ASX at the close

ScreenHunter_31 Jun. 04 16.42 Chris Weston, Chief Market Strategist at IG Markets There will certainly be a number of money managers outperforming benchmarks wishing that the year would end abruptly so they could lock in performance. Still, there is much water left to flow under the bridge, so traders need to stay vigilant. There are five weeks to Christmas and six to the New Year, but traders still have to navigate through the lower liquidity and the raft of December event risk. Here we get the ECB meeting (4 December), the second Targeted Long-Term Refinancing Operation (11 December) and the Japanese election (17...
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QLD’s mega-casino fails

rca__casino_550 From the AFR: Hong Kong billionaire Tony Fung said he is still committed to building the $8.5 billion integrated casino resort at Yorkey’s Knob in Far North Queensland, despite failing to acquire the Reef Casino in Cairns. ...The acquisition of the Reef Casino was crucial to Mr Fung’s plans as the Cairns casino licence was a fall-back if probity checks failed on the Aquis Resort. Aquis said it could not meet the deadline for regulatory approvals for the Reef Casino due by this Friday. I'm sure Comrade Campbell can come up with...
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Is Medibank’s sale a dud deal for taxpayers?

ScreenHunter_5121 Nov. 24 12.54 By Leith van Onselen Business Spectator's Alan Kohler has penned an interesting rebuke of the Medibank privatisation today, arguing that it represents a dud deal for taxpayers: ...someone might have pointed out (but didn’t) that taxpayers are forgoing a dividend of $231m that grows each year, and could have borrowed that $5.7 billion for $185.4m in interest, fixed for 10 years. But that would be debt, wouldn’t it, and we can’t have that. ...with the bond rate at 3.2 per cent, taxpayers would be better off keeping Medibank and borrowing the money for infrastructure rather than...
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Iron ore miner short squeeze disappoints

url I was hoping for better. RIO and BHP are up a lousy 3.5%, reversing just two days of losses. FMG is doing better, up 9.5% and reversing 3 days of losses and one third of the Aitken crash. Here are the comparative indexes: The idiocy spreads are all widening again: The juniors have given the PBOC one giant yawn as the dirt is shoveled over their caskets. ARI is up 5% and BCI 6% but that's about it: Dalian May futures have opened up 2.1%, also muted. Let's see if they get moving later in the...
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BIS’ happy mining cliff

ScreenHunter_08 Nov. 07 08.52 By Leith van Onselen BIS Shrapnel is out today warning of a 40% slump in mining investment: the biggest decline on record. From The ABC: BIS Shrapnel has released the findings of its Mining in Australia 2014-2029 report which points to a 40 per cent collapse in investment in the sector over four years. "Already we're seeing a substantial slump take place in iron ore and coal investment around the country but now with the LNG investment boom about to end we're about to see the biggest slump ever in mining investment," spokesman Adrian Hart said. He said the current slump had barely...
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HIA sees record new home construction

ScreenHunter_01 Mar. 03 22.48 By Leith van Onselen The Housing Industry Association (HIA) has released a new report forecasting a record level of new home construction across Australia in 2014, and elevated construction levels to 2016: “In aggregate, we will commence nearly 190,000 new dwellings in 2014, surpassing the previous record of 187,000 back in 1994.” “The momentum culminating in this milestone has provided a substantial boost to Australia’s economy at a crucial juncture in the cycle. Below trend economic growth and weak labour market outcomes would be considerably worse without the reach a new home...
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ABC joins the austerity drive

BamtcdqCQAE6raU I'm a big fan of the ABC but this will be good for a national broadcaster which is a very deep trough of entitlement. From itself: More than 400 ABC staff could lose their jobs as the public broadcaster moves to implement the $254 million the Federal Government will cut from the public broadcaster over the next five years. Managing director Mark Scott made the announcement when he addressed staff at the ABC's Ultimo Centre in Sydney this morning. Mr Scott said the Corporation was committed to using back-office and overhead savings to fund the $207 million that would be cut from the ABC's budget...
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Why is mining so unpopular?

imgres From her newsletter: Gina Rinehart has attacked the "negativity" she says the mining industry is regarded with, considering Australia couldn't "survive" without it. "For an industry that delivers so much, wouldn't you think there would be just a little more understanding and less negativity for what mining contributes to our country?", Rinehart said in a speech in Darwin on Saturday. ..."Mining is the largest earner of export income generating more than $200 billion in much-needed revenue for our country, a country in record debt", she told the Mining and Related Industries annual lunch at the...
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Sour China steel sentiment turns rancid

images From Mac Bank come the November Chinese steel sentiment survey taken during the APEC week. They're not happy: Demand stinks, especially property: More want less iron ore: Because China is swimming in the stuff: Pre rate cut,...
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Hammer to fall on dodgy Chinese property money

