Unconventional Economist

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Links 21 October 2019

Global Macro / Markets / Investing: Stocks would rally if Trump quits, Wall Street firm predicts – CNN Goldman Banker Arrested Over U.S. Insider Trading Allegations – Bloomberg Global economy: ‘we must do everything possible’ to avoid global ‘fracture’ caused by US-China tensions, urges UN Secretary-General António Guterres – CRWEWorld Ray Dalio says the world

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Weekend Reading: 19-20 October 2019

Global Macro / Markets / Investing: The IMF warns that 40% of all corporate debt in major economies could be considered “at risk” – Reuters The zombie robot argument lurches on: There is no evidence that automation leads to joblessness or inequality – EPI Recession Panic! Experts Are Pessimistic About The Economy! – Zero Hedge

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Unions threaten Labor over FTA treachery

Labor has attracted scorn from union leaders after the party’s caucus voted to support the federal government’s proposed free-trade agreements (FTAs) with Indonesia, Hong Kong and Peru. Construction, Forestry, Maritime, Mining & Energy Union national secretary Michael O’Connor says the decision will cause ongoing tensions between sections of the union movement and Labor. From The

3

One million Aussies forgotten in unemployment statistics

According to the latest official figures, around 709,000 people are currently unemployed in Australia. However, Jim Stanford from the Centre for Future Work suggests that the unemployment rate could be as high as 19.7 per cent if both the underemployed and the ‘marginally attached’ are taken into account. The underemployed are those people who are

27

Australia’s vast household debt a giant economic millstone

Over the June quarter, Australia’s household debt hit a record high 191% of household disposable income, after roughly tripling since the late-1980s: The latest Bank for International Settlements (BIS) global household debt data also confirmed that Australia has the second highest debt load in the world behind Switzerland, as well as the second highest average

4

Property locusts swarm WA Government

With Perth dwelling values having crashed by more than 21%: Property lobbies have met with the Western Australian Government to demand a housing stimulus package. From The West Australian: Major property industry players met senior McGowan Government ministers yesterday to plead their case for a sweeping stimulus package aimed at breathing life into the WA’s

5

Will lower mortgage rates bring property investors back?

From CoreLogic’s head of research, Tim Lawless: Rising home values, low mortgage rates and comparatively attractive rental yields are bringing investors back into the housing market. Despite the bounce in investment activity since June, investors still comprise a relatively small proportion of housing activity. The value of home loans committed to by investors has recorded

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CoreLogic weekly Australian house price update: To the moon

In the week ended 17 October 2019, the CoreLogic 5-city daily dwelling price index, which covers the five major capital city markets, surged another 0.39%: The rise in values was again driven by Sydney and Melbourne: Quarterly dwelling values continue to rise strongly, again driven by Sydney and Melbourne, where prices are rocketing: The rebound

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Low-paid “skilled” visas rush Australia’s jobs market

Australia is commonly regarded as running one of the world’s best ‘skilled-based’ immigration programs. This view is based on the fact that the ‘skilled stream’ comprises around two-thirds of Australia’s non-humanitarian permanent migrant intake, as illustrated in the next chart: MB has consistently challenged this view on a number of grounds. First, while around two-thirds

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41% of international student graduates unemployed or enslaved

A new study from the International Education Association of Australia (IEAA) has found that a large share of international students on subclass 485 (graduate) visas are struggling to find meaningful employment, with 22% not working and many more performing low-paid, unskilled work. The study also found that the income profiles of these temporary graduate visa

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Links 18 October 2019

Global Macro / Markets / Investing: Bank of England boss says global finance is funding 4C temperature rise – The Guardian Recession Terror! World Economy Heading for Worst Year Since Financial Crisis! – WSJ Recession View: IMF sounds alarm over $19 trillion corporate debt mountain! – The Telegraph Global economy! Awfully high chance of economic

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Final auction clearance rate surges to mid-70s

Last weekend, CoreLogic released its preliminary auction clearance rates, which revealed the following results: Today, CoreLogic has released its final auction results, which reported a 3.8% decline in the final national auction clearance rate to 73.5% – well above the same weekend last year (47.0%) and above last week’s 67.6%: As you can see, Sydney’s

3

The next houses shortage will not boost rents or prices

Instead, it will lower living standards. With dwelling construction crashing, and population growth remaining turbo-charged on the back of never-ending mass immigration, pundits are now tipping that Australia’s housing market will soon shift back into chronic shortage: “CBA estimates suggest an undersupply of apartments from 2020,” CBA economist Kristina Clifton said… Ms Clifton said an

