From a perturbed Bill Evans at Westpac:
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Bill Evans: “Substantial falls ahead for house prices”
Primary Section
David Llewellyn-Smith
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Andrews is a disaster but Morrison is a catastrophe
Via a brown-nosing Australian: Morrison wants to keep public faith in the system, to avoid partisan clashes within the collective state and federal leadership of the national cabinet and criticism of those leaders, as well as drive home the point that the commonwealth “has come to the rescue” of the states, particularly Victoria. He also
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US jobs preview
Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for July. The consensus is for an increase of 1.58 million non-farm payroll jobs (+1.47 million private sector), and for the unemployment rate to decrease to 10.5%. The usual indicators are somewhat useless again this month due to the
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Joye: Default tsunami coming in March
Good work from Chris Joye today: One significant concern relates to record unofficial arrears in illiquid and subordinated bonds comprising “securitised” portfolios of Australian home loans, SME loans and consumer loans that are packaged up and sold to investors through residential mortgage-backed securities (RMBS) and asset-backed securities (ABS). We are particularly anxious about RMBS and
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More gold bullishness
Via Bloomie: With no imminent end to collapsing real yields – which just hit a new record low -1.10%, the side effects of financial repression warn of stagflation, asset bubbles and policy impotence. Fresh lows for U.S. 10-year real yields this week show a trap door opened by growing economic angst, climbing inflation expectations and
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The trivial detail upon which Lunatic RBA optimism hangs
Here it is from Luci Ellis as she spruiks the new dart-throwing forecast: Closure of international borders to most movements of people is affecting Australia’s international trade and will continue to do so over the forecast period. International tourism will be infeasible until borders reopen, and will probably only recover slowly. This will affect both
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Lunatic, blindfolded RBA throws dart at forecast
The new SoMP: During the first half of the year, the COVID-19 pandemic led to the most severe contraction in global and domestic economic activity in decades. Since around May, economic conditions have started to recover as containment measures have been eased and fiscal and monetary policies have provided significant support. But a high degree of
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Lancet: COVID-19 causes long term brain damage
Yeh, let it spread because Scummo says we should. Via The Lancet: Abstract Background Increasing evidence supported the possible neuro-invasion potential of SARS-CoV-2. However, no studies were conducted to explore the existence of the micro-structural changes in the central nervous system after infection. We aimed to identify the existence of potential brain micro-structural changes related
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Sandstone universities’ China maelstrom widens
Wow. How underhanded is this? On the one hand, UNSW is busy apologising to Australians for being a CCP-Nazi apologist: The University of NSW has apologised after tweets about the Hong Kong-China situation, featuring a leading human rights expert, were deleted after an online campaign from Chinese students and media. UNSW found itself at the
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MOAR DoleHider easy!
Via AFR: The cost of the JobKeeper wage subsidy will increase by more than $15 billion due to the hammer blow to business caused by the Victorian coronavirus crisis. The $15.6 billion JobKeeper blowout, which will take the total cost of the scheme to $102.2 billion this financial year, is due to two factors. First,
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Daily iron ore price update ($130)
Iron ore prices for August 6, 2020: Spot scorcher. Paper too. Steel is muted but OK. OK, so get this: Rising car and excavator sales in China further buoyed sentiment, analysts at Beijing-based Sinosteel Futures Co Ltd said in a note. “Good car sales data shows that domestic demand is improving, and excavator sales also
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Virus suppression will break “Australia”
Let’s put aside the debate about whether or not Victoria should or shouldn’t crush the virus. Instead, let’s focus on where it is actually going right now. Victoria’s lockdown is backsliding already, under assault from rent-seekers that long ago put aside doing business for lobbying. At rentier headquarters, the AFR: The Victorian Andrews government has
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Services PMI shockingly weak
Despite the reopening, services activity is still falling. This is a grim sign from AIG: Check this out: I find this report hard to believe. The reopening should have lifted activity in services more than this. Given there are a few N/As one wonders if AIG is adjusting it correctly. If not, we’re fooked. Full
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Australian dollar blasts higher with iron ore blowoff
DXY is struggling to hold support: The Australian dollar scorched everything in sight: Gold mania: Oil flamed out: Metals mania: But a GLEN shocker landed on miners: EM stock breakout: Junk fine: Yields squashed: Stocks mania though not Europe (or Australia): The only chart that matters mattered: Not much happened, via Westpac: Event Wrap US
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Morrison Government lurches towards virus civil war
This is incendiary stuff from Coalition stalwart, David Kemp, at the AFR: Slowing the spread of the virus was the policy announced by the Prime Minister and that Australians supported, on the basis that it was the policy of the so-called national cabinet. Unfortunately, some states opted for a political strategy of heightening community fears
