David Llewellyn-Smith


Is the RBA or market wrong?

In its weekly economic missive this morning, Macquarie Bank has an interesting take on the current mismatch between the RBA’s stop/start hawkish rhetoric and pricing in the interest rate futures market. The Macquarie Weekly: The central bank that cried wolf For the past year, the Reserve Bank of Australia has been forecasting great things for


Old economy fights back

Last week, the Unconventional Economist made a fascinating comparison between the rhetoric of the Canadian and Australian central banks on overvalued houses. He noted how much more candid the Canadian central bank has been about the degree of house price overvaluation and the need to mitigate those risks. As we know, neither the government nor


June 20 links: Gimme back the old economy

Europe to withhold half of Greek aid. Bloomberg European liquidity. Zero Hedge Core Europe and Greece. Felix Salmon Central Europe and Greece. Beyondbrics The euro will survive. Wolfgang Munchau Mismanaged crisis. Gavyn Davies FOMC meeting preview. Calculated risk Week ahead for the Dow. Calculated Risk Japan finds hot spots. Washington Post China copies Austrian city. Daily Mail (h/t


Weekend reading: You call that a rally?

Crushed: $US, energy Down: ore Flat:  metals, grains Up: euro, Aussie, CRB, gold Sovereign easing: Ireland, Portugal, Spain, Italy, Belgium, Greece Germany concedes. FT As predicted and solves nothing… Greek maths. Zero Hedge Greece’s Lehman moment. Alphaville Renew Greece. Mohammed El-Erian Beginning global restructuring. Chris Whalen Michael Pettis podcast on China. Alphaville China’s political problem. Bloomberg China house prices still rising. Bloomberg More layoffs coming to Wall St. NYT


Four dark clouds

The Dow went up a bit last night. Hooray! But if you think this correction is over, think again. This is the correction we have to have. Think about it. There are four big economies in the world: Japan, EU, China and the US. A dark cloud hangs over each. Japan is far worse than


Private banking my butt

Last night, the Basel Committee on Banking Supervision circulated a draft document on what level of additional capital requirement Systemically Important Financial Institutions (SIFIs) will be required to hold. According to Bloomberg, it said it: would subject banks to a sliding scale depending on their size and links to other lenders, said the people, who


June 17 links: Up and down

Rocket: $US Flat: gold, ore, metals, energy, Down: euro, Aussie, CRB Smashed: grains Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Philly Fed crashes. Calculated Risk Housing starts, jobless slightly improve. Zero Hedge Royal wedding effect passes. Alphaville Banks using secured funding. Alphaville India tightening. FT Libyan oil gone for years. FT Papandreou wrestles with new cabinet. FT No more stimulus. Tim Duy Citi trashes coal lobby carbon report.


Dutch Disease and jobs

Today the ABS released its quarterly Labour Force Survey – Detailed for May. I’ve broken it up into a series of sectoral charts by full time jobs below. Each says it ends in March but it don’t. Each ends in May, damnit. First up, let’s look at the growing sectors. Top of the pops is,


Car sales crash

Governor Glenn may still be feeling feisty about the economy but it’s becoming increasingly obvious that he’s flying solo. ABS May car sales are out and can only be described as a crash, down 7.6% month on month and 14.5% year on year. These sales levels were first seen in 2003 and again in December


Wolf debates Stevens

Today Martin Wolf of the FT joins the growing ranks of China skeptics. It is interesting to contrast his views with those of Glenn Stevens, enunciated in his speech yesterday. According to Wolf: Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding


Bye, bye Macfarlane years

Over the past several years, the RBA, and some of its former staff, have engaged in a quiet reassessment of their role in the pre-GFC build-up of destabilising levels of debt in the Australian economy. There are a number of examples. There is the late 2009 confession by Ian Macfarlane’s former deputy, Stephen Grenville, that


June 16 links: Trojan markets

Rocket: $US Up: gold, ore Subterranean: euro, Aussie, energy, CRB, metals Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Greece burning. Bloomberg, FT Betting on a Greek accident. FT No QE3. Hilsenrath QE3 will be unlimited. Credit Writedowns US core inflation rises. Calculated Risk US capacity utilisation stalled. Calculated Risk Zombie consumers. Stephen Roach Interbank measures seizing. Zero Hedge Rosenberg calls new recession. Forbes US not yet


Stevens raises his fists

Governor of the Reserve Bank, Glenn Stevens, delivered a fascinating speech this afternoon. One would almost have to describe it as combative. He dismisses weakness in the services economy, wholeheartedly defends the mining boom as pretty much bailing us out (which I agree with)  and more or less tells you to get over any concern you


Melbourne builds on

ABS March quarter dwelling commencements are out and show an onging decline in housing commencements, which is still a give back following last year’s FHOG. For apartments, however, there’s a big seasonally adjusted jump:         MARCH KEY POINTS           DWELLING UNITS COMMENCED The trend estimate for the total number of dwelling units commenced fell 1.9% in


Dour mood sweeps consumers

The Westpac/Melbourne Institute Consumer Confidence Survey is out and makes dour reading. Sentiment fell by 2.6% in June from 103.9 in May to 101.2 in June. The commentary is equally gloomy: This is a soft result. It is the lowest print for the Index since June 2009 (100.1). At that time households were relieved that Australia appeared


