David Llewellyn-Smith


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:


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


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,


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.


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


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


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


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


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


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


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


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,


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


Will the Five Year Plan kill commodities?

A couple of pieces from around the world in the last few days set up an interesting and crucial debate for Australia vis-a-vis China’s new Five Year Plan. The first is by long-term China watcher and economic heavy-weight, Barry Eichengreen: China has been able to grow so rapidly by shifting large numbers of underemployed workers


Links March 11: Pick your poison

Metals solid. Grain futures spanked. Energy futures crushed. Ore eases. $US rocket. Aussie smashed. It’s China’s fault. Bloomberg It’s oil’s fault. FT Portugal, Greece, Ireland to default. Eurointelligence PIIGS relief. Greece, Ireland, Portugal, Spain, Italy, Belgium. German idiocy. Zero Hedge More planning for no fly zone. Bloomberg Gaddafi gains. Reuters US housing plunges to new low. Calculated Risk US deficit yawning. Calculated Risk Fed to


Links March 10: Relative calm

More pain for PIIGS:  Greece run. Ireland, Portugal, Spain, Italy, Belgium. Obama’s no fly zone is looking like PR. FT Libyan war. FT $US sideways. Grains futures flogged. Metals crushed. Energies, gold flat. Greece reaches do or die. To Vima (h/t Calculated Risk) Ireland up for haircuts. Labour (h/t Calculated Risk) PIMCO dumps all Treasuries. Zero Hedge No OPEC capacity increase. Reuters


Shocked consumers

In my previous post on Phil Lowe’s speech, I noted that the RBA is hawkish and clearly still concerned that consumers will binge as mining boom income passes through the economy. The killer quote was: Not unexpectedly, this decline in the relative price of manufactured goods has caught the attention of the household sector. In


The RBA shows an iron hand

Assistant Governor Philip Lowe has delivered a fantastic speech for those wishing to understand the current transition of the Australian economy and how the RBA thinks about it. It’s a very long speech and I suggest you read it in full. But here, at least, are a few highlights. First on inflation and purchasing power


Revenge of the PIIGS

Overnight, markets received a boost from OPEC member’s declaration that they’ll fill any existing or potential supply gap. Later, there was some doubt about the veracity of the claim. The energy complex nonetheless retreated a little, as did gold, and equities jumped. Metals were sold off early then bounced to be even. However, other markets remain


Links March 9: PIIGS panic

PIIGS panic: Greece run. Ireland, Portugal, Spain, Italy, Belgium record wides. The EU’s nasty convergence. Paul Mason EU asleep at the wheel. Reuters, WSJ Record petrol prices for Europe. Zero Hedge OPEC opens the spigot. FT No they don’t. Reuters $140 oil is Roubini’s recession trigger. Bloomberg Libyan rebels flip the bird. FT Rumblings in Kuwait. Arab News (h/t


NAB survey: little rates pressure

The NAB Monthly Business Survey for February is out and it shows a big boost to confidence in the month following the floods: However business conditions largely went the wrong way outside mining and remain weak across the services economy: One ray of light was prices paid, which continues to show moderating inflationary forces. Retail


Have the banks’ rate increases peaked?

From Banking Day today: Westpac’s chief executive, Gail Kelly, said yesterday that she intends to make out-of-cycle interest rate cuts when lower funding costs permit, which she hopes will be in 2013 or 2014. Speaking on the ABC’s 7.30 program, Kelly said she expected the bank’s average cost of funds to plateau towards the end of


Sell signal

I don’t know if you trade, but if you do, there are clear reasons to get cautious. There is a gathering storm over the global economy and market patterns are now making it plain that the risk of a lightening strike is outweighing the benefits of remaining outdoors. Regular readers will know that I have


Pettis on China’s Five Year Plan to consume

Exclusively from Michael Pettis’ newsletter: It seems the weird period of money-market tightening seems to have abated, at least for now.  My SWS colleague Chen Long tells me the following: The PBoC has injected liquidity through open market operations for the 16th consecutive week. The central bank issued RMB 1 billion in 3-month bills and RMB


Links March 8: Hunayn Revolution

Crisis scheduled for Saudi. Robert Fisk Risk off. Grains, metals hammered. Gold, energies, $US up. Ore monstered. NATO considering military option for Libya. Zero Hedge SocGen oil scenarios. Zero Hedge Oil at $110 is a problem. Bloomberg Libyan war. FT Fed at odds on QEIII. Zero Hedge Fed rate rise schedule. Calculated Risk Speculators turn on


Carr’s wrong turn

All right you lot, no more reference to myself in the third person. Today Adam Carr takes on the RBA (h/t The Lorax) in arguing that: So how is it that the household savings ratio has risen so sharply then? Surely consumption must have fallen to facilitate this? Okay, that sounds reasonable and I’m hearing


Ken Henry’s lucky country

On Friday evening, Treasury boss Ken Henry delivered his final public address before stepping down in March. At the University of Tasmania Giblin Lecture, Henry delivered his magnum opus, a broad review of Australian economic history spanning three centuries (full transcript below, h/t The Lorax). The document is a must read in full, but the


Links March 7: Double Dutch

Fog of war. BBC, FT Mapping Arab unrest. Le Monde Diplo Week ahead for the DOW. Calculated Risk US considers tapping oil reserve. Zero Hedge Saudi bans protests. Zero Hedge Financialisation and instability. PragCap Gittins! goes the full barf. SMH Only three days late. Gillard’s Dutch Disease makes news. SMH Covered bonds cap to go


Weekend reading: The Dictator fights

Gadhafi’s assault. FT Risk aaaaaawwwwffff. Barchart Prior oil shock impacts. Zero Hedge, Global Macro Monitor, PragCap IEA says Libyan oil in squeeze. WSJ Who’s at risk from oil spike? The Source Petrol echoes of 2008. Bloomberg US jobs report OK. Calculated Risk I, II US economy risks to upside. Tim Duy America’s collapsing taxes. Tax.com (h/t Naked Capitalism) ECB to raise