David Llewellyn-Smith


Links February 2: Eye of the storm

Egypt’s million man march. FT, Bloomberg Jordan sacks government. FT Will unrest spread to Saudi Arabia? Ambrose Evans-Pritchard What does revolution cost in Oz? $22m. The Age ISM power. Calculated Risk Commodity laggards breaking out. Barron’s Stock picking is dead. Zero Hedge China housing bubble hits terminal velocity. Bloomberg Chanos on short China. FT Higher rates coming in


Holy cash cow, Batman!

Oh yes, ladies and gentleman, fresh from the RBA, that’s another monthly moonshot in Australia’s terms of trade for January. That means: Over the past year, the index has risen by 49 per cent in SDR terms. Much of this rise has been due to increases in iron ore, coking coal and thermal coal export


Get yourself a hard hat

Some boom. According to Bloomberg: Australian manufacturing contracted in January for a fifth straight month as measures of inventories, wages and supplier deliveries declined, a private survey showed. The manufacturing index was 46.7, compared with 46.3 in December, the Australian Industry Group and PricewaterhouseCoopers said in a survey released in Canberra today. A number below 50


The great disleveraging

The RBA’s credit aggregates for December were out yesterday and as always make interesting reading. Owner-occupier mortgage debt expanded at an annualised rate  of 7.3% seasonally adjusted. Investor mortgages grew at 4.8%. Personal debt shrank at 4.2% annualised and business at 4.1%. All four of these figures are showing slow declines or low growth plateaus.


Links February 1: Risk awwwwwn

Egypt rebels rally to El Baradei. WSJ, NYT Brent hits $100. Barchart US PMI details. Zero Hedge Loneliest man at Davos. Bloomberg China’s housing poor. Telegraph US dependent upon global rebalancing. Tim Duy Reform monetary policy. Henry Thornton Coking coal moonshot continues. Coal Portal Maybe this is why. BOM No financialisation of commodities. Krugman (is he nuts?)


The China domino

The stated goal of the Hu Jintao-led Chinese government is a “harmonious society”. Perhaps that is why the word “Egypt” was blocked on certain search engines over the weekend. Multiple factors are in play in Egypt, but there is one vital similarity with China: Food inflation of a breadth and severity that few in the


Links January 31: Fog of war

Egypt approaches endgame. FT Army withdrawing to create chaos? The Arabist Suez not the problem. Contagion is. James Hamilton All things oil – up. Barchart Harmony. China blocks “Egypt”. Reuters China bubble risk. Telegraph Happy Davos. Simon Johnson No commodity speculation. (Nah, none at all) Greed, green and grains Cyclones in Qld. SMH Qld dogs should marry.


Neocon’s revenge II

History, it seems, is not without a sense of irony. You may recall that September 11, 2001 marked the rise in the US of a new breed of foreign policy hawk: The Neoconservatives. The stated goal of the ‘Neocons’ was a “Project for a New American Century”. Their principles were laid out in 1997 in


Weekend Reading: Neocon’s revenge

Egypt turmoil. Bloomberg, Stratfor, FT Follow the struggle. The Arabist The importance of Suez. Zero Hedge Yemen mass protests. The Telegraph Syria mans the barricades. Zero Hedge Jordan marches. FT Fed primed for more. Tim Duy So’s Timmy Geithner. BusinessWeek US GDP. Calculated Risk, Econompic Dubai’s world succumbs to Ozimandius. Telegraph (h/t Naked Capitalism) The China



This blogger has looked on in astonishment as the iron ore price has moonshot through a sequence of cup and handle formations to an all time high. There are a variety of reasons behind the rise, not the least being the blow-off in Chinese growth. However, a number of variables are now in play that


Links January 28: The levy breaks

China land games. Market Watch Japan downgraded. Zero Hedge, The Source China will raise further. Bloomberg Now it’s uranium. Refomed Broker Caterpillar’s 2011 forecast. WSJ Food stockpiling. FT Levy politics. Peter Hartcher Interests slam levy. The Oz Two-speed pay. SMH Loving the China bubble. The Age Coal to rocket. The Oz


Bank wedge

A couple of recent developments are worth assessing with regard to the outlook for banks and their ability to manage interest rate margins. Some weeks ago this blogger wrote in reference to the floods and the RBA: …  the world is quickly swinging from a GFC-deflation toward a recovery led by commodity price inflation … Australia’s


Link January 26: Rolling on

Spanish banks. Eurointellignce US refi kaboom. Calculated Risk Does Martin Wolf read MacroBusiness? Food rocks Egypt. FT India muscles up. FT Contagion running: Ireland, Portugal, Spain, Italy, Belgium, Greece More SHIBOR. Zero Hedge Will China save Europe? Bloomberg Pavlov’s bulls. Jeremy Grantham Dollar down on more Fed giveaways. Businessweek Coal back. SMH Adapt or die.


