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Trading Day: falls across the board

The S&P/ASX 200 suffered one of its worst days dropping over 105 points or nearly 2.5% to close just under 4600 points, after taking strong leads from the falls on Wall Street overnight. Asian markets were also heavily sold off, with the Nikkei down 1.6%, the Hang Seng down 1.7% and Singapore down 0.52%. Other

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53

Retail rips

The ABS just released retail sales data for April and the outcome of +1.1% was way beyond market expectations of a rise of 0.4% with last month’s fall of 0.5% being revised to only -0.3%. These are unequivocally strong and unexpected numbers and will complicate the outlook for the market, which doesn’t think the RBA is

1

Trade surplus steady

ABS International Trade for April is out. Not much of a surprise with an ongoing strong surplus: APRIL KEY POINTS BALANCE ON GOODS AND SERVICES The trend estimate of the balance on goods and services was a surplus of $1,557m in April 2011, a fall of $47m on the surplus in March 2011. In seasonally adjusted

14

Commodities hit new record

Missed this one yesterday. From the RBA’s Index of Commodity Prices: Preliminary estimates for May indicate that the index rose by 2.3 per cent (on a monthly average basis) in SDR terms, after rising by 7.3 per cent in April (revised). The largest contributors to the rise in May were increases in the estimated export prices of

9

Some QEasy charts

With the ructions in overnight markets given the poor state of data coming out of the US and continued sovereign debt issues in Europe, l thought I’d show how this is playing out visually in the important markets. There are a couple of “standout” charts that underline what is really going on: US 10 year

52

QE3 chicken

Breaking news! Last night, Federal Reserve Chairman, Ben Bernanke, announced he is pregnant.  A glowing Bernanke told a packed press conference that the child was neither a girl nor a boy. It was, in fact, a third round of quantitative easing. The child is expected to be born before the year is out. Don’t say

36

Blame your leaders

How about we become solution focused? Maybe even think a little outside the paradigm. MacroBusiness has been full of very well researched articles over the last month with data to burn. Accompanied by more often than not, very well thought through commentary and interpretations. It’s been hard to keep on top of the many topics

17

Getting so much poorer all the time…

From yesterday’s National Accounts, here’s a stab at explaining why, despite the ongoing growth in the economy (ignoring the March quarter hiccup), there are so many folk that are clearly feeling the pinch. First, a graph of real gross national income: A few observations here. First, that extraordinary dip in 2008 looks like the way

3

Chinese shadow banking

Exclusively from Michael Pettis newsletter: My SWS associate Chen Long tells me that last week’s markets indicate that monetary conditions in China are still pretty tight, as measured by the cost of short-term liquidity in the interbank market. As I have argued before, I think this says a lot more about the extent of domestic

15

June 2 links: QE3 dawn

Up: gold, $US Down: euro, Aussie Smashed: CRB, energy, metals, ore, grains Sovereign tension: Ireland, Portugal, Spain, Italy, Belgium, Greece US ISM smashed in May. Calculated Risk ADP employment report crunched in May. Calculated Risk US rising rents. Tim Duy Now Ireland goes for haircuts. FT Eurozone endgame. Martin Wolf China may assume local debts. Businessweek Four banks control 85% of OTC derivatives. London Banker

10

UK moves to prevent bubbles

In 1998, following the release of the Financial System (‘Wallis’) Inquiry’s final recommendations on financial system regulation, the Australian Government implemented a new organisational framework for the regulation of the financial system. Prior to the Wallis Inquiry, regulation was either governed by the states for some products or based on a sectoral approach with industry

2

Trading Day: GDP jitters

The S&P/ASX 200 is down 2 points or 0.04% to 4707 just after midday, after rallying strongly in overnight trade, but pulling back at the open this morning amongst the jitters around the negative GDP figures. Asian markets are also mixed, with the Nikkei down 0.2%, the Hang Seng down 0.2% and Singapore up 0.33%.

