Unconventional Economist

2

Gulf between profits and wages widens to grand canyon

Monday’s June quarter Business Indicators release from the ABS, which feeds into today’s national accounts, showed that wages & salaries remain wildly divergent from business profits. As shown in the next chart, real business gross operating profits continued to boom in the year to June: Whereas, there remained a huge gulf between wages & salaries:

41

The ‘Golden Visa’ migration rort must be shut down

Andrew Martin – managing director of asset management at Moelis Australia, which helps wealthy Chinese to obtain an Australian passport through the Significant Investor Visa (SIV) program – has defended the SIV scheme, sighting its “massive success” amid calls for it to be abolished: Immigration Minister David Coleman recently flagged a review of the business

38

Brace for the Chinese international student bust

Chinese international students are by far the biggest contributor to Australia’s education export industry. As at June 2019, there were 204,000 Chinese students enrolled in Australian educational institutions, comprising 29% of total international student enrolments. The number of Chinese international students studying in Australia is also roughly double second placed India (104,000) and quadruple Nepal

8

Links 4 September 2019

Global Macro / Markets / Investing: UBS chairman: Climate change occurring at ‘astonishing’ speed – Yahoo Wall Street’s Latest Love Affair With Risky Repackaged Debt – NY Times These Are the Major Foreign Holders of U.S. Treasury Securities – Learn Bonds Recession Signals Flashed by The Bond Market May Have Been Exaggerated – Stock Market

11

A little property doom amid the boom

Amid the media glee surrounding Australia’s rebounding property market, spare a thought for Townsville, whose market crashed in 2008 and has yet to recover. From The ABC: The saying “as safe as houses” is a lie, according to Townsville resident Heather White, who is about to lose almost $100,000 on the resale of her home

10

Immigration ponzi sends NSW Government broke

The Committee for Sydney has called on the NSW Government to provide more transport networks. Committee CEO, Gabriel Metcalf, believes Sydney has grown to the point that it needs a mass transport system like London’s, but that the Government does not have the money required to fund more infrastructure projects. It suggests the Government should

0

Australia’s terms-of-trade enjoys one last hurrah

Within today’s dump of balance of payments data that feeds into tomorrow’s June quarter national accounts release was the important news that Australia’s terms-of-trade rose another 1.5% in seasonally adjusted terms and by 2.2% in trends terms: Over the year, the terms-of-trade rose by 8.9% in seasonally adjusted terms and by 8.8% in trend terms.

9

Australian retail sales take a dive

The Australian Bureau of Statistics (ABS) has released retail sales figures for the month of July, which recorded a 0.1% fall in retail sales over the month in seasonally-adjusted terms, with annual sales growth slowing to just 2.4%: In trend terms, annual retail sales growth also slowed to 2.4%. The below chart maps out nominal

55

SMH Population Summit hijacked by ‘Big Australia’ mafia

On 23 September, The SMH will hold a Population Summit to discuss “where key decision-makers and thought-leaders in government, transport, property, planning, banking, finance, architecture, economics and the law will come together to discuss how we successfully plan for a growing Sydney”. The topics for discussion are: Towards a coordinated population policy Congestion costs and

14

Apartments shunned as flamable cladding, faults proliferate

The floor has sunken under Melbourne’s off-the-plan apartment market, with buyer concerns about flammable cladding and building faults leading many to drop out of purchases and shun the sector. From Domain: A recent Four Corners episode highlighted build quality, citing academic research that found 74 per cent of Victorian apartment buildings examined had at least

9

Aussie workers worse off now than GFC

The June quarter Business Indicators report was released by the ABS, which includes aggregate wages & salaries data, namely “gross earnings before taxation and other deductions” and “includes provisions for employee entitlements”. In order to get a better sense of how Australian workers are faring, I have deflated this aggregate nominal wages & salaries data

4

Commodity price index takes a dive

The RBA has released its commodity price index for August, which dived by 6.5% in SDR (currency weighted) terms – the key determinant of the terms-of-trade – and by 4.2% in Australian dollar terms: Preliminary estimates for August indicate that the index decreased by 6.5 per cent (on a monthly average basis) in SDR terms,

48

How can house prices rebound while mortgage growth crashes?

