What’s the cost if energy assets get stranded?

ScreenHunter_03 Jul. 23 09.31 Cross-posted from The Conversation: In the last week the US and China announced goals to reduce emissions by 26-28% and cap emissions by 2030 respectively. India also signalled its aim to end coal imports within 2-3 years. These are telling signs of a move away from fossil fuels by some of the world’s biggest emitters of greenhouse gases, including countries that are key importers of Australia’s coal and gas. The latest report from the UN Environment Programme (UNEP), released this week, called for an end to carbon pollution by 2070, followed by action to reduce greenhouse gas emissions...
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Population ponzi masks fall in Victorian living standards

ScreenHunter_5103 Nov. 21 11.35 By Leith van Onselen Victoria's population growth fetish has once again been shown to be false economy, with today's State Accounts, release by the Australian Bureau of Statistics (ABS), showing a 0.2% fall in Victorian gross state product (GSP) per capita in the year to June 2014, despite a 1.7% headline increase (see next chart). The ACT also registered a fall in per capita GSP, down 0.9% over the year, whereas the mining strongholds of Western Australia and the Northern Territory registered 2.6% and 4.8% rises respectively, with the former's due to rising export volumes and the...
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Uber in guerilla war with protected taxi interests

ScreenHunter_5102 Nov. 21 10.06 Cross-posted from The Conversation: I took two separate rides with two different UberX drivers yesterday. At no time did I feel as though my life was in danger. But in danger I was, at least according to several factions debating the safety of my choice to have an unregulated stranger drive me from one location to another. You see, a war is brewing. Uber, it appears, has been at war since its inception not only with other transport providers, local government and councils, but an increasing group of journalists. This war seems to have reached a boiling point over the past few...
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Australia hits peak car use

ScreenHunter_277 Nov. 14 12.57 By Leith van Onselen Two reports are out about how Australia is losing its love affair with cars, with younger Australians shirking car ownership and the nation reaching "peak car use". The first, aired on ABC's 7.30 Report last night, claims that the enthusiasm for car ownership displayed by the baby boomers is not shared by the younger generations, which is driving an overall decline in car usage: ...while the number of cars per person has risen, the number of new car sales per person has dropped sharply since the GFC. They're now at their lowest in 20 years. The question is: why? If the...
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“Sell ‘em dirt” toasts the Budget

toaster-fire5x384 By Leith van Onselen A fortnight ago, forecasting firm, Macroeconomics, forecast that the Federal Budget revenues would be slashed by $52 billion over four years courtesy of slumping commodity prices, falling mining investment, and weak income growth. Today, The Australian reports that falling commodity prices (iron ore in particular) will punch a $10 billion hole in the Budget this year, pushing the deficit towards $40 billion from the previously forecast $30 billion: Mr Hockey acknowledged the growing pressures last night and warned that a slowing in Chinese manufacturing could also spell...
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RP Data weekly Australian house price update

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen In the week ended 20 November 2014, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, fell by 0.24%.  It was the first decline in nine weeks (see next chart). Home prices fell in three major capitals and rose in two (see next chart). Since the start of the year, home values nationally have risen by 7.43%, with all major capitals except Perth rising in value (see next chart). Over the past 12 months, home values have risen by 8.79% at the 5-city level, led by Sydney and Melbourne (see next...
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Why house prices are rising more than credit

ScreenHunter_02 Apr. 09 08.45 By Leith van Onselen Just over a year ago, Victoria's Department of Sustainability and Environment (DSE) was closed and amalgamated into other departments, and with it I thought its excellent data on the number of housing transfers and mortgage lodgements/discharges had been lost. Searching the Victorian Government's database last night, I stumbled upon this same data on the Department of Transport, Planning and Local Infrastructure (DTPLI) website, which shows a massive surge in the number of mortgages and transfers over the past year 18 months (see below charts). As you can see...
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Links 21 November 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Manufacturing is weakening around the globe - Bespoke Performance of the global financial asset portfolio - Pragmatic Capitalism Hugh Hendry: ’Desperate times breed desperate measures for central bankers - MoneyWeek Earnings seasonality and stock returns - Alpha Architect $75 oil makes shale oil unprofitable - Bloomberg Junk bond banking boom peaks - Bloomberg Junk bonds flourish amid low interest rates - Dealbook Currency carry trades are not what you think - VOX No country for young people - The Economist North America: Global economy's...
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More Australians shift to SMSFs

