Investors pig-out as owner occupier mortgages slow

ScreenHunter_05 Apr. 15 22.08 By Leith van Onselen The Reserve Bank of Australia (RBA) today released its private sector credit aggregates data for the month of July: A chart showing the long-run breakdown in the components is provided below: Personal credit growth (0.2% MoM; 0.5% QoQ; 0.8% YoY) and business credit growth (0.3% MoM; 1.5% QoQ; 3.4% YoY) continue to grow at a modest pace in annual terms, whereas housing credit growth (0.5% MoM; 1.6% QoQ; 6.5% YoY) is stronger, but remains at fairly subdued levels relative to its long-run average growth rate; although it is still growing more than twice as quickly...
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Coalition retreats from draconian dole requirements

ScreenHunter_10 Mar. 29 12.46 By Leith van Onselen The Abbott Government has backed away from its draconian plan to require unemployed jobseekers to apply for 40 jobs a month in order to receive the dole, admitting the plan would have created a "meaningless" burden on employers that would have had to sift through piles of sham job applications. From The AFR: “It is clear that, overwhelmingly, people say that if you're unemployed, your full-time job should be job seeking,” he said. “On the other side, there is the view - and I think it's a legitimate view – that getting people to apply for 40 jobs in a meaningless...
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BIS Shrapnel bull turns bear

imgres By Leith van Onselen BIS Shrapnel has predicted tough times ahead for the Australian economy, forecasting that domestic consumption and investment expenditure will experience its weakest four-year run since the early-1990s recession, averaging just 2% per annum to 2017-18. From Ferret: Richard Robinson, senior economist at BIS Shrapnel warns that employment growth will be soft with only 668,000 jobs created over the next four years. Robinson comments that it will be a slow and difficult transition from an economy driven by the huge resources construction boom, which largely underwrote...
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Weekly RP Data Australian house price update

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen In the week ended 28 August 2014, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, rose by 0.28% (see next chart). Growth in this week's home values was fairly broad-based, with all capitals except Brisbane experiencing rises (see next chart). So far this month, home values have risen by 1.32%, with gains across the board but strongest growth in Sydney and Adelaide (see next chart): Values are up by 6.36% so far in 2014, with all major capitals except for Perth experiencing growth, and particularly...
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Mining gets its coolies

ScreenHunter_59 Aug. 29 07.46 By Leith van Onselen Despite overall unemployment at 12-year highs (and rising), a budding youth unemployment crisis, and its own Department of Employment revealing that skills shortages are at an "historic low", with employers able "to recruit skilled workers without marked difficulty" and "generally large fields of applicants vying for skilled jobs and employers filled a high proportion of their vacancies", the Coalition has announced that it will materially loosen rules to enable employers in specific regions to import more labour from overseas. From The Australian: ...the federal government...
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Links 29 August 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: The stock market can decline without an inversion of the yield curve - Pension Partners Albert Edwards warns on the end of the stock buyback boom - Business Insider Investors can’t help themselves chasing performance - A Wealth of Common Sense Dividend paying stocks are not a substitute for bonds - Pragmatic Capitalism Which hedge funds are attracting big assets - Bloomberg Why S&P 500 index funds are a second-best choice - Rick Ferri North America: Weekly initial unemployment claims continue to trend below 300k - Calculated...
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Dump stamp duty for land taxes

ScreenHunter_30 Aug. 27 15.36 By Leith van Onselen The Housing Industry Association (HIA) yesterday released a report lamenting the high cost of stamp duty in Australia, which "makes household indebtedness worse by increasing required borrowings" and damages the "long-term financial well-being of ordinary homebuyers": “The typical homebuyer in Victoria is hit with a $24,100 stamp duty bill, the highest in the country,” remarked Shane Garrett. “In states like New South Wales and Western Australia, the average homeowner can look forward to handing almost $20,000 over to the state government before the removals truck...
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Why super lump sums must go

ScreenHunter_44 Aug. 28 13.16 By Leith van Onselen First Super chief, Bill Watson, has hit back at calls to require superannuation members to withdraw their super as an annuity to ensure that retirement savings last longer and create less of a drain on the Aged Pension. From The Canberra Times: Mr Watson said he was very concerned by the "kite flying by the Financial Services Council on denying retirees the option of a lump sum and forcing them to take a pension of some description". Referring to the council's push to require retirees to use part of their savings to buy a product that makes periodic payments, such as an...
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Actual capex in surprise lift

ScreenHunter_07 Apr. 05 12.46 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the June quarter of 2014, which registered a surprise seasonally-adjusted 1.1%lift in capex over the quarter but a 4.0% decrease over the year. The result beat analyst’s expectations of a 0.9% fall over the quarter (see below table). While Houses and Holes has covered the more important capex intentions survey, which covers industry’s forward-looking capex plans over the coming years, below are some backward looking charts showing actual capex up to the June quarter...
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Australia’s boom to bust

