Links 12 January 2017

Global Macro / Markets / Investing:







  1. ResearchtimeMEMBER

    Make no mistake, the biggest mother bubble of them all this time round is not houses, US Equities, or maybe even Chinese debt, it is European bonds… AEP on “The global bond rout has begun, leaving equities on borrowed time” ( Key points:

    (i) …the downtrend line has finally broken. US Treasury yields across the maturity spectrum are smashing through lines of resistance, with instant knock-on effects through the $49 trillion (£36 trillion) market for global bonds, and secondary effects through bank lending… back to where it was in late 2008. It touched 1.99pc this morning, up 74 basis points since September, and is actually higher than the average stock dividend on the S&P 500 index. That ought to raise eyebrows. “The two-year Treasury is the canary in the coal mine. It is legitimate to say that the bond bull market of the last 36 years is over…

    (ii) … get out of all bonds with a duration above two years. Anything longer will see an erosion of capital value. Those who hold on – or are pushed into bonds by their pension funds – will suffer a relentless loss of real wealth.

    (iii) What has changed the mood abruptly is news that even the Bank of Japan – the eternal QE recidivist – is reducing bond purchases. It is stepping back from the greatest monetary experiment in history. Even more astonishing is the spectacle of a Japanese economy in full-fledged boom. The peak flow of central bank liquidity is long past. The Fed has begun “quantitative tightening” and will ratchet up its bond sales to $50bn a month by year-end. The European Central Bank halved purchases to €30bn (£27bn) a month this January.

    (iv) Donald Trump and Congress are adding fuel to the fire with a fiscal blitz at the top of the cycle. Economists at Standard & Poor’s think the tax package adds stimulus equal to 0.8pc of GDP this year and next. Citigroup’s Willem Buiter says the boost may be much larger once a barrage of pre-electoral pork barrel spending is included, pushing the budget deficit towards 5.5pc of GDP. This smacks of Peronist debauchery. There are loose parallels with the wild year of 1987 when Wall Street soared to nosebleed levels despite warning signs from the bond markets. “The economy was going from strength to strength. The ISM (manufacturing) index was over 60, about the same as now, yet the market crashed,”…

    (v) The “Bull Bear” indicator of professional advisors is currently at the same euphoric level reached in October 1987. It is higher than at the peak of the dot com bubble… US corporations are running a cash deficit of $250bn a year and have exhausted the use of debt leverage to finance share buy-backs. The edifice is sustainable only as long as borrowing costs remain pinned to the floor…

    • Lifted from comments.

      January 11, 2018 at 1:28 pm

      We need a “job quality” index as well.

      – Percentage wise, how many people are in good quality jobs? A good quality job is one that pays a middle class wage or more, has full time hours, and pays benefits.

      – For those employed, have their wages kept up with the cost of living (ex: rising costs of food, housing, transportation, and other necessities)?

      – For those with benefits, have they been reduced? An example of a reduction is that defined benefit pensions are almost unheard of now outside of the public sector.

      – How stable are these jobs? In the US and Canada labour laws a weak. Red States in the US have laws comparable to that of a developing nation. That leads to lower earnings and more anxiety. There is also the matter that aggregate demand is pushed down from this. Finally the rationale for this is that it will lower unemployment which seems to be a dishonest justification considering the unwillingness of neoliberals to end austerity.

      – Another is unpaid overtime and missed vacations. Employee wage theft should also be considered.

      I think that we are going to find that if we find a way to quantify this that jobs are facing rapid crapification, at outside of a few rich finance people, techies, and executives.

      Maybe the unemployment rates are lower, but the jobs are getting worse.

      Such a study might look something like this one:

      • You have a short memory. Gunna penned this a while back, it still applies”

        “The Bullshit Manifesto
        What is our policy for the future of Australia – it is bullshit

        Australia is a land of bullshit, and better opportunities to bullshit than anywhere else in the world. In Australia people are free to bullshit, happy with their bullshit, and enjoy bullshit rewards better than most of the human race. There has never been a more exciting time to bullshit for Australians, or to bullshit Australians. The bullshit party is the only way to ensure the bullshit continues. Only Bullshit will ensure that tomorrows Australians are bullshitted more than todays. Vote bullshit.

