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

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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


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


Bill Evans: RBA to cut in May

Westpac’s Bill Evans sticks to his May rate cut call: We have now passed the last three significant milestones for insights into the Reserve Bank Board decision on May 5. These are the Board minutes for the April meeting; the Governor’s important speech in New York; and the March quarter inflation report. From our perspective


Sydney set for housing “golden decade”

Ah yes, we’re definitely approaching some sort of peak. Yesterday we had Harry Triguboff framed as the new BHP in an endless property boom and today it’s a Stockland apotheosis: Sydney is entering a “golden decade” of housing growth, with no bubbles in sight, according to Stockland, one of the biggest residential developers in the country. Chief


Melbourne housing’s second wind blows harder

By Leith van Onselen Victoria’s Department of Transport, Planning and Local Infrastructure (DTPLI) has released March’s data on the number of housing transfers and mortgage lodgements/discharges, which confirmed that Victoria’s (read Melbourne’s) housing market has continued to strengthen after appearing to have peaked in November. According to the DTPLI data, the volume of housing transfers


Unemployment climbs across regional Australia

By Leith van Onselen The Australian Bureau of Statistics (ABS) yesterday released its detailed monthly labour force statistics, which includes breakdowns of employment and unemployment across Australia’s capital cities and regions. According to this release, the unemployment rate in Australia’s capital cities was 6.1% in March in raw terms, down 0.3% from February. By comparison,


Who bought Fortescue’s ponzi bond?

From the AFR: To get the latest deal away it not only had to offer a significantly higher coupon on the bonds it was forced to secure the debt against the company’s assets. That rang warning bells at the credit ratings agency Standard & Poor’s which lowered its credit rating on FMG’s senior secured debt.


Daily iron ore price update (squeeze)

Here are the charts for April 23, 2015: Spot climbed again with Tianjin benchmark up 1.7% to $53.80. The Dalian six month futures short squeeze continues unabated with overnight markets up another 2.5% to 414. However, the Singapore 12 month swap has already sobered up. Rebar is still melting. We’re still chopping wood as steel mills


Daily LNG price update (surge)

The Brent oil price surged last night on little extra Yemen bombing but not much else to $64.80. Basically the price is going up now because it’s going up, in anticipation of the looming shale peak: Where it stops is anybody’s guess but I still see a reversion to $60 when the rally flames out.


Inside the Hebei credit collapse

Cross-posted from Investing in Chinese Stocks. The pre-2008 AIG business model of guaranteeing lots of debt for small upfront premiums is still undergoing a full on collapse in China. Recently the Economic Observer covered the troubles in the steel industry, which are rapidly piling up short-term debt. Although not specifically about Hebei, the province has