David Llewellyn-Smith

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Here come the rate cuts, not

From Banking Day: The Australian Government will set the cap on the percentage of assets that can be used to support covered bonds at eight per cent, the Financial Review reports – up from the cap of five per cent suggested by the Government back in December. For some weeks, talk in banking and government

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March 25 Links: Tax flack

Rockets: Aussie, grains. Up:  Ore. Flat:  $US, metals, energy. Struggle at Fukushima goes on. Bloomberg Toyota, Honda extend shut downs. Detroit Free Press Portugese debt. Alphaville, Bloomberg Suppressing Tripoli. FT Sorry, can’t buy the rebels oil. Alphaville MENA crisis and Egypt stocks. Money Game Good, bad US data. Bloomberg Trashing the inflation panic. Tim Duy Era of cheap China

14

RBA warns banks on expanding risks

Back in March 2009, former Reserve Bank Governor Ian Macfarlane gave a now famous speech in which he outlined why Australian banks had avoided the worst consequences of the GFC, because of dumb luck. One of his principle insights in drawing this conclusion was that the banks had benefited from the ebbing of competitive pressures

5

Projecting global growth

Below are two takes on the immediate future of the global economy from heavy-hitters RGE Monitor and PIMCO. First from RGE, Nouriel Roubini’s mob: Upside and downside risks to the global recovery The global economy today can be described as a glass that is half full and half empty. Upside/Positive Risks/Trends: Global recovery and actual

3

March 24 Links: Radioactive quagmire

Tokyo babies can’t drink its water. Bloomberg Other bad signs. Zero Hedge The quagmire beckons in Libya. Bloomberg PIIGS 10 year yields out again: Ireland, Portugal, Greece. But Spain, Italy, Belgium in. Bounce: $US, Ore, metals . Up: Aussie, energy. Ease: grains. US new home sales at record low. Calculated Risk Why PIMCO sold Treasurys. Zero Hedge BRICS slowing. Gavyn Davies Housing market healthy: ANZ. The Age

4

Rio has a whinge

Some days rent-seeking is a challenging business. Take Tom Albanese, CEO of Rio Tinto, who today held forth on the evils of government intervention in mining. According to Reuters: Besides, technical constraints, we are also seeing human constraints. We are seeing a combination of resource nationalism in some cases,” he said, citing “difficult governance” in

5

Links March 23: Uncertainty everywhere

US evacuating base south of Tokyo on radiation. CNN Radioactive rain. Zero Hedge Japan supply damage bad. Alphaville Portugal wants default. FT The Fins now want to stuff Europe. FT PIIGS 10 year yields: Ireland, Portugal, Greece, Spain, Italy, Belgium. Pressure on 2 years as well. Flat: $US, Ore, metals, grains. Up: Aussie, energy. OPEC wants stable oil, at $120. Reuters Civil war in Yemen. WSJ

4

Gotti is wrong on oil

But should be congratulated for staking out a position, a rare event in today’s world of commentary flip flopping. As Deus Forex Machina likes to say, disagreement makes a market so let’s rip in. Gotti asks: Why should oil prices rise in response to the latest turn of events in Libya? We are already seeing

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Links March 22: War rally

Long war. FT Yemen at the brink. FT Bahrain polarising. Mother Jones, WSJ New low: $US. Down: Ore. Flat:  futures for metals, grains. Up: Aussie, energy. Radiation falling. LA Times More food radiation. NYT Japan’s knock-on effects worse than thought. Money Game, The Oz Imagine that? El Erian, QE3 hurdle will be very high. Beyondbrics. Yeh, about as high as 1100 on

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Links March 21: Extrapolations

Japan’s severe industrial fallout. Bloomberg Japan’s food fallout. FT, WSJ Japan and commodity fallout. Reuters Japan and local growth. Huy McKay More on the supply chain. Calculated Risk The Libyan war. George Friedman Where are the Arabs? FT All over the place. AFP, Zero Hedge Nobody knows where this is going. The Interpreter Iran calls for

3

Weekend reading: Crisis drags on

Crisis deepening. NYT Or stabilising. FT Winds to swing towards Tokyo. Bloomberg More radiation released than truth. Zero Hedge Japanese damage. NYT Fukushima described in 1976. Time Japan and local growth. Ian Verrender, Rowan Callick, Michael Stutchbury. Yawn. You read it here days ago. Libyan ceasefire, or not. CNBC Too late to help Libya. Max Hastings

2

Michael Pettis: China slowing

` Exclusively from Michael Pettis newsletter: Quite a few numbers came out this week, but none of them were especially dramatic or likely to change anyone’s mind about anything. The most interesting thing to me is that there are indications that, once again, the economy may be slowing quickly. Every time Beijing gets worried about too

4

Late to the party

As governments far and wide wake up to the danger of fallout in Japan, one is tempted to conclude that the crisis is past its worst. Governments have a habit of coming late to the party. But, in this case, I’m not so sure. I continue to think that markets are underestimating the damage being

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Links March 18: Worse than thought

Cooling spent rods to take weeks. FT Japan shuts supply chain. NYT Canberra panics late. The Age Japan and the global economy. FT Japan’s damaged ports to hit bulk commodities. The Oz Action in Libya suddenly possible. FT Was it my article that changed Obama’s mind? 😉 Gaddafi threatens everything in response. Reuters Weak: Aussie, $US. Flat:  Ore. Up