        This weekend Australians will vote on the flavour of the bullshit they will experience for the next three years, exhorted by bullshit politicians, representing parties who want to bullshit voters, backed by vested interests and corporates who want to bullshit the electorate about the bullshit they already have or are already doing, or the bullshit they want. It will be brought to the attention of Australians though a bullshit media and press, which although it cannot make a profit, is paid to ensure that the bullshit reaching you is the bullshit that someone feels will benefit their bullshit, deploying the finest bullshit commentators and reporters, and running bullshit analysis to ensure that Australians have access to every last skerrick of bullshit coming their way.

        Australia’s institutional framework is a national repository of bullshit, and provides a significant bulwark against anyone seeking change to the way bullshit happens in Australia – from the bullshit of State and Federal politicians and bureaucracies, through to laws and courts which defend the right to bullshit across the breadth of Australian endeavour, with an exactitude which is nothing short of bullshit. It is vital for the bullshit of Australia, that these institutions not only continue to bullshit as they have done, but seek out and engage to further bullshit for future Australians. To lay the foundations of the bullshit of tomorrow, to forecast and shape its form, to allow Australians to choose what bullshit they want, and to bullshit them about how they can achieve that bullshit. This is the promise of bullshit – to take bullshit further, to make bullshit more central, to bring more Australians together around bullshit.

        The bullshit vision

        Our vision is of a world where bullshit is ubiquitous, cheap and affordable. A world where bullshit is efficient and effective, and where the opportunity to bullshit or experience bullshit is a birthright of all Australians, and where Australians from all walks feel that they too are part of the bullshit, that there is bullshit for them, and that they have the opportunity to bullshit, and hand bullshit to their children for their lives and Australia’s future.

        We believe in furthering Australian bullshit no matter how long and hard the bullshit may be. We seek to push bullshit into every crevice and into every sentient moment of our minds. We believe in bullshit from the highest peaks to the oceans depths, from bullshit on the beaches and in the fields, to bullshit in the endless rugged expanses. We will develop our bullshit capability in the North, bullshit across the oceans, and bullshit to new frontiers in space and beyond the stars, seeking out new peoples and lifeforms to bullshit.

        Our vision of a bullshit life is to wake from dreams of bullshit to the sound of bullshit on the radio, interspersed by advertising and news bullshit, promoting a myriad of facets of social bullshit, amounting to economic bullshit, which Australian companies can lever bullshit margins on Australians with. It is Bullshit.

        From there we want Australians to have bullshit on their ways to work, meaningfully experiencing and engaging with bullshit in their chosen careers, feeling bound to a culture of bullshit in their workplaces, where they and their fellow employees and managers are bound by bullshit. With bullshit their efforts can contribute to the bullshitting of Australia and the bequest of bullshit for Australians of tomorrow.

        The bullshit policies

        Economy: The centre of the bullshit for all Australians is in a bullshit economy. Bullshit will leave no stone unturned in building on our bullshit achievements to create an economy which is definitively bullshit. With bullshit for all and a surplus bullshit for future generations and for export. Bullshit of which the rest of the world is rightly admiring and envious. Bullshit which attracts quality bullshit to Australia and builds on the bullshit we have.

        Our economic strategy is to inflate a housing bubble utilising bullshit monetary policy, bullshit land management practices and bullshit credit provided by banks backed by a bullshit budget. From here we believe in bullshitting the entire national economy around this bullshit, with bullshit investment, bullshit trade, and bullshit information management and statistics. Our economic ideology which has withstood the bullshit of time, remains the cultivation of bullshit investment, around the bullshit of trickle-down economics, DSGE, and deregulation, to provide bullshit jobs, so that Australians can pay bullshit taxes – unless they are accessing a bullshit taxation concession……..including

        Negative Gearing bullshit…….. *applause*,
        Capital Gains Tax bullshit…….. *applause*
        Superannuation concession bullshit ……….*applause in unison*
        And the continued bullshit excluding multi-million dollar residences from consideration in access to pensions *applause in unison and standing ovation*

        Only through these policies will Australia’s economy remain bullshit, both now and into the future, bullshit for our children, and bullshit for those who have made Australia the bullshit that it is today. Only through these policies can Australians be the bullshit they vote for when they vote for bullshit.

