ASX at the close

ScreenHunter_31 Jun. 04 16.42 Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Asia is in for a mixed finish to the week with focus primarily on the plunge in oil prices and related stocks. Big energy names in commodity heavy markets such as the ASX 200 are experiencing 6% plus drops, as investors finally succumb to the pressure from declining crude oil prices. With the next OPEC meeting only set to take place in mid-2015, pessimism is likely to grow around crude oil. Additionally the first half of 2015 could see weaker seasonal demand and it will also be interesting to see how this plays out for nations...
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Murray Inquiry to boost small business lending

ScreenHunter_5219 Nov. 28 15.00 By Leith van Onselen The AFR's Chris Joye has published article today arguing that the Murray Financial System Inquiry will likely drive the major banks to increase loans to businesses as increased capital requirements on mortgages makes housing lending less profitable: The Murray inquiry could also drive a dramatic increase in major-bank lending to small businesses and companies as the 67 times leverage (or 1.5 per cent equity) they currently employ when lending against Australia’s housing market shrinks significantly. More equity and less leverage mechanically yields skinnier returns on home...
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Australian dollar 84s with a bullet

1982 With A Bullet ...
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Australia: Haven for bank control frauds?

ScreenHunter_2952 Jun. 24 12.41 By Paul Egan & Philip Soos - Co-Author’s ‘Bubble Economics: Australian Land Speculation 1830 – 2013’   Exuberant household credit growth over the last twenty years has a sinister dimension: the likelihood of widespread predatory lending and bank fraud. Every developed country, including Australia, has laws to regulate and hopefully prevent predatory lending, defined as providing credit to a borrower in full knowledge they lack the capacity to repay it in a timely manner, if at all. Relevant laws and regulations stipulate loan amounts must not exceed the assessed debtor repayment...
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ANZ forecasts rates rise into lower GDP growth

ScreenHunter_24 Oct. 16 09.13 By Leith van Onselen ANZ has revised its forecasts, now tipping lower GDP growth and weaker income growth, but curiously still forecasts 100 basis points of interest rate rises from November 2015: We have revised down our growth profile for Australia, and now expect slightly softer growth in 2015 and 2016 of 2.9% and 3.2% respectively. This new forecast incorporates recent sharp downward revisions to our iron ore price forecast, and has seen us take around 1ppt off our nominal GDP forecast and around ¼ppt off real GDP growth. Lower commodity prices will weigh on profits and wages, while also...
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The banks’ real capital levels are falling

ScreenHunter_06 Jun. 26 22.42 By Martin North, cross-posted from the Digital Finance Analytics Blog: APRA yesterday published the quarterly ADI performance statistics to September 2014. Over the year ending 30 September 2014, ADIs recorded net profit after tax of $33.5 billion. This is an increase of $3.6 billion (12.0 per cent) on the year ending 30 September 2013. As at 30 September 2014, the total assets of ADIs were $4.2 trillion, an increase of $345.0 billion (9.1 per cent) over the year. The total capital base of ADIs was $210.4 billion at 30 September 2014 and risk-weighted assets were $1.7 trillion at that date....
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NDRC: China has wasted $6.8 trillion

Pile of Waste - Electronic Waste Documentation (China: 2007) For those that doubt that iron ore can go lower, read this, from the FT: “Ghost cities” lined with empty apartment blocks, abandoned highways and mothballed steel mills sprawl across China’s landscape – the outcome of government stimulus measures and hyperactive construction that have generated $6.8tn in wasted investment since 2009, according to a report by government researchers. In 2009 and 2013 alone, “ineffective investment” came to nearly half the total invested in the Chinese economy in those years, according to research by Xu Ce of the National Development and Reform...
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House prices to rise further in 2015?

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen The AFR is has published results of a new survey of prominent economists and market observers forecasting that house prices will continue to rise in 2015: The finder.com.au Monthly Reserve Bank Survey of 37 market experts found that 69 per cent of those questioned think that house prices will continue to rise over the next year. However, 14 per cent expect prices to stabilise and 17 per cent expect them to fall. For what it's worth, I expect house prices to rise next year, but at a slowing rate, and expect values to peak sometime in late-2015/ early 2016. This view is...
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Iron ore “moron cross” looms as futures bounce

thj4e6 It's good news today for the big iron ore miners. Glencore and Rio blinking has it up nearly 2%. On the other hand, BHP has been pole-axed nearly 4% owing to its energy exposures. FMG is up 1.5% on the iron ore price bounce. Here are the comparative indexes: The idiocy spreads are static now but RIO and BHP are closing on the moron cross (when BHP falls more than RIO): It may have to be renamed given the BHP oil hit is making the trade semi-rational. Though RIO remains spectacularly overpriced. Junior death runs unabated with AGO at another low today of 18 cents: That despite...
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Deposit growth marches on

rth35e APRA released its monthly banking statistics for October today and deposit growth marches on despite a bad month: Dragging down year on year growth as well: But there's not appreciable difference in the categories: No real...
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Investor mortgage credit gains momentum

