Houses and Holes


Cracked apartment bill rises above $6bn

Via Martin North: New research commissioned by the construction union has revealed that Australia’s building and construction crisis will cost $6.2 billion in remediation and associated costs. The independent research, undertaken by Equity Economics and contained in the report ‘Shaky Foundations: The National Construction Crisis’ being launched today, analysed the additional costs to owners of remediating water


Another LNG import delay

Via the AFR: Andrew Forrest’s pioneering gas import venture has approached the NSW government seeking approval to potentially double the capacity of the reprocessing terminal it plans to install at Port Kembla. Australian Industrial Energy, which is half owned by the iron ore billionaire, formally flagged the need to restart its approvals process in meetings


The great inflation delusion

Via Dr Ed Yardeni: The Fed, the European Central Bank (ECB), and the Bank of Japan (BOJ) came up with lots of headline-grabbing shock-and-awe programs over the past 10 years in reaction to the Great Financial Crisis. Over time, they seemed to lose their effectiveness and ability to shock or awe. Nevertheless, the US economy


Now for some fake “trust in government” reform

The ScoMo Government is a masterful fake. It is currently pretending to cut immigration, pretending to reform banking, pretending to build infrastructure, pretending to be a good economic manager, pretending to care about weak wages, pretending to care about energy prices, pretending to care about anything and everything other than rising house prices. This we


Recessionberg undertakes bogus Hayne bank reform

Via the ABC: Treasurer Josh Frydenberg has revealed an “implementation road map” around the 54 recommendations from the financial services royal commission that called for Government action. The final report from commissioner Kenneth Hayne made 76 recommendations, 54 of which were directed at the Government, which has been accused of dragging its feet in response to the


MS: Global economy slowing fast

Via Morgan Stanley today As regular readers know, Morgan Stanley is pretty bearish on global risk assets. This applies to emerging markets (EM) too, where we’ve been calling for wider credit spreads, weaker EM currencies, particularly in Asia, and lower equity prices. However, not so long ago the narrative guiding investors ran something like this: The


Daily iron ore price update (Vale again)

Texture from Reuters: Brazil’s Vale SA, the world’s largest iron ore exporter, said it had to temporarily halt operations at the Viga concentration plant that is part of its newly-acquired Ferrous Resources do Brasil due to a permit problem, impacting some 330,000 tonnes of iron ore production a month. But it said the suspension would


Recessionberg demands QE

No QE says monetary curmudgeon Stephen Grenville: QE1 was a powerful instrument in rescuing key financial markets which had frozen, but this experience has no relevance for Australia in the foreseeable future. When the current monetary system was put in place in Australia in the 1980s, ‘free markets’ were the lodestone of policy. The RBA


Another APRA head goes as failed Byers hangs on

Via the AFR over the weekend: The Australian Prudential Regulation Authority is looking for a new head of policy and advice, following the resignation this week of Pat Brennan, who had responsibility for developing the regulator’s policies on banks, insurers and super funds. Mr Brennan’s surprise resignation after more than eight years at APRA creates


Newpoll: Scummo honeymoon ends

I was short and dirty, via The Australian: The Coalition’s commanding electoral lead over Labor has slipped, in a sign the post-election honeymoon for the government has ended amid growing concerns over the economy and a clash over climate change. An exclusive Newspoll conducted for The Australian shows the Coalition has lost its post-election gains


The US economy is accelerating!

Via the excellent Damien Boey at Credit Suisse: Overnight, bonds rallied strongly again, partly because of investor nervousness about geo-political risks and slowing growth. Within the stock market, bond proxies and quality exposures outperformed again, while value stocks underperformed. Yet interestingly, we are actually seeing the forward-looking economic data improve: Both the New York and


Pettis: US should tax Chinese capital inflows

Via Michael Pettis: On July 31, 2019, U.S. Senators Tammy Baldwin and Josh Hawley submitted a bill “to establish a national goal and mechanism to achieve a trade-balancing exchange rate for the United States dollar, to impose a market access charge on certain purchases of United States assets, and for other purposes.” According to an earlier memo that further


CPC forges permit for anti-Hong Kong Melbourne street protests

Via the ABC: A pro-China rally planned for Saturday in Melbourne to condemn the clashes in Hong Kong has been postponed after a letter claiming to be an event permit from the Melbourne City Council was confirmed to be fake. A well-known local Chinese media outlet, Australian Red Scarf, first announced the pro-Beijing protests in


ANZ bad loans on the march

Via Martin North: ANZ today provided an update on credit quality, capital and Australian housing mortgage flows as part of the scheduled release of its Pillar 3 disclosure statement for quarter ending 30 June 2019 and associated chart pack. Given the strategy was to shed a portfolio of businesses and focus on the Australian retail market, we


Is Tianenman 2.0 inevitable?

From Jude Blanchette at the Center for Strategic and International Studies (CSIS) at the AFR: Some argue that Beijing will ultimately refrain from the use of violence due to a concern over its global reputation or domestic blowback. Kerry Brown of King’s College London predicted: “Anything too dramatic is going to be quite a high


Aussie bonds howl crisis!

Aussie long bonds are insane. At all time low yields again today: The curve is now inverted all the way out past the 15 year: The last time this happened was the depths of the European debt crisis. Yet US yields are crashing even faster and spreads appear to have bottomed: That’s partially thanks the


Could the ASIC HEM failure tighten mortgage lending?

There is one reason to think so today, via AFR: Westpac Group is set to follow up its landmark victory against ASIC on responsible lending with sweeping changes to home lending policies that include more rigorous assessment, deep diving into household spending, and new debt-to-income analysis of higher-risk loans. The bank is also planning to


Daily iron ore price update (stimulus hopium)

Texture from Reuters: Shanghai steel futures managed to push higher on Wednesday despite unexpectedly weak Chinese economic data for July, including a marked slowdown in industrial output growth amid a protracted U.S.-Sino trade war. “Investors took a glass half full approach to the weak economic data in China, with expectations of extra stimulus measures rising,”


Are Aussie businesses “hoarding labour”?

Via Damien Boey at Credit Suisse: Employment continues to defy the gravity of almost every leading indicator. Growth continues to track well ahead of our proprietary labour market indicator, which is based on ANZ job advertisements, NAB hiring intentions and our domestic demand tracker. Perhaps RBA Assistant Governor Debelle had it right today, when he