Abbott popularity surges among Indian youth

imgres If only they voted, from the UK Telegraph: Australia’s prime minister, has denied claims he bought “likes” on Facebook after it emerged that his biggest supporters are 18 to 34 year olds from New Delhi. Tony Abbott, whose approval ratings in Australia are low, said the surge was due to a recent visit to Australia by Narendra Modi, India’s prime minister, whose foreign tours tend to generate widespread enthusiasm both at home and from India’s expatriate communities. The recent surge in “likes” on Mr Abbott’s Facebook page was detected by a pair of Sydney comedians...
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Australian dollar smash resumes

1343012726_1pesoV The Aussie smash resumed last night with a new four year low just above $85.10: The iron ore crash is playing its part, as is good US growth, with bond rates falling faster in Australia: The end result is the spread between US and Australian bond rates is on verge of breakdown: Phil Lowe gave it a nudge as well. However, the Aussie was singled out for pain across the spectrum: Iron ore is certainly weighing and as it heads for $50 over the next eighteen months we can expect first 80 cents on the dollar, then 60 cents as the rate cuts flow, then sub-50 cents in the next...
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Phil Lowe celebrates houses and holes

url My great hope for the future of the Reserve Bank of Australia is fading away. Deputy Governor Phil Lowe showed great promise in the early century as he led from below the bank's push against the Greenspan doctrine of the time. Alas, the independence of thought that characterised that young man appears to have been molded by the bank's awesome powers of group think into just another broken record pushing Australia further and further into structural imbalances. Last night, vice-Capt' Lowe described Australia's houses and holes economy beautifully while completely overlooking its internal...
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More Glenrio dreaming

images From Gina's mining newsletter: Bernstein’s ­London-based senior analyst, Paul Gait...told The Australian ­Financial Review that Glencore’s shock announcement it would shut down its Australian coal operations for three weeks is a strong indication that Mr Glasenberg will try again for Rio. Mr Glasenberg would be able to point to Glencore’s willingness to pull tonnes out of an oversupplied market in a direct challenge to Rio over its expansion in iron ore, Mr Gait said. “To me this coal announcement is clearly Ivan ­playing games,” he said. “It had the language of someone trying to...
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Daily LNG price update (Brent bash)

fg35 Oil was knocked hither and thither last night as OPEC members muttered about no cuts and tightening discipline on existing targets.  Brent is down 2% in the low $78s as I write: The equivalent LNG contract estimate is $11.64mmBtu: The spot market is still weakening as well, down 6 cents to $10.10mmBtu, with sub-$10 in its sights: In news, the AFR has nice wrap on the state of play for developing US projects: The US could be shipping 60 to 70 million tonnes of liquefied natural gas by the end of the decade, cementing it as one of the industry’s top three players. ...Three...
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The hope of a Chinese rebound

Screen-Shot-2014-11-25-at-13.46.39 From Gavekal’s Chen Long via FTAlphaville: The crucial question is how the new easing cycle will affect credit growth and economic growth. In both 2009 and 2012-13, credit growth surged following rate cuts. In 2009, total credit growth leaped to 36% as new bank loans doubled the target official target. In response GDP growth rebounded to 12% and property prices skyrocketed. In 2012-13, YoY loan growth bounced modestly to 16%, but total credit growth rebounded to 22% in early 2013 as shadow financing exploded. The credit easing ignited another property boom, but the impact on the real economy...
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Links 26 November 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: The commodity super-cycle aint over yet - Market Anthropology Oil prices: What’s the futures market telling us - covestor.com The bull case for European equities - Financial Times US Stocks Surge To ’Best’ Streak In 86 years - Zero Hedge The 51% Chinese Stock Rout That Analysts Never Saw Coming - Bloomberg Millennial Investors Don’t Trust The Market - mebfaber.com North America: US GDP registers best consecutive quarters of growth since 2003 -  Real Time Economics Q3 GDP revised upwards - Bespoke US house price inflation slowing -...
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ASX at the close

