Houses and Holes

1

CPI previews agree: weak

CPI is out Wednesday and several of the major banks have put out previews today. It is no surpise that all are calling for a weak reading. It’s what I expecrt as well. CBA uses a novel approach of gauging the relativities of spending patterns within their own credit card data to predict a 0.45

18

The ‘big girl’s blouse’ jobs debate

In theory it’s the job of media to hold other institutional powers to account. The truth is much more complicated because the media must choose a standard against which to make the judgments that constitute that account. Sure, some of those values are self-selecting: democracy, law and order, social standards etc. But even here you

7

January 23 links: SOPA fail

Global  Seven ways to fix the system. Martin Wolf United States Week ahead for Dow. Calculated Risk FOMC preview. Calculated Risk Fed to reveal all. Gavyn Davies Q4 GDP forecasts. Calculated Risk Hollywood must regroup after losing net battle. LA Times Yeh, like give up Europe: Euro shorts get longer. All Star Charts The no-brainer trade of

10

China’s flash PMI flat

The January China Flash PMI is out and is virtually unchanged from at 48.8 versus 48.7 in December. To my mind the components are more encouraging with new export orders and backlogs of work reversing their declines and new orders markedly easing the pace of decline, suggesting that some rebound in demand lies ahead: Still,

4

Export prices supported by quarterly contracts

December quarter export prices are out and fared better than I thought they would. Down just 1.5%. This is a bit surprising because iron ore and coal make 50% of exports and both fell significantly. First an iron ore price chart: That’s a big fall, confirmed this week by Fortescue Metals, whose average spot price

20

NAB pays for sterling

From Banking Day: Novelty value helped National Australia Bank sell a covered bond denominated in sterling overnight on terms better than banks in Britain can achieve. NAB priced the £500 million bond at 145 basis points over three-month Libor, Dow Jones reported and at the low end of price guidance. The bonds are secured over

12

Is the Baltic Dry worth listening to?

From 4Cast comes this take on what the recent crash in the Baltic Dry means and whether it’s worth listening to. I must say, the correlation between the BDI and Chinese PMI is closer than I’d imagined. Perhaps it’s time to dust off the index…   Weakness in the Baltic shipping index is gaining a

53

Mining boom rhetoric dies with job cuts

Do you get the sense right now that the Australian economy is a little rudderless? If you do, I don’t blame you. This morning’s media coverage of yesterday’s jobs result is chock full of “surprises”, “shocks” and “unexpecteds”. I’m not sure why that’s the case. It’s no surprise at all. MB has been forecasting this

6

January 20 links: Jobs wake up call

Markets: Dollar: $US, Treasuries, ore, energy fall Undollar:  euro, Aussie, gold, metals, CRB flat, grains up. 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

42

Inflation expectations jump

From the Melbourne Institute today, inflation expectations leap in January: The median expected inflation rate, reported in the Melbourne Institute Survey of Consumer Inflationary Expectations, increased to 2.8 per cent in January from 2.4 per cent in December. According to Dr. Michael Chua, a Research Fellow at the Melbourne Institute, “This month’s increase in consumer inflationary expectations

11

A new unemployment consensus – up

Three banks, all agree, unemployment is headed up – macrobated as it were. Westpac is the most bearish: Westpac Economics: first impressions Dec Labour Force Survey surprised with –29.3k, +24.5k full-time and flat unemployment of 5.2%. The December Labour Force Survey headline was weaker than expected; market +10k and Westpac’s bottom of the market –10k. There was

30

Rate cuts boost house price expectations

Westpac has released its quarterly house price expectations index. Since October there’s been a marked lift: The Westpac-Melbourne Institute Consumer House Price Expectations Index posted a strong rise in January, increasing 16.1pts from 9.0 in October to 25.1. This is the highest reading since April last year and the first gain since January 2010. While

35

The World Bank scenario for Oz

Far be it for me to disrupt today’s happy feeling, but following yesterday’s alarming (alarmist?) World Bank report, reader Flawse this morning asked what the consequences for Australia would be in the event of a repeat of a Lehman bank freeze. I don’t think this outcome likely. But it’s an interesting thought experiment and not

25

January 19 links: Three bullish themes

Markets: Dollar: $US, Treasuries, ore, CRB, grains, energy fall Undollar:  euro, Aussie, gold, metals up. 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 Germany

25

World economic catastrophe!

