Deposit growth stable

sdfq From APRA's June banking statistics out today. Monthly deposit growth is more or less stable: Year on year is the same around 8%: The components are showing stability for households and corporations but pressure for financial institutions as credit growth accelerates: I think it fairly clear that the current level of credit growth has already surpassed local deposit growth but the switch has coincided with the global dash for trash driving down bond yields. A presumably more accommodating APRA is allowing banks to resume offshore borrowing growth rather than drive up local...
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RP Data house prices leap in July

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen RP Data’s daily house price index for 31 July has been released, which has enabled me to calculate monthly price movements for the five major capital city markets. As shown below, home values at the 5-city rose by 1.55% in May, driven by a big 3.75% jump in Melbourne and a 1.45% rise in Sydney, more than offsetting the small losses recorded in the other major markets: It was the second consecutive lift in values after May’s large seasonal fall: Values at the 5-city level have now increased by 4.97% since the beginning of the year, with all major...
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Sino Iron slowly ramps up

imgres Sino Iron is slowly raising its output but has a long way to go: Hong Kong-listed Citic Pacific has shipped 1mn t of iron ore concentrate from its Sino Iron mine in Western Australia as it continues its slow production growth following its first shipment in early December. The Sino Iron project hit the 1mn t shipment level through Cape Preston on the Pilbara coast on 12 July, according to Citic Pacific. This implies a slow ramp up after it shipped its first 400,000t shipment of magnetite concentrate from the $10bn Sino Iron venture in early December. Citic Pacific has been bedding down the...
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The Coalition’s roads to nowhere

ScreenHunter_3539 Jul. 31 08.24 By Leith van Onselen Business groups have taken aim at the Abbott Government's road funding fettish, arguing that Australia's dilapidated rail freight network is in desperate need of upgrading and is hampering the nation's export competitiveness. From The AFR: Grain exporters are becoming increasingly frustrated with Australia’s poor freight rail networks, claiming lack of investment in rail infrastructure, which has reduced haulage loads and created track congestion, is forcing more grain onto trucks... GrainCorp’s supply chain manager, Matthew Warrington, told an industry conference in...
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Senators: Axe PPL if you want Budget support

ScreenHunter_3079 Jul. 02 09.04 By Leith van Onselen It seems Tony Abbott's paid parental leave (PPL) scheme, which was devised on the fly by Abbott and Rupert Murdoch, has no friends left and faces imminent defeat in the Senate. Following the Greens' reversal last week, in which they announced that they would now oppose the scheme, key Senate cross-benchers have called-on the Coalition to axe PPL if they wish to secure support to repair the Budget. From The AFR: Senators Nick Xenophon and Bob Day singled out the scheme ahead of separate meetings in Adelaide on Wednesday with Treasurer Joe Hockey... Mr Hockey has hit...
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Former chief minister opposes ACT light rail pork

ScreenHunter_06 Jun. 06 09.33 By Leith van Onselen Former ACT Chief Minister, Kate Carnell, has joined the growing chorus of people against the ACT Light Rail Project, arguing that the population density along the proposed rail route linking Gungahlin in the North and Civic is far too low to make the project viable. From The Canberra Times: [Carnell said] a price tag of $614 million for the project risked detracting from other infrastructure development in the capital... "I think it’s a great idea but we just couldn’t make it work 10 or 15 years ago, and I give you Canberra is a bit bigger now but it’s not bigger...
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China expands housing market supports

fgrs BofAML has useful inventory of the burgeoning Chinese housing policy supports today: Weak property market calls for more concerns The Minister of Housing and Urban-Rural Development (MOHURD), Chen Zhenggao, said on 18 July that one of the top priorities would be destocking of the housing market. A focus on sales may imply further price cuts or discounts, adding to the price concern. The property market remains the major downturn risk for the Chinese economy, in our view. As one of the mini-stimulus measures, the PBoC has requested since mid-May that commercial banks lower mortgage rates and...
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China’s anti-corruption drive is just starting

imgres Via FTAlphaville, Gavekal today sees a top in China's anti-corruption drive: The hunt for tigers should therefore be winding up, now that Xi has bagged both Zhou, the former security chief, and retired general Xu Caihou, a former senior military leader. Such a shift could alleviate some of the political uncertainty that the anti-corruption campaign has brought about, since its breadth and ambition has kept every Chinese official guessing about who will be targeted next. The swatting of flies, however, is certain to continue. About 63,000 people, mostly lower- level officials, have already been...
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Daily iron ore price update (range trade)