18

Labor betrays workers to support wage-crushing Indonesian FTA

Labor’s caucus will shortly decide whether to support the federal government’s proposed free trade agreements (FTA) with Indonesia, Hong Kong and Peru. Sources have indicated that Labor is unlikely to oppose the legislation. Meanwhile, the ACTU is lobbying Labor MPs to oppose the bill, due to concerns about issues such as allowing thousands of Indonesians

12

VIC Government chases ‘dodgy’ builders for flammable cladding costs

In July, the Victorian Government launched a $600 million funding package to remove dangerous flammable cladding, the cost of which is to be split 50/50 by taxpayers and a new developer building levy. Now, the Victorian Government has announced new laws to chase ‘dodgy’ builders for the costs of rectification. From The AFR: On Tuesday

14

Desperate developers puke cash for unwanted apartments

As stalled developments mushroom across Australia’s east coast following a surge in completions: The AFR reports that desperate developers are offering up to $20,000 in cash to clear the backlog of high-rise apartments and house-and-land packages: Cash payments of $20,000 are being offered to buyers of high-rise apartments around Melbourne’s central business district amid concerns

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Indian international students ditch Australia for UK

In recent years, India has been the marginal driver of Australia’s international student enrolments, taking over the growth mantle from China. Over the past two financial years, Indian international student enrolments surged by 39,600 (62%), easily eclipsing the 34,100 (20%) growth in Chinese international students over the same period: It is a similar situation with

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Chinese visa arrivals surge to record high

The Australian Bureau of Statistics on Tuesday released its overseas short-term arrivals and departures figures for August. The number of short-term visitor arrivals rose by 6.4% in the year to August, whereas short-term resident departures only rose by 0.7%. The ratio of annual arrivals to departures also rose to 81.5%: That said, net short-term arrivals

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Links 17 October 2019

Global Macro / Markets / Investing: Bank of England boss says global finance is funding 4C temperature rise – The Guardian Goldman Profit Drops 26% as Deals Slow, Tech-Stocks Struggle – WSJ The IMF Is Utterly Indifferent to the Pain It’s Causing – Truth Dig IMF-global growth slowing to rate not seen since financial crisis

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Building more dams won’t make it rain. Nor will bringing in millions

The Australia Institute’s Maryanne Slattery has hit out at the new found push to build dams across regional Australia to alleviate drought, arguing that it would be both costly and pointless given there will not be enough rain to fill them due to climate change: …if new dams can solve Australia’s water problems, why didn’t

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Jobspocalypse as 5.5 people compete for each entry-level role

Anglicare has released a report which shows that there are 5.5 people competing for every entry-level job position. From The Guardian: Australia’s most disadvantaged jobseekers are forced to compete against growing numbers of underemployed people for a dwindling number of suitable jobs, a report has found… Anglicare’s Annual Jobs Availability Snapshot, released on Wednesday, found

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$15b airport rail tunnel highlights problem with in-fill infrastructure

In September last year, ACCC chairman Rod Sims warned state governments against accepting unsolicited bids for infrastructure projects: “The ACCC considers that state governments should only award new toll road concessions through a competitive bid process, and not following an unsolicited proposal unless there is a truly compelling reason,” Mr Sims said. “Accepted unsolicited proposals

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ABS boss warns further funding cuts will dumben economy

Australia’s chief statistician, David Kalisch, claims that a decade of funding cuts has hampered the Australian Bureau of Statistics’ (ABS) capability, and warns that funding cuts would result in less accurate statistical reporting: The cumulative cuts, at a time when demand for information and data was growing sharply, were a “conundrum” for the ABS which

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Memo to Tudge: “Average population growth” hits 456m in 2200

The Minister for Population, Cities and Urban Infrastructure, Alan Tudge, appeared on Peta Credlin’s Sky News program, whereby he played down angst over Australia’s ballooning population by claiming that Australia’s population growth rate is currently 1.6%, “the average since federation”. Technically, Tudge is correct in his claim, as illustrated in the next chart: However, by

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Political stoush brews over ACT’s marijuana legalisation

Last month, the ACT Legislative Assembly passed laws legalising the recreational use of marijuana, which will allow residents aged over 18 to possess up to 50 grams and grow two plants from next year. This has garnered a strong backlash from the federal government, which labelled the legislation “dangerous” and has threatened to block the

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Aussie rents continue to plummet

CoreLogic has released its quarterly rental review, which reveals that rents fell for the third consecutive month, driven by sharp falls across Sydney: In fact, the only capital city to record strong rental growth in the year to September was Hobart, where rents rose by 6.2%. Hobart is also the rental growth leader over the