ASX at the close

ScreenHunter_31 Jun. 04 16.42 Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets ASX 200 trades at four-week highs Equities have picked up where they left off on Friday with a rally across the region. The ASX 200 has been a standout after weeks of underperformance. The return to strength of the energy space has driven the gains as investors speculate on crude oil prices. After seeing a rebound on Friday, many have been calling a bottom in oil prices and feel this is a beginning of a recovery. With Saudi Arabia pledging its commitment to seeing stability in oil prices, many took this as a catalyst for a...
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WA’s delusional iron ore forecast sinks Budget

ScreenHunter_07 Nov. 22 08.59 By Leith van Onselen The comedy act that was the 2014-15 Western Australian State Budget, which delusionally forecast high iron ore prices as far as the eye can see, along with surging royalty revenue (see below table and chart), has finally been exposed, with the State Government's Mid-year Financial Projections Statement revealing a $1.6 billion downgrade in Budget revenues in 2014-15, and an unprecedented $5 billion downgrade over the forward estimates period (2014-15 to 2017-18). According to the Statement: Notwithstanding strong growth in exports (with Western Australia accounting...
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Petrol prices in biggest fall for six years

ScreenHunter_04 Sep. 23 15.14 From CommSec: According to the Australian Institute of Petroleum, the national average Australian price of petrol fell by 4.0 cents per litre to a 4-year low of 128.4 cents a litre in the week to December 21. The fall in the petrol price over the last month was the biggest decline for an equivalent period in 6 years... Today, the national average wholesale (terminal gate) unleaded petrol price stands at a 4-year low (lowest since October 4 2010) of 112.18 cents per litre, down 4 cents a litre in the past week. The terminal gate price has fallen by over 17 cents a litre in the past five...
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Online retail sales growth lowest on record

ScreenHunter_5611 Dec. 22 13.14 By Leith van Onselen NAB has released its online retail sales index for November, which registered the slowest sales growth in the index's history, with online sales contracting a seasonally adjusted 0.2% over the month to be up just 3.9% over the year: In dollar terms, we estimate Australians spent $16.3 billion on online retail in the 12 months to November 2014. This level is equivalent to 6.8% of spending at traditional bricks & mortar retailers as measured by the ABS (excluding cafés, restaurants and takeaway food, to create a like-for-like comparison) in the 12 months to October...
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Government slashes official iron ore forecast

ScreenHunter_05 Mar. 12 11.39 By Leith van Onselen The Department of Industry, which replaced the now defunct Bureau of Resources and Energy Economics (BREE) as the official commodity forecaster, has heavily downgraded it iron ore price forecast next year to $US63 a tonne, from $US94 a tonne in September. Below are the key extracts from the quarterly report: A rapid increase in the supply of iron ore combined with moderating demand growth in China resulted in the price of iron ore falling 50 per cent in 2014. The price of iron ore (FOB Australia) has averaged US$90 in 2014 but as of mid-December is trading around US$70, the...
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A textbook case of bureaucratic waste

ScreenHunter_5604 Dec. 22 11.22 By Leith van Onselen In a story that is befitting an April Fools Day joke, independent Senator Nick Xenophon has unearthed a textbook case of bureaucratic waste and mismanagement, whereby the Department of Human Services has spent at least $500,000 of taxpayers' money in legal fees fighting a child support dispute over $6000. From The Canberra Times: Throughout the three-year legal battle with the father, a determined litigant known simply as "DT"..., Human Services have tried to resist handing over documents to the court and defied orders to release information to the Office of the Australian...
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Daily iron ore price update (steel glut)

ScreenHunter_07 Nov. 26 16.13 Here are the latest prices and charts pertaining to the iron ore complex, with small bounces recorded for spot (Qingdao), 12 month swap and futures, but ongoing falls for steel prices (Rebar), which hit a multi-year low: Note from the above that average steel prices (Rebar) have fallen to their lowest level in at least 5 1/2 years. The news comes as Beijing has been found to have routinely underestimated output from its sprawling steel sector, according to the SCMP: Beijing has vowed to cut overcapacity in its steel sector, the world's biggest, but huge discrepancies in the data...
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Dog days have arrived for the Australian economy

ScreenHunter_5596 Dec. 22 09.07 By Leith van Onselen Professor Ross Garnaut, whose book released last year entitled Dog Days: Australia after the Boom predicted a prolonged period of falling living standards unless Australia raises productivity and boosts competitiveness by lowering the real exchange rate, has returned proclaiming that "regrettably the dog days scenario [outlined in my book] is playing out very much". From The AFR: “We’ve got a longer period of grind: of falling real per-capita incomes; of underperformance of employment before we get the economy growing at a rate that will start to deal with the unemployment...
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Australia hits peak mortgage debt

