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Ray White goes there: AAA vital to housing

Via the AFR: Mr White said that, while he thought growth in Australia’s house prices would remain steady, he shared some concerns over the macroeconomic prospects. “Before you take a view on where houses prices will go in 2017, you must take a view on interest rates and the AAA rating,” Mr White said. “The only element that

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4

Dirt high-flyers tumble as banks rock the AAA

Big Iron has bifurcated today. Dalian is down a little more from overnight: As Chinese bonds continue to get absolutely flogged: And CNY to fall: BHP is 1.1%, RIO 1.2%, FMG -3.3% and WHC -2%: The high flyers look very vulnerable as the bulks keep falling. Big Gas is firm: Big Gold mixed: Big Debt

13

Fitch, Moody’s affirm AAA

Fitch ash affirmed the AAA. Now from Moody’s: The government’s decision to maintain the objective of a balanced budget by 2020-21 denotes continued commitment to fiscal consolidation. However, meeting the fiscal targets will be difficult in an environment of weaker nominal GDP growth. Its decision to depart from standard practice to assume that commodity prices

26

And now for the MYEFO of Lies

He just never learns. Having placed the nation on downgrade watch owing to lies in May, Treasurer Scott Morrison has doubled down in his MYEFO.  He has downgraded the Budget outlook by $10.3bn over four years: But is still projecting a surplus in 2021: Even though has absolutely no way to get us there. Except

4

How far will the yuan fall?

The FT has a good take today on China’s ongoing USD problem: The dominance of bank lending and portfolio investment as a source of Chinese capital outflows casts doubt on whether Beijing’s recent clampdown on big-ticket foreign deals by the likes of Dalian Wanda and Anbang Insurance can shield the renminbi from downward pressure, intensified by

86

Delusional government deserves downgrade

The levels of delusion in Coalition ranks are quite something to behold and media coverage on the weekend gives us some idea of why. Paul Kelly preens the PM: Turnbull goes to Christmas with a strong period as a transactional prime minister — having been more successful in parliament than many predicted — but facing

29

Banana republicans declare Straya Banana Republic

This nation is rapidly disappearing up its own cloaca at the AFR: The head of the former Abbott government’s budget audit commission, Tony Shepherd, has warned Australia is becoming a “banana republic” and that Monday’s budget update will confirm the nation is living beyond its means. Until Australians recognise and understand the scale of the

27

Luci Ellis sets her course for enormous recession

From The Australian: Avoiding deep scars on the jobs market from a full-blown economic recession is the Reserve Bank of Australia’s top priority, its new chief economist said in an interview. The fact that recessions can have a long-lasting impact on employment is one of the key lessons of the modern era, said Luci Ellis,

9

Aussie housing valuations smash all records

By Leith van Onselen The ABS on Thursday released its National Accounts: Finance & Wealth data for the September quarter, which valued Australia’s dwelling stock owned by households at a record $5.84 trillion dollars. As shown below, the total value of Australia’s dwelling stock was an all-time high 7.2 times incomes as at September 2016,

7

Bank offshore borrowings retrace from recent highs

By Leith van Onselen On Thursday, the Australian Bureau of Statistics (ABS) released its National Financial Accounts for the September quarter, which revealed a $15 billion (2%) decline in Australian banks’ gross external liabilities (offshore borrowings) in the September quarter, with borrowings also down 1% over the year. Bonds issued offshore (-$11 billion), One Name

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Trump to appoint renowned dill top economic advisor

I’ve watched Larry Kudlow for years on CNBC and marveled at his stupidity. It appears someone else was watching and liked what they saw, via The Atlantic: …Kudlow will reportedly be nominated to chair the White House Council of Economic Advisers, a position that will require him to advise the president on economic policy and

8

Links 19th December 2016

Global Macro / Markets / Investing: Preparing for Bentry, not Brexit – VOX Bitcoins 2016 rally crushed all other currencies – Bloomberg Big pharma to get bruised on new pricing regimes – FT The oil price each gulf state needs to balance its budget – Bloomberg (The Saudi’s need $75USD per barrel – lets hope it

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Weekend reading 17-18 December 2016

Global Macro / Markets / Investing: 10 Reasons Why It’s a New Bull Market – Cabot Wealth Justin Trudeau: ’Globalisation isn’t working for ordinary people’ – The Guardian The Emerging Markets Hat Trick: Time to Throw Your Hat In? – researchaffiliates.com Trump May Be Turning China’s $1.16 Trillion Of Treasuries Into A Weapon – Forbes Is the Bond Market

31

Macro Afternoon

by Chris Becker Asian markets are taking it steady at the end of a volatile week, with Japanese stocks the only ones with runs on the board as the Chinese bond and Yuan slides paused briefly. The USD remains strong against, well everything, while only oil is putting on gains, stabilising around the $50USD per

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Do-nothing Malcolm’s housing affordability inquiry recommends nothing

Via the ABC: A parliamentary inquiry established nearly two years ago to investigate housing affordability has made no recommendations, drawing strong criticism from the Opposition. The committee report came after a lengthy debate on negative gearing during the election campaign and amid skyrocketing house prices in Sydney and Melbourne. Last month, NSW Planning Minister Rob

1

One more MYEFO outlook for the road

From Bill Evans at Westpac: • The Treasurer will release the Federal Government’s MidYear Economic & Fiscal Outlook (MYEFO) on Monday, December 19. • In the May Budget, the budget position was projected to edge into surplus in 2020/21, to around $4bn to $5bn. On our figuring, with a $6bn deterioration in the bottom line

3

Big Dirt hit again as China yields rocket

Dalian is unchanged today but my sense is that the bubble is in a spot of bother as liquidity issues spread: Chinese yields are moon-shotting again today: Caixin is downright gloomy: China’s central bank stepped in to urge major commercial banks to lend to non-bank financial institutions on Thursday afternoon after many suspended interbank operations

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Does big government hurt growth?

Cross-posted from The Conversation: Since the late 1970s it has largely been the consensus that “big government” is detrimental to growth. This manifested after the financial crisis when countries, including previously fiscally-comfortable countries like Germany and the UK, adopted austerity programs, ostensibly to spur growth by cutting government expenditure. But our research shows the story