Houses and Holes

91

Western Australia must invade!

There is something very wrong with the east coast media when it fails to report the following from the WSJ: Resource-rich Western Australia state will create its own form of sovereign-wealth fund to help store away earnings from the sale of vast quantities of iron ore and minerals to Asia, the region’s premier said Tuesday.

11

February 22 links: Greek hangover

Markets: Up:  gold, metals, ore, energies, CRB Flat: Aussie, euro Down: Treasuries, USD, grains Sovereign Yields: 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

2

RBA on hold

Find below the RBA Minutes. Looks like no further cuts unless we see a change in the environment. The only other possibility for change is in the phrase: Members noted that the Board’s decisions in November and December 2011 to lower the cash rate by a cumulative 50 basis points in response to the improved

99

What if China cracks?

On Friday, S&P released a series of scenario analyses looking at what the outcomes will be for the Australian economy as China seeks to land its economy this year. Let’s start with the good news. In S&P’s baseline scenario, Australia sails along: Under our base-case scenario, the Australian economy continues to record moderate growth of

63

Floating all boats

Everything is going up. Gold, oil, commodities, stocks, bonds, everything. All at once. And I suppose it’s no wonder. Central banks are pumping money like there is no tomorrow. Here is how Gavyn Davies framed current central bank intervention yesterday: The graph uses the size of the central bank balance sheet as a metric to

5

China realty weakens

By now, it is very clear that the Chinese real estate market is slowing down.  The latest figures from the National Bureau of Statistics show that prices were down or flat for January compared to December 2011. For a visual representation of what’s happening over the past year or so, the following chart from Bloomberg Brief’sMichael McDonough shows

10

February 21 links: It’s all good

Markets: Up:  gold, metals, ore , Aussie, grains, energies, Euro, CRB Flat: USD Down: Treasuries Sovereign Yields: 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 10

2

China links

Courtesy of Sinocism: Soldiers of good fortune|Television|chinadaily.com.cn – perhaps a georgetown adjunct professor and his class can use this show to determine the hidden capabilities of the chinese military police?A reality show seeks the military police’s top cop by pitting contestants against the hardest hardships and toughest troops. Sun Li reports. Bear-bile farm draws rebukes for

52

Is our economy just a case of your mood?

Some weeks ago I pointed that there was a growing gap between the government’s rhetoric on the economy – that we’re exceptional owing to the mining “boom” – and the reality of the economy for the vast majority of the population. I made the point that the government’s economic narrative had hit a wall given the

7

February 20 links: Productivity palava

United States Here come gas prices. Calculated Risk, Pragmatic Capitalism Week ahead for Dow. Calculated Risk Stocks and bonds still singing different tunes. Business Insider The temp job recovery. Washington Post Europe Europe enters decline. FT China China railway construction. China Bystander Xi Jinping. FT  Other Iran stops UK, French company sales. Bloomberg Global QE

64

Roy Morgan: ABS job figures “defy belief”

From Roy Morgan this afternoon and presented without comment: Yesterday’s ABS unemployment estimates (showing January unemployment dropping to 5.1%) defy belief — and common sense. The constant stream of companies announcing retrenchments in the early stages of 2012 are a clear sign that the ABS figures are diverging from reality. Roy Morgan’s unemployment estimate (10.3%,

86

Parko meet petard (updated)

Regular readers will know that the Treasury Secretary Martin Parkinson and I disagree on many things. And that tradition continues today with a speech last night given at the opening of ANU’s new Centre for Economic History. The nub of my disagreement with Dr Parkinson is captured here: Indeed, I cannot count the number of

32

Australian ‘kurzarbeit’

As the Unconventional Economist describes today, yesterday’s employment number although excellent contained one dark spot, a big fall in hours worked. The trend in hours worked has also very clearly been down through the last quarter of last year: The unemployment rate, however, has essentially been unmoved. I can think of two explanations for this.

