Trade deficit improves unexpectedly

surprised-man-reading[1]

by Chris Becker

The Australian Bureau of Statistics (ABS) just released November 2014s trade balance figures and its a surprise to the upside (kind of), with a sub-$1billion deficit for the first time in the calendar year:

Headlines:

  • In trend terms, the balance on goods and services was a deficit of $980m in November 2014, a decrease of $122m (11%) on the deficit in October 2014.
  • In seasonally adjusted terms, the balance on goods and services was a deficit of $925m in November 2014, an increase of $48m (5%) on the deficit in October 2014.
  • In seasonally adjusted terms, goods and services credits rose $160m (1%) to $27,085m. Non-rural goods rose $486m (3%) and rural goods rose $179m (6%). Non-monetary gold fell $519m (38%). Net exports of goods under merchanting remained steady at $43m.
  • In seasonally adjusted terms, goods and services debits rose $208m (1%) to $28,010m. Intermediate and other merchandise goods rose $224m (2%) and consumption goods rose $131m (2%). Non-monetary gold fell $90m (27%) and capital goods fell $78m (1%).

The expected seasonally adjusted print was a -$1.6 billion deficit, with prior months print significantly revised upwards to -$877 million, from -$1.32 billion.

The Aussie dollar immediately broke through the 81 cent handle against the USD, although stocks reversed on the news.

At first glance, this is pleasing news for rebalancing with the trend firming to lower trade deficits, but I’ll have a more in depth look later today!

Comments

  1. GunnamattaMEMBER

    1% growth in exports (Iron ore volumes) and imports – I wnoder if that points to an ugly Christmas spend

    Gee thats a big revision to the October deficit figures from A$1.323 billion to A$877 million

    • I certainly did my part not to spend this Christmas. The best things in life are free. Had a lovely day at the beach with my family.

      • I wont, just catching short sellers exiting closed my shorts and opened a small long happy with 100 or so pips.

        Allready have a nice 40 pip buffer, its made a floor for now. 83-84 ahead. So having lots of fun.

      • Burnt? You mean profit less? I don’t think its going to go catastrophic past my stop.

        It has a long run down. No one silly enough to add short at 80.5 or to hold shorts thru this bounce.

        Its short term. I’m the most aud pessimist there is long term. Unless gas exports juice the numbers in a few years we going down hard.

      • I don’t think it will get past 82.2 and if US data is positive overnight it’ll be back below 81 by the time you wake up

        But what do they say about people who say they know which way foreign exchange is going short-term?

    • We call them mugs bigbob.

      If I’m confident enough to close a massive short then I’m confident enough to place a long. Will short again at a “better” price ( if you consider pips allready obtained)

      • So far probably nothing but the real question is what will happen to those mortgages – they are by definition nonconforming or subprime

      • My guess is that a large percentage of those loans are in difficulty, which will be how the banks and the ASIC picked these guys up. Once a bank writes a loan then as long as the payments are being met as per arrangements they won’t keep raking over the coals, but when the loans goes into arrears then it becomes a different issue, and if there are several with the same broker as the common denominator then mortgage fraud becomes a suspect.

        http://www.theadviser.com.au/breaking-news/31312-brokers-arrested-in-alleged-110m-mortgage-fraud?utm_source=theadviser&utm_medium=email&utm_content=newsflash06_01_2015

        These guys didn’t just fudge the odd figure, they counterfeited supporting loan documents to obtain up to 350 loans with an upfront commission value of over $550,000 so this is serious theft.

        Some of the loans will be OK, but a high proportion will become losses for the banks.

        It’s difficult to say whether the borrowers will have any recourse on the banks, the borrowers may have been complicit – who knows. Whoever underwrote the PI cover will be pretty upset.

      • There are thousands and hundreds of thousands similar mortgages in Australia. Many documents have been falsified by applicants, even more hid important relevant information (real cost of living, other debt, real income, …)

        the full scale of mortgage fraud will become visible once bubble bursts and everything gets exposed

      • I seriously doubt it. It’s been 8 years since the GFC and any rubbish written will have come to light well before now. Arrears rates track close to historical lows.

        I think that’s one myth you can pack into the bottom drawer and forget about.

      • doctorX,

        Barrels are limited to a maximum of rotten apples.

        They have now all been detected in the mortgage / finance barrel and we can now relax.

        That a whole range of lending institutions were dealing with these guys probably indicates they were smart enough to know that by spreading the loans around it was less likely any patterns in behaviour would be detected and any loans developing difficulty could be explained as a one off.

        Probably only detected because multiple loans for a single institution went sour and finally someone (probably ignored for years) was on the ball and started poking around.

        Fortunately, this plan was so amazingly cunning and the industry standards (bank and loan originator) so high that other instances using the same strategy are very unlikely.

        /sarc

      • Yes, I’m sure they’ll be trying very hard to pack this one in the bottom drawer to forget about it Mortgage Pete!

        ‘The Melbourne man at the centre of an alleged $110 million mortgage fraud holds a senior position in one of the country’s largest mortgage brokerage networks, raising concerns that the true scale of the potential financial losses is yet to be known.’

        Read more: http://www.smh.com.au/business/massive-fraud-link-to-melbourne-mortgage-broker-20150106-12iyui.html#ixzz3O5HHQJuy

        Is it any wonder AFGs market share has been skyrocketing?

      • @ Jimbo,

        Yep it doesn’t look good overall does it. I don’t know what the AFG involvement is, I suspect that he is a member of AFG rather than an employee of AFG, but I guess we will find out soon enough.

        The accreditations BTW are held with individual banks and I’m amazed that they didn’t pull them a long time ago if they suspected fraud. They don’t even have to give a reason to withdraw an accreditation.

    • “It’s still a deficit”
      Absaobloodylootely!

      And this, of course, is just the small part of the story. The total Current Account Deficit is the real story but it is not ever mentioned.

      • Everything is given a positive spin. We have a deficit of reality.

        “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”

  2. “We have a deficit of reality”— Charles Ponzi

    I like that Charles.
    We’ll all be using that phrase for the rest of the decade.

  3. Data looks “duked” to me. Best to wait a few months for the negative revisions to come in once a more accurate picture is available.

    • The almost 500M, (one third) reduction in the deficit for October does not inspire confidence in the numbers that’s for sure.

      • This is what I expect to see in the initial stages of the correction in attitudes as overly indebted begin to withdraw spending triggering an unemployment snowball.

        The paradox of thrift is going to be the bull in our china shop/

      • The paradox of thrift is bull! …..Basically 🙂

        Edit – Not to say the effects here are not as you describe