27

Looking sick

It shouldn’t really surprise anyone that housing doom and gloom is continuing into Q2 2011. The leading indicators were certainly bearish, AFG had this to say in early May. AFG, Australia’s largest mortgage broker, has called on the Government to address weak consumer confidence, after figures for April showed mortgage sales fell by nearly 10%

Latest posts

41

The housing-retail link

Feedback loops are an important concept in finance and economics. In a nutshell, positive feedback loops are pro-cyclical in that they act to make an economy more volatile by accentuating booms and then busts. By contrast, negative feedback loops are counter-cyclical in that they act to reduce volatility and make an economy more stable by

21

Bull fighting

Back when the housing market was booming everyone got their slice of the pie there were no losers so no one needed to argue any particular point or methodology. As long as the cash was flowing in from the banks and shadow banks offshore borrowing the system grew and it was all smiles. Investors and home owners

4

Australian dollar catches euro flu

Just a quick update on what is happening in our timezone today which comes with the VERY BIG codicle that Asia often gets it wrong first up after a weekend where a bit of doom and gloom reigns. But we talked a couple of weeks ago about how the European troubles last week and the

1

Trading Day – Monday

The S&P/ASX 200 is down over 80 points or 1.5% at midday, reversing all of last week’s gains. Fear is gripping the Asian markets as well, with the Nikkei down 1.3%, the Hang Seng down 1.55% and Singapore over 1%. The AUD is down below 1.06 at 1.0585 against the USD, whilst gold is above

97

New technologies need carbon pricing

“Just wait for new technologies” remains one of the most frequent catch cries of those opposed to carbon pricing. It was among the justifications for why Australian didn’t embark on carbon pricing in the early part of last decade, after being recommended by CoAG’s Independent Energy Review Panel back in 2002. However, the idea that

4

The Twilight Zone

It is not just the MSM (which I assume stands for the Mainstream Meeja), that has rushed to see the good side of the downgrade of the banks. Brokers are acting as apologists, too. Which is to be expected considering how large the banking sector is as a proportion of the All Ords. If about

18

Is Greece Lehman II?

Over the weekend came this news from the WSJ: French Finance Minister Christine Lagarde signaled Paris might support a rescheduling of Greek debt, warning that Greece is at risk of default if it doesn’t do more to bring its public finances into order. The comments mark a shift in France’s position in a debate that

21

Emerging vs developed: the great divergence

Perhaps an underappreciated consequence of the 2008 global financial crisis has been a great divergence in the fortunes of developed economies and those of emerging markets. In its May “Secular Outlook“, the bond fund manager PIMCO has some very nice charts that illustrate this process well. First, while the debt levels of G20 advanced economies

6

Links May 23: Europe’s volcanos

France may support Greek default. Calculated Risk Lagarde may win IMF job. FT Better hurry… Greek default worst case. Telegraph S&P downgrades Italy. Telegraph Iceland explodes! ABC Jim Grant. QE forever. Zero Hedge QE and shocks. Doug Noland You can’t have cheap money and cheap oil. Zero Hedge QE2 end threatens gold. FT US long-term

34

Scarcity vs abundance II

Last weekend I looked at issues of scarcity and abundance, and how that really needs two economic theories for late stage capitalism, or post-capitalist societies, as Peter Drucker described it. One for what is scarce, using “laws” of supply and demand. The other for what is not scarce (the “knowledge economy”, for instance) which is

1

Australian dollar weekly wrap

After a tumultuous two weeks and an omnious close last Saturday morning the Aussie settled down to trade a 2 cent range this week. That’s not to say that traders didn’t test out the support at 1.05 we have identified previously. But having found it solid, they turned the other way, making a high last

14

Weekend reading: Extension default

Rocket: $US, gold Up: energy, CRB Flat: Aussie, grains Down: ore Smashed: euro Fitch pounds Greece on extension default. Bloomberg Other Greece angles. Calculated Risk Bank contagion. Zero Hedge Greece bond yields. Bloomberg Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium Protectionist war. Credit Writedowns UK’s inflation problem. FT Financial regulation at G20 in trouble. FT Glencore whacked

52

As expected from RPData

As you may have noticed from H&H’s bullhawk post, RPData has released some new charts on how the housing market is travelling and specifically the latest data on capital growth. As I expected nothing much has changed since I last saw their data, when I said. I can only repeat myself. There is no driver for

35

A bullhawk takes flight

The mightiest of Australia’s bullhawks (half housing bull, half rate hawk), Christopher Joye, today published his latest assessment of house prices at Business Spectator. Let’s take a look: A lot of fuss is being made about house prices doing, well, nothing. For the record, this is the outcome we have correctly predicted since early 2010. Year-on-year,

