Negative gearing is a tax shelter for fat cats

By Leith van Onselen After demolishing Treasurer Joe Hockey’s claim on Friday that unwinding negative would cause a significant increase in rents, The AFR quoted my work in an article entitled: Negative gearing: what’s true and what’s not? This AFR article also contained analysis from the Property Council of Australia (PCA), which claimed that Australia’s

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Auction clearances highest on record

The national auction clearance rate set an all time record over the weekend, although volumes were low on account of Anzac Day. The preliminary national clearance rate was an unprecedented 84.3%, up from the 79.2% recorded last weekend, according to Core Logic-RP Data, from RP Data: Sydney’s clearance rate surged 2.8% to 91.1%, whereas Melbourne’s


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 26 April 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;


Five drivers threaten Aussie dollar breakout

It’s not really the news that the RBA wants to hear but in the short term the Australian dollar is threatening to move higher according to MB’s five drivers model of valuation. The five drivers are: interest rate differentials; global and Australian growth (more recently this has become more nuanced for the Aussie to be


Gina: Nobody saw iron ore crash coming

It had to be said, I guess, from the SMH: “None of us predicted it would be as bad as this,” Mrs Rinehart, chairman of Hancock Prospecting, said on Friday at a mining industry lunch in Sydney. “Nobody was predicting – even the most conservative ones – the ore price crash.” Of course it’s not even remotely


Daily iron ore price update (melt-up)

Here are the iron ore charts for April 24, 2015: Now that’s a melt-up. Qingdao spot went through the roof and Tianjin benchmark surged 5.9% to $57. Paper markets have gone berserk with Singapore 12 month swaps playing catch-up while Dalian jumped solidly but then hit the nitrous oxide Friday night ending up another 5%


Daily LNG price update (stockpile)

Brent oil rallied to a new high of $65.40 Friday. The main causes were some short term supply disruptions in Libya and further declines in the US rig count down 22 to 932: The falls are definitely beginning to flatten out but the US shale production peak is also in sight.  But for how long? With


Cracks widen in the Chinese land and debt ponzi

A look back at recent initiatives by China to get its local government debt market moving from UBS via FTAlphaville: This is NOT a Chinese “QE”, but a debt restructuring and asset securitization. Contrary to some news report and comments, the RMB 1 trillion local debt swap does not mean the central government “bailing out”


Links 27 April 2015

Global Macro / Markets / Investing: The Most Important Decision When Selecting a Value Investing Fund – Alpha Architect Why risk is hard to measure – VOX Europe’s Top Asset Manager Says Stock-Market Crash Possible – Bloomberg How Low Can Bund Yields Go? – PIMCO Blog ECB Said to Start Buying Covered Bonds With Negative


Weekend Links 25-26th April 2015

Global Macro / Markets / Investing: Need for better commodity regulation deepens – FT Opec Oil Supply/Demand balance charted – @MauroIppolito Africa and commodity prices – no longer the kiss of death – The Economist Trader Tied to Flash Crash Says He Simply Changed His Mind a Lot – Bloomie Google Caps Costs as Growth


ASX at the close

Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Commodities drive Asia Commodities have been the driving force behind gains in Asia today with commodity stocks and related currencies enjoying a day in the sun. The ASX 200 has managed to dig itself out of the hole it’s been in all week and


Saul Eslake: May rate cut is go

Given Mr Eslake recently described the RBA as “insane” for cutting rates, and his central position on the scurrilously hawkish Shadow RBA, this followingis perhaps singificant from SAul today: The minutes earlier in the week stressed that the RBA was wanting to assess the data flow further before making any decision whether to ease policy


BofAML on why the Budget needs fixing

From Alex Joiner and Saul Eslake at BofAML: One of the key economic challenges Australia faces both now and over the medium term is that of restoring the nation’s finances to a sustainable position. We emphasize that this is not because we think budget deficits, or public debt, are inherently bad. Indeed we have some


LVO cuts through on NG at AFR

Congratulations to the AFR for headlining LVO’s demolition of Joe Hockey’s negative gearing lies this afternoon: Economist Leith van Onselen disputed both Mr Hockey’s claim about rents and Mr Morrison’s argument that negative gearing helped build housing supply. Renters would be turned into owner-occupiers, thereby reducing demand for rental properties and leaving the rental supply-demand balance


Iron ore short squeeze screams higher

We’ve got ourselves a fair dinkum short squeeze going now in iron ore. Given how hot futures markets have turned, BHP and RIO are lagging a little at 2.5% rises. FMG is hotter at 5.3%. To the indexes: After a few brief days of closing, the idiocy spreads are off the races again: A measure


Citi: China property bifurcation deepening

From Citi: Best of times vs. worst of times: In a stabilized but polarized overall property market, we see the “best of times” ahead for quality names as consolidators that are progressing well with their business model transformations (asset-light with high turnover, best city exposures and/or diversified income streams). By contrast, the “worst of times”


Labor still blind on Aged Pension Reform

By Leith van Onselen The Labor party’s denial around the Aged Pension really is beyond belief. Yesterday, while speaking at the National Press Club, shadow treasurer, Chris Bowen, declared that Australia’s pension system was sustainable and not in need of reform: “Let me be very clear, when Joe Hockey says the Age Pension is not


Measuring Australia’s falling living standards

By Leith van Onselen David Hetherington from the progressive think tank, Per Capita, has released a new paper arguing that Australian households face the biggest hit to living standards in a generation as their earnings power diminishes as the biggest commodity price and mining investment boom in the nation’s history unwinds: Nominal wage growth is


Macro Morning (bad news rocks)

By Chris Becker A slew of poorer than expected flash PMI data in Europe, plummeting new home sales in the US, slightly higher than expected weekly jobless claims AND mixed earnings results put a rocket under risk last night (go figure). The tech heavy NASDAQ burst through to a new 15 year high, above its


Joe Hockey flat out lies on negative gearing

By Leith van Onselen Despite being schooled last month on Q&A by the Grattan Institute’s John Daley, Treasurer Joe Hockey has once again come out in defense of negative gearing, repeating the lie that rents would increase significantly if negative gearing was unwound. From The AFR: “If you change negative gearing then there are significant


Abbott’s Lomborg “captain’s call” erupts

Another Abbottalypse moment has arrived, via the SMH: Academics at the University of Western Australia have demanded its hierarchy explain how “sceptical environmentalist” Bjorn Lomborg was appointed as an adjunct professor for a new “consensus centre”… …In a letter to David Harrison, UWA’ s head of corporate and government affairs, obtained by Fairfax Media, the head of the