David Llewellyn-Smith


Daily iron ore price update (Brazick)

Iron ore prices for June 19, 2020: Everything roughly stable on Friday. Port stocks edged up. One bearish signal has emerged, the BDI: Via Reuters: “Most of the strength is due to increased Chinese steel mill demand for iron ore coupled with the increased production and exports out of Brazil,” said Randy Giveans, vice-president, equity


Westpac: Wages crashing

Great analysis here from Westpac’s excellent Justin Smirk: JobKeeper provides a significant boost to incomes but in May wages fell even though jobs gained. JobKeeper is a flat $1500/fortnight payment. As such it could have compressed wage distribution by lifting wages for lower income workers, particularly part-time workers, while lowering wages at the higher level


Mr Armageddon: No Armageddon

If you can be bothered, John Adams has returned to declare there’s no armageddon imminent: I remain bearish property and even more so now that Mr Argmageddon is not: high unemployment; permanently lower migration; plunging rents, and bank tightening. I see no end to any of these at this stage.


American idiots catch the virus

There are lies, damn lies, and then there are statistics. Now do total cases. https://t.co/kzI3Dcv63W — Drew Dickson (@AlbertBridgeCap) June 18, 2020 Literally killing the base. Pretty stupid. Latest polls: Betting: With 200k dead by the election, Trump is going to need a VERY LARGE distraction to win. Cue Green Day:


Immigration junkies gunning for historic wages smash

This is violent economics disguised as something else, via the AFR: Morgan Stanley’s head of Australian strategy and economics, Chris Nicol, has called on the government to focus on migration despite the political heat it may draw due to elevated unemployment, arguing a healthy intake of foreigners is essential for industries like education and tourism.


RBA’s Harper: Australian dollar too high

Via Bloomie: Reserve Bank board member Ian Harper urged Australia’s government to come up with a “tapering arrangement” for its stimulus programs that are due to end in September, warning a sharp cutoff would damage the recovery and potentially drive unemployment even higher “The strongest form of Cold Turkey would be to cut back to


UBS: Real unemployment 13.7%

Via the excellent George Tharenou at UBS: Unemployment rate 7.1% (after 6.4%); & underutilisation a record high 20.2% The unemployment rate also rose more than (consensus) expected, from 5.2% in March, to an upwardly revised 6.4% in April (was 6.2%), and to 7.1% in May (UBS: 7.0%, mkt: 6.7%), now the highest since 2001. A


Not-China launches cyber attack on Australia

Not-China up to no good again: The Australian Government is currently aware of, and responding to, a sustained targeting of Australian governments and companies by a sophisticated state-based actor. The title ‘Copy-paste compromises’ is derived from the actor’s heavy use of proof-of-concept exploit code, web shells and other tools copied almost identically from open source.


Did the RBA nobble CoreLogic?

Via the ABC: The Reserve Bank of Australia (RBA) considered asking private firms to stop telling Australians about slumping property prices, when the early period of coronavirus panic stoked fears of a housing market crash. In a release of highly classified documents from inside Australia’s central bank, economists discussed the need to treat the housing market


Some preposterous gas cartel apologism

Yesterday saw energy boffin Graeme Bethune appear at the AFR to argue that there “is no market failure in Aussie gas”: So, is it true that higher gas prices have failed to promote new east coast supply? No. The Cooper Basin achieved the highest level of production in nearly a decade in the 2020 March


Real unemployment rate 11.6%…or 20.2%…

As mentioned earlier: Here’s a chart showing if participation rate had have remained hypothetically at a 2019 average, the unemployment rate is at 11.6%. The point is no one should so readily consider prematurely removing labour market support until this situation has been materially repaired #ausbiz pic.twitter.com/wHiwX2fAzO — Alex Joiner (@IFM_Economist) June 18, 2020 The


Biden stretches lead over flailing Trump

And this won’t help, via the NYT: Mr. Bolton describes several episodes where the president expressed willingness to halt criminal investigations “to, in effect, give personal favors to dictators he liked,” citing cases involving major firms in China and Turkey. “The pattern looked like obstruction of justice as a way of life, which we couldn’t accept,” Mr. Bolton writes,


Unemployment skyrockets

Fresh from the ABS comes May Labour Force: SEASONALLY ADJUSTED ESTIMATES Employment decreased 227,700 to 12,154,100 people. Full-time employment decreased 89,100 to 8,540,000 people and part-time employment decreased 138,600 to 3,614,100 people. Unemployment increased 85,700 to 927,600 people. Unemployment rate increased 0.7 pts to 7.1%. Underemployment rate decreased 0.7 pts to 13.1%. Underutilisation rate increased


Freedom fighter, Pavlou, demolishes Fake Left on China

A great discussion today as UQ freedom fighter Drew Pavlou joins an international panel discussing CCP influence operations worldwide with a focus on Australia. Worth your time if you can get through the poor tech: Now live with expert panel on Chinese propaganda, link here: https://t.co/VNAv9FEpD7 pic.twitter.com/zlULJk2Noa — Drew Pavlou 柏乐志 (@DrewPavlou) June 17, 2020


Does the economy drive markets or vice versa?

Via the excellent Damien Boey at Credit Suisse: Wide ranging discussion in the early June meeting. Based on the conclusion to the statement accompanying the RBA’s June meeting decision, one would have thought that fiscal-monetary co-ordination was an important theme for discussion among board members. But the June meeting minutes revealed very little explicit attention given to the


FOI: RBA terrified of its own housing bubble

Via the ABC: Reserve Bank economists considered urging the Federal Government to shut down the real estate industry, “pausing” sales of established homes to avoid perceptions of a coronavirus-inspired housing market crash. Highly classified documents from inside Australia’s central bank also suggest house prices could slump up to 15 per cent. The internal reports contradict


Retail lobby demands right to steal wages

It’s a laugh a minute for the cynic: The National Retail Association (NRA) has condemned the Victorian Government for imposing unnecessary red tape on struggling small retailers as Australia enters its first recession in 30 years. Last night the Victorian Parliament passed the Wage Theft Bill 2020, despite staunch opposition from the small business community.


Most ever fundies see stock bubble

Via BofAML monthly fundie survey. The most number of fundies see a stock bubble ever: But perhaps that just means we short squeeze even higher: Nobody believes in earnings: But they’re chasing it now anyway: Hedgies are piling in. What exactly are they “hedging”? Biden risk is rising: I’d add the stock bubble itself at


The Robinhooders are right!

Cross-posted from FTAlphaville: If you had managed to avoid reading the financial press for the past few weeks, and then decided to catch-up on today, you might notice a new phrase being banded about in market commentary. Namely, “Robinhood investors”. Shorthand for retail punters utilising commission-free brokerage platforms (such as Robinhood) to buy stocks, a


Credit Suisse: Diversify to survive stock risks

Via the excellent Damien Boey at Credit Suisse: Infrastructure stimulus package in the wings? Numerous press reports are emerging that US President Trump is mulling over a USD 1 trillion infrastructure stimulus package to shore up the recovery. The reports follow recent Fed announcements (or more precisely, reiterations with more detail) on corporate bond purchasing and “Main Street”