Unconventional Economist

198

Weekend Reading 6-7 March 2021

Global Macro / Markets / Investing: The ‘Elon Musk Effect’ Takes Aim at Crypto Markets – Investing Global oil companies have committed to ‘net zero’ emissions. It’s a sham. – The Guardian Dollar Is Increasingly Overvalued as Deficit Widens, IIF Says – Bloomberg Fed lures banks to buy unwanted US Treasuries – Asia Times Market

12

Government rejects plea to bring international students back

Earlier this week, the chief lobbyist for the international education industry, Phil Honeywood, called on the federal government to run charter flights and separate quarantine facilities to bring international students into the country: “There’s no reason why we can’t have charter flights bringing the students in, walking them across the tarmac into separate quarantine facilities

7

Aged care tax rejected by Frydenberg

Treasurer Josh Frydenberg has acknowledged that funding for the aged-care sector needs to be increased, but he says that growing the economy is the best way to do this. The final report of the aged-care royal commission recommended increasing funding for the sector via the tax system. However, Tony Negline from Chartered Accountants Australia and

11

Mortgage stress ratchets back up

Digital Finance Analytics (DFA) has released mortgage stress data for February, which ratcheted back up to 41.8% of households, up from 39% in January. DFA’s survey is based on a survey of 52,000 people and measures free cash flow. It attributes the lift in mortgage stress to three main factors: people are spending more and

2

States pressure ScoMo on quarantine

State Governments are growing increasingly agitated over quarantine arrangements and are expected to turn up the pressure on the federal government at today’s National Cabinet meeting. A fight has broken out between the NSW Government and its counterparts in Queensland and WA after NSW sent both states an invoice for $7 million (WA) and $30

4

PBO: National cost of COVID response to reach $327bn over five years

The Parliamentary Budget Office (PBO) has released its National Fiscal Outlook, which estimates that the combined net debt of Australia’s three levels of government will blow out to almost $1.3 trillion in the five years to 2024. Federal, state and local governments are forecast to collectively spend some $327 billion on COVID-19 measures over the

4

Household disposable income tanks as stimulus unwound

According to Deloitte, $24.2 billion of fiscal stimulus was withdrawn from the Australian economy in the second half of 2020 as JobSeeker and JobKeeper payments were tapered down, alongside the reduction of early superannuation withdrawals (see next chart). Accordingly, Wednesday’s ABS national accounts release for the December quarter reported a sharp decline in household disposable

11

Premium properties are leading the boom

CoreLogic’s head of research, Eliza Owen, has published a new report examining the movements in property values at low (bottom 25%), middle (middle 50%) and high (top 25%) price points. The report shows that value growth across the most expensive quarter of the market has overtaken the other broad valuation bands. This comes after the

23

Links 5 March 2021

Global Macro / Markets / Investing: Treasuries on the move, U.S. 10-year yield back at 1.47% – CNBC A $21 Trillion Treasuries Mystery Is Bedeviling Global Markets – Bloomberg Bitcoin rises 5% to $50,942.58 – Reuters The pandemic has worsened Africa’s debt crisis. China and other countries are stepping in. – Washington Post Even With

10

Migration agent: International education is an immigration scam

Melanie Macfarlane, founding member of the International Student Education Agents Association and member of the Migration Institute of Australia, has penned an article highlighting how the international education industry is the key feeder of the ‘Big Australia’ mass immigration policy. Macfarlane basically admits that Australia’s international education industry has only grown so big because studying

1

Aussie retail sales continue upward march

The Australian Bureau of Statistics (ABS) has released retail sales data for January, with sales turnover rising 0.5% month-on-month to be up 10.6% compared with January 2020. The next chart shows the strong rebound after April’s record 17.7% monthly decline caused by the national coronavirus lockdown: Food retailing (+1.6%) and Other retailing (+1.4%) drove the

21

How to fund aged care reforms

Around $27 billion was spent on Australia’s aged care system in the 2018-19 financial year, of which the federal government contributed around $20 billion. Economists warn that implementing the minimum recommendations of the aged-care royal commission would require annual expenditure on the sector to be increased by up to $9 billion. However, this could rise

2

Big retailers hit pay dirt as economy recovers

Yesterday’s national accounts data for the December quarter showed that that household spending rose by 4.3% in the December quarter, with household consumption accounting for 2.3% of the nation’s 3.1% growth in GDP. The economy’s rebound from the COVID-induced recession is proving to be a boon for listed retailers, with many enjoying strong growth in

22

Demographia: Australia 3rd most unaffordable housing market

The 2021 Demographia International Housing Affordability Survey has been released and, once again, it ranks Australia as having one of the most expensive housing markets out of the countries surveyed. This year’s report assesses 92 major markets (metropolitan areas) in eight nations for the third quarter of 2020. The nations assessed are: Australia, Canada, Hong

23

Links 4 March 2021

Global Macro / Markets / Investing: Jeff Bezos would pay over $ 5 Billion a year under Warren Wealth Tax Plan. – CNBC Startups Lose Innovative Edge Under Corporate Funding. When an established tech company invests in a startup, innovation suffers – Medium American Homeowners Are Adding Fuel to Bond Market Sell-Off – Bloomberg Experts

9

Roy Morgan business confidence strongest since 2014

Roy Morgan Research has released its business confidence survey for February, which reported its “highest three-month average sentiment since January to March 2014”. Business confidence rose 0.3pts (+0.2%) to 120.8 in February to be 7.3pts above the long-term average of 113.5 (see next chart). Business Confidence is now 16.2pts higher than it was a year

18

Perth property headed for mega boom

All indicators are pointing to a mega boom for Perth’s property market. According to CoreLogic’s February dwelling value results, Perth recorded the strongest quarterly value increase of all capital cities, with prices surging 4.3%. This was the strongest price growth since 2006. The latest market indicators from the Real Estate Institute of Western Australia (REIWA)

8

Australian border ban extended until June

Fairfax reports that the federal government has announced an extension of Australia’s international border closure until at least 17 June 2021. This will mean that Australia’s international border will have been shut for 15 months after initially closing on 17 March 2020. Health Minister Greg Hunt says the Australian Health Protection Principal Committee had recommended

10

New Zealand house prices go vertical

CoreLogic has released its New Zealand dwelling value results for February, which shows that price momentum continued to gather steam. Dwelling values nationally surged by 2.6% over February to be up a whopping 7.6% over the quarter and by 14.5% year-on-year. As shown in the next chart, quarterly value growth is running at its hottest