Australia Day links

Double dip recession in UK. Telegraph SHIBOR spike. Zero Hedge, II EFSF roars into debt. Asymtotix, FT Contagion continues: Ireland, Belgium, Portugal, Greece, Spain, Italy India raging inflation. Economic Times Fake demand. Tim Duy Give them stimulus. Peter Martin CBA customer support smashed. SMH Australian inflation. Adam Carr Chinese coal market tension. The Economist Hess


The levy is right

According to the SMH this morning: The Prime Minister, Julia Gillard, has all but confirmed that a one-off levy to help cover the cost of flood damage is on the cards but the bulk of funds will be raised by budget cuts. Speaking before the inaugural meeting yesterday with the 13-member taskforce of business and


Links January 25: Mixed messsages

Inflation is coming. Alphaville Not to the US. John Dizard, Tim Duy Flood inflation here. FT Quant churn. Zero Hedge Short bonds & stocks. Nic Lenoir China to slow. China Daily Greed siezes metals. Bloomberg Ore falls !?!?!?! Bloomberg Ore flood panic. John Garnaut Record ore inventory. Bloomberg Levy and cuts pay for floods. SMH New frugalism


Fitch as a fiddle final

Bloomberg and AAP/Business Spectator both report breathlessly this morning that the big four banks have passed the Fitch stress test. The AAP/BS version is particularly flattering: Under a severe scenario, gross losses could total over $6 billion across all four banks, with net losses reaching 10 per cent of their combined operating profits, Fitch said in a


China’s blunder

The ongoing demise of the Bretton Woods II (BWII) currency system and its implications for the balance of world growth has been a recurrent theme for this blog. And if recent commentary around China is any guide, the breakdown is accelerating toward another critical moment. To recount, this blogger wrote last year: BWII is the


Links January 24: Demographia damnation

New Demogrpahia housing survey. PDF One poor harvest from chaos. Independent (h/t Naked Capitalism) US saving less. WSJ Irish government collapses. Irish Times Recalling January 2008. Doug Noland Scenarios for oil. FT Rent seekers council attacks. SMH Rent seeking retail prepares. The Age RBA to raise in March. David Uren Palladium joins supply shock. Mining Weekly


Weekend reading: China’s banks

China’s problem. Paul KrugmanChina’s inflation dilemma. Charlie FellChina’s SHIBOR bounces big. Zero HedgeChina NPL’s. Michael Pettis30% chance of Chinese hard landing. Ambrose Evans-PritchardGreatest bear market rally in history. Calculated Risk The efficacy of capital controls. VOX(h/tNaked Capitalism)The future of Fannie & Freddie. NYTEurope’s secret fiscal integration. BloombergInflation nutters. Samuel BrittanThe love of LPTs. Ian VerrenderMelbourne’s


Guest post: Of China and guano

Following the La Niña-related floods in Queensland earlier this month food prices have spiked, adding to an already serious inflation crisis around the world and toppling the government of Tunisia. And while protesters in Tunis were hardly thinking of Queensland bananas or sugarcane as they mobbed the streets, the changing and dramatic climatic conditions that


Links January 21: Ratcheting up

China’s loan cap. Caixin (h/t Naked Capitalism)China’s illusory decoupling. Asia TimesChina overheating. FT, Michael SainsburyOre price drivers. FTChina can beat inflation. Gavyn DaviesOre price record. BloombergOre volume record. The OzIndian exports the key to rally. ReutersChinese sabre rattling. Washington TimesMore US homes. Calculated RiskFinancialisation of cows. GMMRamp mining tax to pay for flood recovery. Ian


Links January 20: Ore rocket

Ore approaching record high. BloombergCommodities bust. Zero HedgeAsian inflation. ReutersChina should get guarantee to buy euro. BloombergChina and Germany. FTIreland defaults. BloombergChina and the US, mutual interests. Martin WolfHow to get tough with China. Naked CapitalismChina NOT selling Treasuries. EconompicBanks want to raise again. SMHChina’s holiday home. Bernard Salt


Pillars of boom

Yesterday Bloomberg published an interesting article on Rio’s iron ore output: Production climbed to 50.1 million metric tons in the three months from 47.2 million tons in the same period a year earlier, according to a statement today from London-based Rio, the second-biggest exporter of the commodity. The figure beat a UBS AG estimate of


Links January 19: Chk Chk … Boom

Spend big on recovery. SMHNo Qld labour shortage. The AgeCommodities rocket. The OzAre banks fixed? Robert Peston(h/t nakedcapitalism)The tinkerbell market. Naked Capitalism, Zero HedgeGermany offers truth or dare to market. Calculated RiskMarket takes dare: Greece, Ireland, Portugal, Spain, Italy, BelgiumWorld bank vs China. FTChina’s Treasury holdings. Zero HedgeKashkari on US debt. BloombergCurrencies, controls and exports.


S&P’s missing $400 billion

Regular readers will recall that this year’s coverage began with the unwholesome news that S&P were in the process of downgrading Australia’s BICRA score – the credit rating given to the Australian financial system. This blogger has chopped a rather important chart from the primary BICRA document (see above, full document below) in order to


Tough choice

A slew of material out yesterday and today has bearing on the medium term outlook for interest rates. First, Reuters reported uncomfortable news on inflation: A private gauge of Australian consumer prices showed annual inflation ran above target in December, with price pressures likely to grow as the Queensland floods push up food costs. The


Links January 18: Fiscal flood

Germany’s European rescue. Wolfgang MunchauWeather hitting steel. FTPox Americana. Niall FergusonAlbert Edwads gets the chills. Zero HedgeCanada tightens macroprudential. BloombergSurplus washed away. SMHInterest rates. Ian VerrenderTAFE gets Dutch Disease. The AgeCoal damage. The AgeResources wage demands. Jennifer HewittChinese port ore stocks at record highs. MinewebOre rocket. Bloomberg


Retailers need therapy

From the SMH today: The Retail Coalition is preparing to hand in documents to the securities regulator to officially incorporate its activities, enabling it to hire staff and ramp up its calls for urgent tax reform. The documents will detail plans to establish a new independent company with a constitution, board of directors, company secretary,


La Nina as Black Swan update

For those that missed it, Yves Smith of Naked Capitalism fame quoted liberally from our very own Flashman over the weekend, firing off a frenzy of activity. Amongst that traffic was a comment from Bruce Krasting that included an excellent link comparing this super La Nina with those of the past. He concludes: You are