Houses and Holes


NAB survey indicates no rate cut

The NAB survey has put in a solid performance for September. Business confidence remained subdued but conditions and trading jumped. So too did the employment index. Forward orders was still in deep negative territory and exports are subdued. Given the backdrop of global volatility, I see this as a very good result. As does NAB:


The perfect storm driving savings

The IMF released a treasure trove of stuff on Australia last week. I’ve been enjoying it immensely. Partly because it’s very good and in line with the MB view of the economy and partly because I’ve had the time to read it thoroughly. The campaign for national ignorance spearheaded by Gittins! ensured there was no


Policy green shoots

Who will ever forget Ben Bernanke’s “green shoots” in March 2009. It was Bernanke’s finest hour as a forecaster and was taken up and boosted in markets by discussion of the “second derivative” economic indicators that showed that the pace of economic slowing was slowing. The rest is history with the moment marking the start


China’s lonely power

Late yesterday, the Lowy Institute released a fascinating new study by John Lee (a former colleague of mine at The Diplomat) into whether or not China will be able to convert its growing economic power into strategic dominance. Regular readers will know that the schism in Australian policy on this topic has been a bugbear


Job ads fall in adjustment overshoot

The softening of the jobs market predicted at MB earlier this year is showing more evidence, with ANZ job ads slowing again in September: Job advertisements on the internet and in newspapers decreased by 2.1% in September. Annual growth in total job advertisements decelerated to 3.1% y/y. • Newspaper job ads were flat in September, while


Should we occupy Martin Place?

Last week, Paul Krugman wrote the following on the growing protest, Occupy Wall Street: There’s something happening here. What it is ain’t exactly clear, but we may, at long last, be seeing the rise of a popular movement that, unlike the Tea Party, is angry at the right people. When the Occupy Wall Street protests


IMF stress tests China/Australia bust

With the Gittins! campaign for national ignorance going swimmingly, it is not at all surprising that we must look offshore for a sensible risk assessment of Australia vis-a-vis China. On cue, as a part of its annual report on the Australian economy, the IMF has produced a three part stress test of the Australian fallout in


A bullhawk leaves the flerd

Throughout 2011, the Australian economics fraternity, media and the community more broadly have been under sustained assault from above. The attack came not from magpies in heat, nor a swarm of killer bees, but from a hitherto unknown creature, the bullhawk. The bullhawk is an occult animal that juxtaposes incompatibles. It is half interest rate


Merrill Lynch: China bust upon us

Zarathustra wrote earlier this week: Deutsche Bank is expecting  a 10% correction in home prices because it would be a disaster if prices are allowed to fall by, say, 30%: Those who understand China’s political economy should know that a 15% decline in average property prices in 35 cities within a few months must be accompanied


Ridout must resign

I’ve spent some time pointing out the flaws in the Australian Industry Group (AIG) approach to defending its manufacturing membership against the annihilation that Canberra’s economic boffins have planned for it. To me it is plainly obvious that to save manufacturing, the AIG must go way beyond its efforts to date. Those efforts have largely


Bull trap

So, we’ve seen a bounce in the American and Australian economies recently. In the US, September has proved better than August with a modest lift in the manufacturing indices, consumer confidence and stable service sector activity, even if personal consumption has stalled. Markets are betting on a decent employment number tomorrow night. In Australia, we’ve


Ken Henry revisits the RSPT debacle

Peter Martin reports this afternoon from the Tax Summit that: Former Treasury boss Ken Henry has conceded he mishandled the selling of the mining super-profits tax the former Rudd government proposed last year. Addressing day two of the tax summit in Canberra, Dr Henry said his review took for granted that Australians understood the difference


Iron bomb

Australia’s lifeline in China, John Garnaut reported this morning the worrying news that: The Chinese steel mills that have been holding up the Australian economy are under pressure, with steel prices falling and iron ore prices expected to follow. Robust steel demand in China led Australia to post a record $5.9 billion in iron ore


