Houses and Holes

39

What’s freaked Swan out?

As I posted last night, the Treasurer, Wayne Swan, released a rather dour communique to Parliament indicating that Australia was ready to take on GFC 2.0. The timing of the missive seemed fairly random, though it did obviously seek to bring pressure to bear upon Europe prior to the G20, such as it is. I

22

A black Swan

In a Ministerial Statement released this evening, Treasurer Wayne Swan gave up on the endless China boom rhetoric and launched a new rather bearish narrative. The release appears to have three aims. First, it’s fair bet we’re seeing the ground shifted for the news that next year’s surplus is evaporating as we speak. Second, the

35

Refinancing boom

ABS Housing Finance Commitments is out for August and there’s a big move on. Here’s the state by state chart for total value of new loans: As we’ve noted many times, housing finance moves in lock step with price rises so surely prices are about to rocket in Sydney and Melbourne! Well…no. And here’s why:

4

Consumer confidence bounce stalls

So, the bounce in consumer confidence has stalled, increasing by just 0.4% in October from 96.9 in September to 97.2. There is a interesting picture building around consumption at the moment. On the back of flattening expectations for rate hikes, we’ve seen a little pop in retail sales, pent up demand if you will. I’ve also

66

Under attack

Dear Reader, MB comments are under attack from some unpleasant person or persons replicating user names and posting insulting comments willy nilly. No premium content details have been hacked. Of course we take this as a signal that we are doing an excellent job and upsetting some interest or another. For the time being, I’ve

7

The historic parallels for trade war

In his masterpiece, The World in Depression, Charles A. Kindleberger concludes the major cause of the Great Depression was a paralysis of leadership caused by the decline of the UK and the immaturity of the US. Neither was able to provide leadership and put themselves forward as the economy of last resort. Kindelberger argues that during

23

NAB survey indicates no rate cut

The NAB survey has put in a solid performance for September. Business confidence remained subdued but conditions and trading jumped. So too did the employment index. Forward orders was still in deep negative territory and exports are subdued. Given the backdrop of global volatility, I see this as a very good result. As does NAB:

26

The perfect storm driving savings

The IMF released a treasure trove of stuff on Australia last week. I’ve been enjoying it immensely. Partly because it’s very good and in line with the MB view of the economy and partly because I’ve had the time to read it thoroughly. The campaign for national ignorance spearheaded by Gittins! ensured there was no

41

Policy green shoots

Who will ever forget Ben Bernanke’s “green shoots” in March 2009. It was Bernanke’s finest hour as a forecaster and was taken up and boosted in markets by discussion of the “second derivative” economic indicators that showed that the pace of economic slowing was slowing. The rest is history with the moment marking the start

53

China’s lonely power

Late yesterday, the Lowy Institute released a fascinating new study by John Lee (a former colleague of mine at The Diplomat) into whether or not China will be able to convert its growing economic power into strategic dominance. Regular readers will know that the schism in Australian policy on this topic has been a bugbear

27

Job ads fall in adjustment overshoot

The softening of the jobs market predicted at MB earlier this year is showing more evidence, with ANZ job ads slowing again in September: Job advertisements on the internet and in newspapers decreased by 2.1% in September. Annual growth in total job advertisements decelerated to 3.1% y/y. • Newspaper job ads were flat in September, while

74

Should we occupy Martin Place?

Last week, Paul Krugman wrote the following on the growing protest, Occupy Wall Street: There’s something happening here. What it is ain’t exactly clear, but we may, at long last, be seeing the rise of a popular movement that, unlike the Tea Party, is angry at the right people. When the Occupy Wall Street protests

30

IMF stress tests China/Australia bust

With the Gittins! campaign for national ignorance going swimmingly, it is not at all surprising that we must look offshore for a sensible risk assessment of Australia vis-a-vis China. On cue, as a part of its annual report on the Australian economy, the IMF has produced a three part stress test of the Australian fallout in

24

A bullhawk leaves the flerd

Throughout 2011, the Australian economics fraternity, media and the community more broadly have been under sustained assault from above. The attack came not from magpies in heat, nor a swarm of killer bees, but from a hitherto unknown creature, the bullhawk. The bullhawk is an occult animal that juxtaposes incompatibles. It is half interest rate

