David Llewellyn-Smith


Another debenture lender freezes

From the SMH: Victoria-based lender Gippsland Secured Investments has frozen $150 million of savings from mostly local investors, putting the future of savings among thousands of rural Victorians in doubt. The move represents the latest regional lender to come under strain following the collapse last year of Banksia Securities, another debenture house which put $660


Australia’s poor profit performance

UBS has an interesting note this morning comparing Australian share market EPS growth to global peers. Australia Has Underperformed On Lacklustre Earnings Delivery Despite improved performance over the past year, Australia has underperformed World and particularly US equities over the last three years. The blame for Australia’s underperformance rests with earnings. While sector composition has


Roll up for the Ashes circus

Boy, is it ever going to script. The second Test went exactly as foreseen. Australia’s pace attack did a creditable job, though they missed the variety of Mitchell Starc. The spinners were decent between them but the batting was awful. Good technique is essential in England. It overrides talent or a good eye. When the


How low will dollar have to go?

UBS is out cutting its Australian dollar forecast to 85 cents: …replacing the lost (domestic) growth from mining capex over the next few years will critically need more than just a moderate housing recovery (which is clearly underway). The economy’s successful transition will need a lift in non-mining capex and activity to both support growth


Slow growth future dawns on the elite

Over the weekend, demographer Bernard Salt of The Australian put forward: …a simple, yet powerful proposition: The coming federal election will trigger a shift from the austerity that has dominated consumer behaviour since the global financial crisis. What lies beyond, at some point, is a new era of rising consumer confidence and retail spending. In


Did China just cut interest rates?

From the ANZ: The People’s Bank of China (PBOC) announced new measures to further liberalize interest rates, effective from 20 July 2013. The central bank cancelled the lending rate floor, which is 70% of the policy lending rate set by the PBoC. Financial institutions will be allowed to set their own lending rates. Bill discount interest rate


Abbott says no to FBT changes

The election saga goes on. Tony Abbott will oppose and abolish Labor’s proposed FBT car tax reform, from BS: “Labor’s tax hike will cost 320,000 Australians an average of $1400 per year.” …”It’s clear that this is a serious blow to an industry under pressure,” he said. …Mr Abbott said this was impacting on nurses


Morgan: Policy beats negative attacks

From Roy Morgan today: This week, the exclusive Roy Morgan Reactor tested Australians’ responses to the appearance on ABC’s Q&A on Monday night of Minister for Defence Stephen Smith, Deputy Leader of the Opposition Julie Bishop, and Greens Senator Scott Ludlum.  As we have seen with previous Reactor tests, direct attacks on opposing parties generated less favourable reactions, whereas clear


Give us Malcolm!

Sadly for our Tony, it’s a slow news day. I might as well join the MSM party on this one. From Reachtel: And from Roy Morgan: New Prime Minister Kevin Rudd (52%) now clearly leads Opposition Leader Tony Abbott (36%, down 11% since June 11/12, 2013) as ‘Better Prime Minister’ according to a special telephone


Big mining canary croaks

From mining explosives maker, Orica, comes no surprise at all: Orica Limited today announced a reduction of earnings guidance for the 2013 financial year following the impact of weaker than expected global economic conditions and higher than expected costs associated with the integration of the ground support business. Group Net Profit After Tax pre individually


Roy Hill moving forward (or not?)

Gina’s AFR continues to pour forth rumours of progress for the big Roy Hill  iron ore mine: Export credit agencies including Export Import Bank of Korea (KEXIM), Japan Bank for International Co-operation (JBIC) and Nippon Export & Investment Insurance (NEXI) had been pressuring Roy Hill shareholders led by Rinehart’s Hancock Prospecting to fully guarantee that


Bowen and Rudd show all baubles

It’s a funny thing that’s happened to Labor economic policy and narrative since the return of Rudd. For the immediate future, it’s mostly positive with the nation finally being offered a story that makes sense. The post-China boom tale is true. The need to manage an economic transition is true. And the need to restore


China: No big stimulus coming

From China’s Finance Minister Lou Jiwei last night: “From a policy perspective, China won’t roll out large-scale fiscal stimulus policies this year,” said Lou, who became finance minister in March. China “will promote economic growth and job creation and fine-tune policies, while keeping the fiscal deficit size unchanged.” No surprise there. Reform is the new stimulus. No doubt there’ll


Is an oil shock brewing?

The oil price jumped to an eighteen month high last night: With the Aussie stuck in the low 90 cent range for now, that has pushed AUD oil to  a new high as well around $117.60: As you can see, local petrol prices are yet to punch above February prices but they’re going  to, probably


Links 19 July 2013

Global Macro/Markets: The prophecies of maestrodamus. Krugman North America: Detroit prepares to file for bankruptcy. FREEP Larry Summers billion dollar bad bet. Bloomberg Flipping is back! CNBC Banks go misfit prime. Bloomberg Fab Fab trial in trouble already. HP US’s prudent consumers. Bloomberg Jobless claims fall sharply. Reuters Europe: Opinion: Why Greece Should Be Given


Starc, Cowan cut

Crikey. I should not have changed my forecast. From the SMH: Mitchell Starc’s hot and cold performance last week has cost him his position in the Australian team for the second Test. Burly Queensland quick Ryan Harris will come into the XI in Starc’s place while Usman Khawaja has been called in to replace Ed


Tapers (and pigs) will fly

Regular readers will know that I’m suspicious of the “taper”. Today I get some support from a Westpac note that makes plenty of sense. Check out, for instance, the FOMC’s growth projections in the below chart. Tapers and pigs will fly and good job Westpac! In his semi-annual testimony to US House of Representatives Committee


Chinese house prices leap

From the MNI: BEIJING (MNI) – Chinese house prices rose at their fastest pace in three years in June as buyers continued to pour in off the sidelines, convinced that a government crackdown on market speculation lacks bite. Prices for new Chinese homes rose 8.81% y/y in June, according to a floor-space weighted average of


HIA: Land sales show weak housing recovery

As MB keeps patiently reminding the nation’s elite, there’ll be no dwelling construction recovery of substance until land prices fall. Sadly, it is swifty going the other way. From the HIA today: The latest HIA-rpdata Residential Land Report provided by the Housing Industry Association, the voice of Australia’s residential building industry and RP Data, Australia’s


NAB quarterly business survey weak

I’ve done the NAB monthly survey already. The quarterly version is out today and shows much the same story of persistent weakness. There doesn’t seem a whole lot of point in repeating it but of note eastern states conditions are stalled and not improving while WA and SA are tumbling. It still has rate cut


Don’t mention Gina!

The AFR’s Chanticleer column is ducking and weaving its way around a few potholes (or falling in them) in its iron ore coverage this week. Recently we heard from the premier column that: At a time when the resources sector is beset with an endless flow of bad news, it is impressive that Gina Rinehart’s


Fracking blockages

A recent note from Citi gives a good round-up of the barriers to expanded gas and oil fracking in Australia as presented at recent conference. Investor “ESG” Perspectives We have focused this note on issues relevant to clients (fund managers and superannuation funds) who are looking at the unconventional gas industry from an “ESG” (Environmental,