ASX at the close

ScreenHunter_31-Jun.-04-16.424-200x200 Chris Weston, Chief Market Strategist at IG Markets It’s another big week for markets, with the perception of future central bank action firmly driving market price action. Asia has started in earnest and is seeing traders in rather bullish mood. Easing of benchmark interest rates from the People’s Bank of China have helped, although the AUD is not finding any real solace here, as traders seem to be positioning for 25 basis point cut tomorrow from the Reserve Bank of Australia. The cut to both the deposit rate and lending had been largely speculated on in local media for some time, so it...
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Chris Joye: Housing an “out-of-control freight train”

ScreenHunter_6302 Mar. 02 14.07 By Leith van Onselen The AFR's Chris Joye has this afternoon issued a stark warning that the Australian housing market is out-of-control: The bottom line is that Australia's housing boom is racing away like an out-of-control freight train... Some folks argue that this boom is nothing to lose sleep over because it is limited to these two cities [Sydney and Melbourne]. Yet New South Wales and Victoria represent almost 60 per cent of Australia's total population, and if you add in Queensland (where property values are rising at 2.3 times the rate of wages), the east coast accounts for 78 per cent...
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Time to choose the tax system we want

ScreenHunter_6278 Mar. 02 09.13 Cross-posted from The Conversation Five years ago the Henry Review undertook a detailed examination of Australia’s tax and transfer system. Today, the Tax and Transfer Policy Institute at ANU’s Crawford School has revisited the Henry Review, as the Australian government prepares to release its tax white paper. Tax reform should not be piecemeal, but should be considered across the system as a whole. Australia raises less tax overall than many comparable countries, including Canada and New Zealand. There is scope, and likely the budgetary need, to increase Australia’s tax take. As the...
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Krugman: Greece won

Capture From Mr Krugman:   How easy will it be to explain that 'victory' to the Greek...
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Minerals and petroleum exploration rises

ScreenHunter_07 Nov. 26 16.13 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released its Mineral & Petroleum Exploration data for the December quarter, which revealed rises in both minerals and petroleum exploration expenditure. Nationally, expenditure on minerals exploration rose by a seasonally-adjusted $6.4 million (1.5%) over the December quarter. The rise was driven by Queensland, where exploration expenditure rose by $9.1 million (10.6%): The various components, presented below in non-seasonally adjusted raw terms, rose over the quarter by $4 million or 0.9%. Iron ore exploration...
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Teflon miners rise as Dalian fades iron ore

2 There's no doubt about financial repression. The price of the only thing that you sell can crater yet your own equity value can still soar. It's magic! RIO is covered in such fairy dust today as it marches higher 2% on the Chinese rate cut and BHP is up a little less. Alas for FMG the truth will out and it is unable to rise as Dalian iron ore futures fall 2 points in the knowledge that China's structural adjustment remains fully on track. Here are the...
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How will the Australian dollar react to RBA cut?

d0hdrk2awqd6iglcwdcrxkd3.300x299x1 From BofAML via Forexlive: A Cut This Week But It's A Close Call: "It is uncontroversial to expect that the RBA will cut rates again in 1H15; the question remains when. We  expect it will cut again at its March meeting this week but the uncertainty is high. This is because although we accept that the short-term economic outlook warrants further easing, the RBA has provided no communicated forward guidance. And while a more dovish stance seems implied by its downgraded growth outlook, it does not seem to be holding a strong easing bias at all. This uncertainty is also reflected in the...
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New home sales plateau

ScreenHunter_18 Jul. 05 10.22 By Leith van Onselen The HIA has released its February New Home Sales Report, which is a survey of Australia’s largest volume builders, and it shows that home sales have plateaued - effectively treading water over the past year, despite a modest rise in January on the back of ‘multi-unit’ sales: Total seasonally adjusted new home sales increased by 1.8 per cent in January 2015, following the December decline of 1.9 per cent. The latest monthly increase was driven by a 9.9 per cent rise in ‘multi-unit’ sales, while detached house sales remained largely unchanged in January 2015 (up by 0.1...
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GDP partials weak

imgres The ABS has released "Business Indicators" which are partial inputs into this week's GDP figure and they portend badly: DECEMBER KEY FIGURES Sep Qtr 14 to Dec Qtr 14 Dec Qtr 13 to Dec Qtr 14 % % Sales of goods and services (Chain volume measures) Manufacturing Trend -0.3 -2.1 Seasonally Adjusted 0.0 -2.5 Wholesale trade Trend 0.3 1.1 Seasonally Adjusted 0.3 0.7 Inventories (Chain volume measures) Trend 0.4 0.4 Seasonally...
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Capital Economics issues Oz wake-up call