As you may have read, the World Bank has issued its half yearly update, Global Economic Prospects, causing a major stir with a pretty nasty forecast of 2.5% global growth with risks to the downside if Europe gives us a credit event. I’ve attached the report below – rare as hens teeth these are, has

11

Not happy, Jan

Consumers remain in dour mood according to today’s Westpac/Melbourne Institute consumer confidence survey which showed a small rise of 2.4% but remains well off optimistic readings. According to Bill Evans: This is a somewhat disappointing result. Despite the Reserve Bank having cut the overnight cash rate by a total of 50bps with the major banks

4

China boom or gloom?

You can always tell when Wall St is set on a rally by the way its media interprets data. Last Night’s Bloomberg story on imminent Chinese stimulus is classic case in point: U.S. stocks rose, sending the Standard & Poor’s 500 Index toward the highest level since July, as slowing Chinese growth added to speculation

11

January 18 links: China confusion

Markets: Dollar: $US, Treasuries, ore,  fall Undollar: CRB, euro, Aussie, gold, metals, energy, grains up. 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

17

China GDP surprise

From Bloomy: China’s economy expanded at the slowest pace in 10 quarters as export demand moderated and a prolonged campaign against consumer and property-price gainscooled growth.  Gross domestic product rose 8.9 percent in the fourth quarter from a year earlier, the statistics bureau said in Beijing today. Growth fell below 9 percent for the first

5

Bond barmy banks

Australia’s big four banks found some funding relief today with covered bond issues in both Europe and locally. From the AFR: Commonwealth Bank of Australia’s five-year covered bond, launched today, is a landmark deal for more reasons than one. For starters, it marks the first time that a local bank has issued covered bonds in

16

Bashing bank bashing

Future Fund chairman and former Commonwealth Bank CEO David Murray is on the hustings this morning beating up on regulators for causing the banks to have to cut costs. According to the AFR: …it is “blindingly obvious” that there will be further job losses in the banking sector, saying the lower demand for credit gives

37

January 17 links: EFSF cut

Markets: Dollar: $US, Treasuries flat Undollar: CRB, euro, Aussie flat. Gold, metals, energy up.  Ore, grains down. 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

3

US economy & QE3

The institutional bank at NAB does some good research but they have a habit of interpreting data with an overly bullish eye. That is one one reason why I prefer the output at Westpac. Still, every so often they produce a report worth your time and today is one of those days with a neat

4

Job ads fall again

The deceleration in job ads continued in December, according ot today’s ANZ Job Ads report: The number of job advertisements on the internet and in newspapers fell 0.9% in December compared to the previous month. Total job advertisements were 2.6% lower than in December 2010, the first negative annual growth rate since February 2010. •

48

You’re fired

Over the weekend, serial entrepreneur and celebrity Mark Bouris penned an investment advice piece in the Daily Telelgraph extolling the virtues of property as a long term investment. It’s not worth wasting too much time on this but the thrust of his piece is worth looking at because it makes one big mistake that you should

1

TD inflation jumps in December

TD Securities-Melbourne Institute inflation for December was out this morning and shows a month on month bounce of 0.5%. However, year on year remains contained at 2.4%. Here is the MOM chart: And YOY: As well as, myriad data: The report indicates that: Contributing to the overall change in December were price increases for holiday

76

The five stages of economic grief

So, we go on holiday expecting the worst and when we return it’s all good! Europe is fixed (at least it was before S&P interfered), the US is powering, property and equity markets are set to boom. Holidays are wonderful things. There is no substitute for the calm that comes with relaxation and the perspective that

12

January 16 links: Downgrade blues

Thanks to The Prince for his spectacular links over the break! Global Macro: Implications of Iranian oil embargo. Econbrowser Americas: US surges troops for Iran. SFGate Week ahead for the Dow. Calculated Risk Europe: Europe argues for austerity/stimulus NYT Greece debt talks to resume. WSJ  After the downgrades, the downward spiral. Wolfgang Munchau RBS on

25

Getting gold wrong

I generally don’t mind a bit of the AFR’s commodities commentator, Stephen Wyatt. But today he shows a complete lack of insight into the dynamics that drive the gold market claiming that: Gold is behaving badly. It’s supposed to be a safe-haven asset but, just when the global economy looks like going to hell in

48

Ralph Norris goes all in on moral hazard

For much of this year, I have argued that the big four banks are being protected by regulatory authorities and the government, which have deployed a smoke screen around the liability side of bank balance sheets. I call this fog Invisopower! One of the reasons I have argued that this is not such a good