Weekend Reading: 23-24 January 2021

Global Macro / Markets / Investing: Rise of the superstar firms: Taking oligopoly seriously in macroeconomics – VOX How much UBI spending should go to children? – UBI Centre Stocks Don’t Care About the Coup – The Atlantic Markets upbeat on Yellen’s push for large fiscal stimulus – Business Times Americas: 900,000 filed for jobless

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Macro Afternoon

Asian stock markets end the week on a poor note, having absorbed the Biden inauguration and initial policy reversals, with commodity currencies weaker against USD as gold and silver remain relatively steady. Bitcoin briefly dipped below the $30K level but has had a small boost this afternoon, but is this enough to stave off a


MB Fund Podcast: Biden boom or bust?

MB Fund’s Head of Investments Damien Klassen, Chief Strategist David Llewellyn Smith and Head of Advice Tim Fuller ask the trillion dollar question: Will Biden trigger a market boom or market bust? President Joe plans to begin immediately unwinding his predecessor’s policies on immigration, climate and other issues on Wednesday with at least 15 executive


CBA: Household spending intentions rising

CBA has released its household spending intentions for December, which remain bullish as Australians emerge from COVID restrictions: Summary The Household Spending Intentions (HSI) series for December 2020 showed that at the end of last year there was a very welcome improvement in spending intentions for Travel, Health & Fitness, Entertainment and Motor Vehicles. Home


In NSW property narco state, developers rule

Last year, NSW Planning Minister, Rob Stokes, used COVID as an excuse to turbo-charge development: NSW planning processes and development applications will be fast-tracked in a bid to support the construction sector and maintain jobs during the COVID-19 pandemic. Assessments of state significant developments, rezoning and development applications will be accelerated under the changes announced


NZ property market experiencing “perfect storm” and “unprecedented” price gains

ANZ Research has released a new report on the New Zealand property market, which claims that a “perfect storm” has developed that has driven “unprecedented gains”: Record Breaker House prices rose 2.9% in December, following similar stellar rises in October and November. This saw a quarterly gain of 7.7% for Q4 (figure 1) – the


Mirabile dictu: International students caput for 2021

Awesome. Via The Australian: Australia’s universities have been warned by new Education Minister Alan Tudge that it will be “very difficult” to get significant numbers of foreign students back on campus this year, amid fears the COVID-ravaged sector will lose up to $10bn from the closed international border. In his first interview since Prime Minister


Hospitality and tourism demand more bailouts

Businesses in Sydney’s northern beaches area have called for JobKeeper to be extended, while the Restaurant & Caterers Association has deepened calls for an industry-focused ‘HospoKeeper’: Restaurant and Caterers Association chief executive Wes Lambert wants an industry-focused “HospoKeeper”. He said a slow deployment of a vaccine meant more industry-damaging lockdowns and border bans were possible…


Scomo quietly explodes IT migrants

Via ITNews: The federal government has expanded the scope of Australia’s fledgling permanent migration scheme for highly-skilled technologists after tripling the program’s intake for this financial year. The change is contained in new direction for the two feeder visas used for the ‘Global Talent Independent’ (GTI) program – subclass 858 and subclass 124 – quietly


Scott Morrison has no idea on quarantine

After abrogating responsibility for quarantining of overseas arrivals to the states, Prime Minister Scott Morrison has rejected QLD’s sensible proposal to shift quarantine from city hotels to regional mining camps, claiming resources workers could become infected and thus hamper Australia’s economic recovery: Ahead of national cabinet on Friday, Mr Morrison expressed scepticism about Premier Annastacia


Christmas retail sales disappoint

The ABS has released preliminary retail sales for December, which fell sharply from November and missed analysts’ expectations: Key statistics The seasonally adjusted estimate fell 4.2% (-$1,329.9m) from November 2020 to December 2020. In seasonally adjusted terms, Australian turnover rose 9.4% in December 2020 compared with December 2019. Following the November rise, all industries except for Cafes, restaurants and takeaway food services


The great China slowing has already resumed

Via Goldman: China – stability may be necessary and sufficient. A strong print in Q4 growth rounded off the solid recovery we have seen in Chinese GDP through 2020, and it is important to reiterate that a robust growth backdrop in China is a key ingredient ofour pro-cyclical stance across global markets. It is often


