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Frydenberg colludes with APRA to water down Hayne

The Hayne Royal Commission is quickly disappearing in the rear view mirror, with Treasurer Josh Frydenberg meeting with senior APRA officials to craft the government’s response. From SBS News: Mr Frydenberg met with Australian Prudential Regulatory Authority deputy chairs Helen Rowell and John Lonsdale in Sydney, just days after the Morrison government was returned to

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Highrise Harry ends discounts

Boom! At the ABC: Billionaire apartment developer Harry Triguboff could not hide his delight at the prospect of an interest rate cut in June and the re-elected Morrison Government’s planned help for first home buyers. The Reserve Bank has given its strongest hint yet that interest rates will fall, almost certainly at its June meeting.

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Australian construction activity fell again in Q1

By Leith van Onselen The ABS has released data on the value of construction work done for the March quarter of 2019, which registered another 1.9% seasonally-adjusted decline in total construction activity over the quarter and a 6.0% decrease over the year: The result badly missed analysts’ expectations of no change (0.0% growth) in construction

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So now we know what kills Aussie banks: sunlight

Over the past year there has an ongoing debate about Australia’s little financial crisis. It was the dramatic widening of bank-to-bank funding costs. Coats starting falling as the Hayne Royal Commission wound up. Westpac explained the spread compression then by observing an abundance of cash: Is the lack of a March “turn” a sign of things

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Latham gets the last laugh

Chris Bowen via Domain today: “We need to remind ourselves how to talk to the base, which is not inner city,” Bowen says in an interview. “If you look at the election, wealthy areas swung to us and poorer areas swung away from us. “When you consider our agenda was fairly redistributive, that’s pretty extraordinary.

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Defence orders marshmellows as gas disaster locks in

Via Matthew Stevens: The fate of Incitec Pivot’s gas-challenged Gibson Island urea plant near Brisbane looms as an early challenge for whomever our returning prime minister, Scott Morrison, gifts with the resources portfolio. …She called out that efforts to secure new gas supplies at a price low enough to re-secure the economics of the company’s

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Property lobby demands dedicated housing minister

By Leith van Onselen The Property lobby has united in demanding the new Morrison Government introduce a dedicated Minister for Housing. From The AFR: Property developer and Rich Lister Nigel Satterley is leading a powerful industry lobby urging the triumphant Coalition to create a dedicated Federal Housing Minister… [Satterley] said a “full-time housing minister” was

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Aussie leading index sinks

Down she goes, via Westpac: The six month annualised growth rate in the Westpac– Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, declined from –0.13% in March to –0.47% in April. The Index growth rate has been consistently negative over the

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Perth property value losses plunge through 19%

By Leith van Onselen Yesterday, CoreLogic’s daily house price index revealed that Perth dwelling value declines have smashed through 19%: This is by far the biggest bust on record for Perth, with the current 19% decline far eclipsing prior price corrections, both in terms of size and duration: The quarterly pace of decline in Perth

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Macro Morning

By Chris Becker  US/China trade tensions are subsiding this time, with US stocks lifting overnight alongside bond yields while the USD remained firm, not withstanding a spike due to the latest OECD Economic Outlook. Commodity prices remain relatively calm during this whole mess although gold is sitting on a monthly low. Yesterday saw Asian stock markets bounce

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How to destroy ScoMo in eighteen months

Via the AFR: Scott Morrison’s shock win in the federal election may have been delivered by the “battlers” – non-university educated voters in lower income brackets – and Christians. ANU professor Ben Phillips found that electorates with a lower percentage of persons with bachelor degrees and income greater than $100,000, and a higher percentage of

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International student’s “clenching and corrupting hold” on universities

By Binoy Kampmark, lecturer at RMIT University There are no protests on the streets and no effigies of university officials being burned by protesting students today. There are no protests outside the officers of the over-remunerated Vice Chancellors and their various henchpersons. It is business and malpractice as usual after revelations by Australia’s national broadcaster that Australian universities have

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UBS: APRA won’t lift house prices

Via the excellent George Theranou at UBS: With actual mortgage rates of ~4% + the new 2.5% buffer, the assessed borrowing rate is likely fall to ~6.5%, below the ~7¼% floor, ‘notionally’ increasing borrowing capacity by ~8%. If the RBA also cuts & mortgage rates decline to 3.5%, borrowing capacity rises ~14%. However, given the

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Links 22 May 2019

Global Macro / Markets / Investing: Global economy would save up to $160 trillion by shifting to renewables, electric cars – Think Progress Full-blown trade war will push world toward recession – Morgan Stanley – Reuters Bonds, Not Stocks, Reflect the State of the Economy – Forbes International evidence for Keynesian economics without the Phillips

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Macro Afternoon

Asian stock markets are generally positive or putting in mild scratch sessions with Japanese stocks ending the day slightly lower after the US seemingly eases up on sanctions against Huawei. Risk sentiment is swinging back to positive while USD remains very firm as the Australian dollar rolls over below its pre-Monday morning gap. The Shanghai

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Chinese Communist Party greets ScoMo with the slap

Via the Communist Party of China foghorn: The surprise victory of Australia’s Liberal National coalition on Saturday gives Prime Minister Scott Morrison’s Liberal Party a third term in government. But apart from delivering his campaign promises to the Australian people, of which he made few, Morrison may also need to recalibrate his country’s relations with

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How will Foxtel survive after Game of Thrones finale?

By Leith van Onselen Roy Morgan’s latest survey on Pay TV Subscription services revealed that Netflix had lifted its Australian subscriber base to 11.3 million households after a 25% annual surge in subscribers. By contrast, Foxtel’s subscriber base slid by 2.7% to 4.9 million households: With Game of Thrones airing its final episode yesterday, to which