Big iron retraces

BHP is down 2.5% today as oil gives it whack. RIO is also down hard 1.5% and FMG is flat. To the indexes:   The idiocy spreads are flat again: Juniors too:         Dalian is off 3 points from this morning as we again pivot around the $60 point of control.

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David Leyonhjelm misses the point on taxes

By Leith van Onselen David Leyonhjelm, Liberal Democrat Senator for New South Wales, has penned a spirited piece in Online Opinion arguing that the level of taxation is far too high, both in a historical sense and when compared against other developed nations: The Coalition, Labor and the Greens will tell you that Australia’s tax


Chinese consumer stuck in doldrums

From Westpac: The absolute level of the CSI indicates that Chinese consumers are still anxious about their personal financial wellbeing and the economy more broadly, despite the major shift in the policy stance since late last year. Note that the 100bp cut in the required reserve ratio (April 20) is fully captured by this survey,


Construction tumbles down mining capex cliff

By Leith van Onselen The ABS has released data on the value of construction work done for the March quarter of 2015, which registered a seasonally-adjusted 2.4% fall in total construction activity over the quarter and an 8.8% decline over the year. The result disappointed analysts’ expectations of a 1.4% fall over the quarter. The


Busted Pascometer throws pin at bubble

From the reformed Micheal Pascoe today: The reporting of banks being pulled into line on investor loans has concentrated on one part, re-establishing a differential between investor and owner-occupier rates without being able to spell out how big that differential might be. It won’t matter much anyway. But there is considerably more to APRA’s intentions than that, as


Citi destroys long run iron ore forecasts

More today from Ivan Szpakowski of Citi, my new favourite analyst at Bloomie: “The next decade is shaping up to be a complete reversal of the past decade…Perhaps the greatest structural challenge facing the iron ore market is the rolling over of Chinese iron ore demand, driven by declining domestic steel demand and rising scrap availability…As


RBA mulls Australia’s GFC bank run

RBA deputy Phil Lowe gives a nice speech today canvassing Australia’s 2008 bank run and what has been done since then to prevent a repeat occurrence. It is worth reading in full and remember while you do so that this is why regulators are now moving to slow mortgage credit growth (far too late in


Goldman sees weak GDP

We’re heading into the first quarter GDP release next week and Goldies is not up beat: Bottom line: Ahead of the official update next week, preliminary trade data point to a $1.0bn widening in Australia’s international trade deficit in 1Q2015 and an ~10bp drag to growth from net exports. On balance, this data are slightly weaker than


How far can the dollar-exposed industrials bull run?

From The Australian: Australian companies with US dollar earnings will be prime property over the next 12 to 18 months, according Shawn Hickman of Market Matters. “I think the $A will eventually fall well under 70c, significantly aiding companies with $US earnings,” Mr Hickman said. “The pursuit of companies with $US earnings is a mature


General Gotti launches total war on youth

By Leith van Onselen Dad’s Army’s Robert Gottliebsen (“Gotti”) is back today deriding Australia’s “young journalists” and defending the rights of older superannuants to avoid paying taxes: When is a retiree rich? The catch cry among the young journalists in many media organisations is that the real problem for the nation is that we have


Macro Morning (the bear awakes)

By Chris Becker This is what happens when you have one market taking a long weekend with US traders coming back and hitting the sell button and buying USD en masse! A very solid US durable goods order plus surprising consumer confidence prints gave further impetus to Fed rate hikes, so its a case of good


Why China’s stock rocket is pointed at Mars

From Goldman via Zero Hedge: China’s policy response to the global financial crisis created one of the largest debt buildups as a share of GDP seen anywhere in the world over the past 50 years. Cognizant of the risks of such a large credit buildup, since early 2013 (when the current Chinese leadership took over),


Tampon GST debate pulls wrong strings

By Leith van Onselen So, it looks like Joe Hockey’s pledge on Monday night’s Q&A Program to dump the GST on women’s sanitary products, like tampons, has the support of the states, which means there’s a good chance that it will be implemented. Viewed in isolation, the idea makes sense. Given that condoms have no


Is this the next big breakdown of the Australian dollar?

MB’s five drivers model of the Australian model nicely projected the recent breakout in the Aussie. As the battler is now sinking again let’s update the model. The five drivers are: interest rate differentials; global and Australian growth (more recently this has become more nuanced for the Aussie to be more about Chinese growth); investor


Mining bust crashes Pilbara property

By Leith van Onselen The mining bust in the Pilbara is fast turning into an epic housing bust, according to the Real Estate Institute of Western Australia: Median house prices in the Pilbara town of Karratha have plunged almost 34 per cent. …the average price in Karratha has fallen to $450,000, compared to $650,000 in


The great land banking scam exposed

Property development can be a dirty business, particularly when it comes to land-banking, which is the speciality of Australia’s largest developers. Land-banking involves the speculative buying of large parcels of land that are currently unsuitable for development in the hope of future development potential. But hope alone is not a business strategy. How can land


Why a Chinese Fortescue is against the national interest

A little PR faux pas with the AFR running a headline story on Fortescue’s own Singapore sling: Fortescue Metals Group established a company Singapore that could buy and sell its iron ore more than a year before it started attacking its rivals for doing the same thing. The company, called Fortescue International Marketing, is incorporated and domiciled in Singapore. Still dormant, it


Daily LNG price update (hammered)

The Brent oil price was hammered 4% last night to $63.93 as I write. The causes were threefold. The US dollar surged. Worries about a return of shale production are increasing and Iraq pledged a huge surge in production, from Bloomberg: The nation plans to boost crude exports by about 26 percent to a record


Daily iron ore price update (pricing power)

Here are the iron ore charts for April 27, 2015:    Spot still strong with Tianjin benchmark up $1 to $62.10. Paper less so with Singapore dancing on the spot and Dalian flat overnight at 435 after yesterday’s bounce. Rebar average is still soft. I don’t think we’re going to break higher. $60 looks a


Chinese bad debt rockets

Cross-posted from Investing in Chinese Stocks. Reuters: China’s top banking regulator warns of rising bad loans, credit risk China’s top banking regulator warned of rising credit risk from real estate, local government debt and unconventional forms of finance, sources with direct knowledge told Reuters, highlighting Beijing’s struggles to prevent risky debt from engulfing a stuttering


Links May 27, 2015

Asia China’s bid to lock in cheap iron ore – CNBC China boosts oil trading visibility, market power – Reuters, Clyde Russell Japan lesson on China debt: extend, don’t pretend – Reuters Chinese Premier Li Keqiang returns from South America with a caseful of deals – SCMP Oil rich East Timor weighs the risks of


ASX at the close

Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Bid tone maintained in Asia Even with limited leads from overnight trade, Asia has managed to grind slowly higher in a fairly quiet session. The Hang Seng has been playing catch up to the gains seen in China yesterday while the Shanghai Composite and