15

How Japan will hit local growth

I am surprised at the resilience of Australian equities to the global sell-off. Either the local market is confident that the crisis can be contained (for some reason I can’t fathom, it’s behaving irrationally, or, it has assessed any economic fallout from the disaster to be minimal for Australia and already priced in). The only

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Japan’s critical moment

An hour ago the IAEA released the following: Temperature of Spent Fuel Pools at Fukushima Daiichi Nuclear Power Plant Spent fuel that has been removed from a nuclear reactor generates intense heat and is typically stored in a water-filled spent fuel pool to cool it and provide protection from its radioactivity. Water in a spent

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Links March 17: Worst case scenario

Reactor 2 containment rupture. NYT Spent rods exposed at reactor 3 and 4. IAEA Radiation hampering containment efforts. FT US, Britain advise flight. BBC Tokyo closed. Reuters PBS Newshour video on radiation in Japan. Describes how problems are containable, except if radiation prevents workers from being able to do so. Precisely what appears to be happening:

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The RBA airbrushes history

Deputy Governor of the RBA, Guy Debelle, yesterday delivered an analysis of Australia’s recent financial history that left a few things out. Let’s take a look: Over much of the past two decades, demand for credit outpaced the growth in deposits, so that banks accessed wholesale funding markets to support growth in lending. This outcome reflected

21

History resumes

I remember the nineties fondly. They were the years before housing bubbles. The years when cricket still had meaning and moustaches were not yet the gimmick of some new age fad. The years when talent still determined who became famous. And the years when the singularity of American might gave the world a moral centre,

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Links March 16: Risk hydra

Monstered: metals, grains, energy, Aussie . Ore eases. $US pop. Trouble at all six reactors now. FT Foreign nationals, companies, flee. FT Reactor core cooling. All Things Nuclear (h/t Naked Capitalism) Excellent Al Jazeera description (all those years of Curiosity Show paying off, though spelling is a problem): Economic fallout. Alphaville China to get hit. Alphaville Ireland will threaten default.

3

More mangy data

There is more bad credit and sales data out today from the ABS. First, Motor Vehicle Sales: Trend – The February 2011 trend estimate (84 485) has shown a decrease of 0.3% when compared with January 2011. Seasonally Adjusted – The February 2011 seasonally adjusted estimate for new motor vehicle sales (84 122) increased by

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The RBA’s message on debt

In today’s Minutes of the March 2011 Monetary Policy Meeting, RBA members had something of a coming out: The household and business sectors in Australia did not appear to be under financial stress, though both continued to show more caution in their borrowing behaviour, as evidenced in slower rates of credit growth over the past

3

High risks

The US equity market held up pretty well last night but looks to me to be are underestimating risks all around. Poor Japan seems headed toward mutliple meltdowns. Live coverage is available at the BBC. New Scientist reports that assuming meltdowns are occurring then it is only a question of whether containment of the radioactivity

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March 15: Crisis resolutions

Meltdown under way at three plants. AP Coverage. BBC Japan’s impact on LNG. Alphaville Reconstruction could be $1 trillion. Zero Hedge Japan’s impact on LNG. Alphaville Metals mixed, copper slumps. Grains, Energy futures stable, gas jumps. Ore eases. $US crunched. Aussie flat. PIIGS relief: Greece, Ireland, Portugal, Spain, Italy, Belgium. Europe fixed! Naah. Naked Capitalism Saudi, UAE troops flood Bahrain. NYT Well … that was quick. Invasion alert. Stratfor (h/t

13

Japan and Chernobyl (updated)

From The Automatic Earth and author Nicole Foss who has a “master thesis at the law faculty of Warwick University in Coventry, England, where she studied International Law in Development”, in nuclear safety research. She later became a Research Fellow at the Oxford Institute for Energy Studies, where her research field was power systems, with a specific

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Into the maelstrom

Let me begin my reiterating my sympathies for the Japanese. There are a number of very big cross currents at work for markets today. The first, of course, if the suffering of the Japanese. Across the world, the coverage is remarkably alike, a result perhaps of diminishing foreign correspondent budgets and the secrecy of the

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Links March 14: Cross currents

Japanese tension mounts. The Economist Partial meltdowns. FT Japan before and after. ABC Insurance fallout. Adele Ferguson Corrections. Tim Boreham Metals hit. Bloomberg Japan will need more energy. WSJ Ziggy tilts at the windmill. The Age So does Hamish Macdonald Bahrain edging toward civil war. Komo, FT Europe finds a deal. FT FOMC preview. Calculated Risk

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Japan fallout

Right now we do not know what is happening in Japan’s nuclear reactors. According to CNN, however, the news is very worrying: A meltdown may be under way at one of Fukushima Daiichi’s nuclear power reactors in northern Japan, an official with Japan’s Nuclear and Industrial Safety Agency told CNN Sunday. “There is a possibility,

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Weekend Reading: Confusion

Metals, Grains, Energy futures crushed. Ore smashed. $US crunched. Aussie rocket. Bifurcating PIIGS: Greece, Ireland, Portugal record wides; Spain, Italy, Belgium relief. All tsunami news. FT Drunken skyscrapers. You Tube Saudi’s day of saturation police presence. FT Forget Saudi’s increasing production. Jim Hamilton Gaddafi to prevail. FT Kuwaiti protesters gassed. Zero Hedge US job openings fall, consumer confidence hit. Calculated Risk US still deleveraging. Zero Hedge More