David Llewellyn-Smith


A warning to Canberra

From the ANU’s East Asia Forum comes this sobering assessment of the challenges facing the Chinese economy: China recently wrapped up the National People’s Congress (NPC) and Chinese People’s Political Consultation Conference (CPPCC) with the approval of the 12th Five Year Plan (FYP) (2011-2015). At the top of the new blueprint is a commitment to


Houses and holes forever!

The press is full of condemnation of Wayne Swan’s preliminary Budget speech yesterday. Personally, it didn’t strike me as so awful. In parts, it was a pretty candid take on the conundrum facing the economy: But this phase of the mining boom, mining boom mark II, will be very different to mining boom mark I,


Westpac: Leading indicators solid

From Westpac and the Melbourne Institute today comes leading indicators for the economy (full report below). And they’re solid: 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 4.7% in February 2011, above its long term trend of


Spinning the Budget

The Treasurer has a nice splash across the media today on why the Budget will be painful. The following from Yahoo7 is as good as any: The second phase of the mining boom won’t produce the “rivers of gold” of government revenue like the former coalition government enjoyed and wasted, Treasurer Wayne Swan says. In


April 20 links: Full faith and credit

Up: grains, gold, metals, energy. Flat: Aussie Down: ore, $US. Greek two-year higher still. Bloomberg Contagion: Portugal, Spain, Italy, Belgium Hurdles to Greek restructuring. Alphaville S&P negative watch smackdown. Naked Capitalism Asia backs US debt. Reuters American housing on the nose. Bloomberg, Calculated Risk QE 2.5. Bloomberg We need SWF. WSJ Tough Budget. SMH These cuts only mean one thing, they projected too much growth


Schizoid RBA minutes

The following is the domestic economy section of the Minutes on Monetary Policy released today. Any regular reader of MacroBusiness will be unsurpised by the PROCESSION of negatives noted during the meeting. Indeed, we might have written these notes ourselves over the past two months. In total, it’s a very negative assessment of the economy that


Another ponzi trick exposed

Merrill Lynch analysts (full report below) have sprung the banks on another method they use to expand the amount of money they can lend to anyone and everyone. From Banking Day: The long-standing use by banks of the poverty line as a proxy for living costs is the subject of a fresh, but sceptical, review


Mixed signals

There’s a lot of noise today. And yes, it’s threatening to be a “risk off” event. Some typical signs are there. Gold is up. Commodities and the Aussie are down. The euro got monstered. The $US bounced hard. But it isn’t that simple. Grains are up solidly which is definitely a growth/inflation play and there


April 19 links: Sovereign default

Rockets: $US, grains. Up: gold. Down: ore, metals, energy, Aussie. S&P puts US on downgrade watch. FT No more QE. FT Cutting the US deficit. Calculated Risk US bond volatility. Alphaville Richard Koo on the absurdity of the downgrade. Money Game Greek two-year goes parabolic. Bloomberg Contagion: Portugal, Spain, Italy, Belgium The toxic route to fiscal union. FT Chinese inflation. NYT Fixing prices.


Craig James capitulates

Wow, it’s funny what a bit of accountability can do. Last week I noted  how Craig James at Commsec was a part of a more general discourse that needed to stop looking down on Australians for adopting a laudable savings cultre and voila today we have a new tone. From Smart Company: Aussie businesses have


Car sales pop

Yesterday one of our more bullish commenters (BK) asked us what we thought of yesterday’s car sales. It’s not usually something we track but it probably should be so thanks for the question and here it is. First from the ABS: I always work in seasonally adjusted figures (unlike DE). The overall result here looks


Glenn Stevens in full flight

Grab a coffee and read the following speech given by Glenn Stevens overnight. I could nit-pick a  few things but basically it’s a cracker.  America, Australia, Asia and the World Economy Glenn Stevens Governor Address to the American Australian Association 2011 Annual Spring Lecture Lunch New York – 14 April 2011 Thank you for the invitation


Don’t spare the horses, James

There’s a piece today by Peter Martin and Phillip Wen in the Fairfax press about how: Australians are richer than ever, paying off debt at an unprecedented rate – but still losing confidence in the economy. New figures show wealth per person climbed to a record high of $266,600 at the end of December, easily


Westpac: consumers turn off housing

After yesterday’s ray of light in the NAB business survey, today we resume regular programming with another very average economic report. Following are some excerpts from the Westpac Consumer Confidence Survey for April with commentary (full report at the end). Lacklustre Consumer Sentiment The Westpac-Melbourne Institute Index of Consumer Sentiment rose 1.2% in April from104.1


NAB survey breaks the gloom

The NAB March Business Survey is out. It looks like a break in the clouds. NAB itself assessed conditions this way: Business conditions recovering while sentiment remains above trend. Inflation remains low, but purchase costs rising. The Australian economy appears to be showing signs of recovery following the flood-induced slowdown, with the NAB business survey