ScreenHunter_5590 Dec. 19 15.43 By Leith van Onselen The Reserve Bank of Australia (RBA) has released its household debt ratio data for the September quarter, which reveals that outstanding mortgage debt has hit the highest ever level when compared against GDP and household incomes. As shown in the next chart, the ratio of housing debt to GDP was a record 87.7% as at September 2014, eclipsing the previous record high 86.9% as at March 2010 (see next chart). In a similar vein, the ratio of housing debt to household disposable income was a record 139.0% as at September 2014, easily eclipsing the June 2010 peak of 134.7%...
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Without revenue, we’ve only half a budget debate

ScreenHunter_64 Jul. 29 15.04 Cross-posted from The Conversation: The missing element in last week’s mid-year economic and fiscal outlook, and more broadly, in current government policy, stares Australians in the face. Revenue needs to be increased. Increasing taxes, reducing tax concessions and eliminating loopholes are all options, which I and other commentators have argued for. For example, journalist Peter Martin has shown that if compulsory superannuation contributions were taxed as income, i.e. like wages (rather than being taxed at a concessional rate) there would be a net gain to the budget of approximately A$12...
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Melbourne drives auction clearances lower

ScreenHunter_19 Mar. 13 13.12 The national auction clearance rate fell over the weekend, driven by a big decline in Melbourne. According to RP Data, the national weighted average preliminary auction clearance rate was 64.3% over the weekend, which was down 0.9% from the 65.2% clearance rate recorded last weekend. Sydney’s clearance rate rose by 5.0% to 76.2%, whereas Melbourne’s fell to 61.2% (last weekend 65.9%). Brisbane, which typically only has a small number of auctions, experienced a rise in its clearance rate (up 3.5% to 50.8%). Overall auction volumes (1,622) were down significantly on last weekend’s...
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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 21 December 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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Reviewing the Trades of the Year (Paid subscribers only)

trader Welcome to MB's final special report for 2014. It is for paid subscribers (not trialees) so get yourself a sub today and Merry Christmas! ______________________________________________________________________ by Chris Becker Its been an astounding year trading markets in 2014 with some tremendous bubbles and eye-popping crashes. As we head into Christmas with a Russian and emerging market currency crisis, energy and commodity markets in turmoil and stocks rising and falling 2% a day who knew it was going to be such a volatile 2014? In this report I want to go over the big movers, not...
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Links 22 December 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Do falling oil prices raise the threat of deflation? - Econbrowser The Conventional Wisdom On Oil Is Always Wrong - fivethirtyeight.com Of Kiwis and Currencies: How a 2% Inflation Target Became Global Economic Gospel - New York Times The Blacklist That Rules Wall Street’s Loan Market - Bloomberg Deflation Warning Sounds as 2-Year Break-Even Rates Go Negative - Bloomberg Oil’s Drop Hits Big Investors Hard - Wall Street Journal When to Throw in the Towel on a Stock - cleareyesinvesting.com What Is Intrinsic Value, And Who Decides It? -...
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Weekend Links Dec 20-21

the-links1-300x233   This will be a little slower than usual today.....   China China’s superlative growth looks hard to sustain – Reuters Chinese corporate failures pegged to rise – Nikkei Asian Review Xi’s Reform Gambit – Project-Syndicate What Bad-Loan Crisis? China Banks Jump Most Since 2009 - Bloomberg Russia may seek China help to deal with crisis - SCMP China says economy was 3.4pc bigger last year – SCMP Beijing may boost project spending in Russia amid rouble crisis – SCMP China adds the equivalent of Singapore to its 2013 economic data –...
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Science, Technology, Culture, Society, Health, Medicine & Sundries Dec 20-21

Digitales_Geländemodell Science & Technology Fairness, accountability, and transparency in big data models - Mathbabe SpaceX to attempt rocket landing at sea – Reuters Russia considers building its own space station: RIA – Reuters 17 Ridiculous Victorian Inventions That Didn’t Change the World – Wired New, tighter timeline confirms ancient volcanism aligned with dinosaurs' extinction - Phy.org How the physics of champagne bubbles may help address the world's future energy needs – Phys.org Research aims to improve rechargeable batteries by focusing on graphene oxide paper –...
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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 Asia rally continues but China stutters Asia has picked up on the positive lead from US trade and extended its gains from a buoyant session yesterday. With the rally managing to last more than a day, I feel the Fed will be pleased it managed to find the right balance with its language. Attention now turns to Japan, where the Bank of Japan (BoJ) meeting concluded without any additional measures announced. However, the statement and press conference could still bring some volatility at some stage during Asian trade. Judging...
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The bad and ugly sides of NewsCorp

the_good__the_bad___the_ugly_wtitle Crossposted from The Conversation: by Denis Muller, Senior Research Fellow in the Centre for Advancing Journalism at University of Melbourne AUST gets wake-call with Sydney terror. Only Daily Telegraph caught the bloody outcome at 2.00 am. Congrats. — Rupert Murdoch (@rupertmurdoch) December 15, 2014 In one brutally insensitive tweet, Rupert Murdoch told the world everything it ever needed to know about the central tenet of the News Corp culture: nothing matters except the story. It is a culture in which the ends justify the means. It is a culture that celebrates cruel vulgarity,...
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How does China stack-up against Japan’s bubble?