Friday’s mortgage credit data from the Reserve Bank of Australia (RBA) revealed record low mortgage growth on both a quarterly and annual basis (see below charts). Following this post, several readers questioned how house prices can reportedly be rising when mortgage growth is crashing. Below is a sample of these comments: AngryMan How can house

14

International students ripped off by Australian universities

It is fair to say that Australian universities’ international student boom could not have been achieved without dramatically lowering English-language standards, as well as restructuring assessments into group assignments to ensure non-English speaking background (NESB) international students pass. As shown in the next chart, the three largest and fastest growing sources for international student enrolments

11

Australia’s visa system overrun by Malaysian scammers

Two month ago, former High Court justice, Ian Callinan, warned that Australia’s Administrative Appeals Tribunal (AAT) was being overloaded with bogus asylum seeker applications from migrants attempting to scam Australia’s visa system: [Former High Court justice Ian Callinan] said “almost everyone” with migration law experience had told him there were applic­ants and representatives who “game

15

Links 3 September 2019

Global Macro / Markets / Investing: America-first trade policy is crushing the global economy – CNN The Big, Dangerous Bubble in Corporate Debt – NY Times What Lower GDP Means For You And Me? – Yuv News The Real “Helicopter Money” – Zero Hedge Americas: Trump is raising your taxes today – Yahoo Parts of

14

Canberra’s apartment boom “plagued with defects”

The ABS’ latest data shows that the ACT experienced a monumental boom in high-rise apartment approvals before crashing 48%: And developer Geocon has driven the high-rise boom across Canberra: While many developers across the country, facing lacklustre demand for apartments during the housing downturn, have scaled back their construction pipeline, Geocon is continuing full steam

3

Labor’s superannuation lies fail evidence test

Labor’s Shadow Assistant Treasurer and Shadow Minister for Financial Services, Stephen Jones, has launched another attack against the “dirty dozen” group of Coalition MPs seeking to freeze the superannuation guarantee (compulsory superannuation) at 9.5%: Jones said the “primary target” of the ‘dirty dozen’ – referring to the 1967 movie – MPs is the legislated increase

5

Q2 GDP takes big hit with weak business indicators

The ABS just released its business indicators for the June quarter, which posted modest rises across most categories: In particular, inventories slumped -0.9% (from +0.7% last quarter), which will shave circa 0.5% from GDP. But company profits (+4.5%) and wages (+1.4%) were a bit stronger. Tomorrow, we’ll receive balance of payments and government spending data

46

CoreLogic: Get ready for a “V-shaped recovery” for property

Following on from this morning’s post on CoreLogic’s daily dwelling values index results for August, CoreLogic has released its full results, which also cover the smaller capitals and regional areas (see next table). As you can see, Sydney (1.6%), Melbourne (1.4%), Brisbane (0.2%), Hobart (0.5%), and Canberra (0.8%), all registered rising dwelling values in August,

4

Another fake congestion ‘solution’ emerges

John L Hopkins – theme leader for Future Urban Mobility at Swinburne University of Technology’s Smart Cities Research Institute – has penned an article claiming that Australia’s congestion woes could be solved via flexible work arrangements: Traffic congestion is one of the most significant challenges facing our cities. Melbourne’s population is growing by around 325

10

NBN farce extends and pretends

A week after it was revealed that Australians pay the highest broadband costs in the OECD and ranks 67 out of a wider list of 83 countries: Embattled NBNco has admitted that it is running way behind schedule in connecting homes to the NBN network: Half a million homes will have to wait longer to connect

28

Aussie John demands return to dodgy mortgages

It’s amazing that only six months after the Hayne Royal Commission exposed prolific criminality in mortgage standards that chief mortgage broker rentier, Aussie John Symond, has “urged the government to intervene to ease the pressure on banks over how stringently they must check customers’ living expenses”: [Symond is] pushing for regulators to take a more

124

Australian property prices surge 1% in August

CoreLogic’s dwelling price results have been released for August, which reveals a strong 1.0% increase in values recorded over the month at the 5-city level, driven by surging values across Sydney (1.6%) and Melbourne (1.4%): It was the second consecutive monthly rise in home values at the 5-city level, which follows a run of losses

5

Auction clearances soften

Auction clearance rates softened over the weekend, with the preliminary rate nationally falling to the low-70s%, driven by retracements across the two biggest markets: The preliminary national auction clearance rate rose to 73.6% versus 79.6% last weekend. However, clearances were still way above the 55.0% recorded in the same weekend last year: Sydney’s preliminary clearance

81

International students “shockingly unfair” to locals

Last week, journalist and mature age Masters student, Meshel Laurie, penned an alarming article in Fairfax explaining how domestic university students are effectively cross-subsidizing the marks of international students by carrying the load in group assignments: It’s a neat trick: group assessment (with groups allocated by instructors) in courses overloaded with full-fee-paying, non-English speaking students

5

Links 2 September 2019

Global Macro / Markets / Investing: Investors Lose Appetite for Shale – Stock Market News How Levolution is Changing the Way ITOs are Created and Launched – Medium CEOs Who Cheat on Spouse Twice as Likely to Cheat at Work: Study – Bloomberg Warren Buffett hasn’t stockpiled this much cash since right before the financial

441

Weekend Reading: 31 August to 1 September 2019

Global Macro / Markets / Investing: Warren Buffett hasn’t stockpiled this much cash since right before the financial crisis – The Week CEOs Who Cheat on Spouse Twice as Likely to Cheat at Work: Study – Bloomberg Wall Street slips as financials drag, trade outlook clouds – Reuters What is a fair CEO wage? A