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AIG gets busy

There’s a spectacular number of vested interests at work in this morning’s media: FIRB is racist; the banks are hard at work discrediting the ratings agencies and Gittins! notes the work of the baccy companies, raised by Boganomics on Friday. But the one story that has me in a lather is Heather Ridout and her call for

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34

Ageing and asset prices

Following on from my previous article, which discussed the adverse impact of Australia’s ageing population on consumption expenditure, I now want to turn to the likely impact of population ageing on asset prices. Much of this analysis will again draw upon the Australian Bureau of Statistics (ABS) long-term population projections, which provides detailed estimates of

17

Greece’s inevitable default

While browsing Bloomberg the other night I noticed two stories about Europe in the top stories list, one under the other. Greece’s Cabinet Approves Asset Sales German Construction, Exports Drove First Quarter When I saw them together I laughed out loud and wondered to myself how many people would see those two stories and understand

5

Links May 30: Frenzy of interests

Week ahead for the DOW. Calculated Risk Will the US double-dip? Steve Keen (h/t Naked Capitalism) The US labour trend. Tim Duy Greece, Ireland flailing. Zero Hedge Where’s the great bond selloff? WSJ Global slowdown. Gavyn Davies Banks cutting rates. SMH This read rather like an ad… Gittins! loves Boganomics! SMH Coking coal. Garimpeiro No

20

Cash is king

The  global financial crisis was in my view the first symptom of what is a reckless attack on money itself. An attack undertaken by the supposed uber-capitalists, Ayn Rand disciples. It is thus especially dangerous because it is unintentional — the worst of all “unintended consequences”, as it were. The lingering sign of this attack

145

Who’s responsible?

In a speech this week, Deputy Governor of the the RBA, Ric Battellino, warned that many first home buyers that bought during the 2009 FHOG scheme were in jeopardy as interest rates rise: Another potential source of vulnerability in the housing market that is often mentioned is the many first-home owners who were attracted into the

11

The great Chinese inflation

From Societe Generale overnight comes a new intensive study of the changing composition of Chinese inflation and how it will radiate outwards. Fascinating reading and essential knowledge for every Australian. Remember the phrase: “deflation in all you own, inflation in all you need”…

4

Weekend reading: Relief

Up:  Aussie, grains, CRB, euro Down: $US, ore, metals, energy, gold, Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Basel III extends and pretends for Europe. FT Pricing Greek default. Felix Salmon US economy stumbling. NYT GSE delinquencies declining. Calculated Risk The great Chinese inflation. Zero Hedge Fitch cuts Japan. Reuters China’s fraudsters. NYT Honestly, nobody does piracy like the Chinese. My favourite story was the creation of an

20

Suck and blow

Off the bat; if you don’t want to smoke, be our guest. You have every right to deny yourself the abundant pleasure. One of our number is known to do so. He does so in the full knowledge that robbing himself of the pleasure is a poor trade-off against a premature, hideous death. The bogan,

19

Risa and rise of the yuan

There is a changing of the guard going on in currency leadership that not many people are watching nor commenting on. It is similar in nature to what is happening with the leadership in global growth and the drivers of the economy and it is why Anthony Bolton of Fidelity moved from the UK to

0

Trading Day: 27th May

The S&P/ASX 200 is up 25 points to 4684 just after midday, continuing to claw back some of this weeks losses. Asian markets are mixed however, with the Nikkei down 0.24%, the Hang Seng up 0.76% and Singapore also up 0.71%. Other risk assets are up too, with the AUD above 1.07 against the USD,

18

Google and correlation madness

Some of you may have heard of Google Trends, a useful tool from Google that lets you plot the activity of popular Google search terms over time. As noted by Justin Wolfers at the Freakonomics blog, there are already some pretty useful applications of this tool; most notably, Google Flu Trends, which uses Google’s search

39

Ageing to punish retail

In 2008, the Australian Bureau of Statistics (ABS) released long-term population projections for Australia under three scenarios: High growth scenario (Series A), which assumes an increase in the fertility rate, higher net overseas migration than existed in 2008, and an increase in life expectancy; Medium growth scenario (Series B), which largely reflected the trends in

76

How much carbon in my milk?

How much do you think the price of a 2 litre bottle of milk will go up with the “great big new tax on everything”. 10c, 20c, 50c, a $1? As a product of ruminating cattle, emitting methane (a greenhouse with 25 times the global warming potential of carbon dioxide) each and every day, it’s

56

The trouble with Super

After my article on the fund management industry, I’ve received many requests from regular MacroBusiness readers for an in-depth analysis of superannuation. In my former career as a financial planner and portfolio manager, I found myself almost exclusively specialising in superannuation, particularly asset allocation. This was mainly by design as the majority of clients within the financial planning

4

Time to buy?

