David Llewellyn-Smith


APRA gets it right on RMBS liquidity

From the AFR, APRA head John Laker last night snuffed out hopes that RMBS may be included in an expanded basket of qualifying assets for Basel III liquidity requirements for banks: “The discretion to add additional assets is qualified by the fact that these assets … must have a proven record of a reliable source


Depressed CEOs give up on 2013

The Australian Industry Group has completed its annual survey of CEO outlooks and probably wishes it hadn’t. Dour results have flowed in across the board from 350 of the best and brightest. Across all industries, Australian CEOs told us that in 2013 they expect: Sales revenue (annual turnover) will improve for 39% of businesses, but


Wesfarmers moves to protect its patch

The stoush between what looks to be a somewhat revitalised ACCC under Rod Sims and Wesfsarmers is heating up. The Age reports that: The ACCC chairman launched a blistering attack on the supermarkets before a Senate estimates committee in Canberra late on Wednesday night, when he laid out the accusations against the supermarkets. The allegations


Much of the world was shrinking in December

Last night’s news from Europe of Q4 GDP has confirmed what was virtually a global recession. It’s only six weeks ago and the current surge of optimism makes it seem like it never happened but the majority of the world was in recession in December with Japan, the Eurozone and the US all shrinking in


Mining tax take to grow, or not

Treasury continued its internationally embarrassing confession (I’m pleased to report yesterday’s MRRT serve went viral in New York overnight), about the mining tax. From the AFR: Treasury secretary Robert Heferen told the committee late on Thursday night that his office would work with the Australian Taxation Office to work out why miners had reduced their instalments


Daily iron ore price update (Rio is Fortescue)

No movement yesterday in the iron ore complex. The big news today is Rio’s earnings release (find it below) which confirms that the company is a ragingly successful iron ore company buried under a huge pile of…overmatter…to make it appear diversified and unattractive to suiters. The iron ore division contributed 44% of group revenue but…wait


Treasury warns on growth

From the AFR: Treasury’s top economic forecaster has warned that Australia’s nominal economy – what the nation is actually paid for what it produces – will grow below the historic average over the next two years, increasing pressure on the budget. David Gruen, the head of Treasury’s macroeconomic group, also warned that the transition from


Why is CITIC buying into Alumina?

From the AFR: CITIC Resources will make a $452 million strategic investment in Alumina to help the Australian company repay its bank debt. The unexpected deal will give Hong Kong listed CITIC – once a major investor in Macarthur Coal – a 13 per cent stake in Alumina and a board seat for its vice


House committee condemns FIFO

The house yesterday released an extensive report on the practice of FIFO (fly-in, fly-out work forces) for mining and its impacts on the Bush. The results were not pretty: The Mayor of Kalgoorlie called the workforce practice of ‘fly-in, fly-out/drive-in, drive-out’ (FIFO/DIDO) the ‘cancer of the bush’. He claimed, and many others agreed, that it


Surviving the defensive stock bubble

This morning the AFR runs with my observations on the ASX from yesterday: A hunger for defensive stocks that generate healthy dividends may have helped Australian shares break the 5000 barrier but investors are warning of a “bubble” in yield stocks. …Baillieu Holst partner Richard Morrow remained unconvinced about the fundamental basis for the market’s


Dam it all, says Tony Abbott

From the Daily Telegraph: UP to 100 dams could be built across the country to prevent floods, fuel power stations and irrigate a food boom to feed 120 million people across the Asia Pacific region, under plans being considered by Opposition leader Tony Abbott. In the second high-level policy leak in a week, The Daily Telegraph has


Stockland follows Mirvac with warning

Stockland announced a nasty profit warning today, following Mirvac the other day, with some very downbeat comments about new residential property: “We have also now conducted our regular residential portfolio review and have identified 13 residential projects that do not meet our hurdles and have impaired them for wholesale disposal rather than continuing to develop


ASX targets blue sky in nonsense cycle

As the press today prematurely ejaculates over the ASX200 crossing 5000 points, let’s pause for a moment to consider where we are at. First, dead ahead is full media climax at 5025.1 points. The intraday post-GFC high. Once above that, it’s blowoff time. So what’s driving the rally besides everything? I’ve have drawn up a


Consumer sentiment surges

Westpac’s Consumer Sentiment reading is out for January and shows a big jump of 7.7% from 100.6 in January to 108.3 in February. This is far from unprecedented as a chart of monthly growth rates shows: But is still impressive and is the highest reading since 2010. Bill Evans offer his commentary below, with which I


Swan jawbone blasts Australian dollar higher

Wayne Swan really needs to learn how to make better use of the Treasurer’s jawbone. The AFR story that I covered this morning about Swan’s commitment to market-based currencies last night coincided with a surge in the Aussie of about three-quarters of a cent. I’ve circled the impolitic moment: Now, maybe it would have happened


The Australian dollar tells a naive truth

From the AFR today: Treasurer Wayne Swan has declared Australia’s support for letting financial markets determine exchange rates, amid rising unease about a global currency war. Mr Swan’s move adds Australia’s voice to those of other leading nations concerned that countries are actively devaluing their currencies to boost exports and growth. In an attempt to calm


Rudd vs Mining Round 2?

There is in Australian sport the phenomenon known as the “square-up”. It transpires when an umpire or referee makes a bad call favouring one team and then follows up with an equally poor decision the other way to even the ledger. Everyone acknowledges the moral correctness of the second wrong call. The square-up seems to


Weekly poll aggregation

Courtesy of Mark the Ballot. Last week we had a surprise from Newspoll, when it moved five percentage points towards the Coalition. Now Morgan has released a weekly poll for the last weekend that has moved four percentage points over the previous weekend; also to the Coalition. This movement from two polling houses has influenced the poll


Much ado about nothing in out-of-cycle rate cuts

It is not always easy to determine bank funding costs. They’re complex. The AFR is very excited today about the prospect of out-of-cycle rate cuts from major banks: “Potentially, we could see out-of-cycle interest rate cuts, but not in the near, near future,” Morningstar bank analyst David Ellis said. “It depends on how offshore, wholesale funding


ASX at the close

Welcome to our new daily closing post on the ASX and boarder markets from Chris Weston at IG Markets. This will be a daily feature to accompany Chris Becker’s (The Prince) epic “Trading Week”. Enjoy! It seems that European markets will see another tepid open, although traders will have to be alert and prepared to


Demand for Australian government bonds falls

Adding to the weakening Australian dollar meme, ANZ has a note out discussing weakening (although still strong) demand for Australian government bonds. The recent fall in Australian bond tender bid/cover ratios reflects a small softening in safe-haven demand, increased credit issuance, and investor preference for riskier assets. We think demand for ACGBs will be upheld and further continued weakness