David Llewellyn-Smith

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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

8

Markets pricing June rate cut

As suggested last week, with the bulk commodities sliding it was only a matter of time…Cross-posted from Mark the Graph. Markets appear to be moving early to price in a June rate cut. The swaps indicator (which gives a lot of false positives) is well into rate cut territory. But the more cautious 30-day bank bills

34

Chinese defaulting on bulk contracts

The World Steel Association last night released April crude steel production statistics and news is mixed: World crude steel production for the 62 countries reporting to the World Steel Association (worldsteel) was 128 million tonnes (Mt) in April 2012, an increase of 1.2% compared to April 2011. China’s crude steel production for April 2012 was

3

European default and Australian banks

The AFR has a no worries, be happy piece this morning about bank funding in the current environment. It begins: Commonwealth Bank of Australia group treasurer Lyn Cobley has shrugged off renewed concerns over Greece’s sovereign debt problems, saying European funding markets remained open for high quality Australian banks, albeit at a higher price. Ms Cobley

14

Are markets closed to the banks?

There are  couple of stories around this morning that suggest the ANZ PR department went into overdrive after last Friday’s statements by Mike Smith that wholesale markets are closed again to the banks. David Uren of The Australian and Banking Day both defend the comments as referring only to European funding markets. The US and

93

Western Australian secession hits the agenda

From The Australian this morning: WEST Australian Premier Colin Barnett has warned his state will “fully integrate” with Asia if the federal government doesn’t ensure WA gets its fair share of the GST pie. Speaking on Sky News’s Australian Agenda program yesterday, Mr Barnett said his state was becoming “much more independent financially” and the

14

Is iron ore swimming naked?

It’s not until the tide goes out that you know who’s been swimming naked, said Warren Buffet famously. Today a video by Reuters of ANZ Bank’s Nicholas Zhu sneaking into Qingdao port to examine enormous stockpiles of iron ore raises the discomforting notion that some large component of Australia’s export boom is shriveling in the

9

The Coalition embraces Invisopower!

The Australian this morning reports on a back down by Joe Hockey on his plans for a Wallis Inquiry should the Coalition win government: REFORMS to banking competition could be pushed back to the second term of a Coalition government under plans to give the industry a respite from change in the wake of the

39

It’s over you idiots!

Time to buy with both hands! The Pascometer has written off the mining boom thereby ensuring its shift to an altogether unimagined high. But seriously, now that BHP has outflanked yesterday’s rousing chorus of “sell ’em dirt” insiders by itself declaring the commodity super cycle dead, it’s going to be immensely entertaining to watch the

57

Notes on a Greek exit

This afternoon Mike Smith confirmed what MB readers already know. From the SMH: ANZ said that current volatile conditions in global markets have seen wholesale funding market for Australian banks freeze again. “Right now, markets are closed again, and this is what happens in this sort of situation,” ANZ Chief Executive Mike Smith said after

6

China’s April property prices

China’s April property prices were just released and increasingly widespread falls are apparent in the year on year figures: ============================================================================ April March Feb. Jan. Dec. Nov. Oct. 2012 2012 2012 2012 2011 2011 2011 ============================================================================ —- Number of Cities on Yearly Change in Price —– New Residential Apartments Increase 23 28 37 53 62 66

22

Leith van Onselen on ABC ‘s “The Business”

Three weeks ago, MacroBusiness’ own Unconventional Economist, Leith van Onselen, gave an interview to the ABC’s Neil Woolridge for a segment on The Business, the ABC’s flagship business news television program that screens from Monday to Thursday on ABC 24 (8.30pm) and ABC 1 (11.oopm). The segment (above) screened last night and discussed the outlook

4

Pincer update

Some good news and bad news today on Australia’s paired macro vulnerabilities. The good news first. On the houses side of the economy, bank CDS prices have fallen a little: I’m as certain as anything in this world that this is only a breather before we go higher. Meanwhile, on the holes side of the

255

My kingdom for a liberal

The Australian and the pseudo-Australian (sorry, AFR) are engaged in an epic round of Labor-bashing, more virulent even than usual. The cause is Labor’s new rhetorical and policy direction of defending its heartland – the battlers. Both papers have dubbed this a vestigial “class warfare” and condemned it. Matthew Franklyn is typical: Wayne Swan is openly defying

19

China real estate unravels

Those that read my morning post will perhaps have clicked through to Patrick Chovanec’s blog to read his post on the unravelling Chinese property market. If you are not one of them, find it below, reproduced with the kindly permission of the good Professor! As a prelude to a broader analysis of China’s GDP, and the accuracy