Houses and Holes

41

China spoils the party

Let’s party! Yes, it’s a world party and we’re all invited. At least, everyone else is. I’m sober, and, like some stale chaperone, worried. Still, let’s face plant into the punch before we call the police. Preliminary US Q3 GDP came in at 2.5%, right on expectations. Here’s the chart from Calculated Risk: This is an

32

October 28 links: Heaven and Hell

To Heaven: metals, gold, grains, euro, Aussie, energy Down: CCI (not sure how this is possible) To Hell: ore, $US, Treasuries Contagion: 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

52

March of the rent-seekers

Obviously at MB we are more used to bashing the MSM than praising it. But, when a ball-tearing piece of analysis comes along, it behooves us to give it as much promotion as possible. And that’s the case with yesterday’s comment by Jessica Irvine at the SMH. Jessica has recently written some bold stuff, putting

5

Iron ore = rate cut

The iron ore price continued to fall yesterday. The spot market dropped another 3.3% to 127.40, now down a dizzying 33%: Just as worrying, 12 months swaps resumed their fall, also down 3.3% plus to $113.67: In better news, Shanghai rebar was stable again. We get more on the market dynamics this morning from Reuters:

3

October 27 links: mORE pain

Up: $US, metals, gold, CCI, Down: grains, euro, Aussie, energy, Treasuries Pulverised: ore Contagion: 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

16

Ministry of Information spins iron ore

The Unconventional Economist has noted before that the business coverage on the ABC is capable of some happy interpretations of economic data. Last night was a clear case in point. During the news, Phillip Lasker presented details of the ongoing crash in the iron ore price and kudos for covering it.  But he overlaid his

22

Iron ore crash

Iron ore is crashing. Overnight the price fell 7% plus to $131.70: Thankfully, 12 month swaps only fell 1% to a new low of $117. Shanghai rebar was also flat on the day. But, as China iron ore port stocks show, there’s plenty in reserve if the draw down continues: So, there’s some inconsistency here. Obviously

4

October 26 links: A flock of black swans

Rockets: energy, gold, CCI, Treasuries Up: $US Flat: grains, euro, Aussie, metals Crushed: ore Contagion: 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

9

Alternative egg heads

Every month the Melbourne Institute puts out its economic forecasts for the year ahead. I like to follow these forecasts because the Institute is made up of very smart, egg-head economists in the mould of the Treasury and RBA, but without the constraints of politics or central bank protocol. Throughout this year they forecast lacklustre

24

China suspends 6000 miles of railway

Take a look at this video from NTD Television covering the difficulties confronting China’s Ministry of Railways. I’m no expert on the issues but Blind Freddy can see the threat here to iron ore. Correct me if I’m wrong, but I’m pretty sure that the anchor has an Aussie accent:

12

It’s the debt, stupid

The more I think about it, the more important today’s speech by Rick Battelino becomes. It’s not that there was anything new in the speech. It was a reiteration of the RBA’s relatively new credit-conservative doctrine. More importantly, it was delivered by its most (formerly) credit-bullish governor. Rates discussion tomorrow will be dominated by the

20

No Cup Day cut?

Deputy Governor of the RBA Rick Battelino has delivered a speech that to my mind makes a Cup Day cut less likely. Find it below, with commentary. Economic and Financial Developments Ric Battellino Deputy Governor Address to Citi’s 3rd Annual Australian & New Zealand Investment Conference  Sydney – 25 October 2011 Introduction 2011 has been a frustrating year

6

France in the gun

From 4cast comes this take on the pressure on the French economy and the implications for the EFSF: While the latest euro PMIs are really no surprise, they nonetheless continue to spell trouble. Through the chequered details currently available (German and French breakdowns heading in opposite directions, with France services weaker, and German manufacturing weaker),

4

The great enthusiasm

Last week Ben Bernanke described his intention to make FOMC communications more clear: In more normal times, when short-term policy rates are not constrained, I expect that balance sheet policies will be rarely used. By contrast, forward guidance and other forms of communication about policy can be valuable even when the zero lower bound is

2

October 25 links: Undollar wonder

Rockets: energy, Aussie, CCI, metals, Up: grains, euro Down: $US, Treasuries, ore Contagion: 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 2

