8

Shorting the banks

About a year ago, the major banks were concerned enough about hedge funds shorting their shares to investigate privately whether it was occurring. They concluded, at least publicly, that it was not. But as the wedging of Australian banks gets stronger — weakening housing on the one side, harder offshore borrowing conditions on the other

Latest posts

29

Saul cracks the mining tax nut

How’s this from Saul Eslake today: The resources super profits tax, as originally envisaged, was (among other things) impractical and relied on a commercially unrealistic assumption that financiers would believe a government promise to refund 40 per cent of the costs of failed mining ventures. But its replacement, the minerals resource rent tax, is arbitrary

92

“Hybrid” policy doesn’t make any sense

Why do economists say that using a price signal is the least cost way of reducing emissions? It’s because in absence of a price signal, there are many, many different ways that people could suggest we reduce emissions and no real good way of deciding between them. Moving to 100% renewables, retrofitting CCS to every

10

Solon’s ghost: Greek default scenarios

The latest this morning is that the EU is trying to shoehorn Greek government asset sales. This could provide both the opportunity to pay down some public debt and boost productivity, helping the rest of the economy better handle the debt left over. However, I’m not yet reassured by these measures. It’s not at all

10

Links May 25: Dead cat

Up: gold, euro, energy, CRB, Aussie, metals Down: $US, ore Smashed: grains Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Italy is the problem, not Spain. Edward Hugh EU seeks forced asset sales in Greece. FT US economy reality check. Zero Hedge Richmond manufacturing smacked. Zero Hedge More Fed softening. Bloomberg Not enough… Can an economy simply stall out? Econbrowser CFTC charges oil price manipulators. FT Meanwhile,

44

China boom or China bust?

Last week, the Australian newspaper published the below chart showing Australia is in the midst of the biggest mining investment boom in its history that is forecast to reach a whopping 7% of GDP (hat tip Tom Conley). It’s a view shared by the Australian Treasury who, in the recent Federal Budget, forecast that “the

0

Trading Day: the correction continues

The S&P/ASX 200 is down 22 points or 0.5% at midday, continuing the broad correction since mid-April. Asian markets are mixed, with the Nikkei down 0.1%, the Hang Seng down 0.2 and Singapore steady, on the back of news that Goldman Sachs has downgraded Chinese GDP growth. The AUD is back above 1.05 after dipping

122

SQM’s bear maul

Following on from Koshee’s recent delivery of bad news for the Australian housing market, Louis Christopher from SQM research appeared on sunrise this morning to give the market a full strength bear mauling. His prediction of this years damage is as follows: CAPITAL CITIES (worst to best) Perth (total 2011 9.8%)  – Currently down 3.8% from peak. Expected

14

NCCP bites credit cards

I have spoken about NCCP many times before in the context of housing and motor vehicle finance. In terms of housing it seems to have had quite a measurable market affect, in terms of vehicle finance it just seems to have simply annoyed the people who have to fill in the extra paperwork. This outcome

6

Brokers Fortesmiscue

Fortescue Metals has done something very difficult, even laudable (although not always in the most laudable fashion). It has successfully challenged the iron ore cartel in Australia of BHP and Rio. That may make it good for competition in the sector, but does it make it a good investment? It is certainly down from some

86

What’s in a name?

John Howard didn’t have time to give it a name. His election commitment in 2007 was to introduce an emissions trading scheme, as was Rudd’s. Turnbull has quipped that if Howard won that election we would already have an ETS. As it turns out, Rudd got up and called it the Carbon Pollution Reduction Scheme,

13

Correlated risk is off

Stock markets around the world are either in full flight correction (Australia) beginning, or wobbling along. Yesterday we had the Asian stock markets, with the ASX200 down 1.88%, Japan (Nikkei 225) down 1.52%, Hong Kong (Hang Seng) over 2.11% and Singapore 1.83%. This action was continued through to Europe, with the German DAX down 2%,

11

King dollar

FT Alphaville today catches up to reality with an explanation of movements in the $US: Take everything you ever thought you knew about foreign exchange and bin it. According to HSBC’s stellar FX guru David Bloom, currency markets are trading through the looking glass, and will continue to do so for some while. As he noted

9

May 24 links: Flight to safety

Rocket: $US Flat: gold Down: grains Smashed: euro, energy, CRB, Aussie, metals Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Austerity my butt. Paul Krugman Fitch warns Belgium. Zero Hedge NATO quagmire in Libya. Guardian Fed index shows slowing US growth. Zero Hedge Fed set on tightening. Tim Duy World slowing. The Economist FX and risk. Alphaville Right question, wrong answer Taliban attacks

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%

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