Houses and Holes


Mirror image

It’s an advanced Western nation with historically weak household debt and rising savings, booming exports but a weak external position, a set of cunningly guaranteed too-big-to-fail banks, slumping house prices and a dramatically two-speed economy. Pop quiz: Is it the US or Australia? It’s a trick question because the answer is it’s both. Last week


Links May 10: Commodity bounce

Rocket: energy, gold, grains Up: Aussie Down: $US, ore US manufacturing boom. Bloomberg We’ll default: Ireland. Daily Mail US rail traffic shows it’s all about exports. Calculated Risk US housing accelerating down. Calculated Risk UK too. Alphaville US household deleveraging flattens. Alphaville US ISM and investing. PragCap Fed clinging to forecasts. Tim Duy Dun and Bradstreet offsets NAB survey.


NAB survey goes to the hawks

The NAB April Business Survey is out and it’s got something for everyone. For the rate doves, the lead Business Conditions Index softened: And the internals dropped pretty substantially: However, two other key indexes for the RBA are strongly inflationary. First and foremost, labour: And employment: In sum, I would say that despite the weakness,


Senate endorses politico-housing complex

Well, I guess I can’t complain about no takers for the “Lost Child of Wallis Competition” over the weekend. If I couldn’t find the inspiration to give up my weekend on the document, I can’t blame anyone else for doing likewise. I’m glad I bothered this morning, though, because the results are, in a word,


June not a done deal

On Friday and over the weekend the consensus came down strongly in favour of a June rate rise. Those declaring June the day included Peter Martin, Terry McCrann and Michael Stutchbury (that gives you all the major papers). Amongst bank economists there is Westpac, RBS and ANZ, as well as, of course, the bullhawks, Adam


Links May 9: A tale of two Budgets

More extend and pretend for Greece. Reuters No exit. Wolfgang Munchau Week ahead for the Dow. Calculated Risk Deposit revolution. Common Dreams (h/t Naked Cap) Kochie indicator: Debt revulsion.  Sunrise Iraq halves projected oil output. Zero Hedge US earnings past the peak. Bespoke Commodities crash. The Economist Chinese, US manufacturing costs converge. Alphaville More retail


Weekend reading: It’s June they reckon

Rocket: $US Hammered: Euro, energy, ore Up: Gold, grains Flat: Aussie US jobs report OK. Calculated Risk Not so good says Goldman. Zero Hedge What ails the US jobs engine? Gavyn Davies Regulatory risk spreads to oil. Zero Hedge Egypt front runner turns on Israel. WSJ Food near record highs. WSJ Taylor Rule condemns QE. Econbrowser Japan shuts more


Lost child of Wallis competition

The Lost Child of Wallis Report is out. I can’t bring myself to read it because I know what a let down it is. So, here’s a challenge for you lot out there. We’ll publish the best 600 word post with full accreditation for the best assessment of the report on Monday. Send all applications to


Will the RBA crash housing?

Well, I was right about one thing after the RBA meeting this week. There was something for everyone and the debate will rage! We had a dovish statement Tuesday and now a hawkish one today. Following this morning’s RBA SoMP, Adam Carr is back claiming victory: At the very least we know they are closer to my view


Pettis warns Canberra

Exclusively from Michael Pettis newsletter comes another warning for Canberra’s boundless China faith. Since January I’ve been writing about – and trying to figure out – the strange happenings in the Chinese copper market. The issue has been a regular topic of conversation in my central banking seminar at Peking University, where much of the


Milk money (QE3)

That was no ordinary night. The $US doesn’t bounce 2% without some serious spur. And the entire commodities complex (CRB) down 3.5%! This is a similar signal to the flash crash of last year, which presaged the sell off into the double-dip funk of mid last year. Here we have the first signal of the triple-dip


Retail sales unsurprisingly poor

Those poor bullhawks.  That strange creature – half housing bull, half rate hawk – must be having a few doubts. Personal crises even. Retail sales for March are in and look, well, crapola. First from the ABS itself: I will add that on a monthly basis there were a few eye-opening falls for different segments. Department stores


April car sales down 4.5%

Adam Carr won’t be happy. He’s relied on growing car sales in part to rationalise his intense campaign for rate hikes. Westpac has just released a note on the April sales figures from the Federal Chamber of Automotive Industries and it’s into reverse I’m afraid: Westpac Economic update Australia: new vehicle sales down 4.5% in


Good and evil in interest rates

According to Peter Martin: The Reserve Bank believes inflation has bottomed and it will soon have to lift interest rates, possibly even next month. The bank’s change of heart emerged during a three-hour board meeting yesterday that resolved to leave the cash rate steady at 4.75per cent but to be prepared to lift it without