        Our Budget bullshit will be balanced budget bullshit. We will achieve our balance with the extensive use of bullshit forecasts – from commodity prices, to employment, to wage growth and government revenues – to bullshit conceptual underpinnings such as that enabled by bullshit bubbles driving bullshit receipts, with statistical bullshit further embellishing that balance. That balance will of course continue to bullshit Australians about the bullshit on the revenue side of the budget, which sees spectacular amounts of bullshit concessions costing bullshit billions, while ordinary people are bullshitted with threats about Medicare, education and social welfare costs

        Trade Our trade Bullshit will maintain Australia’s place at the forefront of global free trade bullshit, with Australians bullshitted at length about the benefits it brings, while experiencing bullshit about the jobs it has cost. To this end we will continue the bullshit which has seen Australians get no sight of Free Trade Agreements bullshitted to them by their representatives, of which they have seen nothing but bullshit before they are signed on their behalf, and of which informed economic analysis suggest the outcomes for Australians over the coming generations are baked in bullshit. We will also ensure that the bullshit benefits of these trade agreements are bullshit years into the future and accrue largely to bullshit sectoral interests, or to sectors of the bullshit economy already dominated by international capital so that these may repatriate the benefits to a less bullshit location. We will further commit to ensuring that global companies continue to bullshit Australian taxpayers through their extensive use of transfer pricing and offshore marketing arrangements, in the sale of resources coming from Australia.

        Education: The next generation of Australians needs quality bullshit.
        We are committed to bullshit education.
        From bullshit overcrowded primary schools filled with bullshit foreign national children of offshore property speculators, to bullshit discrimination by the federal government against the children of government schools, in favour of bullshit in private schools which already have access to taxation write offs for their parents, through to the bullshit denuding of the vocational education sector in favour of bullshit debt propagation which ultimately the taxpayer will be bullshitted for.
        From there we remain committed to ensuring that Australia continues to provide bullshit levels of access to courses in sciences, mathematics, engineering and medicine, while promoting bullshit volumes of meaningless courses designed to ensure bullshit levels of debt servicing and bullshit numbers of marginally employed future Australians wondering where the bullshit jobs they thought they were promised have gone to.

        Population: Australia’s bullshit has always been a magnet for migrants from around the world, and our population has been enhanced and diversified through the addition of generations of migrants.
        Our policy is that Australians continue to bullshit these about the lives they can experience in Australia, while continuing to bullshit existing Australians about the benefits of migration and the role it plays in the economy, in the need for infrastructure, and its role in helping keep asset prices higher through demand from offshore sources of funds.
        Our population policy will be to extend bullshit visas to anyone from anywhere who can promise to turn up with a suitcase full of bullshit derived cash, or who can transfer such funds into an Australian bank account from whatever bullshit offshore generates it and promise to outbid an existing Australian taxpayer for an Australian house.
        This will make population growth bullshit, and will be made more so by the complete absence of any economic narrative involving a need for further industry or employees or the slightest indication whatsoever of what all the new migrants will actually do apart from have children who go to school, and bid up small business prices.
        Of course a bullshit government will be firmly committed to ensuring that corporate Australia can bullshit on visas for employees from offshore whenever they have an inclination to do so, free from the gaze of any regulatory agency.
        Of course bullshit will see too that Australians know that foreigners arriving from offshore in boats will be bullshitted to Nauru or wherever we can send them, at a bullshit cost to Australian taxpayers, and with bullshit consequences for their lives.
        Bullshit stands for bullshit population growth and bullshit population and immigration policy!

        Housing: In no field has Australia’s proud history of bullshit been more exemplified than in its bullshitting of Australians about housing. To the point where here in 2016 the price of Australian housing is the most bullshit in the world and will be a bullshit millstone on the economy for generations to come. A bullshit government will ensure that the golden era of housing bullshit will continue for another thousand years, with never declining prices, ever decreasing land sizes, and ever greater building densities in our suburbs. Housing bullshit needs to be sustained through bullshit housing investment, and Australia’s time honoured bullshit for housing investment has been ‘Negative Gearing’ ……*applause* and ‘Negative Gearing’ ……*applause* will be enshrined in our constitution, forever protecting the bullshit which promotes the tax avoiding needs of highly indebted loss making landlords, over the needs of ordinary folk simply wanting a place to live. But Australian housing requires, deserves, our every endeavour for more bullshit. For this reason a bullshit government will promote the opportunity for foreign nationals to launder their moneys free from any requirement to establish the veracity or provenance of those funds, free from the need to establish any connection or commitment to Australia, and free from the need to provide any tangible benefit for Australia whatsoever apart from the creation of inner cities with as much life as a container shipping terminal in the dark. Housing is the centre point of Australian bullshit, its lifeblood and its reason for being. Only with a bullshit government can the quintessentially Australian bullshit on housing be sustained without question, without fear, and without any logic at all

        Men and women of Australia, this is but a bullshit prospectus of the bullshit we can visit on Australia when we are returned to government, and of the bullshit we can festoon you and your loved ones, as well as your heirs for generations to come.
        We will build a nation of such epic bullshit, bullshit of such legend, so fantastically transformational bullshit that we will be the bullshit of the ages…………… we will be – bullshit!


