Houses and Holes

5

Leading index improves

From Westpac this morning: 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 2.4% in June 2012, below its long term trend of 2.7%. The annualised growth rate of the Coincident Index, which gives a pulse of current activity, was 3.7%, above its

0

Japan’s trade data adds to global slowdown fears

From Bloomie: Japan reported a wider-than-expected trade deficit in July as Europe’s sovereign debt crisis and austerity measures dragged down exports and higher oil prices boosted imports. The shortfall was 517.4 billion yen ($6.5 billion), after a revised surplus of 60.3 billion yen in June, the Finance Ministry said in Tokyo today. The median forecast in a

9

Macro Investor: CBA is not worth the risk

Commonwealth Bank of Australia Ltd (ASX:CBA) is the nation’s largest bank, providing banking, life insurance and related services for individuals, small businesses and medium sized commercial enterprises. It also provides corporate and general banking, international financing, institutional banking, stock broking via Commsec and funds management. On the surface, CBA looks great – record profit, improving

76

End of an era for iron ore?

The world steel association released its July production report overnight and the news is not especially good: World crude steel production for the 62 countries reporting to the World Steel Association (worldsteel) was 130 million tonnes (Mt) in July 2012, an increase of 2.0% compared to July 2011. China’s crude steel production for July 2012

0

China chart pack

Find below ANZ’s excellent monthly China chart pack. The only observation I’d make is that the bank continues to apply a Western paradigm to the PBOC response to economic weakness, forecasting large cuts in reserve ratio requirements and interest rates. The evidence to date is that a more modest easing is coming, if China wishes

11

August 22 links

United States: Lockhardt kills QE3. Zero Hedge, Tim Duy Risk off. Zero Hedge Structured by cows. Dealbreaker Europe: Concessions for Greece. Bloomberg Asia: China’s unprecedented liquidity operation. Alphaville More China links in the daily post from Sinocism Local: RBA exposes low doc loans. The Oz Port Hedland strife. The Oz Coalition’s radical Federalism. AFR RBA

32

Smith canes Abbott

It’s not very often that I agree with Mike Smith but today he is right in caning Abbott’s Great Gaff of China. From the AFR: Australia and New Zealand Banking Group chief executive Mike Smith has called on political leaders to foster a more welcoming attitude towards foreign investment in the resources and agricultural sectors

11

RBA housingfest

The RBA is co-hosting a conference on property markets and financial stability with the BIS. The following are the papers presented. Land and House Price Measurement in China [PDF 1.2M] Yongheng Deng, National University of Singapore, Joseph Gyourko, University of Pennsylvania, Wharton, and Jing Wu, Tsinghua University Comparing Housing Finance Systems [PDF 527K] Frank Warnock and Veronica

35

More resources gloom

The RBA today brought forward its estimate for the mining boom peak. From The Oz today comes more confirmation that the ground is shifting under the resources boom: Analysts think that not all of the projects in the government’s $500 billion pipeline will happen without a major recovery in commodity prices or an increased willingness

1

Rate markets ignore RBA (again)

It’s becoming a tradition for interest rate markets to ignore the RBA’s pronouncements of economic strength. Today’s upbeat Minutes failed to shift interest rate markets, which are still pricing 50bps of cuts in the next twelve months: The next meeting is still rightly discounted:

5

RBA Minutes see mining boom peak

Find the RBA Minutes below. Not much to go on here. Probably more on the hawkish side but nothing on the dollar, bugger all on China or the bulk commodities. More on Europe, actually. A few rumblings on inflation. There was this one intriguing line: Resource investment was forecast to peak during 2013/14 and gradually

9

Ore swaps bust the ton

Iron ore weakness continued yesterday: 12m swaps busted the ton. Here’s a long term chart: Sorry to harp on this, but swaps are rapidly approaching the 2010 low of $98.50 that marks the neckline on the giant post-GFC head and shoulders pattern. The news from China was also poor. From Reuters: An unexpected rebound in

3

ASIC insolvencies improve

Courtesy of Mark the Graph. ASIC has released the June 2012 update to its series on the number of companies entering into a form of external administration for the first time each month. For most states, the trends look good.                    

