Unconventional Economist

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Weekend Reading: 25-26 June 2022

Global Macro / Markets / Investing: Federal balance sheet goes higher for the 4th straight week. “Quantitative Tightening” – St Louis Fed Fear in the Markets; Macro Commentary and Key Takeaways – Valkyrie Cryptofunds The Firefighter Arsonist’s Paradox — Central Bankers Are Now Worried About Inflation – Medium Chances of global recession nearing 50% –

27

New Zealand crowned world’s riskiest housing market

Bloomberg Economics has released its list of the world’s riskiest housing markets that are most vulnerable to a house price crash. Not surprisingly, New Zealand has taken out first place after experiencing extreme price growth over the pandemic, which helped drive home valuations to absurd levels based on price-to-rent and price-to-income ratios: The potential impacts

7

Dictator Dan suffers mass ministerial exodus

The Victorian Andrews Government will reshuffle its frontbench ahead of the state election in November, after four senior cabinet ministers advised that they will retire from politics. James Merlino, Martin Foley, Lisa Neville and Martin Pakula have announced that they will not contest the election, and will step down from their portfolios to give their

12

Household wealth hit record high $14.9 trillion before RBA tightening

The Australian Bureau of Statistics (ABS) yesterday released household wealth data for the March quarter of 2022, which revealed that total household wealth increased by 1.2% ($173 billion) over the March quarter 2022 reaching a record $14,891 billion: Total dwelling assets rose another 2.2% ($210 billion) over the quarter to a record high $9.7 trillion,

115

Australian house prices tumble as RBA rate hikes bite

CoreLogic’s daily dwelling values index tanked in the week ending 23 June, plunging by 0.33% across the five major capitals – the biggest weekly decline since January 2019: Every major capital city market experienced price falls, with the exception of Adelaide: Sydney and Melbourne house prices are tanking, down 1.13% and 0.79% respectively so far

23

Australia’s manufacturing jobs wipeout continues

The Australian Bureau of Statistics (ABS) yesterday released quarterly employment data, which shows the healthcare & social assistance industry has comprehensively driven the nation’s jobs growth over the pandemic, while the manufacturing industry continues to shed jobs. Australia added 113,600 jobs in the May quarter, led by wholesale trade (+43,700), with Education (-30,900) and manufacturing

24

Links 24 June 2022

Global Macro / Markets / Investing: Friday’s $2.25B Bitcoin options expiry might prove that $17.6K wasn’t BTC’s bottom – Around the Globe Bitcoin likely set up for ‘mean reversion’ soon, hints Lead Insights Analyst – Around the Globe Musk says Tesla’s new car factories ‘losing billions of dollars’ – Reuters Valkyrie Investments CEO: We’re firmly

20

Ardern watches in horror as Reserve Bank steers New Zealand into recession

This week’s Westpac McDermott Miller Consumer Confidence Survey recorded the lowest New Zealand consumer confidence reading in records dating back to the late 1980s. As shown in the next chart, the consumer confidence index has historically been a good leading indicator for economic growth, which suggests that New Zealand’s economy is headed for recession: This

8

Auction market sends dire signal for house prices

CoreLogic has released its final auction results for last weekend, which recorded a national clearance rate of only 55.2%: As shown above, auction clearances have tanked everywhere except Adelaide. Sydney continues to lead the nation lower with its clearance rate of 52.7% being the lowest since April 2020 during the first national COVID lockdown. Melbourne’s

7

Albanese takes axe to Coalition-linked senior public servants

The Albanese Government has wasted no time in replacing Coalition-linked senior public servants and department heads. The Saturday Paper’s Post summarised the changes as follows: Diplomat Jan Adams, Australia’s ambassador to Japan, and former ambassador for climate change under the Rudd government, will replace Kathryn Campbell as Department of Foreign Affairs and Trade secretary (The

6

NSW Labor fluffs Transurban with taxpayer millions

Earlier this month, the NSW Perrottet Government announced that it will subsidise residents to travel on Transurban’s private toll road network: About half a million NSW motorists will receive cash rebates paid quarterly into their bank accounts under the NSW Government’s Toll Rebate Scheme to be included in this month’s Budget… “This new program will

14

Australian cities tumble down liveability rankings

Of all the idiotic ‘awards’ handed out, The Economist’s ‘Most Livable City’ must surely rank near the top. Nevertheless, Australian cities continue to plunge down the rankings: The Austrian capital, Vienna, topped the rankings for the first time since 2019, with Melbourne in 10th spot — the highest-ranked Australian city — and tied with Osaka.

5

Public housing shortage costs $25b a year. Ramp immigration!

A new study by public policy consultants SGS Economics and Planning warns that an acute shortage of affordable housing amid decades of under-investment and rising population growth (read immigration) is set to cost taxpayers $25 billion a year if nothing is done: Social housing – a catch-all phrase covering public housing and other forms of

55

Don’t believe “the market” on Aussie interest rates

The latest futures market forecast has the Reserve Bank of Australia (RBA) hiking the official cash rate (OCR) to 3.5% by the end of this year before hitting 4.1% by May 2023: If the market’s projection proved correct, this would lift Australia’s average discount variable mortgage rate to around 7.5% – more than double the

10

Links 23 June 2022

Global Macro / Market / Investing: Bitcoin Suisse Director says crypto market is forming a bottom – Valkyrie Cryptofunds Goldman Warns US Recession Risk Now Higher and More Front-Loaded – Bloomberg Stock Market Jumps After S&P 500’s Worst Week in Two Years – WSJ Skyrocketing Rent Is Driving Inflation – Prospect Inflation is a worldwide

10

ACTU lashes RBA wage-inflation hypocrisy

Earlier today I lashed Reserve Bank Governor Phil Lowe for demanding wage suppression to tame inflation while Australian businesses are busy charging higher prices and earning record profits: Secretary of the Australian Council of Trade Unions (ACTU), Sally McManus, has launched a similarly scathing attack on Twitter, asking why economists and Phil Lowe haven’t called

18

Labor’s popularity won’t last unless it fixes energy crisis

Roy Morgan’s latest polling has the Albanese Government leading the Coalition (L-NP) by 6% on a two party preferred basis. This is an increase on last month’s Federal Election result, where the ALP won 52% to the L-NP’s 48%. However, Roy Morgan’s Government Confidence Index has fallen for three consecutive weeks amid rising concerns around