ScreenHunter_04 May. 21 13.20   By Martin North, cross-posted from the Digital Finance Analytics Blog APRA just released their quarterly super statistics to September 2014. Superannuation assets totalled $1.87 trillion at the end of the September 2014 quarter. Over the 12 months to September 2014 this represents a 9.6 per cent increase. Total assets in MySuper products was $378.1 billion at the end of the September 2014 quarter. Over the 12 months to September 2014 this represents a 128.2 per cent increase. Of these, $1.14 trillion are regulated by APRA and these grew by 2.2% since the previous quarter, whereas $...
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Netflix entry a big win for Aussie consumers

ScreenHunter_5086 Nov. 20 13.43 By Leith van Onselen Little by little, Foxtel's stranglehold on subscription television services is being loosened, with Netflix announcing its entry into Australia next year. From The Australian: Netflix announced internet-connected users will be able to access its library in high definition and 4K where available, although it has not announced pricing. Expectations are it will cost around $10 a month... It is understood Nine Entertainment and Fairfax Media’s joint venture SVOD service Stan is rushing towards a December launch. Its parent, StreamCo, has already confirmed SVOD deals with...
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China Flash PMI falls, misses expectations

ScreenHunter_5083 Nov. 20 13.00 By Leith van Onselen More evidence of the Chinese economy slowing this afternoon, with the HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) for November registering a fall, decreasing to 50.0 from 50.4 in October - a six month low. The result missed analyst's expectations, with economists polled by Bloomberg expecting the flash PMI to fall to 50.2. The Flash China Manufacturing Output Index also fell sharply to 49.5 in November, down from 50.7 in October - a seven-month low. Commenting on the result, Hongbin Qu, Chief Economist, China & Co-Head of Asian...
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WA taxi users “ripped-off” by licence restrictions

ScreenHunter_5082 Nov. 20 12.23 By Leith van Onselen A new report by Professor David Cousins and former ACCC head Professor Allan Fels has found that Western Australians taxi users are being ripped-off by the deliberate rationing of taxi plate numbers by the State Government, which has inflated taxi fares by some 16%. From WA Today: "Inclusion of the lease value of licences in the calculation of fares means that fares are around 16 per cent higher than they should be and that customers are paying around $3.30 more for an average trip as a result," the report said... "When a driver leases a licence from someone, that cost...
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China’s great Australian land grab

ScreenHunter_5081 Nov. 20 11.19 By Leith van Onselen As part of the Australia-China Free Trade Agreement (FTA), concluded on Monday, the foreign investment limits on Australian commercial real estate will be increased from $54 million currently to $1.078 billion, effectively giving Chinese developers unfettered access to Australian land. While many argue that increased participation by Chinese property developers will boost Australian housing supply, thereby improving rental availability and housing affordability, some local developers have accused Chinese developers of land banking - paying over the odds for lots and sitting...
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ACT Government stops affordable land supply

ScreenHunter_5080 Nov. 20 10.36 By Leith van Onselen I have explained previously (here, here and here) how the ACT Government deliberately manipulates urban land supply in order to maintain exorbitant land/house prices. Despite having an abundance of developable land, the Government has for a long-time drip-fed supply to the market, maintaining an artificial land shortage (scarcity) and, in the process, forcing buyers to pay high prices. According to Australian Property Monitors, the median Canberra house cost a whopping $573,000 as at September 2014, with the median house rent a ludicrous $450 - ludicrous because the...
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The Coalition deserved to get shafted on FoFA

ScreenHunter_5079 Nov. 20 10.03 By Leith van Onselen Fairfax's Adele Ferguson has taken a big stick to the Abbott Government for placing big business ahead of consumers in its bid to wind-back the Freedom of Financial Advice (FoFA) reforms introduced by the former Labor Government: The Coalition was always on a kamikaze mission when it decided to back the big end of town over consumers amid a series of financial planning scandals that exposed series flaws in the system. And so it was when a "coalition of common sense" fronted up to a press conference in Canberra at 9.15 on Wednesday morning with a group of victims to...
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Australian housing is not “fairly valued”

ScreenHunter_3949 Sep. 02 08.10 By Leith van Onselen Moody's Analytics (not to be confused with Moody's Investors Service, the credit ratings agency) released a new report in the past few days arguing that Australian housing is "fairly valued as the long-run drivers of house prices—rents, incomes and interest rates—are supportive of current prices". Let's take a look. Why is Sydney so expensive? First, house prices in Australia are high compared with the rest of the world’s because of the rela- tively strong economy, helped initially by the mining and commodity boom, although commodity prices have cooled in 2014; a tax...
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Housing: the last chip for the Aussie economy?