ScreenHunter_5115 Nov. 24 09.52 By Leith van Onselen Details about the parliamentary inquiry's report into foreign investment in Australian property, which is scheduled for release this Thursday, are becoming clearer, with information leaks pointing to the implementation of a new $1,500 application fee on foreign property purchases, as well as an overhaul of the existing monitoring and compliance regime. As reported yesterday in the Daily Telegraph, the proposed new $1,500 application fee would raise some $600 million over the next decade, which would be used to beef-up monitoring and compliance activities by the Foreign...
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CS: RBA to cut on fading property

csrba From The Australian: The Reserve Bank of Australia is moving closer to cutting rate according to Credit Suisse. “Recent comments from RBA Governor Stevens suggest that the Bank is more concerned about the growth outlook than financial stability in the abstract,” Credit Suisse strategists Damien Boey and Hasan Tevfik say in a report. “The unwillingness of the RBA to implement macro-prudential tightening suggests to us that the Bank is worried about overtightening, which in turn implies downside growth risks.” “We believe that the Bank’s next step will be to cut rates, especially...
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Fairfax vs PBOC on a new China credit boom!

imgres Gina's mining newsletter couldn't wait to get its teeth into this one: "Top leaders have changed their views," said a senior economist at a government think-tank involved in internal policy discussions. The economist, who declined to be named, said the People's Bank of China had shifted its focus toward broad-based stimulus and were open to more rate cuts as well as a cut to the banking industry's reserve requirement ratio (RRR), which effectively restricts the amount of capital available to fund loans. ..."Further interest rate cuts should be in the pipeline as we have entered into a rate-cut...
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Phat Dragon on the Chinese rate cut

2 From Westpac's Phat Dragon: The full range of policy interest rates were lowered to varying degrees on Friday night, surprising the market, Phat Dragon included. This is an important move for the real economy and for structural reform, on a number of levels. The actual moves were that the benchmark one year deposit rate was lowered by 25bps to 2.75% from 3.00%, while the ‘top-up’ factor was increased from 1.1 times to 1.2 times. All other maturities were lowered by 25bps, except the 2 year, which was lowered 40bps. Simultaneously, the benchmark one year lending rate was lowered by 40bps,...
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Aussie banks ill-prepared for property crash

ScreenHunter_5114 Nov. 24 09.00 By Leith van Onselen Australia's big four banks are ill-prepared for a housing crisis, according to AMP Capital's head of credit markets, Jeff Brunton, who claims that official stress tests failed to account for the impact on mortgages that did not default. He takes up the argument pioneered at MB by Deep T, from The Canberra Times: "The banks will have enough capital to deal with the mortgages and the corporate borrowers who default, but they will then be left with a financial system that has got a high loan-to-value, with many Australians in negative equity positions"... "The standard stress...
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Macro Morning: Central banks a set a fire

marketmorning By Chris Becker Well its going to be another interesting week on macro markets again with news of an interest rate cut in China and Mario Draghi smacking down the Euro setting the bulls nostrils flaring! First, in Europe Draghi's strident comments on combating deflation saw the union currency crash against the USD, down over 130 pips to just below the 124 handle and just above earlier support in the month: Everyone is watching the 1.2360 terminal support line closely for capitulation and a target down in the low 1.20s from July 2012 levels. The EURAUD actually crashed further, falling over...
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Cometh the moment, cometh the man

Malcolm Turnbull webshot The Australian Liberal Party has a chance to rule the country for a generation. Here is how. Tony Abbott is a dead duck. Anyone still breathing can see the massive shift towards climate change action taking place around the world. China has pledged to cap emissions and will very likely do so ahead of schedule. Coal is in deep trouble. The US has committed to huge cuts in emissions and although the Republican Party is hostile to the commitment it does not have the power to prevent the US Environmental Protection Agency (EPA) from moving ahead. Any attempt at legislation will be blocked by...
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Senate to block cuts to auto industry assistance

