Can US property reflate the global economy?

Via Damien Boey at Credit Suisse: US existing home sales surprised to the upside, rising by 1.3% in August, taking year-ended growth higher to 2.6% from 0.6%. Housing demand was looking weak at the end of 2018, but now it seems to be turning around, largely in response to lower bond yields and mortgage rates.

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McKibbin: Let the devil hold RBA to account

Via Warwick McKibbin today: In recent weeks, Treasurer Josh Frydenberg has signalled his intent to endorse a new Statement on the Conduct of Monetary Policy. Typically, amendments to The Statement have occurred with a change in government or a change in Governor of the Reserve Bank of Australia (RBA). It is critically important that this


Super life insurance reforms pass Senate

The Productivity Commission’s landmark 500-plus page report on Australia’s $2.6 trillion superannuation industry explicitly recommended abolishing compulsory life insurance for people aged under-25: Current settings are more a function of history than considered policy design. …many entrenched problems remain (and insurance accounts for over a third of member complaints against their fund)… Particularly for young


“Panic selling” crashes coking coal, Budget next

Goodbye Budget. Via Mining: The Australian export price of metallurgical coal (FOB hard coking coal Fastmarkets MB) used in steelmaking tanked 7% to $122.50 a tonne. That’s down almost $70 a tonne compared to the start of the year. Fastmarkets MB in a market report says the availability of ample cargoes of lower quality seaborne


Brickworks MD “horrified” by flammable apartments

Brickworks MD, Lindsay Partridge, says he is “horrified” by poor-quality building products and sub-standard construction practices, and has called for greater regulation and tighter controls. From The AFR: Mr Partridge said he had personally seen situations of poor building work and materials. “There was a couple of ones that have horrified me”… [and] has put


Manipulated valuations: WeWork vs your Superannuation

WeWork put its Initial Public Offering on ice this week as the company realised it would not be valued at the $47 billion that WeWork wanted. Indications are that WeWork would struggle to raise money with a $15 billion valuation. The process WeWork took to get a $47 billion valuation is instructive for anyone with


Recessionberg tramples disabled and dead for surplus

Josh Recessionberg collects his Golden Turd award at The Australian today: The principal driver was a record number of Australians in work, with 300,000 people finding a job, 100,000 more than Treasury forecast. This has the effect of increasing tax receipts and decreasing payments as people move from welfare to work. Export earnings in the


MB Fund podcast: The ticking debt bomb

In today’s webinar and podcast, hear from MB Fund’s Head of Investment Damien Klassen, and Tim Fuller took a look into “The Ticking Debt Bomb”. Webinar slides available here  Unfunded liabilities, astronomical government debt, record consumer debt, soaring corporate loans – where does the buck stop? Join us this week as we delve into the


Youth underemployment hits all time high

Yesterday’s ABS labour force release for August revealed a mixed Australian youth labour market – i.e. those aged 15 to 24 years old – with falling unemployment offset by a record rise in underemployment. The trend headline unemployment rate fell slightly to 11.80% in August: Total employment growth for those aged 15-24 years rose marginally


Government needs a lot more jails for bosses

A lot more. Via Domain: Attorney-General Christian Porter says he is prepared to legislate “significant” wage theft penalties – likely to be up to 10 years’ jail – to deter the “unacceptable” practice of persistently underpaying workers, as the government grapples with stagnant wages and a slowing economy. In a wage theft discussion paper to


Unemployment has much futher to rise

Some charts from Damien Boey at Credit Suisse offering a lead on the labour market after yesterday’s weakening read: I can see this coming as: dwelling construction crashes; infrastructure starts to plateau; the NDIS roll out halves; and consumption remains weak. If we get anywhere zero employment growth then the unemployment rate will spike straight


Daily iron ore price update (bash)

Texture from Reuters: Investors are cautious as prospects of China’s economy remain uncertain, a Shanghai-based trader said. Demand can be maintained at the current level but is unlikely to grow further, said the trader, adding that supply of iron ore is relatively sufficient now. The question is not underlying demand. It is weak. The question