url From the SMH: Capital Economics has hit the local market with a bang, with the London-based economic research consultancy predicting the RBA’s cash rate will be 1.5 per cent by the end of the year and that the local economy will grow by a paltry 1.8 per cent this year with unemployment reaching 7 per cent by December, and potentially as high as 7.5 per cent next year. The bearish calls coincide with the appointment for the first time of a chief economist for Australia and New Zealand, Paul Dales, who believes that the RBA and economists will be forced to downgrade GDP and inflation forecasts...
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Some long overdue Glencore skepticism

AM-BH853_GLENCO_9U_20150301124206 From the WSJ: Days after Glencore PLC closed its 2013 purchase of Xstrata PLC in the largest mining deal ever, Chief Executive Ivan Glasenberg called it “a big play” on the commodity he arguably knew best: coal. “To really screw this up, the coal price has got to really tank,” he said in an interview. Since then, coal prices have fallen about 25%. ...China’s appetite for coal has weakened, with its consumption and production falling in 2014 for the first time in 14 years. U.S. demand is also waning as power plants shift to natural gas, and exports from coal-producing countries...
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TD monthly inflation pulls a donut

Pink_frosted_sprinkled_donut The TD Securities/Melbourne Institute Inflation Gauge for February has come in at zero and is running at a paltry 1.3% year on year, down from 1.5% in January. COMMSEC wraps it up: Tradable good prices fell by 0.7 cent over the year to February, but the annual growth rate of non-tradable inflation lifted from 2.5 per cent to 2.8 per cent.  The underlying rate (trimmed mean) rose by 0.2 per cent in February after a 0.3 per cent gain in January. The annual rate rose from 2.3 per cent to 2.7 per cent.  Excluding volatile items like petrol and fruit & vegetables, the inflation...
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Teenagers bear the brunt of unemployment rise

ScreenHunter_3946 Sep. 01 12.43 By Leith van Onselen The Brotherhood of St Laurence has today released a new report on teenage unemployment, whereby one-in-five teenagers are now unemployed: More than 290,000 Australian youth aged 15 to 24 were categorised as unemployed in January. The worst hit were the 15 to 19 year olds, with the unemployment rate for this group hitting 20 per cent – a level not seen since the mid 1990s. Nearly 160,000 Australians aged 15 to 19 were unemployed in January, out of an overall pool of more than 780,000 unemployed. If you are 15 to 24 and looking for work, your probability of finding a...
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Fitch charts the Australian housing bubble

ScreenHunter_02 Apr. 23 10.34 By Leith van Onselen Fitch has released its 2015 Global Housing Outlook report, which contains some worrying charts on Australia. First, the below chart shows that Australia's house price growth has been by far the strongest of the 15 nations sampled since 1997: New mortgage lending has also been the strongest since the Global Financial Crisis: Housing affordability in Australia is also stretched, whether measured on a price-to-income or price-to-rents basis: Meanwhile, three-year housing supply is almost keeping-up with demand (immigration): Fitch expects Australian...
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Which banks are driving the investor bubble?

stock-footage-a-group-of-wild-horses-move-across-the-foothills-near-reno-nevada The Australian Prudential Regulatory Authority (APRA) has released its monthly banking statistics that allow us to examine in detail which banks are driving the investor mortgage bubble and, more to the point, which must also be reined for doing so. The statistics show unsurprisingly that in volume terms it is the big four banks that are dominant: For the past eighteen months, the two Sydney banks, CBA (the big spikes for which appear to be bulk re-categorisations of loans as "investor") and WBC have driven surge. However, more recently both have been slowing with CBA now pushing out less...
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Manufacturing perma-recession deepens

1 It's our monthly update of the manufacturing perma-recession from the AIG today and it does not disappoint: The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) fell by 3.6 points to 45.4 points in February (seasonally adjusted). This indicated a third month of contraction in conditions (readings below 50 points indicate contraction) across the manufacturing sector following a brief stabilisation in November 2014.  The Australian PMI® typically ‘leads’ ABS data for manufacturing output by around 3 months. Recent results from the Australian...
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Australia’s planning disaster