ScreenHunter_12 Sep. 23 12.54 By Leith van Onselen The Reserve Bank of Australia (RBA) today released its private sector credit aggregates data for the month of October: A chart showing the long-run breakdown in the components is provided below:   Personal credit growth (0.0% MoM; 0.4% QoQ; 1.0% YoY) remains in the gutter, whereas business credit growth (0.7% MoM; 1.1% QoQ; 4.3% YoY) and housing credit growth (0.6% MoM; 1.8% QoQ; 7.0% YoY) continue to accelerate, but remain below its long-run average growth rate (with housing credit still growing more than twice as quickly as wages and off a very large debt...
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Cabcharge in hypocritical attack against Uber

ScreenHunter_5210 Nov. 28 10.23 By Leith van Onselen Russell Balding, the Chairman of one of Australia's biggest rent seeking companies, Cabcharge, has hypocritically attacked Uber's ridesharing service, Uber-X, calling for a government crackdown on the grounds that it is both "dangerous and illegal". From ABC's The Business (video above): "It's a rideshare activity that's illegal. And alls I'm asking governments to do is to look at the issues of having a level playing field"... "I welcome competition. I welcome app-based competitors. But the taxi and hire car company operates in a regulated market, and I think all...
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Goldman warns of more iron ore downside

dfgrw From Goldies: Market dynamics change faster than expected The changes in market dynamics following the shift to oversupply have come earlier than we expected. In particular, the period when marginal iron ore mines in China provide some support before the inevitable decline to sub US$80/t prices appears to have ended prematurely. Rather than gradually eroding the linkage between seaborne and domestic iron ore prices over a two-year period, the two markets have effectively decoupled in a matter of months. As the buffer of high-cost, price-sensitive mines in China is depleted and the Chinese...
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Charlie Aitken gets one thing about oil right

imgres I've been giving Charlie Aitken a little curry lately after his dreadful call to buy oil and iron ore on October 22nd this year (he was not alone, Money Morning also recommended going long into the OPEC meeting). But today, our Charlie is back with better advice, from The Australian: Bell Potter executive director Charlie Aitken says the plunging oil price is another reason to expect the Australian dollar to plunge below 80 cents and its hard to disagree, as the deteriorating terms of trade will flow through to the interest rate outlook. “The AUD remains great shorting and will play downside...
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7.30 Report does foreign property investment

ScreenHunter_5115 Nov. 24 09.52 By Leith van Onselen ABC's 7.30 Report did a good job covering the parliamentary inquiry's report into foreign investment in Australian real estate, featuring two segments on the issue last night. In the first segment, the show interviewed a number of players in the real estate industry with direct exposure to foreign investors, with real estate agent, Robert Simeon, providing the most damning assessment: "All of a sudden we're seeing this tsunami of overseas money coming in and it's sort of, like, wiping out markets, wiping out market demographics, it's denying people of the opportunity to...
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Mac Bank sees “twin” hit to property prices

fhew Exactly right from Mac Bank today: Negative catalysts continue to circle the domestic property market making for a rather surreal backdrop. The sharpening of FIRB’s ‘teeth’, along with pending curbs on investors and (emerging) curbs on interest-only loans for owner-occupiers are likely to continue to see the market soften. Impact  Kelly O’Dwyer’s Report on Foreign Investment to give FIRB sharper teeth – The much-awaited O’Dwyer report was released today. There will be a national land register that records citizenship, which will be cross-referenced with various Government...
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RIO blinks

url Hmmm, from the SMH: Rio Tinto's rhetoric around shareholder returns appears to be changing, with its promise of "materially increased" shareholder returns replaced by a pledge to deliver "sustainable" cash returns next year. The seemingly toned-down promise came in documents lodged with the ASX on Friday morning, ahead of a major strategy day in Sydney. ...Rio also announced it will defer the commissioning of a new greenfield mine in the Pilbara called Silvergrass, but insists it will achieve the same volume growth in iron ore exports over the same time frame by taking bottlenecks out of the...
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Residex on why boomers are hog wild for housing

