David Llewellyn-Smith


HIA: Housing affordability improves (and?)

From the HIA comes this quarter’s improved housing affordability measure: The improvement in housing affordability continued unabated in the June 2012 quarter, said the Housing Industry Association, the voice of Australia’s residential building industry. “Excluding the GFC period when interest rates dropped sharply, housing affordability is at its healthiest level since 2003,” said HIA Chief Economist, Dr


Fortescue embraces the hope

Fortescue is out with a good result. With the market giving it 3%: But from the annual report the following is woefully inadequate: That’s the Fortescue assessment for iron ore prices. I know ore is going to bounce some time, perhaps soon, but this is ridiculously thin coverage of the primary risk facing the company.


And now for coking coal…

I have been a bit confused by some of the spot versus contract pricing going in the market for coking coal. It appears I got my quarters mixed up. From ANZ today, there’s clarity, sadly: Newcastle Sept coal futures fell mildly to USD91.5/t. China’s total coal imports fell 10.3% m/m to 20.2mt in July, but is still


Government at a loss

A few Ministers are out this morning trying to make sense of the growing questions around mining investment. First they seem unable to get their story straight. According to the AFR, Martin Ferguson has said: Resources Minister Martin Ferguson has declared the mining boom is over, a day after BHP Billiton shelved the $US20 billion-plus


Iron ore crash goes on

Ore got walloped and swaps got monstered again yesterday: Here’s the latest on market internals from Reuters: Shanghai steel futures hit a record low on Wednesday, exerting more pressure on prices of the raw material iron ore whose freefall has forced Chinese steel producers to skip contracted cargoes. Chinese mills, the world’s biggest iron ore


FOMC Minutes turn dovish

Find the full FOMC Minutes below with highlighted key passages. This looks a bit more promising for QE3 yet is still very vague. So far the Fed has done a nice job of giving us virtual QE3 via the jawbone. This does not yet look like a decisive shift to actual QE. To be honest,


Olympic damn!

BHP has canned Olympic Dam. I have no idea why. The company has $4.7 billion in cash (albeit from $10 billion last year), almost no debt and can borrow at 3% for twelve year bonds. Copper and uranium are supposed to be a part of the next wave of Chinese growth, with copper a central


Leading index improves

From Westpac this morning: The annualised growth rate of the Westpac–Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, was 2.4% in June 2012, below its long term trend of 2.7%. The annualised growth rate of the Coincident Index, which gives a pulse of current activity, was 3.7%, above its


Japan’s trade data adds to global slowdown fears

From Bloomie: Japan reported a wider-than-expected trade deficit in July as Europe’s sovereign debt crisis and austerity measures dragged down exports and higher oil prices boosted imports. The shortfall was 517.4 billion yen ($6.5 billion), after a revised surplus of 60.3 billion yen in June, the Finance Ministry said in Tokyo today. The median forecast in a


Macro Investor: CBA is not worth the risk

Commonwealth Bank of Australia Ltd (ASX:CBA) is the nation’s largest bank, providing banking, life insurance and related services for individuals, small businesses and medium sized commercial enterprises. It also provides corporate and general banking, international financing, institutional banking, stock broking via Commsec and funds management. On the surface, CBA looks great – record profit, improving


End of an era for iron ore?

The world steel association released its July production report overnight and the news is not especially good: World crude steel production for the 62 countries reporting to the World Steel Association (worldsteel) was 130 million tonnes (Mt) in July 2012, an increase of 2.0% compared to July 2011. China’s crude steel production for July 2012


China chart pack

Find below ANZ’s excellent monthly China chart pack. The only observation I’d make is that the bank continues to apply a Western paradigm to the PBOC response to economic weakness, forecasting large cuts in reserve ratio requirements and interest rates. The evidence to date is that a more modest easing is coming, if China wishes