77

Merrill Lynch: China bust upon us

Zarathustra wrote earlier this week: Deutsche Bank is expecting  a 10% correction in home prices because it would be a disaster if prices are allowed to fall by, say, 30%: Those who understand China’s political economy should know that a 15% decline in average property prices in 35 cities within a few months must be accompanied

84

Ridout must resign

I’ve spent some time pointing out the flaws in the Australian Industry Group (AIG) approach to defending its manufacturing membership against the annihilation that Canberra’s economic boffins have planned for it. To me it is plainly obvious that to save manufacturing, the AIG must go way beyond its efforts to date. Those efforts have largely

32

Bull trap

So, we’ve seen a bounce in the American and Australian economies recently. In the US, September has proved better than August with a modest lift in the manufacturing indices, consumer confidence and stable service sector activity, even if personal consumption has stalled. Markets are betting on a decent employment number tomorrow night. In Australia, we’ve

30

Ken Henry revisits the RSPT debacle

Peter Martin reports this afternoon from the Tax Summit that: Former Treasury boss Ken Henry has conceded he mishandled the selling of the mining super-profits tax the former Rudd government proposed last year. Addressing day two of the tax summit in Canberra, Dr Henry said his review took for granted that Australians understood the difference

18

Iron bomb

Australia’s lifeline in China, John Garnaut reported this morning the worrying news that: The Chinese steel mills that have been holding up the Australian economy are under pressure, with steel prices falling and iron ore prices expected to follow. Robust steel demand in China led Australia to post a record $5.9 billion in iron ore

34

Bull versus bear is dead

As the S&P500 rocketed into the close this morning on yet another European bailout rumour, it occurred to me just how broken the equity market is right now. We are trapped in bear market dynamics of grinding sell-offs punctuated by explosive short-covering rallies with no end in sight. The obvious conclusion to draw is that we

19

China’s hard landing conundrum

A Chinese hard  is not an option, at least while there are other options. So, I have been asking myself for the past few months how to avoid a hard landing, or to delay it at the very least.  The most popular defence of the bullish camp (or the most popular argument against the bearish camp)

19

Bill Evans looking good

Westpac’s Bill Evans cut from the pack back in July to forecast year end rate cuts. He was ridiculed at the time by many, including some especially infantile drivel from the bullhawks. Well, after today’s RBA meeting he’s looking awfully good. And today issued a note reaffirming his stance: Westpac Economic update As expected Reserve

12

Record exports

ABS trade figures are out today and there’s no doubt about it, August was a cracking month, posting a big jump to record export revenues above $28 billion for the first time and delivering a surplus of $3.1 billion, the second highest ever. The good news came from one primary source, iron ore: As you

29

NSW units approvals rocket

August building approvals are out and month on month approvals nationally jumped 11.4% from a depressed level. Private sector housing approvals remained very subdued, falling 1% m/m and 9.5% y/y. However units approvals rocketed 35%, propelled mostly by a huge jump in NSW. There were also smaller rises in VIC  and QLD but both remain in down

11

Global PMI’s point down

Overnight, global PMIs painted a gloomy picture of advancing economic weakness. First up, the J.P.Morgan Global PMI dropped into recession for the first time since June 2009, falling from 50.2 in August to 49.9 in September: The new orders index showed greater weakness with a 0.9 point fall: Ironically, the US was the stand out perfomer, with

24

Manufacturing is getting murdered

Nice. The raging recession in Australian manufacturing is worsening. The PMI dropped to a new cycle low, having been in effective recession for over a year. The internals of the survey are very nasty. 10 out of 12 sectors are shrinking: Capacity utilisation is collapsing, suggesting more job losses are ahead: The rate of new

21

Shall we pull the fiscal or monetary lever?

For the first time in many months, nobody is talking about the RBA in a rates meeting week. Ironically, the silence accompanies a context which has made a shift in monetary polcy more likely than at many previous meetings this year. The global economy is unequivocally slowing, recession talk in Europe and the US is now