Australian dollar falls as US housing warms up

DXY eased last night as EUR firmed and CNY fell: The Australian dollar continues to fall versus DMs: Mixed against EMs: Gold firmed: Oil too: Metals were mixed: Miners fell: EM stocks eased: Junk firmed: Treasuries rose: Bunds too: And Aussie bonds: Stocks firmed: More US housing data last night indicating that the bond rally,


CoreLogic weekly Australian house price update: skyrocket

In the week ended 19 September 2019, the CoreLogic 5-city daily dwelling price index, which covers the five major capital city markets, surged another 0.34%: The rise in values was again driven by Sydney and Melbourne, where values rocketed: Quarterly dwelling values are now rising solidly, again driven by Sydney and Melbourne: However, annual losses


Temporary visa deluge fuels modern slavery

The OECD’s annual review of migration trends has revealed that Australia and New Zealand have the largest temporary migrant workforces in the world, which is raising competition for lower-income workers and suppressing wages: Australia had almost 750,000 permits for temporary migrants on issue in 2017, second in total number only to the US. As a


Net immigration surges to 250,000

The Australian Bureau of Statistics (ABS) yesterday released its Australian Demographic Statistics for the March quarter of 2019, which revealed that Australia’s population continues to grow manically led by surging net overseas migration (NOM), mostly into Sydney and Melbourne. According to the ABS, Australia’s population rose by 1.6% in the year to March 2019, well


Links 20 September 2019

Global Macro / Markets / Investing: The Fed just pumped $128 billion into markets to pull down interest rates, its first injection in 10 years – Market Insider Fed cuts rates again, telegraphs more rate cuts by year end (another .25 basis points) – Yahoo Is Your Money Feeding Global Warming?: Money is the oxygen


Macro Afternoon

A generally positive day across Asian risk markets with a good response to the latest Federal Reserve cut, as the USD continued its gains against most of the majors. The Australian dollar tanked on the rise in unemployment which buoyed the local stock market, and this afternoon the BOJ held to its course, sending Yen


Has the Fed plugged the US dollar leak?

Via the excellent Damien Boey at Credit Suisse: The Fed delivered a “hawkish” easing this morning, cutting the Fed funds rate by 25bps to 1.75-2%, and the interest rate on excess reserves by 30bps to 1.8%. Importantly, officials reiterated their “median” guidance for no more rate cuts this year. Interestingly, there were three dissenters –


What Scott Morrison should tell Donald Trump

This is what Australians are up against. The nation’s leading business paper has completely lost faith in its own system. From the AFR editorial: …where we really part company with Washington is that we don’t accept that China is a strategic competitor that must be contained. Mr Morrison has instead revived the Menzian formula of


Australian CEOs bask in “culture of entitlement”

Recently, average CEO pay packets in the top 100 Australian companies surpassed $5 million, according to research from The Australia Institute: Now, the latest CEO pay report from the Australian Council of Superannuation Investors (ACSI) shows that Australia’s top earning CEOs were paid 280-times the average Australian full-time salary of $85,000, which ACSI describes as “a


ABS employment in detail: more wages gloom

As summarised earlier, the Australian Bureau of Statistics (ABS) today released its labour force report for August, which registered a 34,700 increase in total employment but an increase in the headline unemployment rate (from 5.2% to 5.3%) due to a 0.09% increase in labour force participation. However, the underemployment rate rose by 0.2% in seasonally


Business Council shill: ‘Big Australia’ will save economy

Adam Boyton, chief economist of the Business Council of Australia (BCA), has penned a spurious article claiming that mass immigration will prevent the Australian economy from experiencing the economic declines experienced in places like Japan and Europe: One difference between the US on the one hand and the eurozone and Japan on the other is


Final auction clearance rate stays strong

Last weekend, CoreLogic released its preliminary auction clearance rates, which revealed the following results: Today, CoreLogic has released its final auction results, which reported a 2.9% decline in the final national auction clearance rate to 72.8% – well above the same weekend last year (51.8%) and also above last week’s 72.3%: As you can see,


NZ GDP growth slowest since 2013

Statistics New Zealand has released national accounts figures for the June quarter of 2019, with Gross domestic product (GDP) rising by 0.5% over the quarter. Between the June quarter of 2018 and the latest June quarter GDP rose 2.1%, which was the slowest rate since December 2013. As shown below, services drove the GDP growth,