August 22 links

United States: Lockhardt kills QE3. Zero Hedge, Tim Duy Risk off. Zero Hedge Structured by cows. Dealbreaker Europe: Concessions for Greece. Bloomberg Asia: China’s unprecedented liquidity operation. Alphaville More China links in the daily post from Sinocism Local: RBA exposes low doc loans. The Oz Port Hedland strife. The Oz Coalition’s radical Federalism. AFR RBA


Smith canes Abbott

It’s not very often that I agree with Mike Smith but today he is right in caning Abbott’s Great Gaff of China. From the AFR: Australia and New Zealand Banking Group chief executive Mike Smith has called on political leaders to foster a more welcoming attitude towards foreign investment in the resources and agricultural sectors


RBA housingfest

The RBA is co-hosting a conference on property markets and financial stability with the BIS. The following are the papers presented. Land and House Price Measurement in China [PDF 1.2M] Yongheng Deng, National University of Singapore, Joseph Gyourko, University of Pennsylvania, Wharton, and Jing Wu, Tsinghua University Comparing Housing Finance Systems [PDF 527K] Frank Warnock and Veronica


More resources gloom

The RBA today brought forward its estimate for the mining boom peak. From The Oz today comes more confirmation that the ground is shifting under the resources boom: Analysts think that not all of the projects in the government’s $500 billion pipeline will happen without a major recovery in commodity prices or an increased willingness


Rate markets ignore RBA (again)

It’s becoming a tradition for interest rate markets to ignore the RBA’s pronouncements of economic strength. Today’s upbeat Minutes failed to shift interest rate markets, which are still pricing 50bps of cuts in the next twelve months: The next meeting is still rightly discounted:


RBA Minutes see mining boom peak

Find the RBA Minutes below. Not much to go on here. Probably more on the hawkish side but nothing on the dollar, bugger all on China or the bulk commodities. More on Europe, actually. A few rumblings on inflation. There was this one intriguing line: Resource investment was forecast to peak during 2013/14 and gradually


Ore swaps bust the ton

Iron ore weakness continued yesterday: 12m swaps busted the ton. Here’s a long term chart: Sorry to harp on this, but swaps are rapidly approaching the 2010 low of $98.50 that marks the neckline on the giant post-GFC head and shoulders pattern. The news from China was also poor. From Reuters: An unexpected rebound in


ASIC insolvencies improve

Courtesy of Mark the Graph. ASIC has released the June 2012 update to its series on the number of companies entering into a form of external administration for the first time each month. For most states, the trends look good.                    


After holes, is it back to houses?

Last week while I was in bed with flu, Commonwealth Bank CEO, Ian Narev, declared that the bank is in favour of a new Wallis Inquiry into the financial system. So long, that is, as it’s focussed on the following, from the AFR: Commonwealth Bank of Australia chief executive Ian Narev has warned that the


Yancoal cuts expansion plans

From the SMH: The chief executive of Yancoal Australia says coal prices are falling faster than miners can keep up, as the China-backed coalminer said it would halt expansion and seek broad cost cuts. Yancoal chief Murray Bailey told analysts today that the economy of Australia’s largest export market, China, had slowed markedly in relation


Henry says high dollar to Hell and back

From AAP: Former treasury boss Ken Henry has told business the Australian dollar is likely to remain high for the foreseeable future. Dr Henry told the Australian Industry Group forum in Canberra it would not be prudent to bank on an early sizeable depreciation in the exchange rate. “There is no silver bullet that is


Interest rate confusion seizes the nation

According to Westpac, consumers are confused about the prospect for interest rates: The Feb, Jun and Aug Westpac-Melbourne Institute Consumer surveys include an extra question about expectations for mortgage rates over the next 12 months. The Aug survey showed a significant shift with consumers now evenly split on the direction of rates compared with 52% expecting higher rates in the


Abbott promises a return to the golden years (of debt)

Over the weekend, Opposition leader, Tony Abbott, gave a speech in which he promised: …to return Australia to the “golden age” of the Howard government under his “incoming Coalition government”. The tradition of the Howard government would live on, Mr Abbott declared, in no small part because of the similarities between his frontbench and Mr Howard’s