Two speed world

The IMF released it’s quarterly growth update overnight and it’s worth a read. The full report is available below. The introduction argues: The world economic recovery continues, more or less as predicted. Indeed, our growth forecasts are nearly unchanged since the January 2011 WEO Update and can be summarized in three numbers: We expect the world economy to grow at


Debt revulsion deepens

More dud data from the ABS this morning in Finance Commitments. Following are the key points. FEBRUARY KEY POINTS FEBRUARY 2011 COMPARED WITH JANUARY 2011: HOUSING FINANCE FOR OWNER OCCUPATION The total value of owner occupied housing commitments excluding alterations and additions fell 1.0% in trend terms and the seasonally adjusted series fell 4.8% PERSONAL


EIU report on China’s housing bubble

Below find the executive summary of a new report into China’s housing bubble from The Economist Intelligence Unit. It has some terrific stats and is well worth your time, even though its analysis and conclusion add up to the intensely suspicious conclusion that ‘this time it’s different’. One particular claim I’ll take umbrage with is


Swannie Mac

Hot from the office of the Treasuer:  More Support for a Competitive Lending Market Today I announce that I have directed the Australian Office of Financial Management (AOFM) to invest a further $4 billion in high-quality, AAA-rated Australian residential mortgage-backed securities (RMBS) to help smaller lenders continue to offer competitive loans to families and small


The underemployment question

Yesterday’s strong employment numbers from the ABS stoked an interesting debate in the comments about what degree of underemployment Australia suffers. To help the debate along I’ve drawn up the following table from the ABS Underemployed Workers report. It is annual only and from Spetember 2010 It clearly shows two things. First, that labour markets in


The mad, bad commodity rally

There’s something wrong with this rally. To be honest, beyond some vague notion of Japanese reconstruction demand, I can’t find any real cause for it. With China clearly not done with tightening, QE2 about to cease, the ECB hiking rates, global growth past its prime and oil punching through $1.10 on Gaddafi’s scorched earth policy,


April 8 links: Commodity peak

Dear reader, I’ll being going off grid for the next week. Links will be still be available, compiled by Delusional Economics. I’ll still be posting but probably not in the morning’s. Back soon. David Rockets: ore, metals, energy. Up: Aussie. Down: grains. Flat: $US Commodity inflation hitting US expectations. Bloomberg Core Logic registers new plunge in US housing. Calculated Risk These are


Will the RBA cut?

Right now, the economy is far weaker than media and bank economist blather is letting on, or understands. For that matter it’s far more weak than global markets are assuming. The reason is simple and goes back to a piece I wrote ten weeks ago: So, let’s take a closer look at where we are


March 7 links: A QE timeline

Rockets: ore, metals, Aussie. Mixed: grains. Flat: energy. Down: $US A QE timeline. Calculated Risk Must read QE and commodities. Alphaville QE and commodities II. Alphaville More hawkish rhetoric. Tim Duy The US natural gas boon. Carpe Diem Global economy slowing. PragCap Waiting for the great rebalancing. Martin Wolf Maiden wakes up. SMH Port Douglas fire sale. The Oz Ore market dynamics. Reuters


Housing finance shocker

The drumbeat of crappy housing data is getting louder and more frequent. From the ABS February Housing Finance we get the following: Here are a string of graphs to give you a feel for how bad the trends are: I call them bad, yuk, crap and foul. And here’s one last one to drive home the


Golden rocket

As gold again surged to record highs last night on dovish Bernanke comments and weak data, it’s time to revisit the rally. I first began recommending gold to anyone that would listen in early 2001. I was laughed at. Later that year, my friends laughed at me again. This time, it was a running joke


April 6 links: No dice

Rockets: metals. Mixed: grains. Flat: energy, ore. Down: Aussie, $US. Foreigners snapping up Treasuries. Bloomberg Basel III way too soft. Economics Intelligence (h/t Naked Capitalism) No early exit from QE2. Calculated Risk, Tim Duy No inflation says Bernanke. Bloomberg CDOs are back. WSJ Services ISM peaks. Calculated Risk Fukushima radiation off the charts. NHK China raises interest rates again. Bloomberg


Canberra please read: Roubini calls time on China

From Nouriel Roubini at RGE Monitor: I’m writing on the heels of two trips to China during which I met with senior policy makers, bank executives and academics, just as the government launched its 12th Five-Year Plan, intended to rebalance the long-term growth model. My meetings deepened my own impression and RGE’s long-standing house view of


Hardly hawkish

Below is the RBA’s Statement on Monetary Policy: At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent. The global economy is continuing its expansion, led by very strong growth in the Asian region. The recent disaster in Japan will have a noticeable effect on Japanese production in the