Houses and Holes

7

Recessionberg undertakes bogus Hayne bank reform

Via the ABC: Treasurer Josh Frydenberg has revealed an “implementation road map” around the 54 recommendations from the financial services royal commission that called for Government action. The final report from commissioner Kenneth Hayne made 76 recommendations, 54 of which were directed at the Government, which has been accused of dragging its feet in response to the

14

MS: Global economy slowing fast

Via Morgan Stanley today As regular readers know, Morgan Stanley is pretty bearish on global risk assets. This applies to emerging markets (EM) too, where we’ve been calling for wider credit spreads, weaker EM currencies, particularly in Asia, and lower equity prices. However, not so long ago the narrative guiding investors ran something like this: The

1

Daily iron ore price update (Vale again)

Texture from Reuters: Brazil’s Vale SA, the world’s largest iron ore exporter, said it had to temporarily halt operations at the Viga concentration plant that is part of its newly-acquired Ferrous Resources do Brasil due to a permit problem, impacting some 330,000 tonnes of iron ore production a month. But it said the suspension would

10

Recessionberg demands QE

No QE says monetary curmudgeon Stephen Grenville: QE1 was a powerful instrument in rescuing key financial markets which had frozen, but this experience has no relevance for Australia in the foreseeable future. When the current monetary system was put in place in Australia in the 1980s, ‘free markets’ were the lodestone of policy. The RBA

9

Another APRA head goes as failed Byers hangs on

Via the AFR over the weekend: The Australian Prudential Regulation Authority is looking for a new head of policy and advice, following the resignation this week of Pat Brennan, who had responsibility for developing the regulator’s policies on banks, insurers and super funds. Mr Brennan’s surprise resignation after more than eight years at APRA creates

11

Newpoll: Scummo honeymoon ends

I was short and dirty, via The Australian: The Coalition’s commanding electoral lead over Labor has slipped, in a sign the post-election honeymoon for the government has ended amid growing concerns over the economy and a clash over climate change. An exclusive Newspoll conducted for The Australian shows the Coalition has lost its post-election gains

17

The US economy is accelerating!

Via the excellent Damien Boey at Credit Suisse: Overnight, bonds rallied strongly again, partly because of investor nervousness about geo-political risks and slowing growth. Within the stock market, bond proxies and quality exposures outperformed again, while value stocks underperformed. Yet interestingly, we are actually seeing the forward-looking economic data improve: Both the New York and

11

Pettis: US should tax Chinese capital inflows

Via Michael Pettis: On July 31, 2019, U.S. Senators Tammy Baldwin and Josh Hawley submitted a bill “to establish a national goal and mechanism to achieve a trade-balancing exchange rate for the United States dollar, to impose a market access charge on certain purchases of United States assets, and for other purposes.” According to an earlier memo that further

26

CPC forges permit for anti-Hong Kong Melbourne street protests

Via the ABC: A pro-China rally planned for Saturday in Melbourne to condemn the clashes in Hong Kong has been postponed after a letter claiming to be an event permit from the Melbourne City Council was confirmed to be fake. A well-known local Chinese media outlet, Australian Red Scarf, first announced the pro-Beijing protests in

1

ANZ bad loans on the march

Via Martin North: ANZ today provided an update on credit quality, capital and Australian housing mortgage flows as part of the scheduled release of its Pillar 3 disclosure statement for quarter ending 30 June 2019 and associated chart pack. Given the strategy was to shed a portfolio of businesses and focus on the Australian retail market, we

16

Is Tianenman 2.0 inevitable?

From Jude Blanchette at the Center for Strategic and International Studies (CSIS) at the AFR: Some argue that Beijing will ultimately refrain from the use of violence due to a concern over its global reputation or domestic blowback. Kerry Brown of King’s College London predicted: “Anything too dramatic is going to be quite a high

12

Aussie bonds howl crisis!

Aussie long bonds are insane. At all time low yields again today: The curve is now inverted all the way out past the 15 year: The last time this happened was the depths of the European debt crisis. Yet US yields are crashing even faster and spreads appear to have bottomed: That’s partially thanks the

14

Could the ASIC HEM failure tighten mortgage lending?

There is one reason to think so today, via AFR: Westpac Group is set to follow up its landmark victory against ASIC on responsible lending with sweeping changes to home lending policies that include more rigorous assessment, deep diving into household spending, and new debt-to-income analysis of higher-risk loans. The bank is also planning to

0

Daily iron ore price update (stimulus hopium)

Texture from Reuters: Shanghai steel futures managed to push higher on Wednesday despite unexpectedly weak Chinese economic data for July, including a marked slowdown in industrial output growth amid a protracted U.S.-Sino trade war. “Investors took a glass half full approach to the weak economic data in China, with expectations of extra stimulus measures rising,”

9

Are Aussie businesses “hoarding labour”?

Via Damien Boey at Credit Suisse: Employment continues to defy the gravity of almost every leading indicator. Growth continues to track well ahead of our proprietary labour market indicator, which is based on ANZ job advertisements, NAB hiring intentions and our domestic demand tracker. Perhaps RBA Assistant Governor Debelle had it right today, when he

0

Chinese house prices ease

China is out with its 70-city new house prices measure for July at 0.6 month and month a 9.7% year on year: Top tiers are still struggling but below that is strong: And strength remains quite broad based: Here they are: Stable gains.

6

Europe is going to get worse

Via the excellent Damien Boey at Credit Suisse: Overnight, markets were spooked by deteriorating economic data and broad-based inversion of yield curves among the developed markets. The risk-off phase started with weak Chinese data, and was reinforced by weak European data. In 2Q: German real GDP shrunk by 0.1%, the second quarterly contraction within the

13

How to win comrades and influence them

It’s easy, at FTAlphaville: For the past decade, China has driven global demand. While the West fretted over fiscal deficits and, in turn, outsourced economic policy to its central banks, the People’s Republic has repeatedly turned on the fiscal taps, fueling a bull market in commodities, consumer goods and overpriced perishables. As any fashion aficionado will

3

Mortgage arrears still climbing

Via S&P: Australian prime home-loan arrears remained steady in June, with the Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages slipping 1 basis point to 1.51% from a month earlier. That’s according to S&P Global Ratings’ “RMBS Arrears Statistics: Australia,” published today. Arrears typically decline in June and throughout the third quarter. Mortgage

3

Australian jobs power on

Via the ABS just now: TREND ESTIMATES Employment increased 24,600 to 12,915,200 persons. Full-time employment increased 15,100 to 8,849,500 persons and part-time employment increased 9,600 to 4,065,700 persons. Unemployment increased 6,600 to 715,600 persons. Unemployment rate increased by less than 0.1 pts to 5.3%. Participation rate increased 0.1 pts to 66.1%. Monthly hours worked in