I really don’t think so. There are some fair reasons to think we might bounce in the short term. From the FT: Equities and commodities continued to stabilise following the risk sell-off seen at the start of this week, although nagging worries over eurozone sovereign debt kept anxiety levels among investors high. The latest concerns

3

Equities Spotlight: Fleetwood

As we see in H&H’s article on the latest ABS Private Capital Expenditure, Australia appears to be marching towards the mining boom mk 2, spades in hand and singing “hi ho, hi ho”.  In light of the coming boom, we’re going to take quick look at a company that may tap into the rivers of boom

2

May 27 links: Risk holds on

Up:  Aussie, grains, CRB Down: $US, ore, metals, energy, gold, euro, Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Risk is back on. FT Third depression watch. Paul Krugman Kansas Fed manufacturing unchanged. Calculated Risk US DOL claims unchanged. Calculated Risk China considers broader price controls. Bloomberg False growth scare? Pragmatic Capitalist UK debt-deflation has a long way to run. Alphaville Banks to boom on business

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42

Those that read Douglas Adams will recall that the answer to the ultimate question – life, the universe and everything – was 42. This chart was my attempt to recreate that answer: The idea of this chart was to support my notion that retail sales (purple line) drives everything in the Australian economy and that

12

Wisdom of the ages

By popular demand, find attached the full interview with Peter Jonson (AKA Henry Thornton), former chief economist at the RBA on where we’ve all gone horribly wrong. I also recommend the book mentioned in the video, Great Crises of Capitalism.

0

Trading Day – Thursday 26th May

The S&P/ASX 200 is up 36 points or 0.78% to 4626 points just after midday, reversing some of this weeks losses. Asian markets are up, the Nikkei 1.2%, the Hang Seng up slightly at 0.37% and Singapore steady. The AUD is above 1.05 against the USD, whilst gold continues to rise at $1529 USD an

7

Mining capex booms on

The bullhawk’s bible is out. ABS Private Capital Expenditure. Here’s the headline release: MARCH KEY POINTS ACTUAL EXPENDITURE (VOLUME TERMS) The trend volume estimate for total new capital expenditure rose 3.3% in the March quarter 2011 while the seasonally adjusted estimate rose 3.4%. The trend volume estimate for buildings and structures rose 2.6% in the

47

The incredible, invisible RBA

Deputy Governor of the RBA, Rick Battelino, gave a speech this morning that has left me kind of perplexed. The structure of the speech first described the surge in mortgage credit in Australia since the millennium and how much of it came from offshore borrowing in the banks. Second, it described how the banks had

2

Equity Spotlight: Graincorp

Profit Increase and Upgrade Graincorp (ASX Code: GNC) has posted an increase in FY11 net profit of 66%, in addition to lifting FY profit guidance to $145 to $165 million, a $30 million increase from previous guidance which put the figure between $115 and $135 million. The main reason behind the increased result was a

20

RMBS arrears above GFC

Fitch has released its monthly “Dinkum Index”, a read on the health of Australian RMBS and the reading is a concern: Fitch Ratings-Sydney-25 May 2011: Fitch Ratings said today that 30+ days delinquencies in the Australian prime RMBS sector reached a record high of 1.79% in Q111, up 42bp from Q410. Christmas spending, the Queensland floods and

16

China’s hidden debt

Niall Ferguson coined the term “Chimerica” to characterise the economic relationship between China and the United States. In his view, China does the saving, and the United States does the spending.  This is true to a certain extent but that does not mean that China does not borrow. Today, I want to explore debt in the

15

May 26 links: Hither and thither

Up: gold, energy, CRB, Aussie, metals, grains Down: $US, ore, euro Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece ECB says Greek restructure a disaster. Alphaville Roubini says no worries. RGE Fitch OK’s German banks on restructure. Bloomberg Risk for TBTFs just jumped. Zero Hedge US durable goods miss. Zero Hedge Shanghai enters correction territory. FT UK double dip. Alphaville Daddy bear growls again. Alphaville Germany slowing. Macro

35

Retail gloom will deepen

Earlier this week I posted an article, The housing-retail link, which discussed the positive feedback loop (“wealth effect”) caused by changes in house prices. This article argued that changes in housing values are a leading determinant of household consumption expenditure, consumer confidence, employment and growth. That is, when house prices rise (fall) in value, households feel

28

Australian dollar breakdown

Just a quick update on our beloved Aussie and markets in Asia generally. Houses and Holes prescient headline on links this morning that last night was a dead cat bounce is proving correct. As I write my Bloomberg terminal is telling me: AUD/USD is sitting at 1.0477, down 0.78% Dow and S&P Futures down 0.65%