26

February 17 links: US momentum

Markets: Down:  USD, Treasuries, gold, metals, ore Up: grains, energies, Aussie, Euro, CRB Sovereign Yields: 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 10 Year

15

Roy Morgan Consumer Confidence eases

From Roy Morgan: Consumer Confidence has fallen to 115.7pts (down 1.3pts in a week), according to the Roy Morgan Consumer Confidence Rating conducted last weekend (February 11/12, 2012). Consumer Confidence is now 6.2 points lower than a year ago, February 12/13, 2011 (121.9). The decrease in Consumer Confidence is due mainly to Australians being more

94

Employment strong

JANUARY KEY FIGURES Dec 2011 Jan 2012 Dec 11 to Jan 12 Jan 11 to Jan 12 Trend Employed persons (‘000) 11 446.8 11 448.5 1.7 0.2 % Unemployed persons (‘000) 627.5 623.7 -3.8 3.3 % Unemployment rate (%) 5.2 5.2 0.0 pts 0.1 pts Participation rate (%) 65.3 65.3 -0.1 pts -0.5 pts Seasonally

7

Lowe omits China

There’a another speech today by the RBA, with Deputy Governor Phil Lowe addressing CEDA on the forces driving the economy in the year ahead. It’s fairly run-of-the-mill stuff: structural adjustment, high exchange rate, mining boom, tradeables and housing weakness etc. Two parts of the speech caught my eye. The first was the section on risks,

17

Ore gets another towelieing

So, as predicted, ore looks vulnerable and continued its weakness last night. The spot prices got whacked another $2.20, down 1.6% to $137.40. We are still some ways above the next chart supports at $130.80, the post rout lows of late last year: Sadly for the miracle commodity, the 12 month swaps, which tend to

0

Fed Minutes

Find below the full Fed Minutes released last night. Staff Review of the Economic Situation The information reviewed at the January 24-25 meeting indicated that U.S. economic activity continued to expand moderately, while global growth appeared to be slowing. Overall conditions in the labor market improved further, although the unemployment rate remained elevated. Consumer price

13

February 16 links: A convergence of powers

Markets: Up:  USD, Treasuries, gold Mixed: grains, energies, Aussie, Euro, CRB, metals Hammered: ore Sovereign Yields: 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 10

3

Westpac’s children hike

From the SMH, just when you thought it was safe to go back into borrowing: St George Bank has lifted its standard variable home loan rate by more than the big four banks, saying it is important for the economy that it remains strong. St George will lift its standard variable rate (SVR) by 12

0

Consumers breath a sigh of relief

The Westpac–Melbourne Institute Index of Consumer Sentiment index is out and increased by 4.2% in February from 97.1 in January to 101.1 in February. This is decent rise on the month: And not a bad result for rate cuts. Though smaller than the bounce in 2008 and in 2006 when the RBA stopped tightening. But confidence

32

Ore looks vulnerable, again

Iron ore has had a nice bounce since the October rout of last year but there are signs that that has run its course and new weakness is appearing across the charts. For a start, the spot price itself has rolled over and is accelerating downwards: Next, a look at the 12 month futures is

26

February 15 links: European recession

Markets: Flat:  USD, Treasuries Down: grains, energies, Aussie, Euro, CRB, metals, gold Hammered: ore Sovereign Yields: 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 10

20

NAB Survey going nowhere

The NAB Survey for February is out (didnt we just have January?) and shows a very mixed bag: So, confidence and conditions improved a little more but remain in the doldrums. Employment remained depressed and at levels suggesting job losses. Profitability tanked but at least labour price pressures eased. NAB itself reckons: Overall business confidence

145

Dad’s Army fumbles the bazooka

God save me from the Australian media. Robert Gottliebsen, who I openly acknowledge is a legend, has really lost the plot today. Apparently: The debate is on. When I set out yesterday how Treasurer Wayne Swan now has the power to play a big role in setting the level of interest rates, and that the

17

Debelle embraces the unknown

It was obvious in the recent SoMP that the 2012 RBA is more circumspect than the 2011 version. And we have more evidence of a useful acceptance of doubt (or should I say “risk”) in today’s speech by the Assistant Governor Guy Debelle on the local effects of recent shifts in European capital markets. Debelle

44

A key driver of a US recovery

It’s not all that often that I read a piece of research from the banks that impresses me. One exception is Westpac’s Huw MacKay and his periodical, Phat Dragon. More broadly, as I’ve said before, Westpac’s institutional research is the best, with the bold Bill Evans leading the pack on interest rates. But I’m tempted