David Llewellyn-Smith


A lonely voice on manufacturing

Money talks and so there’s nothing like a billionaire or, at least, CEO of a multi-billion dollar firm lending support to your ideas. On that note I can only applaud the lonely voice of Andre Liveris at the Australian American Leadership Dialogue: One of Australia’s most senior expatriate executives has been lobbying political and business


Is recession priced in?

Nope. Not even a bit. Sorry. That doesn’t mean that whatever it is that’s coming for Western growth isn’t priced in, but it definitely is not recession.  Needless to say, then, if you think a recession is coming then ipso facto markets are going much lower as well. The Economist has a very useful take on


August 15 links: Recession musings

Inflation may have stabilised in July. Bloomberg The softening? Too late for falling oil to save the US. James Hamilton Week ahead for the Dow. Calculated Risk Is a recession priced in? Zero Hedge Brazilian echoes. NYT Marx was right – Roubini. Alternet (h/t NakedCapitalism) Fearing Europe. Barrons Fed boxed in. Barry Ritholz Glad someone else finally noticed


Stimulus dreaming

Today the media is full of an ignominious campaign for monetary easing. There’s no need to point it out. It’s all over, with housing and share market spruikers everywhere cajoling, insisting, begging and positioning for rate cuts. It’s increasingly likely that they’ll be delivered but not yet in my view and not at all if


August 12 links: Short squeeze

Rockets: grains, metals, energy, CRB Flat: Euro, Aussie, $US Down: Treasuries Smashed: gold 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


The employment picture

So, the employment market has turned. Kudos to the rather volatile but this time correct Roy Morgan measure. As you can see from the above seasonally adjusted chart, the unemployment rate rose in all states except WA (down .2%). The big jumps were in VIC (up .5%), SA (up .4%) and QLD (up .2%). NSW


Employment bottoms

Just out from the ABS, unemployment rose to 5.1% in July. Will return with further analysis: JULY KEY POINTS TREND ESTIMATES (MONTHLY CHANGE) Employment increased to 11,448,500. Unemployment increased to 598,500. Unemployment rate steady at 5.0%. Participation rate decreased to 65.5%. Aggregate monthly hours worked increased to 1,616.9 million hours SEASONALLY ADJUSTED ESTIMATES (MONTHLY CHANGE)


August 11: Oh dear

Parabolic: gold, $US Up: Treasuries, energy, CRB Flat: grains, metals Crushed: Euro, Aussie 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


Consumers head for Hades

It will come as no great surprise to readers that consumer confidence is plumbing new lows in the Westpac/Melbourne Institute Survey today. Note, however, that three-quarters of the survey was conducted prior to the market crash of the past week. I have not excerpted anything from the document for the simple reason that you really


Limits to growth

And so, I was right and wrong. Or perhaps, it is wrong and right. The FOMC has decided against a new round of QE. However, it has also signaled that it will do something, presumably another round of QE. Global equities bounced anyway from their extremely oversold condition and enjoyed a melt-up into the close.


Full FOMC Statement

Below find the full FOMC Statement. And below that, find a useful guide to the changed language from Zero Hedge. Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected.  Indicators suggest a deterioration in overall labor


August 10 links: The milk of paradise

Parabolic: gold, Treasuries Up: ore, Flat: Euro, grains, $US Crushed: Aussie, energy, metals, CRB Contagion returns: 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


Paths of recession

As I wrote this morning, I’m of the view that global equity markets have begun to price a forthcoming Western recession. Since then markets have rallied hard on the hope of QE3 tomorrow, which would change the game, but I thought anyway that I would trace the possible lines of weakness in the global economy and


Bank CDS prices rocket

Find below a chart of recent CDS price movements for the major banks:   And for a longer term perspective, try this one: This chart tells us a couple of things. First, the cup and handle formation identified last week has now delivered its promised surge and we have broken through the level set in


NAB Survey shows further weakness

For what it’s worth, the NAB Business Survey for July is out and shows steadily increasing weakness. Here’s the commentary: Business conditions weaken showing an economy continuing to lose momentum and traveling below trend. Confidence remains subdued in the face of continuing uncertainty – but carbon didn’t appear to cause further retreat. Growth in the domestic


Housing finance bounce ends

JUNE KEY POINTS VALUE OF DWELLING COMMITMENTS June 2011 compared with May 2011: The trend estimate for the total value of dwelling finance commitments excluding alterations and additions rose 0.5%. Owner occupied housing commitments rose 0.9%, while investment housing commitments fell 0.4%. In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations


Where’s the bottom?

So, where is the bottom? To begin to fathom an answer, me must first understand why markets are falling. Last night’s action offers some clues. Although there is plenty of press blaming the US downgrade, it is far more than that. For starters, the downgrade has seemingly done nothing to the attractiveness of Treasuries as


August 9 links: Freefalling

Parabolic: gold, US Treasuries Up: ore, $US Down: Euro, grains Crushed: Aussie, energy, metals, CRB Europe rips in on ECB: 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


Head and shoulders horror

I know we’ve had a bad day on the sharemarket and I’m no doubt doing a bit of data mining as a result. But I’ve noticed a rather nasty sequence of head and shoulders patterns forming on the S&P500. First, the 1 year chart: That’s a beauty isn’t it? We reported it last week and


G7 spouts twaddle

Here is the full statement of the G7 released recently: In the face of renewed strains on financial markets, we, the Finance Ministers and Central Bank Governors of the G-7, affirm our commitment to take all necessary measures to support financial stability and growth in a spirit of close cooperation and confidence. We are committed


Job ads flat

The ANZ July job market report is out and shows a slight deterioration from May: Total job advertisements on the internet and in newspapers decreased by 0.7% in July to be 8.3% higher than a year earlier. Newspaper job ads fell by 0.5% m/m, while internet job advertising decreased by 0.7% m/m. Newspaper advertising is


Pricing catastrophe

I have argued in support of Bill Evans’ end of year rate cut call. But today’s overnight index swaps (OIS) are pricing  50 basis points of cuts for the September RBA meeting and look overdone to me: 7/09/2011    4.256% 5/10/2011    3.879% 2/11/2011    3.641% 7/12/2011    3.508% 8/02/2012    3.370% 7/03/2012    3.325% 4/04/2012    3.301% And yes, that’s six


Crisis of the West

In one very important sense, the Standard & Poors downgrade of the United States credit rating is spot on. The debt ceiling debacle that preceded the ratings action showed an extraordinarily destructive political culture at work in Washington. To take the Federal Government within inches of default for no apparent reason was beyond infantile and


Fog of the aged

Have you ever wondered why MacroBusiness exists? Why it is necessary for a dozen thirty and (just) forty-somethings to get together and write their buns off about the Australian economy? The first and most vital clue in answering the question is the ages of the MB team. At MB we are seasoned enough to have


August 8: At the precipice

Israel crashes. Bloomberg ECB mulls massive bond purchases. WSJ French-German statement. ZeroHedge Europe’s Lehman moment. BBC S&P wrong, no recession. Buffet Recession is upon us. Gavyn Davies, Nouriel Roubini Week ahead for the Dow. Calculated Risk  Three things the Fed can do. WSJ Nothing in the Australian press of value.