Some thin-sliced Chanticleer today: …perhaps the best supporting evidence for Scott’s big Coles spin-off comes when you examine the returns on capital each division of this conglomerate is producing. At Bunnings, which will officially be crowned the flagship of the Wesfarmers fleet after the Coles demerger, return on capital was a staggering 49.4 per cent, up from 41.8
It may come as a shock but the former One Steel/Arrium dog is now the birthplace of the Australian energy future, via the AFR: British billionaire Sanjeev Gupta expects to begin construction of the Cultana solar energy project which encompasses 780,000 solar panels near the revived Whyalla steelworks early in 2019 as part of a broader $1.37
AUD breaks again: Mid-71s looming as crucial support. Long bond yields are falling too as wages go precisely nowhere: ASX lovin’ it: Dalian is sniffing at those Chinese house prices: Big Iron is down anyway: Big Gas looks toppy: Big Gold is in trouble as DXY powers: Big Mortgage is enjoying falling yields but CBA
The great Chinese ponzi is alive and well with house prices for July off to the races up monthly 1.1% and annual 5.8%: Price gains are broad-based outside of a few top tier eastern megacities: Which is a lot of them: Here’s the raw data: And the prices versus iron ore inventories tracker: Given these
From Martin North today: The latest edition of the DFA Household Financial Confidence Index to end July 2018 remains in below average territory, coming in at 89.6, compared with 89.7 last month. We had expected a bounce this month, in fact the rate of decline did slow, thanks to small pay rises for some in the
I really did not want to touch this poison but the media is going nuts so here it is: Queensland senator Fraser Anning has praised the White Australia Policy and called for a plebiscite as “the final solution to the immigration problem” in the most inflammatory maiden speech to an Australian Parliament since One Nation
Via Bill Evans: The consumer mood deteriorated in August, giving back about half of the surprisingly strong gains seen in June and July. Those gains look to have been partly a positive response to the tax cuts announced in the May Budget, which passed into legislation in June, the first round of cuts coming into
Via the AFR today: The scale of NAB’s inability to report licence breaches on time has been revealed in a document published by the Hayne royal commission which shows the bank breaking conditions of its licence at the alarming rate of around once every week between 2014 and 2017. Of the 297 breaches the bank
Via Gottiboff today: Let’s assume such a major overseas event will not take place and concentrate on the events we can control which are contributing to the housing mess in Sydney and Melbourne. We’ll start with the banks and their regulators. The banks now have a set of rules that have been imposed on them
“Beijing” Bob Carr is back: Australia was “unimaginable” without the dynamic presence of Chinese-Australians. Those were the words of Malcolm Turnbull last week, resetting the rhetoric of Australia-China relations. The new language is welcome, especially to someone such as Kun Huang, who might be wondering if it had been a mistake to have been born
This is old school AFR from Alan Mitchell: Economists call the problem “regulatory capture” and, as well as being under-resourced, it seems the financial sector’s main regulators, APRA and ASIC, may have fallen prey to it. None of these problems are new. The failures of governments and regulators to protect the public from the behaviour of industry have
Via the AFR: The nation appears headed for an election over emissions reductions and power prices after a majority of Coalition MPs endorsed the National Energy Guarantee and set the scene for a showdown with Labor. …Last night, the states, which must pass separate legislation to establish the mechanism for the NEG but were awaiting
DXY is off to the races. CNY held and EUR is cooked: The Australian dollar tumbled again versus developed markets (DM): And emerging markets (EM): Gold held on: Oil didn’t: Nor base metals: Big miners are breaking down: EM stocks sank fingernails into the clifftop: EM junk bounced: Treasuries were sold: Bunds too: Italy is
That is, it crashes with risk as the USD climbs, which makes sense since it really is just an effusion of liquidity: My God that is one ugly bearish descending triangle! And let us not forget that BTC is the strongest of the cryptos: A Reddit enthusiast captures the moment nicely: Just wanted to say
Spot down. Paper down. Steel up. The last time steel was at these prices iron ore was trading at $180. Output is astonishing: Texture from Reuters: Mills in the world’s top steel producer churned out 81.24 million tonnes of crude steel last month, up 1.3 percent from June and 7.2 percent from the same month
