Leith van Onselen

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Weekend Reading: 30-31 May 2020

Global Macro / Markets / Investing: Markets fall as Trump plans to hold a news conference Friday on China – The Hill Plunging solar energy prices spell bright future for clean electricity – DW A Universal Basic Income is Essential and Will Work – DW Fed Why Main Street is bleeding while Wall Street Soars

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Mortgage repayment cliff beckons

A Senate committee has been told that businesses and households have now deferred around $250 billion worth of loan repayments due to the coronavirus pandemic. However, Australian Prudential Regulation Authority (APRA) chairman Wayne Byres conceded that some customers will not be able to repay their loans when they are required to resume repayments: Australian Prudential

17

Vale Hong Kong as CCP overlords take control

China’s National People’s Congress has approved a draft resolution that paves the way for anti-sedition laws to be enacted in Hong Kong. The laws will end Hong Kong’s autonomy by banning “acts and activities” considered to be a threat to China’s national security, and will permit “national security agencies” to operate in Hong Kong. The

5

CBA: Huge fiscal stimulus props up household income

Gareth Aird, head of Australian economics at CBA, has published research on the extent to which household impacts have been supported by the federal government’s stimulus: Key Points Growth in government benefit payments has accelerated due to both the number of people receiving JobSeeker as well as the doubling in the fortnightly JobSeeker payment. Growth

16

Telstra divides and conquers NBN

History doesn’t repeat but it sure does rhyme. In 2011, the Gillard Government agreed to pay Telstra $9 billion in instalments for its fixed line customers to migrate to the National Broadband Network (NBN). This decision was made, in part, to remedy the structural mess made by the Howard Government when it privatised Telstra in

12

Lies, damn lies and international students

The education lobby has been caught out exaggerating the collapse in international students, which according to Department of Education data, is actually not that large: Only about 121,000, or 20 per cent, of some 606,000 primary student visa holders were stranded outside Australia on 17 May… The figures, which have not been released publicly, show

53

Australia “heading for small business disaster”

Simon Reynolds, founder of The Fortune Institute, claims Australia is “heading for a small business disaster” and has called for further assistance from the federal government: “We are heading for a small business disaster”… “The government has offered them temporary money, but that will run out fast. “In biblical terms, the government is handing out

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Links 29 May 2020

Global Macro / Markets / Investing: Coronavirus pushes global credit rating downgrade threat to record high – Reuters Some 42% Of Jobs Lost In Pandemic Are Gone For Good – Forbes COVID-era junk bond deals begin to go sour in just 2 months – Reuters ‘The Top End of the Economy Will Be Fine …

5

Australia’s regions hit hardest by COVID-19 job losses

The Grattan Institute has analysed job losses at the electorate level, which reveals that regional areas have been much harder hit than inner-city areas: Unsurprisingly, electorates with large tourism industries and a high share of hospitality workers have been hit especially hard… Workers living in rural and regional electorates have been hit much harder than

20

Property locusts swarm as first home buyers strike

Last week, we witnessed two of Australia’s main housing groups – the Property Council of Australia (PCA) and Master Builders Australia (MBA) – call for massive subsidies to stimulate new home construction. Then, Prime Minister Scott Morrison flagged massive housing stimulus. Now, Housing Industry Association (HIA) president Simon Norris says many prospective house buyers are holding

3

Actual capex falls less than expected in Q1

The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the March quarter, which registered a 1.6% seasonally adjusted fall in capex volumes over the quarter and a 6.1% decrease over the year (see below table). However, the 1.6% quarterly decline beat market expectations of a 2.6% decline. The first chart

4

Seek new job ads rebound 40% from lows

From Seek: Key insights (weeks 20 & 21 compared to April 2020): New job ads posted on SEEK during the fortnight ended 24 May are up 39.7% compared to April 2020. This is a further uplift from 26.8% In the previous two weeks. The biggest contributors to job ad growth are Trades & Services, Hospitality

13

NZ facing worst ever economic downturn

The Reserve Bank of New Zealand (RBNZ) yesterday released its bi-annual Financial Stability Report (FSR), which stated that the nation faces its sharpest economic contraction in 160 years: In New Zealand, border closures and economic lockdowns have led to an unprecedented decline in economic activity. Even accounting for an expected recovery in the second half

53

Investors dump rental properties

People often say that investors are the marginal price setters in the property market, especially in Sydney and Melbourne. If true, the below story from The AFR will have the property industry concerned, given investors are reportedly set to dump rental properties: One in three renters face housing stress and are at risk of defaulting

29

No university bailout for international students

Australia’s universities continue to cry poor over the reduction in international student numbers, signaling heavy financial and job losses: While universities across Australia have different exposures to the coronavirus-induced downturn, revenue is estimated to drop by $3 billion this year collectively. That could cause the loss of up to 21,000 jobs, with 7,000 estimated to

7

Aussie jobs market continues to improve

Callam Pickering, economist at global jobs site Indeed, has provided another update on Australian job postings. According to Pickering, new job postings have more than doubled since their low on 19-April: Total job postings are tracking 51% below their trend last year, but have clearly improved over recent weeks: Pickering has also deconstructed ABS data

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Australia’s superannuation system drives inequality

Robert Lechte, a welfare-state advocate living in Melbourne, believes that Australia’s superannuation system “enshrines inequality”: Like other market-based schemes, superannuation has reinforced and accelerated existing inequalities. Because super is primarily funded by employer contributions, it is self-evidently terrible for the unemployed or those out of paid work due to disability, sickness, or caregiving. They earn

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Links 28 May 2020

Global Macro / Markets / Investing: M2 Money Supply – Am I wrong to be freaked out about this chart? – St Louis Fed Central bank asset purchases creating ‘fake markets’, analyst warns – Financial Post Global stocks rally and break records – CNBC Americas: Canadian Real Estate Prices Expected To Drop Up To 18%

24

Are new car sales about to boom?

According to Robert Gottliebsen, new car sales may be about to boom: Google searches for new and used cars have risen rapidly in recent weeks and this could signal that demand for new and used cars has finally turned… The car industry should benefit from further COVID-19 relaxations. Australians have been slashing their expenditure on

50

Time QLD opened up

The Queensland government is reviewing its border restrictions on a monthly basis, as it faces growing pressure to relax the ban on interstate travellers. However, Premier Annastacia Palaszczuk says the state will not re-open its borders until no new coronavirus infections have been recorded in New South Wales and Victoria for 28 days. They are