David Llewellyn-Smith


Misreading the NAB Survey

Today’s NAB Survey has received a lot of attention from the broader media for the fall in business confidence. The Australian took the cake with it’s headline that confidence had been “crushed”. Here is a longer term chart to give you an idea of where we actually are: The past month hardly fell off a


Abbott hoses his own fire on FDI

From the AFR: Tony Abbott has attempted to draw a line under Coalition infighting over foreign investment, warning his colleagues against complacency and reminding them that “we all support foreign investment”. Debate about the sale of Cubbie Station, which is worth up to $275 million, has raged since late August when Treasurer Wayne Swan approved


NAB Survey undermines rate cut hopes

Rate cut bets for the October meeting should have just sold off. The NAB Survey for August is out and shows an economy that is weathering a shift from a decline in enthusiasm for mining investment with a rise in interest rate sensitive sector activity. Here are the headline results: No alarm bells in there.


China’s trade data misses again

China has released its August trade data and picture remains ugly. Exports rose 2.7 percent in August from a year earlier while imports fell 2.6 percent, resulting in a trade surplus of $26.7 billion. The increase in overseas shipments compares with the median estimate for 2.9 percent growth from analysts and import gains of 3.5 percent and a trade surplus of $19.5


Coal projects get the chop

This afternoon coal major Xstrata announced a bunch of job cuts in the face of ongoing falling prices but more interesting was the following part of the release: Although we are not breaking down the reductions by individual site, the restructure is focused on scaling back high cost production at some of our mines. We do


Japan slowing fast

Japan’s Q2 GDP is out this morning and as foreshadowed last week it is weakening fast. From Bloomie: Sept. 10 (Bloomberg) — Japan’s economy expanded in the second quarter at half the pace the government initially estimated, underscoring the risk of a contraction as Europe’s debt crisis caps exports. Gross domestic product grew an annualized 0.7 percent in the three


Coking coal falls heavily

We may be seeing the beginnings of a bottom for iron ore but the same can’t yet be said for coking coal. From ANZ: Spot thermal coal fell 2.3% to USD86.37 last week, while coking coal shed 5.4% to USD153.20/t. Coking coal prices continue to drift lower as buyers stay on the sidelines awaiting the results of Q4


Macro Investor Volume 1, Number 11

Health and finance are areas of inquiry with increasingly interrelated terms. This is especially the case in the matter of monetary policy, where liquidity ‘injections’ and central bank ‘life support’, among other things, are in the common lexicon. But when it comes to quantitative easing (i.e. QE) in the US and Britain, or outright monetary


An iron ore squeeze

It’s an eye-popping iron ore table today: So, the exuberance of last week finally seized parts of the steel complex with 12 month swaps hitting the proverbial afterburners. Up 9.1% on the day! And who said there’s no speculation in the iron ore markets? Spot followed with a solid climb: Needless to say, with the


Macro Investor this week

This week, Macro Investor Vol 1, No 10 explored the questions surfacing about the mining boom, the terms of trade and Chinese growth, and the growing risk that Australia is negatively re-rated by global markets and the Aussie dollar falls…We looked at a number of short and long trades around iron ore, the dollar and the shifting perceptions


China links

Courtesy of Sinocism. BUSINESS AND ECONOMY Hard Living in Beijing – Economic Observer Online – In-depth and Independent – People coming to Beijing to work and pursue their dreams are increasingly meeting with insurmountable frustration. The slowing economy, rising living costs and government policies that disadvantage residents without a Beijing Hukou are combining to see an


More bad news for coking coal

Courtesy of ANZ Newcastle September coal futures fell 0.2% to USD91.2/t, while spot coking coal is trading at USD160.44/t. The Vice Chairman of the China Chamber of Commerce announced China will remove the 40% export duty on coking coal in line with a WTO ruling. This could be reflecting softer domestic conditions. China is a high-cost swing supplier and has exported


PCI slides away

The AiG Performance of Construction Index for August is out today and shows further deterioration: Not much surprise here given this accords with ABS and HIA data, especially since it was new orders that drove the dip in all three. I have questioned the efficacy of the engineering component of this index before but it’s


Iron ore price stabilising?

It’s all good today! Not much movement overnight in the steel complex but enough to suggest that the big falls are behind us. 12 month swaps are starting to price with some consistency in the mid $90s range: There is also clearly a lift in broader sentiment as Draghi applies his band-aid and although it


Bill Evans unpacks the participation rate

Bill Evans joins the employment skeptics. Westpac first impressions: August Labour Force Survey Employment –8.8k in August (WBC –5k; mkt 5k). Unemployment rate 5.1%, from 5.2% in July as participation rate falls 0.2ppts to 65.0%. In August, total employment fell 8.8k as part-time employment declined 9.3k. The outcome was a little below our expectation, but


Jobs and unemployment fall

Yes, that’s right, jobs and unemployment both fell. In August, full time jobs were up 600 but part time down 9,300, net down 8,800. The unemployment rate fell to 5.1% because the participation rate also fell 0.2% to 65%, which is the lowest since 2006. Revisions to last month were down, from 14k jobs to


Gina announces 3d1k award

From the AFR: Mining billionaire Gina Rinehart has offered a $50,000 bounty to a representative of the resources industry who best promotes mining in the face of “far left or non-understanding media attacks”. …“We need people and we have some who are prepared to be unpopular or very unpopular in some areas of our media,”


Macro Investor: Shorting iron ore

Iron ore prices (as measured by 62% fines) have fallen over 50% from their peak at almost $200 per tonne, after doubling twice from early 2009. This dynamic is due to collapsing demand, as inventories in China climb to new heights amid increasing volume output from Chinese, Australia, African and Brazilian suppliers. …Due to the


Fitch dumps Fortescue onto negative watch

Late yesterday Fitch joined Moody’s in adding heat to FMG: Fitch Ratings-Sydney-05 September 2012: This announcement corrects the version published earlier today. The third paragraph should read that the company has completed negotiations on the sale of its Solomon power station rather than being in advanced negotiations as previously stated. An amended version follows: Fitch