ScreenHunter_01 Feb. 17 18.55 By Leith van Onselen Find above an interesting video interview on The AFR with Lindsay David, author of the new book Australia Boom to Bust. In the interview, David slams Australia's record high mortgage debt (see next chart), claiming that "no one in the Western world has ever done what we are doing”. He also claims The AFR article attached to the interview that the three pillars of the Australian economy: real estate, resources and the banks will eventually collapse: He says that as Chinese authorities appreciate, they’ve built more houses and apartments than they need, demand...
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SMSF lobby hogs the tax trough

ScreenHunter_05 Apr. 15 22.08 By Leith van Onselen In an extraordinary showcase of self-interest, the lobby group representing self-managed super funds (SMSFs) - the SMSF Alliance - has slammed calls to tighten tax concessions around superannuation, arguing that the rich are entitled to their tax breaks. From The AFR: The $1.8 trillion superannuation industry has defended its generous tax breaks, saying it should not be used as a cash cow to rescue the budget deficit at the cost of healthy retirement savings. ...an alliance of self-managed funds said that the rich were just as entitled to benefits... “People who...
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RBA too late the hero on mortgage risks (members)

ScreenHunter_31 Aug. 28 07.42 By Leith van Onselen The Reserve Bank of Australia (RBA) has provided its second submission to the Murray Financial System Inquiry (FSI), which reportedly warns against moves to bolster competition in the mortgage market for fear that it would pump even more funds into property and heighten financial system risks.  From Business Spectator: “The supply of mortgage finance in Australia is ample,” the RBA said. “Therefore, any proposed policies that could further increase that supply should be subject to rigorous analysis of their costs, benefits to consumers and risks to financial...
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It’s time to allow “grey” car imports (members)

ScreenHunter_29 Aug. 27 14.45 By Leith van Onselen The Productivity Commission's (PC) report into Australia's Automotive Manufacturing Industry recommends relaxing controls on so-called "grey" imports of second-hand cars, noting that Australian consumers are being fleeced, particularly when it comes to purchasing higher-end vehicles: It might be the case that some ‘premium’ vehicle segments (such as luxury European made motor vehicles) are characterised by larger profit margins and are relatively less competitive compared to overseas pricing because of the existence of fewer close substitutes. An increased supply of...
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Links 28 August 2014 (members)

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: U.N. Draft Report Lists Unchecked Emissions’ Risks - New York Times When FX wars become negative interest wars - Financial Times We should not be surprised that different sectors shine at different times - Crossing Wall Street The return to “behemoth stocks” - Aleph Blog Risk control vs. risk avoidance - A Wealth of Common Sense A simple switching model between value and momentum - Alpha Architect The active vs. passive debate has become tiresome -  Capital Spectator Active vs. passive is the wrong question: cost is what matters -...
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NBN cost-benefit analysis signals end of an era

ScreenHunter_26 Aug. 27 14.14 Cross-posted from The Conversation: The long-awaited cost-benefit analysis of the National Broadband Network suggests the days of politicians shooting from the hip with taxpayer dollars are numbered. As Labor’s NBN unfolds amid reviews and revelations, it’s apparent the NBN was a political move based on romantic notions of policy-making ending in Labor’s electoral defeat in 2013. In government, the Coalition called for a strategic review of the NBN, revealing a number of problems with the project’s implementation. Malcolm Turnbull also promised to deliver an independent...
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Shock horror! Super funds are gouging members

ScreenHunter_25 Aug. 27 12.57 By Leith van Onselen Australian Super chief executive, Ian Silk, has bemoaned that the financial services industry is using the compulsory superannuation system to enrich themselves, rather than look after their members. From The AFR: As pressure grows on super funds to cut fees, Mr Silk on Tuesday warned there was a risk that savings from the funds becoming more efficient were not being passed on members. “The biggest concern as the superannuation sector grows is that the financial benefits from the economies of scale are being captured by the agents and not ordinary Australians,” Mr...
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Mining unwind drags construction activity down

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen The ABS has released data on the value of construction work done for the June quarter of 2014, which registered a seasonally-adjusted 1.2% fall in total construction activity over the quarter and a 0.6% decline over the year. The result disappointed analysts' expectations for a 0.5% fall over the quarter. The 1.2% quarterly decline in construction activity was driven entirely by a 3.1% fall in engineering construction, which more than offset the 2.2% rise in residential construction and the 0.5% increase in non-residential construction (-1.5%): Residential...
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Labor’s NBN gold-plated

