Go slow on carbon? Check!

I was at the Melbourne Mining Club lunch yesterday where BHP Billiton Chairman, Jac Nasser, delivered a thought-provoking speech which touched on carbon, among many other issues. A transcript of his speech is available here. His call for a “go slow” on carbon has resulted in front page headlines in The Australian and the Fin

Latest posts


Lilliput Inc.

Australia’s bigger companies, with a few exceptions such as BHP, Rio and News Corporation, are awful at globalisation. This is becoming obvious with the Australian dollar at such high levels. Global companies adapt to high currencies by relocating production elsewhere, acquiring offshore, manipulating their cross border value chains. That way they can at least respond,


Mirror image

It’s an advanced Western nation with historically weak household debt and rising savings, booming exports but a weak external position, a set of cunningly guaranteed too-big-to-fail banks, slumping house prices and a dramatically two-speed economy. Pop quiz: Is it the US or Australia? It’s a trick question because the answer is it’s both. Last week


Links May 10: Commodity bounce

Rocket: energy, gold, grains Up: Aussie Down: $US, ore US manufacturing boom. Bloomberg We’ll default: Ireland. Daily Mail US rail traffic shows it’s all about exports. Calculated Risk US housing accelerating down. Calculated Risk UK too. Alphaville US household deleveraging flattens. Alphaville US ISM and investing. PragCap Fed clinging to forecasts. Tim Duy Dun and Bradstreet offsets NAB survey.


Mortgage madness

Houses and Holes today posted a nice summary of the recently released report from the Senate Inquiry into Competition within the Australian banking sector. While there are some sensible recommendations in the report, including establishing a broad ranging inquiry into the Australian financial system, there are some absolute shockers aimed at increasing the availability of


Buy a house because I said so!

It seems the ah…fans…of housing are getting nervous. I’m not sure if there has been recent guild meeting but last week saw a number of bullish property pieces. It’s worth assessing their merits. In the latest Eureka Report, Monique Sasson Wakelin penned an attack on the “bubble brigade”. In it she argued the real question


Low flying birds

I am not sure exactly why people invest in Australian airlines. Qantas is busy cannibalising itself with Jetstar. This was always a danger for a member of a protected duopoly, that it would go for the low cost solution and get a low cost result. Virgin Blue, sorry, Virgin Australia, is not expected to pay a dividend and


Trading Day – 9th May

The S&P/ASX 200 is up 1% at almost 4800 points after finding a bottom late last week. Other Asian markets are mixed, with the Nikkei down a little but Hang Seng up, Singapore steady after their weekend election results. Short term price action as illustrated last week showed a decelerating correction – it looks like


NAB survey goes to the hawks

The NAB April Business Survey is out and it’s got something for everyone. For the rate doves, the lead Business Conditions Index softened: And the internals dropped pretty substantially: However, two other key indexes for the RBA are strongly inflationary. First and foremost, labour: And employment: In sum, I would say that despite the weakness,


Senate endorses politico-housing complex

Well, I guess I can’t complain about no takers for the “Lost Child of Wallis Competition” over the weekend. If I couldn’t find the inspiration to give up my weekend on the document, I can’t blame anyone else for doing likewise. I’m glad I bothered this morning, though, because the results are, in a word,


June not a done deal

On Friday and over the weekend the consensus came down strongly in favour of a June rate rise. Those declaring June the day included Peter Martin, Terry McCrann and Michael Stutchbury (that gives you all the major papers). Amongst bank economists there is Westpac, RBS and ANZ, as well as, of course, the bullhawks, Adam


Osama, Obama and the 2012 Presidential election

It has been some time since I’ve posted on this blog. And what a strange couple of months it has been in US politics. The ongoing fiasco that is the US budget, ludicrous debates about President Obama’s birth certificate, and most recently, the death of Osama bin Laden. What, if anything, does all this mean


Links May 9: A tale of two Budgets

More extend and pretend for Greece. Reuters No exit. Wolfgang Munchau Week ahead for the Dow. Calculated Risk Deposit revolution. Common Dreams (h/t Naked Cap) Kochie indicator: Debt revulsion.  Sunrise Iraq halves projected oil output. Zero Hedge US earnings past the peak. Bespoke Commodities crash. The Economist Chinese, US manufacturing costs converge. Alphaville More retail


Weekend Musings: AFG, Turning bearish, Budget and Greece

Another weekend, another dive into what is rumbling around my thought box. AFG Mortgage Index. AFG’s latest mortgage report came out this week. Their overview of the lending market was fairly bearish. AFG, Australia’s largest mortgage broker, has called on the Government to address weak consumer confidence, after figures for April showed mortgage sales fell