79

Demonising mining

This morning the head of the Minerals Council of NSW, Nikki Williams, gave a feisty speech about the increasingly troubled relationship between mining firms and the community. The speech left me a bit short of oxygen to be honest and, in my view, will simply inflame tensions. Let’s take a look: We’re the darlings of

3

CPI previews

Find below a couple of CPI previews from the major banks. Both ANZ and NAB see a subdued CPI print as likely but differ on the implications. ANZ predictd a cut, NAB does not. Strategy Around the Q3 CPI Release[1] CPI Preview Sept 2011

30

Good news from China

HSBC’s China flash PMI for October resumed growth jumping from 49.9 to 51.1. Just about every component made a turn for the better: This is something of a surprise, though perhaps it should not have been. The turnaround is being led by export orders, probably to the US where the August debt-ceiling shock has clearly

12

Producer prices clear way for rate cut (updated)

ABS Producer Prices for the September quarter have come in weak: SEPTEMBER KEY POINTS FINAL (STAGE 3) COMMODITIES rose 0.6% in the September quarter 2011. mainly due to rises in the prices received for electricity, gas and water (+8.2%), commercial fishing (+14.1%) and other agriculture (+3.7%). partly offset by falls in the prices received for

46

APRA spills the beans

Adding to recent RBA speeches, John Laker of APRA gave a speech late last week that parted the curtain on Invisopower! more directly than I have seen before. In his opening address to the Senate Standing Committe on Economics, Mr Laker said: Our assessment is that the Australian banking system is well placed to deal

10

Terms of trade still taking a hit

The Australian’s China correspondent, Michael Sainsbury reckons you should worry about Europe, not China: To read some of the headlines this week about Australia’s biggest export, iron ore, one might have thought the sky was falling. One might have concluded the iron ore worm had suddenly turned, that by far our biggest market, China, had suddenly got

6

October 24 links: Euro delay

Europe to announce Wed. MarketWatch Banks need 108 billion euros. FT EU report blows up austerity. Alphaville Summit despair. Telegraph Leaders blame Italy. FT They must cut debt and boost growth, as well as launch an all out war for world peace! Measuring US pain. Gavyn Davies US data this week. Calculated Risk The end of

16

Sydney unoccupied

The SMH reports that the 100 or so kids that have occupied Martin Place for eight days in sympathy with the “Occupy Wall Street” protests have been forcibly removed, following the eviction of the Melbourne chapter Friday afternoon. I still don’t think this was necessary and, at least according to the SMH poll, it appears

95

Unoccupying Melbourne

I must admit, beyond writing a story about why we might want to carry the Occupy Wall Street banner downunder a few weeks ago, I haven’t shown a lot of interest in the various “Occupy” movements in Australian cities. Not for any particular reason beyond that I assumed, rightly it seems, that any Australian movement

85

Mining jobs in context

The Pascometer offers an advertorial today for “Queensland Mining and Gas Jobs Expo” which: …rolls into Caloundra on the Sunshine Coast today with organisers expecting 2000 people to attend.  On Wednesday 10,000 people turned up for the expo’s Gold Coast gig. The patchwork economy is working. Those with longer memories will recall job applicants queueing

27

Hope from the US?

Last night’s market action may have been worrisome for China (with metals crushed) and frustrating for Europe (going nowhere fast) but US data was excellent. The Philly Fed Index, a guide to manufacturing in the north east, and the same Philly Fed that collapsed in August, rebounded at a record pace, blowing away all market

20

Iron ore still falling

Yesterday brought no respite for iron ore. The 12 months swaps market fell another 3.08% to a new low at $117 and Shanghai rebar was down 2.44%. Ore itself fell 1.3% to $145.80. If you combine this with the dizzying crash of copper, 6% last night to a new correction low, you have to ask

4

October 21 links: On pause

Flat: $US, Treasuries, energy, grains, Aussie, euro Down: CCI Hammered: ore, metals Contagion: 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 2

64

Will you pay for The Oz?

In a stroke of irony, The Australian released the following story online this afternoon: THE Australian has announced it will launch digital subscriptions on Monday, with a three-month free trial for all readers. Publisher News Limited said the national broadsheet’s strategy was built around a digital content pass which would provide access to The Australian online and