38

GDP as expected

The AUD rallied straight after the GDP result this morning and now sits at 1.0729, equally 3 year swap rates have risen 5 bps post number also  suggesting that for currency and interest rate traders at least the GDP was not as weak as they had feared even if market economists got pretty close: Indeed

62

$30 billion fantasy

In response to the Garnaut Report, Terry McCrann today claims that the government will collect “$30billion” from the carbon tax if the price reaches $70. This is a scare campaign being run by much of the Murdoch press. McCrann’s reasons that: In theory, the price is then set by the market. But if we are to

5

Manufacturing slides away

Last month the AIG PMI  showed a hint of improvement suggested light at the end of the tunnel for manufacturing. Sadly, this month, it’s ugly. The RBA has its adjustment going just fine already. Manufacturing activity remained in negative territory in May with the seasonally adjusted Australian Industry Group-PwC Australian PMI® down slightly by 0.7 points to 47.7

19

Profiting from debt: FSA

Following on from The Prince’s article on Australian debt, this week’s equities spotlight focuses on FSA Group Ltd – one of Empire’s favourite debt companies and a current constituent of our portfolio. The Business FSA Group Ltd (FSA) is the largest provider of debt solutions to individuals and businesses in Australia.  The operations of FSA can be split

33

Of RBA and men

It is going to be so hard for the RBA to hike rates next week given the nature and structure of economic growth that is being revealed by the economic data over the past month, since the SoMP was released. It will be interesting to see how they handle this because we are not seeing

51

Relative optimism

Today I’m going to take issue with a couple of my fellow bloggers. I’m going to be optimistic, in a real sort of way. I write often on Dutch Disease, which is a very real problem and, in my view, poses a serious threat to our prosperity in the long term. This, however, can sometimes

5

June 1 links: Garnaut

Up: CRB, energy, euro Flat: gold, Aussie, metals, ore Down: $US, grains Sovereign easing: Ireland, Portugal, Spain, Italy, Belgium, Greece New Greek bailout. Alphaville Food to double by 2030. BBC US PMI tanks. Calculated Risk US housing still dumping. Calculated Risk US consumer confidence hammered. Naked Capitalism Inflation will prevent QE3. Zero Hedge QE3 will nationalise the ten year. Zero Hedge Fed still set to tighten. Tim Duy

67

The Economist on Australia

The Economist magazine has published an article on the Australian economy entitled The next Golden State, which argues that with a bit of self-belief and the right policies, Australia could become the next California. Here’s an extract: IMAGINE a country of about 25m people, democratic, tolerant, welcoming to immigrants, socially harmonious, politically stable and economically

25

RPData’s latest

RPData’s latest monthly round up is out. The near-double interest rate hike in November last year has bitten, with seasonally-adjusted Australian capital city dwelling values down 1.2% in the three months to end April, although in raw terms home values are mostly unchanged (-0.2%). Expensive suburbs have been the poorest performers in line with the

5

Buy banks!

Brokers are obviously not reading enough MacroBusiness. A report by Morningstar is urging investors to continue to hold bank shares. In a sense, it should be an obvious call. We have a record terms of trade, the banks survived the GFC in reasonable shape, the banks have diversified their sources of offshore funding, and China

2

Crumbling foundations

I wanted to retouch on the Building Approvals data released this morning and pop a chart or two in so that you can see just how weak the overall picture has become. This first chart is the break up of the overall Building Approvals series. There seems to be a clear dichotomy between the volatile

3

Trading Day: has the selling stopped?

The S&P/ASX 200 is up almost 1% or 42 points to 4707 this afternoon. Asian markets are up strongly, with the Nikkei up 1.5%, the Hang Seng up 0.9% and Singapore up 0.32%. All risk assets are up, with the AUD just above 1.07 against the USD, whilst gold is at $1538 USD an ounce.

10

Credit flat

The RBA credit aggregates for April are out and show litttle change from the 30 year lows in mortgage growth rates. Business credit has stalled again and personal credit remains weak. Total credit provided to the private sector by financial intermediaries was flat over April 2011, after rising by 0.6 per cent over March. Over the

16

Ouch – Rate hike off the table

It is going to be very hard for the Reserve Bank to hike after the raft of data that was just released. Here is a quick Snapshot: RP Data-Rismark house Prices -0.1% mom raw and -0.3% seasonally adjusted Building Approvals -1.3% mom and -11.5% yoy. Slighthly better than market expectations but hardly rosy. Private housing

21

Profiting from debt

Much news and analysis has been made regarding the level of public debt around the world, particularly in the so-called PIIGS (Portugal, Ireland, Italy, Greece, Spain) European nations, although the US and the UK are in similar shape quantitatively. More than enough news has been made regarding Australia’s public debt, which is paltry in comparison,

20

China services boom!

There seems to be a sudden, concerted push by the government to make it clear to the nation that the rise of China represents a huge opportunity for Australian services exporters. In his recent inaugural speech, new treasury head, Martin Parkinson, argued that the government should embrace this vision to help offset community anxiety about