Unconventional Economist

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Swan rules out changes to negative gearing

By Leith van Onselen My decision on election day has become easier after Federal Treasurer, Wayne Swan, today ruled-out making any changes to negative gearing rules, which cost the taxpayer around $4 billion currently. From News.com.au: FEDERAL Treasurer Wayne Swan has ruled out supporting any changes to the existing negative gearing arrangements… “We ruled out

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RBA Minutes see no mining cliff

By Leith van Onselen The Reserve Bank of Australia (RBA) has just released its Minutes of the May Monetary Policy Board Meeting where it decided to cut the official cash rate by 25 basis points to 2.75%. According to the Minutes, the decision was based primarily on the benign inflation print for the March quarter,

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Moody’s: Aussie ABS arrears rise but losses stable

  Just in from Moody’s Credit Ratings Agency: Sydney, May 21, 2013 — Moody’s Investors Service says that the delinquencies across all Australian asset-backed security (ABS) programs have increased in Q1 2013 from Q4 2012. Nonetheless, losses have remained stable. “At end-March 2013, for instance, the 30-plus delinquencies were at 0.46% for SMART ABS deals,

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Another mining canary bites the dust

By Leith van Onselen Earlier this month, we noted how falling mining equipment sales could be a harbinger of a sharper than expected reduction in mining capex. Then last week, mining services contractors, Coffey, UGL and Worley Parsons, cut their earnings guidance for 2013 and announced plans to cut jobs amid a raft of project

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Weekly RP Data property wrap

By Leith van Onselen Please find below RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 19 May 2013. This week’s report includes: Latest weekly dwelling value results; Latest median house & unit prices; Average time on market & vendor discounts; Auction results & clearance rates;

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Links 21 May 2013

Global Macro/Markets: Helicopter money as a policy option – VOX Learning About Growth from Austerity by Michael Spence – Project Syndicate Is There a Stock-Market Bubble? – New Yorker BIS and IMF attacks on quantitative easing deeply misguided warn monetarists – The Telegraph Gold falls for eighth session, silver down sharply – Reuters Andy Xie

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RBNZ targets high LVR lending

By Leith van Onselen Following last week’s Memorandum of Understanding between the Reserve Bank of New Zealand (RBNZ) and the New Zealand Government, the RBNZ has today outlined how it will use macro-prudential policy tools to target high loan-to-value (LVR) mortgage lending – i.e. mortgages where the deposit or equity in the property is less

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More negative gearing scaremongering

By Leith van Onselen In a post-Budget newsletter last week, the “Barefoot Investor”, Scott Pape, questioned why Australia’s cash-strapped Federal Government had not considered scrapping negative gearing. From Property Observer: “Our 1.25 million loss making landlords cost taxpayers $5 billion a year – a significant saving when the budget is in deficit of $18 billion,”

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Links 20 May 2013

Global Macro/Markets: Is This Another Bubble? We Can’t Know Without Better Data – Bloomberg For Stock-Picking Advice, Dont Ask an Economist – New York Times Some Perspective on the “Can’t Lose” Market – Pragmatic Capitalism Fiscal prioritisation: Lessons from three wars – VOX North America: Secretary Lew Sends Debt Limit Letter to Congress – US

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Australia’s painful budget choice

Cross-posted from The Conversation More than a decade ago the federal treasury produced the first Intergenerational Report (IGR), warning of the challenges facing the Australian economy due to demographic change. The IGR warned that the living standards of future generations would depend on the decisions made at that time. Unfortunately budgetary decisions made in the

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HIA trades report suggests ongoing weak construction

By Leith van Onselen Earlier this month, the ABS released construction materials data, which showed ongoing weakness in the production of concrete blocks, clay bricks, roof tiles, and plasterboard – items typically associated with housing construction (see next chart). Today, the Housing Industry Association (HIA) has released its March quarter Trades Report, which is a

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Budget sacrifices education, saves speculators

Cross-posted from Paul Wallbank. In researching the tech angle of the 2013 Australian Federal budget for Technology Spectator the other night, one thing kept really bugging me – the government’s cap on tax deductible education expenses. The decision to cap self education deductions was made earlier in the year by Treasurer Wayne Swan. The Government values the

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Argus warns on Australia’s private debt load

By Leith van Onselen Finally, we have a high profile Australian – former BHP Billiton chairman and NAB chief executive, Don Argus – talking sense on Australia’s high private debt and how it is a millstone on Australia’s future productivity. From the Australian: Australia was set to inherit the same challenges confronting stricken economies elsewhere

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Mining canaries dropping like flies

By Leith van Onselen Earlier this month, I noted how falling mining equipment sales could be a harbinger of a sharper than expected reduction in mining capex. Then earlier this week, mining services contractors, Coffey and UGL, cut their earnings guidance for 2013 and announced plans to cut jobs amid a raft of project delays

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Gerard Minack’s parting warning

By Leith van Onselen Please find above an interesting video on ABC’s The Business with Gerard Minack, the soon to be ex-Chief Global Equity Strategist with Morgan Stanley. In this interview, which is Minack’s last before leaving Morgan Stanley, he provides his outlook for the global economy. Minack warns that low interest rates are creating

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Weekly RP Data house price update

By Leith van Onselen In the week ended 16 May 2013, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, recorded a -0.45% decline, which followed last week’s 0.38% rise. It was the biggest weekly decline in more than year (see next chart). All capital cities recorded falls

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S&P downgrades NZ banks

By Leith van Onselen Back in March, Standard and Poors (S&P) released a report warning about the increasing risk of a New Zealand property crash and noting that Australia’s Big Four banks, which own New Zealand’s Big Four, would be on the hook in the event that they needed to be bailed-out (my emphasis): In

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There ain’t no mining cliff: Wood Mackenzie

By Leith van Onselen Yesterday afternoon, consultant Wood Mackenzie poured cold water over the view that Australia is on the verge of a mining investment cliff, whereby mining-related capital expenditures (capex) fall sharply from their current lofty level of nearly 7% of GDP (see next chart). From the Wall Street Journal: SYDNEY—Investment in Australia’s resources

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Links 17 May 2013

Global Macro/Markets: Soros Leads Gold-Stake Cuts Before Bear Market Drop – Bloomberg Gold bar premiums hit record in Asia on supply constraints – Reuters Gold Prices Falling – Business Insider U.S. Officials Deal Blow to Bitcoin – Wall Street Journal The deflation gang – FT Alphaville North America: Brooklyn to California Bubble Threat Grows in

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European economy facing generational shift down

By Leith van Onselen Above is an interesting video interview screened earlier today on CNBC with Paul Drake, Founder of View from the Peak: Macro Strategies. In the interview, Drake argues: The European economy is facing a generational shift and a ‘lost generation”, whereby growth will be structurally lower for at least another 10 to

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Unlike Australia, NZ Budget tackles housing affordability

By Leith van Onselen While the major political parties continue to ignore Australia’s highly unaffordable housing, the 2013 New Zealand Budget, released earlier today, announced a variety of measures aimed at boosting supply and improving overall housing affordability. Measures announced included: Introduction of the Housing Accords and Special Housing Areas Bill, which will enable the