28

How big the ore bounce?

So, with a temporary floor under the ore price, it’s time to ask how big is the bounce likely to be? We have had a solid rebound so far with spot up another 1.7% last night to $125, 12 month swaps are at $129.50 unchanged and Shanghai rebar is also flat. According to Reuters, traders

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12

Chart of the Day: S&P500 and the Fed

Continuing our series of charts on the US S&P500 stock index, is today’s from Doug Short, plotting the US Federal Reserve’s (the Fed) intervention via the Fed Funds Rate and other programs that has arguably sustained asset prices. The intervention has been a series of programs, emergency at first (TARP, TALF etc), then a series

17

Limited rate effect

Back in late October Sell on News posted a note from Deutsche Bank explaining that an interest rate cut was unlikely to have much affect on equity values. In a similar vein I note that Gail Kelly said as much about the rest of the economy on the this week’s inside business from the ABC: ALAN KOHLER:

2

Expect falls in Chinese inflation

China’s inflation figures for October will be out on Wednesday.  The consensus is looking for a 5.4% yoy rise of the headline CPI, vs. 6.1% in September. China’s consumer prices inflation has been driven pretty much by food prices, and food prices have been stubbornly high for a while, which pushed the CPI inflation high, and indeed,

20

ECRI sticks to US recession call

The CNBC folk gave the ECRI chief, Lakshman Achuthan, a pretty serious grilling last night. I can’t say he held up that well. Not because he lost any argument but because there wasn’t one. The ECRI methodology is a black box. As I’ve said many times, I’m quite suspicious of “Leading Indexes” in general, at

19

Xtranormal urban planning

The above video has been adapted from a satirical article written by Ross Elliott, who runs the blog The Pulse. Readers seeking further information on these matters are encouraged to read the below articles: Jumping the urban growth boundary Block sizes shrinking. Blame government policy Rethinking urban planning

2

November 8 links: Wen wants ’em lower

Up:  CRB, energy, $US, Treasuries, ore, gold Mixed:  grains, metals, euro, Aussie Contagion: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year Germany 2

3

Trading Day

An interesting day on the S&P/ASX 200 Index, closing down 7 points or 0.18% lower to 4272 points after being down more than half a percent all day. In after hours trading, the index is steady, with Euro and US markets are pointing to slightly higher or steady opens. Asian markets experienced similar losses, with

17

Grilling Qantas

The hansard of last Friday’s Qantas Senate hearing was released today and it’s a real eye-opener.  I recommend you read it cover to cover because you’re unlikely to find anything quite so darkly amusing for some time. What it shows is that there is something very weird happening in relations between government and business these days.

7

Australian dollar is headed lower

What’s your view on equities, the S&P 500 or the bourses of Europe? The reason I ask you this question is because if you can riddle me that then you know where the Australian dollar is going to head in the next week or so. As the Prince showed earlier today in C0TD, whether its

6

Busting some NAB myths

I’ve been thinking about and doing a bit of digging around the move by NAB move to not pass on the full rate cut and have come to two interlinked conclusions. The first is that it should come as no surprise that NAB did what it did.  It is quite difficult to judge where the various

9

ANZ job ads down again

ANZ job ads were down again in October by 0.7% in, the sixth fall in seven months. Annual growth in total job advertisements slowed to 1.8% y/y. Here are the charts: And here is a chart of job ads (inverted) against the unemployment rate: And further details from the release: Here’s what ANZ has to say: ANZ

3

ASX value trap

Downwards earnings revisions are widely being predicted, which of course makes the market subject to the double whammy of investment fear due to the travails of Western developed markets, and the growing evidence that many of the non-resources stocks, plus a few of the resources companies, are coming under pressure. Merrill Lynch reckons growth forecasts for

77

Swan is right to keep cutting

Speaking to the ABC this morning, Treasurer Wayne Swan maintained his commitment to a 2012/13 budget surplus despite the growing realisation that revenue is going to fall well short, as forecast here weeks ago: WAYNE SWAN: Well it’s a forecast from Access Economics. I can’t say that it’s accurate. What we are going to do

3

Chart of the Day: S&P500 vs CCI

Following on from Friday’s Chart of the Day, today’s chart from the McClellan Market Report (via Pragmatic Capitalism), shows how closely correlated commodities have become with the stock market: Note that the commodity index used is the old CRB index now called the CCI (which MacroBusiness reports on each morning through the Daily links post).