ScreenHunter_5113 Nov. 24 07.42 By Leith van Onselen The Australian is reporting today that the Senate will block the Abbott Government's bid to cut assistance to the automotive sector (known as the Automotive Transform­ation Scheme, or ATS) by $900m between 2013-14 and 2020-21, by bringing forward the end date for the scheme and lowering the amount that individual firms can claim: Blocking the bill would reverse $500m in cuts to 2017-18 announced in last year’s Mid-Year Economic and Fiscal Outlook and a further $400m in savings announced in the May budget... “All available evidence shows that decimating the...
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NSW surges to top of land cost leaderboard

ScreenHunter_18 Jul. 05 10.22 By Leith van Onselen Earlier this month, the Australian Bureau of Statistics (ABS) released its 2013-14 Australian System of National Accounts (ASNA) data release, which provided a detailed presentation of annual national accounts data. Locked away on Table 61 was my favourite section of the release: data on aggregate land values at the state and national levels. This years release confirmed that, at a national level, the land values underpinning the Australian house prices surged, with all states and territories recording growth in nominal terms, but with New South Wales and Victoria leading...
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Auction clearances slip on high volumes

ScreenHunter_19 Mar. 13 13.12 The national auction clearance rate slipped over the weekend on the back of falls in Sydney and Melbourne. According to RP Data, the national weighted average preliminary auction clearance rate was 67.7% over the weekend, which was down 1.3% from the 69.0% preliminary clearance rate reported last weekend. Sydney’s clearance rate fell by 0.9% to 74.3%, whereas Melbourne’s fell to 64.9% (last weekend 66.7%). Brisbane, which typically only has a small number of auctions, experienced a big jump in its clearance rate (up 6.9% to 52.2%). Overall auction volumes (3,294) were up slightly on last...
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RP Data weekend property market update

ScreenHunter_18 Mar. 18 17.58 Click to view RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 23 November 2014. 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; and New listings...
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How far will the iron ore short squeeze run?

images Charlie Aitken will probably be patting himself on the back today. On Friday morning he said buy iron ore: “Obviously, the most beaten up sector in Australian equities is pure play iron ore stocks,” says Bell Potter Executive Director Charlie Aitken. “Yet, from a trading perspective they should be bought. All I know is every time the AFR runs a front page article about how much less Andrew Forrest is worth on paper that it’s usually the short-term bottom in iron ore prices and a solid, tradeable rally in Fortescue(FMG) follows.” “If we get any stability, or dare I say it, actually a...
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Daily iron ore price update (sixties)

anvil6-200x200 Here are the iron ore charts for November 21, 2014: And so, paper continued to burn on Friday, even after the Chinese rate cut, Dalian recovered but not much. Singapore is clearly more hopeful. Benchmark spot fell faster than Qingdao and ended at a new low of $69.80. Rebar average is clearly headed back from whence it came. Reuters has texture: "We knew that this year was going to be the first year when iron ore was in oversupply and I think we're just living with the consequences of that," Goldman Sachs analyst Christian Lelong said. "Right now there is no hard floor for...
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Daily LNG price update (the next iron ore)

dgwr Lot's of material news today for LNG and none of it good. The oil price managed a small bounce to $76.50 on the central bank bonfire Friday: That's got the LNG contract price up to $13.14mmBtu: But the central bank action won't reverse oil declines, only delay them a bit. From the FT: US imports of crude oil from Opec nations is at its lowest level in almost 30 years, underlining the impact of the shale revolution on global trade flows. The lower dependence on imports from the cartel, which pumps a third of the world’s crude, comes amid advances in hydraulic fracturing that has...
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China cuts interest rates, and?

imgres31-200x200 During the awful Chinese October data dump, I had this to say: One wonders if said target isn’t about to be cut, along with 2015 GDP and, possibly even reserve ratio requirements. Yes, the data was poor, moreover it showed no evidence of any turn from easing measures too date, so it's not really any great surprise that China cut rates late Friday. The FT says the following: The People’s Bank of China slashed its benchmark lending rate by 0.4 percentage points, while cutting its deposit rate by 0.25 per cent. This was a departure from previous rate adjustments, in which the lending and deposit...
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Sell side blows on China rate cuts

1311618182438 From Danske Bank: While it was clear that there was a slight easing bias in monetary policy in China, the interest rate cut was nonetheless a bit of a surprise. It suggests that China now has a more substantial easing bias in monetary policy and the government’s attempt to contain credit growth will be loosened somewhat in coming months. Hence, supporting growth now appears to be a higher priority. The implication of today’s interest rate cut is that the Chinese growth manufacturing PMIs and growth have probably bottomed out and should start to improve in Q1 when investment demand and...
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