Houses and Holes


No rate rise here

Following is the summary of today’s ABS employment report for January: Employment increased 24,000 to 11,441,500. Full-time employment decreased 8,000 to 8,022,400 and part-time employment increased 32,000 to 3,419,100. Unemployment increased 8,900 (1.5%) to 606,500. The number of persons looking for full-time work increased 900 to 426,800 and the number of persons looking for part-time work


Sir Ralph declares war

According to the SMH this morning, CBA chief: Ralph Norris has re-opened the debate over a resource sector super profits tax by calling for a Norwegian-style sovereign wealth fund to ensure Australia does not squander the windfall from the mining boom. The comments by the Commonwealth Bank of Australia boss add to calls by a


Links February 10: Monetary musings

Why China should worry about Egypt. Barry Eichengreen China to tighten, big time. FT Yeh, right. PragCap Speculation behind food prices. Clouded outlook Commodity bubble. Surly Trader Commodities to squeeze US economy. Barrons I come to praise Bernanke. Calculated Risk Bond market paranoiacs. Alphaville Some Asian currencies rising. WSJ Britain’s austerity. Martin Wolf CBA wants SWF. SMH


Pettis on Chinese liquidity

From Michael Pettis’ exclusive newsletter: Because of the lunar New Year festivities not a whole lot happened in China last week, not counting of course the never-ending stream of fireworks and the several really great jiao zi dinners I have managed to snag from my students and their families.  I have nonetheless been getting a lot


Will Ben print again?

With June and the end of Federal Reserve bond purchases fast approaching, the question that must surely be growing in the minds of global traders, policy-makers concerned about food inflation or anyone that gives a hoot about Australia’s non-resource exports is ‘will Ben do it again?’ By that, this blogger means Ben Bernanke and the


Links February 9: China hot

Chinese inflation and rates up. Bloomberg Who cares. FT US bond market pressure. Barrons Housing affordability groups meet. The Age Full China bull. Robin Bromby Contagion on: Portugal, Spain, Italy, Greece Ore price steady. Reuters BDI stabilises. Dry Ships


The “cautious consumer” meme

Is the media deliberately obtuse? Following Myer’s complete wipeout, there’s a universal chorus of “cautious consumers” being the problem. It’s the weather, it’s the banks, it’s rate rises, it’s your grandmother’s cat. The problem with this “cautious consumers” line is that it implies a choice. The Australian shopper has apparently elected not to buy. Well,


Links February 8: Pinning the ears back

Bizarro European summit. Eurointelligence, Wolfgang Munchau Market’s verdict: Contagion on. Portugal, Spain, Italy, Belgium, Ireland, Greece, Krugman wrong again. NYT Bangladesh the next food domino. Zero Hedge Wall St bouncing back. Simon Johnson US economy accelerating. Tim Duy O’Farrell backs burbs. SMH China’s Lewisian turning point. John Garnaut Cautious consumers yada, yada, yada. The Age IWT


Fruits of disleveraging

So then, after today’s howler by Myer, reality has partially  dawned on the market and the media: Retail is toast. The above chart shows today’s bloodbath for the stock. The only wonder is why it rose in the previous month. There are a number of explanations in the media for the result, most repeating the


Fashion victim

Sure enough, markets woke up late Friday to the truth about the RBA’s Statement on Monetary Policy. That is, it was far more dovish than the chatterazzi made out. By the close, the dollar was some half a cent lower on the day and well below the level it was when the statement was released.


Ban the bonus!

It’s bonus time for bankers around the world and the GFC is a distant memory. In the US, the Wall St bonus pool is at a record high. In the UK, Barclays Bob Diamond of Barclays is in hot water. And here, if the Sunday Telegraph (h/t threedogsandakid) is to be believed, then MacBank is


Links February 7: Profits and bonuses

Currency manipulation. Michael Pettis Versus capital controls. WSJ China: bulls vs bears. WSJ Week ahead for the DOW. Calculated Risk Peripheral Europe needs more. VOX Not a done deal.  WSJ Egyptian parties meet. NYT Bonus time! Rotten Apple, FT, Sunday Telegraph Poor fan. Stuart Washington Love the levy. Gittins! Miners’ mind-numbing profits. Adele Ferguson More


Weekend Reading: QEIII

US unemployment report solid. Calculated Risk Long Treasuries screaming. Zero Hedge Bernanke denies role in food spike. FT Reluctant to move. Gavyn Davies Merkel’s mission. Bloomberg Clawbacks are coming. FT Big banks and fiscal ruin. Baseline Scenario Game on for Portugal. Bloomberg SWF now. Michael West TBTF. Malcolm Maiden Fairfax addresses it’s rising shareholder. Adele Ferguson Expanding


Hawkish blather

There’s quite a lot of blather in the media about the RBA’s outlook on interest rates following the quarterly statement on monetary policy. Most of it predicting more rate rises sooner rather than later – here, here and here – and everyone interpreting the RBA’s statement that it will “look through” the flood effects as proof that it’s


Paul Krugman is wrong (updated)

A few days ago, Nobel Laureate Paul Krugman declared again that there is no ‘financialisation’ element to the current commodity price surge. He began: I’ve been getting a fair bit of correspondence insisting that political unrest, in the Arab world and elsewhere, is being caused by … Ben Bernanke. You see, quantitative easing is responsible for