ScreenHunter_12 Sep. 23 12.54 By Leith van Onselen Feedback loops are an important concept in finance and economics. In a nutshell, positive feedback loops are pro-cyclical in that they act to make an economy more volatile by accentuating booms and then busts. By contrast, negative feedback loops are counter-cyclical in that they act to reduce volatility and make an economy more stable by mitigating boom/bust cycles. Positive feedback loops come in various forms. With respect to the Australian housing market, one important positive feedback loop is the link between Australian home values and consumer confidence, borrowing,...
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Links 20 November 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: A conundrum for Treasury yields - Capital Spectator Tinkering with the core bond recipe - Alliance Bernstein Torturing historical market data - A Wealth of Common Sense Are junk bonds sending a warning signal? - Charlie Bilello Equity returns and the yield curve - Crossing Wall Street Investor behaviour not investment behaviour that matters - Irrelevant Investor Bear market “cures” are often worse than the disease itself - Servo Wealth What does it mean for a market to be “overbought“? - Adam Grimes North America: A Carbon Tax...
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Australia’s twin economic diseases

ScreenHunter_5059 Nov. 18 16.08 By David Collyer, cross-posted from Prosper Australia Australia has two infections that compromise our economic health. Their remarkably similar symptoms – fever, delirium, impaired judgement – muddy diagnosis and hamper effective treatment. Most are familiar with ‘Dutch disease’, where a resource bounty – in Holland’s case off-shore oil and gas production – lifts a country’s exchange rate, makes other activity like manufacturing and agriculture uneconomic and cause great dislocation even while headline GDP and national accounts look rosy. Australia has a dose of this clap....
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Abe’s high-stakes gamble in calling snap election

ScreenHunter_14 Jun. 18 21.33 Cross-posted from The Conversation It may seem politically counter-intuitive for a prime minister to seek an early election just when the economy has gone into recession. But following his return to Japan from the G20 Leaders' Summit in Brisbane, Shinzo Abe has done just that. Although an election is not required until late 2016, Abe has called a snap election for the Lower House of the Diet only halfway through his Liberal Democratic Party (LDP) government’s first term. The Diet will be dissolved on November 21; the election campaign proper will start December 2; the election will be held...
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Resources jobs in calm before storm

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen DFP Recruitment has released its mining and resources jobs index for October, which registered a rise of 1.3% to 63.56, the first increase since January 2014. Year on year, the number of mining and resources job advertisements has fallen by 28.7% nationally, but by only 1.6% in the last quarter, suggesting some stabilisation. Permanent opportunities rose 4% in October, in stark contrast to a 38% fall over the past year. Contract and Temporary roles fell 1.4% to 79.92 and have recorded a 20.6% decline over past year (see next chart). The decline in mining and...
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Cross-party committee slams data retention plan

ScreenHunter_5065 Nov. 19 11.23 By Leith van Onselen The Abbott Government's metadata legislation to require telecommunications companies to store detailed information about the calls and internet use of its customers for two years has been slammed by a cross-party federal committee, which believe that it will place unreasonable limitations on human rights. From The Guardian: Among its concerns, the joint parliamentary committee on human rights raised a warning about the length of time material could be kept, questioned how the information could be used, and criticised the lack of definition about what constitutes a reason for...
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Abbott urged to junk roads pork

ScreenHunter_5064 Nov. 19 10.08 By Leith van Onselen The Tourism and Transport Forum, which is chaired by Liberal Party luminary Bruce Baird, has called on the Abbott Government to recast its roads-only funding policy. From The Canberra Times: "While state governments have recognised the need to invest in public transport, we are calling on the federal government to reconsider its stance on funding public transport as it has the budgetary capacity to accelerate the construction of key projects that will make a material improvement to Australia's national productivity," TTF chief executive Margy Osmond said. "Yes, investment in...
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Sowing the seeds of a mass youth exodus

ScreenHunter_5063 Nov. 19 09.15 By Leith van Onselen Business Spectator's Robb Burgess has posted a thought-provoking article today arguing that the seeds have been sown for the mass emigration of young Australians seeking better opportunities offshore: ... unemployment in the 18 to 24 age group has been rising steadily since the Lehman Brothers global shock of late 2008, from a low around 9 per cent to 14 per cent today... If many youngsters had not given up job hunting, the 14 per cent unemployment rate would be even higher... [The financial system] present[s] a current 18-to-24 year-old with a future of...
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The bank capital mirage

ScreenHunter_16 Jun. 06 16.17 By Leith van Onselen The AFR's Chris Joye has been on fire recently, systematically tearing apart the myth that Australia's banks are "well-capitalised" and "safe". In today's AFR column, Joye has taken on APRA's new boss, Wayne Byres, and showed that in contrast to APRA’s claims that an increase in the home loan share of bank assets from 55% to 65% has been the main driver of the rise in their “risk-weighted” tier 1 capital, it has been actually fuelled by a regulatory artifice that will likely be reversed (thank you Deep T. before Mr Joye): A central question for David Murray’s...
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