Bull versus bear is dead

As the S&P500 rocketed into the close this morning on yet another European bailout rumour, it occurred to me just how broken the equity market is right now. We are trapped in bear market dynamics of grinding sell-offs punctuated by explosive short-covering rallies with no end in sight. The obvious conclusion to draw is that we


China’s hard landing conundrum

A Chinese hard  is not an option, at least while there are other options. So, I have been asking myself for the past few months how to avoid a hard landing, or to delay it at the very least.  The most popular defence of the bullish camp (or the most popular argument against the bearish camp)


Bill Evans looking good

Westpac’s Bill Evans cut from the pack back in July to forecast year end rate cuts. He was ridiculed at the time by many, including some especially infantile drivel from the bullhawks. Well, after today’s RBA meeting he’s looking awfully good. And today issued a note reaffirming his stance: Westpac Economic update As expected Reserve


Record exports

ABS trade figures are out today and there’s no doubt about it, August was a cracking month, posting a big jump to record export revenues above $28 billion for the first time and delivering a surplus of $3.1 billion, the second highest ever. The good news came from one primary source, iron ore: As you


NSW units approvals rocket

August building approvals are out and month on month approvals nationally jumped 11.4% from a depressed level. Private sector housing approvals remained very subdued, falling 1% m/m and 9.5% y/y. However units approvals rocketed 35%, propelled mostly by a huge jump in NSW. There were also smaller rises in VIC  and QLD but both remain in down


Global PMI’s point down

Overnight, global PMIs painted a gloomy picture of advancing economic weakness. First up, the J.P.Morgan Global PMI dropped into recession for the first time since June 2009, falling from 50.2 in August to 49.9 in September: The new orders index showed greater weakness with a 0.9 point fall: Ironically, the US was the stand out perfomer, with


Manufacturing is getting murdered

Nice. The raging recession in Australian manufacturing is worsening. The PMI dropped to a new cycle low, having been in effective recession for over a year. The internals of the survey are very nasty. 10 out of 12 sectors are shrinking: Capacity utilisation is collapsing, suggesting more job losses are ahead: The rate of new


Shall we pull the fiscal or monetary lever?

For the first time in many months, nobody is talking about the RBA in a rates meeting week. Ironically, the silence accompanies a context which has made a shift in monetary polcy more likely than at many previous meetings this year. The global economy is unequivocally slowing, recession talk in Europe and the US is now


State of the states

Find below Westpac’s “Coast to coast” document for September. It’s a useful note that splits much of the national data, state by state. Here’s Bill Evans overall prediction: On 15 July we downgraded our growth forecasts for the world economy and Australia. Recent developments, globally and domestically, have reinforced our expectations that activity will be


What kind of Western recession?

Regular readers will recall that I began forecasting a Western recession some months ago. That judgement is now becoming mainstream. Last night, Willem Buiter called an imminent European recession. From Alphaville: Even with a leveraged EFSF, additional fiscal tightening and tighter financial conditions are likely to be sizeable drags for Euro Area growth. Taking this into account,


Fitch downgrades New Zealand

Below find Fitch’s reasoning for this morning’s downgrade of New Zealand. Let’s not get too cocky with our Kiwi neighbours. So far as I can tell, if China were so slow for an extened period, you could pretty much substitute Australia for New Zealand in every single sentence. Fitch Ratings-Hong Kong-29 September 2011: Fitch Ratings


Mortgage delinquencies by postcode

Moody’s has produced its annual report into Australian mortgage arrears. Below is their findings. Below that find the reports themselves, including a list of the 300 most delinquent post codes. For a bit of fun you can surf around and compare the newspaper reports that have reproduced the press release with…ahem…very little alteration. These are


Gittins! endorses catatonic ignorance

In a video that defines the ethos of a generation, Ross Gittins this morning comes clean with his frustration that you are interested in what happens overseas and in the future. As an alternative he endorses blind optimism (or should we call it catatonic ignorance) as the way forward for you and your family. Please watch