ScreenHunter_17 Aug. 27 10.44 By Leith van Onselen The Coalition's 196-page cost benefit review into the National Broadband Network (NBN) has been released and finds that Labor's plan for fibre-to-the-premises (FTTP) broadband is markedly ($16 billion) inferior to the Coalition's multi-technology mix (MTM) solution. The study compares four main scenarios: leaving things as they are with no further progress; an unsubsidised rollout of hybrid-fibre coaxial (HFC) and fibre to the node (FTTN); a full fibre to the premises (FTTP) rollout with wireless and satellite in high-cost areas; and a multi-technology mix...
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Abbott too slow to give ground on PPL

ScreenHunter_03 Jun. 26 21.56 By Leith van Onselen The AFR has revealed today that Prime Minister Tony Abbott has finally conceded to the Coalition party room that he needs to give ground on paid parental leave (PPL) if the policy is ever to come to fruition: Coalition MPs are predicting Tony Abbott will water down his paid parental leave scheme in order to salvage it after the Prime Minister confided with colleagues that more change to the policy should be expected... According to details of the conversation now circulating throughout the Coalition, Mr Abbott told the gathering “there’s been some water under the...
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Car industry’s job losses will be worse than forecast (members)

ScreenHunter_10 Mar. 29 12.46 By Leith van Onselen The Productivity Commission has released a new report on the closure of the car industry. It concludes: Australia's automotive manufacturing industry is undergoing significant change. Motor vehicle producers in Australia have not been able to survive in the highly competitive global and domestic automotive markets — Ford, Holden and Toyota have announced they will cease local manufacturing before the end of 2017. Component manufacturers face ongoing adjustment pressure and rationalisation. It is estimated that up to 40 000 people may lose their jobs as a result...
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Bursting the banks’ “no bubble” bubble (members)

ScreenHunter_04 Apr. 15 22.05 By Leith van Onselen As noted yesterday afternoon by Houses & Holes, Australia's big four bank chief economists united for an interview with The AFR to declare that Australian housing is not a bubble. For a bit of fun, I thought that it was worth evaluating each of the banks' arguments to determine whether they hold water. First up is the ANZ's Warren Hogan: “Certainly no bubble,” said Mr Hogan. “The perceived expensiveness of our property market is as much as anything a social issue, affordability issues. We simply don’t have the speculative credit element there to describe...
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Links 27 August 2014 (members)

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: 2008 Meltdown Was Worse Than Great Depression, Bernanke Says - Wall Street Journal OECD GDP growth up 0.4% in Q2 - OECD Never say never in the stock market - Brian Lund Successful investing is more about avoiding mistakes than anything else - ThinkAdvisor Pimco is going extend its active ETF business to equities - ETF Why are alternative asset mutual funds still so expensive?  - Morningstar North America: Where are we in the credit cycle? - Aleph Blog Case-Shiller house price growth slowing - Calculated Risk Blacks, Latinos Dominate...
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Come along to the 123rd Henry George dinner

ScreenHunter_10 Aug. 26 15.12 If you live in Melbourne, please consider attending the 123rd Henry George Commemorative dinner, hosted by Prosper Australia, on Wednesday 3 September at the Royal Society of Victoria, 8 Latrobe St, Melbourne. This year's guest speaker is Professor John Freebairn from Melbourne University, one of Australia’s most pre-eminent economists (and my first microeconomics lecturer). With the state election nearing, Professor Freebairn will be speaking on the reforms Victoria needs to keep on the move. Professor Freebairn holds the Ritchie Chair in Economics at the University of Melbourne, and has...
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Trade deficit to subtract 0.7% from Q2 GDP (members)

ScreenHunter_01 Jan. 25 13.29 From Westpac this afternoon comes analysis of today's preliminary June quarter estimate of Australia's international trade balance from the ABS, with Westpac estimating a 0.7% drag on GDP growth over the quarter - a sharp turnaround from the 1.4% positive contribution made in the March quarter: Australia’s international trade balance was a deficit of $4.69bn in the June quarter, a turnaround of $7.26bn on the revised March quarter surplus of $2.57bn. These figures are broadly in line with the monthly trade release, which reported a $7.74bn deterioration between Q1 and Q2. Export earnings...
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Coalition metadata targets innocent

ScreenHunter_07 Aug. 26 13.14 By Leith van Onselen The Australian has revealed today that the Attorney General's Department is seeking a wide array of powers in its bid to require telecommunications companies to store detailed information about the calls and internet use of its customers for two years: Confidential consultations with the companies — including Telstra, Optus and iiNet — commenced late last week with the circulation of a paper that has been obtained by The Australian... The paper, prepared for “preliminary discussions”, reveals the companies should retain records that would identify the names and...
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