David Llewellyn-Smith


Down, down, prices are down!

I was accused this morning of gloating over the accident that’s transpiring in Australia’s bulk commodities. Happily a bevy of readers came to my defence. But there is someone that is gloating over the accident and that’s FTAlphaville, which posted the following on the falling iron ore price today: We can laugh at ourselves can’t we?


Kevin Rudd joins the China bulls

Find below the text of speech given by Kevin Rudd today. More of the same China commodity intensity forever guff, though at least Garnaut’s China caution gets a mention. What seems to have passed our entire elite by is the possibility that China will be fine and will continue to grow happily but we won’t


Coking coal hits new low

From the ANZ today: Newcastle Sep coal futures lost 0.4% to USD89.9/t, while iron ore again fell heavily, losing 4.7% to USD90.3/t. Chinese steel prices continue to weigh on iron ore. Hot-rolled coil is nearing a month long losing streak, while the most active rebar contract on the SFE hit an all time low yesterday with open interest at record


Charlie Aitken defends the ore price

Via FT Alphaville comes this quote from Charlie Aitken: Right here right now the spot markets are in turmoil as Vale dumps cargoes, traders who have been caught long at higher prices cut that trading inventory, and Chinese steel mills sit on their hands and run down inventories. It is estimated that Chinese steel mill


CBA to buy Standard Chartered?

Last night FTAlphaville speculated on a truly remarkable possibility. The cross post is below: As fantasy banking M&A goes — this isn’t such an outlandish idea, we reckon. But see what you think: Following their strong share price performance in 2012, an obvious question arises as to how the Australian major banks can use their


Bloxo puts the commodities bull case

Paul Bloxham of HSBC  recently released a very good piece of research arguing that the global economy had made a structural shift towards emerging markets growth that would continue a powerful surge in infrastructure growth and support high prices for commodities for decades. I agreed with his note but disagreed with its conclusion, that this


Iron ore price assumptions collapse

By David Llewellyn-Smith The iron ore complex tanked again yesterday: Perhaps some hope in the contango with the 12month which did signal the bottom in last year’s crash: But Chinese steel prices are still falling too: Here are some choice iron ore quotes from Reuters: “We believe that China is in the middle of a


The surplus is history

By David Llewellyn-Smith The AFR has a respectable take on the growing structural deficit of the Federal Budget today: Future governments may need to raise $120 billion – or almost $20,000 for the average four-person family – by the end of the decade to pay for Labor’s spending commitments. …These include the National Disability Insurance


Construction work done solid

The ABS June quarter Construction Work Done figures are out and show a decent quarter at a 0.2% fall, below consensus of a 0.5% rise. Offsetting the miss was a large upwards revision to the March quarter from 5.5%% to 7.8%. The dollar fell about 20 pips on the release. JUNE KEY FIGURES  Jun qtr


Australian dollar to fall

There’s an institutional research report about the Australian dollar that has gained a lot of attention around the world in the past few days. It is by a boutique insto research firm called Variant Perception. Called “Australia: The unlucky country, it argues: A substantially weaker currency in Australia is inevitable given fundamental factors. Oversized banks


Carbon tax shifts to neutral

The removal of the carbon price floor yesterday is essentially placing the carbon tax on idle. The price floor notion was designed to prevent the kind of price collapses that have plagued the European carbon price market. By instead linking to that market, the Gillard government has ensured that the price for local credits will


Links August 29

United States: Case Shiller rises. Calculated Risk Jackson Hole is going to disappoint. Zero Hedge Consumer confidence falls. The Oz Europe: Draghi skips Jackson Hole. CNBC Germany and France make friends. FT Asia: Japan downgrades self. Reuters China’s bad debt nightmare. Alphaville For more China-focussed links, check out the post by Sinocism later today. Australia:


Interest rate markets rallying again

While the equity markets sail blithely on, there are signs that the crunch under way in Australia’s terms of trade is beginning to strain interest rate markets. The Credit Suisse rate futures market for the next twelve months has added more than one cut in the past week or so: And rate path probabilities from


$12 billion Budget black hole

From the AFR comes some old news but worth repeating: Treasury will have to look for up to $12 billion in savings this financial year if the Gillard government is to deliver its promise of returning the federal budget to surplus in 2012-13, an analysis by Macquarie Bank has found. Treasurer Wayne Swan forecast a budget


New home sales head back down

HIA New Home Sales for July are out and, contrary to recent RBA hopium, the new year started with a whimper: New home sales posted a very disappointing result in July 2012, losing nearly all the modest ground made in late 2011/12, said the Housing Industry Association, the voice of Australia’s residential building industry. The HIA New


Macro Investor: Shorting the battler

As the Australian stock market approaches former highs on a very fast rebound, complacency from this optimism is clouding the medium and long-term economic reality. This is reflected in falling sovereign credit default swap (CDS) prices, now at very cheap levels and the higher Australian dollar against most major currency pairs: Add in concerns about


All quiet on the iron ore price front

All quiet on the ore front yesterday with little movement anywhere (though swaps haven’t updated yet): As some buying support appears to be coming back into the market, I thought it worth revisiting a chart from Morgan Stanley from last year’s falls: Take a close look at the very sensitive relationship between the iron ore


Why you’ll get no QE3

As Jackson Hole approaches so too does disappointment on QE3. It’s one simple word: oil. Here is the history: Here are the charts for US gas and diesel prices: The more things change the more they stay the same. Why give more destabilising QE when the “QE put” is inflating everything already. Or, from the


Bears under the beds!

It’s all very entertaining. Last week it was Chris Joye at the AFR condemning some bearish menace looming over housing. Sadly too, the Governor of the Reserve Bank of Australia has recently taken to bear bashing, reckoning that Australians are more worried about the economy than the Greeks. Yesterday in his weekly drivel, Wayne Swan


Coking coal still sliding

From the ANZ: Newcastle FOB physical thermal coal prices were steady last week at USD89.05/t. Although market activity remained subdued, the end of the Muslim holiday of Eid al-Fitr in Indonesia should see more movement this week. Having hit a low of a low of USD81-82/t in late July, thermal coal prices have held up well. The same cannot be


Macro Investor Volume 1, number 9

Macro Investor Vol 1, No 9. is now available at the website and in PDF. War is peace, ignorance is strength, there was no mining boom… The mining boom has transformed Australia’s political economy in ways that will be felt for years to come as what has been forecast as a structural revolution will, in


Credit crunch seizes iron ore price

Friday’s ore price movements showed some stabilisation: With 12 month swaps catching a break, there is some hope that last’s week’s heavy dump was the capitulation phase for the ore price. There is not much hope in the fundamentals, however, with rebar falling to a new low and little discussion so far of Chinese steel-makers