FHOG bust redux

Back in mid 2010 when I wrote for Business Spectator, I compiled a column on the turning point in Australian housing and the likely shape of the coming bust: This column concludes that the RBA has busted the first home-buyer bailout bubble, as it should. Now, we will see just how strong supply and demand


June 15 links: Relief rally

Flogged: $US, grains Up: euro, Aussie, ore, energy, CRB, gold, metals Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece What will QE3 look like? Credit Writedowns, Zero Hedge Is the US slowdown temporary? Calculated Risk US retail sales fall. Calculated Risk US PPI tumbles. Zero Hedge Majority say no QE3. Bloomberg China to keep tightening. Imarket News India inflation raging. BusinessWeek Food prices stoke protests in China. FT Wolf


Goosing the stockmarket

Regular readers will know that I am confident that QE3 is on the way sometime after markets get their swoon on. There are a number of reasons why I’ve formed that judgement. First, it’s because, in my view, the US economy is driven by markets, not the other way around. As Alan Greenspan argued in


Chinese inflation bubbles on

From Bloomberg (h/t The Lorax): China’s inflation accelerated to 5.5 percent in May, the fastest pace in almost three years, and industrial output grew more than economists forecast. The annual gain in consumer prices matched the median estimate in a Bloomberg News survey of economists. Production rose 13.3 percent last month, the statistics bureau said in


Lending Finance: Mixed

So, ABS lending finance is out and its ugly too. Here’s the key points: APRIL KEY POINTS APRIL 2011 COMPARED WITH MARCH 2011: HOUSING FINANCE FOR OWNER OCCUPATION The total value of owner occupied housing commitments excluding alterations and additions fell 1.1% in trend terms, while the seasonally adjusted series rose 6.3%. PERSONAL FINANCE The


NAB Business Survey: Yuck

The May NAB Business Survey is out and is a bit of a shocker. Here are the key stats, with everything falling: And the commentary: The domestic economy continued to soften in May, with business conditions now just a little above the relatively weak levels recorded in February immediately following the floods. Trading conditions, employment


WTF Gotti

Following the ‘debate’ over the Resource Super Profits Tax (RSPT) last year, Robert Gottliebsen described how: Here at Business Spectator, Alan Kohler, Stephen Bartholomeusz and myself realised that Rudd and Swan had made a diabolical mistake soon after it was announced. We decided to highlight every aspect of this terrible measure until it was changed.  And they


Can the oil stabiliser work?

So, last night oil got thumped, down 2%. Given the fall, and the prospect for further weakness, I thought it might be useful to ask, where oil might head to and what the implications are for this price trajectory. The stakes could not be higher. There’s an opinion at large that the current slowdown in


June 14 links: Gathering gloom

Down: $US, ore, energy, CRB, gold, metals, grains, Up: euro, Aussie Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Is Greece Lehman II. NYT Greece downgraded. WSJ Dr Doom reappears. Bloomberg And on Europe. FT Week ahead for Dow. Calculated Risk US banks to cut Treasury holdings. FT, Alphaville US Treasury liquidity. Doug Noland Global policy sinking. Gavyn Davies Labour Left wants bigger mining tax. SMH No! Says Forest.


Weekend reading: Crushed

Rocket: $US Up: ore Crushed: energy, CRB, gold, metals, euro, Aussie, S&P Flat: grains Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Financial contagion. Calculated Risk Time to panic for the US. New Economic Perspectives (h/t Naked Cap) ECRI WLI falls again. WSJ Stocks have just begun fall. Zero Hedge Sigh, I agree… Germany digs in on Greece. Bloomberg Emerging markets shifting from tightening. WSJ Or are they?


Mining’s new cold war

So, we are about to enjoy another batch of mining advertisments on our televisions and in our cinemas. Given the political motivation of the last round of ads in 2010, addressing the then proposed Resource Super Profits Tax (RSPT), I thought it might be worthwhile taking a look at this new generation of ads and


June 10 links: OPEC buggered

Up: $US, ore, energy, CRB, gold, metals Flat: grains, euro, Aussie Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece US house prices to keep falling. Shiller Bye bye US middle class. My Budget 360 (h/t Naked Capitalism) Output slack. Tim Duy US traded deficit. Calculated Risk Corn rocket. Zero Hedge ECB to hike again? Zero Hedge Monstrous risks in emerging markets. Reuters China’s SMEs face cash crunch. FT Gas


Full time jobs by state

Below find the state by state break up of full time jobs, all seasonally adjusted. Weakness in NSW, QLD and SA is not sufficiently offset by gains in VIC and WA for a total fall of 22,000. The RBA’s adjustment to Quarry Australia continues apace.


Full time jobs down again

  MAY KEY POINTS TREND ESTIMATES (MONTHLY CHANGE) Employment increased to 11,444,200. Unemployment decreased to 588,400. Unemployment rate steady at 4.9%. Participation rate steady at 65.6%. Aggregate monthly hours worked increased to 1,602.5 million hours. SEASONALLY ADJUSTED ESTIMATES (MONTHLY CHANGE) Employment increased 7,800 (0.1%) to 11,440,500. Full-time employment decreased 22,000 to 8,027,100 and part-time employment