11

How big was the RBA’s 2011 miss?

There is a clear consensus at MB that the RBA got monetary policy settings right this year. They balanced the medium term structural forces of the mining boom against the temporary inflation spike caused by the floods and the weakness in the services economy emanating from falling house prices. Kudos. However, the same can’t be

9

Europe descends into farce

Over the weekend it became even more obvious that the new “updated” EFSF  is already failing to meet its defined goals. The G20 proved that the rest of the world doesn’t have the appetite to shovel money at Europe via this sort of mechanism. World leaders balked at writing new checks to help bail out

0

Data Vault

Australian Data House Prices House prices in Australia have continued their steady slide lower with the privately produced RP Data-Rismark house price index showing prices fell for their 9th straight month in September. The seasonally adjusted index fell 0.2% while last months 0.4% decline was revised to show a drop og 0.6%. Prices are now down 4.1% over

42

Housing slide to hit Victorian Budget

Back in April, RP Data released some fantastic research showing the increasing reliance of Australia’s state and local governments on property taxes. Two charts from this research stood out. First, the below chart shows how aggregate property taxes rose from around $19 billion in 2000-01 to nearly $32 billion in 2009-10. And the below chart

4

IMF, G20 fail

Westpac’s Russell Jones is the best strategic analyst in the country (not blogging at MB!). His skepticism is a welcome draught of realism amidst the wasteland of optimistic fantasy that passes for analysis in Australian finance. Here’s his take on the failure of the G20 and IMF over weekend. I couldn’t agree more. Strategic Insights_Busted

2

Momentum vs rescue in China realty

The real estate market in China has started to move lower, at least so it seems.  Certainly, not everyone is happy about it, as some buyers who bought new flats just months ago are now sitting on an unrealised loss as property developers cut prices.  As we know, that anger boiled over in the smashing of some developer

4

November 7 links: Downgrade day

US Xmas season looking solid. Calculated Risk Week ahead for the Dow. Calculated Risk Dow volatility at record highs. NYT Earnings warning ratio rockets. WSJ Greek economists debate exit. Greek economists for reform (h/t Naked Capitalism) 2007 again. Tim Duy O’Farrell: teach Asian language. SMH Nah, sell em dirt. Coalition creates$13 billion Budget black hole. SMH, Philip Coorey Access

20

What a piece of work is a man

We live in hyper-metarialist times, both financial materialism and scientific materialism. It has become so intense, it is scarcely noticed. Yet its consequences are profound, not least for how we understand economics. The concluding remarks of Adam Curtis’ documentary “All Watched Over By Machines of Loving Grace” detail some of them. He argues, using the example

26

RPData market update

RPData‘s Australian housing market update for November ( looking at September data ) came out late this week. I recommend watching the entire video, but if you are pressed for time or are only interested in one market then Sydney is @4:10, Melbourne is @ 5:32, Brisbane is @6:50, Adelaide is @8:50 ,Perth is @ 9:58,

24

Weekend Links

Up:  CCI, energy , $US, Treasuries Flat:  ore Mixed:  grains Down: metals, gold, euro, Aussie Contagion: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year

12

Trading Day

The S&P/ASX 200 Index had a stonking day, closing up 109 points or 2.55% higher to 4281 points after positive leads from overnight markets. In after hours trading, the index is up 8 points, although Euro and US markets are pointing to slightly lower or mixed opens. Asian markets experienced similar gains, with Japan’s Nikkei

37

The RBA throws a bucket of cold water

The RBA’s November Statement on Monetary Policy was released this morning and shows the bank in retreat from both its inflation concerns and growth forecasts. Growth for 2011 has been cut 0.25% to 1.75%. Growth for 2012 growth has been cut 0.5% to 4%. CPI inflation has been cut from 3.6% to 3.25% for 2011

25

Do we like troubled times?

I follow the key Roy Morgan economic data sets as a useful counterpoint to ABS data. The Roy Morgan database is very large and their data generally raw so it can be useful in pinpoint turning points. In that vein, RM yesterday released consumer confidence and unemployment numbers for October, which show a much stronger divergence

11

Westpac bearish on Europe

Russell Jones of Westpac is one the our best strategic market thinkers. And for those that like an official stamp on their advice, the following is a nice take on where things are up to in the Eurozone. If you’ve been reading MB, none of this will be a surprise to you. Strategic Insights_It’s All