Macro Afternoon

by Chris Becker Risk off? Not quite but Asian markets are not reacting well to the mixed lead from Wall Street overnight, exacerbated by the BOJ’s decision to cut its inflation target and a drop in commodity prices. In China, the Shanghai Composite is just positive going into the close, currently up only 0.3% to 3145

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The private health insurance subsidy isn’t worth it

Cross-posted from The Conversation: Almost 20 years after the 30% subsidy for private health insurance was introduced, premiums continue to rise every year. This comes at a cost to the federal budget – which was forecast at A$6.5 billion in the 2016 federal budget from the subsidy alone. Meanwhile, consumers continue to view private health


Despite falling rents, affordable rentals at all-time lows

By Leith van Onselen The ABS’ latest CPI data showed that housing rents nationally have registered zero growth in inflation-adjusted terms over the past five years (see my earlier post): Despite this, the number of affordable rental properties is at all-time lows according to a Anglicare’s latest Rental Affordability Snapshot. From The ABC: Each year


Gas lobby soils self as Straya joins every gas exporter on earth

APPEA pooing its pants as Australia joins every other gas exporter on earth in having a domestic reservation policy: Gas export controls announced today by the Commonwealth are a short-term measure that risk exacerbating tight market conditions unless accompanied by genuine reforms. “Restricting exports is almost unprecedented for Australia,” said APPEA Chief Executive Malcolm Roberts. “At


Import, export prices signal another big terms-of-trade rise

By Leith van Onselen The Australian Bureau of Statistics (ABS) has released export and import prices for the March quarter, which portends another much-needed increase in Australia’s terms-of-trade when the national accounts are released in early June. According to the ABS, export prices surged by 9.4% over the March quarter and were up by 29.1%


NSW Government cold on high speed rail pork

By Leith van Onselen NSW Premier, Gladys Berejiklian, has come out against the proposal to build a high speed train line between Sydney and Melbourne, citing doubts about the cost and benefits of a very fast train service. From The Australian: NSW Premier Gladys Berejiklian is known to be sceptical despite claims by one interested


Do-nothing Malcolm: Gas price to halve

Via The Australian: Malcolm Turnbull has promised manufacturers the price they pay for gas will halve as he intervenes in the market and imposes tough export controls to ensure Australian businesses, families, employers and industry receive guaranteed and affordable supplies. The Prime Minister said 65,000 jobs reliant on gas were at risk until action was


ABC does the WA economic/property bust

By Leith van Onselen ABC’s 7.30 Report last night ran a depressing segment on the Western Australian economic/property crash. The segment features a project engineer named Brad Wright, who has seen his income slashed and has lost a tonne of money in investment properties: BRAD WRIGHT, PROJECT ENGINEER: People have had their income slashed to


Rooftop solar rockets as gas prices itself out

Well done gas cartel: Fears about rising energy prices have driven consumers and businesses to install solar panels at the fastest rate in at least a decade, lifting total national capacity to the equivalent of powering a city the size of Melbourne. New figures from the Australian Photovoltaic Institute show the country has passed 6 gigawatts of solar


Exclusive: S&P hoses Morrison’s Budget accounting fiddle

This morning I asked S&P’s Australian analyst, Craig Michaels, the following: Does today’s mooted changes in Budget accounting, which divides supposed good and bad debt, alter the way S&P views the Budget? Specifically: will it alter the calculation of general government debt to GDP? will it alter S&P’s view of the 30% general government debt


Is the Canadian property bubble bursting?

Canada’s largest mortgage non-bank mortgage lender appears to be going under, via Bloomberg: Home Capital Group Inc.’s shares plunged more than 60 percent after the mortgage lender disclosed a costly new loan to tide it over as its deposits dwindle, intensifying a spiral of bad news for the company. The C$2 billion ($1.5 billion) loan is


Mass immigration is diluting Australia’s skills base

By Leith van Onselen Sustainable Australia president, William Bourke, penned a thought-provoking letter in The AFR arguing that Australia’s permanent skilled migration program is actually diluting Australia’s skills base: Australia’s record permanent immigration program of around 200,000 that’s diluting our skills base. Although the so-called “skilled” category is two-thirds of the annual program, the government


Morrison to fiddle Budget books for infrastructure

By Leith van Onselen The AFR has reported today that Treasurer Scott Morrison will reform the way the Federal Budget is reported to separate “good” debt from “bad” debt, thereby allowing it to expand spending on infrastructure: …debt accrued to fund recurrent costs in health, welfare and other everyday expenses will essentially be classified as


UBS warns on impact of macroprudential 2.0

From the always excellent Jonathon Mott at UBS: Is the purple patch coming to an end? Over the last six months the Aussie banks have enjoyed a purple patch. While share prices have been supported by the global reflation trade and investors closing underweight positions, EPS forecasts have been revised upwards for the first time


Bank mortgage broker channel akin to US sub-prime

Via Investor Daily: In a ‘Spectrum Insights’ article released recently, Spectrum Asset Management principal Damien Wood put forward his views that the third-party channel is a significant risk that could spark problems for Australia’s banks. Mr Wood noted that while high levels of household debt and interest-only mortgages have received plenty of attention, Australia’s preferred


Real Australian rents have not grown for 5 years!

By Leith van Onselen The March quarter consumer price index (CPI) data, released yesterday by the Australian Bureau of Statistics (ABS), revealed continued weak rental growth at the national capital city level. According to the ABS, rents nationally grew by just 0.1% over the March quarter of 2016 and by only 0.6% over the year