David Llewellyn-Smith

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Mad Monkenomics

For the past week or so we’ve all been subjected to a thrashing at the hands of Wayne Swan for being pessimistic about the economy. This appears to be the government’s new economic narrative to help us understand the bizarro world in which we find ourselves – in the midst of an epic mining investment

25

February 2 links: Bears capitulate

Markets: Up: ore,  grains, gold, Aussie, euro, metals, CRB, Treasuries Down: $US, energy 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 Year Germany

2

North Asian PMIs bounce

It’s been a big day for North Asian PMIs. South Korea, China, Taiwan and Japan on Monday all show pretty good bounces off recent lows. At this stage only Japan is expanding but all have turned the corner from the slide that was underway in the last quarter of last year. First China, where two

11

Hope springs eternal in NAB housing survey

NAB’s quarterly survey of housing insiders shows an improvement in sentiment. And here’s why: Moderating house price declines and stronger rental growth saw NAB’s Residential Property Index move just back into positive territory in the December quarter (+1 point) after two consecutive quarters of negative results. Although conditions improved in all states, there is considerable variation

64

New home sales slump again

Evidence continues to mount that Australians are not responding to interest rate cuts with a stampede into housing. HIA new home sale for December was just released and gave back most November’s gains: The HIA – JELD-WEN New Home Sales Report, based on a survey of Australia’s 100 largest builders, showed a decline of 4.9 per cent

5

Manufacturing has a good month

The January AIG PMI is out this morning and low and behold manufacturing expanded: Yay! And now for the bad news. The expansion seems to have been driven by an enormous outperformance by a single stomach-stuffing sector: The index is seasonally adjusted but the category seems to outperform every year as the Christmas binge leaves

36

February 1 links: Valeaxed

Markets: Up: $US, ore,  grains, gold, Aussie Down: euro, metals, CRB, Treasuries, energy 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 Year Germany

1

NAB Survey hints at job losses

The NAB Business Survey for December is out today and shows relative stability in the confidence and business conditions components: Business confidence strengthened a little in December, although it remained below the series long-run average. Business sentiment over recent months has been seemingly resilient to the weakness in Europe, which has contributed to a slowing in global

32

House prices resume falls

So then, R.P.Data December house price data is out and the melt continues down 0.2% seasonally adjusted for the month: The raw data was much worse, down 1.2% on the month: But there was an upwards revision for November to 0.4%. Below find the full tables, with everywhere falling except  Sydney (which has been supported

6

US economy stumbles

In mid November I wrote a piece called Can the US consumer carry us all. It was following the release of good October retail sales growth and argued the following: This demand appears to have caught producers off guard, or, they have been managing inventories rather well. The September wholesale inventory number last week was low and

18

January 31 links: Risk returns

Markets: Up: $US, ore Down: euro, Aussie, gold, metals, CRB, Treasuries, grains, energy 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 Year Germany

15

Fitch dumps big banks onto negative watch

In a move that will probably take the markets a little by surprise, Fitch has just announced it’s placing the big four on negative ratings watch owing to funding pressures and commodity exposure: Fitch Ratings-Sydney/New York/Singapore-30 January 2012: Fitch Ratings says that in conjunction with its broad review of the largest banking institutions in the

36

Bloody pessimists

Last week I asked a couple of times what kind of economic narrative Canberra is going to adopt given talk of a mining “boom” doesn’t make much sense when folks are losing their jobs. Perhaps we now have an answer from Swanny via News: Federal Treasurer Wayne Swan has conceded that employment growth may not

0

China holds rates

From Bloomy: China (CNGDPYOY) signaled caution toward more monetary loosening by holding off on a reduction in bank reserve requirementsthat some economists had predicted would come before a week-long holiday ending Jan. 28. Barclays Capital Asia Ltd., JPMorgan Chase & Co. and Industrial Bank Co. said this month that ratios were likely to fall ahead of the Lunar New

26

Comparing house price declines, again

On Friday at its blog, R.P.Data produced an interesting comparison of house prices across a number of Anglosphere markets. The first three years of US home prices coming down could be characterized as a reasonably steep downwards trajectory.  Using a compounding growth rate, between April 2006 and April 2009 the annual rate of decline averaged

1

Local bank funding decoupling

There are a couple of stories around this morning about the pressure on bank funding. Firstly from Banking Day: Margins in banking declined by around 10 basis points over the last six months, Mike Hirst, the chief executive of Bendigo and Adelaide Bank, said in an interview with Business Spectator. Hirst told the website that Bendigo’s

18

Interest rate nonsense

There’s a couple of articles about today from veteran commentators looking to make headlines rather than sense. The first is by Peter Martin who argues or quotes from someone who argues, that Israel is a terrific leading indicator for Australian interest rates: Could Israel hold the key to next week’s Australian decision on interest rates?

13

January 30 links: Earnings gloom

Global Iran blinks. Zero Hedge United States Boehner sees another payroll extension. Bloomberg Week ahead for Dow. Calculated Risk The war on savers. Credit Writdowns Nervous retail investors. Big Picture The weakest recovery. Bespoke Four facts behind the US GDP miss. Sober Look Europe: Calm is the time to bet on euro bust-up. Reuters Greece

10

Davos babblefest

Below find a selection of videos from Davos this week. Enjoy the crazy babblefest when you first click through. I wanted to leave it this way for the symbolism of it all. To view, wait for the ads to run then pause each video so you can concentrate on one at a time. Stephen Roach

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Weekend reading

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

18

ALP bounces on rate cut speculation

I’ve noted many times before the relationship between interest rate trends and the popularity of the incumbent government. It’s not rocket science. In a country flooded to the gunnels with mortgage debt, what would you expect? Roy Morgan is out today with more evidence that that is the case: RM do not usually include rate cuts

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The Australian condemns self (updated)

There’s a funny story at The Australian today. The above is a screen shot and here’s the text that we can see: AUSTRALIANS remain resistant to paying for online content and services and smartphone applications despite spending an extraordinary amount of time online outside of work and education, according to a global survey. KPMG’s latest

0

SME Christmas trade was OK

ANZ has released its Small Business Sales Trends report.  Highlights include: Small business sales increased by 3.3% y/y in December 2011 Year-to-date growth remains relatively flat at 1.9% Non-retail and services continue to outperform traditional retailers, with automotive(+8.2% y/y) and trades (+6.4% y/y) the best performers in December Among the retail-related small businesses, restaurants retain

6

IMF versus Swanny

I mentioned recently in my post on the IMF half yearly WEO that the IMF needed to catch up to reality in its forecasts for Australian growth and overnight they did so in a Briefing Note for the G20: The 2012 figure has been cut by 10% 0.3% to 3%. As the AFR points out: In

33

The winners and losers of QE3

On Wednesday evening our time, the January FOMC meeting delivered the following statement: Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global growth. While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated.

3

January 27 links: Fed wake

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

14

Australia Day links

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

5

Skilled vacancies fall again

  From the DEEWR Vacancy Report today, seasonally adjusted: Monthly Change Decreased by 3.0% to 84.1 (Jan 2006 = 100) Declined in all eight occupational groups Strongest falls recorded for Machinery Operators and Drivers (down by 4.7%), and Labourers (4.5%) Increased in the Northern Territory (up by 7.0%) and the Australian Capital Territory (1.2%) Annual

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Is there a fly in the rate cut ointment?

Following my headline post on the CPI, reader PeteFaulkner rightly pointed out that I made no reference to the September quarter revision to the trimmed mean. Here it is from the ABS: In the December quarter 2011, the All groups CPI, seasonally adjusted rose 0.2%, compared with the original All groups CPI recording no change.