Remarkable news: The Australian Prudential Regulation Authority (APRA) has sought industry feedback on potential approaches to adjust the capital framework for authorised deposit-taking institutions (ADIs) to make capital ratios more transparent, comparable and flexible. The prospective approaches are outlined in a discussion paper released today for industry consultation. The approaches would not change the amount
Chinese July data is out and the overall message is a clear slowing, especially in the building economy with fixed asset investment slumping to 5.5%, industrial production at 6% and retail sales at 8.8%: But real estate sales have turned and are still rising steadily year to date: Year on year took off, perhaps on
Amusing stuff today as the ASX decouples from Planet Earth. The AUD is at the lows: Bonds are flat: ASX to the moon as the emerging word falls apart: Dalian is holding: Big Iron is up as Chinese growth slides away: Big Gas too: Big Gold is dead cat bouncing: Big Mortgage is loving the
Vai Damien Booey at Credit Suisse: Europe goes “cold Turkey” We have just published an article explaining why we are concerned about contagion risks from Turkey (attached). We argue that Europe is going “cold Turkey” in two respects: 1. The ECB has warned us about banks’ EUR exposure to Turkey. 2. The ECB still plans to go ahead with
Via the Australian Industry Group: Wage theft inquiry headed into dangerous ground Statement from Australian Industry Group Queensland Head, Shane Rodgers The Queensland Parliament’s inquiry into what it terms “wage theft” risks turning mathematical errors into criminal offences, Australian Industry Group Queensland Head Shane Rodgers said today. The Parliamentary inquiry, which begins public hearings this
I’ve been having this conversation regularly lately. Gold is falling and breaking support just as global markets tilt towards a possible risk accident: Once again gold is proving that it is the absolute opposite of a cyclical safe haven. When markets crash so does it. Notice that exactly the same thing during the GFC, even
Has a political party ever torn itself apart so spectacularly as the Coalition on energy? The AFR says the NEG will pass the party room: The Coalition party room is expected to endorse the National Energy Guarantee on Tuesday despite last ditch efforts by former prime minister Tony Abbott and former Nationals leader Barnaby Joyce to torpedo the policy.
The beauty of politics is that it is so predictable. The phrase “always back self-interest” is a pure truth in the political arena. Hence this is no surprise at all, via the AFR: The federal government is no longer committing to take any unlegislated company tax cuts to the next election. Finance Minister Mathias Cormann,
DXY was soft last night but EUR and CNY crumbled anyway: AUD fell to new two year lows but ended roughly where it started versus DMs: It was strong against EMs: Gold is once again illustrating that it is useless in a market crisis: Oil is fading: As are base metals: And big miners: EM
Iron ore prices for August 13, 2018: The stimulus party rolls on, largely confined to futures markets. This is still not inconsistent with seasonal patterns, especially so since the Winter shutdowns bring forward demand. Rebar inventories are still falling at a decent clip even if well above last year. My outlook remains unchanged. Overnight Chinese
China released new yuan loans last night and the result is more slowing in July. Bank lending was strong at 1450bn yuan. But total social financing was much less so at 1040bn yuan meaning shadow finance contracted for the third straight month down a whopping -440bn yuan:: This is now an unprecedented crash in shadow
We all know how it ends. Eventually China is overwhelmed by its own bad debt. The dreams of empire crumble to empty vestiges, wealth greys with demographics, dynamism sinks into the rentier bog and endless growth into secular stagnation. This is China’s destiny and Australia will suffer for it. But in the meantime we are
Via Gottiboff today: There are no simple answers as to how our corporate and government decision-making ran off the rails. …I reckon the rot actually started in Canberra around 1999, when the Howard government changed the public service policy. Until that time public servants, like executives, were required to give “frank, fearless and honest” advice
Via Bill Evans at Westpac: The Reserve Bank’s August Statement on Monetary Policy provides few surprises. Of most interest in the Statement is the update in the Bank’s forecasts. In particular, this update includes another six months of forecasts to cover the whole of 2020. The GDP growth rate forecasts through to end 2018 and
The AUD is at new two year lows this morning: Looks like the next supports are down in the mid-71 cents range. It’s DXY to the moon and EUR flushed: Bonds are bid strongly and yields are breaking into a downtrend: XJO is holding up, down 20 pips: Dalian has popped at the open on MOAR
