Links 19 August, 2016

Macro & Markets




Terra Specufestorus

…and furthermore…



  1. Dr. Drew Pinsky Says He Is “Gravely Concerned” About Hillary Clinton’s Health | Zero Hedge

    Board-certified medicine specialist and TV personality Dr. Drew Pinsky has come out and said that he is “gravely concerned” about presidential candidate Hillary Clinton’s health, pointing out that treatment she is receiving could be the result of her bizarre behaviors. … view and read more via hyperlink above …

    • They aren’t stealing jobs. They are getting them due to a system that encourages their employment. Be pissed off, but at the right people. The politicians and vested interests that perpetuate these destructive schemes.

      • +100. Little Johny Howard gifted us the 457 visa. But he also gave us a similar exit option via E3 visa in the disastrous USFTA. Use it and get out.

      • Call it what you want and blame who you want but it is wrong.

        I just wonder how PM Howard resisted the urge to give out 125,000 x 457 visas per year like Gillard did!

        Gillard was an utter disgrace.

    • When in doubt, always turn to The Idiot for guidance.

      “All credit to Howard though. The guy ain’t a moron. You don’t actually speak about this stuff. You tell the plebs one thing that kinda has to do with immigration, when they think you’re on the same page, you then get on with executing the actual plan. Notice the real acceleration in immigration numbers after Johnny told us in 2001 he’d be deciding who was welcome in Australia – everyone he could fit! Rank amateur, Kevin Rudd, actually articulated his belief in a big Australia. He was soon executed by his party after the Labor focus groups went ballistic at the idea. This is why political parties tiptoe around the issue – because for various reasons, people hate the idea of high immigration. And because they hate it, they’re continually denied a voice in the debate.

      The cloaked love of immigration on the right comes down to currying favour with their rent seeking paymasters. It’s the cheapest and easiest sugar hit for business there is. What’s better than more people if you’re in a volume business like banking, real estate development or supermarkets? Then there’s that added bonus of wage suppression. And don’t forget temporary visas that you can use with your buddies to attract malleable labour from less fortunate countries, all while continuing your campaign of terror against the unemployed…”

  2. It appears from the comments section that the Japanese immigration system is working just fine.

  3. (United Kingdom households) Good news, we’re getting richer ! … but mostly due to soaring housing prices … UL Daily Mail

    • ONS figures show UK net worth went up nearly £500billion last year
    • Value of homes now contributes some 62 per cent of the total
    • Average worth of households up to £378,000 from £367,000 in 2014 … read more via hyperlink above …

    Update the total housing stock values to GDP for these Anglo countries from these 2013 figures from Forbes …

    … via …

    New Zealand’s Bubble Economy Is Vulnerable … Scoop News NZ

    … in normal markets total housing stock value should not exceed in the order of 1.2 through 1.5 times GDP.

    The latest report on the New Zealand housing circus …

    New Zealand’s homes top an ‘obscene’ $900 billion combined value |

    • NEW ZEALAND Productivity Commission report recommends major changes to planning regime aimed at freeing up development in urban areas |

      … extract …

      English pleased

      Commenting on the report, Finance Minister Bill English says it’s particularly pleasing that the Commission has identified a shift in planning culture is needed.

      “We’ve seen this thinking constrain growth in Auckland, which has caused the land and housing supply issues we’re currently working to resolve, and the Commission has noted the negative effect it has had on low and middle income households. The Commission’s draft findings corroborate much of the work the Government is already doing. For example, we’ve already introduced legislation overhauling the Resource Management Act to provide more consistent and responsive planning and to support housing development and business growth,” says English.

      English also says he’s encouraged the draft report recommends an emphasis that favours development, but with clear limits.

      “Most New Zealanders will agree with the Commission that a future planning system will recognise that the natural and built environments require different regulation, and the natural environment must be protected by clear standards. We are already considering legislative options to ensure that,” says English.

      Submissions on the draft report are open until October 3, with the final report expected by November 30. Click on the following link for a 40 page summary of the full report:

      PDF iconbetter-urban-planning-draft-report-summary.pdf

  4. What does it really mean when Aussie Banks fully hedge a US issued bond?
    Sounds like a trivial question that should be answered with some snide quip like GIYF.
    BUT is it a trivial question?

    So I searched the RBA to see what they’d written on the issue…The best analysis that I can find is
    Foreign Currency Exposure and Hedging in Australia
    it’s a bit dated (2009), it’s pretty comprehensive BUT fails IMHO to answer four fundamental questions.
    Who are the counter-parties to this hedge?
    Why are these counter parties willing to take on a Risk that’s considered too big for our largest Banks to handle?
    For what magnitude of exchange rate shift will these counter-parties remain solvent? (hint google LTCM)
    How do these Counter parties manage this risk?

    For me the most intriguing question is the fourth …How do these Hedge Counter parties manage this risk?

    If we look to the corporate world for some hints, we’ll see that Corporate Bonds are often hedged against Corporate Equities. In essence the Buyer of the Bond shorts (or synthetically shorts) the shares / Equities of the Bond Issuer. If the value of the Shares falls they simple increase their short position to ensure a fully hedged loan …hmmm don’t need to be a genius to figure out what happens when the SHTF. Sometimes this continuous Hedging is built into the Bond in the form a Convertible Note with a resettable conversion ratio (Bonds of this type have justifiably earned the title: Death Spiral Convertibles).
    OK so lets assume the same rules apply and the Exchange rate risk for these Aussie Bank bonds are hedged against their Equity with synthetic Short positions. Just how would a Hedgie go about the task of constructing this sort of synthetic Equity Short? There’s a name for these sorts of plays, they’re called Exotic Derivatives. but there’s another big problem when the magnitude of the Bonds vastly exceeds the Market Cap of the Issuer, which takes us right back to the fundamental question: How do the Hedgies lay off this bet?
    And what does the “laying off” of this Hedge mean for Australia if/when the economy goes pear shaped? Seems to me the risk always returns to the local economy.

    I’d sleep better if I thought the RBA had answers to these questions, however I suspect they’re also kinda clueless.