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ASX at the close

Chris Weston, Chief Market Strategist at IG Markets It looks as though the USD has found its mojo again and this once again is having clear ramifications for other asset classes. US data showed some signs of life yesterday and perhaps the best way to look at this is through the Citigroup economic surprise index

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6

It’s not yet time to buy gold

The AFR is reporting that UBS is pushing the local gold sector hard: Gold stocks are set to boom thanks to the gold price and merger activity, with UBS slapping a buy on its entire gold coverage list with the exception of Newcrest. UBS put out the note as the sector enjoys a boost from a wave of mergers

14

Phil Lowe warns on rising housing risks

By Leith van Onselen In the Q&A session to today’s speech, RBA deputy Phil Lowe warned about rising housing risks, which has necessitated regulatory action to slow mortgage credit growth. From The AFR: “My subjective assessment would be the level of risk in bank mortgage portfolios has risen over the past couple of years”… “Household

82

At Aussie: We’ll slave you

By Lindsay David, cross-posted from the Australia: Boom to Bust Blog Ever been on an Australian home lenders website and tested their ‘how much can I borrow’ calculator? Aussie Home Loans seems fine lending $1.014 million to a household with a “pre tax” income of $115,000 (or almost 9x income). Image source (www.aussie.com.au) Aussie may

1

Big iron retraces

BHP is down 2.5% today as oil gives it whack. RIO is also down hard 1.5% and FMG is flat. To the indexes:   The idiocy spreads are flat again: Juniors too:         Dalian is off 3 points from this morning as we again pivot around the $60 point of control.

21

David Leyonhjelm misses the point on taxes

By Leith van Onselen David Leyonhjelm, Liberal Democrat Senator for New South Wales, has penned a spirited piece in Online Opinion arguing that the level of taxation is far too high, both in a historical sense and when compared against other developed nations: The Coalition, Labor and the Greens will tell you that Australia’s tax

2

Chinese consumer stuck in doldrums

From Westpac: The absolute level of the CSI indicates that Chinese consumers are still anxious about their personal financial wellbeing and the economy more broadly, despite the major shift in the policy stance since late last year. Note that the 100bp cut in the required reserve ratio (April 20) is fully captured by this survey,

8

Construction tumbles down mining capex cliff

By Leith van Onselen The ABS has released data on the value of construction work done for the March quarter of 2015, which registered a seasonally-adjusted 2.4% fall in total construction activity over the quarter and an 8.8% decline over the year. The result disappointed analysts’ expectations of a 1.4% fall over the quarter. The

39

Busted Pascometer throws pin at bubble

From the reformed Micheal Pascoe today: The reporting of banks being pulled into line on investor loans has concentrated on one part, re-establishing a differential between investor and owner-occupier rates without being able to spell out how big that differential might be. It won’t matter much anyway. But there is considerably more to APRA’s intentions than that, as

2

Citi destroys long run iron ore forecasts

More today from Ivan Szpakowski of Citi, my new favourite analyst at Bloomie: “The next decade is shaping up to be a complete reversal of the past decade…Perhaps the greatest structural challenge facing the iron ore market is the rolling over of Chinese iron ore demand, driven by declining domestic steel demand and rising scrap availability…As

8

RBA mulls Australia’s GFC bank run

RBA deputy Phil Lowe gives a nice speech today canvassing Australia’s 2008 bank run and what has been done since then to prevent a repeat occurrence. It is worth reading in full and remember while you do so that this is why regulators are now moving to slow mortgage credit growth (far too late in

0

Goldman sees weak GDP

We’re heading into the first quarter GDP release next week and Goldies is not up beat: Bottom line: Ahead of the official update next week, preliminary trade data point to a $1.0bn widening in Australia’s international trade deficit in 1Q2015 and an ~10bp drag to growth from net exports. On balance, this data are slightly weaker than

4

How far can the dollar-exposed industrials bull run?

From The Australian: Australian companies with US dollar earnings will be prime property over the next 12 to 18 months, according Shawn Hickman of Market Matters. “I think the $A will eventually fall well under 70c, significantly aiding companies with $US earnings,” Mr Hickman said. “The pursuit of companies with $US earnings is a mature

40

General Gotti launches total war on youth

By Leith van Onselen Dad’s Army’s Robert Gottliebsen (“Gotti”) is back today deriding Australia’s “young journalists” and defending the rights of older superannuants to avoid paying taxes: When is a retiree rich? The catch cry among the young journalists in many media organisations is that the real problem for the nation is that we have

5

Macro Morning (the bear awakes)

By Chris Becker This is what happens when you have one market taking a long weekend with US traders coming back and hitting the sell button and buying USD en masse! A very solid US durable goods order plus surprising consumer confidence prints gave further impetus to Fed rate hikes, so its a case of good

4

Why China’s stock rocket is pointed at Mars

From Goldman via Zero Hedge: China’s policy response to the global financial crisis created one of the largest debt buildups as a share of GDP seen anywhere in the world over the past 50 years. Cognizant of the risks of such a large credit buildup, since early 2013 (when the current Chinese leadership took over),

39

Tampon GST debate pulls wrong strings

By Leith van Onselen So, it looks like Joe Hockey’s pledge on Monday night’s Q&A Program to dump the GST on women’s sanitary products, like tampons, has the support of the states, which means there’s a good chance that it will be implemented. Viewed in isolation, the idea makes sense. Given that condoms have no

5

Is this the next big breakdown of the Australian dollar?

MB’s five drivers model of the Australian model nicely projected the recent breakout in the Aussie. As the battler is now sinking again let’s update the model. The five drivers are: interest rate differentials; global and Australian growth (more recently this has become more nuanced for the Aussie to be more about Chinese growth); investor

42

Mining bust crashes Pilbara property

By Leith van Onselen The mining bust in the Pilbara is fast turning into an epic housing bust, according to the Real Estate Institute of Western Australia: Median house prices in the Pilbara town of Karratha have plunged almost 34 per cent. …the average price in Karratha has fallen to $450,000, compared to $650,000 in

32

The great land banking scam exposed

Property development can be a dirty business, particularly when it comes to land-banking, which is the speciality of Australia’s largest developers. Land-banking involves the speculative buying of large parcels of land that are currently unsuitable for development in the hope of future development potential. But hope alone is not a business strategy. How can land

15

Why a Chinese Fortescue is against the national interest

A little PR faux pas with the AFR running a headline story on Fortescue’s own Singapore sling: Fortescue Metals Group established a company Singapore that could buy and sell its iron ore more than a year before it started attacking its rivals for doing the same thing. The company, called Fortescue International Marketing, is incorporated and domiciled in Singapore. Still dormant, it