ScreenHunter_31 Jun. 04 16.42 Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets Yesterday’s euphoric reaction to China’s easing measures has proved to be short lived as equities around the region experience some downside today. Japan is an exception after returning to trade following yesterday’s holiday in observance of Labour Thanksgiving Day. The Nikkei has played a bit of catch up and is modestly firmer with investors focusing on BoJ monetary policy meeting minutes and some comments by BoJ Governor Kuroda. USD/JPY reacted positively to the BoJ minutes which showed Kuroda is considering expanding the...
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More analysts see rate cuts

capex-620x349 From the SMH blog: There’s an increasing likelihood that the Reserve Bank will have to cut rates next year, global asset manager AllianceBernstein says. “The risks for the Australian economy are tilting to the downside, in our view, and, far from increasing interest rates, there’s a growing prospect that the RBA may well need to cut them again,” said AllianceBernstein senior economist Guy Bruten. Currently, the vast majority of economists is expecting a rise in the cash rate next year. The rationale is that the downturn in resources is being offset by an economic rebalancing in which...
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Australian dollar threatens new lows

fghe5 The Aussie is under heavy selling pressure today as it becomes apparent to markets that the Aitken iron ore crash is far from over: Only 30 pips from the break and then onto 80 cents, followed by 60 cents in the subsequent 18 months as the rate cuts flow: And finally, full circle for the mining boom, under 50 cents in the next global shock. One really does wonder why any investor, local or international, would buy Australian right...
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Taxis and hire cars declare war on Uber

ScreenHunter_5153 Nov. 25 11.54 By Leith van Onselen The fight against Uber's ridesharing service, Uber-X, is getting ugly, with taxi and hire car companies resorting to making citizens' arrests against drivers illegally carrying passengers. From The SMH: Hire car owner Russell Howarth has now carried out multiple arrests of uberX drivers, and other drivers are attempting to mobilise in various ways against what they see as an existential threat to their pay and conditions... The incident demonstrates the volatility of situations where the incumbent industry attempts to turn the tables on its upstart competitor... Anger...
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Capex preview

imgres From Westpac come a preview to tomorrow's capex release: The ABS survey of private business investment plans, the CAPEX survey, will provide some further guidance to growth prospects. The September quarter edition will be released on November 27, with responses received over October and November. This update will include the fourth estimate of plans for 2014/15. The 3rd estimate for 2014/15 pointed to a decline in business capex, with a sharp downturn in mining only partially offset by a lift in service sector investment. These broad themes are likely to be restated. What policy makers will...
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China plans profits-based tax for iron ore miners

imgres From Bloomie: Regulators are working on a plan to shift the current volume-based taxation to price-based, China Business News reports, citing Lei Pingxi, executive vice chairman of the China Metallurgical Mining Enterprise The reform may help ease mining company's tax burden amid falling iron ore prices. What a choking irony. It was Australia's giant iron ore miners that trashed the equivalent Australian tax, insisting that it would deter their expansion plans, and now the Chinese rivals they are trying to put out of business with that excess supply will be supported by a Chinese version. As...
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Iron ore crash resumes

liub Charlie Aitken had one good day but the iron ore crash returns today with RIO and BHP at the verge of new 2014 lows, down the better part of 2% and retracing much of yesterday's short squeeze. FMG is down 6%. Here are the comparative charts: The idiocy spreads are still widening: Juniors are still corpses: Dalian iron ore futures have slumped again, down 2.3% to new lows at 465, roughly $60. And there's more to come, I reckon. The following two charts from Morgan Stanley show that Chinese iron ore inventories remain abundant: Both "days of inventory" lines are a little...
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Risk on, as interest only mortgages hit record

ScreenHunter_12 Sep. 23 12.54 By Leith van Onselen APRA just released their quarterly data on housing exposures, which captures Authorised Deposit-Taking Institutions (ADIs) loans to the housing sector for the September quarter of 2014. According to APRA, ADIs’ total domestic housing loans were $1.3 trillion, an increase of $103.4 billion (9.0%) over the year to September, with the value of interest only loans growing by 14%. There were also 5.2 million housing loans outstanding with an average balance of $239,000. Of mortgages issued in the September quarter, 42.5% were interest-only loans. Moreover, over the year to...
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Glencore-Rio merger is pure fantasy

url From the AFR: Hedge funds including GLG Partners, DE Shaw & Co, and Pentwater Capital Management were told this month by a prominent London mining banker to prepare for an all-but-inevitable takeover of Rio Tinto by Glencore, according to people familiar with the meeting. Former JPMorgan Chase & Co. dealmaker Ian Hannam, who now runs a boutique advisory firm, convened representatives of more than 20 investors at Corrigan’s Mayfair restaurant in the British capital in mid-November to share his views on the potential deal, the people said, asking not to be identified discussing a private...
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Markets begin pricing rate cut

imgres From The Australian: Speculation of another rate cut in Australia continues to grow, with overnight indexed swaps now pricing in a 40% chance of a 25 basis point cut next August. Expectations on the peak probability of a rate cut have risen from about 12% in the past two weeks. While the market is some way from fully pricing in a rate cut, 40% is quite a substantial probability. Contrary to the consensus of economists, which is for a 25 basis point hike in Q315, Q415 and Q415, the market sees no chance of a rate hike in the next 12 months. A number of economists recently lowered their 2015 GDP...
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Fitch: Aussie banks will need to raise capital