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Time for the Green New Deal
Classical economics would prescribe decades of austerity to pay off the levels of government spending seen in the COVID-19 pandemic. But there’s another way, says modern monetary theorist, Dr Steven Hail, Research Scholar at the Global Institute for Sustainable Prosperity and Economics Lecturer at Australia’s University of Adelaide. Via Struggles from Below: A recent New
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No business but no bankruptcies
Very, very strange times with capitalism all but suspended: ASIC data shows businesses still holding their breath and hoping for rescue. (Monthly data and weekly) #ausecon pic.twitter.com/2juFvfSiVW — ☔Jason Murphy (@jasemurphy) August 5, 2020
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Stop whining, start printing: VIC lockdown $12bn nothing burger
Via Scummo: Combined with the damage of the stage three lockdown, it will cost the nation $10 to $12bn overall. “This is a heavy blow, a heavy blow: 80 per cent of this economic cost is expected to be in the affected areas of Victoria, of around $6 billion to $7 billion in that state,”
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Morrison out of ideas to save property prices
Good news here, via the AFR: The federal government is planning a series of housing initiatives for the October 6 federal budget, but has rejected growing calls to fund large-scale social housing projects, saying that was more of a state responsibility. Housing Minister Michael Sukkar told a closed conference last week that housing would be
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Revenge of the CCP-Nazi apologists
We begin, as always, with Labor and the once hawkish Richard Marles, at Domain: Opposition defence spokesman Richard Marles says a Labor government would not let backbenchers lead the debate on China, accusing the Morrison government of letting “fringe dwellers” damage Australia’s relationship with its biggest trading partner. Mr Marles hit out at government MPs
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Gotti wrong again on gas supply
Though at least he covers it. Via Gottiboff: The dam wall holding commercial gas prices at ridiculous levels is starting to crack …The crack in wall was actually opened by ACCC chief Rod Sims late in 2017 when he approved a buying group, Eastern Energy Buyers Group, to aggregate orders from medium sized businesses up
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All Australian property is turning into Perth
Via Martin North: DFA has released our latest results from our rolling 52,000 household surveys. As a result of the economic slowdown (which was already underway before COVID) and exacerbated by the COVID restrictions, more households are falling into financial stress. We define stress in cash flow terms – money in and money out –
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UBS: Aussie banks mull “artificial dividends”
Via the excellent Jonathon Mott at UBS: Two steps forward… one big step back? With Melbourne moving to Level 4 lockdown (all non-essential businesses closed), the outlook for the Australian economy and banks has deteriorated sharply. After a strong economic bounce from May until early July, this is a clear setback. While the assumptions underpinning
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Plenty of fuel left in the gold rocket tank
A couple of charts today make the point. Real interest rates have room to fall further: Gold ETF flows are still very small: AUM proportions dedicated to gold are still WAY down versus previous peaks: Probably the best chart of all, DXY is still very high: The lows of the GFC period are 24%
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Daily iron ore price update (monetary)
Iron ore prices for August 5, 2020: Spot up. Paper up more. Iron ore has now caught the monetary tailwind out of the falling US dollar. Chinese empty apartments are still fine: Brazil is still sick: But it has exited shutdown more swiftly than elsewhere: I’m still hanging on. But if we get one more
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ScoMo left behind as Australia votes for virus elimination
The Morrison Government should do a major volte-face on its virus suppression strategy. There are three reasons. First and most important, elimination is the best way forward. Virus-free New Zealand is tracking for far better economic, lifestyle and health outcomes than Australia is. Second, governments in the virus-free states of WA, SA, QLD, TAS, ACT
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Australian dollar rips new high as commodities riot
The DXY smash resumed last night with EUR at new highs: Australian dollar hit new highs versus USD but could not hold them: It was strong against EMS: Gold is at record highs again: Oil broke out: Dirt surged ex-copper: Miners boomed: EM stocks took off: Junk not so much: As oil spooked yields: But
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Irrelevant S&P dumps Victoria on downgrade watch
Who cares. Deficits are irrelevant… Overview • On Aug. 3, 2020, the State of Victoria declared a “state of disaster” in response to rising cases of COVID-19, triggering additional lockdown measures that we expect to severely hit economic activity. • There is an increasing possibility that we will lower our long-term rating on Victoria within
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Evil Anna gets jump on lockdown
In other countries, this is called corruption. In Australia, it is the natural course of a political career. Via the AFR: It wasn’t until several hours after the state government brought down the shutters on retail and construction in Victoria that the Australian Banking Association was able to breathe a sigh of relief. With the
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Does Australia need Labor’s new bank?
Via Crikey: A slow news day in a pandemic is a great time to trot out the old “wouldn’t it be a good idea to start a government-owned bank” story. What a fabulous concept. No wonder Labor’s shadow treasurer Jim Chalmers jumped at the chance to support the union-backed report from the Per Capita think tank. But wait. Wasn’t it Labor which sold the last government-owned