liub Here are the iron ore charts for July 30, 2014: Paper markets retraced, including rebar futures. Physical was up but is going nowhere fast. Likewise the BDI cape was up 5 points and is dancing on the spot. Reuters has texture: "Mills are still in the market to buy some material although demand is not that big, so the market is still oversupplied," said an iron ore trader in Shanghai. ..."Local stockists are booking for immediate requirements only, due to continuing price fluctuations and the arrival of the rainy season," said British-based steel consultancy MEPS on China. Basically,...
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Australian dollar smacked on US growth

iluiub The US released Q2 GDP last night and the news was good (charts from ZH): Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 4.0 percent in the second quarter of 2014, according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 2.1 percent (revised). The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports,...
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FOMC still dovish

imgres The Fed tapered another $10 billion last night. And a little hawkish rhetoric crept into its statement which remains, on balance, dovish: Information received since the Federal Open Market Committee met in June indicates that growth in economic activity rebounded in the second quarter. Labor market conditions improved, with the unemployment rate declining further. However, a range of labor market indicators suggests that there remains significant underutilization of labor resources. Household spending appears to be rising moderately and business fixed investment is advancing, while the recovery...
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Links 31 July 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Industrial stocks are falling apart - Bespoke Don’t be fooled, all is not well for stocks - Yahoo Why ‘buy and hold‘ is a misnomer - A Wealth of Common Sense Money is coming out money market funds into equities - Financial Times North America: The US economy bounced back in Q2 at a 4.0% rate - Calculated Risk Steady but Slow Remains the Story of This Recovery - New York Times Is the economic recovery actually now trickling down to the middle class? - The Reformed Broker US housing data this month has been not so hot - Business...
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ASX at the close

ScreenHunter_31 Jun. 04 16.42 Chris Weston, Chief Market Strategist at IG Markets Asia has witnessed another extension of the gains seen in recent days, and it’s clear there is a geographical shift in terms of money flow. The long emerging market trade is working well, although China is having a breather today after strong gains, which have been helped by recent actions from the government and central bank. Monetary easing, backed by a number of equity market-friendly reforms, has seen good flows towards China, with the Hang Seng following suit. Japan has also broken out of its recent range, assisted by good corporate...
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How big finance swallowed the UK economy

ScreenHunter_3536 Jul. 30 15.02 The below article, from The Conversation, serves as another useful counter-point to the Grattan Institute's latest report (debunked here), which argued that the Australian economy doesn't need to make things anymore, since "the nation has moved from prosperity coming from regional jobs in primary industry a century ago, to suburban jobs in manufacturing after World War Two, to city centre jobs in knowledge-intensive businesses today".   Something strange is afoot in the Office of National Statistics. Every time the Chancellor of the Exchequer takes a bow for his outstanding economic...
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Aussies still love their cars

ScreenHunter_04 Jun. 14 13.54 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released its annual motor vehicle census (MVC), which revealed that Australian's affection for private transport shows no sign of slowing, with the total number of registered vehicles and the per capita number of vehicles rising more strongly than population growth. According to the ABS, the total number of vehicle registrations grew by 2.6% in the year to 2014, with average annual growth of 2.5% recorded between 2009 and 2014 (see next table). Growth in passenger motor vehicles was relatively weaker, however, at...
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How will the RET affect power bills?

ScreenHunter_3526 Jul. 30 13.16 Cross-posted from The Conversation: The review of the Renewable Energy Target is due to be handed to the federal government any day now, yet amazingly there are still conflicts over whether the policy makes electricity more or less expensive. Amid claims that the target raises power prices, most people will want to know what will happen to their bills if the scheme is wound back or scrapped. The economic analyses carried out so far have delivered wildly differing results. The most recent report says bills will fall if the target is scrapped, while others say the exact opposite. A deluge...
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Roy Hill passes halfway

imgres The last starter of Australia's major projects, Gina's Roy Hill, appears to be making cracking progress: The Roy Hill iron ore mine has hit a milestone, reaching the construction halfway point. The mine has been ramping up progress at the site since the successful completion of a US$ 7.2 billion loan facility in March, which was the biggest in the world at the time. Close to 5000 people will work on the project, with more than 3800 workers currently on site and the number set to increase to 4500 later this year. The mine is also on track to ship first ore late next year. 90% of those...
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Iron ore collapse claims its first big victim