0

Trading Day – 20th May

The S&P/ASX 200 is down 22 points or 0.4% at midday, pausing from its rebound rally since Tuesday, mainly from weakness in BHP, RIO and bank stocks (i.e most of the index). Asian markets are up generally, with the Nikkei up 0.3%, the Hang Seng up 0.2% and Singapore steady. The AUD is steady at

16

Central banks and the Australian dollar

There is an old trading adage which I subscribe to that says you should not overtrade. It’s the same with blogging about currencies – sometimes it is best to stay on the sidelines. So I’ve been quiet as there hasn’t been much to say on the Aussie this week. Really, it has just traded in a

39

The states push back

In a recent post about the Budget I mentioned that Treasury has previously over estimated the taxation take for the federal government and therefore seem to be underestimating the pressure that large amounts of private sector debt is exerting on the economy under the current fiscal and monetary settings. This led me to make the following

34

Floor price idea flawed

There’s a proposal doing the rounds in Canberra for a floor price on the price of CO2 permits, to apply once the emissions trading scheme moves from its fixed price period into a floating price period.     The UK has just implemented such a scheme as a “top up” on the price of permits under the

42

Moody’s is serious

I wasn’t at my desk when I heard the news that Moody’s had downgraded Australia’s major banks. At the time I didn’t feel the need to look too deeply as I was feeling a little smug. I have been posting for quite some time that these banks are undercapitalized and therefore, by extension, over rated.

45

Just say it, Shane

AMP Capital Investors chief economist, Shane Oliver, is a curious beast. Recently he has been arguing that Australian housing is not a bubble. Here’s an example of Dr Oliver’s “no bubble” thesis from an article published yesterday in SmartCompany: I don’t regard Australian house prices as a bubble. While there was probably a bubble seven or eight

26

Full moon parity

The Australian dollar is the only currency that the bogan believes in. It’s the currency that last year’s designer drug can be purchased in, it’s the currency that Centrelink can be defrauded in, and it’s the currency that can be acquired in wholesale volumes when one goes to work in the mines. While Australia’s economy

0

Links May 20: More US weakness

Up: Euro Flat: Aussie, gold, grains Down: energy, $US, ore Hammered: CRB US home sales, Philly, Consumer all weak. Bloomberg China candidates for IMF. MarketWatch DOW signaling triple dip. Clustertock Reasons why China is a bubble. MarketWatch House prices drop everywhere. SMH More Moody’s denial. Malcolm Maiden Big tobacco next up with jawboning. Jessica Irvine

1

Trading Day 19th May – risk back on?

The S&P/ASX 200 is up almost 60 points or 1.3% at midday, clawing back some of the losses of the near month long correction. Asian markets however are mixed on the back of the Japanese GDP shrinking, with the Nikkei down slightly, the Hang Seng up 0.4% and Singapore up 0.5%. The AUD is up

21

Is QE setting markets up for a crash?

As highlighted today by my colleague Houses and Holes, a growing number of commentators — most recently Richard “Balance Sheet Recession” Koo — are weighing in on on the folly of quantitative easing and the risk that it poses for asset prices. The main charge is as follows. As The Bernank himself has hinted at

3

Labour price easing confirmed

The ABS has today released its quarterly Average Weekly Earnings. Like the Wage Cost Index yesterday, wages are not accelerating and in fact, in this measure, in the big employment sectors of Retail Trade, Accommodation, Food Services and Admin Services they actually went backwards. Health care which is another big employer was up only 0.5%

0

Dollar the destroyer

The full impact of Dutch disease is being tracked by analysts mainly by their looking at the effect of the higher $A on earnings. Deutsche Bank has issued a currency review that tells a mixed tale. Wesfarmers, Sims, Bluescope, OneSteel, CSR, the materials sector, the gaming industry are all “negatively impacted”. Companies with significant off shore

22

Equities Spotlight: BHP

This is the first of a regular equities analysis post we’ll be introducing to MacroBusiness.  In the posts we’ll be taking a single company and analysing its business and financials from the perspective of a fundamental/value investor.   In a continuation of this week’s earlier post on BHP and the AUD, today we  look at BHP Billiton. The Business BHP

15

NZ moves to quarantine negative gearing

When it comes to recent banking/housing policy, our Kiwi cousins across the pond have it all over us Aussies. Back in April, I wrote about three policy actions being undertaken by the Reserve Bank of New Zealand (RBNZ) and the New Zealand Government aimed at reducing the economy’s exposure to the housing market and improving financial

42

The gold vigil

I’ve said before that investing is more about psychology than about fundamental valuations, numbers and metrics. In the case of residential property’s evil “twin” brother, gold, this is more true than ever. Regular readers know that I am watching out for signs of the current bull market in gold becoming an out of control bubble.