      • Gunnamatta Its all bullshit when you think about it.
        I came out of the Federal court years ago with another young lawyer and we looked at each other and said ‘this is all bullshit isnt it?’ He did the honorable thing and took off into 50 acres of Tarkine Wilderness chowing down on mung beans for twenty years. I just opted for different bullshit.

        I ditched law for industrial relations and sorting out agreements and intractable issues for some of the largest employers around. The issues that invariably drew the most heat were the ones I had earmarked as ‘bullshit’ and it didnt matter whether it was the Union side or management side there was always loads of ‘bullshit’ in the equation.
        Chat with line managers and most often they wanted to chat about ‘bullshit’ the ordinary mug punters would want to bring up issues too, or union officials, and they were all ‘bullshit’. More than once I was offered some very good gigs but always held off with a little man in the back of my head saying ‘this is bullshit’
        One day after resolving some particularly gnarly issues for one outfit involving a psychologist I shared a beer with him and basically downloaded my thought that it was all ‘bullshit’ – he told me he thought it was nearly all bullshit but that I should drop what I was doing and go and see if there was anything out there I thought wasnt bullshit.

        I ended up working in TV business news media and print media (mainly bullshit) in Europe and the mid east and working offside for finance and investment types making sure their bullshit is tailored to the bullshitees (as we used to refer to them).

        Eventually I come back to Australia and find a whole society sucking up ‘bullshit’ every time it turns on the TV or radio, opens up a paper.

        Then I look at politics and think to myself ‘those men (and women) are talking bullshit’
        For sure the powers that be have cottoned on to the fact that idle thinking types represent a danger. Their response has been to either make sure the populace is dumbed down or to make sure they are so deeply in hock that they will put up with loads of ‘bullshit’ just to service the debt.
        Uncle Rupert has cottoned on to the fact that if you spread the ‘bullshit’ far enough then everyone thinks it is normal.

        Of course we have bullshit jobs. Its Bullshit. Bullshit everywhere.
        Bullshit in the home straight by 8 lengths. Bullshit bowling a marathon spell from the Members and and Bullshit carving up the opposition with hard ball gets in the middle.
        Management is bullshit, strategy is bullshit, 95% of the people you will ever meet are bullshit in the context in which you will meet them.
        The one thing I will be explaining to my son and daughter is the view it is all bullshit, and why I have bent over backwards to avoid immersing them in it, to give them an out from the bullshit should they want it, in circumstances where they dont have to pay a bullshit ransom to some rent seeking bullshitter who think is they have a right to impose a bullshit tithe on others.
        A bullshit free world. That is something to dream about.

      • Buy a gun, a dog, a vegie patch, and some chickens. Atleast then the bullshit can be used 😉

      • WW….

        I think I have proven my memory skills quite adequately ww, time and time again.

        Further more I not really compelled by massive non sequitur rolling diatribes without an means to evaluate their emotive bleating.

        Now I offered a substantiated view that was contra to the above, as such, its incumbent on you or anyone else to directly offer a reply which engages that data pro or con. My main thrust was to highlight the disparity in the suggestion that a boom was on when classically only two of the four criteria was applicable e.g. Main St was not experiencing much of any sort of material benefit. In fact on a weighted bases labour has not seen material benefit from increases in GDP or Productivity for decades, the vector for that is increase is very narrow and has the propensity to not be used for socially productive enterprise.

        disheveled… quite the conundrum for those that carry on about QE and such, on one had decry government action and yet then when a few boxes get ticked genuflect to the market.

  2. The polls suggest the government should side with the Indian Community against the African in Tarneit. Conviction rates are irrelevant when no one is charged. There is undoubtedly a crisis when residents are too fearful to leave the house.

  3. Australia has two of the busiest domestic air routes in the world (Sydney – Melbourne is number 2 and Brisbane – Sydney is number 8) but the reality is that high speed rail links for those routes are not even on the drawing board. The dudes that have the Sydney airport monopoly must be pinching themselves with how that arrangement just fell into their laps.

    maybe our leaders are showing great foresight in waiting for maglev or even Elon to come to our aid…

    • Mining BoganMEMBER

      Oh no, he was the last one!

      That’s sad. Music thay can kill the neighbour’s lawn, gone forever.