imgres From the SMH: The fifth biggest iron ore business in Australia is in limbo today, after an apparent boardroom coup saw a hedge fund take control of American company Cliffs Natural Resources this morning. ...Activist hedge fund Casablanca Capital has led that campaign, and claimed overnight that it had taken control of the Cliffs board at a meeting of the miners’ shareholders over night...Casablanca has long urged the Cleveland-based Cliffs to raise its dividend and sell foreign assets... Cliffs mines about 11 million tonnes of iron ore per year across three deposits near Koolyanobbing in...
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How the CGT discount fueled property speculation

ScreenHunter_12 Sep. 23 12.54 By Leith van Onselen The Australian Treasury has released a new paper, which examines historical trends in capital gains taxes (CGT), as well as forecasting issues. While the paper is rather wonkish, and not particularly interesting, it does point-out that the decision by the Howard Government in 1999 to halve the rate of capital gains tax for investments held for more than year has fueled negatively geared property investment: ...the total effective concessions on capital gains income are significant. Both the indexation and discount methods have provided a strong incentive towards...
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Iron ore miners rise into thin air as futures fall

ub The iron ore miners are off to the races again today despite Chinese markets reversing course. Dalian and rebar futures have both fallen at the open, down 1% and 0.7%, and the news flow is mixed as well. Westpac's China consumer confidence index is up but the internals softer:: The head-to-head comparison with the business surveys implies that households are feeling less direct benefit from easier policy vis-a-vis the corporate sector. While there was a consistent lift across household perceptions of current, one year and five year ahead business conditions, with the latter indicator improving...
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Coalition’s internet policy is a gift to Murdoch

ScreenHunter_3454 Jul. 24 07.36 By Leith van Onselen The Coalition's draconian internet policy is one step closer to becoming reality after the release last week of the Online Copyright Infringement Discussion Paper. According to the Discussion Paper, the Government is seeking to make it easier for the copyright industry to sue internet service providers (ISPs), as well as force them to censor the internet by blocking various overseas sites that carry copyrighted content. Mark Gregory, Senior Lecturer in Electrical and Computer Engineering at RMIT University, last month contended that the Coalition's internet policy...
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Is defence one big entitlement industry?

ScreenHunter_3500 Jul. 28 11.40 By Leith van Onselen ABC's The Business last night aired a segment on the Defence discussion paper, released earlier this week, which questioned whether Australia should build defence hardware locally or instead purchase it off-the-shelf at lower cost offshore. It's an interesting issue, particularly in light of the Government's commitment to increase the nation’s defence budget to $50 billion within a decade, with defence spending’s share of GDP also targeted to increase to 2% of GDP from 1.6% currently. Included in this planned spending is the procurement of armoured vehicles,...
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Carr, Bloxo want recession to stop house prices

imgres Mad Adam Carr today takes a tilt at macroprudential: Five years after the GFC, many nations appear to be lurching head first into yet another housing crisis. In response, increased macroprudential regulation has become the policy du jour, proudly advocated by the International Monetary Fund and widely adopted around the world. ...Suspicion should be raised, however, when what were previously well accepted principles are so easily cast aside. ...Remember that the US housing crisis was not result of insufficient regulation. Instead the crisis was caused by a combination of a housing glut,...
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Why Work for the Dole is poor policy

ScreenHunter_10 Mar. 29 12.46 By Leith van Onselen Employment Minister, Eric Abetz, has acknowledged business' criticism that its beefed-up "Work-for-the-Dole" program, which would require the unemployed to apply for 40 jobs a month in order to continue to receive benefits, could create a deluge of sham job applications, and has signaled possible changes. From The Guardian: Abetz emphasised that the government did not want “red tape and inconvenience to employers” and would listen to feedback... Asked whether there was a risk the 40-application rule would become a box-ticking exercise, with people applying for jobs...
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Graduates stuck in jobs mire

k.jbj From the annual Graduate Careers Australia survey: This section of the Graduate Destinations report examines the progress of new higher education graduates, from all levels of study, four months after course completion, comparing employment and further study outcomes. Table 1 examines the broad outcomes of 2013 graduates by level of award. Outcomes include graduates available for full-time employment (those in full-time employment as well as those seeking full-time employment), those in full-time study, those graduates interested only in part-time or casual employment (whether in it, or...
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