ASX at the close

ScreenHunter_31 Jun. 04 16.42 Chris Weston, Chief Market Strategist at IG Markets With the S&P 500 trading to a new record high and continuing to eye the top of the multiyear channel resistance, there seem to be a number of countertrend moves taking place. Around the Asia region today, equities are generally offered, with the Nikkei leading the way. The USD has been sold, predominantly against the JPY and AUD, while the JPY has been the star as it rallied against all G10 currencies. Commodities are generally flat, although energy is seeing better buyers. A few thoughts from the trading day: 1)      There seems to...
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Iron ore miners flog dead cat as Dalian heads for Hades

awfq3 Finally today some relief for the army of reckless tards that pile into iron ore every time it falls. The majors are both up 1% after yesterday's 3% shellacking that broke all sorts of technical levels and set them up for more pain, much more, in my view. FMG is also enjoying a 3% bounce but is still languishing far below the former support line and now resistance level at $2.92. And so, onto the comparative index charts: The majors are breaking down, however the idiocy spreads are trying but failing to close given the speed of the iron ore decline: But the juniors are showing no such...
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Phat Dragon sees rough road for China developers

rth35 From Westpac's Huw Mackay: Phat Dragon has allocated a considerable portion of the available column inches in this chronicle to housing sector activity of late. A week ago, the very welcome signs of stabilisation in housing starts, and to a lesser extent sales, were presented, alongside a further update on the promising trend in daily sales activity post Golden Week, with Beijing highlighted as the exemplar in this regard. New information coming to hand in the intra-chronicle period - the October update on house prices (70 city series) - showed that while the market remains under...
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What’s the cost if energy assets get stranded?

ScreenHunter_03 Jul. 23 09.31 Cross-posted from The Conversation: In the last week the US and China announced goals to reduce emissions by 26-28% and cap emissions by 2030 respectively. India also signalled its aim to end coal imports within 2-3 years. These are telling signs of a move away from fossil fuels by some of the world’s biggest emitters of greenhouse gases, including countries that are key importers of Australia’s coal and gas. The latest report from the UN Environment Programme (UNEP), released this week, called for an end to carbon pollution by 2070, followed by action to reduce greenhouse gas emissions...
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Goldman sees 2015 crapola economy

Crapola-500x500 This is two days old now but is worth revisiting: There are two main changes in our Australian economic forecasts. Firstly we have shaved our 2015 GDP growth by 30pps from 2.3% to 2.0%. This compares with consensus forecasts for 2.9%. The core themes behind our bottom-of-consensus forecasts that we held through 2014 appear to be still the central themes; 1. A terms of trade shock from lower commodity prices driving nominal income growth back towards stall speed. 2. A household income shock as an uncompetitive exchange rate and labour costs coalesced with 'cost out and capital...
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Population ponzi masks fall in Victorian living standards

ScreenHunter_5103 Nov. 21 11.35 By Leith van Onselen Victoria's population growth fetish has once again been shown to be false economy, with today's State Accounts, release by the Australian Bureau of Statistics (ABS), showing a 0.2% fall in Victorian gross state product (GSP) per capita in the year to June 2014, despite a 1.7% headline increase (see next chart). The ACT also registered a fall in per capita GSP, down 0.9% over the year, whereas the mining strongholds of Western Australia and the Northern Territory registered 2.6% and 4.8% rises respectively, with the former's due to rising export volumes and the...
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RBA up-sells dirt phase three

images Find below a fresh (or, rather, stale) speech from the latest RBA doyen to be using the mining rear vision mirror. For all of its happy points, the analysis overlooks one crucial fact. If Chinese demand isn't growing then neither are Australia's export earnings. It simply does not matter that demand is strong if it is not stronger than last year, especially if we've entered oversupply. Rate of growth is all that matters to an economy hooked on expanding dirt exports. It's increasingly obvious that Chinese steel output has peaked, given it's been falling all year ex-exports, despite the's RBA...
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Uber in guerilla war with protected taxi interests

ScreenHunter_5102 Nov. 21 10.06 Cross-posted from The Conversation: I took two separate rides with two different UberX drivers yesterday. At no time did I feel as though my life was in danger. But in danger I was, at least according to several factions debating the safety of my choice to have an unregulated stranger drive me from one location to another. You see, a war is brewing. Uber, it appears, has been at war since its inception not only with other transport providers, local government and councils, but an increasing group of journalists. This war seems to have reached a boiling point over the past few...
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Australia hits peak car use

