David Llewellyn-Smith


The AIG wakes up

It seems that the Australian Industry Group has finally gotten my message and has sloughed its genteel suasion of policy in favour of a full-throated roar for protection. The campaign is a macroeconomic gamble and may do nothing to alleviate members suffering. But, at least the manufacturing “crisis” I have been calling for has arrived


Shareholder confidence falls

It’s a slow data day today so for something a bit different here is the Global Proxy/Melbourne Institute Shareholder Confidence Survey for August. It doesn’t take Einstein to figure out that sentiment is falling but I guess some attempt to measure how far and fast is welcome. Doing so quarterly, however, isn’t terribly useful. GPS


Good news for oil (and Libya)

The FT is reporting that: Colonel Muammer Gaddafi’s 41-year rule over Libya was collapsing as rebel forces advanced deep into the capital, capturing his son, Seif al-Islam. As jubilant crowds filled Green Square at the heart of Tripoli on Sunday night, the rebels said they would grant safe passage to Col Gaddafi and his family


10 steps to manufacturing annihilation

Poor, poor manufacturing. It’s on the ten steps to doom: 1. Resources boom drives up the dollar and crushes competitiveness. 2. Canberra consensus embraces manufacturing’s destruction in the name of “adjustment” towards greater resources output. 3. Australian Industry Group (AIG) adopts a genteel approach to defending its members from annihilation. 4. Ken Henry proposes byzantine resource


What is Mike Smith up to?

Last Friday, the media was full of quotes from ANZ CEO Mike Smith about a coming crisis: “Europe is frankly a mess, with quite genuine concerns about the solvency of countries such as Greece, Ireland and Portugal [and] the contagion effect that has on countries such as Italy and Spain,” he said in a conference call. “In


August 22 links: Libyan hope

Fighting erupts in Tripoli. WSJ, FT What will Bernanke say? Calculated Risk, FT, Gavyn Davies US growth and earnings. Zero Hedge US rail traffic flat. PragCap Profits of doom miss the mark. SMH LOL More bank discounts. The Age Here comes the manufacturing ‘crisis’. The Oz Hooray! Get ye to the Pilbara you bludgers. The Oz (Being sarcastic) The ‘natural’


Weekend special: Perverse Chinese banking

Take an hour today to view this spectacular discussion about the contemporary Chinese banking system from G+ (h/t Patrick Chovanec). It includes the history of reform, the epic fallout of the 08/09 stimulus, real levels of debt, off balance sheet and non-performing loans, asset bubbles, the role of inflation, triggers for crisis, durability of growth,


This is not a test

Sadly I’ve been right. The US is plunging into recession. Not just idling in, plunging. Last night’s collapse in the Philly Fed leaves no room for doubt. Europe will follow. Next up in the US will be a new round of job losses. Look at this chart from Zero Hedge which compares the Philly Fed Index


US recession a certainty

From the excellent analysts at Forecast comes this note from yesterday: US recession a certainty on asset based probability model * Probability model currently arguing that a recession is a near certainty within next year * Backs up signals from the more coincident consumer confidence gauge * Argues for more ‘distribution’ as risk is unloaded


August 19: Disastrous data

Rockets: Treasuries, $US, gold Smacked: Euro,  Aussie, grains, metals, CRB Thunderstruck:  energy Ragin’ contagion: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year Germany


Do we have Dutch disease?

Well, obviously. But exactly what form it takes is open to question and fresh from the farm, Paul Bloxham of HSBC, takes the question on in a comprehensive new report. According to Bloxham, we aren’t ill at all (just as we have no housing bubble). However, we do face the following challenges: First, through banking


McKibbin’s parting shot

From The Oz today comes an interview with Warwick McKibbin as he prepares for departure from the RBA Board. Never one to go gently into that good night, and bearing the MB standard of Reynard the Fox, McKibbin has launched a final broadside against the structure of the RBA Board. Outgoing Reserve Bank board member


August 18 links: More undollarness

Up: Treasuries grains, metals, energy, CRB, gold, Euro,  Aussie Down: $US Contagion easing: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year Germany 2


Leading indicators still lousy

The Westpac/Melbourne Institute Leading Indicators Index is out today. I’ve criticised this index before because some of its components look obsolete, but as you can see, it has a pretty decent track record of anticipating trend changes in growth: And there’s not much doubt about what it’s signaling ahead today: weakness. The annualised growth rate


