Australian banks

From Goldies: Our Economic team’s views call for unprecedented policy divergence between the RBA (2 rate cuts) and the Fed (3 rate hikes) over the remainder of the year.

So much for rebalancing!

Big gas is taking it in the team today following the Doha dud with WPL -1.4%, OSH -4%, STO -6%, ORG -5% and LNG -1%:   I imagine the market will now follow every tick is every OPEC oil minster’s face henceforth so volatility is going to be the name of the game.

Bloomberg takes the sovereign rating cudgels to Australia today: Thirty years ago, then-Treasurer Paul Keating warned the country risked becoming a “banana republic” because of its reliance on resources and it took nearly 17 years to regain the two top credit scores.

From Fitch: Fitch Ratings-Sydney-14 April 2016: Australian investors remain downbeat in their outlook for credit, with more than half expecting fundamental credit conditions for financials and corporates to deteriorate over the next 12 months, according to Fitch Ratings’ fifth fixed-income investor survey.

From the AFR: More than 20 mortgage lenders have discreetly increased loan rates in the past six weeks with other major banks expected to make repayment announcements over coming weeks, according to analysis of rate changes.

It’s becoming a bear market rally for the ages for big iron with BHP up 4.8%, RIO 3.1% and FMG 2.8% as Dalian is up another 5.5 points at the open:   RIO and FMG are now at new highs in the rally.

Australia’s bank funding cost rocket flamed out yesterday with CBA CDS falling 5bps to 115pbs: One would expect as much given the second round commodity price surge.

From the excellent Jonathon Mott at UBS: Single name exposures (Bad Debts) to dominate the 1H16 Results The last few months have seen a handful of large, high profile corporate collapses.

By Leith van Onselen Professor Ross Garnaut fronted the Melbourne Economic Forum yesterday and warned that the Government would be unable to bail-out the banks again if another Global Financial Crisis (GFC) hit.

If it digs, buy it!

The Aussie bank funding cost rocket appears still relatively well-fueled.

By Leith van Onselen You’ve gotta love the Turnbull Government’s response to Labor’s call for a Royal Commission on the banks as noted by Houses and Holes this morning with Treasurer Scott Morrison scrambling to boost ASIC’s powers and resources in a bid to head-off a Royal Commission.

From the AFR: Treasurer Scott Morrison will meet the Australian Securities and Investments Commission this week as part of efforts to head off a royal commission into the banks by boosting regulators’ powers and resources.

Another reason for caution around banks from CLSA: Politics vs Pricing Power ?

In fact, the entire bourse is hovering at the brink if you ask me, unable to rally on good news.

By Leith van Onselen Since its inception, MB has warned regularly on the banks’ excessive reliance on offshore funding to keep the housing ponzi inflated, which risks imploding if/when international capital markets seize-up.

So says the AFR: The market has punished the banks so far in 2016, with the big four trading around 10 per cent lower across the board, prompting some investors to describe the stocks as “screaming cheap”.

Ugly today for banks.

The Australian bank funding cost rocket is firing up the booster as spreads widen worldwide once more.