David Llewellyn-Smith


Tax insights from the national accounts

Courtesy of Mark the Graph. Table 18 of the National Accounts gives us a window on government revenue. The growth rate in the revenue from the various sectors of the economy gives an indication on whether those sectors are doing well or not. I will limit the following analysis to the GFC and subsequent years –


China links

Courtesy of Sinocism. The New York Times has a very disturbing front page story about Africa’s elephants being slaughtered in a poaching frenzy: The vast majority of the illegal ivory — experts say as much as 70 percent — is flowing to China, and though the Chinese have coveted ivory for centuries, never before have so


GDP slows

Second quarter GDP slowed to 0.6% versus consensus of 0.7%, delivering 3.7% over the year: JUNE KEY FIGURES % change Mar qtr 12 to Jun qtr 12 % change Jun qtr 11 to Jun qtr 12 GDP (Chain volume measure) Trend 0.8 3.8 Seasonally adjusted 0.6 3.7 Final consumption expenditure (Chain volume measure) Trend 1.0


PSI collapses again

The AiG Performance of Services Index for August is out and it has collapsed again: This is one of the indicators that triggered an overly bearish episode for me earlier this year so some skepticism is in order. However, there is one standout point about the August result and that is how generalised the slowdown


Iron ore volumes showing the pain?

Yesterday Port Hedland released its August shipping statistics including iron ore tonnages, which looked like this: Not bad but closer inspection throws up a few worries. August tends to be a down month but this year the fall is 9.3% versus half that in the previous two years. Volumes tend to be highest mid year


Moody’s reiterates Fortescue negative watch

Not much joy for FMG following yesterday’s announcement with the share price still falling and Moody’s unimpressed: Sydney, September 04, 2012 — Moody’s Investors Service has today announced that it is continuing its review for possible downgrade of the Ba3 corporate family rating of Fortescue Metals Group Limited (Fortescue) and the Ba3 senior unsecured rating of FMG Resources (August


The iron ore dominoes

By David Llewellyn-Smith First up, yesterday’s iron ore price moves, which are not pretty: So, a new low for spot, 12 month swaps rolling over and Chinese steel prices still weakening. Complimenting the price action, the international interest in iron ore ramped up again last night with more bearish analyses.  The first story of interest


Fearful Symmetry sees India fighting stagflation

Chidambaram’s remarks upon re–assuming the role noted that while India’s obvious objective is high growth and moderate inflation, it is currently experiencing the reverse. (The piquant whiff of stagflation emanating from the subcontinent has been one of the many impediments thrown in front of the rupee this year.) He then argued that India has some relatively recent experience from


Links September 5

United States: ISM misses. Calculated Risk, ZeroHedge What Jackson Hole means. El Erian Europe: Troika demands 6 day work week for Greeks. Zero Hedge Oh dear Spain flees itself. NYT SNB vows to suppress Swissy. FT Asia: China not gunna ease. Bloomberg Local: As the iron ore anvil falls. Zero Hedge, Alphaville Steel cliff. Alphaville Aussie


Westpac downgrades GDP forecast

From Westpac this afternoon: Net exports made a rare positive contribution to growth, adding 0.3ppts to Q2 GDP. This largely offsets a 0.4ppt subtraction from Q1 growth. The net export outcome for Q2 fell short of expectations, reflecting disappointment on exports. (mkt median +0.6ppts, Westpac +0.8ppts) Export volumes advanced by 2.5% in Q2, following a


Poker-faced RBA holds

A poker-faced RBA holds: Statement by Glenn Stevens, Governor: Monetary Policy Decision At its meeting today, the Board decided to leave the cash rate unchanged at 3.50 per cent. Having picked up in the early months of 2012, growth in the world economy has since softened. Current assessments are that global GDP will grow at


Grenville versus Pettis

In recent days, someone (anyone!) in Australia’s economic elite finally engaged with Michael Pettis in a debate on China. It was Stephen Grenville, a former Deputy Governor at the RBA and now Lowy Institute doyen. Grenville argued that: Leading the growth pessimists is Michael Pettis, who has a bet with The Economist that growth will average


Current account balance and net exports

The ABS has just released the June quarter current account figures and the deficit was a little better than expected at -11.8 billion instead of 12.2 expected: That puts the current account deficit somewhere in the 3.5% of GDP range (using the back of an envelope!) Not too bad. Net exports, however, was less positive


Where are we spending?

Cross-posted from Mark the Graph. Where are you shopping these days? Given yesterday’s shock result for department stores I thought I would have a look at where we spend our money. For each of the sectors, what proportion of our shopping dollar do they capture. The results are a little surprising … We are spending more at


$119 billion in projects up in smoke?

The AFR has released an excellent study of the next round of jeopardised mining projects: Analysis by The Australian Financial Review of the federal government’s Bureau of Resources and Energy Economics’ major projects pipeline shows more than a dozen big developments in the less advanced category will be further delayed, endangering the next phase of the resources boom.


Rates are going lower

Rates are going lower. Not today but cuts are coming. Warwick Mckibbin has reversed course, detaching himself from a temporary bullhawkian alliance. From the AFR: Former Reserve Bank of Australia board member Warwick McKibbin has scrapped his call for an official rate rise, saying the government’s rush to deliver a short-term surplus threatens to crunch the


RBA index of commodity prices: yuck!

Late yesterday the RBA released its August Index of Commodity Prices: Preliminary estimates for August indicate that the index fell by 3 per cent (on a monthly average basis) in SDR terms, after rising by 0.9 per cent in July (revised). The largest contributors to the fall in August were declines in the prices of


North Asian manufacturing is in recession

We already know that the Chinese HSBC and official PMIs sank in August: The other North Asian export powerhouses released their PMIs late yesterday and, unsurprisingly, they showed the same pattern. Taiwan was down 1.4 points to 46.1: South Korea managed an immaterial rise: But at least its nee orders slowed their decline. A few


Macau casino indicator up

Our indirect gauge of China’s economic growth, Macau casino revenue, increased by 5.5% in August compared to the same month a year ago to MOP26.136 billion, a slight rebound from the 1.5% yoy increase in July. Still, a worrying trend.


ABS business indicators mixed

The ABS Business Indicators series for the June quarter is out and is mixed. The key dimensions of the release are company profits and inventories which are a part of GDP calculus. Company profits came in with a big ouch: Here’s the chart, showing we remain well below long run growth trends: Consensus was for


ANZ job ads heading south

ANZ job ads for August are out and, yes, unemployment is going to rise: The number of job advertisements on the internet and in newspapers fell 2.3% in August after falling 0.8% in July. This was the fifth consecutive monthly fall, something that last occurred in the second half of 2011, when consumer and business confidence was