ScreenHunter_277 Nov. 14 12.57 By Leith van Onselen The Grattan Institute will launch a new book today entitled City Limits: Why Australia's city's are broken and how we can fix them. The book contains a bunch of charts and analysis showing how Australia's cities are not functioning properly. Included amongst these is the next chart showing how the bulk of jobs created over the five years to 2011 were created closer to the CBD, whilst most new houses were created further-out from the CBD: The book also claims that inner city workers earn much more on average ($77,000 a year) than their suburban counterparts...
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Macro Morning: EU up, US down

marketmorning-200x200 By Chris Becker Friday night saw two important economic releases surprise to the upside plus another Chinese surprise over the weekend. First, in Europe, the German CPI print for February ticked up which dragged the year-on-year up out of deflation at 0.1%, sending the DAX up nearly 0.9%: Momentum is clearly accelerating here for the German market, but the technical pictures is different for the UK FTSE, which had a scratch day on Friday and is meeting resistance overhead on the dailies: In the US, the 4Q GDP print came in at 2.2%, beating expectations of a 2% growth rate, although it...
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It’s the economy, stupid

Capture Another day, another twist in The Abbottalypse, from the AFR: The latest monthly Fairfax/Ipsos poll shows the Coalition trailing Labor by just 51 per cent to 49 per cent on a two-party preferred basis. ...Mr Abbott still remains highly unpopular and Malcolm Turnbull has stretched his lead by 4 points to 39 per cent as the most preferred Liberal leader. Julie Bishop has moved into second place on 24 per cent, ahead of Mr Abbott on 19 per cent. Mr Shorten's rating as preferred prime minister fell 6 points in a month from 50 per cent to 44 per cent and Mr Abbott's same rating rose 5 points to 39...
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New Treasury head outlines reform challenge

ScreenHunter_6198 Feb. 25 09.00 By Leith van Onselen New secretary to the Australian Treasury, John Fraser, gave a speech on Friday to the Committee for Economic Development of Australia (CEDA) entitled “Australia’s Economic Policy Challenges”, which outlined some important observations about the economy and Budget, as well as priorities for economic reform. First up, Fraser claimed that tighter banking regulations are constraining growth in the real economy - a view I strongly dispute: [Australia's] economic growth has been below its long run average in 5 of the past 6 financial years, weighing on job creation and...
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RP Data: Home prices up 0.3% in February

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen RP Data's price results are in for February, with the daily index recording a 0.32% rise over the month at the 5-city level, with Sydney once again leading the way (see next chart). It was the third monthly rise in values since the unexpected fall in November, with values also up by 2.50% over the quarter (see next chart). The slide in price growth nationally has also been arrested, thanks to a second wind in Sydney (see next chart). Values are now 13.9% above the October 2010 peak at the 5-city level, with values in all major capitals except Brisbane also...
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Auction clearances remain fully mental

ScreenHunter_01 Jul. 19 09.10 Just when you thought the Great Australian Housing Bubble was running out of steam, the national auction clearance rate delivered another frothy result, driven again by strong demand in Sydney and Melbourne. The preliminary national clearance rate was a hot 77.1%, just a smidgen under last week's 77.7% and comfortably above the 74.2% recorded at the same time last year. Sydney’s clearance rate fell 5.0% to 82.8%, whereas Melbourne’s rose by 1.6% to 76.5%. Clearances in Brisbane, which typically only has a small number of auctions, fall sharply to 54.6% from 68.9% last weekend. Overall...
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RP Data weekly housing market update

ScreenHunter_6077 Feb. 15 19.10 Click to view Core Logic-RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 1 March 2015. 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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Foreign investor fees still up in the air

ScreenHunter_4459 Oct. 13 10.08 By Martin North, cross-posted from the Digital Finance Analytics Blog Speaking on ABC Insiders yesterday, Josh Frydenberg, Assistant Treasurer made the point that the foreign investor regulations, recently announced were open for consultation, and that a number of issues had yet to be resolved. For example, should a foreign investor pay the fee each time they apply to purchase a property (so bidding on multiple properties would mean multiple fees)? Or should they pay one fee to cover multiple potential transactions? If they are not successful in purchasing the target property, is the fee refundable?...
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Now is the ideal time for WA to panic

broken-promises-logo-200x200 From the WA Treasurer, Dr Mike Nahan: The message from Western Australia's Treasurer Mike Nahan to business and consumers is simple: Do not panic. He said the mining construction boom had ended, but the mining production boom was ramping up, and the WA Government was successfully managing the transition. Dr Nahan was selling the slowdown of the WA economy to top level business audiences in Perth this week, hoping to stop the post-boom gloom about a state that has been the nation's economic powerhouse for a decade spiralling downward. "When we've had such growth as we've had in the last 10...
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