Houses and Holes

3

Retail sales fall in April

April retail sales are in and fell 0.2% month on month, well below consensus of a 0.2% rise. March was revised up 0.2% to 1.1%. The internals were uniformly weak with only food and eating out eking out growth: So, more evidence of an April freeze in the household sector, with some hope apparent in

10

Mixed signals from the bulks

the news that China is not building apartments on the moon did not prevent a solid rally in iron ore spot and 12 month futures overnight. Both up almost 2% (white and yellow lines): However, as you can see, nobody actually in the Chinese steel markets seems to have gotten the AFR memo about imminent

10

Fitch: Bank funding improving

From Banking Day today: The composition of major Australian banks’ funding is improving, but only slowly, Fitch Ratings said yesterday. Fitch downgraded three of the big banks in February, citing their dependence on offshore wholesale funding markets as the main reason for the move. Commonwealth Bank, National Australia Bank and Westpac were cut from AA

47

China to build apartments on moon!

By David Llewellyn-Smith From me this morning: China yesterday unveiled a $400 trillion yuan ($60 trillion) stimulus package that aims to put empty apartments on the moon. Dubbed a “maxi-me” of the stimulus package unveiled in 2008 to combat the initial hit from the global financial crisis, the program includes dead end infrastructure and ghost

5

Roy Morgan consumer confidence steady

From Roy Morgan today: Consumer Confidence is at 108.3pts (up 0.1pts in a week) according to the Roy Morgan Consumer Confidence Rating conducted last weekend (May 26/27, 2012). Consumer Confidence is now 4.4pts lower than a year ago May 28/29, 2011 (112.7). Australians have gained a little confidence over the past week about their personal

21

Chinese whispers of stimulus

Bloomberg is reporting that regional markets (and the ASX) are up on speculation about Chinese stimulus: China’s stocks rose for a second day, driving the benchmark index to a two-week high, on speculation the government will take more steps to halt a decline in economic growth. …“There are expectations China will introduce more stimulus to boost

0

China links

Courtesy of Sinocism. Yesterday’s note opened with the claim from a Weibo user that big news was coming. It came, sort of, though it was not about the Wang Lijun or Bo Xilai cases. Xinhua first announced that CPC Central Committee Politburo met and urged the country to “deepen the reform of its technological system and accelerate the building

15

New home sales rise from canvas

HIA-JELDWEN new home sales for April are out today and show a small bounce from March’s crater low. The internals are not at terribly encouraging, surging in Victoria on disappearing stimulus and where more dwellings are least needed: The HIA – JELD-WEN New Home Sales report, based on a survey of Australia’s 100 largest builders, showed

52

After the Party

Find below an excellent new report by the Labor aligned think tank, Per Capita (h/t Mav). This is the clearest description I’ve yet read of the effects upon the national Budget of the mining boom and how we pissed much of it up against a wall. Thouroughly recommended reading and not notably partisan. After the

18

A post-Budget bounce for Gillard?

Courtesy of Mark the Graph. Today’s Australian has the latest Newspoll results. Perhaps we are seeing a post budget bounce.We will start with the primary vote. The two-party preferred prediction. Are you satisfied or dissatisfied with the way Julia Gillard is doing her job as Prime Minister? Are you satisfied or dissatisfied with the way Tony

49

We are ill prepared for a shock

I have intermittently tracked the economic narrative emanating from our economic leadership in Canberra and Martin Place. Looking for sense in the transition we face from yesteryear’s credit driven model of economic growth to today’s commodities investment driven growth. At times leaders have made some sense, even if they refused to acknowledge what we were

24

Current account deficits forever!

Westpac has produced an interesting take on the strength and sustainability of the Australian current account deficit. I’ll make no bones about being a deficit hawk and, as such, find this note a little stale! Indeed, the arguments contained herein seem a bit fair weather to me. They are as follows: In gross terms, Australia

17

NAB online retail index slows

NAB’s April online retail index for April is out and shows slowing growth: According to the Index, the value of online sales in Australia for the year to April 2012 was $11.1 billion. However, our research shows a clear slowdown in growth over the past year, with year-on-year growth rates declining to 15.5% in April. The Household goods

0

Take Chinese bulk defaults in your stride

The ANZ commodity team has a note out this morning suggesting that recent defaults by the Chinese in the bulk commodity space is nothing to be worried about. The note contains some interesting detail and is worth a quick read. However, the note also argues that the recent weakness is not some harbinger of doom

121

A profoundly mismanaged boom

David Uren has an important report today on the forthcoming bust of the commodities investment boom: Following his post-budget address to business economists, Treasury secretary Martin Parkinson was asked whether the slowing rate of new resource projects getting a go-ahead cast doubt on the strength of the investment outlook. He replied that Treasury applied very

39

How dry is the RBA’s powder?

Following yesterday’s poor job vacancies data, the risk that Australia is sliding towards recession has increased. So, as a thought experiment, I have revisited our last period of falling growth, the GFC, and see what kind of powder the RBA has kept dry. The following chart is the result, tracking the change in the cash

16

Skilled vacancies tank in April

So, more data confirmation of the April freeze. DEEWR Skilled Vacancies is out for that month and is down 7% in seasonally adjusted terms (trend down 0.8%): The internals aren’t pretty either with wall to wall declines in sectors and states: I am officially worried. Vacancy Report May 2012

0

Leading index still subdued

The Westpac/Melbourne Institute Leading Index is out and is forecasting ongoing lacklustre growth at 2.2% in March 2012, below its long term trend of 2.9%. The annualised growth rate of the Coincident Index, which gives a pulse of current activity, was 3.1%, around its long term trend of 3.0%. More below. er20120523BullLeadingIndex

4

Myer confirms deteriorating trade conditions

Attached is Myer’s profit downgrade release. The Myer downgrade is becoming a staple bi-annual event buy today was a little more worrying that usual. On current trading conditions, Bernie Brookes said: …the result was solid considering the very difficult trading environment in April, which has continued in the first few weeks of the fourth quarter.

7

OECD joins the optimists

Below find the OECD’s assessment of the Australian economy over the two years. It’s an exciting piece of fiction best enjoyed on a short plane flight. Australia can be expected to keep reaping the benefits from the minig boom. Despite sharp sectoral disparities, economic growth should be around potential in 2012 and 2013. Mining expansion

52

Paul Howes’ vision

Find below the AWU’s Paul Howes’ Press Club address of yesterday. The speech has been largely ignored by the vested interests driven business media which is a shame because it’s pretty good. Sure, there’s some contradiction in it. And a lot I don’t agree with, such as his assessment of bank re-regulation being an excuse

8

Europe crunches consumer confidence

There has been some debate about the influence of external events upon Australian consumer confidence. To my knowledge, nobody as actually tried to measure the effects discretely, but this week’s Roy Morgan Consumer Confidence reading weighs in heavily on the side of deep impact. The number fell 7.5 points to the lows of mid last