Links February 4: Inflate/deflate

US ISM strongish. Bloomberg Versus US employers still unsure of recovery. FT Rice now flying. Zero Hedge Liberalise food. Javier Blas UN indicators have food prices at record. Zero Hedge IMF warns Asia overheating. WSJ European consumers close wallets. Econompic Irish bank run. Ambrose Evans-Pritchard Ireland by Michael Lewis. Vanity Fair Contagion returns. Portugal China anomalies. Zero


Links February 3: Inflation rages

Egypt riots. BBC Yemen President offers resignation. Hindustan Times Pakistan next? Marc Faber Worse to come for food. FT Wen commits to tackling inflation. Reuters Iceland’s successful bankruptcy. Bloomberg Neoclassical to behavioural economics. Credit Writedowns (h/t Naked Cap) US refinance now reverse ATM. Calculated Risk Australia more risky (and expensive). The Age Yasi to boost commodity


Yuan gush

From Michael Pettis’s exclusive newsletter comes this update on Chinese lending and interest rates: It seems that already bankers might be anticipating the relaxation of lending targets.  Rumors on the ground suggest that new lending in January may come in as high as RMB 1.2 trillion.  This might seem pretty strong evidence that the PBoC


Links February 2: Eye of the storm

Egypt’s million man march. FT, Bloomberg Jordan sacks government. FT Will unrest spread to Saudi Arabia? Ambrose Evans-Pritchard What does revolution cost in Oz? $22m. The Age ISM power. Calculated Risk Commodity laggards breaking out. Barron’s Stock picking is dead. Zero Hedge China housing bubble hits terminal velocity. Bloomberg Chanos on short China. FT Higher rates coming in


Holy cash cow, Batman!

Oh yes, ladies and gentleman, fresh from the RBA, that’s another monthly moonshot in Australia’s terms of trade for January. That means: Over the past year, the index has risen by 49 per cent in SDR terms. Much of this rise has been due to increases in iron ore, coking coal and thermal coal export


Get yourself a hard hat

Some boom. According to Bloomberg: Australian manufacturing contracted in January for a fifth straight month as measures of inventories, wages and supplier deliveries declined, a private survey showed. The manufacturing index was 46.7, compared with 46.3 in December, the Australian Industry Group and PricewaterhouseCoopers said in a survey released in Canberra today. A number below 50


The great disleveraging

The RBA’s credit aggregates for December were out yesterday and as always make interesting reading. Owner-occupier mortgage debt expanded at an annualised rate  of 7.3% seasonally adjusted. Investor mortgages grew at 4.8%. Personal debt shrank at 4.2% annualised and business at 4.1%. All four of these figures are showing slow declines or low growth plateaus.


Links February 1: Risk awwwwwn

Egypt rebels rally to El Baradei. WSJ, NYT Brent hits $100. Barchart US PMI details. Zero Hedge Loneliest man at Davos. Bloomberg China’s housing poor. Telegraph US dependent upon global rebalancing. Tim Duy Reform monetary policy. Henry Thornton Coking coal moonshot continues. Coal Portal Maybe this is why. BOM No financialisation of commodities. Krugman (is he nuts?)


The China domino

The stated goal of the Hu Jintao-led Chinese government is a “harmonious society”. Perhaps that is why the word “Egypt” was blocked on certain search engines over the weekend. Multiple factors are in play in Egypt, but there is one vital similarity with China: Food inflation of a breadth and severity that few in the


Links January 31: Fog of war

Egypt approaches endgame. FT Army withdrawing to create chaos? The Arabist Suez not the problem. Contagion is. James Hamilton All things oil – up. Barchart Harmony. China blocks “Egypt”. Reuters China bubble risk. Telegraph Happy Davos. Simon Johnson No commodity speculation. (Nah, none at all) Greed, green and grains Cyclones in Qld. SMH Qld dogs should marry.


Neocon’s revenge II

History, it seems, is not without a sense of irony. You may recall that September 11, 2001 marked the rise in the US of a new breed of foreign policy hawk: The Neoconservatives. The stated goal of the ‘Neocons’ was a “Project for a New American Century”. Their principles were laid out in 1997 in


Weekend Reading: Neocon’s revenge

Egypt turmoil. Bloomberg, Stratfor, FT Follow the struggle. The Arabist The importance of Suez. Zero Hedge Yemen mass protests. The Telegraph Syria mans the barricades. Zero Hedge Jordan marches. FT Fed primed for more. Tim Duy So’s Timmy Geithner. BusinessWeek US GDP. Calculated Risk, Econompic Dubai’s world succumbs to Ozimandius. Telegraph (h/t Naked Capitalism) The China



This blogger has looked on in astonishment as the iron ore price has moonshot through a sequence of cup and handle formations to an all time high. There are a variety of reasons behind the rise, not the least being the blow-off in Chinese growth. However, a number of variables are now in play that


Links January 28: The levy breaks

China land games. Market Watch Japan downgraded. Zero Hedge, The Source China will raise further. Bloomberg Now it’s uranium. Refomed Broker Caterpillar’s 2011 forecast. WSJ Food stockpiling. FT Levy politics. Peter Hartcher Interests slam levy. The Oz Two-speed pay. SMH Loving the China bubble. The Age Coal to rocket. The Oz


Bank wedge

A couple of recent developments are worth assessing with regard to the outlook for banks and their ability to manage interest rate margins. Some weeks ago this blogger wrote in reference to the floods and the RBA: …  the world is quickly swinging from a GFC-deflation toward a recovery led by commodity price inflation … Australia’s