CBA: Household income and savings booming

By Gareth Aird, Head of Australian Economics at CBA: Key points: Growth in household income has inched higher over the past few months despite the two-staged tapering of the JobKeeper and JobSeeker payments. Growth in salary and wages paid into CBA bank accounts has lifted materially over recent months reflecting strong growth in employment, hours


Westpac: COVID has changed the labour market

Via Westpac’s always excellent Justin Smirk: There has been a stunning recovery in the labour market but the rising share of part-time employment, rising participation and still elevated unemployment suggests the market is quite different to what it was pre-COVID. Total employment: 50k from 90k (revised from 90k); Unemployment rate: 6.6% from 6.8% (unrevised 6.8%);


China mulls lifting coal ban as Aussie trade war backfires big

Via Morgan Stanley: Increasing noise on possible policy reversal: Shanghai Metals Market (SMM) reported yesterday that the Chinese government was in the preliminary stages of lifting its informal ban on Australian coal imports, but that such a move would still need to be approved by senior leaders. There has been no official comment on the article.


Youth labour market continues to lag

Yesterday’s ABS labour force release for December revealed that Australia’s youth unemployment rate – i.e. for those aged 15 to 24 years old – fell sharply on the back of a sharp fall in the participation rate. The headline youth unemployment rate fell 1.7% to 13.9% but remains more than 2.5 times higher than the


Macro Morning

  Last night saw the frothiness in risk markets take a small pause as bond yields rose slightly on the lower than expected US weekly jobless claims, as the latest ECB meeting also made no waves. The USD continued its retreat however, while commodities were mixed, Bitcoin crashed to a new monthly low. The cryptotulip was


Wall St remains bullish Australian dollar

Data from Westpac: US weekly jobless claims eased back from last week’s high levels. Initial claims came in at 900k (vs. est. 935k, prior revised to 926k from 965k), with continuing claims at 5.054mn (est. 5.3m, prior revised to 5.18m from 5.27m). Housing starts rose 5.8% (est. 0.8%, prior revised up to 3.1% from 1.2%), and permits rose


Why is Twiggy risking life and limb flying around with COVID?

Don’t listen to what they say, watch what they do, at AFR: Andrew Forrest contracted the potentially deadly COVID-19 virus while globe-hopping in pursuit of renewable energy projects for his Fortescue Metals Group and spent several days in a Swiss hospital receiving high-level care. Why is Australia’s richest man risking life and limb flying around


Links 22 January 2021

Global Macro / Markets / Investing: Gold rises due to US stimulus expectations – Guardian Mag S&P 500 rises to all-time high ahead of Biden’s inauguration, Netflix leads Nasdaq to a record – CNBC Inflation Is Coming. That Might Even Be a Problem. – Bloomberg Risk of ‘lost generation’ amid global asset bubbles and debt


Macro Afternoon

Share markets are rising in co-ordination following the Biden inauguration, with risk appetite soaring overnight, with the USD in full retreat as gold and silver is breaking out to new highs. The latest numberwang saw the Aussie dollar reach new highs, but Bitcoin is slowly deflating however, again selling off throughout the session to be


Alarm! “US to face underpopulation”

The population ponziteers are at it again, this time warning that the US is facing “underpopulation” because its birth rate has fallen to a 35 year low: The U.S. birth rate in 2019 fell to its lowest level in 35 years, well below the requisite 2.1 babies per woman required to sustain our population through


Netflix juggernaut crushes competition

Subscription video-on-demand giant Netflix has advised that it gained more than 8.5 million global subscribers in the December quarter and 37 million during 2020. Netflix finished the 2020 calendar year with 203.7 million customers worldwide. It also reported revenue of $US6.64 billion for the December quarter, compared with $US5.45 billion for the same period in


Stocks the be-all and end-all of US policy

Via GaveKal: US equity valuations are stretched. On pretty much whatever valuation measure you care to look at, whether EV/EBITDA, price to earnings, price to cash flow, price to book or dividend yield, US equity markets are somewhere between their 90th and 99th percentile. At the same time, sentiment and technical indicators are signaling that