May 4 links: Rate rage

Down: metals,  energy, Aussie Flat: $US, grains Osama victim of Arab revolt. Asia Times Gross backs emerging markets on inflation concern for US. MarketBeat Seems backwards to me… Who pays for Greece? Business Insider China is big. MarketWatch US ISM strong. Calculated Risk But growth is not good. Tim Duy Adani buys coal port. FT RBA will lift. Peter Martin,


Strength not weakness is hitting housing

The Unconventional Economist posted on the bearish musings of Louis Christopher overnight. Mr Christopher’s thoughts looks fine and good, but made little sense to me. Here is the quote: I still do not believe this is going to be the big one- that being the big 40% house price crash. However for many vendors, it’s


RBA holds, options open

The RBA has pretty much delivered market expectations with a hold and more hawkish statement. However, this is not as hawkish as I might have expected, with a strong nod toward both tradable goods sectors and housing. Options look open for next month. The debate will rage! Statement by Glenn Stevens, Governor: Monetary Policy Decision


Is al-Qaeda still a risk?

Following is an excellent assessment of the current and future path for al-Qaeda from Jamestown, a world-leading international relations website. How Important is Bin Laden Anyway? Bin Laden is not a religious scholar; he is not a military planner; he is not even a politician. He will, however, always be the man who brought down


Commodity boom gets bigger

The RBA has released its monthly commodity index and its up substantially again. Even with the dollar, there is another 3.8 rise for April. Preliminary estimates for April indicate that the index rose by 7.6 per cent (on a monthly average basis) in SDR terms, after rising by 0.8 per cent in March (revised). The


Ray of light for manufacturing?

Today AIG PMI  shows manufacturing still in recession in April. However, there is a the hint of a trend change in both the the headline index and its internal measures. It is slow progress and nobody should be breaking out the champagne, expecially since the dollar has not stopped rising but there is slow progress towards expansion.


Broad based house price falls

Find above a snap shot of the ABS eight city house price index released today. Relative to Rismark, falls are a slower than in Brisbane and Perth but much more widespread, and larger in Melbourne and Sydney. Here is a graph of the eight cities since 2002, It is a long way up to the


Take a chill pill

My kingdom for a rational media. Today’s selection of economic commentary, from interest rates to the Budget and carbon taxes is so full of amphetamines that one is tempted to conclude that everyone is still high from last night’s Logies. From the top, we have a piece from Alan Kohler that makes no economic sense:


RSPT anniversary

Sinclair Davidson has a terrific insight today into what transpired in the RSPT debacle for the Rudd Goverment. Much of the piece is derived from freshly released FOI documents: It is now possible to reconstruct much of what was happening within government and the bureaucracy in the run-up to the announcement of the RSPT and


May 2 links: Total hysteria

Inflation rampant. David Uren RBA must hike. Chris Joye, Adam Carr, Terry McCrann Abandon the surplus. Alan Kohler Abandon the carbon tax. Robert Gottliebsen Arrogant RSPT. Sinclair Davidson Our China weakness. Clancy Yeates New mining ads. Here Food financialisation. Foreign Policy China manufacturing slowing. Bloomberg Post crisis growth always sucks. NYT Anglosphere stronger than it


Weekend reading: Up, up and away

Up: metals, grains, energy, Aussie Down: $US Japan’s wipeout. Alphaville Yuan rising. Bloomberg Inflation or deflation for the US. FT US PMI slows, a bit. Bloomberg Bernanke is hawkish, sorta. Tim Duy Here we go again. Derivatives exempted. FT More austerity excellence. Irish slash growth. FT Canberra cops out on saving. SMH Budget deficit $50 billion. Peter Martin Copper


The RBA’s irrational bet

March Credit Aggregates are out from the RBA  and make fascinating reading. Here’s what the bank had to say: Total credit provided to the private sector by financial intermediaries rose by 0.6 per cent over March 2011, after rising by 0.6 per cent over February. Over the year to March, total credit rose by 3.6 per cent.


World Bank warns China (Canberra)

The World Bank has damned the lifeboats in its China Quarterly Update and called out multiple risks including a housing bubble, inflation and external imbalances. Here is the money excerpt: Inflation is unlikely to escalate but there are risks. Food price increases seem to have slowed for now, sequentially, and the (yoy) rate of increase in


Inflation expectations my butt

So, Bernanke has given markets what they need to hear. First, it’s damn the lifeboats on commodities inflation: Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to


Will the RBA hike?

So, Adam Carr is enjoying a spectacular victory lap having been the only one who dared contemplate a June rate rise. And fair enough too. Here’s is a sample: The bottom line is that inflation is on the march – in addition to food, health costs are rising, as are the costs of education, rents,


Inflation stirring

Find above details of today’s ABS CPI release for the March quarter. Broadly speaking, I have two observations. First, if you look at the above bar graph, it is entirely clear that this is an outlying result vis-a-vis the trend. Roughly 23% of the jump came from fruit and vegetables alone, which is clearly flood related