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Dallas Fed: China understating slow down

From the Dallas Federal Reserve comes this today: China’s Slowdown May Be Worse Than Official Data Suggest by Janet Koech and Jian Wang Vol. 7, No. 8, August 2012 | Issue in PDF In the months following the 2008–09 economic crisis, emerging-market economies robustly rebounded. Output in China and India expanded more than 10 percent in 2010,


“Keep taking the pills, Nev”

Fresh and cross-posted  from FT Alphaville, comes this unusually frank assessment of Fortescue and iron ore. Remember the joke about the $120 iron ore price floor? How we laughed. And for continued amusement here’s Nev Power, chief executive of Fortescue Metals,the highly-leveraged poster child of the Australian resources boom, discussing iron ore at Wednesday’s annual results announcement. From


My endless boom

By David Llewellyn-Smith It’s playing out as expected with the Pascometer leading off a chorus of nay-saying insiders yesterday afternoon and today. The boom isn’t over. Oh no! This is the endless boom, don’t you know. It’s entering a new phase, a third, fourth,fifth…twelfth stage. The AFR is wall-to-wall miner drivel this morning. The consensus now


More on China’s dud Flash

The HSBC/Markit China manufacturing PMI flash estimate for August drops to a 9-month low. The internals look weak as well.  New export orders slide to 44.7 from 46.7, while new orders slide from 48.7 to 46.6.  Both input and output prices components continue to point to further lack of inflationary pressure (or indeed, further deflationary pressure).  While


And now for coking coal…

I have been a bit confused by some of the spot versus contract pricing going in the market for coking coal. It appears I got my quarters mixed up. From ANZ today, there’s clarity, sadly: Newcastle Sept coal futures fell mildly to USD91.5/t. China’s total coal imports fell 10.3% m/m to 20.2mt in July, but is still


Coke no longer a defence play?

The uncertainty in the market has created something of an excessive focus on defensive investments, and Coca Cola Amatil has been one of the candidates for that play. Analysts are looking pretty non-committal. Merrill notes that the company “pretty much pre-announced its result”  so it was very much in line with expectations. It has a


Olympic damn!

BHP has canned Olympic Dam. I have no idea why. The company has $4.7 billion in cash (albeit from $10 billion last year), almost no debt and can borrow at 3% for twelve year bonds. Copper and uranium are supposed to be a part of the next wave of Chinese growth, with copper a central


Draghi does his best

Two weeks ago I wrote a post about Mario Draghi and what appeared to be ECB’s step across the Rubicon into the arena of politics and fiscal policy in order to force Europe’s politicians to break the ‘chicken and egg’ stand-off that has plagued Europe for over a year. In that post I described his


Very expensive banks

There is a growing degree of scepticism about the banking sector amongst analysts and it is not surprising. As UBS points out Australian banks’ market capitalisation has now reached US$305bn, for which you could get: US Bancorp; Goldman Sachs; Standard Chartered; Deutsche Bank; and the entire UK domestic banking system. The scepticism can be seen


Macro Investor: CBA is not worth the risk

Commonwealth Bank of Australia Ltd (ASX:CBA) is the nation’s largest bank, providing banking, life insurance and related services for individuals, small businesses and medium sized commercial enterprises. It also provides corporate and general banking, international financing, institutional banking, stock broking via Commsec and funds management. On the surface, CBA looks great – record profit, improving


RBA housingfest

The RBA is co-hosting a conference on property markets and financial stability with the BIS. The following are the papers presented. Land and House Price Measurement in China [PDF 1.2M] Yongheng Deng, National University of Singapore, Joseph Gyourko, University of Pennsylvania, Wharton, and Jing Wu, Tsinghua University Comparing Housing Finance Systems [PDF 527K] Frank Warnock and Veronica


RBA Minutes see mining boom peak

Find the RBA Minutes below. Not much to go on here. Probably more on the hawkish side but nothing on the dollar, bugger all on China or the bulk commodities. More on Europe, actually. A few rumblings on inflation. There was this one intriguing line: Resource investment was forecast to peak during 2013/14 and gradually


Grexit looms again

It’s been 7 months and taken a private sector default but there is mounting evidence that European leaders are again reaching the limits of their own failure on Greece. So are we being soften up for a Greek exit yet again? Possibly, but even if that isn’t the case there is growing evidence that Greece is


After holes, is it back to houses?