Ok, we all know that anyone who says “this time it is different” is to be treated at best as misinformed, at worst as a fool. “They are the five most dangerous words in the English language” etc. etc. But, to repeat my question: “Are things always the same?” Mostly, yes. Modern housing bubbles are


Australian Dollar Weekly Wrap

Those of you not heavily involved in currency markets probably wonder about their stability after a week where the Aussie made post float high at 1.1013 and then promptly fell to a low of 1.0537 before closing at 1.07. But that is life in currency land and it wasn’t just the Aussie that saw such


Weekend reading: It’s June they reckon

Rocket: $US Hammered: Euro, energy, ore Up: Gold, grains Flat: Aussie US jobs report OK. Calculated Risk Not so good says Goldman. Zero Hedge What ails the US jobs engine? Gavyn Davies Regulatory risk spreads to oil. Zero Hedge Egypt front runner turns on Israel. WSJ Food near record highs. WSJ Taylor Rule condemns QE. Econbrowser Japan shuts more


Lost child of Wallis competition

The Lost Child of Wallis Report is out. I can’t bring myself to read it because I know what a let down it is. So, here’s a challenge for you lot out there. We’ll publish the best 600 word post with full accreditation for the best assessment of the report on Monday. Send all applications to


Will the RBA crash housing?

Well, I was right about one thing after the RBA meeting this week. There was something for everyone and the debate will rage! We had a dovish statement Tuesday and now a hawkish one today. Following this morning’s RBA SoMP, Adam Carr is back claiming victory: At the very least we know they are closer to my view


Trading Day – 6th May

The S&P/ASX 200 is down but slowly recovering at 4740 points after last nights shock fall in commodity markets (oil down 10% alone, AUD/USD down to 1.05) Short term price action resembles a decelerating downtrend (note red curve under low points in last week on chart below). The index (XJO) is hovering above its 260


RBA Statement: rate rises ahead

The RBA’s quarterly Statement on Monetary Policy (SoMP) is just out. It is a big document, full of thoughts and views. But there is one key table and one key set of outcomes that really drive any interpretation of what they are saying. That is, where do they think GDP and inflation are going to


Pettis warns Canberra

Exclusively from Michael Pettis newsletter comes another warning for Canberra’s boundless China faith. Since January I’ve been writing about – and trying to figure out – the strange happenings in the Chinese copper market. The issue has been a regular topic of conversation in my central banking seminar at Peking University, where much of the


To beer fridge or not to beer fridge

Mark Latham posed a question in his Op Ed to the Australian Financial Review yesterday which bears thinking about. It was this: “How can the Greens support Labor’s policy of overcompensating consumers for the financial impact of a carbon tax, knowing that more money for carbon-hungry households means more emissions?” Maybe the Greens reckon the


Sell in May – a repeat of 2010?

Regular readers may remember that each morning I peruse my bearish sounding “Crashlist” before starting the day trading the Australian equity markets. This list comprises the major currencies crosses, indices, gold, 10 year US T-Note and the US Dollar Index. A well deserved dip in “risk” markets across the world has been transpiring for most


Charlene trashes the tardis

The bogan is a voracious consumer of media. It will, on any given day, access any or all of a variety of newspapers and news sites ranging from the Herald Sun to the Daily Telegraph and occasionally the Courier Mail. On the days it’s feeling like pretending it knows something about economics or politics, it


Milk money (QE3)

That was no ordinary night. The $US doesn’t bounce 2% without some serious spur. And the entire commodities complex (CRB) down 3.5%! This is a similar signal to the flash crash of last year, which presaged the sell off into the double-dip funk of mid last year. Here we have the first signal of the triple-dip


Links May 6: Stall and fall

Up: $US  Down: Gold, energy, grains Falling: Aussie  Silver down 20% in week and oil collapsing BBC, Bloomberg US initial jobless claims sharply higher CalcRick US housing double dips CalcRisk ECB holds on rates Bloomberg These two pay the price: Greece, Portugal as Portugal heads for recession BBC , 2 years pfft !! ESRB needs to audit Greek


The 1980s Texas housing bubble myth

Over the past few months, I have argued feverishly that housing markets with responsive land supply are both more affordable and less prone to bubbles/busts than markets where land supply is constrained by physical and/or regulatory barriers. In many of these articles, I have used Texas as an example of a housing market largely free


Hating Telstra

The market’s scepticism about Telstra is one of the most sustained negative critiques of a big Australian corporate yet seen. It makes an interesting comparison to the euphoria about telcos in the first half of last decade. The scepticism may be partly attributable to the after effects of that era. The stock is on a


We’re in The Monthly

A few months ago the Unconventional Economist and I were interviewed by Christine Kenneally a freelance journalist who has written for Time,  The New Yorker, The New York Times, Slate and New Scientist, as well as other publications. In this case she was writing an article to appear in the May issue of the Monthly magazine.