Houses and Holes

39

It’s over you idiots!

Time to buy with both hands! The Pascometer has written off the mining boom thereby ensuring its shift to an altogether unimagined high. But seriously, now that BHP has outflanked yesterday’s rousing chorus of “sell ’em dirt” insiders by itself declaring the commodity super cycle dead, it’s going to be immensely entertaining to watch the

57

Notes on a Greek exit

This afternoon Mike Smith confirmed what MB readers already know. From the SMH: ANZ said that current volatile conditions in global markets have seen wholesale funding market for Australian banks freeze again. “Right now, markets are closed again, and this is what happens in this sort of situation,” ANZ Chief Executive Mike Smith said after

6

China’s April property prices

China’s April property prices were just released and increasingly widespread falls are apparent in the year on year figures: ============================================================================ April March Feb. Jan. Dec. Nov. Oct. 2012 2012 2012 2012 2011 2011 2011 ============================================================================ —- Number of Cities on Yearly Change in Price —– New Residential Apartments Increase 23 28 37 53 62 66

22

Leith van Onselen on ABC ‘s “The Business”

Three weeks ago, MacroBusiness’ own Unconventional Economist, Leith van Onselen, gave an interview to the ABC’s Neil Woolridge for a segment on The Business, the ABC’s flagship business news television program that screens from Monday to Thursday on ABC 24 (8.30pm) and ABC 1 (11.oopm). The segment (above) screened last night and discussed the outlook

4

Pincer update

Some good news and bad news today on Australia’s paired macro vulnerabilities. The good news first. On the houses side of the economy, bank CDS prices have fallen a little: I’m as certain as anything in this world that this is only a breather before we go higher. Meanwhile, on the holes side of the

255

My kingdom for a liberal

The Australian and the pseudo-Australian (sorry, AFR) are engaged in an epic round of Labor-bashing, more virulent even than usual. The cause is Labor’s new rhetorical and policy direction of defending its heartland – the battlers. Both papers have dubbed this a vestigial “class warfare” and condemned it. Matthew Franklyn is typical: Wayne Swan is openly defying

19

China real estate unravels

Those that read my morning post will perhaps have clicked through to Patrick Chovanec’s blog to read his post on the unravelling Chinese property market. If you are not one of them, find it below, reproduced with the kindly permission of the good Professor! As a prelude to a broader analysis of China’s GDP, and the accuracy

27

Average weekly earnings power on

The ABS has released its Feb quarter Average Weekly Earnings (AWOTE) report today and it shows ongoing solid wage rises across the nation. Better than the market was forecasting too with QoQ growth of 1.1% versus expectations of 1% and YoY growth of 4.4% versus 4.1% expected. Here’s the long term chart: That’s still very

10

Inflation expectations ease

In news that will change absolutely nothing for anyone, anywhere, inflation expectations have eased 2 pips to 3.1%. The thing that still gets me about this chart is what the frack was “Bubbles” Macfarlane thinking? The pink line is the 50 day moving average. Where was the tough love when it was needed? And bravo to

3

Roy Morgan consumer confidence pops on Budget

From Roy Morgan: Consumer Confidence is at 115.7pts (up 5.4pts in a week) according to the Roy Morgan Consumer Confidence Rating conducted last weekend (May 12/13, 2012) — the first measure of Consumer Confidence after Treasurer Wayne Swan delivered the Federal Budget last Tuesday and Opposition Leader Tony Abbott’s Budget reply on Thursday. Consumer Confidence

7

The pincer tightens

You will perhaps be unsurprised to hear that the twin measures of Australian vulnerability both deteriorated overnight. On the housing side of the economy, bank CDS prices rose another 10 pips or so and are clearly at levels associated with closed markets for Australian bank bonds, approaching 190bps: Gotta love that Budget surplus. Except, maybe

67

A China hard landing?

Perhaps I’m wrong but today it looks to me like China is heading into a hard landing. There are three stories that you must read to make this case. Happily, all three are available at MacroBusiness. The first is Zarathustra’s description of the monetary pain that is growing in China. It describes the capital outflow

63

BHP’s bitter pill

Cross posted from Henry Thornton: In early March of this year, Henry was sufficiently concerned to spend several hours quizzing the man who manages his equity portfolios. Key assumptions were as follows.  The US economy is recovering but not yet strongly; Europe is mired in recession and could yet trigger a major global setback; China

19

Rate cut flops with consumers

It appears consumers are not easily bought at the moment with the Westpac/Melbourne Institute Consumer Sentiment reading a measly gain of 0.8% following a 50bps rate cut and cash splash Budget. Here are the major components: Nice pop in family finances which reverses April’s dump. Otherwise, nada. Full details below. er20120516BullConsumerSentiment

7

China chart pack

ANZ has a released its monthly China chart pack and for the chart-loving sinophile you can’t go past it. Enjoy! ANZ Greater China Economic Insight Incl Monthly Chartbook – 15 May 2012 (1)

26

Now Treasury confesses

It’s Treasury’s turn today to confess how they got their economic forecasts so wrong over the past eighteen months. Treasury head Martin Parkinson describes the Treasury’s errors at length in the attached speech. In short, they made the same errors as the RBA, over estimated exports, under estimated imports and assumed lot’s of capital gains

8

RBA Minutes alert to risk

Find below the Minutes of the May meeting of the RBA board. Nothing new that I can see beyond concern over Europe and the weakness spreading form the housing market at home. Minutes of the Monetary Policy Meeting of the Reserve Bank Board Sydney – 1 May 2012 Members Present Glenn Stevens (Chairman and Governor), Philip

38

Australia’s pincer is closing again

Regular readers will know my obsession with two prices: bank CDS and iron ore. These may seem unrelated but they are not. Bank CDS prices are the cost to ensure Australian bank bonds and as such are a good guide to the global perception of Australian bank risk. Iron ore makes up roughly a quarter

23

How much does Greece owe?

Cross-posted from the excellent Sober Look: As discussed earlier, Greek exit from the Eurozone may be the only way the nation could gain some control over its monetary system. Given the complete “credit isolation” of Greece’s banks and the private sector from the rest of the Eurozone, the ECB is powerless to improve liquidity conditions in

11

ASX shares daily

By David Llewellyn-Smith in for Chris Becker Remember to read “Trading Week“, published Saturday morning, to put these events and ideas in context. Asian markets were all marginally up today. The local market, the S&P/ASX200, bumped around all day before finishing up 7 points to 4292. Telcos led the charge up almost 1% with financials up almost a

35

The RBA’s confesses

Deputy Governor of the RBA, Phil Lowe, delivered a speech today in which he explained why RBA forecasts for growth, inflation and capacity constraints have been wrong and what that means for monetary policy. The Deputy put the missed forecasts down to three factors. Exports were weaker than expected, especially for coal. Housing construction was

11

Don’t bet on a European resolution

By David Llewellyn-Smith Over the past few weeks, as equity markets around the world have awoken to the renewed dangers of Greece by falling 4% to 5%, there’s been a growing chorus among the usual bullish suspects to buy the dip. Over the weekend, this line of thinking received some heavy duty support in the