Houses and Holes

32

Bull trap

So, we’ve seen a bounce in the American and Australian economies recently. In the US, September has proved better than August with a modest lift in the manufacturing indices, consumer confidence and stable service sector activity, even if personal consumption has stalled. Markets are betting on a decent employment number tomorrow night. In Australia, we’ve

22

October 6 links: Undollar joy

Plunge: $US Down: Treasuries, ore Up: CRB, Aussie, euro, grains, 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

30

Ken Henry revisits the RSPT debacle

Peter Martin reports this afternoon from the Tax Summit that: Former Treasury boss Ken Henry has conceded he mishandled the selling of the mining super-profits tax the former Rudd government proposed last year. Addressing day two of the tax summit in Canberra, Dr Henry said his review took for granted that Australians understood the difference

18

Iron bomb

Australia’s lifeline in China, John Garnaut reported this morning the worrying news that: The Chinese steel mills that have been holding up the Australian economy are under pressure, with steel prices falling and iron ore prices expected to follow. Robust steel demand in China led Australia to post a record $5.9 billion in iron ore

12

Just how tight are rates?

From the boys at 4cast comes this fascinating alternative take on how tight Australian monetary policy really is: The RBA took away its own self-erected roadblocks to policy flexibility today using CPI revisions to move away from the stale tightening bias to one of willingness to respond to (negative) risks. Timing remains an issue of

34

Bull versus bear is dead

As the S&P500 rocketed into the close this morning on yet another European bailout rumour, it occurred to me just how broken the equity market is right now. We are trapped in bear market dynamics of grinding sell-offs punctuated by explosive short-covering rallies with no end in sight. The obvious conclusion to draw is that we

19

China’s hard landing conundrum

A Chinese hard  is not an option, at least while there are other options. So, I have been asking myself for the past few months how to avoid a hard landing, or to delay it at the very least.  The most popular defence of the bullish camp (or the most popular argument against the bearish camp)

13

October 5 links: China worries

Rocket: $US  Flat: Treasuries, ore Crushed: CRB, Aussie, euro, grains, 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

19

Bill Evans looking good

Westpac’s Bill Evans cut from the pack back in July to forecast year end rate cuts. He was ridiculed at the time by many, including some especially infantile drivel from the bullhawks. Well, after today’s RBA meeting he’s looking awfully good. And today issued a note reaffirming his stance: Westpac Economic update As expected Reserve

19

Cut next month, if needed

Statement by Glenn Stevens, Governor: Monetary Policy Decision At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent. Conditions in global financial markets have continued to be very unsettled, with uncertainty increasing about both the prospects for resolution of the sovereign debt and banking problems in Europe, and the

12

Record exports

ABS trade figures are out today and there’s no doubt about it, August was a cracking month, posting a big jump to record export revenues above $28 billion for the first time and delivering a surplus of $3.1 billion, the second highest ever. The good news came from one primary source, iron ore: As you

29

NSW units approvals rocket

August building approvals are out and month on month approvals nationally jumped 11.4% from a depressed level. Private sector housing approvals remained very subdued, falling 1% m/m and 9.5% y/y. However units approvals rocketed 35%, propelled mostly by a huge jump in NSW. There were also smaller rises in VIC  and QLD but both remain in down

11

Global PMI’s point down

Overnight, global PMIs painted a gloomy picture of advancing economic weakness. First up, the J.P.Morgan Global PMI dropped into recession for the first time since June 2009, falling from 50.2 in August to 49.9 in September: The new orders index showed greater weakness with a 0.9 point fall: Ironically, the US was the stand out perfomer, with

16

October 4 links: Down, down, prices are down

Up: $US, Treasuries, gold Flat: grains, metals, ore Down: CRB, Aussie, euro 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

7

Inflation contained for now

Find below the release for today’s TD Securities-Melbourne Institute Monthly Inflation Gauge: The TD Securities – Melbourne Institute Monthly Inflation Gauge rose by 0.1 per cent in September, following a 0.1 per cent decrease in August and a 0.3 per cent rise in July. In the twelve months to September, the Inflation Gauge rose by

24

Manufacturing is getting murdered

Nice. The raging recession in Australian manufacturing is worsening. The PMI dropped to a new cycle low, having been in effective recession for over a year. The internals of the survey are very nasty. 10 out of 12 sectors are shrinking: Capacity utilisation is collapsing, suggesting more job losses are ahead: The rate of new

21

Shall we pull the fiscal or monetary lever?

For the first time in many months, nobody is talking about the RBA in a rates meeting week. Ironically, the silence accompanies a context which has made a shift in monetary polcy more likely than at many previous meetings this year. The global economy is unequivocally slowing, recession talk in Europe and the US is now

9

October 3 links: Tax to the max

US Personal Income Outlays decline in August. Economic Populist US BLS preview. Calculated Risk US data this week. Calculated Risk US fundamentals still OK. Modelled Behaviour Greece to miss deficit targets. Reuters So what does the Troika do with this? Slowing consumers. Gavyn Davies China’s bear market roaring. Bespoke Fears of Chinese hard landing grow. WSJ

6

State of the states

Find below Westpac’s “Coast to coast” document for September. It’s a useful note that splits much of the national data, state by state. Here’s Bill Evans overall prediction: On 15 July we downgraded our growth forecasts for the world economy and Australia. Recent developments, globally and domestically, have reinforced our expectations that activity will be

15

What kind of Western recession?

Regular readers will recall that I began forecasting a Western recession some months ago. That judgement is now becoming mainstream. Last night, Willem Buiter called an imminent European recession. From Alphaville: Even with a leveraged EFSF, additional fiscal tightening and tighter financial conditions are likely to be sizeable drags for Euro Area growth. Taking this into account,

18

Fitch downgrades New Zealand

Below find Fitch’s reasoning for this morning’s downgrade of New Zealand. Let’s not get too cocky with our Kiwi neighbours. So far as I can tell, if China were so slow for an extened period, you could pretty much substitute Australia for New Zealand in every single sentence. Fitch Ratings-Hong Kong-29 September 2011: Fitch Ratings

16

September 30 links: Decent data

Up: $US, Treasuries, grains Flat:  gold, metals, CRB, Aussie, euro Down: 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

17

September 29 links: We’re still waiting

Up: $US, Treasuries Hammered:  gold, metals, CRB, Aussie, euro, grains Flat: 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

22

Mortgage delinquencies by postcode

Moody’s has produced its annual report into Australian mortgage arrears. Below is their findings. Below that find the reports themselves, including a list of the 300 most delinquent post codes. For a bit of fun you can surf around and compare the newspaper reports that have reproduced the press release with…ahem…very little alteration. These are

8

New home sales remain weak

New Home Sales for August are out and remained very subdued: The latest HIA – JELD-WEN New Home Sales Report, a survey of Australia’s major residential builders, showed that the number of new homes sold in August 2011 edged up by 1.1 per cent in August following declines of 8 per cent in July and 8.7

6

NAB housing survey dour

Since April 2010, NAB has been conducting the Quarterly Australian Property Survey: …with the aim of developing Australia’s pre-eminent survey of market conditions in the Commercial and Residential Property market. The large external panel of respondents comprised of Real Estate Agents/Managers, Property Developers, Owners/Investors, Asset/Fund Managers and Valuers. Here is the split of the surveyed:

47

Gittins! endorses catatonic ignorance

In a video that defines the ethos of a generation, Ross Gittins this morning comes clean with his frustration that you are interested in what happens overseas and in the future. As an alternative he endorses blind optimism (or should we call it catatonic ignorance) as the way forward for you and your family. Please watch