Last week while I was in bed with flu, Commonwealth Bank CEO, Ian Narev, declared that the bank is in favour of a new Wallis Inquiry into the financial system. So long, that is, as it’s focussed on the following, from the AFR: Commonwealth Bank of Australia chief executive Ian Narev has warned that the


McKinsey: Australia vulnerable beyond the boom

By Leith van Onselen Following on from Houses & Holes’ excellent post yesterday on the looming terms-of-trade correction facing Australia, McKinsey Global last week published a fascinating report entitled Beyond the Boom, which supports MacroBusiness’ view that the Australian economy is dangerously undiversified and highly exposed to a sharp fall in commodity prices. According to


Interest rate confusion seizes the nation

According to Westpac, consumers are confused about the prospect for interest rates: The Feb, Jun and Aug Westpac-Melbourne Institute Consumer surveys include an extra question about expectations for mortgage rates over the next 12 months. The Aug survey showed a significant shift with consumers now evenly split on the direction of rates compared with 52% expecting higher rates in the


Abbott promises a return to the golden years (of debt)

Over the weekend, Opposition leader, Tony Abbott, gave a speech in which he promised: …to return Australia to the “golden age” of the Howard government under his “incoming Coalition government”. The tradition of the Howard government would live on, Mr Abbott declared, in no small part because of the similarities between his frontbench and Mr Howard’s


Mixed messages on rental vacancies in July

By Leith van Onselen On Friday, SQM Research released rental vacancies data for the month of July, which suggested that Australia’s rental market tightened slightly over the month: According to the Media Release from SQM Research: Most capital cities either remained the same or slipped marginally during July, with Canberra the only capital city to


Macro Investor Volume 1, Number 8

Macro Investor Vol 1, No 8. is now available at the website and in PDF. Keep on moving on… Waiting for stimulus can be like waiting for Godot. You know (or hope) it’s coming, but it’s still not there and as you wait it can be very, very hard to move. But you don’t need


Sentiment nosedives in Queensland

Over the last couple of months I’ve written a few posts covering the new Queensland Liberal government’s plans to implement an austere  state budget under the banner of “putting Queensland back on track”. Since Campbell Newman came to power the CourierMail has been running a near-daily campaign documenting the latest policy statements and including a


Risk Is Always With Us

A question that has been asked, but not nearly often enough, is why did the complex risk defrayal methods fail so completely during the global financial crisis? The GFC proved that risk measures based on INTERNAL measures, i.e. measures within the system, will fail. At the time of the GFC many participants thought they had


AMP, Wesfarmers, Platinum, Adelaide Brighton, Brambles, ASX, Invocare, iiNet, Alumina

By Chris Becker Earnings reports started up again yesterday and are now accelerating with over 100 companies on the All Ords reporting this week. Full valuations, including position signals, portfolio allocations and Risk Scores for this week will be posted in the next edition of Macro Investor in the “Stocktake” section on Monday. Here’s Thursday’s wrap


Is the food spike finally hitting China?

Courtesy of Sober Look: China’s Ministry of Commerce blamed the increase in vegetable prices on “strong winds and rainfall in the country’s eastern regions” that “disrupted production and logistics.” Nevertheless vegetable prices are up 15.4% over the past four weeks. China Daily: – The wholesale prices of 18 types of vegetables in 36 cities rose


Sovereign wealth fund no go

Last Friday I wrote a post discussing the risks presented by a slowdown in foreign investment due to the macro-economic structure of the Australian economy.  I finished that article with the statement: So why is this so important? Well, what you may have realised from the above is that it isn’t so much the mining resources,