Dad’s Army: “Impossible” for house prices to fall

From Dad’s Army’s Gotti today: …it is almost impossible for dwellings to go down significantly while the existing [policy] chain remains in place. To negative gearing and capital gains concessions are added…Australia’s population is rising but in most centres, the supply of housing land and building approvals restricts the amount of new dwellings available…Secondly, the

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IMF humiliates Aussie macroprudential

By Leith van Onselen The…ahem…shortsightedness of Glenn Stevens’ comments last year that macro-prudential controls on high risk mortgage lending were “dreaded” and the “latest fad” has, once again, been exposed with a new working paper from the International Monetary Fund (IMF) which evaluates evidence from 119 countries over the 2000-13 period and finds that macro-prudential policies


Aussie weakens after bonfire of the shorts

Not much need to do a long Aussie piece today but I’ll note quickly that last week’s Commitment of Trader’s report showed shorts still being squeezed in the currency:   Short positioning is now way back to Oct 2014 levels, offering plenty of room to shift the market down. The Battler was hit hard Friday


Gittins re-writes mining boom history

By Leith van Onselen Fairfax’s Ross Gittins has written a spirited post today chastising economists for not questioning the wisdom of the once-in-a-century mining boom, which drove-up the exchange rate and has now guttered other trade-exposed industries: Now we’re in the final throes of the decade-long mining resources boom, it’s a good time to reflect


Will Fortescue destroy big iron?

Among the piles of media surrounding Fortescue Metals Group today one stands out. The AFR’s junket queen, Jenifer Hewitt, has delivered a worthwhile insight from her FMG sponsored trip to the Boao Forum on the weekend: Andrew Forrest was one of the few world business leaders to have meetings with China’s Xi Jinping at the Boao


Daily LNG price update (retracement)

The Brent oil price gave up much of the Yemen gains on Friday down 5% to $56.19. The war is not pretty but will not be regional and the US ‘s Camp Lemonnier is nicely positioned on the Mandab Strait should it become maritime. It’s a minor issue for the oil market. Bigger is the Iran deal and


Chinese developers build into bust

From the FT: Most listed mainland homebuilders recorded a steady rise in revenue last year, but sharp declines in profit for many are a symptom of aggressive price-cutting designed to shift stock and generate much-needed cash in the debt-laden sector. …“With the downward pressure on the economy, the real estate industry will continue to undergo


This time it’s different for Chinese stocks!

From Bocom International Holdings Co. via FTAlphaville on the ye auld Chinese share surge: Currently, the yield gap shown in our chart [ showing earnings yield minus bond yield in China versus the Shanghai Comp] is plunging nearing its historical extreme. If bond yield can continue to fall to the 3% range due to slowdown and


Choked land supply forces buyers to camp-out

By Leith van Onselen In his maiden Parliamentary speech, Family First senator, Bob Day (a former home builder), made the following comments in relation to Australia’s constipated land supply system [my emphasis]: The single most important factor affecting housing affordability has been land. In no other area of the economy has the interference of government


Auction clearances going bananas

The national auction clearance rate delivered yet another mental result over the weekend, driven again by strong demand in Sydney and Melbourne. The preliminary national clearance rate was 77.5%, up marginally from last week’s 77.4%, with clearance rates still running at their strongest level in six years in trend terms: Sydney’s clearance rate fell 4.1%


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 29 March 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;


Links 30 March 2015

Global Macro / Markets / Investing: Oil Is Tumbling Again – Bloomberg Krugman: Unreal Keynesians – New York Times Krugman: Anti-Keynesian Delusions – New York Times Are Equities Overvalued? – Project Syndicate Reflexivity in the Stock Market – Pure Alpha Trade Biotech Stocks…and Benjamin Graham – Wall Street Journal North America: 47% of American households


Weekend Links 28-29 March, 2015

China China ramps up global manhunt for corrupt officials with operation ‘Skynet’ – SCMP China’s government debt-bond swap plan expected to draw investors – SCMP Mainland China imports less gold from Hong Kong as prices fall – SCMP China to let mutual funds invest in Hong Kong via connect scheme: regulator – Reuters U.S. questions


MB 2.0 soft launch

Welcome to the MB 2.0 soft launch. We’ve recreated the site to provide members with a simpler and quicker user experience. The growth of the site continues to be extraordinary and it was experiencing slowdowns on the Wordpress platform. In the foreseeable future we expect demand for quality analysis on the economy to rise much further so we have prepared


ASX at the close

Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Calm restored in Asia Sentiment is somewhat improved in Asian trade in the absence of fresh developments from the Yemen conflict. Currency moves remain key at the moment and there are signs the greenback might be looking to start gaining momentum yet again. The


Comrade Colin embraces the cartel

From Fairfax: Colin Barnett said there had been an over-reaction to Mr Forrest’s idea, including by Rio Tinto chief executive Sam Walsh, who labelled it a “harebrained scheme” and “absolute nonsense”. “I don’t think Andrew Forrest ever used the word cartel and I think the response has been a little bit exaggerated,” the Liberal leader


Saxo Bank: 50% chance of Aussie recession

By Leith van Onselen Steen Jakobsen, chief economist at Denmark’s Saxo Bank, has given a stinging critique of the Australian economy, claiming that it is afflicted by a housing bubble and has a 50% chance of falling into recession. From Yahoo Finance: The mining boom had inspired laziness and arrogance… There’s dangerous levels of investment


Fortescue ‘worthless’ at current ore prices

More scuttlebutt on Fortescue this afternoon, via The AFR: Fortescue’s stock is worthless at current spot iron ore prices, analysts at CBA calculate. Zippo, zilch… There is $US7.5 billion ($11.5 billion) in net debt squatting on Fortescue’s balance sheet. In Aussie dollar terms, that’s approaching twice the company’s market capitalisation – just a number, sure,


TPP so bad even the US congress is shocked

By Leith van Onselen More worrying details have emerged about the the Trans-Pacific Partnership (TPP) – the US-led regional trade pact between 12 nations (including Australia) – with the New York Times revealing that members of the US Congress have been viewing the secretive document and are disgusted by its contents: Members of Congress have


Australia: one of the worst housing bubbles ever

By Lindsay David By all accounts, Australia is experiencing what is one of the greatest credit-fuelled real estate bubbles in modern times. On the back of a collapsing mining sector, we can thank the RBA, APRA, ASIC and the political elite in Canberra for creating a flawed household wealth-creation strategy that shares all the hallmarks


PIMCO shorts the Aussie dollar

Fixed income investment management company, Pacific Investment Management Co. (PIMCO), has told investors that it is short the Australian dollar, citing falling commodity prices and interest rates. From Bloomberg: “Our highest conviction views are in the currency markets, and we remain short the yen and the Australian dollar against a long U.S. dollar position”… According