Houses and Holes


Banks get reason to keep May rate cut

As we forge back to the future on European concerns, it is becoming increasingly apparent that we have also seen a recent bottom in Australian bank CDS spreads (CDS are credit insurance for underlying bonds): On the longer term chart you can see that the recent rebound has curtailed what looked like a promising fall:


Keen slaps Krugman back

Love him or hate him, you have to admire Dr Steve Keen’s chutzpah, which is slowly but surely going global. Today Dr Keen returns via the global blogosphere to defend himself against a recent ill-considered attack from Paul Krugman. It’s clear that Keen has Krugman on toast here, as was first noted at Naked Capitalism. This


China’s exports, imports weak

From ANZ China’s March trade data: Export growth beat market expectations, gaining 8.9% y/y, down from February’s 18.4%, but above market expectations of 7.0%. Shipments to the US and emerging economies remained upbeat, while exports to the EU recorded a smaller y/y decline. • Import growth surprised on the downside, gaining only 5.3% y/y in March, compared with the last


NAB Business Survey stuck in a rut

NAB has released its March Business Survey today and there is little to report. In fact, it looks pretty much a carbon copy of the subdued February survey: As you can see, businesses have reported a second month of good trading conditions. However, forward orders and exports are flat. Labour costs are elevated but contained


Do we appreciate the mining boom?

The AFR this morning has an interesting survey of how Australian’s perceive the benefits of the mining boom. Here’s the chart of the results: The AFR represented these results as “mining boom benefits go unsung”. I’m not so sure. The one unequivocal general benefit of the mining boom is invisible. That’s because it is the


The US is slowing

So, as forecast, the US mini-cycle is slowing. It’s not disastrous. And we need more data for confirmation, but I’m satisfied that a slowing is underway. The ISM manufacturing has held so far but is well below last year’s highs: But the regional indexes are also showing early signs of rolling over which I expect


Chinese consumer inflation accelerates

Find below a useful note on yesterday’s from ANZ on yesterday’s Chinese inflation numbers for March which saw the CPI rise 0.2% to 3.6% largely on accelerating food prices. The PPI deflated for the month, down 0.3% to minus 0.3% suggesting ongoing weakness in the China’s industrial economy. ANZ now sees no new monetary easing


QE gone

Following is a must watch video interview with the Fed’s Jeffrey Lacker from Bloomberg on why QE is gone. I don’t buy it. Do we really expect the Fed to give up low mortgage rates and a low dollar without a fight? Nonetheless, markets are taking the opportunity to pull back from risk.  Enjoy:


The trade deficit is here to stay

Market pundits were again surprised by yesterday’s trade deficit. Notes from a number of banks expressed surprise and Peter Martin captures the mood this morning: Unexpectedly bad trade figures for February show income from resource exports down for the second consecutive month. Over the quarter, income from coal exports fell 19 per cent, and income from metal


April 5 links: Risk off

For Markets try our new morning column Macro Morning. Global macro:  Time to derisk. Humble student United States: No QE3. Bloomberg No more Twist either. Zero Hedge Policy hold. Tim Duy, Gavyn Davies ISM services slows. Calculated Risk House price decline slows. Calculated Risk ADP hits 200k. Zero Hedge The return of the US manufacturer.


Labour market heat map burns red

CBA has produced a useful new note that depicts the strength and weakness in labour market segments using heat maps. You’ll notice from the above image that the result is a wall of red. It’s a short note and worth a read. Labour Market Heat Maps Regional Industry Jobs Growth 04 Apr 2012 1457 1


Mckell’s new housing report

Another week, another housing report. This time it’s from a new Sydney based think tank, the McKell Institute. This one has many suggestions for freeing up supply including slaughtering some sacred cows like phasing out negative gearing and capital gains concessions. I haven’t looked at in depth but it’s yours to enjoy! McKell_HomesForAll_A4


FMG’s soft power

Or is that Chinese soft power at work  in Perth? I just ran across the following transcript of yesterday’s Andrew Forrest address to the BOAO Forum, China’s answer to Davos. I was mostly struck by just how large a political, economic and cultural gulf the speech seeks to cross. ANDREW FORREST BOAO FORUM THE NOBLEST


Milky wilkies turns sour

Find below the FOMC March minutes. I’ve highlighted the bit that freaked markets out: a 2% inflation threshold for QE3. That won’t be easy with oil where it is. Developments in Financial Markets and the Federal Reserve’s Balance Sheet The Manager of the System Open Market Account (SOMA) reported on developments in domestic and foreign


The AFR calls for a recession

Damn, who wouldn’t run a newspaper? Aside from the small problem that you lose money hand over fist, it entitles you pontificate every which way with no consequences. Yesterday I noted that the AFR had backflipped its editorial direction on the need for a Budget surplus. Today it’s official: Standard & Poor’s and Fitch Ratings


April 4 links: Lovin’ the surplus

Markets: Up:   Treasuries, USD Flat: ore, gold, CRB, euro Down:  Stocks, energies, Aussie 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


Global steel rebound?