ScreenHunter_277 Nov. 14 12.57 By Leith van Onselen Two reports are out about how Australia is losing its love affair with cars, with younger Australians shirking car ownership and the nation reaching "peak car use". The first, aired on ABC's 7.30 Report last night, claims that the enthusiasm for car ownership displayed by the baby boomers is not shared by the younger generations, which is driving an overall decline in car usage: ...while the number of cars per person has risen, the number of new car sales per person has dropped sharply since the GFC. They're now at their lowest in 20 years. The question is: why? If the...
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UK Tories: Abbott a “16th century flat-earther”

tumblr_muouxh3J3N1rwjpnyo2_500 You know you're anti-climate change agenda is in trouble when: the two world super powers turn against you the third largest economy in the world gives you a serve everyone else moves towards new and more aggressive policy action, and... your traditional conservative allies start seeing you as a pre-science troglodyte, From the SMH: The attitude of Prime Minister Tony Abbott to the global challenges of climate change is "eccentric", "baffling" and "flat earther", according to a group of senior British Conservatives. The group, including Prime Minister David Cameron's Minister for Energy...
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Macro Morning: Oil firms

marketmorning By Chris Becker The S&P500 headed to another record high last night with buyers all through the session as the CPI and initial jobless claims prints came in bang on expectations: The PMI deluge overnight began in Europe and although all came in above expansion, they were well under expected readings showing continued signs of weakness in the currency union. This pattern continued in the US but then the Philly Fed print was way above expectations (nearly double) and is being written off as an anomaly by most. European stocks were mixed at best with the FTSE slipping 0.25%, the French...
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“Sell ‘em dirt” toasts the Budget

toaster-fire5x384 By Leith van Onselen A fortnight ago, forecasting firm, Macroeconomics, forecast that the Federal Budget revenues would be slashed by $52 billion over four years courtesy of slumping commodity prices, falling mining investment, and weak income growth. Today, The Australian reports that falling commodity prices (iron ore in particular) will punch a $10 billion hole in the Budget this year, pushing the deficit towards $40 billion from the previously forecast $30 billion: Mr Hockey acknowledged the growing pressures last night and warned that a slowing in Chinese manufacturing could also spell...
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Why Westpac is wrong on a rising Australian dollar

1343012726_1pesoV From the AFR: Though Reserve Bank Australia chief Glenn Stevens is doing all he can to talk the dollar down, Westpac Banking Corporation, the economy’s most-accurate forecaster, said it is set to rise well above its current value. ...“The failure of US yields to rise in response to decent economic data does raise more serious questions about whether the US dollar is primed for a sustained rally, particularly against high-yielding currencies such as the Aussie,” said Westpac strategist Sean Callow. “Over the next few months the Aussie will trend higher against the US dollar.” Westpac...
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LNG white elephant to trample eastern economy

roaring-elephant-john-keaton Yesterday I attended the latest in the Melbourne Economic Forum series, on energy, and there was one paper that stole the show. Professor Philip Adams of Victoria University unleashed the Centre of Policy Studies model of the Australian economy on the question of whether the LNG boom will increase welfare in the long run and the results were stunning. Here it is: 1. Introduction What follows is an assessment of the economic impacts of two key developments in the gas market on the East Coast of Australia: 1. the construction and operation of three large LNG projects in QLD utilising gas generated,...
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Daily iron ore price update (raising the dead)

anvil1-200x2001111 Here are the iron ore charts for November 20, 2014: It's been a long time between flying anvils but we have one today, finally. Paper markets are still awful with Dalian pricing in the range of $61 by May. Despite its turn, the 12 month swap spread to spot is still very wide and in the past a move to contango has been a very reliable guide to turns in the physical market. Rebar average is now catching down after its APEC head fake but, as you can see in the last chart, the spread from it to iron ore spot is now at its most narrow since the GFC and as a rough guide to steel mill...
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World Steel zero growth again

October 2014 From the World Steel Association: World crude steel production for the 65 countries reporting to the World Steel Association (worldsteel) was 137 million tonnes (Mt) in October 2014, the same compared to October 2013. China’s crude steel production for October 2014 was 67.5 Mt, a slight decrease of -0.3% compared to October 2013. Elsewhere in Asia, Japan produced 9.4 Mt of crude steel in October 2014, a decrease of -0.5% compared to October 2013. South Korea produced 6.2 Mt of crude steel in October 2014, up by 4.5% on October 2013. In the EU, Germany produced 3.5 Mt of crude steel in...
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US gives commodity definancialisation a big shove

imgres The commodity super cycle is going bust for three interlocking reasons: China is in structural transition away from fixed asset investment as its growth driver and as the dominant buyer of commodities is hitting demand hard. The US recovery has restored its currency as the cleanest of the dirty shirts and the US dollar is in a bull market meaning dollar-priced commodities all suffer a monetary deflation. The move by post-modern markets into commodity trading is reversing spectacularly. The fad of seeing commodities as an asset class is passing and this definanicalisation process means hoarding...
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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 20 November 2014, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, fell by 0.24%.  It was the first decline in nine weeks (see next chart). Home prices fell in three major capitals and rose in two (see next chart). Since the start of the year, home values nationally have risen by 7.43%, with all major capitals except Perth rising in value (see next chart). Over the past 12 months, home values have risen by 8.79% at the 5-city level, led by Sydney and Melbourne (see next...
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Why house prices are rising more than credit

ScreenHunter_02 Apr. 09 08.45 By Leith van Onselen Just over a year ago, Victoria's Department of Sustainability and Environment (DSE) was closed and amalgamated into other departments, and with it I thought its excellent data on the number of housing transfers and mortgage lodgements/discharges had been lost. Searching the Victorian Government's database last night, I stumbled upon this same data on the Department of Transport, Planning and Local Infrastructure (DTPLI) website, which shows a massive surge in the number of mortgages and transfers over the past year 18 months (see below charts). As you can see...
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More consumer surveys see Xmas grinch

imgres We recently saw a rather depressing take on Xmas sales this year in the Westpac Red Book. We've also seen the Deloitte Chep Index predict lousy Xmas volumes. Now, from Banking Day: Yesterday Commonwealth Bank released results of a survey showing that consumers expect to spend less this year than last. CBA has estimated that average Christmas spending per head on gifts, holidays, entertainment, extra food and drink and Boxing Day sales (covering the period from December 1 to January 6 next year) would be A$1079 per head, compared with $1116 per head in 2013.This adds up to an estimated total Christmas...
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Links 21 November 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Manufacturing is weakening around the globe - Bespoke Performance of the global financial asset portfolio - Pragmatic Capitalism Hugh Hendry: ’Desperate times breed desperate measures for central bankers - MoneyWeek Earnings seasonality and stock returns - Alpha Architect $75 oil makes shale oil unprofitable - Bloomberg Junk bond banking boom peaks - Bloomberg Junk bonds flourish amid low interest rates - Dealbook Currency carry trades are not what you think - VOX No country for young people - The Economist North America: Global economy's...
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ASX at the close

ScreenHunter_31 Jun. 04 16.42 Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Equities are mixed in Asia as investors struggle to disseminate the latest FOMC meeting minutes. While most analysts feel the minutes were a slight downgrade from the moderately hawkish statement immediately after the meeting, it seems investors feel the Fed is continuing to pave the path towards tightening. Given we’ve had significant Fedspeak and economic data since the last meeting, perhaps the ‘dovish’ take on the minutes was a little overdone. Bottom line, the Fed is now in ‘data dependant’ mode and it is a matter...
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There are no takeover targets in iron ore

538078 From  Bloomie, some people just don't get it:: Today's plunge in iron ore is creating tomorrow's acquisition targets. ...Among the most vulnerable are Western Australia's Atlas Iron, BC Iron and Gindalbie Metals, according to stock broker Fat Prophets. All three - valued at less than $US200 million ($232 million) after losing two thirds of their value this year, or more - are struggling with production costs that are too high for the current market. Private funds such as X2 Resources, which has raised as much as $US3.75 billion from investors, may be able to pick up bargains before an iron-ore...
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China makes it official: No more coal

lets_call_the_coal_thing_off From the AFR: China’s coal use will be permitted to grow by only 5 per cent over the next seven years after the world’s biggest polluter unveiled a cap on coal consumption for the first time. The State Council – China’s Cabinet – said the country’s annual coal use would be halted at 4.2 billion tonnes by 2020. Last year, China burned 4 billion tonnes of coal, with around 9 per cent being imported, according to the state-run China Daily. That's that,...
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More Australians shift to SMSFs

ScreenHunter_04 May. 21 13.20   By Martin North, cross-posted from the Digital Finance Analytics Blog APRA just released their quarterly super statistics to September 2014. Superannuation assets totalled $1.87 trillion at the end of the September 2014 quarter. Over the 12 months to September 2014 this represents a 9.6 per cent increase. Total assets in MySuper products was $378.1 billion at the end of the September 2014 quarter. Over the 12 months to September 2014 this represents a 128.2 per cent increase. Of these, $1.14 trillion are regulated by APRA and these grew by 2.2% since the previous quarter, whereas $...
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