Houses and Holes


FIFObids gets underway

In another first for the Australian labour market, a new website has launched where mining companies can bid for FIFO workers. From the SMH: A website, inspired by Australia’s skilled labour shortage, has seen resources companies bidding for workers like eBay bargains this week. The privately funded FIFObids website, where companies can bid on the anonymous skills profiles


Dwelling starts miss big

The pain in housing construction is becoming very palpable indeed with a huge miss in first quarter dwelling starts from the ABS today. Consensus for some reason expected a minor fall of -2.3%, as opposed to what was delivered, -12.6%: The internals are all a bit depressing too: To give you some perspective, that total


Relief for bank funding costs

Over the past week, CDS prices (the cost of insuring a five year bond against default) have corrected significantly on easing European worries: This pricing suggests the banks could now issue unsecured debt in the range of 160bps over swap, which is a long way down from last week. Of course, over the longer term


Leading indicators sing a gloomy tune

Two leading indexes for Australia are out this morning and both sing a gloomy tune for April. The Westpac/Melbourne Institute version rose slightly but remains quite depressed: The annualised growth rate of the Westpac–Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, was 0.2% in April 2012, well


No news like EZ good news

The AFR is reporting this morning that a European bailout is a done deal: European leaders are poised to announce a €750 billion deal to bail out Spain and Italy, The Telegraph has reported from the G20 summit in Los Cabos, Mexico. The Guardian has reported that German Chancellor Angela Merkel is poised to allow the euro zone’s


Europe’s waning policy credibility

Courtesy of Sober Look. The historical chart from Barclays Capital overlays the timeline of the various Eurozone policy actions on top of the iTraxx Main spread. It’s a good chronology of policy announcements and market stress periods. As a bit of background, iTraxx Main is a CDS index referencing 125 investment grade European corporations. It’s


Economic backwardness in China

Exclusively from Michael Pettis’ newsletter. Premier Wen’s recent attack on the Chinese banking system last month has highlighted what was already a very interesting debate on Chinese banks and the Chinese financial system.  There is a growing sense that the Chinese banking system is deeply flawed and needs to be reformed. But why should China reform


The letter from Fairfax staff to Gina (updated)

From the SMH, the following has was sent to Gina Reinhart on June 7 (republished with permission). Dear Mrs Rinehart, The journalists employed at Fairfax metropolitan media – The Sydney Morning Herald, The Sun-Herald, The Age, The Sunday Age and The Australian Financial Review – have asked us, as their representatives, to write to you about recent reports concerning your attempts


RBA Minutes suggest cuts are done for now

Find below the RBA minutes. Looks like the bank was more sanguine than I going into the last meeting but cut anyway as insurance against the likelihood that “precautionary behaviour both abroad and at home would intensify”. Quite sensible. The “finely balanced” rhetoric of the decision suggests strongly that I have been right in arguing


Canberra reacts to Fairfax

From AAP: Stephen Conroy reckons: “If she was to directly interfere and breach that charter it would actually lead to a crisis of confidence among the readership,” he said. …Ms Rinehart was entitled to turn the Fairfax newspapers into “the mining gazette” but the company’s other shareholders needed to know about that. “Senator Conroy said


Mining moves to control the media

There’s lot’s of stuff going on at Fairfax. Printing plant closures. Job losses. A reorientation towards internet delivery. It’s all very difficult and my sympathies go out to those families affected. Sadly, however, I am not confident that the transformation can succeed. It simply does not address the core challenge confronting the company: declining advertising


Parko’s poisoned chalice

Yesterday, Secretary of the Treasury Martin Parkinson spoke for CEDA and the result was a nice illustration of the poisoned political economy that he must deal with. Let’s take a look. My first key message is that Australia is well-placed to cope with further global turmoil. This is due both to the underlying strength of


Why investors hold US Treasuries

Courtesy of Sober Look. Financial advisers continue to profess that US treasuries should be a large part of a balanced portfolio. With the 10-year treasury yielding around 1.6%, the advice is hardly based on return expectations. It is also not due to expectations of mark to market gains. The up-side case in being long the


Media revolutions

You live in a media duopoly. This has certain shortcomings. The first is that when one side does something,  the other will invariably follow. Today’s example is Fairfax shifting to a freemium model, following the News move of some months ago. But there is another problem. The media duopoly is a reflection of a broader


China property price falls ease

See above today’s May China property price data from the National Bureau of Statistics. The number of cities registering price falls on  a yearly basis increased but on a monthly basis increases rose in all three dwelling categories. It’s clear that, for the time being at least, price falls are moderating (at least on this


Will the Fed unleash the boob?

This one is a bit late owing to this morning’s round of media bashing but it’s still important to cover (to say the least). The Fed meets Thursday our time and the question of whether or not more milky wilkies (quantitative easing) will be forthcoming will be important for markets. Let’s take a look. All


New car sales bounce

The ABS has released April new car sales and they show good growth up 2.4% up in May from April and 22.4% year on year. Here’s the month on month chart: Of course, there always a catch and today it’s a big one, most obvious in the year on year chart: See that last big


Bulk commodities still mixed

In recent days we seen a number cross-currents in the bulk commodities. On the positive half of the ledger, the spot  iron price (white) and 12 month swaps have based (yellow) , as have Chinese steel prices (purple and green). The recovery is quite muted as this point, no doubt reflecting generally weak global economic


Fairfax to erect paywalls

Wow. From the SMH: Fairfax Media will cut 1900 staff and erect paywalls on the websites of its two main metropolitan newspapers as it adjusts to shrinking advertising revenue. Fairfax, publisher of this website, will also shift to compact-sized versions for those two newspapers, The Age and The Sydney Morning Herald, from the first quarter of 2013. The


Consumer rate cut expectations rise

Westpac has a note out this morning looking at expectations for future rate cuts at large: Most Australians expect mortgage interest rates to decline over the next year but the consensus is not strong. • The Feb, Jun and Aug Westpac-Melbourne Institute Consumer surveys include an extra question about expectations for mortgage rates over the next 12 months. The


A bullhawk departs this earth

Don’t say I didn’t warn you. When the GDP figure came out two weeks ago I advised going long bullhawk rhetoric. Last week we were subjected to some extraordinary drivel at Business Spectator, where the bullhawks make their nest, and today another feathered bovine screetches completely free of this earth and into a fantasy world of unicorns,


Mixed signals for financial stability

In what looks like a co-ordinated leak to offset any Greek jitters, David Uren at The Australian today carries a simple statement that: THE government is confident our banking system can withstand everything that Europe can throw at it without needing the guarantees that forestalled a bank run during 2008-09. The Financial Regulators Council has


The despair of Ross Gittins

Last week Ross Gittins suggested we all throw in the towel vis-a-vis understanding the economy and today he follows through in a convulsion of public despair: The release of two downbeat indicators of business and consumer confidence last week serves only to deepen the puzzle over the gap between how we feel and what the objective


Innovation schminnovation

From the AFR: The innovation community is aghast that the new research and development (R&D) tax credit is being considered for cuts even before the end of its first year of operation on June 30. The credit is one of the options that could go in order to fund a company tax cut, being considered


Roy Morgan Business Confidence sags in May

Not that we especially needed reminding but according to Roy Morgan, business confidence fell significantly in May: Business Confidence in Australia dropped 6.4pts in May 2012 to 105.8, down from 112.2 in April and is now at the lowest level since August 2011. These are the latest findings from the Roy Morgan Research Business Confidence