ScreenHunter_06 Jun. 26 22.42 By Leith van Onselen Global credit ratings agency, Fitch, has labelled Australia's big four banks’ capital profiles as “about average” and claimed that they could be forced to increase their capital buffers by up to $53 billion - equivalent to nearly two year's combined profits - if the Murray financial system inquiry takes aggressive action to bolster the banking system: Australia's Financial System Inquiry (FSI), due to report by end-2014, is likely to recommend higher capital requirements for the large banks, says Fitch Ratings. A higher capital charge and/or a rise to the mortgage...
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Consumer confidence tracks sideways

ScreenHunter_15 Mar. 18 16.24 By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index rose by 1.3 points in the week ended 23 November to 114.3, to be just above its long-run average reading of 113.2 (see next chart). ANZ chief economist was particularly happy with the result, noting that “alongside low interest rates and rising house prices, this should support consumer confidence and retail spending as we head into the Christmas season”. ANZ also provided the below chart, which compares the sub-index of the financial situation compared to a year ago against real household consumption...
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Aussies flee to New Zealand

ScreenHunter_5145 Nov. 25 09.48 By Leith van Onselen Statistics New Zealand has today released its permanent & long-term migration figures, which revealed that New Zealand net migration is at record highs, with net migration from Australia to New Zealand also at the highest level in 21 years: Seasonally adjusted permanent and long-term (PLT) migration figures showed a net gain (more arrivals than departures) of 5,200 migrants in October 2014. This surpasses the previous high, recorded in August 2014 (4,800). Before 2014, the last peak was in February 2003 (4,700). Net migration has increased in most months over the...
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The last stand of Australia’s dying economic model

url The AFR is reporting that: Australia’s big four banks are tipped to raise $134 billion from wholesale markets this financial year, the most since 2009-10, as lenders use cheaper global funds to fuel domestic competition. ...The last time banks raised this much wholesale money was in financial 2010, when the government was guaranteeing bank borrowings in response to the financial crisis. The trend helps to lower banks costs, as most of the wholesale money being raised replaces more expensive funding secured during the crisis. Three cheers for them! Here are the latest offshore borrowing...
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The population monster that’s swallowing Victorian governments

ScreenHunter_5140 Nov. 25 08.03 By Leith van Onselen The Australian's Judith Sloan has questioned why Victorians are set to throw-out the one-term Napthine Government when its performance has not been all that bad: It’s not as though the Coalition government has been especially bad. There is a good news story to tell about fiscal management, expense control and initiatives for some needed new infrastructure. Victoria retains its AAA credit rating, which is in marked contrast with most of the other states. To be sure, the Victorian economy has been sagging along with the rest of the economy. And given the relative...
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Macro Morning: German joy

marketmorning By Chris Becker A relatively calm night on macro markets with small gains in most stock markets, USD strengthening against all but the Euro currencies with only two data releases of note. First, the German IFO survey surprised a little on the upside which helped the DAX move along, up 0.5% with further gains in futures: The daily trend for DAX is now a little over-extended, having now reached its former high in September but is following the S&P500 in lockstep, up 0.3% to another record high. The second data print - services PMI for the US - came in strong, but a bit lower than...
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Why do talking heads hate short-sellers?

somebody-clipart-1227973289772298741celfred_Pointing_finger.svg.med One of the more enduring mysteries of investment is the special hostility that is reserved for short-sellers. Most (if not all) of the major investment talking heads never offer short calls and more often than not spend their days trying to have them banned. It's a mystery for two simple reasons: shorts are the smartest players in the market and it is they that take out the rubbish why would anyone restrict themselves to only one half of the gains available in investment? Of course it's not a mystery at all. The hostility is a result of three generations of a credit-driven rise in asset...
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NZ gives Oz an income thrashing

ScreenHunter_5138 Nov. 25 07.35 By Leith van Onselen Statistics New Zealand has released its annual National Accounts (Income and Expenditure) data for the year to March 2014, which revealed that New Zealand national disposable income increased by a strong 8.2% over the year: New Zealand earned $14.4 billion more as a country than in 2013, Statistics New Zealand said today. National disposable income was up 8.2 percent to $189.2 billion, in current prices, in the March 2014 year. The growth was led by business profits, while income from employment also grew. Business profits were up $9.0 billion (9.8 percent), due to large...
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