Fearful Symmetry sees intransigent Indian inflation

The inflation story remains a patchwork of trends feeding into an intransigent headline reading that has rarely dipped below 9% since early 2010. The overall situation has not deteriorated in recent months, but despite some kernels of hope, nor has it improved in concrete, unambiguous fashion. The RBI’s preferred core series is non-food manufactures. fearful symmetry buttresses that information  with


Marx is back

Recently, Nouriel Roubini’s exhumed of Karl Marx to help explain the current travails of the global economy. His argument included this spectacular paragraph: So Karl Marx, it seems, was partly right in arguing that globalization, financial intermediation run amok, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (though his


Euro doom

Delusional Economics has led the MB debate on Europe. His regular readers will know that he has identified the fundamental problem at the heart of the euro, structures that do not enable different members countries to be competitive. I have fought against this fundamental diagnosis, preferring to believe that the EU project is passionately supported


How China can (but won’t) save global growth

Once again we must turn to PRC owned and controlled media to get a balanced assessment of the prospects for Chinese reform policies, its contribution to global growth and the scope for stimulus in the event of a Western recession. Enjoy the following discussion and take a moment to wonder why Australian media is incapable


August 17 links: Where’s the growth?

Up: $US, Treasuries grains, metals, energy, CRB, gold Flat: Euro, Aussie Contagion peg: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year Germany 2


Saul’s productivity probe

As all economically literate folk know, only productivity growth can make you rich in the long run. As all economically literate Australians know, we’ve got none of it. In this magnum opus prepared for the RBA conference, Saul Eslake delves into why that is the case. Productive reading to you!


RBA musings

A couple of the banks have put put out commentaries on the RBA Minutes that are of interest. First up, Paul Bloxham of HSBC: Minutes show they were on the verge of hiking The minutes were mostly old news. But they do remind us just how close the RBA was to hiking, due to inflation


Wage growth slashed

The Melbourne Institute is out with its quarterly Wages Report and chalk it up as another data point showing that the labour market has shifted from strength to weakness: Total pay growth over the 12 months to August 2011 slowed sharply, to 2.9 per cent from 5.1 per cent in the 12 months to May. Wage


The theoretical rate hike

RBA Minutes are out (find them below) and they, as always, make fascinating reading. The entire meeting was dominated by discussion of external and internal risks.  Although there is a still quite upbeat assessment of the mining boom and ongoing concern about medium term inflation, the discussion about whether to raise rates seems to have


Is the US already in recession?

Following my earlier discussion on the different impacts different kinds of shocks, from the eminently sensible team at Forecast comes this analysis of the implications of the recently recorded collapse in US consumer confidence. Enjoy. M/T: Confidence shocks – why the US may already be in recession * Michigan confidence plunge is a red alert


Conference Board: China slowing significantly (not)

From Bloomberg: Aug. 16 (Bloomberg) — Growth in China, the world’s second-biggest economy, is slowing “significantly,” according to The Conference Board, a New York-based research organization. “The economy is significantly moderating right now and also over the next couple of months,” Bart van Ark, the organization’s chief economist, told Bloomberg Television from New York ahead of the release of


The shocks that matter

Last night, the US blog, Calculated Risk, had an interesting argument about whether or not “event” shocks have a different effect on consumer psychology than do more enduring economic shocks. He produced the following table to make the point that the recent debt-ceiling debacle was an event-driven blow to confidence that is likely to be


Fighting the Fed

Last night’s market action screams QE3. Anything physical – grains, oil, gold – went bonkers, whilst the $US and Treasuries got thrashed. Welcome to QE3 and a new  “undollar” rally. An “undollar” rally is, of course, the process of buying anything physical that is priced in US dollars and therefore is set to rise in price


August 16: Undollar rally

Rockets: grains, metals, energy, CRB, Euro, Aussie, gold Smashed: $US, Treasuries Contagion mixed: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year Germany 2


New car sales jump

From the ABS this morning comes July new car sales with a big bounce. Obviously there’s a seasonal aspect to but equally so, it was bigger than usual, coming after months of weakness. In part, there may be a snap back from the tsunami related delays for Japanese cars but there were no tax-related changes