Via the Kouk today: Word has it that the framing of the budget, due to be handed down by Treasurer Josh Frydenberg the day after April fools day (and around 6 weeks before the election), is more problematic than usual. Problematic because there is some mixed news on the economy that will threaten the current
Via Damien Boey at Credit Suisse: In an article last year (“Desperately seeking wage inflation”, dated 20 February 2018), we introduced our proprietary wage tracker. Using data from the NAB business survey on labour costs, wage claims from enterprise bargaining agreements (EBAs), and male full-time equivalent employment as a share of the “active” labour force,
Via the AFR, only a week late: The economy is at risk of a “doozy recession” as the housing downturn accelerates at an “alarming pace” weakening consumer sentiment, warns former Morgan Stanley global strategist Gerard Minack. Mr Minack, who is known for calling the global financial crisis, said a recession would drive cash rates to
But records are made to be broken. Via S&P: Australian Prime Home Loan Delinquencies Rose In December; 90-Plus Days Arrears Hit Record High MELBOURNE (S&P Global Ratings) Feb. 20, 2019–Australian prime home-loan arrears rose in December, according to a recently published report by S&P Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian
From Treasury genius Phil Gaetjens this morning: Treasury Secretary Philip Gaetjens has warned that “falling house prices could also cause consumer spending to be weaker than forecast” and said “care must be take” on mortgage broker reforms. Mr Gaetjens told an estimates committee that government needed to remain fiscally disciplined at a time where debt
Via Domain comes another signal of a step change in the milieu of Australia/China relations: Former trade minister Andrew Robb has quietly ceased his controversial $880,000 per annum consultancy with a company closely linked to the Chinese government, as the deadline looms for lobbyists for overseas state interests to sign up to Australia’s new foreign influence
Some good news today from DEEWR: Jobs market still hanging on.
Fair dinkum this government is corrupt, via the ABC: Australia has a new strategy to win over its Pacific neighbours: reality television. The Government has framed it as a soft power push that will lift Australia’s profile by beaming top-rating programs into Pacific nations. Australia will plunge billions of dollars into projects across the region
Via Westpac: • The six month annualised growth rate in the Westpac– Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, fell from –0.29% in December to –0.43% in January. As discussed last month, despite some choppiness, the major trend is consistent
Go Bernie! What an immense relief to see a candidate that understands being “left” and winning elections is about addressing class politics NOT identity politics.
Via The Australian: The Greens face an electoral backlash as voters concerned about climate change and asylum-seekers — and enticed by Bill Shorten’s softer policy agenda — refuse to shift their support to a minor party beset by dysfunctional campaigning and infighting. Private polling from the major parties shows the Greens’ national vote remains below
Another weak consumer signal: One wonders how much of the late year crash was local consumers or whether its the leading edge of a Chinese visitor slowdown as well.
Via the AFR: The chief executives of the four big banks will be made to face Parliament twice a year to report on progress in implementing the banking royal commission reforms, as part of a boosted accountability regime Labor will introduce if it wins the election. As well, the banks, the regulators ASIC and APRA
More weakening consumer: Not too bad but with population growth of 1.6% and inflation at 1.8% same store sales of 3.5% is clearly stalling.
Not involved in any succession arrangements: Emigration looms as an option.
Via Martin North today: We have updated our scenarios to take account of a range of new data, and the latest input from our household surveys. A peak to trough fall of 20-30% over 2-3 years remains our base case, but with risks to the downside. On the other hand the RBA’s base case gets
Iron ore prices for February 19, 2019: Looks like for now Vale is priced given the overnight news did not support the market. Unless we see some more materially damaging developments, weakening Chinese demand may begin to ease prices henceforth.
DXY sank last nigh as CNY and EUR rallied: The Australian dollar jumped across the board: Gold pumped too: Oil firmed: Even copper joined the party: Big miners powered: EM stocks lifted: Junk led the way: Treasuries were bid: And bunds: So too stocks: It was an evening dominated by three news points. The first
For fifteen years it lay low. A peaceful rise it said. Benefits to all it said. Open and fair trade for all it said. One economy and two systems it said. Either it was lies all along or something has gone horribly wrong because China’s mask of friendliness has now dropped off. In its place
Via Bill Evans at Westpac: The minutes of the Reserve Bank Board meeting for February have largely confirmed the themes which were set out in the February Statement on Monetary Policy. Key to these themes is “the probabilities around these scenarios were now more evenly balanced than they had been over the preceding year when
Via Bartho: The national broadband network is on track, both in terms of the rollout of the network and its financials. That will really complicate matters for Labor if it wants to change either. With more than 4.6 million premises activated and another 8.1 million ready to connect, NBN Co has only three million more
After today’s longest RBA minutes in living memory, the Australian dollar fell away. Who can say if it was the obvious fact that they’re going to have to cut rates or it was just the market’s vote of disgust at a dithering fool: Bonds are bid: And stocks: Big Iron is just loving China’s swiftly
Via the RBA come minutes: International Economic Conditions Members commenced their discussion of the global economy by noting that growth in Australia’s major trading partners had been above trend, despite moderating in the second half of 2018. Growth in major trading partners was forecast to be around trend in 2019 and 2020. However, the downside
Via UBS today: Reporting season has been better than feared. To date, the 1.2 ratio of beats-to-misses has been only modestly below average, while company guidance has been surprisingly resilient, with more outlook upgrades than downgrades. Despite companies remaining generally optimistic on the outlook, 61% of companies have seen downgrades to FY19 consensus EPS estimates
Via The Australian: The Reserve Bank has called on education authorities to help arrest the sharp decline in the number of senior students in NSW studying economics, by elevating the status of the subject within the curriculum. Once the third most popular subject choice for Year 12 students, economics enrolments have plummeted over the past
Via The Australian: An international cyber hunt involving Australian, US and British intelligence agencies has been launched in response to an attack on the Australian parliament and the major political parties using a form of sophisticated “tradecraft” that had not been detected before. While the source country has not been identified beyond doubt, intelligence officials
Via FTAlphaville: A recent petition at a University of Toronto campus drew on a familiar rhetorical strain. Students felt “offended and hurt”, and believed it was their “obligation to protest”. The petition, which attracted over 11,000 signatures, had little to do with domestic politics. Instead, the signatories objected to the election of a student union president of
Via UBS’s excellent George Tharenou today: The Foreign Investment Review Board released data for 17/18. The value of approvals to buy housing collapsed 58% y/y to $13bn in 17/18, the lowest level since 09/10, after already slumping 59% y/y to $30bn in 16/17. After a ‘super boom’ of 322% from 12/13 to the record $72bn
Via Reuters: Chinese coal traders are halting purchases of Australian coal and coking coal as clearing times through China’s customs have at least doubled to 40 days or more, four traders at major buyers told Reuters on Monday. The traders said only cargoes from Australia, the biggest supplier of the fuel to the world’s top
Via ANZ’s new profits release: As I noted last week, ANZ had indeed led the specufestor clamp down: It’s a great shame they’re turning that around. That said, I do not expect it to make much difference to systemic growth. I was thinking of rewarding the bank with my own business. No longer.
