in Brisbane,


Adani coal quango sets deadline

From Matthew Stevens, where there is coal there is life apparently: Australia’s Indian coal adventurer, Adani Group, has inked a September start date to begin off-site work on its controversial $US16 billion Carmichael coal mine project. …There are two core reasons for this determination to seize the moment. First, Adani’s four-year quest to get on


Daily iron ore price update (boing)

Here are the iron ore charts for May 23, 2015: Qingdao spot took off without warning or paper support. Paper is still treading water. Dalian added one point Friday night to be at 421 this morning. Rebar average continues its slow bleed out. The restock rolls on. In steel, CISA mills’ average daily crude steel


China land sales enter “freezing point”

Cross-posted from Investing in Chinese Stocks. From iFeng: 土地市场跌至五年冰点 房企拿地热情不高: “Now to the inventory is still the top priority, we are very careful about second-tier cities, third- and fourth-tier cities we have all withdrawn and in the future will basically no longer purchase land in these areas.” A national housing prices president told reporters. …May 19,


Mapping China’s glide slope

From SocGen’s Wei Yao via FTAlphaville: Three developments in the past two weeks suggest that Chinese policymakers are yielding to the pressure arising from economic deceleration and are easing the implementation of fiscal reform. These policy adjustments are being touted by many as a major retracement of reform and deleveraging efforts, but we do not entirely


Links 25 May 2015

Global Macro / Markets / Investing: Overvalued in Silicon Valley, but Don’t Say ‘Tech Bubble’ – New York Times Is Finance Parasitic? – Uneasy Money The Risks of Owning an Individual Stock – alphaarchitect.com Like Buffett, Another Folksy Investor Turns Patience Into Profit – Wall Street Journal Here’s a great chart showing all the times


Weekend Links May 23-24, 2015

China A cautionary tale from the muddy waters of Chinese business – FT.com Weak Chinese Demand Is Pummeling Mining Stocks Everywhere, Except in China – Bloomberg China pushing ‘build now, pay later’ model to emerging world – Bruegel Development Finance with Chinese Characteristics? – Project-Syndicate The Irresistible Rise of the Renminbi – Project-Syndicate China getting


ASX at close

Chris Weston, Chief Market Strategist at IG Markets Volatility in the equity markets has fallen off a cliff today, with tight ranges seen in Australian and Japanese markets. China, however, has put on a further 2% (on massive volume) and continues to soldier on as unused funds from recent IPO’s have been repositioned back into


Pascometer talks super sense

Fairfax’s Michael Pascoe (the “Pascometer”) is talking way too much sense these days, today tackling the prickly issue of superannuation: Superannuation tax expenditure – that is, what the various super tax breaks cost the budget – will soon match the cost of the actual pension and do very little to reduce pension costs… “The tax


Inequality worsening, but Australia better than most

By Leith van Onselen The OECD has released a new report on inequality today, which revealed that two-fifths of the populations of developed countries have gained little over recent decades, driving rising income and wealth inequality that is damaging economic growth. The report finds that wealthiest 10% of the population now earns 9.6 times the


Big iron struggles to see the light

The big miners took off this morning at the open but have been selling all day and are now flat with FMG down 1.5%. There’s not much reason for anything else. To the indexes: Idiocy spreads are still closing:     Juniors are falling too with BCI now down 25% since it perched itself in


When pork fails

By Leith van Onselen Hot on the heels of its calls to “end the age of entitlement”, the Abbott in early 2014 provided a dubious $16 million grant provided to Cadbury in Hobart. It was revealed later that Alastair Furnival, who was at the time chief of staff to Assistant Health Minister Fiona Nash, had


Super industry talks book on pension changes

By Leith van Onselen Industry Super Australia (ISA) has released some perverse analysis today arguing that modest income earners would lose the most from the Government’s tightening of the assets test for the Aged Pension. From The Canberra Times: …middle income Australians would be dealt the heaviest blow – losing more than $100,000 over their


APPEA: No new LNG projects

From Goldies: Further Australian LNG FIDs in the next several years unlikely… We provide feedback from the Australian Petroleum Producers & Explorers Association (APPEA) conference. Australia has 6 LNG projects under construction which are approaching start-up in 2015-17. Further LNG projects in Australia appear increasingly unlikely over the medium term, in the absence of structural labour market reform (which looks


Madometer signals top of everything

From the contrarian indicator The Madometer today: So it is that we face the development of a positive feedback loop. We have a sudden boost to confidence, as the nation celebrates a more pragmatic budget and the apparent end of the RBA’s easing cycle.   This adds momentum to an already solid rebound in consumer spending, encourages a


China headed for 5% growth

From Lombard Street Research with some eye-popping charts and spot on in my book: China’s economy has slowed sharply and this will have a significant impact on global trade and GDP. The authorities are likely to respond to this, mainly through targeted monetary and fiscal stimulus. But as they don’t want to compound the imbalances that have caused


Westpac bulks up for 40 year dirt boom

From Reuters: A recent entrant in Asia’s commodities markets, Australia’s Westpac Banking Corp is ramping up to take advantage of a commodities “supercycle” that it says has at least another 30 years to run. While some global banks have exited commodities due to more stringent regulations, Westpac is setting itself to support a deeper push


Woeful affordability thrust back under spotlight

By Leith van Onselen The AFR has produced an alarming report today on the rapidly declining levels of housing affordability across Australia, with families in Australia’s three biggest cities struggling to find well-located accommodation for under $750,000: Prospective purchasers with $750,000 to spend on a three-bedroom house in the first four months of the year had


Opposition parties too late the hero on TPP

By Leith van Onselen At the eleventh hour, Labor, the Greens and the cross-benchers have united to raise concern about the Trans-Pacific Partnership (TPP) trade deal, which is entering its final stages of negotiation. From The Guardian: The Australian parliamentary working group, founded by Labor’s Melissa Parke, Greens senator Peter Whish-Wilson and independent senator Nick