ScreenHunter_5587 Dec. 19 12.38 From Westpac's Phat Dragon comes his final report for 2014: ...can a current account surplus economy have a financial crisis? Phat Dragon notes that history says yes (indeed, there is one underway in Russia right now), but beyond resource dependency, the best example is the Japanese experience in the 1990s. In Japan a combination of rapid credit growth, pervasive, other-worldly asset price inflation (equities, real estate, gold course memberships etc etc), with ever escalating expansions in balance sheets funded by revalued assets, in classic Kindlebergian fashion. Rapid currency appreciation kept...
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East West Link highlights need for FOI reform

ScreenHunter_5488 Dec. 16 10.03 Cross-posted from The Conversation: The disclosure of the full business case for the East West road link in Melbourne confirmed what many had suspected – the project is a dud. The release also unequivocally shows that the Victorian Freedom of Information (FOI) system failed on its most basic task – that is, to facilitate the disclosure of information that is in the utmost public interest. It is hard to conceive, apart from the reasons for bringing the country to war, of what could carry a higher public interest than how a government proposes to use A$5 billion in taxpayer money for a major...
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Bad, not high, taxes are holding Australia back

ScreenHunter_5581 Dec. 19 10.14 By Leith van Onselen John Roskam, executive director of the Institute of Public Affairs, has penned a piece in The AFR today debunking the "myth" that Australia is a low taxing country, and arguing that the only true tax reform is one that cuts taxes: It is a myth that Australia is a low-tax country, because we’re not... The claim that Australia is a “low-tax” country is based on data collected and presented by the Paris-based Organisation for Economic Co-operation and Development (OECD)... When the OECD calculates taxes in Australia, it includes taxes collected by local, state and...
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Daily iron ore price update (uptick)

iron ore cranes digging by Chris Becker An arrest in falls yesterday across the iron ore complex, saving rebar, as news that India will be adding to the seaborne supply glut in the near future. First the tables and charts: Texture on India from Mining Weekly: India’s steel ministry today said that state owned mining company National Mineral Development Corp will raise output to over 75 million tonnes per annum by the 2018-2019 financial year. The target for 2020-2021 is more than 100 million tonnes per year. That’s up from only 30 million in the current year. The production surge is required to push...
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Gerard Minack on why in 2015, Australia runs out of luck

ScreenHunter_5557 Dec. 18 18.22 By Gerard Minack, founder of Minack Advisors Australia’s once in a century commodity boom is (unsurprisingly) reversing. There is a serious risk – say, a 40% chance – that Australia has a recession in 2015. Recession would become my base case if leading indicators of employment deteriorate. Under almost any scenario the outlook is for a lower A$, lower interest rates and under-performing equities. If there is a recession expect sharp outright losses in equities, notably banks, and significant falls in house prices. The past decade saw a once-in-a-century boom in Australia’s commodity...
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Macro Morning (Santa is in town!)

marketmorning by Chris Becker Santa (or Janet depending on your spelling) has arrived! A stunning bounce in risk since the FOMC meeting with stocks soaring, bonds falling and oil going fa-la-la-la down down down. First off the coal in the stocking, with Treasuries having their worst sell off in nearly two years as capital rotated out of bonds and into stocks, with 10 year yields up 7 points to 2.21% and 30 years up 9 points to 2.82% A similar dynamic in European bonds, with UK Gilts up 10 points to 1.87% and German bunds up 2 points as the continent also swamped into stocks. In fact the hourly chart of DAX...
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Phat Dragon’s China real estate chart pack

ScreenHunter_18 Nov. 22 14.25 Below are some charts and commentary from Phat Dragon's latest China Real Estate Chart Pack: Prices remain under downward pressure, but some diversity first returned in October, and increased in November, after the oneway race to the bottom seen in Q3. The new market across every tier remains visibly weak. Developers continue to discount aggressively to clear their stock on hand and sellers are maintaining abundant supply in the secondary market in the vast majority of cities. As in October, Beijing saw gains month-on-month in secondary markets, while Shanghai edged slightly lower after a...
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