David Llewellyn-Smith

17

Debelle embraces the unknown

It was obvious in the recent SoMP that the 2012 RBA is more circumspect than the 2011 version. And we have more evidence of a useful acceptance of doubt (or should I say “risk”) in today’s speech by the Assistant Governor Guy Debelle on the local effects of recent shifts in European capital markets. Debelle

44

A key driver of a US recovery

It’s not all that often that I read a piece of research from the banks that impresses me. One exception is Westpac’s Huw MacKay and his periodical, Phat Dragon. More broadly, as I’ve said before, Westpac’s institutional research is the best, with the bold Bill Evans leading the pack on interest rates. But I’m tempted

12

February 14 links: Productivity pow wow

Markets: Flat:  Treasuries Up: grains, energies, Aussie, Euro, CRB Down: ore, metals, gold, USD 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

10

Reserve Bank of NAB hikes

And here is the last of the majors: National Australia Bank (NAB) today confirmed that its standard variable home loan interest rate would increase by 0.09% to 7.31% pa – the lowest of the major banks. NAB’s standard variable home loan rate of 7.31% pa is effective from Monday 20 February and means NAB customers

18

Reserve Bank of CBA hikes

The Reserve Bank of the CBA has joined the fray, hiking 0.1%: The Commonwealth Bank today announced it will increase interest rates for its variable rate home loan accounts by 0.10 per cent per annum and for its six month Term Deposit account by 0.20 per cent.  The change in home loan interest rates reflect

40

Reserve Bank of BEN hikes

And there goes anothery! From the SMH: Regional lender Bendigo and Adelaide Bank has increased its standard variable mortgage rate 15 basis points to 7.45 per cent, becoming the latest lender to hike interest rates outside the Reserve Bank’s interest process. Westpac and the ANZ defied the Treasurer, Wayne Swan, and lifted variable rates 0.10

129

It’s a credit crunch, stupid

My God our media is backward. I mean it. It has no idea what is going on beyond a press release shoved in its face. It’s baffling. The weekend reaction to the banks’ Friday rate hikes was dominated by a schoolyard binary construction of the problem: the banks versus the government. Some took the side

20

February 13 links: Bank blather

   United States Youth unemployment highest since WWII. Time Income bugs the consumer. Reuters Yep Week ahead for the Dow. Calculated Risk Magazine cover indicator screams sell. Barrons Europe Germany will save everyone but Greece. Gavyn Davies Asia China tells banks to roll dodgy debt. FT Local The Campaign for National Ignorance ramps up. Nasty, neeeeargative

82

Reserve Bank of WBC hikes

As expected, Westpac’s Gail Kelly has taken guidance from the Governor of the Reserve bank of ANZ, Mike Smith, and raised rates on variable mortgages by 10bps: Westpac has followed ANZ’s lead in increasing its standard variable interest rates after the Reserve Bank’s decision on Tuesday to leave rates on hold. Earlier today, ANZ lifted

35

Reserve Bank of ANZ analysis

So, rather sensibly, ANZ has pulled the trigger. The 0.06% hike to loans that everyone has, not in the least offset by the .15% cut to the fixed rate loans that nobody has. Of course if borrowers jump in, rates are likely to immediately fall past that very rate! (h/t GB) Undoubtedly the major banks

54

Reserve Bank of ANZ hikes

  ANZ February 2012 Interest Rate Review ·         variable rates for mortgages and small business increase by 0.06%pa ·         three year fixed rate mortgage cut by 0.15% to 5.99%pa  ANZ today announced it will increase interest rates for variable rate mortgages and small business lending by 0.06%pa while reducing the three year fixed rate package mortgage by

6

RBA SoMP embraces uncertainty

Last year we have terrific time analysing the RBA’s quarterly Statement on Monetary Policy as its medium term framework for an ongoing mining boom seemed constantly out of date with an economic reality that juddered in the opposite direction. That has caught up with the RBA once more and they have again lowered their projected

85

The twin pillars of our discontent

As the absurdly overdue angst about the dollar and manufacturing jobs gathers intensity and the incredibly overblown angst about bank interest rates prepares to enter blowoff, one can only wonder about where everyone has been and why everybody treats these as separate issues. These two pillars of discontent are the base for our entire economy.

