David Llewellyn-Smith


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


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


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


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


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


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


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,


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


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


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


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


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


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


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


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%


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


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


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