Links 11 October 2018

Global Macro / Markets / Investing:





Leith van Onselen


  1. The UK tightening a few screws on money laundering….
    What is an Unexplained Wealth Order?
    A UWO is a new power which has been designed to target suspected corrupt foreign officials who have potentially laundered stolen money through the UK
    Meanwhile downunder we do things differently……..

  2. I recommend the Summers link – my only regret is that he didn’t write a whole book a la Theroux.

  3. The Traveling Wilbur

    And BANG! Markets implode like it’s 1999.

    Probably a temporary negative sideways adjustment though.

    PS Don’t use the ‘algo’ word. Ta.

      • The ABC is right again:“More to come.
        Dow Jones slumps 2.3% in worst day on Wall Street for 8 months,
        ASX futures are trading significantly lower, down 97 points (1.6 per cent)”
        [the AFR says 1.8% or over 100 points. (Note to triage)]
        WW say another 60 billion loss for local equities
        (the loss today in equities will equal the loss for the year for RE.)
        So numberwang, 63+9+ 45+ 42 + 60 (today) =/= $200 billion.
        A loss like this on a thursday
        makes for pooing your pants day tomorrow?

  4. … How prepared are you for ‘normal’ interest rates ? …

    Fed on path to ‘normalisation’; US Federal deficit jumps by a third; US home loan rates breach 5%; China expands TBTF resilience; equity markets tumble; UST 10yr at 3.23%; oil down, gold holds; NZ$1 = 64.7 USc; TWI-5 = 68.8 |

    … extract …

    … While the Fed may not be artificially stimulating the American economy, Congress certainly is and at a faster rate. US Federal deficit for the full year to September has come in at an enormous -US$900 bln, 35% higher than the -$665.8 bln in the previous budget year. The political will to control these exploding deficits has evaporated. For perspective, the US federal deficit has risen from -3.4% of GDP in the year to September 2017, to -4.3% in the year to September 2018. This debt binge is unprecedented, accentuated by large corporate tax cuts. At the current rate of deficit spending it will be -5.5% of GDP in twelve months, and rising. Almost certainly it is past a sustainable rate with interest payments now taking a bigger slice of their spending than even what is spent on Defence. And of course, rising interest rates just exposes the issue to a bigger, earlier shock. Confidence could leak away quickly when markets take fright. … read more via hyperlink above …

    … via above …

    Mortgage Applications Decline in Latest MBA Weekly Survey | Mortgage Bankers Association

    … extract …

    … The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since February 2011, 5.05 percent, from 4.96 percent, with points increasing to 0.51 from 0.49 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week. … read more via hyperlink above …

    • How about we put a floor under high rise harry?
      Like a fully greased trapdoor floor.
      Fairfacts/Governments will intervene if Australia’s housing prices fall too steeply, says billionaire developer Harry Triguboff, who expects a year of tough conditions but no crash.
      Triguboff said. “The way Australians have always made money is on property.
      But prices have come down and mortgage arrears are growing.”
      Mr Triguboff rejected talk that Sydney’s housing prices could fall 40 per cent. “Prices won’t crash,” he said, but noted that the market would be weak for at least a year.
      Strong migration would put a floor under the market, he said.
      WW. Govts intervene, with what.? This aint no picnic.

  5. sydboy007MEMBER

    So google say their conscience wont let them use AI to help the pentagon, but they have no issues helping the Chinese govt link searches to phone numbers.

  6. NEW ZEALAND : The number of homes sold last month was the lowest in September since 2011 but prices remained flat |

    September was a terrible month for the residential real estate industry with just 5506 homes sold throughout the country, the lowest number in any month since January when the market is traditionally on holiday, and the lowest for the month of September since 2011. … read more via hyperlink above …

  7. From this morning’s “Letters Fairfax Won’t Publish” file:

    10 October 2018

            What are we expected to do?

    Ross Gittins (“Want a more capable nations? Start younger”, The Age, 10 October 2018) condemns his fellow citizens for letting “loyalty to a particular party determine their support or opposition to particular policies. Don’t think for yourself, just follow your herd of choice.”

    What are people supposed to do?

    Australia’s system of elective government only allows us to vote for parties. We’re not allowed to vote for policies. Unless we vote for one of the major parties our vote will probably be wasted. In fact, for most people what’s the point of even trying to understanding policies? Unless we’re members of a powerful lobby group, our views count for nothing anyway.