44

Greece has a deal, sort of

We are painfully edging towards a resolution on Greece, but as per usual we aren’t quite there yet. A quick re-cap of the previous 24 hours. Yesterday Greek party leaders ended a 7 hour meeting without resolution on the deal with the Troika (European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank

13

February 10 links: Dollar angst

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

11

Chinese inflation jumps

From Bloomy: China’s inflation unexpectedly rebounded in January as a weeklong holiday boosted spending and food-price gains accelerated. Consumer prices rose 4.5 percent from a year earlier, the National Bureau of Statistics said on its website today. That compares with the median 4 percent estimate in a Bloomberg News survey of 33 economists and 4.1 percent

20

Roubini & Chovanec on China

Nouriel Roubini sits down with Patrick Chovanec, associate professor at Tsinghua University’s School of Economics and Management in Beijing, China for a discussion on the likelihood of a hard landing in China and consider the short and medium term implications of policy adjustments, leadership transitions, and technology advancements.

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Three ugly options for manufacturing

The AFR editorial takes the high hand to the PM today over manufacturing subsidies: Asked if there was an obligation on the car industry to become efficient so that it would not need subsidies in the future, Prime Minister Julia Gillard declared yesterday that the media completely misunderstood what the government was doing. But at

7

February 9 links: Past the peak

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

112

Geelong gets “adjusted”

From the SMH: About 600 workers at Alcoa’s aluminium smelter in Geelong face an uncertain future after the company announced this morning it was reviewing the plant’s viability, blaming metal prices, rising costs and the soaring dollar. In a statement posted on the company’s website, Alcoa Australia managing director Alan Cransberg stressed the review had

32

Righto ANZ, time to man-up

So, the RBA has kicked the banks from under its skirts. There’ll be no easy ‘clipping the ticket’ as the rate cut sidles casually by. If the banks are as good as their word then they need to raise interest rates to offset rising funding costs. All four CEOs, and Chairmen as well, have told

23

February 8 links: Rates lunacy

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

163

Hawks 1, economy 0

So, the hawks, whomever they may be, have won the day at the RBA. Let’s try the statement for sense: Statement by Glenn Stevens, Governor: Monetary Policy Decision At its meeting today, the Board decided to leave the cash rate unchanged at 4.25 per cent. Information becoming available since the December meeting confirms that economic

7

Construction under the pump, apparently

The AIG PCI is out this morning and shows more weakness head for dwelling construction: The national construction industry declined again in January amid further falls in activity and new orders. ■ The Australian Industry Group Performance of Construction Index (Australian PCI®) in conjunction with the Housing Industry Association decreased by 1.2 points to 39.8 in January. This

63

Politico-housing complex reaps the whirlwind

I wonder if it’s entered the collective heads of those involved in the current furor over banks and interest rates – bankers, government, media – that the present debacle is the direct result of the failure to appropriately redefine the Australian financial system in the post-GFC world? Probably not. What do I mean? Well, today’s

6

February 7 links: Bank furor

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

20

ANZ job ads blow up rate cut!

So, who’s be an economic prognosticator, eh? You go all in on an outcome in the morning and by lunch time you’re an idiot when the new data rolls out. ANZ job ads has printed a juicy bounce at 6% MOM. But more seriously, one doesn’t change one’s call based upon a single indicator. As

13

Chrissy retail joins the new normal

Just out from the ABS, retail falls 0.1% in December: DECEMBER KEY POINTS CURRENT PRICES The trend estimate rose 0.2% in December 2011. This follows a rise of 0.2% in November 2011 and a rise of 0.2% in October 2011. The seasonally adjusted estimate fell 0.1% in December 2011. This follows a rise of 0.1%

0

China links

Courtesy of Sinocism: Nobel peace prize jury under investigation – Yahoo! News – If the Stockholm County Administrative Board, which supervises foundations in Sweden’s capital, finds that prize founder Alfred Nobel’s will is not being honored, it has the authority to suspend award decisions going back three years — though that would be unlikely and unprecedented,

49

Swan vs the banks

The Cupboard today has an interesting discussion on the increasingly high-pitched debate between Treasurer Swan and the big banks: Mr Swan said the banks had a much higher return on equity than most of their global peers and accused them of trying “to maintain forever huge profitability”. National Australia Bank chairman Michael Chaney hit back,