Houses and Holes


Inflation expectations dump(ed)

Here’s an important data point I missed last week amid the market madness. From the Melbourne Institute: The median expected inflation rate, reported in the Melbourne Institute Survey of Consumer Inflationary Expectations, decreased to 2.7 per cent in August from 3.4 per cent in July. According to Dr. Michael Chua, a Research Fellow at the Melbourne Institute, “Consumers


A lonely voice on manufacturing

Money talks and so there’s nothing like a billionaire or, at least, CEO of a multi-billion dollar firm lending support to your ideas. On that note I can only applaud the lonely voice of Andre Liveris at the Australian American Leadership Dialogue: One of Australia’s most senior expatriate executives has been lobbying political and business


Is recession priced in?

Nope. Not even a bit. Sorry. That doesn’t mean that whatever it is that’s coming for Western growth isn’t priced in, but it definitely is not recession.  Needless to say, then, if you think a recession is coming then ipso facto markets are going much lower as well. The Economist has a very useful take on


Stimulus dreaming

Today the media is full of an ignominious campaign for monetary easing. There’s no need to point it out. It’s all over, with housing and share market spruikers everywhere cajoling, insisting, begging and positioning for rate cuts. It’s increasingly likely that they’ll be delivered but not yet in my view and not at all if


The employment picture

So, the employment market has turned. Kudos to the rather volatile but this time correct Roy Morgan measure. As you can see from the above seasonally adjusted chart, the unemployment rate rose in all states except WA (down .2%). The big jumps were in VIC (up .5%), SA (up .4%) and QLD (up .2%). NSW


Limits to growth

And so, I was right and wrong. Or perhaps, it is wrong and right. The FOMC has decided against a new round of QE. However, it has also signaled that it will do something, presumably another round of QE. Global equities bounced anyway from their extremely oversold condition and enjoyed a melt-up into the close.


Paths of recession

As I wrote this morning, I’m of the view that global equity markets have begun to price a forthcoming Western recession. Since then markets have rallied hard on the hope of QE3 tomorrow, which would change the game, but I thought anyway that I would trace the possible lines of weakness in the global economy and


Bank CDS prices rocket

Find below a chart of recent CDS price movements for the major banks:   And for a longer term perspective, try this one: This chart tells us a couple of things. First, the cup and handle formation identified last week has now delivered its promised surge and we have broken through the level set in


Housing finance bounce ends

JUNE KEY POINTS VALUE OF DWELLING COMMITMENTS June 2011 compared with May 2011: The trend estimate for the total value of dwelling finance commitments excluding alterations and additions rose 0.5%. Owner occupied housing commitments rose 0.9%, while investment housing commitments fell 0.4%. In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations


Where’s the bottom?

So, where is the bottom? To begin to fathom an answer, me must first understand why markets are falling. Last night’s action offers some clues. Although there is plenty of press blaming the US downgrade, it is far more than that. For starters, the downgrade has seemingly done nothing to the attractiveness of Treasuries as


Head and shoulders horror

I know we’ve had a bad day on the sharemarket and I’m no doubt doing a bit of data mining as a result. But I’ve noticed a rather nasty sequence of head and shoulders patterns forming on the S&P500. First, the 1 year chart: That’s a beauty isn’t it? We reported it last week and


Crisis of the West

In one very important sense, the Standard & Poors downgrade of the United States credit rating is spot on. The debt ceiling debacle that preceded the ratings action showed an extraordinarily destructive political culture at work in Washington. To take the Federal Government within inches of default for no apparent reason was beyond infantile and


Fog of the aged

Have you ever wondered why MacroBusiness exists? Why it is necessary for a dozen thirty and (just) forty-somethings to get together and write their buns off about the Australian economy? The first and most vital clue in answering the question is the ages of the MB team. At MB we are seasoned enough to have


SoMP hedges its bets

Today’s quarterly Statement on Monetary Policy is, like the economy, a balancing act. The RBA’s confirmed its central medium term bias to raise interest rates by confirming its expects above average rates of growth ahead: In the short term, the GDP outcomes for the next few quarters are expected to be boosted by arecovery in


The centre cannot hold

It’s quaint you know. Analysts faith in the system, I mean. There are a couple of really smart articles out this morning from really smart people about really smart things. And they’re making reassuring noises that there is no recession coming and that you should stay in your trades, that yesterday’s money making strategy is


August 5: The crash we had to have

Rockets: $US Pulverised: CRB, energy Only smashed: Aussie, grains, metals, gold, euro Up: ore Ragin’ contagion: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year


PC report spanks online retail

In its monster retail report, the Productivity Commission has recommended (among a great many things) that the government lower the tax free threshold on online purchases of foreign goods. Thankfully, however, it has also amply demonstrated the practical foolishness of the idea with an assessment of the costs involved in monitoring the parcels at the


Is unemployment about to jump?

Yesterday, Roy Morgan Research released their latest poll on unemployment and and it caused a minor stir amongst market watchers: In July 2011 Australia’s total unemployment as measured by Roy Morgan was 885,000 (7.6%), up 40,000 (0.6%) from June 2011, and up 148,000 (up 1.3%) since July 2010. The Roy Morgan July 2011 ‘underemployed’* estimate was virtually


In-credible retail falls

ABS June retail sales are out and it’s more of the same with the seasonally adjusted estimate falling 0.1%. This follows a fall of 0.6% in May 2011 and a rise of 1.0% in April 2011. On to the charts. The first shows that the result was a big miss versus market expectations, God only knows


Services sector still in recession, or is it?

The AIG PSI Index for July is out this morning and makes interesting reading with the services sector still in recession, but without the same collapse seen in Monday’s manufacturing gauge: ■  The services sector contracted in July, with the latest seasonally  adjusted Australian Industry Group/Commonwealth Bank  Australian Performance of Services Index (Australian PSI®) rising 


Whither now the US?

I’ve been warning for a couple of months that the US economy is in trouble. It’s hasn’t really been that hard to see, so long as you recognise its underlying condition. The US economy is in a depression. It’s not quite the kind we saw in the 1930s but it’s a depression nonetheless, just slower


Building approvals by state

Following are a series of charts drawn from today’s ABS Building Approvals numbers. First up, is the national chart for dwelling approvals, which doesn’t look too bad, though is obviously in a significant declining trend, giving back after last year’s stimulus dragged forward demand: When we break down by state, however, we get a very