Find below a bullish report on global steel output from ANZ. The ANZ team is a bit reflexively bullish for my tastes and there some rather large questions still hang over Chinese output but there are some useful charts in this note. Happy reading. Anz Hifi Steel Mar12


Roy Morgan unemployment eases further

Roy Morgan unemployment is out today and shows another steady decline from its recent cyclical peak: Unemployment was 9.3% (down 0.4% since February 2012) — an estimated 1,120,000 Australians were unemployed and looking for work. A further 7.9% (unchanged) of the workforce were working part-time looking for more work (underemployed) — 959,000 Australians. In total


S&P demands a surplus

For some time I have laboured in the wilderness on the question of bank funding and the national Budget. Indeed I took the AFR to the woodshed last week for its hopelessly political assessment of Budget imperatives. Well, they seem to have listened. From S&P and Fitch via the AFR this morning comes the hard, cold truth about


World manufacturing eats braaaaains

The PMIs are out and here’s the wrap. Let’s begin with the good news. The US’s nice run continues, not lighting up the night, but decent nonetheless, up 1% to 53.4. A chart from Calculated Risk: And from the ISM itself: You can see the internals were marginally less encouraging with new orders down 0.4%


I’d cut today

Yesterday the Pascometer redlined on hawkish monetary policy, suggesting a cut today. Whether that’s true or not, it’s pretty clear we’re headed for more. For the case against today’s meeting, the international environment has improved since last month. The European recession is advancing but not so quickly that it represents an existentential threat to Australia. Like Delusional


NAB online retail index rises

For those that don’t know, NAB recently launched an online retail sales index. Today it registered strong growth in February: For the 12 months ending February 2012, Australia’s total online spending was around $10.9 billion. This level is around 5.0% the size of traditional bricks & mortar retail spending (excluding cafés, restaurants and takeaway food) for the


Pascometer redlines on MacroBusiness

Regular readers will know that occasionally we track Michael Pascoe as a contrarian indicator. That is, when the Pascometer redlines on a subject, it is well worth considering going long the opposite. But what do you do when the Pascometer redlines on you? That’s the harrowing question confronting MB today after the Pascometer popped the


TD March inflation bounces

From TD Securities and the Melbourne Institute: The TD Securities – Melbourne Institute Monthly Inflation Gauge rose by 0.5 per cent in March, following a 0.1 per cent increase in February and a 0.2 per cent increase in January. In the twelve months to March, the Inflation Gauge increased by 1.8 per cent, the lowest


The case for slowing the mining boom

Find below a very readable and, in my view, very important piece of research launched today by The Australia Institute called “Too much of good thing”. The piece argues that Australia should use a mine auction permit system to slow the mining boom. It suggest such a system would: better capture the economic rents for


Can the US consumer keep spending?

Regular readers will know that my take on the US economy in the new normal is pretty straight forward. It is that without high debt and asset price growth, the US consumer must rely on income growth or reduced savings to grow his/her personal outlays. With consumption roughly 70% of the economy, that means slower


The vacuous surplus debate

There are some strange old arguments floating around at the AFR this morning. Apparently “business”, represented largely by several non-business folk, is attacking “government” for its surplus obsession. Let’s take a look. Economists and business leaders have criticised the federal government’s plan to deliver a budget surplus, saying it was based on politics rather than


US manufacturing has slowed

Regular readers will know that I follow the regional Fed manufacturing surveys in the US for two reasons. The first is that after the GFC, which prompted the need for the US to rebalance to external demand, the PMIs are a key guide to whether any expansion is sustainable. Second, I predicted a run of


The magic pudding wants his money back

From the AFR this morning comes the awakening of Wayne Swan and his Treasury: Treasurer Wayne Swan says the federal government will need to cut and cancel whole spending programs to return the budget to surplus next financial year, as it fights a structural decline in the tax base that will keep revenue at depressed levels for


The miracle commodity saves!

You are perhaps bemused that I follow the iron ore price with such regularity but to me it is bizarre that its price movements are not front page news every day. To be frank, you could scrap the business pages of every paper and simply print the iron ore price and you’d get a better