ScreenHunter_05 Apr. 15 22.08 By Leith van Onselen Residex has released its dwelling price results for October, which revealed 0.49% growth for houses nationally and 0.15% growth in unit values at the national level. Over the year, there has been a clear slowing of momentum, with house values growing by 6.71% nationally, with unit values up by 6.69% (see next chart). As shown above, there is significant divergence in growth rates across the capital cities and regions, with Sydney (+16.83% YoY houses, 13.99% YoY unites) way out in front of the other capitals, and driving growth nationally, and at the other end of the...
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Macro Morning: Thar oil blows

marketmorning By Chris Becker The major market shaker overnight was obviously the huge play by OPEC to not "interfere" in the energy market, by keeping production on track to shake out the shale producers in the US. This saw an already weak oil price smashed over 6% through its support all the way to $68USD per barrel: Not exactly rocket surgery that sort of trade setup, with a very high risk reward ratio for those of us short already - as the price action dictated - but I'm not sure if there's going to be a short squeeze here as OPEC seems firm on getting it down to $60 or so. Here's nice wrap from Chris...
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OPEC declares oil war on US (and Australia)

A861wWarDeclared_thumb The Aitken oil crash is really warming up now. Here's how the OPEC meeting broke up: Recording its concern over the rapid decline in oil prices in recent months, the Conference concurred that stable oil prices – at a level which did not affect global economic growth but which, at the same time, allowed producers to receive a decent income and to invest to meet future demand – were vital for world economic wellbeing. Accordingly, in the interest of restoring market equilibrium, the Conference decided to maintain the production level of 30.0 mb/d, as was agreed in December 2011. As always, in...
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Daily iron ore price update (Cloudbroken?)

anvil1-200x2001111 Here are the iron ore price charts for November 27, 2014: Relief at last. Paper markets broadly rallied and physical followed. Rebar average is offering support with stable prices for a few days. Whether the dump is over is really besides the point. You simply cannot be bearish enough in this market and I still expect rallies to be brief. Much downside in the next eighteen months remains. In news, RIO is expected to approve more ore today: JPMorgan’s Lyndon Fagan said the key focus of the investor day, attended by divisional heads from iron ore, energy and innovation, would be any...
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WA budget into the pit

broken-promises-logo From News comes no surprise: A day after Premier Colin Barnett conceded a deficit could not be avoided, Treasurer Mike Nahan released the September quarter financial report showing an operating deficit of $347 million for the period. ...But Mr Barnett has flagged a grim mid-year review, which will be handed down next month. He said yesterday that the state’s finances were “not pretty” and foreshadowed higher fees and charges for households. What you need, Comrade Colin, is more iron ore in the West Pilbara to boost your volumes. Oh,...
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Parko departs with bitter message from the pulpit

ScreenHunter_05 May. 21 15.13 By Leith van Onselen Outgoing Secretary of the Australian Treasury, Dr Martin Parkinson, has given his final speech to the Committee for Economic Development of Australia (CEDA), in which he Below are the key extracts. First, Dr Parkinson outlines the conundrum facing the Australian economy, whereby GDP growth will be supported by rapidly rising mineral export volumes, given a reasonable "headline figure", but national income and employment growth will be anaemic due to falling commodity prices (terms-of-trade) and declining mining investment: Australia’s growth over the past decade has...
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RP Data weekly Australian house price update

ScreenHunter_15 Mar. 05 15.42 By Leith van Onselen In the week ended 27 November 2014, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, fell by 0.27%.  It was the second consecutive weekly decline (see next chart). Home prices fell in three major capitals and rose in two (see next chart). So far in November, home values have fallen by 0.30%, dragged down by Melbourne and Adelaide (see next chart). Since the start of the year, home values nationally have risen by 7.14%, with all major capitals except Perth rising in value (see next...
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More evidence on why house prices are outpacing credit

ScreenHunter_06 May. 15 16.47 By Leith van Onselen Up until a year ago, I used to report monthly State Government data on housing transfers and mortgage lodgements for Queensland. However, for some reason, the State Government ceased publishing its monthly series and I stopped reporting on the matter. After various Google searches I discovered that Queensland now produces a fortnightly series, dating back to mid-2008, showing the number of housing transfers, mortgage lodgements and mortgage discharges. As shown below, the number of housing transfers and mortgage lodgements (including refinancings) bottomed in...
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