    It doesn’t have to be this way. In principle, Australia could have a democratic government – a genuinely democratic government, a directly democratic government – in which people were allowed to vote for policies. It’s a system used in some of the most successful societies on the planet.[1]

    My apologies if I’m wrong, but I have yet to see Mr Gittins ever express support for such a system. Is he just “following the herd” in his opposition to it?

    If and when he does come out and express support for genuine democracy then he might have grounds for criticising other people. Not before.

    Stephen Morris


    • Maybe not,
      I think the punters have taken too much “Felix Felicis”,
      Harry Potter has a potion”Felix Felicis”, Which works like Bundaberg Rum,
      whereby everything the drinker attempts,
      they think, will have a good chance of being successful.

      Donald Horne > The Lucky Country (1976)
      The punters found the meaning of life in consumer spending.

    • THis sorta stuff is always interesting especially if GE (turbines) is involved
      they knocked off IP from the poms, frank whittle, on high temp materials, and thus produced the first effective turbochargers, and have never looked back.
      But the poms also gave the ruskies a coupla jet engines to use, and were surprised when the advanced model of the engine turned up in the Mig. (which then shot down a heap of US ac.)

    • Damn we’re on a very slippery slope when Intelligence officers operating in their own country can be indicted for crimes committed (at their bequest) in other countries. This outcome kinda guts the whole concept of the absolute sovereignty of states, and without absolute sovereignty, can the crime of treason (and its close cousin espionage) even exist?
      Seriously where are we at if suspected state Intelligence agents are being detained in third party countries and extradited because of some idea that the crime of espionage was committed at their request? This sets a precedent that is as dangerous as it is foolish, because as everyone knows turn-about is fair play.

      • interested partyMEMBER

        Just to clarify….surrender of Xu from Belgium.
        3rd paragraph…bottom section.

        China would never give up their own…not in this climate.

      • At least he is still breathing….what?
        These were all Chinese nationals detained in China, as in Traitors working for the CIA that were caught in China by the Chinese and prosecuted under Chinese law.
        Very different from CIA agents that supposedly recruited these (traitors) being detained in a third country (in this case Belgium) and extradited to China. Is that what you want to see happening?

      • interested partyMEMBER

        No, I get your point.
        I discounted the distinction between traitor and spy.
        It is still notable that this stuff is either ramping up, or being deliberately exposed for propaganda ammo. It does no good, either way.

  8. Why are NZ homes so pricey? It has nothing to do with avocados | Charlie Gates |

    … extract …

    … But why? To find out I asked economist Shamubeel Eaqub and housing expert Hugh Pavletich about the main problems keeping house prices so high. Here are the three main problems they raised.

    1. Land supply

    Eaqub said that “by far the biggest culprit behind higher house prices … is the cost of land.”

    Since 1995 land costs have risen 73 per cent faster than incomes, he wrote in his book.

    Land is expensive because there is not enough that can be used for housing. A lot of land is tied up in complex and restrictive planning rules.

    Restrictions on land use constrict the supply of homes, Eaqub said.

    Pavletich and Eaqub agreed that we should expand the city limits and build high density housing in the city centre.

    2. Infrastructure funding

    Land without infrastructure is just a paddock.

    The roads, sewerage and powerlines needed for new homes are expensive.

    Councils have under funded infrastructure for decades and are reluctant to borrow money to pay for it because that is politically unpopular.

    Changes since the late 1980s, like privatising public assets, also mean councils are less able to fund infrastructure, Eaqub said.

    “Councils were stripped of their assets,” he said.

    “Councils went from having lots of sources of income to just rates for infrastructure funding.”

    Pavletich said councils lost control of their costs.

    “They could not keep up with growth and meet their infrastructure requirements.”

    “Costs have blown out and they haven’t got the money to do it.”

    This means land that could be used for housing often remains a paddock.

    Eaqub said that liberal economic reform in the late 1980s, known as Rogernomics, also changed the housing market because people could more easily borrow money.

    “The pre-1980s banking system was very differently regulated and you couldn’t get any money. That was gradually lessening from the 1960s onwards.” … read more via hyperlink above …
    … IPSOS plling … the major issue for Kiwis is excessively priced housing …

    New Zealand Issues Monitor – Concerns about housing grow
    … When do the politicians intend to ALLOW (yes … that’s all …) affordable new housing to be built ? …

    How to get a (NZ)$650,000 KiwiBuild-style house down to an affordable (NZ)$300,000 – Stephen Sellwood of Infrastructure New Zealand – NZ Herald