60

After holes, is it back to houses?

Last week while I was in bed with flu, Commonwealth Bank CEO, Ian Narev, declared that the bank is in favour of a new Wallis Inquiry into the financial system. So long, that is, as it’s focussed on the following, from the AFR: Commonwealth Bank of Australia chief executive Ian Narev has warned that the

11

Yancoal cuts expansion plans

From the SMH: The chief executive of Yancoal Australia says coal prices are falling faster than miners can keep up, as the China-backed coalminer said it would halt expansion and seek broad cost cuts. Yancoal chief Murray Bailey told analysts today that the economy of Australia’s largest export market, China, had slowed markedly in relation

21

Henry says high dollar to Hell and back

From AAP: Former treasury boss Ken Henry has told business the Australian dollar is likely to remain high for the foreseeable future. Dr Henry told the Australian Industry Group forum in Canberra it would not be prudent to bank on an early sizeable depreciation in the exchange rate. “There is no silver bullet that is

6

Interest rate confusion seizes the nation

According to Westpac, consumers are confused about the prospect for interest rates: 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 Aug survey showed a significant shift with consumers now evenly split on the direction of rates compared with 52% expecting higher rates in the

134

Abbott promises a return to the golden years (of debt)

Over the weekend, Opposition leader, Tony Abbott, gave a speech in which he promised: …to return Australia to the “golden age” of the Howard government under his “incoming Coalition government”. The tradition of the Howard government would live on, Mr Abbott declared, in no small part because of the similarities between his frontbench and Mr Howard’s

3

Moody’s warns on mutuals sector

Adding to the poor Bendigo Bank result today (which Macro Investor subscribers will be enjoying) comes a warning from Moody’s: Sydney, August 20, 2012 — Moody’s Investors Service says that Australia’s mutual financial institutions have strong balance sheets, as reflected in their asset quality and funding profiles, but slower credit growth and strong competition from banks for deposits

0

Macro Investor Volume 1, Number 8

Macro Investor Vol 1, No 8. is now available at the website and in PDF. Keep on moving on… Waiting for stimulus can be like waiting for Godot. You know (or hope) it’s coming, but it’s still not there and as you wait it can be very, very hard to move. But you don’t need

27

BIS says Australian banks are too big

David Uren at The Australian this morning picks up on BIS comments about Australia’s enormous banks: The performance of Australia’s banking sector is seen by world investors and our own authorities as one of the great sources of our economic strength since the global financial crisis. However, research by the Bank for International Settlements suggests

20

Terms of trade shock developing

By David Llewellyn-Smith I know that at the moment it’s much more fashionable to celebrate the bubble in the Australian dollar than it is to point to weakening fundamentals, but the fact is our terms of trade are falling fast. The prime culprit remains iron ore, which late last week broke down again: And the

0

Macro Investor this week

Find below the contents page of this week’s Macro Investor report for you to consider a 21 day free trial subscription. Macro Investor Volume 1, No 7 Macro Bearish strategies, bullish tactics Strategies and tactics are often, necessarily, very different and thus sometimes confusing. In this market especially the long-term view may differ considerably from the short-term reality. Differing,

31

Ken Henry’s RSPT haiku

Yesterday former Treasury Secretary Ken Henry appeared in the below ANU video at the AFR in which he complained about the state of public policy debate (no arguments there), celebrated the fiscal response to the GFC (no argument there, either, beyond the FHOG, which wasn’t Treasury’s idea), mentioned in passing the challenge of the Australian

5

NAB Survey still weak

The July NAB Business Survey has printed a another weak result. There was improvement in a number of headline segments: Confidence jumped, obviously, according to NAB on easing international fears. However, conditions and profitability both dived. Oddly, labour costs and input surged. The weakness in employment eased but is still at levels associated with rising

1

Ore melt goes on

After a few days of stability, the ore price slid again yesterday: And the charts: And Chinese steel prices: The recovery in Chinese bulk shipping indexes remains plateaued: